Pre-effective Amendment no.2
Securities Act of 1933
Rule 472
27 December, 1995
Securities and Exchange Commission
490 5th Street
Washington, DC 20549
RE: Peregrine Funds
File no: 33-64191
811-07425
Pre-effective Amendment no.2
Dear Ladies and Gentlemen:
On Behalf of Peregrine Funds ("Registrant"), transmitted herewith for filing
pursuant to Rule 472 under the Securities Act of 1933 ("Rule") is Pre-effective
Amendment no. 2 to the Registration Statement, which has been black-lined to
show changes from the prior filing.
The changes consist of the Registrant's responses to staff comments, updating
certain information relating to the Registrant's board of trustees and officers
and action taken by them regarding the Advisory, Distribution and other
Agreements, the inclusion of a balance sheet and minor editorial changes.
Please acknowledge acceptance of this filing via the EDGAR Postmaster.
Should you have any questions regarding this submission, I can be reached at
212.293.2031.
Very truly yours,
Thaddeus Leszczynski
cc: Patricia Williams
<PAGE>
Securities Act of 1933
Rule 461
28 December, 1995
Securities and Exchange Commission
490 5th Street
Washington, DC 20549
RE: Pelegrine Funds
File no: 33-64191
811-07425
Request for Acceleration Pursuant to Rule 461
Dear Ladies and Gentlemen:
The undersigned, Peregrine Funds ("Registrant") and Van Eck Securities
Corporation ("Underwriter"), request that the Registrant's registration
statement be declared effective on December 28, 1995 or as soon as is
practicable thereafter. Pre-effective amendment no. 2 the Registrant's
registration statement is being filed via EDGAR concurrently with this request.
The compensation paid to the Underwriter has not been reviewed by the National
Association of Securities Dealers, Inc. Registrant is an investment company and
the Underwriter receives no compensation for its services. Review by the
Association is not required.
Please acknowledge acceptance of this filing via the EDGAR Postmaster.
Should you have any questions regarding this submission, I can be reached at
212.293.2031.
Very truly yours,
/s/
Thaddeus Leszczynski, Vice President
Van Eck Securities Corporation
/s/
Thaddeus Leszczynski, Secretary
Peregrine Funds
cc: Patricia Williams
Michael Schaefer
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 /x/
Pre-Effective Amendment No. 2
Post-Effective Amendment No. _____
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No. 2
(Check appropriate box or boxes)
PEREGRINE FUNDS
(Exact name of registrant as specified in charter)
99 Park Avenue
New York, New York 10016
(Address of principal executive offices)
Registrant's telephone number: (800) 910-5255
Copy to:
Frank E. Morgan, Esq. Thaddeus Leszczynski, Esq.
Mayer, Brown & Platt Van Eck Associates
1675 Broadway 99 Park Avenue
New York, NY l0019 New York, NY 10016
(Name and address of agent for service)
Approximate date of proposed public offering January 1, 1996. It is proposed
that this filing will become effective (check appropriate box):
/ /Immediately upon filing pursuant to / /on (date) pursuant to paragraph (b)
paragraph (b)
/ /60 days after filing pursuant to / /on (date) pursuant to
paragraph (a)(1) paragraph (a)(1)
/ /75 days after filing pursuant to / /on (date pursuant to paragraph
paragraph (a)(2) (a)(2) of rule 485
The proposed public offering will occur as soon as practicable after the
effective date of this registration statement. The registrant hereby amends this
amendment to its registration statement on such date or dates as may be
necessary to delay its effective date until the registrant shall file a further
amendment which specifically states that this registration statement shall
thereafter become effective in accordance with section 8(a) of the Securities
Act of 1933 or until the registration statement shall become effective on such
date as the Commission, acting pursuant to section 8(a), may determine.
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
- --------------------------------------------------------------------------------
Title of Amount being Proposed Proposed Amount of
Securities registered maximum maximum registration
being offering price aggregate fee
registered per unit offering price
- --------------------------------------------------------------------------------
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant
elects to register an indefinite number of shares of beneficial interest.
<PAGE>
PEREGRINE FUNDS
Cross-Reference Sheet
Pursuant to Rule 501(b) of Regulation S-K
under the Securities Act of 1933
Form N-1A
Form N-1A Item No.
Part A Caption or Location in Prospectus
1. Cover Page Cover page
2. Synopsis Fund Summary
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Fund's Investment Objective,
Policies and Risks; Fund Details
5. Management of the Fund Management
6. Capital Stock and Other Securities Dividends and Distributions; Taxes
7. Purchase of Securities Being Offered Buying and Selling Fund Shares;
How to Buy Shares
8. Redemption of Repurchase Buying and Selling Fund Shares;
How to Sell Shares
9. Pending Legal Proceedings Not Applicable
Caption or Location in
Statement of Additional
Part B Information
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History General Information
13. Investment Objectives and Policies Overview of Investment Objective
and Policies of the Fund;
Investment Restrictions;
14. Management of the Fund Trustees and Officers
Caption or Location in
Statement of Additional
Part B Information
15. Control Persons and Principal Holder of No Principal Holder of Securities
Securities
16. Investment Advisory and Other Services Investment Advisory Services;
17. Brokerage Allocation and Other Practices Portfolio Transactions and
Brokerage
18. Capital Stock and Other Securities General Information
19. Purchase, Redemption and Pricing of Valuation of Shares, Portfolio
Securities Being Offered Transactions and Brokerage,
Redemptions in Kind
20. Tax Status Taxes
21. Underwriters The Distributor
22. Calculations of Performance Data Performance
23. Financial Statements Financial Statements
<PAGE>
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SUBJECT TO COMPLETION
DECEMBER 26, 1995
Prospectus
___, 1995
Peregrine Funds/Asia Pacific Growth Fund
- --------------------------------------------------------------------------------
99 Park Avenue, New York, New York 10016
Account Assistance: (800) 910-5255
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The Asia Pacific Growth Fund (the "Fund") seeks long-term capital appreciation
by investing in the securities of companies that are expected to benefit from
the development and growth of the economies of Asia and the Pacific Basin.
Peregrine Asset Management (Hong Kong) Limited ("Peregrine") serves as
investment adviser to the Fund.
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, A BANK. THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENTAL
AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
This Prospectus sets forth concisely information about the Fund that you should
know before investing. It should be read and retained for future reference.
A Statement of Additional Information ("SAI") dated ___ 1995, about the Fund has
been filed with the United States Securities and Exchange Commission ("SEC") and
is incorporated herein by reference. For a free copy of the SAI, write to the
above address or call the telephone number listed above.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS
TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
TABLE OF CONTENTS PAGE
- --------------------------------------------------------------------------------
Shareholder Transaction Data .............................................
Fund Summary..............................................................
Fund Details .............................................................
Fund's Investment Objective, Policies and Risks ..........................
Buying and Selling Fund Shares ...........................................
Dividends and Distributions ..............................................
Tax-Sheltered Retirement Plans............................................
Facts About Your Account .................................................
Management ...............................................................
Advertising ..............................................................
Taxes ....................................................................
Additional Information ...................................................
<PAGE>
SHAREHOLDER TRANSACTION DATA
The following table is intended to assist you in understanding the various
direct and indirect costs and expenses you will bear when you invest in the
Fund. All of the Annual Fund Operating Expenses are paid out of Fund assets. The
Fund's adviser, Peregrine, may, from time to time, waive fees and/or reimburse
certain operating expenses of the Fund.
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Charge
Imposed on Purchases ............................................ 0%
Redemption Charge (Imposed on redemptions
within 60 days of purchases) ................................. 2%
ANNUAL FUND OPERATING EXPENSES: (as a percent of average net assets)
Management Fees ................................................... 1.00%
Other Expenses .................................................... 1.05%
Portfolio Administration Fees ................................... .25%
Transfer Agent and Custodian Fees ............................... .29%
*Other Expenses ................................................. .51%
Total Fund Operating
Expenses......................................................... 2.05%+
* Other Expenses are estimates which assume $30 million in average daily net
assets. Actual "Other Expenses" may vary.
+ Peregrine has voluntarily agreed to waive management fees and/or assume
Operating Expenses (excluding interest, taxes, brokerage commissions and
extraordinary expenses) to limit Total Fund Operating Expenses to an annual
rate of 2.00% of the Fund's average daily net assets until December 31, 1997.
EXAMPLE: You would bear the 1 year 3 years
following expenses on a
$1,000 investment assuming
(1) 5% annual return and (2) $21 $64
redemption at the end of
each time period:
THE ABOVE EXAMPLE IS MEANT TO ILLUSTRATE THE EFFECT OF EXPENSES ON RETURN AND
SHOULD NOT BE CONSIDERED TO REPRESENT PAST OR FUTURE RETURNS OR EXPENSES, WHICH
MAY BE GREATER OR LESS THAN THOSE SHOWN. For more information see "Management."
<PAGE>
FUND SUMMARY
[WHO SHOULD CONSIDER INVESTING IN THE FUND]
Investors who wish to pursue their investment goals by investing in the
economies of Asia and the Pacific Basin and are willing to assume the risks
associated with these investments should consider the Fund. Investing in these
markets can afford investors diversification as well as a way to participate in
the growth opportunities available in Asia and the Pacific Basin. See "How to
Buy Shares" and "How to Sell Shares."
The value of the Fund's investments will vary from day to day, and generally
reflect market, economic and political conditions, interest rates and company,
political or economic news. In the short-term, stock prices can fluctuate
dramatically in response to these factors. Over time, however, stocks have shown
greater growth potential than other types of securities, such as bonds. Bonds
fluctuate in response to interest rates and the credit rating of the issuer,
generally declining in value when interest rates rise or the credit rating of
the issuer declines. See "Fund's Investment Objective, Policies and Risks."
[RISK PROFILE]
The value of the Fund's shares can be expected to fluctuate more and to be more
volatile than funds investing only in securities of large U.S. companies or more
developed countries or bond funds. The Fund is not meant to be a complete or
balanced investment program and is intended for those investors who can assume
greater risk with respect to a portion of their investment portfolio.
The Fund's risks include share price and currency fluctuations, confiscatory
taxation, expropriation, nationalization, inefficient securities markets and
settlement practices and lack of developed legal systems. See "Fund's Investment
Objective, Policies and Risks - Risk Factors."
[INVESTMENT ADVISER AND As investment adviser, Peregrine manages the
DISTRIBUTOR] investments of the Fund and handles the other
business affairs of the Fund under supervision of the
Board of Trustees. Peregrine has been registered with
the SEC as an investment adviser since April 17,
1995. Peregrine was incorporated in Hong Kong in 1991
and is an indirect subsidiary of Peregrine Investment
Holdings Limited ("Peregrine Holdings"). Peregrine
Holdings and its affiliates comprise one of the
largest independent Asian based investment banks
located outside Japan and Korea. Established in 1988,
Peregrine Holdings and its affiliates have offices in
sixteen Asian and mid-Eastern countries as well as in
Europe and the United States. Peregrine acts as
sub-investment adviser to one other investment
company registered with the SEC, and as adviser to
five other offshore funds. As of November 30, 1995,
Peregrine managed assets totaling $130 million. See
"Management."
Van Eck Securities Corporation ("Distributor"), a
Delaware corporation, is a wholly-owned subsidiary of
Van Eck Associates Corporation, and serves as the
Fund's distributor and markets the Fund's shares.
<PAGE>
FUND DETAILS
[ORGANIZATION OF THE The Fund is a separate series of Peregrine Funds,
FUND] and is an open-end, management investment company.
Peregrine Funds was organized as a Delaware business
trust on December 1,1995. The Fund is a diversified
fund as that term is used in the Investment Company
Act of 1940, as amended (the "1940 Act"). With
respect to 75% of a diversified fund's assets, no
more than 5% of its assets may be invested in the
securities of any one issuer and not more than 10% of
the outstanding voting securities of an issuer may be
owned.
[BOARD OF TRUSTEES] The Fund is governed by a Board of Trustees, which
is responsible for protecting the interests of
shareholders. The Trustees are experienced executives
who meet throughout the year to oversee the Fund's
activities, review contractual arrangements with
companies that provide services to the Fund and
review performance. The majority of Trustees are not
otherwise affiliated with Peregrine.
[SHAREHOLDER The Fund may hold special shareholder meetings and
MEETINGS] mail proxy materials. These meetings may be called to
elect or remove Trustees, change the fundamental
investment objective and policies, approve an
investment advisory contract or for other purposes.
You are entitled to one vote for each share you own.
If you cannot attend a shareholder meeting you may
vote by proxy.
[FUND'S PORTFOLIO Peregrine may utilize its broker-dealer and other
TRANSACTIONS] affiliates and other firms that sell Fund shares to
purchase and sell the Fund's portfolio securities and
other assets, provided that their services and
commissions are comparable to those of other firms.
[PORTFOLIO MANAGEMENT] The portfolio manager is responsible for the
day-to-day management of the Fund. Gary Greenberg is
portfolio manager of the Fund.
Gary Greenberg, C.F.A., Manager of the Fund, has been
serving in such capacity since the Fund commenced
operations. Mr. Greenberg, Deputy Managing Director
of Peregrine, joined Peregrine in July, 1994 and is
responsible for Peregrine's investment strategy in
various regions of the world and is portfolio manager
for a fund which invests in smaller companies in
India. Prior to joining Peregrine, Mr. Greenberg
served as co-manager of the Acorn International Fund
from 1992 to 1994. During that time period he was
principal and portfolio manager of an asset
management company which managed over U.S. $4
billion, including approximately U.S. $2 billion
invested in non-U.S. companies. From 1989 to 1992 he
was international securities analyst at Harris Asso-
ciates L.P.
Other investment professionals at Peregrine who are
expected to have significant input in determining the
Fund's investments include:
<PAGE>
Bruce Seton, Chief Investment Officer of Peregrine,
has been serving in such capacity since September,
1994. Mr. Seton serves as Chief Executive Officer of
Peregrine and is responsible for establishing
Peregrine's overall investment guidelines and
strategies. Prior to joining Peregrine in 1994, Mr.
Seton spent twenty-two years at Gartmore Investment
Limited managing funds emphasizing Asian emerging
market investments.
Aureole Foong, Director of Peregrine, joined
Peregrine in 1994 as a fund manager. His
responsibilities at Peregrine include managing funds
which invest in equities and derivatives in the Asia
region. Prior to joining Peregrine, Mr. Foong worked
from 1990 to 1994 at Unifund, a Geneva-based private
investment company, where he served as a Senior Vice
President.
Peregrine, its investment personnel and its affiliated companies may invest in
securities for their own accounts pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain activities.
FUND'S INVESTMENT OBJECTIVE, POLICIES AND RISKS
[OBJECTIVE] The Fund's investment objective is long-term capital appreciation by
investing in the securities of companies that are expected to benefit from the
development and growth of the markets or economies in Asia and the Pacific
Basin.
The Fund considers "Asia" to include Australia, Bangladesh, Brunei, Cambodia,
Hong Kong, India, Indonesia, Republic of Korea, Laos, Malaysia, Myanmar
(formerly, Burma), Nepal, New Zealand, Pakistan, Papua New Guinea, the People's
Republic of China ("China"), the Philippines, Singapore, Sri Lanka, Taiwan,
Thailand, and Vietnam. Other countries may be included in the future. The Fund
will normally invest in at least three Asian countries. The Fund does not expect
to invest in Japan.
[FUND'S BENEFITS AND RISKS] [BENEFITS] Peregrine believes Asia has potential for
dramatic economic growth. The Fund offers investors who believe that Asia offers
strong long-term growth potential the ability to concentrate an investment in
Asian securities. The Fund's performance is closely tied to economic and
political conditions within Asia. The Fund may not be suitable for all investors
and is intended for investors willing to assume greater risk and as a complement
to a broader investment plan. The Fund is not intended as a complete investment
program.
When you sell your Fund shares they may be worth more or less than you paid for
them. Their value will depend upon the value of the Fund's investments, which
varies in response to many factors. Stock values fluctuate in response to the
activities of individual companies, and general market, economic and political
conditions. The securities of smaller, less well-known companies may be
particularly volatile. Bond values fluctuate based on changes in interest rates
and in the credit quality of the issuer. In addition, some of the Fund's
investments will be denominated in foreign currencies which fluctuate in
response to global economic, market and political factors. Peregrine will select
investments for the Fund that it believes offer the greatest opportunity for
long-term capital appreciation. There can be no assurance that Peregrine will be
successful.
<PAGE>
Peregrine normally invests the Fund's assets according to its investment
objective and policies. Peregrine determines whether an issuer or its principal
business are located in Asia by looking at such factors as its country of
organization, the primary trading market for its securities, and the location of
its assets, personnel, sales, and earnings. When allocating the Fund's
investments among countries, Peregrine considers such factors as the potential
for economic growth, political developments, expected levels of inflation,
governmental policies and the outlook for currency relationships. There can be
no assurance that the Fund will achieve its investment objective.
[EMERGING MARKET RISKS]
Investors should expect volatility in the value of the Fund's shares as emerging
markets are characterized by wide fluctuations in securities' prices. Countries
in Asia are in various stages of economic development. Each has its own risks.
Some are considered emerging markets, which generally have low-to-middle-income
economies. Except for Australia and New Zealand, the other Asian countries are
considered emerging markets. Most countries in this region are heavily dependent
on international trade. Some have prosperous economies, but are sensitive to
world commodity prices. Others are especially vulnerable to recessions and
economic factors in other countries. Some countries in the region have
experienced rapid growth recently, and many suffer from obsolete financial
systems, economic problems, or less developed legal systems. Many are
experiencing political and social uncertainty. In addition, the return of Hong
Kong to Chinese control may affect the entire region known as "Greater China".
The securities markets in Asia may be subject to emergencies caused by
governmental actions and political and economic factors. In the event an
emergency exists, the Fund may, with the approval of the SEC, suspend your right
to redeem your Fund shares during the emergency.
[INTERNATIONAL INVESTING RISKS]
The Fund's policy of investing in non-U.S. markets and, in particular, emerging
markets, involves increased or additional economic and political risks from
those mentioned above as compared to investing in the U.S. or other developed
markets. The Fund's share price will be affected by events and factors in the
various world markets.
These foreign markets have generally less stringent investor protection rules
and enforcement, disclosure standards and governmental regulation. In addition,
some foreign companies are not subject to the same financial accounting,
auditing and reporting standards that are required of U.S. companies. Compared
to U.S. markets, foreign markets are less developed and less liquid, have fewer
issuers, may be more subject to influence by large investors and more
susceptible to manipulation. Some have unstable governments. In addition to the
political and economic factors that can affect the value of foreign securities,
a governmental issuer may be unwilling to repay principal and interest when due
and may require that the conditions for payment be renegotiated. Investing in
countries with emerging economies or securities markets is subject to the
additional risks associated with political and economic structures undergoing
rapid change, economies heavily dependent upon international trade and extremely
sensitive to commodity prices and to economic factors in other countries, the
lack of developed securities markets and effective regulations, less developed
legal and economic sectors, restrictions on foreign ownership of securities, and
governments that in the past have failed to recognize private ownership, have
nationalized or expropriated private property, imposed currency exchange
controls, levied confiscatory taxes and limited the removal of funds or other
assets.
<PAGE>
[OTHER RISKS]
In addition, because the Fund may invest in a wide variety of investments and
use various investment techniques, the Fund may be riskier and more volatile
than Funds whose investments and investment techniques are less varied. Some of
the more common risks associated with the investments and investment techniques
available to the Fund and not discussed here are summarized below in "Fund's
Investments and Techniques." See also "Risk Factors" in the SAI.
[INVESTMENT POLICIES] In pursuing its goals, the Fund will focus on equity
securities but it may also invest in other types of financial instruments,
including debt securities of any quality. The Fund may invest in the securities
of any issuer, including companies and other business organizations, as well as
governments and governmental and quasi-governmental agencies. The Fund, however,
will tend to focus on the equity securities of both large and small companies in
Asia. Except in unusual circumstances, Peregrine will normally invest at least
65%, and at times nearly all, of the Fund's total assets in securities of
issuers expected to benefit from the development and growth of the economies of
Asia. The Fund will normally invest in at least three Asian countries.
Peregrine may use different investment techniques to attempt to achieve the
Fund's investment objective and to hedge the Fund's risks, but there is no
guarantee that these strategies will work as Peregrine intends. Also, as a
mutual fund, the Fund seeks to spread investment risks by diversifying its
holdings among many companies and industries. Of course, diversification does
not eliminate risk and when you sell your Fund shares, they may be worth more or
less than you paid for them.
The Fund may, in seeking to avoid foreign taxes or comply with foreign
investment restrictions, invest in certain countries in Asia through
wholly-owned entities organized in a foreign country.
The Fund's investments will normally be denominated in a foreign currency. To
attempt to protect against uncertainties in the markets or in anticipation of
the need for cash to meet redemption requests or settlement of portfolio
transactions, the Fund may, for temporary defensive purposes, invest in
short-term debt securities and money market instruments in excess of 35% of the
Fund's total assets. There is no limit on the amount of foreign currencies or
short-term instruments denominated in a foreign currency the Fund may hold.
The Fund may invest in a variety of instruments that are or may become available
in the market, and Peregrine may use a number of investment techniques and
strategies to achieve the Fund's objective. There are a number of risks and
restrictions associated with these instrument types and investment practices
that should be considered by investors. The investment types and investment
practices that will be used most often are listed below under "Fund's
Investments and Techniques." (A complete listing of the Fund's policies and
limitations and more detailed information about the Fund's investments and
strategies is contained in the Fund's SAI.) Policies and limitations are
considered at the time of purchase; the sale of instruments is not required in
the event of a subsequent change in circumstances.
Peregrine may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the Fund
achieve its goals. Current holdings and recent investment strategies are
described in the Fund's financial reports which are sent to shareholders twice a
<PAGE>
year. For a free SAI or annual or semi-annual report, call (800) 910-5255 or
write to the Fund at the address on the cover. The Fund commenced operations on
___________; the first semi-annual report for the period ended June 30, 1996
will be available on or about August 30, 1996.
[FUND'S INVESTMENTS AND TECHNIQUES]
EQUITY SECURITIES. Equity securities may include common stocks, preferred
stocks, direct equity interests in unincorporated entities or enterprises,
convertible securities, and warrants. Common stocks, the most familiar type of
equity security, represent an equity (ownership) interest in a corporation.
Although equity securities have a history of long-term growth in value, their
prices fluctuate based on changes in a company's financial condition and on
overall market, economic and political conditions. Smaller companies are
especially sensitive to these factors. The Fund also considers equity swaps,
indexed securities and similar instruments whose values are tied to one or more
equity securities to be equity securities.
DIVERSIFICATION. Diversification of the Fund's investment portfolio can reduce
the risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry.
RESTRICTIONS: With respect to 75% of total assets, the Fund may not invest more
than 5% of its total assets in securities (including debt securities) of any one
issuer. The Fund may not invest more than 25% of its total assets in any one
industry. These limitations do not apply to U.S. government securities.
FOREIGN AND EMERGING MARKETS SECURITIES. The Fund will normally invest a
significant portion of its assets in securities of issuers located outside the
U.S. and traded outside the U.S. These securities will usually be non-U.S.
dollar denominated, but also may be dollar denominated (such as ADRs). Changes
in the value of foreign currencies can significantly affect the value of the
Fund's investments and share price. Peregrine may use a variety of techniques to
either increase or decrease the Fund's exposure to any currency.
DEBT SECURITIES. Bond and other debt instruments are used by issuers to borrow
money from investors. The issuer pays the investor a fixed or variable rate of
interest, and must repay the amount borrowed at maturity. Some debt securities,
such as zero coupon bonds, do not pay current interest, but are purchased at a
discount from their face values. In general, bond prices rise when interest
rates fall, and vice versa. Debt securities have varying degrees of quality and
varying levels of sensitivity to changes in interest rates. Longer-term bonds
are generally more sensitive to interest rate changes than short-term bonds.
Lower-quality debt securities (sometimes called "junk bonds") are speculative
and involve greater risk of default or price fluctuations due to changes in the
issuer's creditworthiness, or the reality that the issuer may already be in
default. The market prices of these securities may fluctuate more than
higher-quality securities and may decline significantly in periods of general
economic difficulty.
RESTRICTIONS: The Fund currently intends to limit its investments in debt
securities rated lower than Baa by Moody's Investors Services ("Moody's") to 25%
of its total assets. Purchase of a debt security is consistent with the Fund's
debt quality policy if it is rated at or above the stated level by Moody's or
<PAGE>
rated in the equivalent categories by Standard & Poor's Corporation ("S&P"), or
is unrated but judged to be of equivalent rating quality by Peregrine. The
ratings of Moody's and S&P represent their respective opinions as to the quality
of the obligations they undertake to rate. Ratings, however, are general and are
not absolute standards of quality.
The SAI provides an explanation of the ratings assigned to debt holdings (not
including money market instruments).
ADJUSTING INVESTMENT EXPOSURE. The Fund may use various techniques to increase
or decrease its exposure to changing security prices, interest rates, currency
exchange rates, commodity prices, or other factors that affect security values.
These techniques may involve derivative transactions such as buying and selling
options, futures and forward contracts, entering into currency exchange
contracts, swap agreements, purchasing indexed securities, and selling
securities short.
Peregrine may use these practices to adjust the risk and return characteristics
of the Fund's portfolio of investments. If Peregrine judges market conditions
incorrectly or employs a strategy that does not correlate well with the Fund's
investments, these techniques could result in a loss to the Fund, regardless of
whether the intent was to reduce risk or increase return. These techniques may
increase the volatility of the Fund and may involve a small investment of cash
relative to the magnitude of the risk assumed. In addition, these techniques
could result in a loss to the Fund if the counterparty to the transaction does
not perform as promised.
REPURCHASE AGREEMENTS. In a repurchase agreement, the Fund buys a security at
one price and simultaneously agrees to sell it back at a higher price. The
difference between the sale and repurchase prices represents interest earned by
the Fund. Delays or losses to the Fund could result if the other party to the
agreement defaults or becomes insolvent.
FOREIGN REPURCHASE AGREEMENTS. Repurchase agreements with foreign dealers may be
less well-secured than U.S. repurchase agreements, and may be denominated in
foreign currencies. They also may involve greater risk of loss or counterparty
default. Some counterparties in these transactions may be less creditworthy and
subject to less regulation than those in U.S. markets.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
Peregrine, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
Securities subject to legal or contractual restrictions and repurchase
agreements maturing in more than seven days are considered illiquid. Difficulty
in selling these securities may result in a loss or may be costly to the Fund.
RESTRICTIONS: The Fund may not enter into a repurchase agreement maturing in
more than seven days if, as a result, more than 15% of the Fund's net assets
would be invested in these repurchase agreements and other illiquid securities.
SHORT SELLING. Short selling involves selling a security that the Fund does not
own and has borrowed from a broker. When the Fund purchases the security to
replace the borrowed security, if the value of the security declines as
anticipated, the Fund will profit to the extent of the difference between the
purchase price and the sale price. If the price of the security increases, the
Fund will suffer a loss.
<PAGE>
RESTRICTIONS: The value of securities of any one issuer sold short will
constitute no more than 2% of the Fund's net assets or no more than 2% of the
issuer's outstanding class of securities. Only liquid securities will be sold
short. The value of the securities sold short will constitute no more than 25%
of the Fund's net assets.
OTHER INSTRUMENTS. Other securities in which the Fund may invest include rights,
securities of investment companies, and real estate-related investments.
LEVERAGE. The Fund may use leverage by borrowing from banks, or through reverse
repurchase agreements, futures, options and similar transactions. Leverage will
subject the Fund's share price to greater fluctuation.
RESTRICTIONS: The Fund may not borrow in an amount exceeding 33 1/3% of its
total assets.
LENDING OF PORTFOLIO SECURITIES. Securities may be lent to broker-dealers and
institutions, including affiliates of Peregrine. Lending is a means for the Fund
to earn income. This practice could result in a loss or a delay in recovering
the Fund's securities.
RESTRICTIONS: Loans of the Fund's securities, in the aggregate, may not exceed
33 1/3% of the Fund's total assets.
FUNDAMENTAL POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, which are subject to change only with shareholder approval, and are
all listed below. All policies stated throughout this Prospectus, other than
those identified in this section as fundamental can be changed without
shareholder approval.
The Fund's investment objective is to seek capital appreciation by investing in
the securities of companies that are expected to benefit from the development
and growth of the economies of Asia. This objective can be changed only with
shareholder approval.
The Fund, with respect to 75% of total assets, may not invest more than 5% of
its total assets in the securities (including debt securities) of any one
issuer, and may not own more than 10% of the outstanding voting securities of a
single issuer, excluding entities of which it is the sole owner. The Fund may
not invest more than 25% of its total assets in any one industry. The Fund may
borrow in an amount not exceeding 33 1/3% of its total assets. Loans of the
Fund's securities, in the aggregate, may not exceed 33 1/3% of total assets.
BUYING AND SELLING FUND SHARES
The Fund is a "no-load" mutual fund. The Fund does not currently impose a
transaction or sales charge for investors purchasing shares directly from the
Fund. However, to reduce transaction costs to the Fund resulting from excessive
shareholder activity a redemption fee of 2% ("Redemption Fee") of the value of
the shares sold will be retained by the Fund if you sell your shares within 60
days of purchase. Shares will be purchased or redeemed at the next share price
calculated after the investment or request for redemption is received and
accepted. The share price is calculated at the close of trading on the New York
Stock Exchange ("NYSE"), currently 4:00 P.M., Eastern Time, on each day the NYSE
<PAGE>
is open for business. Purchases and sales will be made in U.S. Dollars. The Fund
may, without notice, suspend the offering of shares or reject any purchase
order.
[HOW TO BUY SHARES]
[THROUGH A FINANCIAL INSTITUTION OR DST]
Fund shares may be purchased at their net asset value per share without payment
of a sales charge by (1) ordering the shares through a financial institution
(which may impose a transaction charge for its services), and forwarding a
completed Application or investment firm settlement instructions with payment;
or (2) completing an Application and mailing it with payment to the Fund's
Transfer Agent and Dividend Paying Agent, DST Systems, Inc., c/o Peregrine
Funds, P.O. Box 419558, Kansas City, Missouri, 64141-9558.
The Fund will not issue share certificates. Fractional shares will be issued.
[BROKERS, BANKS AND FINANCIAL PROFESSIONALS]
You may purchase or sell your shares through a broker, a bank or investment
professional. These financial institutions may charge a fee for their services.
Your financial institution has the responsibility of submitting your orders
received by it prior to the close of trading on the NYSE to the Distributor not
later than 5:00 p.m., Eastern Time, or to DST through the facilities of the
National Securities Clearing Corporation by 7:00 p.m., Eastern Time, to receive
that day's price.
Certain financial institutions may enter into sales agreements with the
Distributor and may place confirmed purchase orders on behalf of their
customers, with payment to follow within three business days. If payment is not
received by the Fund, the financial institution will be held liable for any fees
or losses the Fund or Distributor may incur.
Some unaffiliated financial institutions have entered into agreements with the
Fund, Distributor and/or Peregrine to provide services to shareholders. If such
financial institutions provide assistance in marketing the Fund, the financial
institutions will be compensated by Peregrine from its own resources.
[PAYMENT] Payment for shares must be made in U.S. Dollars. Checks drawn on a
foreign bank will not be accepted unless provisions are made for payment in U.S.
Dollars through a U.S. bank. Double endorsed checks will not be accepted.
[MINIMUM PURCHASES] Initial purchases must be in the amount of $50,000 or more
per account. Subsequent purchases must be in the amount of $5,000 or more.
Purchases may be made through selected dealers or banks or investment
professionals or by forwarding payment to DST Systems, Inc. ("DST"). Either
minimum may be waived by the Fund in special circumstances deemed to be
appropriate by the Fund's Board of Trustees.
[HOW TO SELL SHARES]
You may sell your shares on any business day by writing to or calling DST or
your financial institution. If you purchased shares through an investment
professional you may be required to sell your shares through that investment
<PAGE>
professional if your shares are held in "street name". The redemption price will
be the net asset value per share next determined after the receipt of a request
in proper form as described herein.
[IN WRITING]
To sell shares you may write to DST, c/o Peregrine Funds, P.O. Box 419558,
Kansas City, Missouri 64141-9558. Your redemption request must (1) be signed by
all owners exactly as their names appear on the account Application and
signature page, (2) specify the number of shares or amount of investment to be
redeemed if less than all shares in the account are to be sold, (3) contain a
signature guarantee of each owner's signature by an eligible guarantor
institution (notarization by a notary public is not acceptable) for redemptions
of $50,000 or more, or if the redemption check is to be made payable to other
than the owners or is to be sent to an address other than the record address or
the record address has been changed within the past 30 days and (4) provide any
additional documents regarding accounts of estates, trusts, guardianships,
custodianships, partnerships and corporations (e.g., appointments as executor or
administrator, trust instruments or certificates of corporate authority)
requested by DST. Banks, trust companies, savings institutions and
broker/dealers are eligible to guarantee your signature.
[BY TELEPHONE]
You may sell your shares by telephone by calling either (1) your financial
institution (which may charge a transaction fee) or (2) DST at 1-800-910-5255,
if the shares are not held in street name. Estates, trusts, guardianships,
custodianships, partnerships and corporations may not call DST to sell their
shares. Telephone calls to DST are recorded. Shares will be redeemed by
telephone if you provide the correct social security number, tax identification
number or account number. To protect against fraud or losses DST may require
additional information. The Fund reserves the right to refuse a request for the
telephone redemption privilege without prior notice, either before, during or
after the call.
Telephone instructions accepted after the close of business on the NYSE will not
be processed until the following business day. In the case of joint or multiple
owners, one owner's call may effect the telephone exchange or redemption.
Because of unusual market conditions it may be difficult and/or impossible to
contact DST or your broker, bank or investment professional to redeem your
shares. You should continue to try contacting them by telephone at their
telephone number or written instructions may be sent by post or courier.
You may request redemption by telephone of $50,000 or less per day if the
proceeds check is to be payable to you and sent to the address we have on our
records or the proceeds are to be wired to the bank account of record. To
protect you and the Fund from fraud, a telephone redemption request will not be
accepted if you changed the registered address within one month of the request.
[UNAUTHORIZED TELEPHONE REDEMPTIONS] Like most mutual funds, the Fund and DST
may only be liable for losses resulting from unauthorized transactions if they
do not follow reasonable procedures designed to verify the caller's identity.
Telephone calls may be recorded and account number and other information may be
requested. If you do not want the ability to redeem by telephone, check the
appropriate box on the Application or call DST for instructions.
<PAGE>
[REDEMPTION FEE]
Shares redeemed within 60 days of purchase will incur a Redemption Fee of 2%
which will be deducted from the value of those shares. The Redemption Fee is
paid to the Fund, not to the Distributor, and is intended to cover the costs
incurred by the Fund resulting from short-term trading by investors. The
Redemption Fee does not apply to shares acquired through the reinvestment of
distributions. Shares held the longest will be redeemed first for purposes of
calculating the fee.
[PAYMENT OF SALES PROCEEDS] Payment for shares sold will normally be made within
seven days after a proper redemption request is received, except for delays
which may be permitted under applicable law or rule. If Fund shares to be
redeemed were purchased by check, to protect the Fund from losses, the Fund will
pay the proceeds only after it is satisfied that your check has been cleared for
payment. This may take as long as 15 days. Payment will generally be made by
wire transfer to your designated account at a domestic commercial bank. You may
request in writing that redemption proceeds be paid by check. The check will be
made payable to the record owners at the record address.
DIVIDENDS AND DISTRIBUTIONS
The Fund will distribute its net investment income and net capital gains
annually, generally in December. Dividends or distributions declared in December
but paid in the following January will be includible in your income as of the
record date (usually in December) of such dividends or distributions. The fiscal
year of the Fund ends on December 31.
DIVIDEND REINVESTMENT PLAN
[DIVIDEND REINVESTMENT]
Dividends and distributions will be automatically reinvested in Fund shares at
net asset value unless you or your financial institution notifies DST that
dividends and distributions are to be paid in cash. If you do not want your
dividends reinvested automatically please check "Cash" on the Application.
TAX-SHELTERED RETIREMENT PLANS
You may purchase Fund shares for tax-sheltered retirement plans. These plans
allow individuals to shelter investment income and capital gains from current
taxes. Contributions may be tax deductible. These accounts require separate
applications to open. Additional information about these plans may be found in
the SAI or may be requested from the Fund.
[IRAS] An Individual Retirement Account and Spousal Individual Retirement
Account (IRA/SPIRA) are available to anyone who has earned income. (Investments
may also be made for a spouse, if the spouse has earned income of less than
$250.)
[SEP] A Simplified Employee Pension Plan (SEP) is available to employers,
including self-employed individuals that want to provide retirement income to
their employees without all the administrative requirements of qualified plans.
<PAGE>
[QUALIFIED PENSION PLAN] A Qualified Pension Plan is available to self-employed
individuals, partnerships, corporations and their employees.
[403 (B) PLANS] A 403(b)(7) Program is available to employees of certain
tax-exempt organizations and schools.
FACTS ABOUT YOUR ACCOUNT
[YOUR ACCOUNT]
DST maintains Fund account records. However, brokers, banks and financial
institutions maintain account records for shares that are held in street name
for their clients. If you purchased your shares from a financial institution you
must call or write to the institution if you have questions about your account
or want to sell shares you own. DST will have no record of your account.
[MINIMUM ACCOUNT SIZE] If, at any time, the number of shares in your account
falls below a specified amount, currently 500 shares, you will be notified and
will have 30 days to bring the number of shares you own up to the minimum
amount. If you are unable to comply with the account minimum within 30 days, the
Fund may redeem your Fund shares involuntarily and mail the proceeds to you.
Your shares will be redeemed at the net asset value on the day your account is
closed.
[FUND'S BUSINESS DAYS] You may transact business (buy and sell shares) in your
account on each day the NYSE is open. Shares are purchased and sold at the net
asset value per share (NAV) next calculated after your order is received and
accepted. The NAV is calculated at the close of business on the NYSE, currently
4:00 P.M., Eastern Time.
[FUND'S NAV] The Fund's NAV is the value of one share. It is computed by adding
the value of the Fund's investments, cash and other assets, subtracting the
Fund's liabilities and dividing the result by the number of shares outstanding
at the time.
[VALUATION OF FUND'S INVESTMENTS] The assets of the Fund are primarily valued on
the basis of market quotations. Foreign securities are valued on the basis of
quotations from the primary market in which they are traded. If market value is
not ascertainable, investments are valued at fair value as determined in good
faith by the Board of Trustees. Foreign investments will be valued in U.S.
Dollars using the prevailing exchange rates on that day. The Fund invests in
securities, options or futures contracts listed or traded on foreign exchanges
which may trade on Saturdays or other customary U.S. national business holidays
(days on which the Fund is not open for business). Consequently, the Fund's NAV
may be affected on days when you may not purchase or redeem shares.
[SPECIAL SERVICES] You may be charged a fee for special services you request,
such as providing historical account documents.
[TRANSFER OF OWNERSHIP] To transfer ownership (re-register) of all or a portion
of your shares you must provide a written request with any documents DST may
request to satisfy itself that the request is genuine. See "How to Sell Shares."
DST will require the same information and certifications, all in proper form,
necessary to open and close an account.
<PAGE>
MANAGEMENT
[INVESTMENT ADVISER] Peregrine is the investment adviser and manages the Fund's
portfolio of investments pursuant to an Investment Advisory Agreement and is
paid an investment advisory fee ("Advisory Fee") by the Fund at an annual rate
of 1.00% of average daily net assets. Peregrine acts as sub-adviser to one other
mutual fund registered with the SEC under the 1940 Act and manages portfolios of
pension plans and others. Total aggregate assets under management by Peregrine
were approximately $130 million as of November 30, 1995.
Peregrine has voluntarily agreed to waive the Advisory Fee and/or assume
operating expenses (excluding interest, taxes, brokerage commissions and
extraordinary expenses) in order to limit the Fund's total expenses to an annual
rate of 2.00% of the Fund's average daily net assets until December 31, 1997.
[PORTFOLIO ADMINISTRATOR]
Van Eck Associates Corporation ("Van Eck") serves as the Fund's portfolio
administrator pursuant to a Portfolio Accounting and Administration Agreement.
Van Eck performs accounting and administrative services for the Fund and is paid
a fee ("Portfolio Administration Fee") at an annual rate of .25% of the Fund's
average daily net assets or $75,000, whichever is greater. Van Eck is
responsible for calculating the Fund's NAV, maintaining the Fund's records and
providing certain other accounting and administrative services.
The Advisory and Portfolio Administration Fees paid by the Fund are generally
more than those paid by other comparable mutual funds.
ADVERTISING
From time to time, the Fund may advertise its performance. Past performance is
not indicative of future performance.
[AVERAGE ANNUAL TOTAL RETURN] The Fund may advertise its performance in terms of
average annual total return, which is computed by finding the average annual
compounded rate of return over a period so that the initial amount invested
would equal the ending account value. The calculation assumes that all dividends
and distributions by the Fund are reinvested and includes all recurring fees
charged to all shareholder accounts. It is not the actual return in each year,
but an average. The actual return in any year may be more or less than the
average. Average annual total return for periods of less than a year is equal to
the actual return annualized and assumes that performance to date will continue
for the rest of the year.
[AGGREGATE TOTAL RETURN] The Fund may advertise aggregate total return for a
specified period of time, which is the percentage change in the net asset value
of Fund shares initially purchased assuming reinvestment of dividends and
capital gains distributions without giving consideration to the length of time
of the investment.
Non-recurring expenses may be excluded from the calculation of rates of return
so that the rates may be higher than if these expenses were included. The SAI
describes the methods used to calculate the Fund's total return.
The Fund may quote performance results from recognized services and publications
which monitor the performance of mutual funds and the Fund may compare its
performance to various published historical indices. These include market,
economic and performance data and indices. For example, the Fund may quote the
<PAGE>
market performance of the S&P 500; Morgan Stanley Capital International Europe
Australia Far East (EAFE) Index; the Morgan Stanley Capital International
Combined Far East Ex-Japan Free Index or another appropriate index; performance
of various world economies or economic indicators; or compilations of historical
performance data from rating agencies. The Fund is rated in the Asia/Pacific
Basin Funds Category by performance rating agencies. Micropal, Ltd., a worldwide
mutual fund performance evaluation service, is one rating agency; Lipper
Analytical Services is another.
TAXES
[FUND'S TAX STATUS] The Fund intends to qualify as a "regulated investment
company" under the Internal Revenue Code and will not pay income or excise taxes
to the extent that it distributes its net taxable investment income and capital
gains.
[TAXATION OF DIVIDENDS YOU RECEIVE] Notice as to the tax status of dividends and
distributions will be mailed to you annually. Income from dividends and
distributions is normally taxable whether or not reinvested. Distributions from
net investment income and short-term capital gains will be taxed as ordinary
income. Distributions of long-term capital gains will be taxed at capital gain
rates. If the Fund fulfills certain requirements, shareholders of the Fund may
be able to claim a foreign tax credit or deduction for foreign taxes paid to
foreign governments by the Fund during the year. The Fund does not anticipate
that any portion of the Fund's dividends will be eligible for the 70% corporate
dividends received deduction.
[TAXATION ON SALE OF SHARES] When you redeem your shares you may incur a capital
gain or loss for tax purposes. The amount of the capital gain or loss, if any,
is the difference between what you paid for your shares and what you receive. Be
sure to keep your regular statements - they contain the information necessary to
calculate the capital gain or loss.
This discussion was a brief description of the tax consequences of an investment
in the Fund. You should consult your tax adviser for additional tax
consequences, including state and local taxation, of dividends, distributions
and sale of Fund shares.
[NON-RESIDENTS] Distributions of net investment income and short-term capital
gains, if any, made to non-resident aliens will be subject to 30% withholding or
lower tax treaty rates because such distributions are considered U.S. source
income. Currently, the Fund is not required to withhold tax from long-term
capital gains distributions paid to non-resident aliens.
ADDITIONAL INFORMATION
[QUESTIONS ABOUT THE FUND] For further information about the Fund, please call
your financial advisor or the Fund toll free at (800) 544-4653 or write to the
Fund at the cover page address.
[CUSTODIAN] The custodian of the assets of the Trust is The Chase Manhattan
Bank, N.A., 4 Chase Metrotech Center, Brooklyn, New York 11245.
[INDEPENDENT ACCOUNTANTS] Price Waterhouse LLP, 1177 Avenue of the Americas, New
York, New York 10036, are the Fund's independent accountants. The Fund's annual
financial statements are audited by Price Waterhouse.
<PAGE>
[COUNSEL] Mayer, Brown & Platt, 1675 Broadway, New York, New York 10019, serves
as outside counsel to the Trust.
[TRANSFER AND DIVIDEND DISBURSING AGENT] DST Systems, Inc., 1055 Broadway,
Kansas City, MO 64105, serves as the Fund's transfer, dividend disbursing and
shareholder servicing agent.
[INVESTMENT ADVISER] Peregrine Asset Management (Hong Kong) Limited, New World
Tower, Suite 1710, 16-18 Queens Road Central, Hong Kong, serves as the
investment adviser to the Fund.
[DISTRIBUTOR] Van Eck Securities Corporation, 99 Park Avenue, New York, New York
10016, serves as distributor for the Fund's shares.
[PORTFOLIO ADMINISTRATOR] Van Eck Associates Corporation, 99 Park Avenue, New
York, New York 10016, serves as portfolio administrator for the Fund.
<PAGE>
SUBJECT TO COMPLETION
DECEMBER 26, 1995
PEREGRINE FUNDS
(THE "TRUST")
99 PARK AVENUE, NEW YORK, N.Y. 10016
SHAREHOLDER SERVICES: TOLL FREE (800) 910-5255
ASIA PACIFIC GROWTH FUND
Peregrine Funds is a mutual fund. Asia Pacific Growth Fund is the only series
of the Trust.
TABLE OF CONTENTS PAGE
----
General Information........................................................... 2
Overview of Investment Objective and Policies of the Funds.................... 2
Risk Factors ................................................................. 4
Foreign Securities......................................................... 4
Emerging Market Securities................................................. 4
Foreign Currency Transactions.............................................. 8
Futures and Options Contracts and Complex Securities....................... 9
Options, Futures and Forward Contracts..................................... 9
Hedging and Other Investment Techniques....................................11
Indexed Securities and Structured Notes....................................12
Swap Agreements............................................................13
Loans of Portfolio Securities..............................................13
Borrowing .................................................................14
Real Estate Securities.....................................................14
Investment Company Securities..............................................15
Rights.....................................................................15
Partly Paid Securities.....................................................15
Direct Investments.........................................................15
Repurchase Agreements......................................................16
Debt Securities............................................................17
Rule 144A Securities and Section 4(2) Commercial Paper.....................17
Investment Restrictions.......................................................18
Investment Advisory Services..................................................20
The Distributor...............................................................21
Portfolio Transactions and Brokerage..........................................22
Trustees and Officers.........................................................24
Valuation of Shares...........................................................25
Tax-Sheltered Retirement Plans................................................26
Investment Programs...........................................................29
Taxes.........................................................................29
Redemptions in Kind...........................................................32
Performance...................................................................32
Additional Information........................................................33
Financial Statements..........................................................33
Appendix......................................................................34
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY ANY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE A
PROSPECTUS.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ
IN CONJUNCTION WITH THE FUND'S CURRENT PROSPECTUS, DATED ___, 1995 (THE
"PROSPECTUS"), WHICH IS AVAILABLE AT NO CHARGE UPON WRITTEN OR TELEPHONE REQUEST
TO THE TRUST AT THE ADDRESS OR TELEPHONE NUMBER SET FORTH AT THE TOP OF THIS
PAGE.
SHAREHOLDERS ARE ADVISED TO READ AND RETAIN THIS STATEMENT OF ADDITIONAL
INFORMATION FOR FUTURE REFERENCE.
STATEMENT OF ADDITIONAL INFORMATION - ___, 1995
GENERAL INFORMATION
-------------------
Peregrine Funds (the "Trust") is an open-end management investment company
organized as a "business trust" under the laws of the State of Delaware. The
Board of Trustees has authority to create additional series or funds, each of
which may issue a separate class of shares. There is currently one series of the
Trust: Asia Pacific Growth Fund ("Fund").
The Fund is classified as a diversified fund under the Investment Company Act of
1940 (the "1940 Act"). A diversified fund is a fund which meets the following
requirements: At least 75% of the value of its total assets is represented by
cash and cash items (including receivables), government securities, securities
of other investment companies and other securities for the purpose of this
calculation limited in respect of any one issuer to an amount not greater than
5% of the value of the Fund's total assets and to not more than 10% of the
outstanding voting securities of such issuer.
Peregrine Asset Management (Hong Kong) Limited (the "Adviser") serves as
investment adviser to the Fund.
OVERVIEW OF INVESTMENT OBJECTIVE AND POLICIES OF THE FUND
The Fund's investment objective long-term capital appreciation by investing in
the securities of companies that are expected to benefit from the development
and growth of the economies of Asia and the Pacific Basin.
The Fund may invest in a broad range of equity securities, warrants and equity
options of companies located in, or expected to benefit from the development and
growth of the economies of countries located in Asia and the Pacific Basin. The
Fund considers "Asia" to include Australia, Bangladesh, Cambodia, Hong Kong,
India, Indonesia, Korea, Laos, Malaysia, Myanmar (formerly Burma), Nepal, New
Zealand, Pakistan, Papua New Guinea, the Philippines, Singapore, Sri Lanka,
Taiwan, Thailand and Vietnam. Other countries may be added in the future.
Currently, the Fund does not invest in Japan. Equity securities include common
and preferred stocks, structured notes, equity swaps, direct equity interests in
<PAGE>
trusts, partnerships, joint ventures and other unincorporated entities or
enterprises, special classes of shares available only to foreign persons in
those markets that restrict ownership of certain classes of equity to nationals
or residents of that country, convertible preferred stocks and convertible debt
instruments. The Fund may buy and sell financial futures contracts and options
on financial futures contracts, forward currency contracts and put or call
options on securities, securities indices and foreign currencies, currency
swaps, structured and indexed notes and other instruments which may be or become
available that are consistent with the Fund's investment objective. The Fund may
also lend its portfolio securities and borrow money for investment purposes
(i.e., leverage its portfolio). Although the Fund will invest its assets in a
manner consistent with its investment objectives and policies there can be no
assurance the Fund will be able to achieve its objective.
The Fund expects that under normal market conditions at least 65%, and at times,
substantially all of its assets will normally be invested in equity securities,
structured and indexed notes, swaps and other instruments whose return is tied
to one or more issuers in the Asia region and issuers that the Fund may invest
in consist of companies that (a) are located in Asia or whose securities are
principally traded in an Asian country or (b)(i) have at least 50% of their
assets in one or more countries located in Asia or (ii) derive at least 50% of
their gross sales, revenues or profits from providing goods or services to or
from within one or more countries located in Asia. These investments are
typically listed on stock exchanges or traded in the over-the-counter markets in
Asian countries, but may be traded on exchanges or in markets outside Asia.
Similarly, the principal offices of these companies may be located outside these
countries. The Fund may commit 25% or more of its total assets to any one
country in Asia, and will normally invest in at least three Asian countries. The
Fund may invest, without limitation, in depository shares or depository
receipts, such as American Depository Receipts and Shares, and Global Depository
Receipts and Shares. Depository receipts and shares are generally issued by
custodian banks as evidence of ownership of the underlying foreign securities.
The Fund may, for temporary defensive purposes, invest more than 35% of its
total assets in high grade, liquid debt securities of foreign and United States
companies which are not in Asia, foreign governments and the U.S. Government,
and their respective agencies, instrumentalities, political subdivisions and
authorities, as well as in money market instruments denominated in U.S. dollars
or a foreign currency. These money market instruments include, but are not
limited to, negotiable or short-term deposits with domestic or foreign banks
with total surplus and undivided profits of at least $50 million; high quality
commercial paper; and repurchase agreements maturing within seven days with
domestic or foreign dealers, banks and other financial institutions deemed to be
creditworthy under guidelines approved by the Board of Trustees of the Fund. The
commercial paper in which the Fund may invest will, at the time of purchase, be
rated P-1 or better by Moody's Investors Services, Inc. ("Moody's") or A-1 or
<PAGE>
better by Standard & Poor's Corporation ("S&P") or, Fitch-1 by Fitch or Duff-1
by Duff & Phelps or if unrated, will be of comparable high quality as determined
by the Adviser.
Some countries in the Asia region have favorable tax treaties with other
countries, the effect of which is that entities organized under the laws of the
tax favored country pay a lower rate of tax on income or capital gains earned on
investments in the taxing country. The Fund may invest, when it is advantageous
for tax reasons, through wholly-owned entities.
The Fund may invest in collateralized mortgage obligations. The Appendix to this
Statement of Additional Information contains an explanation of the rating
categories of Moody's and S&P relating to the fixed-income securities and
preferred stocks in which the Fund may invest, including a description of the
risks associated with each category.
RISK FACTORS
Foreign Securities
Investors should recognize that investing in foreign securities involves certain
special considerations which are not typically associated with investing in
United States securities. Since investments in foreign companies will frequently
involve currencies of foreign countries, and since the Fund may hold securities
and funds in foreign currencies, the Fund may be affected favorably or
unfavorably by changes in currency rates and in exchange control regulations, if
any, and may incur costs in connection with conversions between various
currencies. Most foreign stock markets, while growing in volume of trading
activity, have less volume than the New York Stock Exchange, and securities of
some foreign companies are less liquid and more volatile than securities of
comparable domestic companies. Similarly, volume and liquidity in most foreign
bond and equity markets are less than in the United States, and at times
volatility of price can be greater than in the United States. Fixed commissions
on foreign securities exchanges are generally higher than negotiated commissions
on United States exchanges. There is generally less government supervision and
regulation of securities exchanges, brokers and listed companies in foreign
countries than in the United States. In addition, with respect to certain
foreign countries, in particular, emerging market countries, there is the
possibility of exchange control restrictions, expropriation or confiscatory
taxation, political, economic or social instability, which could affect
investments in those countries. Foreign securities such as those purchased by
these Funds may be subject to foreign government taxes, higher custodian fees
and dividend collection fees which could reduce the yield on such securities.
EMERGING MARKET SECURITIES
Many countries in the Asia region are considered developing or emerging
countries. The Fund may have a substantial portion of its assets in these
countries or countries with developing securities markets. Although there is no
universally accepted definition, a developing or emerging country is generally
<PAGE>
considered by the Adviser to be a country which is in the initial stages of
industrialization or economic development. With the exception of Australia and
New Zealand, the other Asian countries are considered developing or emerging
markets.
Shareholders should be aware that investing in the equity and fixed income
markets of those countries and emerging markets involves exposure to unstable
governments, economies based on only a few industries, and securities markets
which trade a small number of securities. Securities markets of these countries
tend to be more volatile than the markets of developed countries; however, such
markets have in the past provided the opportunity for higher rates of return to
investors. Some of these countries do not have securities markets or exchanges
or are in the initial stages of formation.
Political and economic structures in many such countries may be undergoing
significant evolution and rapid development, and therefore, such countries may
lack the social, political and economic stability characteristic of the United
States. Certain of these countries have in the past failed to recognize private
property rights and have at times nationalized or expropriated the assets of
private companies. An investment in the Fund presents a greater risk of loss to
investors than would an investment in a fund investing in a more diversified
portfolio of companies located in more stable countries. The economies of
countries with developing markets may be highly vulnerable to changes in local
or global trade conditions, and may suffer from extreme and volatile debt
burdens or inflation rates. Local securities markets may be unable to respond
effectively to increases in trading volume, potentially making prompt
liquidation of substantial holdings difficult or impossible at times. Securities
of issuers located in developing markets may have limited marketability and may
be subject to more abrupt or erratic price movements. However, such markets have
in the past provided the opportunity for higher rates of return to investors.
There is no assurance that these markets will offer such opportunity in the
future.
Since the Fund invests at least 65% of its total assets in Asia region
investments, the investment performance will be especially affected by events
affecting Asian companies. The value and liquidity of these investments may be
affected favorably or unfavorably by political, economic, fiscal, regulatory or
other developments in Asia or neighboring regions. The extent of economic
development, political stability and market depth of different countries in Asia
varies widely. Certain countries in Asia, including Bangladesh, Cambodia, China,
Laos, Indonesia, Malaysia, Nepal, the Philippines, Thailand, and Vietnam are
either comparatively underdeveloped or are in the process of becoming developed.
Investments in these countries typically involve greater potential for gain or
loss than investments in securities of issuers in developed countries. Given the
Fund's investments, the Fund will likely be particularly sensitive to changes in
China's economy as the result of a reversal of economic liberalization,
political unrest or changes in China's trading status. In addition, the Fund
will invest a significant portion of its assets in Hong Kong and will be
affected by the return of Hong Kong to Chinese control.
The securities markets in Asia are substantially smaller, less liquid and more
volatile than the major securities markets in the United States. A high
proportion of the shares of many issuers may be held by a limited number of
<PAGE>
persons and financial institutions, which may limit the number of shares
available for investment by the portfolio. A limited number of issuers in Asian
securities markets may represent a disproportionately large percentage of market
capitalization and trading value. The limited liquidity of securities markets in
Asia may also affect the Fund's ability to acquire or dispose of securities at
the price and time it wishes. Accordingly, during periods of rising securities
prices in the more illiquid Asian securities markets, the Fund's ability to
participate fully in such price increases may be limited by its investment
policy of investing not more than 15% of its net assets in illiquid securities.
Conversely, the Fund's inability to dispose fully and promptly of positions in
declining markets will cause the Fund's net asset value to decline as the value
of the unsold positions is marked to lower prices. In addition, securities
markets in Asia are susceptible to being influenced by large investors trading
significant blocks of securities.
Many emerging countries limit the percentage foreign investors, such as the
Fund, may own of their domestic issuers by requiring that such issuers issue two
classes of shares- "local" and "foreign" shares. Foreign shares may be held only
by investors that are not considered nationals or residents of that country and
in some markets may be convertible into local shares. Foreign shares may be
subject to restrictions on the right to receive dividends and other
distributions, and may have limited voting and other rights, to name a few.
Local shares are intended for ownership by nationals or residents of the
country. The market for foreign shares is generally less liquid than the market
for local shares, although in some cases foreign shares may be converted into
local shares. In addition, foreign shares often trade at a premium to local
shares, while at other times there is no premium. If the Fund were to purchase
foreign shares at a premium and sell when there is a lower or no premium, the
Fund could realize a loss on its investment. Ownership by foreign investors of
local shares may be illegal in some jurisdictions and, in others, foreign owners
of local shares may not be entitled, among other things, to participate in
certain corporate actions such as stock dividends, rights and warrant offerings
(while foreign holders of foreign shares would participate). If the Fund were to
own local shares and could not participate in a stock, warrant or other
distribution, the Fund could suffer material dilution of its interest in that
issuer and the value of its holdings could decline dramatically, over a very
short period, causing a loss on its investment. Generally, it is expected that
the Fund will hold foreign shares. However, because of their limited number,
foreign shares may, at times, not be available for purchase by the Funds or the
premiums may be, in the opinion of the Adviser, unjustified or prohibitively
high. In order to participate in these markets, the Fund may deem it advisable
to purchase local shares which may expose the Fund to the additional risks
described above. The Fund will only purchase local shares where foreign shares
are not available for purchase or premiums are excessive and when, in the
opinion of the Adviser, the potential for gain in these markets outweighs the
risks that issuers will take corporate actions which may result in dilution to
the Fund. Where permitted by local law, the Fund will attempt to convert local
shares to foreign shares promptly. There can be no assurance that the Adviser
will be able to assess these risks accurately or that the Fund will be able to
convert its local shares to foreign shares or that dilution will not result.
The stock markets in certain of the Asian region countries, particularly the
Chinese markets, are undergoing a period of growth and change which may result
in trading volatility and difficulties in the settlement and recording of
<PAGE>
transactions, and in interpreting and applying the relevant law and regulations.
In particular, the securities industry in China is not well developed. China has
no securities laws of nationwide applicability. The municipal securities
regulations adopted by Shanghai and Shenzhen municipalities are very new, as are
their respective securities exchanges and other self-regulatory organizations.
In addition, Chinese stockbrokers and other intermediaries may not perform as
well as their counterparts in the United States and other more developed
securities markets. The prices at which the Fund may acquire or dispose of
investments may be affected by trading by persons with material non-public
information and by securities transactions by brokers in anticipation of
transactions by the Fund in particular securities. The securities markets in
Cambodia, Laos and Vietnam are currently non-existent.
Economies of countries in the Asia region may differ favorably or unfavorably
from the United States economy in such respects as rate of growth of gross
national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position. As export-driven economies,
the economies of countries in the Asia region are affected by developments in
the economies of their principal trading partners. Revocation by the United
States of China's "Most Favored Nation" status under United States international
trade laws, which the United States' President and Congress consider annually,
would adversely affect the trade and economic development of China and Hong
Kong. Hong Kong and Taiwan have limited natural resources, resulting in
dependence on foreign sources for certain raw materials and economic
vulnerability to global fluctuations of price and supply.
Governmental actions in China can have a significant effect on the economic
conditions in the Asia region, which could adversely affect the value and
liquidity of the Fund's investments. Although the Chinese government has
recently begun to institute economic reform policies, there can be no assurances
that it will continue to pursue such policies or, if it does, that such policies
will succeed.
China and certain countries in the region do not have comprehensive systems of
laws, although substantial changes have occurred in China in this regard in
recent years. The corporate form of organization has only recently been
permitted in China and national regulations governing corporations were
introduced only in May 1992. Prior to the introduction of such regulations
Shanghai had adopted a set of corporate regulations applicable to corporations
located or listed in Shanghai, and the relationship between the two sets of
regulations is not clear. Consequently, until a firmer legal basis is provided,
even such fundamental corporate law tenets as the limited liability status of
Chinese issuers and their authority to issue shares remain open to question.
Laws regarding fiduciary duties of officers and directors and the protection of
shareholders are not well developed. China's judiciary is relatively
inexperienced in enforcing the laws that exist, leading to a higher than usual
degree of uncertainty as to the outcome of litigation. Even where adequate law
exists in China, it may be impossible to obtain swift and equitable enforcement
of such law, or to obtain enforcement of a judgment by a court of another
jurisdiction. The bankruptcy laws pertaining to state enterprises have rarely
been used and are untried in regard to an enterprise with foreign shareholders,
and there can be no assurance that such shareholders, including the Fund, would
<PAGE>
be able to realize the value of the assets of the enterprise or receive payment
in convertible currency. As the Chinese legal system develops, the promulgation
of new laws, existing laws and the preemption of local laws by national laws may
adversely affect foreign investors, including the Fund. The uncertainties faced
by foreign investors in China are exacerbated by the fact that many laws,
regulations and decrees of China are not publicly available, but merely
circulated internally. Similar risks exist in other Asia region countries.
Trading in futures contracts traded on foreign commodity exchanges may be
subject to the same or similar risks as trading in foreign securities.
FOREIGN CURRENCY TRANSACTIONS
Under normal circumstances, consideration of the prospects for currency exchange
rates will be incorporated into the long-term investment decisions made for the
Fund with regard to overall diversification strategies. Although the Fund values
its assets daily in terms of U.S. Dollars, it does not intend physically to
convert holdings of foreign currencies into U.S. Dollars on a daily basis. The
Fund will do so from time to time, and investors should be aware of the costs of
currency conversion. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference (the "spread")
between the prices at which they are buying and selling various currencies.
Thus, a dealer may offer to sell a foreign currency to the Fund at one rate,
while offering a lesser rate of exchange should the Fund desire to resell that
currency to the dealer. The Fund, at times, will use forward contracts, along
with futures contracts, foreign exchange swaps, structured notes and put and
call options (all types of derivatives), to "lock in" the U.S. Dollar price of a
security bought or sold and as part of its overall hedging strategy, for
defensive purposes and for cash management purposes. The Fund will conduct
foreign currency exchange transactions, either on a spot (i.e., cash) basis at
the spot rate prevailing in the foreign currency exchange market, or through
purchasing put and call options, or entering into futures contracts or forward
contracts to purchase or sell foreign currencies or using structured notes, swap
agreements or other instruments that may become available. See "Futures and
Options Contracts and Complex Securities."
At the maturity of the forward on contract, the Fund may either sell the
portfolio security and make delivery of the foreign currency, or may retain the
security and terminate its contractual obligation to deliver the foreign
currency prior to maturity by purchasing an "offsetting" contract with the same
currency trader obligating it to purchase, on the same maturity date, the same
amount of the foreign currency. There can be no assurance, however, that the
Fund will be able to effect such a closing purchase transaction.
<PAGE>
It is impossible to forecast the market value of a particular portfolio security
at the expiration of the forward currency contract. Accordingly, the Fund may
decide to proceed with the purchase or sale as anticipated or may determine not
to proceed. In the first instance, the Fund may have to purchase additional
foreign currency on the spot market (and bear the expense of such purchase) if
the market value of the security has fluctuated; or in the second, to enter into
an offsetting transaction.
FUTURES AND OPTIONS CONTRACTS AND COMPLEX SECURITIES
The Fund may buy and sell forward, futures and options contracts, structured
notes, swap agreements and other complex securities which are or may become
available for hedging and investment purposes. These are commonly referred to as
"derivatives." Derivatives include financial futures and forward contracts on
foreign or domestic currency, security, interest-rate, stock and bond indices.
Options, Futures and Forward Contracts
A forward contract, like a futures contract, involves an obligation to purchase
or sell a specific asset at a future date, which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set at the
time of the contract. Unlike futures contracts which are standardized
exchange-traded contracts, forward contracts are usually traded in the
over-the-counter market conducted directly between financial institutions and
their customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for such trades. There is, however, an
interest rate factor reflected in the delivery prices. A security or
interest-rate futures or forward contract is an agreement to buy or sell a
specified security at a set price on a future date. An index contract is an
agreement to take or make delivery of an amount of cash based on the difference
between the value of the index at the beginning and at the end of the contract
period. A foreign currency contract is an agreement to buy or sell a specified
amount of a currency for a set price on a future date.
When the Fund enters into a futures contract, it must make an initial deposit,
known as "initial margin," as a partial guarantee of its performance under the
contract. As the value of the security, index or currency fluctuates, either
party to the contract is required to make additional margin payments, known as
"variation margin," to cover any additional obligation they may have under the
contract. The Fund will not commit more than 5% of its total assets to initial
margin deposits on futures contracts and premiums on options, except that margin
deposits for futures positions entered into for bona fide hedging purposes are
excluded from the 5% limitation.
In establishing a position in a futures or forward contract, which may be a long
or short position, the Fund will own an offsetting position or appropriate high
grade, liquid assets, such as U.S. Government securities or cash will be
segregated with the Fund's Custodian to ensure that the position is not
leveraged above applicable limits. See "Borrowing" below. This segregated
account will be marked-to-market daily to reflect changes in the value of the
underlying futures or forward contract. If the value of the securities placed in
the segregated account declines, additional cash or securities will be placed in
the account on a daily basis so that the value of the account will equal the
amount of the Fund's commitments with respect to such contracts. Certain
exchanges do not permit trading in particular futures contracts at prices in
excess of daily price fluctuation limits set by the exchange. Trading in futures
contracts traded on foreign exchanges may be subject to the same or similar
risks as trading in foreign securities.
<PAGE>
The Fund may invest in options on futures contracts. Compared to the purchase or
sale of futures contracts, the purchase and sale of options on futures contracts
involves less potential risk to the Fund because the maximum exposure is the
amount of the premiums paid for the options.
The Fund may invest up to 5% of its total assets, taken at market value at the
time of investment, in premiums on call and put options on domestic and foreign
securities, foreign currencies, stock and bond indices and financial futures
contracts (entered into for other than bona fide hedging purposes). As the
holder of a call or put option, the Fund pays a premium and has the right (for
generally 3 to 9 months) to purchase (in the case of a call option) or sell (in
the case of a put option) the underlying asset at the exercise price at any time
during the option period ("American" option) or at expiration of the contract
("European" option). An option on a futures contract gives the purchaser the
right, but not the obligation, in return for the premium paid, to assume a
position in a specified underlying futures contract (which position may be a
long or short position) at a specified exercise price during the option exercise
period. If the call or put is not exercised or sold (whether or not at a
profit), it will become worthless at its expiration date and the Fund will lose
its premium payment. The Fund may, with respect to options it has purchased,
sell them, exercise them or permit them to expire.
The Fund may write call or put options. As the writer of an option, the Fund
receives a premium. The Fund keeps the premium whether or not the option is
exercised. If the call or put option is exercised, the Fund must sell (in the
case of a written call option) or buy (in the case of a written put option) the
underlying asset at the exercise price. The Fund may write only covered put and
call options. A covered call option, which is one where the Fund owns the
underlying asset, sold by the Fund exposes it during the term of the option to
possible loss of opportunity to realize appreciation in the market price of the
underlying asset or to possible continued holding of an underlying instrument
which might otherwise have been sold to protect against depreciation in the
market price of the underlying instrument. A covered put option written by the
Fund exposes it during the term of the option to a decline in price of the
underlying instrument. A put option sold by the Fund is covered when, among
other things, cash or short-term liquid securities are placed in a segregated
account to fulfill the obligations undertaken. Covering a put option sold does
not reduce the risk of loss.
The Fund may invest in options which are either listed on a domestic securities
exchange, traded on a foreign exchange or over-the-counter.
In general, exchange traded options are third party contracts with standardized
prices and expiration dates. Over-the-counter options are two party contracts
with price and terms negotiated by the buyer and seller, are generally
considered illiquid, and will be aggregated with other illiquid positions for
purposes of the limitation on illiquid investments. With respect to
over-the-counter options, the Fund is exposed to the risk that the other party
will fail to perform under the contract; in such a case the Fund would incur a
loss equal to the then current "market" value of the option.
<PAGE>
HEDGING AND OTHER INVESTMENT TECHNIQUES
The Fund may use options, forward and futures contracts, structured and indexed
notes, swaps and similar investments (commonly referred to as derivatives) as a
defensive technique to protect against declines in the values of assets the
Adviser deems desirable to hold for tax or other considerations and to gain
investment exposure to certain securities, markets or assets. One defensive
technique involves selling a futures or forward contract, purchasing a put
option or structured or indexed note or entering into a swap agreement whose
value is expected to be inversely related to the asset being hedged. If the
anticipated decline in the value of the asset occurs, it would be offset, in
whole or part, by a gain on the instrument. The premium paid for the put option
would reduce any capital gain otherwise available for distribution when the
asset is eventually sold.
Hedging against a change in the value of an asset the Fund holds may reduce or
preclude the opportunity for gain if the value of the hedged asset should
increase.
The Fund may use futures contracts, options, structured and indexed notes,
forward contracts and swaps and other similar instruments for investment
purposes, such as creating "synthetic" positions or implementing "cross-hedging"
strategies. A synthetic position will be covered by segregation of short-term
liquid assets. A synthetic position permits the Fund to obtain investment
exposure and is the duplication of a cash market transaction when deemed
advantageous by the Adviser for cost, liquidity, tax or transactional efficiency
reasons. A cash market transaction is the purchase or sale of a security or
other asset for cash. For example, from time to time, the Fund experiences large
cash inflows which may be redeemed from the Fund in a relatively short period.
In this case, the Fund currently can leave the amounts uninvested in
anticipation of the redemption or the Fund can invest in securities for a
relatively short period, incurring transaction costs on the purchase and
subsequent sale. Alternatively, the Fund may create a synthetic position by
investing in a futures contract on an asset, such as a securities index gaining
investment exposure to the relevant market while incurring lower overall
transaction costs. By segregating cash, the Fund's futures contract position
would generally be no more leveraged or riskier than if it had invested in the
cash market - i.e., purchased the securities. In addition, a structured note may
permit the Fund to gain investment exposure that might not otherwise be
available. For example, some countries permit only residents or nationals to
invest in their markets. The Fund could enter into a structured note whose
principal value would be tied to the performance of that country's market index.
Cross-hedging involves the use of one asset to hedge against the decline in
value of another asset. For example, the Fund could hedge against a decline in
the value of a Taiwanese securities position by taking a position in the Hong
Kong market that is expected to perform inversely to the Taiwanese market.
The use of such instruments as described herein involves several risks. First,
there can be no assurance that the prices of such instruments and the hedged
<PAGE>
asset or the cash market position will move as anticipated. If prices do not
move as anticipated the Fund may incur a loss on its investment, may not achieve
the hedging protection it anticipated and/or incur a loss greater than if it had
entered into a cash market position. Second, investments in such instruments may
reduce the gains which would otherwise be realized from the sale of the
underlying securities or assets which are hedged. Third, positions in such
instruments can be closed out only on an exchange that provides a market for
those instruments. There can be no assurance that such a market will exist for a
particular futures contract or option. If the Fund cannot close out an exchange
traded futures contract or option which it holds, it would have to perform its
contract obligation or exercise its option to realize any profit and would incur
transaction costs on the sale of the underlying assets. Further, if the other
party to a swap, structured or indexed note, forward contract or option were to
default on its obligation, the Fund would incur a loss. Finally, certain of
these derivative instruments may be illiquid, difficult to value accurately and
subject to extreme volatility.
The futures and options markets in the Asia region countries are not as
developed as similar markets of more developed countries, and the Fund may not
be able to hedge or employ the strategies described above. In addition, swaps
and indexed or structured notes may not be available. It is the policy of the
Fund to meet the requirements of the Internal Revenue Code of 1986, as amended
(the "Code") to qualify as a regulated investment company to prevent double
taxation of the Fund and its shareholders. One of these requirements is that
less than 30% of a Fund's gross income must be derived from gains from the sale
or other disposition of securities held for less than three months. The extent
to which the Fund may engage in the foregoing transactions may be materially
limited by this requirement.
INDEXED SECURITIES AND STRUCTURED NOTES
The Fund may invest in securities whose value is linked to one or more
currencies, interest rates, stocks, bonds, financial instruments or indices. An
indexed security or structured note enables the Fund to purchase a note whose
coupons and/or principal redemption are linked to the performance of an
underlying asset. Indexed securities may be positively or negatively indexed
(i.e., their value may increase or decrease if the underlying instrument
appreciates). Indexed securities may have return characteristics similar to
direct investments in the underlying instrument or to one or more options on the
underlying asset or other assets. Indexed securities may be more volatile than
the underlying instrument itself, and present many of the same risks as
investing in forward, futures and options contracts. Indexed securities are also
subject to credit risks associated with the issuer of the security with respect
to both principal and interest. Indexed securities may be publicly traded or may
be two-party contracts (such two-party agreements are referred to here
collectively as "structured notes"). When the Fund purchases a structured note,
it will make a payment of principal to the counterparty. Some structured notes
have a guaranteed repayment of principal while others place a portion (or all)
of the principal at risk. Structured notes may give the Fund increased liquidity
or access to markets that it might otherwise be precluded from investing in.
These instruments may also be difficult to value accurately.
<PAGE>
The Adviser will monitor the liquidity of these instruments under the
supervision of the Board of Trustees and those instruments determined to be
illiquid will be aggregated with other illiquid securities and limited to 15% of
the net assets of the Fund .
SWAP AGREEMENTS
The Fund may enter into swap agreements. Swap agreements permit the Fund to swap
(trade) the performance of one asset for another. For example, the Fund may swap
the performance of the Hang Seng Index (Hong Kong) for the Bombay Index (India).
By entering into such a swap, the Fund could simultaneously hedge a portion of
its exposure to the Hong Kong market and gain exposure to the Indian market.
Rather than enter into a swap agreement, the Fund could have sold its Hong Kong
holdings and purchased Indian securities, thereby incurring transaction and
other costs. Since swaps are individually negotiated, the Fund may expect to
achieve an acceptable degree of correlation between its portfolio investments
and its swap position. Currency swaps usually involve the delivery of the entire
principal value of one designated currency in exchange for the other designated
currency. Therefore, the entire principal value of a currency swap is subject to
the risk that the other party to the swap will default on its contractual
delivery obligations.
The use of swaps is a highly specialized activity that involves investment
techniques and risks different from those associated with ordinary portfolio
transactions. If the Adviser is incorrect in its forecasts of market values and
currency exchange rates, the investment performance of the Fund would be less
favorable than it would have been if this investment technique were not used.
Swaps are generally considered illiquid and will be aggregated with other
illiquid positions for purpose of the limitation on illiquid investments.
High grade, liquid assets, such as U.S. Government securities or cash will be
segregated with the Fund's Custodian in an amount equal to the Fund's net
obligation on such swap agreements. If the value of the securities placed in the
segregated account declines, additional cash or securities will be placed in the
account on a daily basis so that the value of the account will equal the amount
of the Fund's commitments with respect to such contracts.
LOANS OF PORTFOLIO SECURITIES
The Fund may lend to broker-dealers portfolio securities with an aggregate
market value of up to one-third of its total assets. Such loans must be secured
by collateral (consisting of any combination of cash, U.S. Government securities
or irrevocable letters of credit) in an amount at least equal (on a daily
mark-to-market basis) to the current market value of the securities loaned. The
Fund may terminate the loans at any time and obtain the return of the securities
loaned within one business day. The Fund will continue to receive any interest
or dividends paid on the loaned securities and will continue to have voting
rights with respect to the securities. The Fund might experience a loss if the
broker-dealer with which it has engaged in a portfolio loan transaction breaches
its agreement.
<PAGE>
BORROWING
The Fund may borrow up to 33 1/3 % of the value of its net assets to increase
its holdings of portfolio securities. Under the 1940 Act, the Fund is required
to maintain continuous asset coverage of 300% with respect to such borrowings
and to sell (within three days) sufficient portfolio holdings to restore such
coverage if it should decline to less than 300% because of market fluctuations
or other factors, even if the sale would be disadvantageous from an investment
standpoint. Leveraging by means of borrowing will exaggerate the effect of any
increase or decrease in the value of portfolio securities on the Fund's net
asset values, and money borrowed will be subject to interest and other costs
(which may include commitment fees and/or the cost of maintaining minimum
average balances) which may or may not exceed the investment return from the
securities purchased with borrowed funds. It is anticipated that such borrowings
would be pursuant to a negotiated loan agreement with a commercial bank or other
institutional lender.
REAL ESTATE SECURITIES
Although the Fund will not invest in real estate directly, it may invest its
assets in equity securities of real estate investment trusts ("REITs") and other
real estate industry companies or companies with substantial real estate
investments. Therefore, the Fund may be subject to certain risks associated with
direct ownership of real estate and with the real estate industry in general.
These risks include, among others: possible declines in the value of real
estate; possible lack of availability of mortgage funds; extended vacancies of
properties; risks related to general and local economic conditions;
overbuilding; increases in competition, property taxes and operating expenses;
changes in zoning laws; costs resulting from the clean-up of, and liability to
third parties for damages resulting from, environmental problems; casualty or
condemnation losses; uninsured damages from floods, earthquakes or other natural
disasters; limitations on and variations in rents; and changes in interest
rates.
REITs are pooled investment vehicles which invest primarily in income producing
real estate or real estate related loans or interests. REITs are generally
classified as equity REITs, mortgage REITs or hybrid REITs. Equity REITs invest
the majority of their assets directly in real property and derive income
primarily from the collection of rents. Equity REITs can also realize capital
gains by selling properties that have appreciated in value. Mortgage REITs
invest the majority of their assets in real estate mortgages and derive income
from the collection of interest payments. REITs are not taxed on income
distributed to shareholders, provided they comply with several requirements of
the Code.
Investing in REITs involves certain unique risks in addition to those risks
associated with investing in the real estate industry in general. Equity REITs
may be affected by changes in the value of the underlying property owned by the
REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, and
are subject to the risks of financing projects. REITs are subject to heavy cash
flow dependency, default by borrowers, self-liquidation and the possibilities of
failing to qualify for the exemption from tax for distributed income under the
<PAGE>
Code. REITs (especially mortgage REITs) are also subject to interest rate risk
(i.e., as interest rates rise, the value of the REIT may decline).
INVESTMENT COMPANY SECURITIES
The Fund may invest in issuers which are considered under the 1940 Act to be
investment companies. These investment companies may or may not be registered
with the Securities and Exchange Commission ("SEC"). may be foreign investment
companies. Investing in foreign investment companies involves the same risks as
investing in foreign securities. Investing in investment companies permits the
Fund to invest in markets that might otherwise have been inaccessible and to
obtain greater diversification. These investments involve the payment of dual
management fees.
RIGHTS
Rights are privileges granted to existing shareholders or may be attached to
other securities. Rights entitle the holder to purchase shares of a new issue
before being offered to the public, often below the public offering price. Some
rights are registered and are freely transferable while others are not. Rights
are similar to options in that they give the holder the right, not the
obligation, to purchase shares.
PARTLY PAID SECURITIES
Partly paid securities are securities for which the purchaser pays on an
installment basis. A partly paid security trades net of outstanding installment
payments. For this reason, the obligation to make payment is usually transferred
upon sale of the security. Fluctuations in the market value do not affect the
obligation to make installment payments when due. Partly paid securities become
fully paid securities upon payment of the final installment. Until that time,
the issuer of a partly paid security typically may retain the right to restrict
the voting and dividend rights of the security and to impose restrictions and
penalties in the event of a purchaser's default.
High grade, liquid assets, such as U.S. Government securities or cash will be
segregated with the Fund's Custodian in an amount equal to the "unpaid"
installments on these securities. If the value of the securities placed in the
segregated account declines, additional cash or securities will be placed in the
account on a daily basis so that the value of the account will equal the amount
of the Fund's commitments with respect to such contracts.
DIRECT INVESTMENTS
The Fund may invest up to 10% of its total assets in direct investments. Direct
investments include (i) the private purchase from an enterprise of an equity
interest in the enterprise in the form of shares of common stock or equity
interests in trusts, partnerships, joint ventures or similar enterprises, and
(ii) the purchase of such an equity interest in an enterprise from a principal
investor in the enterprise. In each case the Fund will, at the time of making
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the investment, enter into a shareholder or similar agreement with the
enterprise and one or more other holders of equity interests in the enterprise.
The Adviser anticipates that these agreements will, in appropriate
circumstances, provide the Fund with the ability to appoint a representative to
the board of directors or similar body of the enterprise and for eventual
disposition of the Fund's investment in the enterprise. Such a representative of
the Fund will be expected to provide the Fund with the ability to monitor its
investment and protect its rights in the investment and will not be appointed
for the purpose of exercising management or control of the enterprise.
Certain of the Fund's direct investments will include investments in smaller,
less seasoned companies. These companies may have limited product lines, markets
or financial resources, or they may be dependent on a limited management group.
The Fund does not anticipate making direct investments in start-up operations,
although it is expected that in some cases the Funds' direct investments will
fund new operations for an enterprise which itself is engaged in similar
operations or is affiliated with an organization that is engaged in similar
operations. Such direct investments may be made in entities that are reasonably
expected in the foreseeable future to benefit from the growth and development in
Asia either by expanding current operations or establishing significant
operations in Asia.
Direct investments may involve a high degree of business and financial risk that
can result in substantial losses. Because of the absence of any public trading
market for these investments, the Fund may take longer to liquidate these
positions than would be the case for publicly traded securities. Although these
securities may be resold in privately negotiated transactions, the prices on
these sales could be less than those originally paid by the Fund. Furthermore,
issuers whose securities are not publicly traded may not be subject to public
disclosure and other investor protection requirements applicable to publicly
traded securities. If such securities are required to be registered under the
securities laws of one or more jurisdictions before being resold, the Fund may
be required to bear the expenses of registration. In addition, in the event the
Fund sells unlisted foreign securities, any capital gains realized on such
transactions may be subject to higher rates of taxation than taxes payable on
the sale of listed securities. Direct investments are generally considered
illiquid and will be aggregated with other illiquid investments for purposes of
the limitation on illiquid investments. Direct investments can be difficult to
price and will generally be valued at fair value as determined in good faith by
the Board of Trustees. The pricing of direct investments may not reflect the
price at which these assets could be liquidated.
REPURCHASE AGREEMENTS
The Fund may engage in repurchase agreement transactions. Under the terms of a
typical repurchase agreement, the Fund acquires an underlying asset for a
relatively short period (usually not more than one week) subject to an
obligation of the seller to repurchase, and the Fund to resell, the asset at an
agreed upon price and time, thereby determining the yield during the holding
period. The agreement results in a rate of return that is not subject to market
fluctuations during the holding period. Repurchase agreements could involve
certain risks in the event of default or insolvency of the other party,
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including possible delays or restrictions upon the Fund's ability to dispose of
the underlying asset. The Adviser acting under the supervision of the Board of
Trustees, reviews the creditworthiness of those non-bank dealers with which the
Fund enters into repurchase agreements to evaluate these risks. Entering into
repurchase agreements with foreign dealers poses similar risks to investing in
foreign securities.
The Fund will not enter into a repurchase agreement with a maturity of more than
seven business days if, as a result, more than 15% of the value of the Fund's
total assets would then be invested in such repurchase agreements and other
illiquid securities. The Fund will only enter into a repurchase agreement where
(i) the underlying asset is of the type which the Fund's investment policies
would allow it to purchase directly, (ii) the market value of the underlying
security, including accrued interest, will be at all times equal to or exceed
the value of the repurchase agreement, and (iii) payment for the underlying
securities is made only upon physical delivery or evidence of book-entry
transfer to the account of the custodian or a bank acting as agent.
DEBT SECURITIES
The Fund may invest in debt securities. The market value of debt securities
generally varies in response to changes in interest rates and the financial
condition of each issuer. During periods of declining interest rates, the value
of debt securities generally increases. Conversely, during periods of rising
interest rates, the value of such securities generally declines. These changes
in market value will be reflected in the Fund's net asset value. Debt securities
with similar maturities may have different yields, depending upon several
factors, including the relative financial condition of the issuers. For example,
higher yields are generally available from securities in the lower rating
categories of S&P or Moody's. However, the values of lower-rated securities
generally fluctuate more than those of high grade securities. Many securities of
foreign issuers are not rated by these services. Therefore the selection of such
issuers depends to a large extent on the credit analysis performed by the
Adviser.
RULE 144A SECURITIES AND
SECTION 4(2) COMMERCIAL PAPER
Rule 144A establishes a "safe harbor" from the registration requirements of the
Securities Act of 1933 ("1933 Act") for resales of certain securities to
qualified institutional buyers. The SEC adopted Rule 144A to allow a broader
institutional trading market for securities otherwise subject to restriction on
resale to the general public.
The Adviser will monitor the liquidity of restricted securities in the Fund's
holdings under the supervision of the Board of Trustees. In reaching liquidity
decisions, the Adviser will consider, among other things, the following factors:
(1) the frequency of trades and quotes for the security; (2) the number of
dealers wishing to purchase or sell the security and the number of other
potential purchasers; (3) dealer undertakings to make a market in the security
and (4) the nature of the security and the nature of the marketplace trades
(e.g., the time needed to dispose of the security, the method of soliciting
offers and the mechanisms of the transfer). In addition, commercial paper may be
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issued in reliance on the "private placement" exemption from registration
afforded by Section 4(2) of the 1933 Act. Such commercial paper is restricted as
to disposition under the federal securities laws and, therefore, any resale of
such securities must be effected in a transaction exempt from registration under
the 1933 Act. Such commercial paper is normally resold to other investors
through or with the assistance of the issuer or investment dealers who make a
market in such securities, thus providing liquidity.
Securities eligible for resale pursuant to Rule 144A under the 1933 Act and
commercial paper issued in reliance on the Section 4(2) exemption under the Act
may be determined to be liquid in accordance with guidelines established by the
Board of Trustees for purposes of complying with investment restrictions
applicable to investments by the Fund in illiquid securities.
INVESTMENT RESTRICTIONS
The following investment restrictions are in addition to those described in the
Prospectus. Policies that are identified as fundamental may be changed only with
the approval of the holders of a majority of the Fund's outstanding shares. Such
majority is defined as the vote of the lesser of (i) 67% or more of the
outstanding shares present at a meeting, if the holders of more than 50% of the
Fund's outstanding shares are present in person or by proxy, or (ii) more than
50% of the Fund's outstanding shares. As to any of the following policies, if a
percentage restriction is adhered to at the time of investment, a later increase
or decrease in percentage resulting from a change in value of portfolio
securities or amount of net assets will not be considered a violation of the
policy. Restrictions 1, 4, 9, 11, 12, 14 and 16 are not fundamental, unless
otherwise provided for by applicable federal or state law.
The Fund may not:
1. Invest in securities which are subject to legal or contractual
restrictions on resale ("restricted securities") or for which there is
no readily available market quotation or engage in a repurchase
agreement maturing in more than seven days with respect to any security
if the result is that more than 15% of the Fund's net assets would be
invested in such securities, excluding securities which are deemed to
be liquid under Rule 144A under the Securities Act of 1933.
2. Purchase or sell real estate, except the Fund may purchase securities
of companies which deal in real estate, including securities of real
estate investment trusts, and may purchase securities which are
collateralized by interests in real estate.
3. Purchase or sell commodities or commodity futures contracts, except
that financial futures contracts which may include stock and bond index
futures contracts, foreign currency futures contracts and similar
contracts or financial assets are not considered commodities or
commodity contracts. The Fund may not commit more than 5% of its total
assets to initial margin deposits on futures contracts not used for
hedging purposes.
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4. The Fund may not purchase more than 3% of the total outstanding voting
stock of any investment company or invest more than 5% of its total
assets in the securities of any investment company or invest more than
10% of its total assets in investment companies in general. Such
purchases may involve only customary broker's commissions.
5. Lend to broker-dealers portfolio securities with an aggregate
market value in excess of 33 1/3% of its total assets.
6. As to 75% of the Fund's total assets, purchase securities of any
issuer, if immediately thereafter (i) more than 5% of the Fund's total
assets (taken at market value) would be invested in the securities of
such issuer, or (ii) more than 10% of the outstanding voting securities
of such issuer would be held by the Fund. This restriction does not
apply to any company of which the Fund is the sole beneficial owner or
securities acquired as part of a merger, acquisition of assets or other
reorganization.
7. Underwrite any issue of securities (except to the extent that a Fund
may be deemed to be an underwriter within the meaning of the Securities
Act of 1933 in the purchase of securities for investment or disposition
of restricted securities).
8. Borrow money, in excess of 33 1/3% of the value of its net assets to
increase holdings of portfolio securities.
9. Mortgage, pledge or otherwise encumber its assets except to secure
borrowing effected within the limitations set forth in restriction (8).
10. Issue senior securities. The Fund may: (i) borrow money in
accordance with restrictions described above, (ii) enter into
forward contracts, (iii) purchase futures contracts on margin,
(iv) issue multiple classes of securities, and (v) enter into
swap agreements or purchase structured notes or similar
instruments.
11. Make short sales of securities, except the Fund may engage in the
transactions permitted in these restrictions and under the Fund's
investment policies as set forth in its registration statement without
limitation.
12. Purchase any security on margin, except that it may obtain such
short-term credits as are necessary for clearance of securities
transactions and, may make initial or maintenance margin payments in
connection with options and futures contracts and options on future
contracts and borrowing effected within the limitations set forth in
these restrictions.
13. Invest more than 25% of the value of the Fund's total assets in the
securities of issuers having their principal business activities in the
same industry, except that this limitation does not apply to
obligations issued or guaranteed by the United States Government.
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14. Participate on a joint or joint and several basis in any trading
account in securities, although transactions for the Fund and any other
account under common or affiliated management may be combined or
allocated between the Fund and such account.
15. Purchase participations or other interests (other than equity stock
interests) in oil, gas or other mineral, leases or exploration or
development programs.
16. Invest in real estate limited partnerships or in oil, gas or other
mineral leases.
In order to comply with certain securities laws of a state in which shares of
the Fund are currently sold, the Fund has undertaken with respect to investment
restriction number 1, not to invest more than 10% of its assets in "restricted
securities" and not to invest more than 5% of its assets in securities of
"unseasoned" issuers, i.e., companies which together with their predecessors
have a record of less than three years continuous operation. To the extent the
above restrictions have been adopted to comply with state securities laws, they
shall not apply to the Fund once such laws are no longer in effect.
INVESTMENT ADVISORY SERVICES
The Adviser, Peregrine Asset Management (Hong Kong) Limited, manages the
investments of the Fund and provides the Fund with office space, facilities and
simple business equipment and provides the services of executive and clerical
personnel for administering its affairs. The Adviser compensates all executive
and clerical personnel and Trustees of the Trust if such persons are employees
or affiliates of the Adviser or its affiliates. The Adviser's fee is computed
daily and paid monthly at an annual rate of 1.00% of average daily net assets.
Van Eck Associates Corporation, 99 Park Avenue, New York, New York ("Van Eck")
serves as portfolio administrator ("Portfolio Administrator") for the Fund
pursuant to a Portfolio Accounting and Administrative Services Agreement dated
December 20, 1995. It provides accounting and administrative services and is
responsible for calculating the Fund's NAV, providing certain accounting and
administrative services and such other services and assistance as the Fund may
request.
The expenses borne by the Fund include: all the charges and expenses of the
transfer and dividend disbursing agent, the custodian fees and expenses, legal
counsel, auditors' and accounting fees and expenses, brokerage commissions for
portfolio transactions, taxes, if any, the advisory fee and portfolio accounting
and administrative fees, extraordinary expenses, expenses of shareholders' and
Trustees' meetings, and of preparing, printing and mailing proxy statements,
reports and other communications to shareholders, expenses of preparing and
setting in type prospectuses and periodic reports and expenses of mailing them
to current shareholders, legal and accounting expenses and expenses of
registering and qualifying shares for sale, fees and expenses of Trustees who
are not "interested persons" of the Adviser, membership dues of professional
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associations, fidelity bond and errors and omissions insurance premiums, the
cost of maintaining the books and records of the Fund, and any other charges and
fees not specifically enumerated as an obligation of the Distributor, Adviser or
Portfolio Administrator.
The Investment Advisory Agreement ("Advisory Agreement") was approved at a
meeting of the Board of Trustees held on December 19, 1995. The Advisory
Agreement provides that the Adviser shall reimburse the Trust for expenses of
the Trust in excess of certain expense limitations required by state regulation
unless the Trust has obtained an appropriate waiver of such expense limitations
or expense items from a particular state authority. Under the Advisory
Agreement, the maximum annual expenses which the Trust may be required to bear,
inclusive of the advisory fee but exclusive of interest, taxes, brokerage fees,
Rule 12b-1 Plan distribution payments (the Fund does not currently have such a
Plan) and extraordinary items may not exceed the lowest expense limitation
imposed by any state in which the Fund is registered. Currently, only one state
imposes such an expense limitation on the Fund. For the purposes of the expense
limitations imposed on the Fund by this state, expenses may not exceed: (i) 2.5%
of the first $30,000,000 of average net assets, 2.0% of the next $70,000,000 of
average net assets and 1.5% of the remaining average net assets. The amount of
the advisory fee to be paid to the Adviser each month will be reduced by the
amount, if any, by which the annualized expenses of the Fund for that month
exceeds the foregoing limitations. At the end of the fiscal year, if the
aggregate annual expenses of the Fund exceed the amount permissible under the
foregoing limitations, then the Adviser will be required promptly to reimburse
the Fund for the total amount by which expenses exceed the amount of the
limitations, not limited to the amount of the fees paid. If aggregate annual
expenses are within the limitations, however, any excess amount previously
withheld will be paid to the Adviser.
The Advisory Agreement provides that it shall continue in effect from year to
year as long as it is approved at least annually both (i) by a vote of a
majority of the outstanding voting securities of the Fund (as defined in the
1940 Act) or by the Trustees of the Trust, and (ii) in either event by a vote of
a majority of the Trustees who are not parties to the Advisory Agreement or
"interested persons" of any party thereto, cast in person at a meeting called
for the purpose of voting on such approval. The Advisory Agreement may be
terminated on 60 days written notice by either party and will terminate
automatically in the event of an assignment within the meaning of the 1940 Act.
THE DISTRIBUTOR
Shares of the Funds are offered on a continuous basis and are distributed
through Van Eck Securities Corporation (the "Distributor"), a wholly-owned
subsidiary of the Portfolio Administrator. The Trustees of the Trust approved a
Distribution Agreement appointing the Distributor as distributor of shares of
the Fund on December 19, 1995.
The Distribution Agreement provides that the Distributor will pay all fees and
expenses in connection with printing and distributing prospectuses and reports
for use in offering and selling shares of the Fund and preparing, printing and
<PAGE>
distributing advertising or promotional materials. The Fund will pay all fees
and expenses in connection with registering and qualifying its shares under
federal and state securities laws.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser is responsible for decisions to buy and sell securities and other
investments for the Fund, the selection of brokers and dealers to effect the
transactions and the negotiation of brokerage commissions, if any. In
transactions on stock and commodity exchanges in the United States, these
commissions are negotiated, whereas on foreign stock and commodity exchanges
these commissions are generally fixed and are generally higher than brokerage
commissions in the United States. In the case of securities traded on the
over-the-counter markets, there is generally no stated commission, but the price
usually includes an undisclosed commission or markup. In underwritten offerings,
the price includes a disclosed fixed commission or discount.
In purchasing and selling the Fund's portfolio investments, it is the Adviser's
policy to obtain quality execution at the most favorable prices through
responsible broker-dealers. In selecting broker-dealers, the Adviser will
consider various relevant factors, including, but not limited to, the size and
type of the transaction; the nature and character of the markets for the
security or asset to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer; the broker-dealer's
execution services rendered on a continuing basis; and the reasonableness of any
commissions.
The Adviser may cause the Fund to pay a broker-dealer who furnishes brokerage
and/or research services a commission that is in excess of the commission
another broker-dealer would have received for executing the transaction if it is
determined that such commission is reasonable in relation to the value of the
brokerage and/or research services which have been provided as defined in
Section 28(e) of the Securities Exchange Act of 1934. Such research services may
include, among other things, analyses and reports concerning issuers,
industries, securities, economic factors and trends, and portfolio strategy. Any
such research and other information provided by brokers to the Adviser are
considered to be in addition to and not in lieu of services required to be
performed by the Adviser under the Advisory Agreement with the Trust. The
research services provided by broker-dealers can be useful to the Adviser in
serving its other clients or clients of the Adviser's affiliates.
In executing portfolio transactions on behalf of the Fund, the Adviser may
utilize the services of the Distributor and other affiliated persons as broker
pursuant to procedures adopted by the Board of Trustees. The procedures are
designed to ensure that commissions paid are comparable to those charged by
other firms.
The Trustees will periodically review the Adviser's performance of its
responsibilities in connection with the placement of portfolio transactions on
behalf of the Fund and review the commissions paid by the Fund over
representative periods of time to determine if they are reasonable in relation
to the benefits to the Fund.
<PAGE>
Investment decisions for the Fund are made independently from those of the other
investment accounts managed by the Adviser and affiliated companies. Occasions
may arise, however, when the same investment decision is made for more than one
client's account. It is the practice of the Adviser to allocate such purchases
or sales insofar as feasible among its several clients or the clients of its
affiliates in a manner it deems equitable. The principal factors which the
Adviser considers in making such allocations are the relative investment
objectives of the clients, the relative size of the portfolio holdings of the
same or comparable securities and the availability in the particular account of
funds for investment. Portfolio securities held by one client of the Adviser may
also be held by one or more of its other clients or by clients of its
affiliates. When two or more of its clients or clients of its affiliates are
engaged in the simultaneous sale or purchase of securities, transactions are
allocated as to amount in accordance with formulae deemed to be equitable as to
each client. There may be circumstances when purchases or sales of portfolio
securities for one or more clients will have an adverse effect on other clients.
When the Adviser places purchase and sale transactions on behalf of the Fund and
its own account or that of its affiliates, it will coordinate the trading in
such a manner that it is fair to the participants.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and subject to seeking the most favorable price and
execution available and such other policies as the Trustees may determine, the
Adviser may consider sales of shares of the Fund as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund.
While it is the policy of the Fund generally not to engage in trading for
short-term gains, the Fund will effect portfolio transactions without regard to
the holding period if, in the judgment of the Adviser, such transactions are
advisable in light of a change in circumstances of a particular company, within
a particular industry or country, or in general market, economic or political
conditions. The Fund anticipates that its annual portfolio turnover rates will
not exceed 100%.
The Adviser and related persons may, from time to time, buy and sell for their
own accounts securities recommended to clients for purchase or sale. The Adviser
recognizes that this practice may result in conflicts of interest. However, to
minimize or eliminate such conflicts a Code of Ethics has been adopted by the
Adviser which requires that all trading in securities suitable for purchase by
client accounts must be approved in advance by a person familiar with purchase
and sell orders or recommendations. Approval will be granted if the security has
not been purchased or sold or recommended for purchase or sale on behalf of a
client account within seven days; or if the security has been purchased or sold
or recommended for purchase or sale by a client account, it is determined that
the trading activity will not have a negative or appreciable impact on the price
or market of the security or the activity is of such a nature that it does not
present the dangers or potential for abuses or is likely to result in harm or
detriment to a client account. At the end of each calendar quarter, all related
personnel of the Adviser are required to file a report of all transactions
entered into during the quarter. These reports are reviewed by a senior officer
of the Adviser.
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TRUSTEES AND OFFICERS
The Trustees and Officers of the Trust, their addresses, positions with the
Trust and principal occupations during the past five years are set forth below.
Trustees:
*GARY GREENBERG - TRUSTEE
1710 New World Tower, 16-18 Queen's Road Central, Hong Kong; President of the
Fund since the Fund commenced operations; Deputy Managing Director of Peregrine,
since July, 1994; co-manager of the Acorn International Fund from 1992 to 1994;
and international securities analyst with Harris Associates L.P. (investment
adviser) from 1989 to 1992.
WESLEY G. MCCAIN - TRUSTEE
144 East 30th Street, New York, NY; Chairman, Towneley Capital Management, Inc.
(investment adviser); Chairman, Eclipse Financial Asset Trust (mutual fund);
Trustee of investment companies advised by Van Eck; General Partner, Pharaoh
Partners, L.P.; President, Millbrook Associates, Inc.; Trustee, Libre Group
Trust; Chairman, Eclipse Financial Services, Inc.; Former Director,
International Investors Incorporated; and Former Secretary and Treasurer,
Millbrook Advisers, Inc. (investment adviser); and Former Chairman, Finacor,
Inc. (financial services).
RICHARD STAMBERGER - TRUSTEE
888 17th Street, N.W., Washington, D.C. 20006; Principal, National Strategies,
Inc., a public policy firm in Washington, D.C.; Executive Vice President, Chief
Operating Officer, and a Director of NuCable Resources Corporation (technology
firm/since 1988); associated with Anderson Benjamin & Reed, a regulatory
consulting firm based in Washington, D.C. (1985-1986); White House Fellow-Office
of Vice President (1984-1985); Director of Special Projects, National Cable
Television Association (1983-1984); and Trustee of investment companies advised
by Van Eck.
Messrs. McCain and Stamberger are each paid an annual fee of $5,000 for serving
as Trustees, and reimbursed for expenses in attending Board of Trustees
meetings.
Officers:
BRUCE SETON - 1710 New World Tower, 16-18 Queen's Road Central, Hong Kong -
Executive Vice President of the Trust. Chief Investment Officer of Peregrine,
since September, 1994; Chief Executive Officer of Peregrine. Prior to joining
Peregrine in 1994, Mr. Seton spent twenty-two years at Gartmore Investment
Limited managing funds emphasizing Asian emerging market investments.
AUREOLE FOONG - 1710 New World Tower, 16-18 Queen's Road Central, Hong Kong -
Vice President of the Trust. Vice President of Peregrine since 1994; prior
thereto, a Senior Vice President at Unifund, a Geneva-based private investment
company from 1990 to 1994.
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THADDEUS LESZCZYNSKI - 99 Park Avenue, New York, NY 10016 - Secretary of the
Trust. An officer of Van Eck and investment companies advised by Van Eck.
BRUCE SMITH - 99 Park Avenue, New York, NY 10016 - Treasurer of the Trust. An
officer of Van Eck and investment companies advised by Van Eck.
*An "interested person" as defined in the 1940 Act.
As of ___, 1995, all officers and Trustees as a group owned less than 1% of the
outstanding shares of the Fund.
VALUATION OF SHARES
The net asset value per share of the Fund is computed by dividing the value of
all of the Fund's securities plus cash and other assets, less liabilities, by
the number of shares outstanding. The net asset value per share is computed as
of the close of the New York Stock Exchange, Monday through Friday, exclusive of
national business holidays. The Fund will be closed on the following national
business holidays: New Years Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas.
The net asset value need not be computed on a day in which no orders to
purchase, sell or redeem shares of the Fund have been received.
The value of a financial futures or commodity futures contract equals the
unrealized gain or loss on the contract that is determined by marking it to the
current settlement price for a like contract acquired on the day on which the
commodity futures contract is being valued. A settlement price may not be used
if the market makes a limit move with respect to a contract. Securities or
futures contracts for which market quotations are readily available are valued
at market value, which is currently determined using the last reported sale
price. If no sales are reported as in the case of most securities traded
over-the-counter, securities are valued at the mean of their bid and asked
prices at the close of trading on the New York Stock Exchange (the "Exchange").
Short-term investments having a maturity of 60 days or less are valued at
amortized cost, which approximates market. Options are valued at the last sales
price unless the last sales price does not fall within the bid and ask prices at
the close of the market, in which case the mean of the bid and ask prices is
used. All other securities are valued at their fair value as determined in good
faith by the Board of Trustees. Foreign securities or futures contracts quoted
in foreign currencies are valued at appropriately translated foreign market
closing prices or as the Board of Trustees may prescribe.
Generally, trading in foreign securities and futures contracts, as well as
corporate bonds, United States government securities and money market
instruments is substantially completed each day at various times prior to the
close of the Exchange. The values of such securities used in determining the net
asset value of the shares of the Fund may be computed as of such times. Foreign
currency exchange rates are also generally determined prior to the close of the
Exchange. Occasionally, events affecting the value of such foreign securities
and foreign exchange rates may occur between such times and the close of the
<PAGE>
Exchange which will not be reflected in the computation of the Fund's net asset
values. If events materially affecting the value of such securities occur during
such period, then these securities will be valued at their fair value as
determined in good faith by the Trustees.
TAX-SHELTERED RETIREMENT PLANS
The Trust does not offer a prototype tax-sheltered retirement plan. However,
banks, broker-dealers and other financial intermediaries may offer such plans
through which shares of the Fund may be purchased. These plans are more fully
described below. Persons who wish to establish a tax-sheltered retirement plan
should consult their financial institutions as to the availability of such plans
and their own tax advisers or attorneys regarding their eligibility to do so and
the laws applicable thereto, such as the fiduciary responsibility provisions and
diversification requirements and the reporting and disclosure obligations under
the Employee Retirement Income Security Act of 1974. The Trust is not
responsible for compliance with such laws. Further information regarding the
retirement plans, including applications and fee schedules, may be obtained upon
request to the Fund.
The rules discussed below are complex. Individuals and their employers should
consult with their tax advisers and legal counsel regarding the advantages and
disadvantages of the different plans.
INDIVIDUAL RETIREMENT ACCOUNT ("IRA") AND SPOUSAL INDIVIDUAL RETIREMENT ACCOUNT
("SPIRA"). The IRA is available to all individuals, including self-employed
individuals, who receive compensation for services rendered and wish to purchase
shares of the Fund. An IRA may also be established pursuant to a SEP. SPIRAs are
available to individuals who are otherwise eligible to establish an IRA for
themselves and whose spouses are treated as having no compensation of their own.
In general, the maximum deductible contribution to an IRA which may be made for
any one year is $2,000 or 100% of annual compensation includible in gross
income, whichever is less. If an individual establishes a SPIRA, the maximum
deductible amount that the individual may contribute annually is the lesser of
$2,250 or 100% of such individual's compensation includible in his gross income
for such year; provided, however, that no more than $2,000 per year for either
individual may be contributed to either the IRA or SPIRA. Contributions to a SEP
(discussed below) are excluded from an employee's gross income and are subject
to different limitations.
All taxpayers, including those who are active participants in employer-sponsored
retirement plans, will be able to make fully deductible IRA contributions at the
same levels discussed above, if their adjusted gross income is less than the
following levels: $25,000 for single taxpayers and $40,000 for married taxpayers
who file joint returns.
Married taxpayers who file joint tax returns will generally be deemed to be
active participants if either spouse is an active participant under an
employer-sponsored retirement plan. In the case of taxpayers who are active
participants in employer-sponsored retirement plans and who have adjusted gross
<PAGE>
income which exceeds the specified levels, deductible IRA contributions will be
phased out on the basis of adjusted gross income between $25,000 and $35,000 for
single taxpayers, adjusted gross income of $10,000 and under for married
taxpayers who file separate returns, and combined adjusted gross income between
$40,000 and $50,000 for married taxpayers who file joint returns. The $2,000 IRA
deduction is reduced by $200 for each $1,000 of adjusted gross income in excess
of the following levels: $25,000 for single taxpayers, $40,000 for married
taxpayers who file joint returns, and $0 for married taxpayers who file separate
returns. In the case of a taxpayer who contributes to an IRA and a SPIRA, the
$2,250 IRA deduction is reduced by $225 for each $1,000 of adjusted gross income
in excess of $40,000.
Individuals who are ineligible to make fully deductible contributions may make
nondeductible contributions up to an aggregate of $2,000 in the case of
contributions (deductible and nondeductible) to an IRA and up to an aggregate of
$2,250 in the case of contributions (deductible and nondeductible) to an IRA and
SPIRA and the income upon all such contributions will accumulate tax-free until
distribution.
In addition, a separate IRA may be established by a "rollover" contribution,
which may permit the tax-free transfer of assets from qualified retirement plans
under specified circumstances. A "rollover contribution" includes a lump sum
distribution received by an individual because of severance of employment, from
a qualified plan and paid into an individual retirement account within 60 days
after receipt.
Dividends and capital gains earned on amounts invested in either an IRA or SPIRA
are automatically reinvested by the Trustee in shares of the Fund and accumulate
tax-free until distribution. Distributions from either an IRA or SPIRA prior to
age 59-1/2, unless made as a result of disability or death, may result in
adverse tax consequences and penalties. In addition, there is a penalty on
contributions in excess of the contribution limits and other penalties are
imposed on insufficient payouts from the IRA or SPIRA after age 70 1/2.
SIMPLIFIED EMPLOYEE PENSION PLAN ("SEP"). A SEP may be utilized by employers to
provide retirement income to employees by making contributions to employee SEP
IRAs. Owners and partners may qualify as employees. The employee is always 100%
vested in contributions made under a SEP. The maximum contribution to a SEP-IRA
(an IRA established to receive SEP contributions) is the lesser of $30,000 or
15% of compensation, excluding contributions made pursuant to a salary reduction
arrangement. Subject to certain limitations, an employer may also make
contributions to a SEP-IRA under a salary reduction arrangement by which the
employee elects contributions to a SEP-IRA in lieu of immediate cash
compensation. The maximum amount which may be contributed to a SEP-IRA (for
1995) under a salary reduction agreement is the lesser of $500 (as adjusted for
cost of living increases) or 15% of compensation.
Contributions by employers under a SEP arrangement up to the maximum permissible
amounts are deductible for federal income tax purposes. Contributions up to the
maximum permissible amounts are not includible in the gross income of the
employee. Dividends and capital gains on amounts invested in SEP-IRAs are
<PAGE>
automatically reinvested in shares of the Fund and accumulate tax-free until
distribution. Contributions in excess of the maximum permissible amounts may be
withdrawn by the employee from the SEP-IRA no later than April 15 of the
calendar year following the year in which the contribution is made without tax
penalties. Such amounts will, however, be included in the employee's gross
income. Withdrawals of such amounts after April 15 of the year next following
the year in which the excess contributions are made and withdrawals of any other
amounts prior to age 59 1/2, unless made as a result of disability or death, may
result in adverse tax consequences.
QUALIFIED PENSION PLANS. The Qualified Pension Plan can be utilized by
self-employed individuals, partnerships and corporations (for this purpose,
called "Employers") and their employees who wish to purchase shares of a Fund
under a retirement program.
The maximum contribution which may be made to a Qualified Pension Plan in any
one year on behalf of a participant is, depending on the benefit formula
selected by the Employer, up to the lesser of $30,000 or 25 percent of
compensation (net earned income in the case of a self-employed individual).
Contributions by Employers to Qualified Pension Plans up to the maximum
permissible amounts are deductible for federal income tax purposes.
Contributions in excess of permissible amounts will result in adverse tax
consequences and penalties to the Employer. Dividends and capital gains earned
on amounts invested in Qualified Pension Plans are automatically reinvested in
shares of the Fund and accumulate tax-free until distribution. Withdrawals of
contributions prior to age 59-1/2, unless made as a result of disability, death
or early retirement, may result in adverse tax consequences and penalties.
403(B)(7) PROGRAM. The Tax-Deferred Annuity Program and Custodial Account
offered by the Fund (the "403(b)(7) Program") allows employees of certain tax
exempt organizations and schools to have a portion of their compensation set
aside for their retirement years in shares held in an investment company
custodial account.
In general, the maximum limit on annual contributions for each employee is the
lesser of $30,000 per year (as adjusted by the IRS for cost-of-living
increases), 25% of the employee's compensation or the employee's exclusion
allowance specified in Section 403(b) of the Code. However, an employee's salary
reduction contributions to a 403(b)(7) Program may not exceed $9,500 a year
(1995) (as adjusted for cost of living expenses and may be further adjusted if
the employee participates in another plan). Contributions in excess of
permissible amounts may result in adverse tax consequences and penalties.
Dividends and capital gains on amounts invested in the 403(b)(7) Program are
automatically reinvested in shares of the Fund. It is intended that dividends
and capital gains on amounts invested in the 403(b)(7) Program will accumulate
tax-free until distribution.
Employees will receive distributions from their accounts under the 403(b)(7)
Program following termination of employment by retirement, disability or death.
Withdrawals of contributions prior to age 59 1/2, unless made as a result of
disability, death or early retirement, may result in adverse tax consequences
and penalties.
<PAGE>
INVESTMENT PROGRAMS
DIVIDEND REINVESTMENT PLAN. Reinvestments of dividends of the Fund will occur on
a date selected by the Board of Trustees.
TAXES
TAXATION OF THE FUND -- IN GENERAL
The Fund intends to qualify and elect to be treated each taxable year as a
"regulated investment company" under Subchapter M of the Code. To so qualify,
the Fund must, among other things, (a) derive at least 90% of its gross income
from dividends, interest, payments with respect to securities loans, gains from
the sale or other disposition of stock, securities or foreign currencies, or
other income (including gains from options, futures or forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies; (b) derive less than 30% of its gross income from the sale or other
disposition of any of the following which was held less than three months (the
"30% test"): (i) short sales of securities; (ii) stock or securities; (iii)
options, futures or forward contracts (other than on foreign currencies) or (iv)
foreign currencies (or options, futures or forward contracts on foreign
currencies) but only if such currencies (or options, futures or forward
contracts) are not directly related to the Fund's principal business of
investing in stock or securities; and (c) satisfy certain diversification
requirements.
As a regulated investment company, the Fund will not be subject to federal
income tax on its net investment income and capital gain net income (capital
gains in excess of its capital losses) that it distributes to shareholders if at
least 90% of its net investment income and short-term capital gains for the
taxable year are distributed. However, if for any taxable year the Fund does not
satisfy the requirements of Subchapter M of the Code, all of its taxable income
will be subject to tax at regular corporate rates without any deduction for
distribution to shareholders, and such distributions will be taxable to
shareholders as ordinary income to the extent of the Fund's current or
accumulated earnings or profits.
The Fund will be liable for a nondeductible 4% excise tax on amounts not
distributed on a timely basis in accordance with a calendar year distribution
requirement. To avoid this tax, during each calendar year the Fund must
distribute (i) at least 98% of its ordinary income (not taking into account any
capital gains or losses) for the calendar year, (ii) at least 98% of its capital
gain net income for the twelve month period ending on October 31 (or December
31, if the Fund so elects), and (iii) any portion (not taxed to the Fund) of the
2% balance from the prior year. The Fund intends to make sufficient
distributions to avoid this 4% excise tax.
TAXATION OF THE FUND' INVESTMENTS
ORIGINAL ISSUE DISCOUNT. For federal income tax purposes, debt securities
purchased by the Fund may be treated as having an original issue discount.
Original issue discount represents interest for federal income tax purposes and
can generally be defined as the excess of the stated redemption price at
<PAGE>
maturity of a debt obligation over the issue price. Original issue discount is
treated for federal income tax purposes as income earned by the Fund, whether or
not any income is actually received, and therefore is subject to the
distribution requirements of the Code. Generally, the amount of original issue
discount included in the income of the Fund each year is determined on the basis
of a constant yield to maturity which takes into account the compounding of
accrued interest.
Debt securities may be purchased by the Fund at a discount which exceeds the
original issue discount remaining on the securities, if any, at the time the
Fund purchased the securities. This additional discount represents market
discount for income tax purposes. In the case of any debt security issued after
July 18, 1984, having a fixed maturity date of more than one year from the date
of issue and having market discount, the gain realized on disposition will be
treated as interest to the extent it does not exceed the accrued market discount
on the security (unless the Fund elects to include such accrued market discount
in income in the tax year to which it is attributable). Generally, market
discount is accrued on a daily basis. The Fund may be required to capitalize,
rather than deduct currently, part or all of any direct interest expense
incurred or continued to purchase or carry any debt security having market
discount, unless it makes the election to include market discount currently.
Because the Fund must include original issue discount in income, it will be more
difficult for the Fund to make the distributions required for it to maintain its
status as a regulated investment company under Subchapter M of the Code or to
avoid the 4% excise tax described above.
OPTIONS AND FUTURES TRANSACTIONS. Certain of the Fund's investments may be
subject to provisions of the Code that (i) require inclusion of unrealized gains
or losses in the Fund's income for purposes of the 90% test, the 30% test, the
excise tax and the distribution requirements applicable to regulated investment
companies, (ii) defer recognition of realized losses, and (iii) characterize
both realized and unrealized gain or loss as short-term or long-term gain or
loss. Such provisions may apply to options and futures contracts. The extent to
which the Fund makes such investments may be materially limited by these
provisions of the Code.
FOREIGN CURRENCY TRANSACTIONS. Under section 988 of the Code, special rules are
provided for certain foreign currency transactions. Foreign currency gains or
losses from foreign currency contracts (whether or not traded in the interbank
market), from futures contracts that are not "regulated futures contracts," and
from unlisted options are treated as ordinary income or loss under section 988.
The Fund may elect to have foreign currency-related regulated futures contracts
and listed options subject to ordinary income or loss treatment under section
988. In addition, in certain circumstances, a Fund may elect capital gain or
loss for foreign currency transactions. The rules under section 988 may also
affect the timing of income recognized by a Fund.
TAXATION OF THE SHAREHOLDERS
Distributions of net investment income and the excess of net short-term capital
gain over net long-term capital loss are taxable as ordinary income to
shareholders. Distributions of net capital gain (the excess of net long-term
<PAGE>
capital gain over net short-term capital loss) are taxable to shareholders as
long-term capital gain, regardless of the length of time the shares of the Fund
have been held by such shareholders. Any loss realized upon a taxable
disposition of shares within six months from the date of their purchase will be
treated as a long-term capital loss to the extent of any long-term capital gain
distributions received by shareholders during such period.
Distributions of net investment income and capital gain net income will be
taxable as described above whether received in cash or reinvested in additional
shares. When distributions are received in the form of shares issued by the
Fund, the amount of the distribution deemed to have been received by
participating shareholders is the fair market value of the shares received
rather than the amount of cash which would otherwise have been received. In such
a case, participating shareholders will have a basis for federal income tax
purposes in each share received from the Fund equal to the fair market value of
such share on the payment date.
Distributions by the Fund result in a reduction in the net asset value of the
Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution nevertheless would be taxable to the
shareholder as ordinary income or long-term capital gain as described above,
even though, from an investment standpoint, it may constitute a partial return
of capital. In particular, investors should be careful to consider the tax
implications of buying shares just prior to a distribution. The price of shares
purchased at that time includes the amount of any forthcoming distribution.
Those investors purchasing shares just prior to a distribution will then receive
a return of their investment upon distribution which will nevertheless be
taxable to them.
Income received by the Fund may give rise to withholding and other taxes imposed
by foreign countries. If more than 50% of the value of the Fund's assets at the
close of a taxable year consists of securities of foreign corporations, the Fund
may make an election that will permit an investor to take a credit (or, if more
advantageous, a deduction) for foreign income taxes paid by the Fund, subject to
limitations contained in the Code. If the Fund satisfies this requirement, the
Fund will make such an election. As an investor, you would then include in gross
income both dividends paid to you and the foreign taxes paid by the Fund on its
foreign investments. The Fund cannot assure investors that they will be eligible
for the foreign tax credit. The Fund will advise shareholders annually of their
share of any creditable foreign taxes paid by the Fund.
The Fund may be required to withhold federal income tax at a rate of 31% from
dividends made to any shareholder who fails to furnish a certified taxpayer
identification number ("TIN") or who fails to certify that he or she is exempt
from such withholding or who the Internal Revenue Service notifies the Fund as
having provided the Fund with an incorrect TIN or failed to properly report for
federal income tax purposes. Any such withheld amount will be fully creditable
on each shareholder's individual federal income tax return.
<PAGE>
The foregoing discussion is a general summary of certain of the current federal
income tax laws affecting the Fund and investors in Fund shares. The discussion
does not purport to deal with all of the federal income tax consequences
applicable to the Fund, or to all categories of investors, some of which may be
subject to special rules. Investors should consult their own advisors regarding
the tax consequences, including state and local tax consequences, to them of
investment in the Fund.
REDEMPTIONS IN KIND
The Fund has elected to have the ability to redeem its shares in kind,
committing itself to pay in cash all requests for redemption by any shareholder
of record limited in amount with respect to each shareholder of record during
any ninety-day period to the lesser of (i) $250,000 or (ii) 1% of the net asset
value of such company at the beginning of such period.
PERFORMANCE
The Fund may advertise performance in terms of average annual total return for
1, 5 and 10 year periods, or for such lesser periods as the Fund has been in
existence. Average annual total return is computed by finding the average annual
compounded rates of return over the periods that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
- --------------------------------------------------------------------------------
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a
hypothetical $1,000 payment made at
the beginning of the 1, 5, or 10
year periods at the end of the year
or period;
- --------------------------------------------------------------------------------
The calculation assumes all dividends and distributions by the Fund are
reinvested at the price stated in the Prospectus on the reinvestment dates
during the period, and includes all recurring fees that are charged to all
shareholder accounts.
The Fund may also advertise performance in terms of aggregate total return.
Aggregate total return for a specified period of time is determined by
ascertaining the percentage change in the net asset value of shares of the Fund
initially acquired assuming reinvestment of dividends and distributions and
without giving effect to the length of time of the investment according to the
following formula:
<PAGE>
- --------------------------------------------------------------------------------
[(B-A)/A](100) = ATR
Where A = initial investment
B = value at end of period
ATR = aggregate total return
- --------------------------------------------------------------------------------
The calculation assumes all distributions by the Fund are reinvested at the
price stated in the Prospectus on the reinvestment dates during the period, and
includes all recurring fees that are charged to all shareholder accounts.
ADVERTISING PERFORMANCE
As discussed in the Fund's Prospectus, the Fund may quote performance results
from recognized publications which monitor the performance of mutual funds, and
the Fund may compare its performance to various published historical indices.
These publications are listed in Part B of the Appendix. In addition, the Fund
may quote and compare its performance to the performance of various economic and
market indices and indicators, such as the S&P 500, Financial Times Index,
Morgan Stanley Capital International Europe, Australia, Far East Index, Morgan
Stanley Capital International World Index, Morgan Stanley Capital International
Combined Far East (ex-Japan) Free Index, Salomon Brothers World Bond Index,
Salomon Brothers World Government Bond Index, GNP and GDP data. Descriptions of
these indices are provided in Part B of the Appendix.
ADDITIONAL INFORMATION
CUSTODIAN. The Chase Manhattan Bank, N.A., is the custodian of the Trust's
portfolio securities, cash, coins and bullion. The custodian is authorized, upon
the approval of the Trust, to establish credits or debits in dollars or foreign
currencies with, and to cause portfolio securities of the Fund to be held by its
overseas branches or subsidiaries, and foreign banks and foreign securities
depositories which qualify as eligible foreign custodians under the rules
adopted by the SEC.
FINANCIAL STATEMENTS
An audited statement of Assets and Liabilities and footnotes thereto for the
Fund, reflecting the $100,000 investment by the Adviser is filed herewith.
<PAGE>
APPENDIX
PART A.
CORPORATE BOND RATINGS
Description of Moody's Investors Service, Inc. corporate bond ratings:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt-edge". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high quality bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be greater or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Moody's applies the numerical modifiers 1, 2 and 3 to each generic rating
classification from Aa through B. The modifier 1 indicates that the security
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the issue ranks in the
lower end of its generic rating category.
Description of Standard & Poor's Corporation corporate bond ratings;
AAA -- Bonds rated AAA have the highest rating assigned by S&P to debt
obligations. Capacity to pay interest and repay principal is extremely strong.
AA -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.
<PAGE>
A -- Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB -- Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.
PREFERRED STOCK RATINGS
Moody's Investors Service, Inc. describes its preferred stock ratings as:
aaa - An issue which is rated aaa is considered to be a top-quality preferred
stock. This rating indicates good asset protection and the least risk of
dividend impairment within the universe of convertible preferred stocks.
aa - An issue which is rated aa is considered a high-grade preferred stock.
This rating indicates that there is reasonable assurance that earnings and asset
protection will remain relatively well maintained in the foreseeable future.
a - An issue which is rated a is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater than in the aaa
and aa classifications, earnings and asset protection are, nevertheless,
expected to be maintained at adequate levels.
baa - An issue which is rated baa is considered to be medium-grade, neither
highly protected nor poorly secured. Earnings and asset protection appear
adequate at present but may be questionable over any great length of time.
ba - An issue which is rated ba is considered to have speculative elements,
and its future cannot be considered well assured. Earnings and asset protection
may be very moderate and not well safe-guarded during adverse periods.
Uncertainty of position characterizes preferred stocks in this class.
b - An issue which is rated b generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and maintenance of other
terms of the issue over any long period of time may be small.
caa - An issue which is rated caa is likely to be in arrears on dividend
payments. This rating designation does not purport to indicate the future status
of payment.
ca - An issue which is rated ca is speculative in a high degree and is likely
to be in arrears on dividends with little likelihood of eventual payment.
<PAGE>
c - This is the lowest rated class of preferred or preference stock. Issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Standard & Poor's Corporation describes its preferred stock ratings as:
AAA - This is the highest rating that may be assigned by S&P to a preferred
stock issue and indicates an extremely strong capacity to pay the preferred
stock obligations.
AA - A preferred stock issue rated AA also qualifies as a high-quality fixed
income security. The capacity to pay preferred stock obligations is very strong,
although not as overwhelming as for issues rated AAA.
A - An issue rated A is backed by a sound capacity to pay the preferred stock
obligations, although it is somewhat more susceptible to the adverse effect of
changes in circumstances and economic conditions.
BBB - An issue rated BBB is regarded as backed by an adequate capacity to pay
the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to make payments for a preferred
stock in this category than for issues in the A category.
BB, B - Preferred stocks rated BB, B, and CCC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay preferred
stocks. BBB indicates the lowest degree of speculation and CCC the highest
degree of speculation. While such issues will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.
SHORT-TERM DEBT RATINGS
Description of Moody's short-term debt ratings:
Prime-1--Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
leading market positions in well-established industries, higher rates of return
of funds employed, conservative capitalization structure with moderate reliance
on debt and ample asset protection, broad margins in earnings coverage of fixed
financial charges and high internal cash generation and well-established access
to a range of financial markets and assured sources of alternate liquidity.
Prime-2--Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
<PAGE>
Prime-3--Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
Not Prime--Issuers rated Not Prime do not fall within any of the Prime rating
categories.
Description of S&P's short-term debt ratings:
A-1--This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus sign (+) designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated 'A-1'.
A-3--Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
B--Issues rated B are regarded as having only speculative capacity for timely
payment.
C--This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period.
PART B
The publications and services from which the Fund will quote performance are:
Micropal, Ltd. (an international investment fund information service), Fortune,
Changing Times, Money, U.S. News & World Report, Money Fund Scorecard,
Morningstar, Inc., Business Week, Institutional Investor, The Wall Street
Journal, Wall Street Transcripts, The New York Post, Investment Company
Institute publications, The New York Times, Barron's, Forbes magazine, Research
magazine, Donaghues Money Fund Report, Donaghue's Money Letter, The Economist,
FACS, FACS of the Week, Financial Planning, Investment Daily, Johnson's Charts,
Mutual Fund Profiles (S&P), Powell Monetary Analysis, Sales & Marketing
Management Magazine, Life magazine, Black Enterprise, Fund Action, Speculators
Magazine, Time, NewsWeek, U.S.A Today, Wiesenberger Investment Service, Mining
Journal Quarterly, Mining Journal Weekly, Northern Miner, Gold Gazette, George
Cross Newsletter, Engineering and Mining Journal, Weekly Stock Charts-Canadian
Resources, Jeweler's Circular Keystone, Financial Times, Journal of Commerce,
Mikuni's Credit Ratings, Money Market Directory of Pension Funds, Oil and Gas
<PAGE>
Journal, Pension Funds and Their Advisers, Investment Company Data, Inc., Mutual
Funds Almanac, Callan Associates, Inc., Media General Financial Services,
Financial World, Pensions & Investment Age, Registered Investment Advisors, Aden
Analysis, Baxter Weekly, Congressional Yellow Book, Crain's New York Business,
Survey of Current Business, Treasury Bulletin, U.S. Industrial Outlook, Value
Line Survey, Bank Credit Analyst, S&P Corporation Records, Euromoney, Moody's,
Investment Dealer's Digest, Financial Mail, Financial Post, Futures, Grant's
Interest Rate Observer, Institutional Investor, International Currency Review,
International Bank Credit Analyst, Investor's Daily, German Business Weekly,
GATT Trade Annual Report, and Dimensional Fund Advisers, Inc.
Market Index Descriptions
FINANCIAL TIMES INDEX: a capitalization-weighted index of securities traded on
the London Stock Exchange. It is calculated on a total return basis with
dividends reinvested.
MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALIA, FAR EAST INDEX (US$
TERMS): An arithmetic, market value-weighted average of the performance of over
1,079 companies listed on the stock exchanges of Europe, Australia, New Zealand
and the Far East. The index is calculated on a total return basis, which
includes reinvestment of gross dividends before deduction of withholding taxes.
MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX (US$ TERMS): An arithmetic,
market value-weighted average of the performance of over 1,515 companies listed
on the stock exchanges of the following countries: Australia, Austria, Belgium,
Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan,
Malaysia, the Netherlands, New Zealand, Norway, Singapore, Spain, Sweden,
Switzerland, the United Kingdom and the United States. The index is calculated
on a total return basis, which includes reinvestment of gross dividends before
deduction of withholding taxes. The combined market capitalization of these
countries represents approximately 60% of the aggregate market value of the
stock exchanges of the above 22 countries.
MORGAN STANLEY CAPITAL INTERNATIONAL COMBINED FAR EAST EX-JAPAN FREE INDEX: An
arithmetic, market value-weighted average of the performance of companies listed
on the stock exchanges of the following countries: Hong Kong, Indonesia, Korea
(Korea is included at 20% of its market capitalization in the Combined Free
Index), Malaysia, Philippines Free, Singapore Free and Thailand. The combined
market capitalization of these countries represents approximately 60% of the
aggregate market value of the stock exchanges of the above seven countries.
SALOMON BROTHERS WORLD BOND INDEX (US$ TERMS): Measures the total return
performance of high quality securities in major sectors of the international
bond market. The index covers approximately 600 bonds from 10 currencies:
Australian Dollars, Canadian Dollars, European Currency Units, French Francs,
Japanese Yen, Netherlands Guilder, Swiss Francs, UK pounds Sterling, US Dollars
<PAGE>
and German Deutsche Marks. Only high-quality, straight issues are included. The
index is calculated on both a weighted basis and an unweighted basis. Generally,
index samples for each market are restricted to bonds with at least five years'
remaining life.
SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX (US$ TERMS): The WGBI includes the
Government bonds markets of the United States, Japan, Germany, France, the
United Kingdom, Canada, Italy, Australia, Belgium, Denmark, the Netherlands,
Spain, Sweden and Austria. Country eligibility is determined based on market
capitalization and investability criteria. A market's eligible issues must total
at least US$20 billion, Y2.5 trillion and DM30 billion for three consecutive
months for the market to be considered eligible for inclusion. Once a market
satisfies this criteria, it will be added at the end of the following quarter.
Guidelines by which a market may be excluded from the index have also been
established. A market will be excluded if the market capitalization of eligible
issues falls below half of all of the entry levels for six consecutive months.
Once again, the market will be removed at the end of the following quarter. In
addition, market entry barriers are a reason for exclusion despite meeting the
size criteria (for example, if a market discourages foreign investor
participation).
GROSS DOMESTIC PRODUCT: The market value of all final goods and services
produced by labor and property supplied by residents of a country in a given
period of time, usually one year. Gross Domestic Product comprises (1) purchases
of persons, (2) purchases of governments (Federal, State & Local), (3) gross
private domestic investment (includes change in business inventories), and (4)
international trade balance from exports. Nominal GDP is expressed in 1993
dollars. Real GDP is adjusted for inflation and is currently expressed in 1987
dollars. Gross National Product (GNP) also includes the above components of GDP
of foreign subsidiaries of domestic companies.
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
a) Financial Statement
b) Exhibits
(1) Master Trust Agreement (Declaration of Trust)
(2) By-Laws
(3) Not Applicable
(4) Not Applicable
(5) Investment Advisory Agreement
(6) Distribution Agreement
(7) Not Applicable
(8) Form of Global Custody Agreement filed with the
Registration Statement dated November 13, 1995**
(9) (a) Form of Transfer Agency Agreement filed with the
Registration Statement dated November 13, 1995**
(b) Portfolio Accounting and Administrative Services
Agreement
(10) Opinion of Mayer, Brown & Platt
(11) Consent of Independent Accountants
(12) Not Applicable
(13) Agreement re: providing initial capital*
(14) Not Applicable
(15) Not Applicable
(16) Not Applicable
- ---------------------
*To be supplied by Amendment
**Previously filed
<PAGE>
(17) To be supplied by Amendment
(18) Powers of Attorney
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
Set forth below are the number of record holders, as of December 26, 1995, of
each class of securities of the Registrant:
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
Shares of beneficial interest 1
ITEM 27. INDEMNIFICATION
Article VI of the Trust's Master Trust Agreement provides as follows:
Section 6.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, etc. To the fullest extent
permitted by law, the Trust shall indemnify (from the assets of the Sub-Trust or
Sub-Trusts in question) each of its Trustees and officers (including persons who
serve at the Trust's request as directors, officers or trustees of another
organization in which the Trust has any interest as a shareholder, creditor or
otherwise (hereinafter referred to as a "Covered Person") against all
liabilities, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Trustee or officer, director or trustee, except with respect to any
matter as to which it has been determined that such Covered Person had acted
with willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such Covered Person's office (such conduct
referred to hereafter as "Disabling Conduct"). A determination that the Covered
Person is entitled to indemnification may be made by (i) a final decision on the
merits by a court or other body before whom the proceeding was brought that the
person to be indemnified was not liable by reason of Disabling Conduct, (ii)
dismissal of a court action or an administrative proceeding against a Covered
Person for insufficiency of evidence of Disabling Conduct, or (iii) a reasonable
determination, based upon a review of the facts, that the Covered Person was not
<PAGE>
liable by reason of Disabling Conduct by (a) a vote of a majority of a quorum of
Trustees who are neither "interested persons" of the Trust as defined in section
2(a)(19) of the 1940 Act nor parties to the proceeding, or (b) an independent
legal counsel in a written opinion. Expenses, including accountants' and counsel
fees so incurred by any such Covered Person (but excluding amounts paid in
satisfaction of judgments, in compromise or as fines or penalties), may be paid
from time to time from funds attributable to the Sub-Trust in question in
advance of the final disposition of any such action, suit or proceeding,
provided that the Covered Person shall have undertaken in writing to repay the
amounts so paid to the Sub-Trust in question if it is ultimately determined that
indemnification of such expenses is not authorized under this Article VI and (i)
the Covered Person shall have provided security for such undertaking, (ii) the
Trust shall be insured against losses arising by reason of any lawful advances,
or (iii) a majority of a quorum of the disinterested Trustees who are not a
party to the proceeding, or an independent legal counsel in a written opinion,
shall have determined, based on a review of readily available facts (as opposed
to a full trial-type inquiry), that there is reason to believe that the Covered
Person ultimately will be found entitled to indemnification.
Section 6.5 COMPROMISE PAYMENT. As to any matter disposed of by a compromise
payment by any such Covered Person referred to in Section 6.4, pursuant to a
consent decree or otherwise, no such indemnification either for said payment or
for any other expenses shall be provided unless such indemnification shall be
approved (a) by a majority of the disinterested Trustees who are not parties to
the proceeding or (b) by an independent legal counsel in a written opinion.
Approval by the Trustees pursuant to clause (a) or by independent legal counsel
pursuant to clause (b) shall not prevent the recovery from any Covered Person of
any amount paid to such Covered Person in accordance with any of such clauses as
indemnification if such Covered Person is subsequently adjudicated by a court of
competent jurisdiction to have been liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's office.
Section 7(b) of the Investment Advisory Agreement provides as follows:
The Trust will indemnify the Advisor against, and hold it harmless from, any and
all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) not resulting from Disabling Conduct by the Advisor.
Indemnification shall be made only following: (i) a final decision on the merits
by a court or other body before whom the proceeding was brought that the Advisor
was not liable by reason of Disabling Conduct, or (ii) in the absence of such a
decision, a reasonable determination, based upon a review of the facts, that the
Advisor was not liable by reason of Disabling Conduct by (A) the vote of a
majority of a quorum of Trustees of the Trust who are neither "interested
persons" of the Trust nor parties to the proceeding ("disinterested non-party
Trustees") or (B) an independent legal counsel in a written opinion. The Advisor
shall be entitled to advances from the Trust for payment of the reasonable
<PAGE>
expenses incurred by it in connection with the matter as to which it is seeking
indemnification in the manner and to the fullest extent permissible under
applicable law. The Advisor shall provide to the Trust a written affirmation of
its good faith belief that the standard of conduct necessary for indemnification
by the Fund has been met and a written undertaking to repay any such advance if
it should ultimately be determined that the standard of conduct has not been
met. In addition, at least one of the following additional conditions shall be
met: (x) the Advisor shall provide security in form and amount acceptable to the
Trust for its undertaking; (y) the Trust is insured against losses arising by
reason of the advance; or (z) a majority of a quorum of disinterested non-party
Trustees, or independent legal counsel, in a written opinion, shall have
determined, based on a review of facts readily available to the Trust at the
time the advance is proposed to be made, that there is reason to believe that
the Adviser will ultimately be found to be entitled to indemnification.
(c) No provision of this Agreement shall be construed to protect the
Adviser from liability in violation of Section 17(i) of the 1940 Act.
The relevant portions of the Distribution Agreement are as follows:
Section 5. INDEMNIFICATION.
(a) The Trust agrees to indemnify, defend and hold the
Distributor, its officers, directors, employees and agents and any person who
controls the Distributor within the meaning of Section 15 of the 1933 Act or
Section 20 of the Securities Exchange Act of 1934, as amended ( the "1934 Act"),
free and harmless from and against any and all losses, claims, damages,
liabilities and expenses (including the cost of investigating or defending such
claims, damages or liabilities and any counsel fees incurred in connection
therewith) which the Distributor, its officers, directors, employees and agents
or any such controlling person may incur under the 1933 Act, the 1934 Act, or
under common law or otherwise, which (i) may be based upon any wrongful act by
the Trust or any or its employees, or representatives, or (ii) which may arise
out of or may be based upon any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement, Prospectus, or
Statement of Additional Information of a Fund or arising out of or based upon
the omission or any alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such claims, damages, liabilities or expenses arise out of or
are based upon any such untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with information furnished
in writing by the Distributor to the Trust for use in the Registration Statement
of such Fund Prospectus or Statement of Additional Information; PROVIDED,
HOWEVER, that in no case is the Trust's indemnity deemed to protect the
Distributor, its officers, directors, employees, agents or any person who
controls the Distributor within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of his duties or by reason of his reckless
disregard of obligations and duties under this Agreement. The Distributor agrees
to promptly notify the Trust of any event giving rise to right of
indemnification hereunder, including any action brought against the Distributor,
its officers, directors, employees and agents or any such controlling person,
such notification to be given by letter or telegram addressed to the Trust at
<PAGE>
its principal business office, but the Distributor's failure so to notify the
Trust shall not relieve the Trust from any obligation it may have to indemnify
the Distributor hereunder or otherwise. The Trust will be entitled to
participate at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce any such liability, but if the Trust
elects to assume the defense, such defense shall be conducted by counsel chosen
by it and satisfactory to the Distributor, its officers, directors or
controlling person or persons, defendant or defendants in the suit. In the event
that the Trust elects to assume the defense of any such suit and retain such
counsel, the Distributor, its officers, directors or controlling person or
persons, defendant or defendants in the suit, shall bear the fees and expenses
of any additional counsel retained by them, but, in case the Trust does not
elect to assume the defense of any such suit, it will reimburse the Distributor
or such, officers, directors or controlling person or persons, defendant or
defendants in the suit, for the reasonable fees and expenses of any counsel
retained by them. The Trust agrees promptly to notify the Distributor of the
commencement of any litigation or proceedings against it or any of its officers
or Trustees in connection with the issuance or sale of any Shares.
The Distributor agrees to indemnify, defend and hold the Trust, its
Trustees and officers and any person who controls the Trust, if any, within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, free and
harmless from and against any and all losses, claims, damages, liabilities and
expenses (including the cost of investigating or defending such claims, damages
or liabilities and any counsel fees incurred in connection therewith) which the
Trust, its Trustees or officers or any such controlling person may incur under
the 1933 Act, the 1934 Act, or under common law or otherwise, but only to the
extent that such liability or expense incurred by the Trust, its Trustees or
officers or such controlling person arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in
information furnished in writing by the Distributor to the Trust for use in the
Registration Statement, Prospectus or Statement of Additional Information of a
Fund; PROVIDED, HOWEVER, that in no case is the Distributor's indemnity deemed
to protect a Trustee or officer or any person who controls the Trust within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any
liability to which any such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his
duties or by reason of his reckless disregard of obligations and duties under
this Agreement. The Trust agrees to promptly notify the Distributor of any event
giving rise to rights of indemnification hereunder, including any action brought
against the Trust, its Trustees or officers or any such controlling persons,
such notification being given to the Distributor at is principal business
office, but the Trust's failure so to notify the Distributor shall not relieve
the Distributor from any obligation it may have to indemnify the Trust hereunder
or otherwise. The Distributor shall be entitled to participate, at its own
expense, in the defense, or if it so elects, to assume the defense of any suit
brought to enforce any such liability, but if the Distributor elects to assume
the defense, such defense shall be conducted by counsel chosen by the
Distributor and satisfactory to the Trust, to its officers and Trustees, or to
any controlling person or persons, defendant or defendants in the suit. In the
event that the Distributor elects to assume the defense of any such suit and
<PAGE>
retain such counsel, the Trust, such officers and Trustees or controlling person
or persons, defendant or defendants in the suit shall bear the fees and expenses
of any additional counsel retained by them, but, in case the Distributor does
not elect to assume the defense of any such suit, the Distributor will reimburse
the Trust, such officers and Trustees or controlling person or persons,
defendant or defendants in such suit for the reasonable fees and expenses of any
counsel retained by them. The Distributor agrees promptly to notify the Trust of
the commencement of any litigation or proceedings against it in connection with
the issue and sale of any of Shares.
Section 6. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in the
first paragraph of Section 5 is for any reason held to be unavailable from the
Trust, the Trust and the Distributor shall contribute to the aggregate losses,
claims, damages, liabilities or expenses (including the reasonable costs of
investigating or defending such claims, damages or liabilities but after
deducting any contribution received by the Trust from persons other than
Distributor who may also be liable for contribution, such as persons who control
the Trust within the meaning of the 1933 Act, officers of the Trust who signed
the applicable Registration Statement and Trustees) to which the Trust and the
Distributor may be subject in such proportion so that the Distributor is
responsible for that portion represented by the percentage of the sales charge
appearing in the Prospectus of the Fund bears to the public offering price
appearing therein and the Trust is responsible for the balance; provided,
however, that (i) in no case shall the Distributor be responsible for any amount
in excess of the portion of the Sales Charge received and retained by it in
respect of the Shares of a Fund purchased through it hereunder and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this Section 6,
each person, if any, who controls the Distributor within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Distributor. Each party who may seek contribution under this
Section 6 shall, promptly after receipt of notice of commencement of any action,
suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section 6,
give written notice of the commencement of such action, suit or proceeding to
the party or parties from whom such contribution may be sought, but the omission
so to notify such contributing party or parties shall not relieve the party or
parties from whom contribution may be sought from any other obligation it or
they may have otherwise than on account of this Section 6.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Reference is made to the caption "Management" in the Prospectus and to
the captions "The Distributor" and "Trustees and Officers" in the Statement of
Additional Information.
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS
The business and other connections of the principal underwriters are listed in
the Broker-Dealer Form BD of Van Eck Securities Corporation as currently on file
with the NASD -File number 2269 and the SEC - File No. 8-4618.
(c) Not applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The following table sets forth information as to the location of
accounts, books and other documents required to be maintained pursuant to
Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder (17 CFR 270.31a-1 to 31a-3).
Accounts, books and documents listed by
reference to specific subsection of 17 CFR Person in Possession and Address
270 31a-1 to 31a-3
31a-1(b)(1) Bruce J. Smith
Van Eck Funds
99 Park Avenue
New York, NY 10016
31a-1(b)(2)(i) Bruce J. Smith
Van Eck Funds
99 Park Avenue
New York, NY 10016
31a-1(b)(2)(ii) Bruce J. Smith
Van Eck Funds
99 Park Avenue
New York, NY 10016
31a-1(b)(2)(iii) Bruce J. Smith
Van Eck Funds
99 Park Avenue
New York, NY 10016
31a-1(b)(2)(iv) DST Systems Inc.
21 West Tenth Street
Kansas City, MO 64105
<PAGE>
31a-1(b)(3) Bruce J. Smith
Van Eck Funds
99 Park Avenue
New York, NY 10016
31a-1(b)(4) Thaddeus Leszcynski
Van Eck Funds
99 Park Avenue
New York, NY 10016
31a-1(b)(5) Peregrine Asset Management
1710 New World Tower
16-18 Queen's Road Central
Hong Kong
31a-1(b)(6) Bruce J. Smith
Van Eck Funds
99 Park Avenue
New York, NY 10016
31a-1(b)(7) Bruce J. Smith
Van Eck Funds
99 Park Avenue
New York, NY 10016
31a-1(b)(8) Bruce J. Smith
Van Eck Funds
99 Park Avenue
New York, NY 10016
31a-1(b)(9) Peregrine Asset Management
1710 New World Tower
16-18 Queen's Road Central
Hong Kong
31a-1(b)(10) Peregrine Asset Management
1710 New World Tower
16-18 Queen's Road Central
Hong Kong
31a-1(b)(11) Peregrine Asset Management
1710 New World Tower
16-18 Queen's Road Central
Hong Kong
<PAGE>
31a-1(c) Not Applicable
31a-1(d) Van Eck Securities Corporation
99 Park Avenue
New York, NY 10016
31a-1(e) Not Applicable
31a-1(f) Peregrine Asset Management
1710 New World Tower
16-18 Queen's Road Central
Hong Kong
31a-2(a)(1) Bruce J. Smith
Van Eck Funds
99 Park Avenue
New York, NY 10016
DST Systems, Inc.
21 West Tenth Street
Kansas City, MO 64105
Peregrine Asset Management
1710 New World Tower
16-18 Queen's Road Central
Hong Kong
31a-2(a)(2) Bruce J. Smith
Van Eck Funds
99 Park Avenue
New York, NY 10016
Peregrine Asset Management
1710 New World Tower
16-18 Queen's Road Central
Hong Kong
31a-2(a)(3) Peregrine Asset Management
1710 New World Tower
16-18 Queen's Road Central
Hong Kong
31a-2(b) Not applicable
<PAGE>
31a-2(c) Van Eck Securities Corporation
99 Park Avenue
New York, NY 10016
31a-2(d) Peregrine Asset Management
1710 New World Tower
16-18 Queen's Road Central
Hong Kong
31a-2(e) Not Applicable
31a-3 Not Applicable
ITEM 31. MANAGEMENT SERVICES
All management related service contracts entered into by or for the
Fund are described in Parts A and B of this Registration Statement.
ITEM 32. UNDERTAKINGS
The Fund will file a post-effective amendment, using financial
statements which may not be certified, within four to six months following the
commencement of operation of the Fund.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant certifies that it meets all of
the requirements for effectiveness of this registration statement pursuant to
Rule 485 (b) under the Securities Act of 1933 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereto
duly authorized in the City of New York, and State of New York on the 26th day
of December, 1995.
PEREGRINE FUNDS
Registrant
/s/ Gary Greenberg*
---------------------------
By: Gary Greenberg, Chairman
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the date indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Gary Greenberg*
_______________________________ President December 26, 1995
Gary Greenberg
/s/ Bruce Smith
_______________________________ Treasurer December 26, 1995
Bruce Smith
/s/ Wesley G. McCain*
_______________________________ Trustee December 26, 1995
Wesley G. McCain
/s/ Richard Stamberger*
______________________________ Trustee December 26, 1995
Richard Stamberger
- ------------------
*Executed on behalf of Trustee by Thaddeus Leszczynski, attorney-in-fact.
<PAGE>
EXHIBITS INDEX
EXHIBIT NO.
Financial Statement of Assets & Liabilities of December 20, 1995 and related
footnotes to such statement of Assets & Liabilities and report of Independent
Accountants on such statement.
(1) Master Trust Agreement (Declaration of Trust)
(2) By-Laws
(3) Not Applicable
(4) Not Applicable
(5) Investment Advisory Agreement
(6) Distribution Agreement
(7) Not Applicable
(8) Form of Global Custody Agreement filed with the Registration Statement
dated November 13, 1995**
(9) (a) Form of Transfer Agency Agreement filed with the Registration Statement
dated November 13, 1995**
(b) Portfolio Accounting and Administrative Services Agreement
(10) Opinion of Mayer, Brown & Platt
(11) Consent of Independent Accountants
(12) Not Applicable
(13) Agreement re: providing initial capital*
(14) Not Applicable
(15) Not Applicable
(16) Not Applicable
(17) Financial Data Schedule
(18) Powers of Attorney
- ---------------------
*To be supplied by Amendment
**Previously filed
<PAGE>
THE ASIA PACIFIC GROWTH FUND
(A SEPARATE SERIES OF PEREGRINE FUNDS)
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 20, 1995
ASSETS
Assets:
Cash $100,000
Deferred organization expenses (Note 1) 95,000
--------
Total assets 195,000
LIABILITIES
Liabilities:
Organization expenses payable and total liabilities (Note 1) 95,000
--------
Commitments (Notes 1 and 2)
NET ASSETS (Applicable to 10,000 shares of beneficial interest issued
and outstanding, $0.001 par value, unlimited number of shares
authorized) 100,000
--------
Net asset value per share $ 10.00
========
NOTE 1. Organization
The Asia Pacific Growth Fund (a separate series of Peregrine Funds) (the
"Fund") was organized as a Delaware Business Trust on December 1, 1995 as a
diversified, open-end management investment company. The Fund has had no
operations other than the sale to Peregrine Asset Management Limited (Hong Kong)
(the "Investment Adviser") of 10,000 shares of beneficial interest for $100,000.
A portion of the costs incurred and to be incurred in connection with the
organization and initial registration of the Fund will be paid by the Investment
Adviser, however, the Fund will reimburse these costs. Such organizational costs
estimated at $95,000 will be deferred and amortized over a period of 60 months
from the date the Fund commences operations. In the event that, at any time
during the five year period beginning with the date of the commencement of
operations, the initial shares acquired by the Investment Adviser prior to such
date are redeemed, by any holder thereof, the redemption proceeds payable in
respect of such shares will be reduced by the pro rata share (based on the
proportionate share of the original shares redeemed to the total number of
original shares outstanding at the time of redemption) of the then unamortized
deferred organizational expenses as of the date of such redemption. In the event
that the Fund liquidates before the deferred organizational expenses are fully
amortized, the Investment Adviser shall bear such unamortized deferred
organizational expenses.
<PAGE>
NOTE 2. Agreements and Affiliated Parties
The Fund expects to enter into an investment advisory agreement (the
"Investment Advisory Agreement") with the Investment Adviser. Under the
Investment Advisory Agreement, the Fund will pay the Investment Advisor a fee,
payable monthly, at an annual rate of 1% of the average daily net assets of the
Fund. The Investment Adviser has voluntarily agreed to waive its fee and/or
assume operating expenses (excluding interest, taxes, brokerage commissions and
extraordinary expenses) in order to limit the Fund's total expenses to an annual
rate of 2.00% of the Fund's average daily net assets until December 31, 1997.
The Fund expects to enter into a Portfolio Accounting and Administrative
Services Agreement (the "Portfolio Accounting and Administrative Services
Agreement") with Van Eck Associates Corporation (the "Administrator"). Under the
Portfolio Accounting and Administrative Services Agreement, the Fund will pay
the Administrator a fee at an annual rate of 0.25% of the average daily net
assets of the Fund or $75,000, whichever is greater.
The Fund expects to enter into a distribution agreement (the "Distribution
Agreement") with Van Eck Securities Corporation (the "Distributor"), an
affiliate of the Administrator. The Distribution Agreement provides that the
Distributor will pay all fees and expenses in connection with printing and
distributing prospectuses and reports for use in offering and selling shares of
the Fund and preparing, printing and distributing advertising or promotional
materials. The Fund will pay all fees and expenses in connection with
registering and qualifying its shares under federal and state securities laws.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholder and Board of
Trustees of The Asia Pacific Growth Fund
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of The Asia Pacific
Growth Fund, a separate series of Peregrine Funds (the "Fund"), at December 20,
1995, in conformity with generally accepted accounting principles. This
financial statement is the responsibility of the Fund's management; our
responsibility is to express an opinion on this financial statement based on our
audit. We conducted our audit of this financial statement in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statement is
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
December 22, 1995
<PAGE>
EXHIBIT 1
<PAGE>
PEREGRINE FUNDS
MASTER TRUST AGREEMENT
December 1, 1995
<PAGE>
TABLE OF CONTENTS
PAGE
- --------------------------------------------------------------------------------
ARTICLE I - NAME AND DEFINITIONS...............................................1
Section 1.1 Name and Principal Office ....................................1
Section 1.2 Definitions...................................................1
(a) "By-Laws".......................................................1
(b) "Certificate of Trust"..........................................1
(c) "Class".........................................................1
(d) "Commission"....................................................1
(e) "Covered Person" ...............................................1
(f) "DBTA"..........................................................2
(g) "Declaration of Trust"..........................................2
(h) "Disabling Conduct".............................................2
(i) "General Items" ................................................2
(j) "Majority of the Outstanding Voting Shares".....................2
(k) "1940 Act"......................................................2
(l) "Person"........................................................2
(m) "Shareholder"...................................................2
(n) "Shares"........................................................2
(o) "Sub-Trust".....................................................2
(p) "Trust".........................................................2
(q) "Trustees"......................................................2
ARTICLE II - PURPOSE OF TRUST..................................................2
ARTICLE III - THE TRUSTEES ....................................................3
Section 3.1 Number, Designation, Election, Term, etc. ..................3
(a) Trustees .....................................................3
(b) Number .......................................................3
(c) Election and Term ............................................3
(d) Resignation and Retirement ...................................3
(e) Removal ......................................................3
(f) Vacancies ....................................................3
(g) Effect of Death, Resignation, etc. ...........................4
(h) No Accounting.................................................4
Section 3.2 Powers of Trustees .........................................4
(a) Investments ..................................................5
(b) Disposition of Assets ........................................5
(c) Ownership Powers .............................................5
(d) Subscription .................................................5
(e) Form of Holding ..............................................5
(f) Reorganization, etc. .........................................5
(g) Voting Trusts, etc. ..........................................6
(h) Compromise ...................................................6
(i) Partnerships, etc. ...........................................6
(j) Borrowing and Security .......................................6
(k) Guarantees, etc. .............................................6
(i) Insurance.....................................................6
(m) Pensions, etc. ...............................................6
(n) Distribution Plans ...........................................6
<PAGE>
Section 3.3 Certain Contracts...........................................7
(a) Advisory .....................................................7
(b) Administration ...............................................7
(c) Distribution .................................................7
(d) Custodian and Depository......................................7
(e) Transfer and Dividend Disbursing Agency.......................7
(f) Shareholder Servicing.........................................7
(g) Accounting....................................................7
Section 3.4 Compliance with 1940 Act....................................8
Section 3.5 Payment of Trust Expenses and Compensation of Trustees......8
Section 3 6 Ownership of Assets of the Trust............................8
Section 3.7 Action by Trustees..........................................9
ARTICLE IV - SHARES............................................................9
Section 4.1 Description of Shares ....................................9
Section 4.2 Establishment and Designation of Sub-Trusts and Classes ...10
(a) Assets Belonging to Sub-Trusts...............................10
(b) Liabilities Belonging to Sub-Trusts..........................11
(c) Dividends and Distributions..................................11
(d) Liquidation .................................................12
(e) Voting ......................................................12
(f) Redemption by Shareholder ...................................12
(g) Redemption by Trust .........................................12
(h) Net Asset Value..............................................13
(I) Transfer.....................................................13
(j) Equality.....................................................13
(k) Fractions....................................................13
(l) Conversion Rights ...........................................14
(m) Class Differences............................................14
Section 4.3 Ownership of Shares........................................14
Section 4.4 Investments in the Trust...................................14
Section 4.5 No Pre-emptive Rights .....................................15
Section 4.6 Status of Shares and Limitation of Personal Liability .....14
Section 4.7 No Appraisal Rights .......................................14
ARTICLE V - SHAREHOLDERS' VOTING POWERS AND MEETINGS..........................15
Section 5.1 Voting Powers .............................................15
Section 5.2 Meetings ..................................................15
Section 5.3 Record Dates ..............................................15
Section 5.4 Quorum and Required Vote ..................................16
Section 5.5 Action by Written Consent .................................16
Section 5.6 Inspectors of Elections....................................16
Section 5.7 Inspection of Records......................................17
Section 5.7 Additional Provisions .....................................17
ARTICLE VI - LIMITATION OF LIABILITY; INDEMNIFICATION.........................17
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable;
Notice.....................................................17
Section 6.2 Trustee's Good Faith Action; Expert Advice;
No Bond or Surety .........................................17
Section 6.3 Indemnification of Shareholders ...........................18
Section 6.4 Indemnification of Trustees, Officers, etc. ...............18
Section 6.5 Compromise Payment ........................................19
Section 6.6 Indemnification Not Exclusive, etc. .......................19
Section 6.7 Liability of Third Persons Dealing with Trustees ..........19
Section 6.8 Discretion ................................................19
<PAGE>
ARTICLE VII - MISCELLANEOUS...................................................20
Section 7.1 Duration and Termination of Trust .........................20
Section 7.2 Reorganization ............................................20
Section 7.3 Amendments ................................................20
Section 7.4 Provisions in Conflict With Law or Regulations.............21
Section 7.5 Trust Only.................................................21
Section 7.6 Filing of Copies; References; Headings.....................21
Section 7.7 Applicable Law.............................................21
Section 7.8 Registered Agent...........................................22
Section 7.9 Integration................................................22
<PAGE>
MASTER TRUST AGREEMENT
AGREEMENT AND DECLARATION OF TRUST made as of this 1st day of December,
1995, by the Trustees hereunder, and by the holders of shares of beneficial
interest to be issued hereunder as hereinafter provided. This Declaration of
Trust shall be effective upon the filing of the Certificate of Trust in the
office of the Secretary of State of the State of Delaware.
WITNESSETH:
WHEREAS, this Trust has been formed to carry on the business of an
open-end management investment company registered under the 1940 Act; and
WHEREAS, this Trust is authorized to issue its Shares of beneficial
interest in separate series, each separate series to be a Sub-Trust hereunder,
and to issue classes of Shares of any Sub-Trust or divide Shares of any
Sub-Trust into two or more classes, all in accordance with the provisions
hereinafter set forth; and
WHEREAS, the Trustees have agreed to manage all property coming into
their hands as trustees of a Delaware business trust in accordance with the
provisions of the Delaware Business Trust Act (12 Del. C. Section 3801 ET SEQ.),
as from time to time amended and including any successor statute of similar
import (the "DBTA"), and the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets which they may from time to time acquire in
any manner as Trustees hereunder IN TRUST to manage and dispose of the same upon
the following terms and conditions for the benefit of the holders from time to
time of shares of beneficial interest in this Trust and the Sub-Trusts created
hereunder as hereinafter set forth.
ARTICLE I - NAME AND DEFINITIONS
Section 1.1 NAME AND PRINCIPAL OFFICE. This Trust shall be known as
"Peregrine Funds" and the Trustees shall conduct the business of the Trust under
that name or any other name or names as they may from time to time determine.
The principal office of the Trust shall be located at 99 Park Avenue New York,
New York 10016 or such location as the Trustees may from time to time determine.
Section 1.2 DEFINITIONS. Whenever used herein, unless otherwise required
by the context or specifically provided:
(a) "By-laws" shall mean the By-Laws of the Trust as amended
from time to time;
(b) "Certificate of Trust" shall mean the certificate of trust
filed on behalf of the Trust with the office of the Secretary of State of the
State of Delaware;
(c) "Class" refers to any class of Shares of any Series or
Sub-Trust established and designated under or in accordance with the provisions
of Article IV;
(d) "Commission" shall have the meaning given it in the 1940
Act;
(e) "Covered Person" shall have the meaning given to it in
Section 6.4 hereof;
<PAGE>
(f) "DBTA" shall have the meaning given to it in the recitals of
this Declaration of Trust;
(g) "Declaration of Trust" shall mean this Agreement and
Declaration of Trust as amended or restated from time to time;
(h) "Disabling Conduct" shall have the meaning given to it in
Section 6.4 thereof;
(i) "General Items" shall have the meaning given to it in
Section 4.2(a) hereof.
(j) "Majority of the Outstanding Voting Shares" of the Trust or
Sub-Trust or of a class of a Sub-Trust shall mean the vote, at the annual or a
special meeting of Shareholders duly called, of the lesser of (i) 67% or more of
the Shares of the Trust or Sub-Trust present at such meeting (or of a class of a
Sub-Trust, as the case may be) if holders of more than 50% of the outstanding
Shares of the Trust or Sub-Trust (or of a class of a Sub-Trust, as the case may
be) are present or represented by proxy; or (ii) more than 50% of the
outstanding voting Shares of the Trust or Sub-Trust or of a class of a
Sub-Trust, as the case may be.
(k) "1940 Act" refers to the Investment Company Act of 1940 and
the Rules and Regulations thereunder, all as amended from time to time;
(l) "Person" means a natural person, corporation, limited
liability company, trust, association, partnership (whether general, limited or
otherwise), joint venture or any other entity;
(m) "Shareholder" means a beneficial owner of record of Shares;
(n) "Shares" refers to the transferable units of interest into
which the beneficial interest in the Trust and each Sub-Trust of the Trust
and/or any class of any Sub-Trust (as the context may require) shall be divided
from time to time;
(o) "Sub-Trust" or "Series" refers to a series of Shares
established and designated under or in accordance with the provisions of Article
IV;
(p) "Trust" refers to the Delaware business trust established by
this Declaration of Trust, inclusive of each and every Sub-Trust established
hereunder; and
(q) "Trustees" refers to the trustees of the Trust and of each
Sub-Trust hereunder named herein or elected in accordance with Article III.
ARTICLE II - PURPOSE OF TRUST
The purposes of the Trust are (i) to operate as an open-end management
investment company registered under the 1940 Act, and to offer Shareholders of
the Trust and each Sub-Trust of the Trust one or more investment programs
primarily in securities and debt instruments, and (ii) to engage in such
activities that are necessary, suitable, incidental or convenient to the
accomplishment of the foregoing and which may be engaged in or carried on by a
trust organized under the DBTA.
<PAGE>
ARTICLE III - THE TRUSTEES
Section 3.1 NUMBER, DESIGNATION, ELECTION, TERM. ETC.
(a) TRUSTEES. The initial Trustees hereof and of each Sub-Trust
hereunder shall be Rodger A. Lawson, Thaddeus Leszczynski, and Bruce J. Smith.
(b) NUMBER. The Trustees serving as such, whether named above or
hereafter becoming Trustees, may increase or decrease the number of Trustees to
a number other than the number theretofore determined, provided, however, that
the number of Trustees shall in no event be less than one. No decrease in the
number of Trustees shall have the effect of removing any Trustee from office
prior to the expiration of such Trustee's term, but the number of Trustees may
be decreased in conjunction with the removal of a Trustee pursuant to subsection
(e) of this Section 3.1.
(c) ELECTION AND TERM. Trustees, in addition to those named
above, may become such by election by Shareholders or the Trustees in office
pursuant to Section 3.1(f). Each Trustee, whether named above or hereafter
becoming a Trustee, shall serve as a Trustee of the Trust and of each Sub-Trust
hereunder during the lifetime of this Trust and until its termination as
hereinafter provided except as such Trustee sooner dies, resigns, retires or is
removed. Subject to Section 16(a) of the 1940 Act, the Trustees may elect
successors and may, pursuant to Section 3. l(f) hereof, appoint Trustees to fill
vacancies.
(d) RESIGNATION AND RETIREMENT. Any Trustee may resign or retire
as a trustee of the Trust, by written instrument signed by such Trustee and
delivered to the other Trustees or to any officer of the Trust, and such
resignation or retirement shall take effect upon such delivery or upon such
later date as is specified in such instrument and shall be effective as to the
Trust and each Sub-Trust hereunder.
(e) REMOVAL. Any Trustee may be removed with or without cause at
any time (i) by written instrument, signed by at least three-fourths of the
number of Trustees in office immediately prior to such removal, specifying the
date upon which such removal shall become effective; or (ii) by vote of
Shareholders holding not less than two-thirds of the Shares then outstanding,
cast in person or by proxy at any meeting called for the purpose; or (iii) by a
written declaration signed by Shareholders holding not less than two-thirds of
the Shares then outstanding and filed with the minutes of the Trust. Any such
removal shall be effective as to the Trust and each Sub-Trust hereunder.
(f) VACANCIES. Any vacancy or anticipated vacancy resulting from
any reason, including without limitation, the death, resignation, retirement,
removal or incapacity of any of the Trustees, or resulting from an increase in
the number of Trustees by the other Trustees may (but so long as there are at
least two remaining Trustees, need not unless required by the 1940 Act) be
filled by a vote of a majority of the remaining Trustees, subject to the
provisions of Section 16(a) of the 1940 Act, through the appointment in writing
of such other person as such remaining Trustees in their discretion shall
determine and such appointment shall be effective upon the written acceptance of
the person named therein to serve as a trustee of the Trust and agreement by
such person to be bound by the provisions of this Declaration of Trust, except
that any such appointment in anticipation of a vacancy to occur by reason of
voluntary or mandatory retirement, resignation or increase in number of Trustees
to be effective at a later date shall be deemed effective upon the effective
date of said retirement, resignation or increase in number of Trustees. As soon
as any Trustee so appointed shall have accepted such appointment and shall have
agreed in writing to be bound by this Declaration of Trust and the appointment
is effective, the Trust estate shall vest in the new Trustee, together with the
continuing Trustees, without any further act or conveyance.
<PAGE>
(g) EFFECT OF DEATH, RESIGNATION, ETC. The death, resignation,
voluntary or mandatory retirement, removal or incapacity of the Trustees, or any
one of them, shall cause a Trustee to cease to be a trustee of the Trust but
shall not operate to annul or terminate the Trust or any Sub-Trust hereunder or
to revoke or terminate any existing agency or contract created or entered into
pursuant to the terms of this Declaration of Trust.
(h) NO ACCOUNTING. Except to the extent required by the 1940 Act
or under circumstances which would justify removal for cause, no person ceasing
to be a trustee of the Trust as a result of death, resignation, voluntary or
mandatory retirement, removal or incapacity (nor the estate of any such person)
shall be required to make an accounting to the Shareholders or remaining
Trustees upon such cessation.
Section 3.2 POWERS OF TRUSTEES. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purpose of the Trust. The Trustees in all instances
shall act as principals, and are and shall be free from the control of the
Shareholders. The Trustees shall have full power and authority to do any and all
acts and to make and execute any and all contracts and instruments that they may
consider necessary or appropriate in connection with the management of the
Trust. The Trustees shall not be bound or limited by present or future laws or
customs with regard to investment by trustees or fiduciaries, but shall have
full authority and absolute power and control over the assets of the Trust and
the business of the Trust to the same extent as if the Trustees were the sole
owners of the assets of the Trust and the business in their own right, including
such authority, power and control to do all acts and things as they, in their
sole discretion, shall deem proper to accomplish the purposes of this Trust.
Without limiting the foregoing, the Trustees:
(i) may adopt By-Laws not inconsistent with this Declaration of
Trust providing for the conduct of the business and affairs of the Trust and may
amend and repeal them to the extent that such By-Laws do not reserve that right
to the Shareholders;
(ii) may from time to time in accordance with the provisions of
Section 4.1 hereof establish Sub-Trusts, each such Sub-Trust to operate as a
separate and distinct investment medium and with separately defined investment
objectives and policies and distinct investment purposes;
(iii) may from time to time in accordance with the provisions of
Section 4.1 hereof establish Series or establish classes of Shares of any Series
or Sub-Trust or divide the Shares of any Series or Sub-Trust into classes;
(iv) may as they consider appropriate designate employees and
agents who may be denominated as officers with titles, including, but not
limited to, "president," "vice-president," "treasurer," "secretary," "assistant
secretary," "assistant treasurer," "managing director," "chairman of the board"
and "vice chairman of the board" and who in such capacity may act for and on
behalf of the Trust, as and to the extent authorized by the Trustees or as
permitted in the By-Laws, and appoint and terminate agents and consultants and
hire and terminate employees, any one or more of the foregoing of whom may be a
Trustee, and may provide for the compensation of all of the foregoing;
(v) may appoint from their own number, and terminate, any one or
more committees consisting of two or more Trustees, including, without implied
limitation, an executive committee, which may, when the Trustees are not in
session and subject to the 1940 Act, exercise some or all of the power and
authority of the Trustees as the Trustees may determine;
<PAGE>
(vi) in accordance with Section 3.3, may employ one or more
advisers, administrators, depositories and custodians and may authorize any
depository or custodian to employ sub-custodians or agents and to deposit all or
any part of such assets in a system or systems for the central handling of
securities and debt instruments, retain transfer, dividend, accounting or
Shareholder servicing agents or any of the foregoing, provide for the
distribution of Shares by the Trust through one or more distributors, principal
underwriters or otherwise, and subject to Section 5.3, set record dates or times
for the determination of Shareholders or various of them with respect to various
matters;
(vii) may compensate or provide for the compensation of the
Trustees, officers, advisers, administrators, custodians, other agents,
consultants and employees of the Trust or the Trustees on such terms as they
deem appropriate; and
(viii) in general, may delegate to any officer of the Trust, to
any committee of the Trustees and to any employee, adviser, administrator,
distributor, depository, custodian, transfer and dividend disbursing agent, or
any other agent or consultant of the Trust such authority, powers, functions and
duties as they consider desirable or appropriate for the conduct of the business
and affairs of the Trust, including, without implied limitation, the power and
authority to act in the name of the Trust and any Sub-Trust and of the Trustees,
to sign documents and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing and to the extent not inconsistent with
the 1940 Act or other applicable law, the Trustees shall have power and
authority for and on behalf of the Trust and each separate Sub-Trust established
hereunder:
(a) INVESTMENTS. To invest and reinvest cash and other property,
including, without implied limitation, to invest any and all of the assets of
the Trust in the securities of one or more open-end management investment
companies, and to hold cash or other property uninvested without in any event
being bound or limited by any present or future law or custom in regard to
investments by trustees;
(b) DISPOSITION OF ASSETS. To sell, exchange, lend, pledge,
mortgage, hypothecate, write options on and lease any or all of the assets of
the Trust;
(c) OWNERSHIP POWERS. To vote or give assent, or exercise any
rights of ownership, with respect to stock or other securities, debt instruments
or property; and to execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting to such person or
persons such power and discretion with relation to securities, debt instruments
or property as the Trustees shall deem proper;
(d) SUBSCRIPTION. To exercise powers and rights of subscription
or otherwise which in any manner arise out of ownership of securities or debt
instruments;
(e) FORM OF HOLDING. To hold any security, debt instrument or
property in a form not indicating any trust, whether in bearer, unregistered or
other negotiable form, or in the name of the Trustees or of the Trust or of any
Sub-Trust or in the name of a custodian, sub-custodian or other depository or a
nominee or nominees or otherwise;
(f) REORGANIZATION, ETC. To consent to or participate in any
plan for the reorganization, consolidation or merger of any corporation or
issuer, any security or debt instrument of which is or was held in the Trust; to
<PAGE>
consent to any contract, lease, mortgage, purchase or sale of property by such
corporation or issuer, and to pay calls or subscriptions with respect to any
security or debt instrument held in the Trust;
(g) VOTING TRUSTS, ETC. To join with other holders of any
securities or debt instruments in acting through a committee, depository, voting
trustee or otherwise, and in that connection to deposit any security or debt
instrument with, or transfer any security or debt instrument to, any such
committee, depositary or trustee, and to delegate to them such power and
authority with relation to any security or debt instrument (whether or not so
deposited or transferred) as the Trustees shall deem proper, and to agree to
pay, and to pay, such portion of the expenses and compensation of such
committee, depository or trustee as the Trustees shall deem proper;
(h) COMPROMISE. To compromise, arbitrate or otherwise adjust
claims in favor of or against the Trust or any Sub-Trust or any matter in
controversy, including but not limited to claims for taxes;
(i) PARTNERSHIPS, ETC. To enter into joint ventures, general or
limited partnerships, limited liability companies and any other combinations or
associations;
(j) BORROWING AND SECURITY. To borrow funds and to mortgage and
pledge the assets of the Trust or any part thereof to secure obligations arising
in connection with such borrowing;
(k) GUARANTEES, ETC. To endorse or guarantee the payment of any
notes or other obligations of any person; to make contracts of guaranty or
suretyship, or otherwise assume liability for payment thereof; and to mortgage
and pledge the Trust property or any part thereof to secure any of or all such
obligations;
(l) INSURANCE. To purchase and pay for entirely out of Trust
property such insurance and/or bonding as they may deem necessary or appropriate
for the conduct of the business, including, without limitation, insurance
policies insuring the assets of the Trust and payment of distributions and
principal on its portfolio investments, and insurance policies insuring the
Shareholders, Trustees, officers, employees, agents, consultants, investment
advisers, managers, administrators, distributors, principal underwriters, or
independent contractors, or any thereof (or any person connected therewith), of
the Trust individually against all claims and liabilities of every nature
arising by reason of holding, being or having held any such office or position,
or by reason of any action alleged to have been taken or omitted by any such
person in any such capacity, including any action taken or omitted that may be
determined to constitute negligence, whether or not the Trust would have the
power to indemnify such person against such liability;
(m) PENSIONS, ETC. To pay pensions for faithful service, as
deemed appropriate by the Trustees, and to adopt, establish and carry out
pension, profit-sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and provisions, including the
purchasing of life insurance and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the Trustees, officers,
employees and agents of the Trust; and
(n) DISTRIBUTION PLANS. To adopt on behalf of the Trust or any
Sub-Trust, including with respect to any class thereof, a plan of distribution
and related agreements thereto pursuant to the terms of Rule 12b-1 of the 1940
Act and to make payments from the assets of the Trust or the relevant Sub-Trust
or Sub-Trusts pursuant to said Rule 12b-1 plan.
<PAGE>
Section 3.3 CERTAIN CONTRACTS. Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations of present and
future law or custom in regard to delegation of powers by trustees generally,
the Trustees may, at any time and from time to time and without limiting the
generality of their powers and authority otherwise set forth herein, enter into
one or more contracts with any one or more corporations, trusts, associations,
partnerships, limited partnerships, limited liability companies, other type of
organizations, or individuals (each a "Contracting Party"), to provide for the
performance and assumption of some or all of the following services, duties and
responsibilities to, for or on behalf of the Trust and/or any Sub-Trust, and/or
the Trustees, and to provide for the performance and assumption of such other
services, duties and responsibilities in addition to those set forth below as
the Trustees may determine appropriate:
(a) ADVISORY. Subject to the general supervision of the Trustees
and in conformity with the stated policy of the Trustees with respect to the
investments of the Trust or of the assets belonging to any Sub-Trust of the
Trust (as that phrase is defined in subsection (a) of Section 4.2), to manage
such investments and assets, make investment decisions with respect thereto, and
to place purchase and sale orders for portfolio transactions
relating to such investments and assets;
(b) ADMINISTRATION. Subject to the general supervision of the
Trustees and in conformity with any policies of the Trustees with respect to the
operations of the Trust and each Sub-Trust (including each class thereof), to
supervise all or any part of the operations of the Trust and each Sub-Trust, and
to provide all or any part of the administrative and clerical personnel, office
space and office equipment and services appropriate for the efficient
administration and operations of the Trust and each Sub-Trust;
(c) DISTRIBUTION. To distribute the Shares of the Trust and each
Sub-Trust (including any classes thereof), to the principal underwriter of such
Shares, and/or to act as agent of the Trust and each Sub-Trust in the sale of
Shares and the acceptance or rejection of orders for the purchase of Shares;
(d) CUSTODIAN AND DEPOSITORY. To act as depository for and to
maintain custody of the property of the Trust and each Sub-Trust and accounting
records in connection therewith;
(e) TRANSFER AND DIVIDEND DISBURSING AGENCY. To maintain records
of the ownership of outstanding Shares, the issuance, redemption and transfer
thereof, and to disburse any dividends declared by the Trustees and in
accordance with the policies of the Trustees and/or the instructions of any
particular Shareholder to reinvest any such dividends;
(f) SHAREHOLDER SERVICING. To provide services with respect to
the relationship of the Trust and its Shareholders, records with respect to
Shareholders and their Shares, and similar matters; and
(g) ACCOUNTING. To handle all or any part of the accounting
responsibilities, whether with respect to the Trust's properties, Shareholders
or otherwise.
The same person may be the Contracting Party for some or all of the services,
duties and responsibilities to, for and of the Trust and/or the Trustees, and
the contracts with respect thereto may contain such terms interpretive of or in
addition to the delineation of the services, duties and responsibilities
provided for, including provisions that are not inconsistent with the 1940 Act
<PAGE>
relating to the standard of care of and the rights to indemnification of the
Contracting Party and others, as the Trustees may determine. Nothing herein
shall preclude, prevent or limit the Trust or a Contracting Party from entering
into sub-contractual arrangements relating to any of the matters referred to in
Section 3.3.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust
is a shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter or distributor or agent of or for any Contracting
Party, or of or for any parent or affiliate of any Contracting Party or that the
Contracting Party or any parent or affiliate thereof is a Shareholder or has an
interest in the Trust or any Sub-Trust, or that
(ii) any Contracting Party may have a contract providing for the
rendering of any similar services to one or more other corporations, trusts,
associations, partnerships, limited partnerships, limited liability companies or
other organizations, or have other business or interests, shall not affect the
validity of any contract for the performance and assumption of services, duties
and responsibilities to, for or of the Trust or any Sub-Trust and/or the
Trustees or disqualify any Shareholder, Trustee or officer of the Trust from
voting upon or executing the same or create any liability or accountability to
the Trust, any Sub-Trust or its Shareholders, provided that in the case of any
relationship or interest referred to in the preceding clause (i) on the part of
any Trustee or officer of the Trust, either (x) the material facts as to such
relationship or interest have been disclosed to or are known by the Trustees not
having any such relationship or interest and the contract involved is approved
in good faith by a majority of such Trustees not having any such relationship or
interest (even though such unrelated or disinterested Trustees are less than a
quorum of all of the Trustees), (y) the material facts as to such relationship
or interest and as to the contract have been disclosed to or are known by the
Shareholders entitled to vote thereon and the contract involved is specifically
approved in good faith by a vote of the Shareholders, or (z) the specific
contract involved is reasonable and fair to the Trust as of the time it is
authorized, approved or ratified by the Trustees or by the Shareholders.
Section 3.4 COMPLIANCE WITH 1940 ACT. Any contract entered into
pursuant to Section 3.2 or 3.3 shall be consistent with and subject to the
requirements of Section 15 of the 1940 Act (including any amendment thereof or
other applicable Act of Congress hereafter enacted) with respect to its
continuance in effect, its termination and the method of authorization and
approval of such contract or renewal thereof.
Section 3.5 PAYMENT OF TRUST EXPENSES AND COMPENSATION OF TRUSTEES. The
Trustees are authorized to pay or to cause to be paid out of the principal or
income of the Trust or any Sub-Trust, or partly out of principal and partly out
of income, and to charge or allocate the same to, between or among such one or
more of the Sub-Trusts and/or one or more classes of Shares thereof that may be
established and designated pursuant to Article IV, as the Trustees deem fair,
all expenses, fees, charges, taxes and liabilities incurred or arising in
connection with the Trust, any Sub-Trust and/or any class of Shares thereof, or
in connection with the management thereof, including, but not limited to, the
Trustees' compensation and such expenses and charges for the services of the
Trust's officers, employees, investment adviser, administrator, distributor,
principal underwriter, auditor, counsel, depository, custodian, transfer agent,
dividend disbursing agent, accounting agent, Shareholder servicing agent, and
such other agents, consultants, and independent contractors and such other
expenses and charges as the Trustees may deem necessary or proper to incur.
Without limiting the generality of any other provision hereof, the Trustees
shall be entitled to reasonable compensation from the Trust for their services
as trustees of the Trust and may fix the amount of such compensation.
Section 3.6 OWNERSHIP OF ASSETS OF THE TRUST. Title to all of the
assets of the Trust and of each Sub-Trust shall at all times be considered as
vested in the Trust.
<PAGE>
Section 3.7 ACTION BY TRUSTEES. Except as otherwise provided by the
1940 Act or other applicable law, this Declaration of Trust or the By-Laws, any
action to be taken by the Trustees on behalf of or with respect to the Trust or
any Sub-Trust or class thereof may be taken by a majority of the Trustees
present at a meeting of Trustees (a quorum, consisting of at least one-half of
the Trustees then in office, being present), within or without the State of
Delaware, including any meeting held by means of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time, and participation by such means
shall constitute presence in person at a meeting, or by written consents of a
majority of the Trustees then in office (or such larger or different number as
may be required by the 1940 Act or other applicable law).
ARTICLE IV - SHARES
Section 4.1 DESCRIPTION OF SHARES. The beneficial interest in the Trust
shall be divided into Shares, all with $.001 par value, but the Trustees shall
have the authority from time to time to issue Shares in one or more Series (each
of which Series of Shares shall represent the beneficial interest in a separate
and distinct Sub-Trust of the Trust, including without limitation each Sub-Trust
specifically established and designated in Section 4.2), as they deem necessary
or desirable. For all purposes under this Declaration of Trust or otherwise,
including, without implied limitation, (i) with respect to the rights of
creditors and (ii) for purposes of interpreting the relevant rights of each
Sub-Trust and the Shareholders of each Sub-Trust, each Sub-Trust established
hereunder shall be deemed to be a separate trust. Notice of the limitation of
liabilities of a Sub-Trust shall be set forth in the certificate of trust of the
Trust, and debts, liabilities, obligations and expenses incurred, contracted for
or otherwise existing with respect to a particular Sub-Trust shall be
enforceable against the assets of such Sub-Trust only, and not against the
assets of the Trust generally or any other Sub-Trust. The Trustees shall have
exclusive power without the requirement of Shareholder approval to establish and
designate such separate and distinct Sub-Trusts, and to fix and determine the
relative rights and preferences as between the shares of the separate Sub-Trusts
as to right of redemption and the price, terms and manner of redemption, special
and relative rights as to dividends and other distributions and on liquidation,
sinking or purchase fund provisions, conversion rights, and conditions under
which the several Sub-Trusts shall have separate voting rights or no voting
rights.
In addition, the Trustees shall have exclusive power, without the
requirement of Shareholder approval, to issue classes of Shares of any Sub-Trust
or divide the Shares of any Sub-Trust into classes, each class having such
different dividend, liquidation, voting and other rights as the Trustees may
determine in their sole discretion, and may establish and designate the specific
classes of Shares of each Sub-Trust. The fact that a Sub-Trust shall have
initially been established and designated without any specific establishment or
designation of classes (i.e., that all Shares of such Sub-Trust are initially of
a single class), or that a Sub-Trust shall have more than one established and
designated class, shall not limit the authority of the Trustees to establish and
designate separate classes, or one or more further classes, of said Sub-Trust
without approval of the holders of the initial class thereof, or previously
established and designated class or classes thereof.
The number of authorized Shares and the number of Shares of each
Sub-Trust or class thereof that may be issued is unlimited, and the Trustees may
issue Shares of any Sub-Trust or class thereof for such consideration and on
such terms as they may determine (or for no consideration if pursuant to a Share
dividend or split-up), all without action or approval of the Shareholders. All
Shares when so issued on the terms determined by the Trustees shall be fully
paid and non-assessable (but may be subject to mandatory contribution back to
the Trust as provided in subsection (h) of Section 4.2). The Trustees may
classify or reclassify any unissued Shares or any Shares previously issued and
reacquired of any Sub-Trust or class thereof into one or more Sub-Trusts or
classes thereof that may be established and designated from time to time. The
<PAGE>
Trustees may hold as treasury Shares, reissue for such consideration and on such
terms as they may determine, or cancel, at their discretion from time to time,
any Shares of any Sub-Trust or class thereof reacquired by the Trust.
The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining the holders of
Shares entitled to be treated as such, to the extent provided or referred to in
Section 5.3.
The establishment and designation of any Sub-Trust or of any class of
Shares of any Sub-Trust in addition to those established and designated in
Section 4.2 shall be effective (i) upon the execution by a majority of the
Trustees then in office of an instrument setting forth such establishment and
designation of the relative rights and preferences of the Shares of such
Sub-Trust or class, (ii) upon the execution of an instrument in writing by an
officer of the Trust pursuant to the vote of a majority of the Trustees, or
(iii) as otherwise provided in either such instrument. At any time that there
are no Shares outstanding of any particular Sub-Trust or class previously
established and designated, the Trustees may by an instrument executed by a
majority of their number (or by an instrument executed by an officer of the
Trust pursuant to the vote of a majority of the Trustees) abolish that Sub-Trust
or class and the establishment and designation thereof. Each instrument
establishing and designating any Sub-Trust shall have the status of an amendment
to this Declaration of Trust.
Any Trustee, officer or other agent of the Trust, and any organization
in which any such person is interested may acquire, own, hold and dispose of
Shares of any Sub-Trust (including any classes thereof) of the Trust to the same
extent as if such person were not a Trustee, officer or other agent of the
Trust; and the Trust may issue and sell or cause to be issued and sold and may
purchase Shares of any Sub-Trust (including any classes thereof) from any such
person or any such organization subject only to the general limitations,
restrictions or other provisions applicable to the sale or purchase of Shares of
such Sub-Trust (including any classes thereof) generally.
Section 4.2 ESTABLISHMENT AND DESIGNATION OF SUB-TRUSTS AND CLASSES.
Without limiting the authority of the Trustees set forth in Section 4.1 to
establish and designate any further Sub-Trusts, the Trustees hereby establish
and designate one Sub-Trust which shall be known as "Asia Pacific Growth Fund,"
and which shall initially consist of a single class of Shares. The Shares of
such Sub-Trusts and any Shares of any further Sub-Trust or classes thereof that
may from time to time be established and designated by the Trustees shall
(unless the Trustees otherwise determine with respect to some further Sub-Trust
at the time of establishing and designating the same) have the following
relative rights and preferences:
(a) ASSETS BELONGING TO SUB-TRUSTS. All consideration received
by the Trust for the issue or sale of Shares of a particular Sub-Trust or any
classes thereof, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall be held by the Trustees in trust for the
benefit of the holders of Shares of that Sub-Trust or class thereof and shall
irrevocably belong to that Sub-Trust (and be allocable to any classes thereof)
for all purposes, and shall be so recorded upon the books of account of the
Trust. Separate and distinct records shall be maintained for each Sub-Trust and
the assets associated with a Sub-Trust shall be held and accounted for
separately from the other assets of the Trust, or any other Sub-Trust. Such
consideration, assets, income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, together with any General Items (as
hereinafter defined) allocated to that Sub-Trust as provided in the following
<PAGE>
sentence, are herein referred to as "assets belonging to" that Sub-Trust (and
allocable to any classes thereof). In the event that there are any assets,
income, earnings, profits, and proceeds thereof, funds, or payments which are
not readily identifiable as belonging to any particular Sub-Trust (collectively
"General Items"), the Trustees shall allocate such General Items to and among
any one or more of the Sub-Trusts established and designated from time to time
in such manner and on such basis as they, in their sole discretion, deem fair
and equitable; and any General Items so allocated to a particular Sub-Trust
shall belong to that Sub-Trust (and be allocable to any classes thereof). Each
such allocation by the Trustees shall be conclusive and binding upon the holders
of all Shares of all Sub-Trusts (including any classes thereof) for all
purposes.
(b) LIABILITIES BELONGING TO SUB-TRUSTS. The assets belonging to
each particular Sub-Trust shall be charged with the liabilities in respect of
that Sub-Trust and all expenses, costs, charges and reserves belonging to that
Sub-Trust, and any general liabilities, expenses, costs, charges or reserves of
the Trust which are not readily identifiable as belonging to any particular
Sub-Trust shall be allocated and charged by the Trustees to and among any one or
more of the Sub-Trusts established and designated from time to time in such
manner and on such basis as the Trustees in their sole discretion shall
determine. In addition, the liabilities in respect of a particular class of
Shares of a particular Sub-Trust and all expenses, costs, charges and reserves
belonging to that class of Shares, and any general liabilities, expenses, costs,
charges or reserves of that particular Sub-Trust which are not readily
identifiable as belonging to any particular class of Shares of that Sub-Trust
shall be allocated and charged by the Trustees to and among any one or more of
the classes of Shares of that Sub-Trust established and designated from time to
time in such manner and on such basis as the Trustees in their sole discretion
shall determine to be fair and equitable. The liabilities, expenses, costs,
charges and reserves allocated and so charged to a Sub-Trust or class thereof
are herein referred to as "liabilities belonging to" that Sub-Trust or class
thereof. Each allocation of liabilities, expenses, costs, charges and reserves
by the Trustees shall be conclusive and binding upon the Shareholders, creditors
and any other persons dealing with the Trust or any Sub-Trust (including any
classes thereof) for all purposes. Any creditor of any Sub-Trust may look only
to the assets of that Sub-Trust to satisfy such creditor's debt.
The Trustees shall have full discretion, to the extent not inconsistent
with the 1940 Act and other applicable law, to determine which items shall be
treated as income and which items as capital; and each such determination and
allocation shall be conclusive and binding upon the Shareholders.
(c) DIVIDENDS AND DISTRIBUTIONS. Dividends and distributions on
Shares of a particular Sub-Trust or any class thereof may be paid with such
frequency as the Trustees in their sole discretion may determine, which may be
daily or otherwise pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Trustees in their sole discretion may
determine, to the holders of Shares of that Sub-Trust or class, from such of the
income and capital gains, accrued or realized, from the assets belonging to that
Sub-Trust, or in the case of a class, belonging to that Sub-Trust and allocable
to that class, as the Trustees in their sole discretion may determine, after
providing for actual and accrued liabilities belonging to that Sub-Trust or
class. All dividends and distributions on Shares of a particular Sub-Trust or
class thereof shall be distributed pro rata to the holders of Shares of that
Sub-Trust or class in proportion to the number of Shares of that Sub-Trust or
class held by such holders at the date and time of record established for the
payment of such dividends or distributions, except that in connection with any
dividend or distribution program or procedure the Trustees in their sole
discretion may determine that no dividend or distribution shall be payable on
Shares as to which the Shareholder's purchase order and/or payment have not been
received by the time or times established by the Trustees under such program or
procedure. Such dividends and distributions may be made in cash or Shares of
that Sub-Trust or class or a combination thereof as determined by the Trustees
in their sole discretion or pursuant to any program that the Trustees may have
in effect at the time for the election by each Shareholder of the mode of the
making of such dividend or distribution to that Shareholder. Any such dividend
<PAGE>
or distribution paid in Shares will be paid at the net asset value thereof as
determined in accordance with subsection (h) of this Section 4.2.
The Trustees shall have full discretion to the extent not inconsistent
with the 1940 Act and other applicable law to determine which items shall be
treated as income and which items as capital; and each such determination and
allocation shall be conclusive and binding upon the Shareholders.
(d) LIQUIDATION. In the event of the liquidation or dissolution
of the Trust, subject to Section 7.1 hereof, the holders of Shares of each
Sub-Trust or any class thereof that has been established and designated shall be
entitled to receive, when and as declared by the Trustees, the excess of the
assets belonging to that Sub-Trust, or in the case of a class, belonging to that
Sub-Trust and allocable to that class, over the liabilities belonging to that
Sub-Trust or class. The assets so distributable to the holders of Shares of any
particular Sub-Trust or class thereof shall be distributed among such holders in
proportion to the number of Shares of that Sub-Trust or class thereof held by
them and recorded on the books of the Trust. The liquidation of any particular
Sub-Trust or class thereof may be authorized at any time by vote of a majority
of the Trustees then in office.
(e) VOTING. On each matter submitted to a vote of the
Shareholders, each holder of a Share shall be entitled to one vote for each
whole Share and a proportionate vote for each fractional Share standing in such
Shareholder's name on the books of the Trust irrespective of the Series thereof
or class thereof and all Shares of all Series and classes thereof shall vote
together as a single class; provided, however, that (i) as to any matter with
respect to which a separate vote of one or more Series or classes thereof is
required by the 1940 Act or the provisions of the writing establishing and
designating the Sub-Trust or class, such requirements as to a separate vote by
such Series or classes thereof shall apply in lieu of Shares of all Series and
classes thereof voting together; and (ii) as to any matter which affects the
interests of one or more particular Series or classes thereof, only the holders
of Shares of the one or more affected Series or classes thereof shall be
entitled to vote, and each such Series or class shall vote as a separate class.
(f) REDEMPTION BY SHAREHOLDER. Each holder of Shares of a
particular Sub-Trust or any class thereof shall have the right at such times as
may be permitted by the Trust to require the Trust to redeem all or any part of
such holder's Shares of that Sub-Trust or class thereof at a redemption price
equal to the net asset value per Share of that Sub-Trust or class thereof next
determined in accordance with subsection (h) of this Section 4.2 after the
Shares are properly tendered for redemption, subject to any contingent deferred
sales charge or redemption charge in effect at the time of redemption. Payment
of the redemption price shall be in cash; provided, however, that if the
Trustees determine, which determination shall be conclusive, that conditions
exist which make payment wholly in cash unwise or undesirable, the Trust may,
subject to the requirements of the 1940 Act, make payment wholly or partly in
securities or other assets belonging to the Sub-Trust of which the Shares being
redeemed are part at the value of such securities or assets used in such
determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone payment of the redemption
price and may suspend the right of the holders of Shares of any Sub-Trust or
class thereof to require the Trust to redeem Shares of that Sub-Trust during any
period or at any time when and to the extent permissible under the 1940 Act.
(g) REDEMPTION BY TRUST. Each Share of each Sub-Trust or class
thereof that has been established and designated is subject to redemption by the
Trust at the redemption price which would be applicable if such Share was then
being redeemed by the Shareholder pursuant to subsection (f) of this Section 4.2
(i) at any time, in the sole discretion of the Trustees, or (ii) upon such other
<PAGE>
conditions as may from time to time be determined by the Trustees and set forth
in the then current prospectus included in the registration statement or any
amendment of the Declaration of Trust. Upon such redemption the holders of the
Shares so redeemed shall have no further right with respect thereto other than
to receive payment of such redemption price.
(h) NET ASSET VALUE. The net asset value per Share of any
Sub-Trust shall be (i) in the case of a Sub-Trust whose Shares are not divided
into classes, the quotient obtained by dividing the value of the net assets of
that Sub-Trust (being the value of the assets belonging to that Sub-Trust less
the liabilities belonging to that Sub-Trust) by the total number of Shares of
that Sub-Trust outstanding, and (ii) in the case of a class of Shares of a
Sub-Trust whose Shares are divided into classes, the quotient obtained by
dividing the value of the net assets of that Sub-Trust allocable to such class
(being the value of the assets belonging to that Sub-Trust allocable to such
class less the liabilities belonging to such class) by the total number of
Shares of such class outstanding; all determined in accordance with the methods
and procedures, including without limitation those with respect to rounding,
established by the Trustees from time to time.
The Trustees may in their sole discretion determine to maintain the net
asset value per Share of any Sub-Trust at a designated constant dollar amount
and in connection therewith may adopt procedures not inconsistent with the 1940
Act for the continuing declarations of income attributable to that Sub-Trust as
dividends payable in additional Shares of that Sub-Trust at the designated
constant dollar amount and for the handling of any losses attributable to that
Sub-Trust. Such procedures may provide that in the event of any loss each
Shareholder shall be deemed to have contributed to the capital of the Trust
attributable to that Sub-Trust such Shareholder's pro rata portion of the total
number of Shares required to be canceled in order to permit the net asset value
per Share of that Sub-Trust to be maintained, after reflecting such loss, at the
designated constant dollar amount. Each Shareholder of the Trust shall be deemed
to have agreed, by making an investment in any Sub-Trust with respect to which
the Trustees shall have adopted any such procedure, to make the contribution
referred to in the preceding sentence in the event of any such loss.
(i) TRANSFER. All Shares of each particular Sub-Trust or class
thereof shall be transferable, but transfers of Shares of a particular Sub-Trust
or class thereof will be recorded on the Share transfer records of the Trust
applicable to that Sub-Trust or class only at such times as Shareholders shall
have the right to require the Trust to redeem Shares of that Sub-Trust or class
and at such other times as may be permitted by the Trustees.
(j) EQUALITY. Except as provided herein or in the instrument
designating and establishing any class of Shares or any Sub-Trust, all Shares of
each particular Sub-Trust or class thereof shall represent an equal
proportionate interest in the assets belonging to that Sub-Trust, or in the case
of a class, belonging to that Sub-Trust and allocable to that class, subject to
the liabilities belonging to that Sub-Trust or class, and each Share of any
particular Sub-Trust or class shall be equal to each other Share of that
Sub-Trust or class; but the provisions of this sentence shall not restrict any
distinctions permissible under subsection (c) of this Section 4.2 that may exist
with respect to dividends and distributions on Shares of the same Sub-Trust or
class. The Trustees in their sole discretion may from time to time divide or
combine the Shares of any particular Sub-Trust or class into a greater or lesser
number of Shares of that Sub-Trust or class without thereby changing the
proportionate beneficial interest in the assets belonging to that Sub-Trust or
class or in any way affecting the rights of Shares of any other Sub-Trust or
class.
(k) FRACTIONS. Any fractional Share of any Sub-Trust or class,
if any such fractional Share is outstanding, shall carry proportionately all the
rights and obligations of a whole Share of that Sub-Trust or class, including
rights and obligations with respect to voting, receipt of dividends and
distributions, redemption of Shares, and liquidation of the Trust.
<PAGE>
(l) CONVERSION RIGHTS. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the authority to provide
that holders of Shares of any Sub-Trust or class thereof shall have the right to
convert said Shares into Shares of one or more other Sub-Trusts or classes
thereof in accordance with such requirements and procedures as may be
established by the Trustees.
(m) CLASS DIFFERENCES. Subject to Section 4.1, the relative
rights and preferences of the classes of any Sub-Trust may differ in such other
respects as the Trustees may determine to be appropriate in their sole
discretion, provided that such differences are set forth in the instrument
establishing and designating such classes and executed by a majority of the
Trustees (or by an instrument executed by an officer of the Trust pursuant to a
vote of a majority of the Trustees).
Section 4.3 OWNERSHIP OF SHARES. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each
Sub-Trust and each class thereof that has been established and designated. No
certificates certifying the ownership of Shares need be issued except as the
Trustees in their sole discretion may otherwise determine from time to time. The
Trustees may make such rules as they consider appropriate for the issuance of
Share certificates, the use of facsimile signatures, the transfer of Shares and
similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent, as the case may be, shall be conclusive as to who are
the Shareholders and as to the number of Shares of each Sub-Trust and class
thereof held from time to time by each Shareholder.
Section 4.4 INVESTMENTS IN THE TRUST. The Trustees may accept or reject
investments in the Trust and each Sub-Trust from such persons and on such terms
and for such consideration, not inconsistent with the provisions of the 1940
Act, as they from time to time authorize or determine. The Trustees may
authorize any distributor, principal underwriter, custodian, transfer agent or
other person to accept orders for the purchase of Shares that conform to such
authorized terms and to reject any purchase orders for Shares whether or not
conforming to such authorized terms.
Section 4.5 NO PRE-EMPTIVE RIGHTS. Shareholders shall have no
pre-emptive or other rights to subscribe for any additional Shares or other
securities issued by the Trust or any Sub-Trust.
Section 4.6 STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY.
Shares shall be deemed to be personal property giving only the rights provided
in this Declaration of Trust. Every Shareholder by virtue of acquiring Shares
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death, incapacity, dissolution, termination or
bankruptcy of a Shareholder during the continuance of the Trust shall not
operate to dissolve or terminate the Trust or any Sub-Trust thereof nor entitle
the representative of such Shareholder to an accounting or to take any action in
court or elsewhere against the Trust or the Trustees, but only to the rights of
such Shareholder under this Trust. Ownership of Shares shall not entitle the
Shareholder to any title in or to the whole or any part of the Trust property or
right to call for a partition or division of the same or for an accounting, nor
shall the ownership of Shares constitute the Shareholders as partners. Neither
the Trust nor the Trustees, nor any officer, employee or agent of the Trust
shall have any power to bind personally any Shareholder, nor except as
specifically provided herein to call upon any Shareholder for the payment of any
sum of money or assessment whatsoever other than such as the Shareholder may at
any time personally agree to pay.
Section 4.7 NO APPRAISAL RIGHTS. Shareholders shall have no right to
demand payment for their shares or to any other rights of dissenting
<PAGE>
shareholders in the event the Trust participates in any transaction which would
give rise to appraisal or dissenters' rights by a shareholder of a corporation
organized under the General Corporation Law of the State of Delaware, or
otherwise.
ARTICLE V - SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 VOTING POWERS. The Shareholders shall have power to vote
only (i) for the election or removal of Trustees as provided in Section 3.1,
(ii) with respect to any contract with a Contracting Party as provided in
Section 3.3 as to which Shareholder approval is required by the 1940 Act, the
DBTA or any other applicable law (iii) with respect to any termination or
reorganization of the Trust to the extent and as provided in Sections 7.1 and
7.2, (iv) with respect to any amendment of this Declaration of Trust to the
extent and as provided in Section 7.3, and (v) with respect to such additional
matters relating to the Trust as may be required by the 1940 Act, the DBTA or
any other applicable law, this Declaration of Trust, the By-Laws or any
registration of the Trust with the Commission (or any successor agency) or any
state, or as the Trustees may consider necessary or desirable. There shall be no
cumulative voting in the election of Trustees. Shares may be voted in person or
by proxy. Proxies may be given orally or in writing or pursuant to any
computerized or mechanical data gathering process specifically approved by the
Trustees. A proxy with respect to Shares held in the name of two or more persons
shall be valid if executed by any one of them, unless at or prior to exercise of
the proxy the Trust receives a specific written notice to the contrary from any
one of them. If Shares are held jointly by two or more persons, any one of them
may vote at any meeting in person or by proxy in respect of such Shares, but if
more than one of the holders shall be present at such meeting in person or by
proxy, and such joint owners or their proxies so present disagree as to any vote
cast, such vote shall not be received in respect of such Shares. A proxy
purporting to be executed by or on behalf of a Shareholder shall be deemed valid
unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. Until Shares are issued, the Trustees
may exercise all rights of Shareholders and may take any action required by law,
this Declaration of Trust or the By-Laws to be taken by Shareholders.
Section 5.2 MEETINGS. No annual or regular meeting of Shareholders is
required. Special meetings of Shareholders may be called by the Trustees from
time to time for the purpose of taking action upon any matter requiring the vote
or authority of the Shareholders as herein provided or upon any other matter
deemed by the Trustees in their sole discretion to be necessary or desirable.
Shareholder meetings may be held at such time and place within the continental
United States as may be fixed by the Trustees. Written notice of any meeting of
Shareholders shall be given or caused to be given by the Trustees by mailing
such notice at least ten days and not more than 120 days before such meeting,
postage prepaid, stating the time, place and purpose of the meeting, to each
Shareholder at the Shareholder's address as it appears on the records of the
Trust. At any such meeting, any business properly before the meeting may be
considered whether or not stated in the notice of the meeting. The Trustees
shall promptly call and give notice of a meeting of Shareholders for the purpose
of voting upon removal of any Trustee of the Trust when requested to do so in
writing by Shareholders holding not less than 10% of the Shares then
outstanding. If the Trustees shall fail to call or give notice of any meeting of
Shareholders for a period of 30 days after written application by Shareholders
holding at least 10% of the Shares then outstanding requesting a meeting be
called for any other purpose requiring action by the Shareholders as provided
herein or in the By-Laws, then Shareholders holding at least 10% of the Shares
then outstanding may call and give notice of such meeting, and thereupon the
meeting shall be held in the manner provided for herein in case of call thereof
by the Trustees.
Section 5.3 RECORD DATES. For the purpose of determining the
Shareholders who are entitled to notice of any meeting or to vote or act at any
meeting or any adjournment thereof, or who are entitled to participate in any
dividend or distribution, or for the purpose of any other action, the Trustees
<PAGE>
may from time to time close the transfer books for such period, not exceeding 30
days (except at or in connection with the termination of the Trust), as the
Trustees may determine; or without closing the transfer books the Trustees may
fix a date and time with respect to each Sub-Trust not more than 120 days prior
to the date of any meeting of Shareholders or other action as the date and time
of record for the determination of Shareholders entitled to vote at such meeting
or any adjournment thereof or to be treated as Shareholders of record for
purposes of such other action, and any Shareholder who was a Shareholder at the
date and time so fixed shall be entitled to vote at such meeting or any
adjournment thereof or to be treated as a Shareholder of record for purposes of
such other action, even though such Shareholder has since that date and time
disposed of such Shareholder's Shares, and no Shareholder becoming such after
that date and time shall be so entitled to vote at such meeting or any
adjournment thereof or to be treated as a Shareholder of record for purposes of
such other action.
Section 5.4 QUORUM AND REQUIRED VOTE. Except as otherwise provided by
the 1940 Act or other applicable law, 30% of the Shares entitled to vote shall
be a quorum for the transaction of business at a Shareholders' meeting, but any
lesser number shall be sufficient for adjournments. Any meeting of Shareholders,
whether or not a quorum is present, may be adjourned for any lawful purpose
provided that no meeting shall be adjourned for more than six months beyond the
originally scheduled meeting date. Any adjourned session or sessions may be
held, within a reasonable time after the date set for the original meeting
without the necessity of further notice. A majority of the Shares voted at a
meeting at which a quorum is present, shall decide any questions and a plurality
shall elect a Trustee, except when a different vote is required or permitted by
any provision of the 1940 Act or other applicable law or by this Declaration of
Trust or the By-Laws.
Section 5.5 ACTION BY WRITTEN CONSENT. Subject to the provisions of the
1940 Act and other applicable law, any action taken by Shareholders may be taken
without a meeting if a majority of Shareholders entitled to vote on the matter
(or such larger proportion thereof as shall be required by the 1940 Act or by
any express provision of this Declaration of Trust or the By-Laws) consent to
the action in writing and such written consents are filed with the records of
the meetings of Shareholders. Such consent shall be treated for all purposes as
a vote taken at a meeting of Shareholders.
Section 5.6 INSPECTORS OF ELECTION. In advance of any meeting of the
Shareholders, the Trustees may appoint inspectors of election to act at the
meeting or any adjournment thereof ( the "Inspectors of Election"). If
Inspectors of Election are not so appointed, the chairman, if any, of any
meeting of the Shareholders may, and on the request of any Shareholder or his or
her proxy shall, appoint Inspectors of Election of the meeting. The number of
Inspectors of Election shall be either one or more. If appointed at the meeting
on the request of one or more Shareholders or proxies, a Majority of the
Outstanding Voting Shares shall determine whether one or more Inspectors of
Election are to be appointed, but failure to allow such determination by the
Shareholders shall not affect the validity of the appointment of Inspectors of
Election. In case any person appointed as Inspector of Election fails to appear
or fails or refuses to act, the vacancy may be filled by appointment made by the
Trustees in advance of the convening of the meeting or at the meeting by the
person acting as chairman. The Inspectors of Election shall determine the Shares
owned by Shareholders, the Shares represented at the meeting, the existence of a
quorum, the authenticity, validity and effect of proxies, shall receive votes,
ballots or consents, shall hear and determine all challenges and questions in
any way arising in connection with the right to vote, shall count and tabulate
all votes or consents, determine the results, and do such other acts as may be
proper to conduct the election or vote with fairness to all Shareholders. If
there are three or more Inspectors of Election, the decision, act or certificate
of a majority is effective in all respects as the decision, act or certificate
of all. On request of the chairman, if any, of the meeting, or of any
Shareholder or his or her proxy, the Inspectors of Election shall make a report
in writing of any challenge or question or matter determined by them and shall
execute a certificate of any facts found by them.
<PAGE>
Section 5.7 INSPECTION OF RECORDS. The records of the Trust shall be
open to inspection by Shareholders for any lawful purpose reasonably related to
a Shareholder's interest as a Shareholder. The Trustees may from time to time
establish reasonable standards, including standards governing what information
and documents are to be furnished, at what time and location and at whose
expense, with respect to Shareholders' inspection of Trust records.
Section 5.8 ADDITIONAL PROVISIONS. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
ARTICLE VI - LIMITATION OF LIABILITY; INDEMNIFICATION
Section 6.1 TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE.
All persons extending credit to, contracting with or having any claim against
the Trust shall look only to the assets of the Sub-Trust with which such person
dealt for payment under such credit, contract or claim; and neither the
Shareholders of any Sub-Trust nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, nor any other Sub-Trust
shall be personally liable therefor. Every note, bond, contract, instrument,
certificate or undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Trust, any Sub-Trust or the Trustees or any of them
in connection with the Trust shall be conclusively deemed to have been executed
or done only by or for the Trust (or the Sub-Trust) or the Trustees and not
personally. The Trustees and the Trust's officers, employees and agents shall
not be liable to the Trust or the Shareholders; provided however, that nothing
in this Declaration of Trust shall protect any Trustee or officer, employee or
agent against any liability to the Trust or the Shareholders to which such
Trustee or officer, employee or agent would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee or of such officer,
employee or agent.
Every note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or by any officers or officer shall give notice that
the same was executed or made by or on behalf of the Trust or by them as
Trustees or Trustee or as officers or officer and not individually and that the
obligations of such instrument are not binding upon any of them or the
Shareholders individually but are binding only upon the assets and property of
the Trust, or the particular Sub-Trust in question, as the case may be, but the
omission thereof shall not operate to bind any Trustees or Trustee or officers
or officer or Shareholders or Shareholder individually or otherwise invalidate
any such note, bond, contract, instrument, certificate or undertaking.
Section 6.2 TRUSTEE'S GOOD FAITH ACTION; EXPERT ADVICE; NO BOND OR
SURETY. The exercise by the Trustees of their powers and discretion hereunder
shall be binding upon everyone interested. A Trustee shall be liable to the
Trust and the Shareholders for such Trustee's own willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee, and for nothing else, and shall not be liable
for errors of judgment or mistakes of fact or law. Subject to the foregoing, (a)
the Trustees shall not be responsible or liable in any event for any neglect or
wrongdoing of any officer, agent, employee, consultant, adviser, administrator,
distributor or principal underwriter, custodian or transfer, dividend
disbursing, Shareholder servicing or accounting agent of the Trust, nor shall
any Trustee be responsible for the act or omission of any other Trustee; (b) the
Trustees may take advice of counsel or other experts with respect to the meaning
and operation of this Declaration of Trust and their duties as Trustees, and
shall be under no liability for any act or omission in accordance with such
advice or for failing to follow such advice; and (c) in discharging their
duties, the Trustees, when acting in good faith, shall be entitled to rely upon
the books of account of the Trust and upon written reports made to the Trustees
by any officer appointed by them, any independent public accountant, and (with
respect to the subject matter of the contract involved) any officer, partner or
responsible employee of a Contracting Party appointed by the Trustees pursuant
to Section 3.3. The Trustees as such shall not be required to give any bond or
<PAGE>
surety or any other security for the performance of their duties. To the extent
that, at law or in equity, a Trustee has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to a Shareholder, any such Trustee
acting under this Declaration of Trust shall not be liable to the Trust or to
any such Shareholder for the Trustee's good faith reliance on the provisions of
this Declaration of Trust. The provisions of this Declaration of Trust, to the
extent that they restrict the duties and liabilities of a Trustee otherwise
existing at law or in equity, are agreed by the Shareholders to replace such
other duties and liabilities of such Trustee.
Section 6.3 INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder
(or former Shareholder) of any Sub-Trust of the Trust shall be charged or held
to be personally liable for any obligation or liability of the Trust solely by
reason of being or having been a Shareholder and not because of such
Shareholder's acts or omissions or for some other reason, the Trust on behalf of
said Sub-Trust (upon proper and timely request by the Shareholder) shall assume
the defense against such charge and satisfy any judgment thereon, and, to the
fullest extent permitted by law, the Shareholder or former Shareholder (or such
Shareholder's heirs, executors, administrators or other legal representatives or
in the case of a corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets of said Sub-Trust estate to be
held harmless from and indemnified against all loss and expense arising from
such liability.
Section 6.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, etc. To the fullest
extent permitted by law, the Trust shall indemnify (from the assets of the
Sub-Trust or Sub-Trusts in question) each of its Trustees and officers
(including persons who serve at the Trust's request as directors, officers or
trustees of another organization in which the Trust has any interest as a
shareholder, creditor or otherwise (hereinafter referred to as a "Covered
Person") against all liabilities, including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel fees, incurred by any
Covered Person in connection with the defense or disposition of any action, suit
or other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered Person may be or may
have been involved as a party or otherwise or with which such person may be or
may have been threatened, while in office or thereafter, by reason of being or
having been such a Trustee or officer, director or trustee, except with respect
to any matter as to which it has been determined that such Covered Person had
acted with willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office
(such conduct referred to hereafter as "Disabling Conduct"). A determination
that the Covered Person is entitled to indemnification may be made by (i) a
final decision on the merits by a court or other body before whom the proceeding
was brought that the person to be indemnified was not liable by reason of
Disabling Conduct, (ii) dismissal of a court action or an administrative
proceeding against a Covered Person for insufficiency of evidence of Disabling
Conduct, or (iii) a reasonable determination, based upon a review of the facts,
that the Covered Person was not liable by reason of Disabling Conduct by (a) a
vote of a majority of a quorum of Trustees who are neither "interested persons"
of the Trust as defined in section 2(a)(19) of the 1940 Act nor parties to the
proceeding, or (b) an independent legal counsel in a written opinion. Expenses,
including accountants' and counsel fees so incurred by any such Covered Person
(but excluding amounts paid in satisfaction of judgments, in compromise or as
fines or penalties), may be paid from time to time from funds attributable to
the Sub-Trust in question in advance of the final disposition of any such
action, suit or proceeding, provided that the Covered Person shall have
undertaken in writing to repay the amounts so paid to the Sub-Trust in question
if it is ultimately determined that indemnification of such expenses is not
authorized under this Article VI and (i) the Covered Person shall have provided
security for such undertaking, (ii) the Trust shall be insured against losses
arising by reason of any lawful advances, or (iii) a majority of a quorum of the
disinterested Trustees who are not a party to the proceeding, or an independent
legal counsel in a written opinion, shall have determined, based on a review of
readily available facts (as opposed to a full trial-type inquiry), that there is
reason to believe that the Covered Person ultimately will be found entitled to
indemnification.
<PAGE>
Section 6.5 COMPROMISE PAYMENT. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 6.4,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless such
indemnification shall be approved (a) by a majority of the disinterested
Trustees who are not parties to the proceeding or (b) by an independent legal
counsel in a written opinion. Approval by the Trustees pursuant to clause (a) or
by independent legal counsel pursuant to clause (b) shall not prevent the
recovery from any Covered Person of any amount paid to such Covered Person in
accordance with any of such clauses as indemnification if such Covered Person is
subsequently adjudicated by a court of competent jurisdiction to have been
liable to the Trust or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office.
Section 6.6 INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article VI, "Covered Person" shall include such person's heirs, executors
and administrators, an "interested Covered Person" (one against whom the action,
suit or other proceeding in question or another action, suit or other proceeding
on the same or similar grounds is then or has been pending or threatened), and a
"disinterested" person (a person against whom none of such actions, suits or
other proceedings or another action, suit or other proceeding on the same or
similar grounds is then or has been pending or threatened). Nothing contained in
this Article VI shall affect any rights to indemnification to which personnel of
the Trust, other than Trustees and officers, and other persons may be entitled
by contract or otherwise under law, nor the power of the Trust to purchase and
maintain liability insurance on behalf of any such person.
Section 6.7 LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
Section 6.8 DISCRETION. Whenever in this Declaration of Trust the
Trustees are permitted or required to make a decision (a) in their "sole
discretion," "sole and absolute discretion," "full discretion" or "discretions"
or under a similar grant of authority or latitude, the Trustees shall be
entitled to consider only such interests and factors as they desire, whether
reasonable or unreasonable, and may consider their own interests, and shall have
no duty or obligation to give any consideration to any interests of or factors
affecting the Trust or the Shareholders, or (b) in their "good faith" or under
another express standard, the Trustees shall act under such express standard and
shall not be subject to any other or different standards imposed by this
Declaration of Trust or by law or any other agreement contemplated herein. Each
Shareholder and Trustee hereby agrees that any standard of care or duty imposed
in this Declaration of Trust or any other agreement contemplated herein or under
the Act or any other applicable law, rule or regulation shall be modified,
waived or limited in each case as required to permit the Trustees to act under
this Declaration of Trust or any other agreement contemplated herein and to make
any decision pursuant to the authority prescribed in this Declaration of Trust.
<PAGE>
ARTICLE VII - MISCELLANEOUS
Section 7.1 DURATION AND TERMINATION OF TRUST. Unless terminated as
provided herein, the Trust shall continue perpetually and, without limiting the
generality of the foregoing, no change, alteration or modification with respect
to any Sub-Trust or class thereof shall operate to terminate the Trust. The
Trust may be terminated at any time by a majority of the Trustees then in office
subject to a favorable vote of a Majority of the Outstanding Voting Shares of
the Trust.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in accordance with the
provisions of subsection (d) of Section 4.2.
Section 7.2 REORGANIZATION. The Trust, or any one or more Sub-Trusts,
may, either as the successor, survivor, or non-survivor, (1) consolidate or
merge with one or more other trusts, Sub-Trusts, partnerships, limited liability
companies, associations or corporations organized under the laws of the State of
Delaware or any other state of the United States, to form a consolidated or
merged trust, partnership, limited liability company, association or corporation
under the laws of which any one of the constituent entities is organized, with
the Trust in the case of a merger to be the survivor or non-survivor of such
merger, or (2) transfer a substantial portion of its assets to one or more other
trusts, Sub-Trusts, partnerships, limited liability companies, associations or
corporations organized under the laws of the State of Delaware or any other
state of the United States, or have one or more such trusts, Sub-Trusts,
partnerships, limited liability companies, associations or corporations merged
into or transfer a substantial portion of its assets to it, any such
consolidation, merger or transfer to be upon such terms and conditions as are
specified in an agreement and plan of reorganization authorized and approved by
the Trustees and entered into by the Trust, or one or more Sub-Trusts as the
case may be, in connection therewith. Any such consolidation, merger or transfer
shall require the affirmative vote of the holders of a Majority of the
Outstanding Voting Shares of the Trust (or each Sub-Trust affected thereby, as
the case may be), except that (a) such affirmative vote of the holders of Shares
shall not be required if the Trust (or Sub-Trust affected thereby, as the case
may be) shall be the survivor of such consolidation or merger or transferee of
such assets; (b) the Trustees may, without Shareholder approval, cause the Trust
or any Series of the Trust to invest any or all of its assets in securities
issued by a registered investment company or Series thereof, subject to the
provisions of the 1940 Act; and (c) the Trustees may, without Shareholder
approval, cause the Trust, or any Series of the Trust, to transfer all or
substantially all of its assets and liabilities to another registered investment
company having substantially identical investment objectives and policies in
exchange for shares of such other investment company if, but only if, the Trust
or Series, as the case may be, retains the shares of such other investment
company as an investment.
Section 7.3 AMENDMENTS. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or repeal the prohibition of assessment upon the Shareholders without the
express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) may be amended at any time, so long as such
amendment does not materially adversely affect the rights of any Shareholder
with respect to which such amendment is or purports to be applicable and so long
as such amendment is not in contravention of the 1940 Act, the DBTA or any other
applicable law, by an instrument in writing signed by a majority of the Trustees
then in office (or by an officer of the Trust pursuant to the vote of a majority
of such Trustees). Any amendment to this Declaration of Trust that materially
adversely affects the rights of Shareholders may be adopted at any time by an
<PAGE>
instrument in writing signed by a majority of the Trustees then in office (or by
an officer of the Trust pursuant to a vote of a majority of such Trustees) when
authorized to do so by the vote in accordance with subsection (e) of Section 4.2
of Shareholders as specified in Section 5.4 hereof. Subject to the foregoing,
any such amendment shall be effective as of any past or future time as provided
in the instrument containing the terms of such amendment or, if there is no
provision therein with respect to effectiveness, upon the execution of such
instrument and of a certificate (which may be a part of such instrument)
executed by a Trustee or officer of the Trust to the effect that such amendment
has been duly adopted.
Section 7.4 PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.
(a) The provisions of this Declaration of Trust are severable, and if
the Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, the DBTA, or with other applicable
laws and regulations, the conflicting provisions shall be deemed never to have
constituted a part of this Declaration of Trust; provided, however, that such
determination shall not affect any of the remaining provisions of this
Declaration of Trust or render invalid or improper any action taken or omitted
prior to such determination.
(b) If any provision of this Declaration of Trust shall be held invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration of Trust in any jurisdiction.
Section 7.5 TRUST ONLY. It is the intention of the Trustees to create
only a business trust under DBTA with the relationship of trustee and
beneficiary between the Trustees and each Shareholder from time to time. It is
not the intention of the Trustees to create a general partnership, limited
partnership, joint stock association, corporation, bailment, or any form of
legal relationship other than a Delaware business trust except to the extent
such trust is deemed to constitute a partnership under the Internal Revenue Code
of 1986, as amended and applicable state tax laws. Nothing in this Declaration
of Trust shall be construed to make the Shareholders, either by themselves or
with the Trustees, partners or members of a joint stock association except to
the extent such Shareholders are deemed to be partners under the Code and
applicable state tax laws. However, it is the intention of the Trustees to
create a partnership among the Shareholders for purposes of taxation under the
Code and applicable state tax laws.
Section 7.6 FILING OF COPIES; REFERENCES; HEADINGS. The original or a
copy of this instrument and of each amendment hereto shall be kept at the office
of the Trust where it may be inspected by any Shareholder. Anyone dealing with
the Trust may rely on a certificate by an officer of the Trust as to whether or
not any such amendments have been made, as to the identities of the Trustees and
officers, and as to any matters in connection with the Trust hereunder; and,
with the same effect as if it were the original, may rely on a copy certified by
an officer of the Trust to be a copy of this instrument or of any such
amendments. In this instrument and in any such amendment, references to this
instrument, and all expressions like "herein", "hereof" and "hereunder" shall be
deemed to refer to this instrument as a whole as the same may be amended or
affected by any such amendments. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or control or affect the
meaning, construction or effect of this instrument. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
Section 7.7 APPLICABLE LAW. This Declaration of Trust is created under
and is to be governed by and construed and administered according to the laws of
the State of Delaware. The Trust shall be of the type referred to in Section
3801 of the Act and of the type commonly called a "business trust," and without
limiting the provisions hereof, the Trust may exercise all powers which are
ordinarily exercised by such a trust.
Section 7.8 REGISTERED AGENT. The Corporation Trust Company of 1209
Orange Street, City of Wilmington, County of New Castle, Delaware 19801 is
hereby designated as the initial registered agent for service of process on the
Trust in the State of Delaware.
<PAGE>
Section 7.9 INTEGRATION. This Declaration of Trust constitutes the
entire agreement among the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements and understandings pertaining
thereto.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals for themselves and their assigns, as of the day and year first above
written.
/s/ Rodger Lawson
- --------------------------------------------------------------------------------
[Name]
/s/ Thaddeus Leszczynski
- --------------------------------------------------------------------------------
[Name]
/s/ Bruce Smith
- --------------------------------------------------------------------------------
[Name]
<PAGE>
EXHIBIT 2
<PAGE>
BY-LAWS
OF
PEREGRINE FUNDS
(A Delaware Business Trust)
These By-Laws are adopted pursuant to Section 3.2 of the Master
Trust Agreement of Peregrine Funds, as amended from time to time (the
"Declaration of Trust"), dated December 1, 1995. Capitalized terms used in these
By-Laws and not otherwise defined herein shall the meanings assigned thereto in
the Declaration of Trust.
ARTICLE 1
DECLARATION OF TRUST AND PRINCIPAL OFFICE
1.1 DECLARATION OF TRUST. These By-Laws shall be subject to the
Declaration of Trust of Peregrine Funds, the Delaware business trust established
by the Declaration of Trust (the "Trust").
1.2 PRINCIPAL OFFICE OF THE TRUST. The principal office of the Trust
shall be located at 99 Park Avenue, New York, New York 10016.
ARTICLE 2
MEETINGS OF TRUSTEES
2.1 REGULAR MEETINGS. Regular meetings of the Trustees may be held
without call or notice at such places either within or without the State of
Delaware and at such times as the Trustees may from time to time determine,
provided that notice of the first regular meeting following any such
determination shall be given to absent Trustees.
2.2 SPECIAL MEETINGS. Special meetings of the Trustees may be held at
any time and at any place designated in the call of the meeting when called by
the Chairman of the Board, the President or the Treasurer or by two or more
Trustees, sufficient notice thereof being given to each Trustee by the Secretary
or an Assistant Secretary or by the officer of the Trust calling the meeting.
2.3 NOTICE. It shall be sufficient notice to a Trustee of a special
meeting to send notice by electronic transmission (which term shall include
without limitation, telephone, telegram or telefacsimile) or delivered
personally or by mail at least twenty-four hours before the meeting addressed to
each Trustee at his or her usual or last known business or residence address or
to give notice to him or her in person or by telephone at least twenty-four
hours before the meeting. Notice of a meeting need not be given to any Trustee
if a written waiver of notice, executed by him or her before or after the
meeting, is filed with the records of the meeting, or to any Trustee who attends
the meeting without protesting in writing prior thereto or at its commencement
the lack of notice to him or her. Neither notice of a meeting nor a waiver of a
notice need specify the purposes of the meeting.
2.4 QUORUM; ADJOURNMENT; VOTE REQUIRED FOR ACTION. At any meeting of the
Trustees a majority of the Trustees then in office shall constitute a quorum.
Any meeting may be adjourned from time to time by a majority of the votes cast
upon the question, whether or not a quorum is present, and the meeting may be
held as adjourned without further notice. At the adjourned meeting, the Trustees
may transact any business which might have been transacted at the original
meeting. Except in cases where the Declaration of Trust or these By-Laws
otherwise provide, the vote of a majority of the Trustees present at a meeting
at which a quorum is present shall be the act of the Trustees.
<PAGE>
2.5 PARTICIPATION BY TELEPHONE. One or more of the Trustees or of any
committee of the Trustees may participate in a meeting thereof by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.
ARTICLE 3
OFFICERS
3.1 ENUMERATION; QUALIFICATION. The officers of the Trust shall be a
Chairman of the Board, a President, a Treasurer, a Secretary and such other
officers or assistant officers, including Vice Presidents, Assistant Treasurers
and Assistant Secretaries, if any, as the Trustees from time to time may in
their discretion elect. The Trust may also have such agents as the Trustees from
time to time may in their discretion appoint. The Chairman of the Board shall be
a Trustee and may but need not be a beneficial owner of the Trust (a
"Shareholder"); and any other officer may but need not be a Trustee or
Shareholder. Any two or more offices may be held by the same person.
3.2 ELECTION. The Chairman of the Board, the President, the Treasurer,
and the Secretary shall be elected annually by the Trustees at a meeting held
within the first four months of the Trust's fiscal year. The meeting at which
the officers are elected shall be known as the annual meeting of Trustees. Other
officers, if any, may be elected or appointed by the Trustees at said meeting or
at any other time. The Trustees may fill any vacancy in or add any additional
officers at any time.
3.3 TENURE. The Chairman of the Board, the President, the Treasurer,
and the Secretary shall hold office until the next annual meeting of the
Trustees and until their respective successors are chosen and qualified, or in
each case until he or she sooner dies, resigns, is removed or becomes
disqualified. Each other officer shall hold office and each agent shall retain
authority at the pleasure of the Trustees.
3.4 POWERS. Subject to the other provisions of these By-Laws, each
officer shall have, in addition to the duties and powers set forth herein and in
the Declaration of Trust, such duties and powers as are commonly incident to the
office occupied by him or her as if the Trust were organized as a Delaware
business corporation and such other duties and powers as the Trustees may from
time to time designate.
3.5 CHAIRMAN, PRESIDENT. Unless the Trustees otherwise provide, the
Chairman of the Board, or, if there is none, or, in the absence of the Chairman,
the President, shall preside at all meetings of the Shareholders and of the
Trustees.
3.6 VICE PRESIDENT. The Vice President, or if there be more than one
Vice President, the Vice Presidents in the order determined by the Trustees (or
if there be no such determination, then in the order of their election) shall in
the absence of the President or in the event of his or her inability or refusal
to act, perform the duties of the President, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the President. The
Vice Presidents shall perform such other duties and have such other powers as
the Trustees may from time to time prescribe.
3.7 TREASURER. The Treasurer shall be the chief financial and accounting
officer of the Trust, and shall, subject to the provisions of the Declaration of
Trust and to any arrangement made by the Trustees with a custodian, investment
adviser or manager, or transfer, shareholder servicing or similar agent, be in
charge of the valuable papers, books of account and accounting records of the
Trust, and shall have such other duties and powers as may be designated from
time to time by the Trustees or by the President.
3.8 ASSISTANT TREASURER. The Assistant Treasurer, or if there shall be
more than one, the Assistant Treasurers in the order determined by the Trustees
(or if there be no such determination, then in the order of their election),
shall, in the absence of the Treasurer or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the Treasurer
and shall perform such other duties and have such other powers as the Trustees
may from time to time prescribe.
3.9 SECRETARY. The Secretary shall record all proceedings of the
Shareholders and the Trustees or any committees of Trustees, in books to be kept
therefor, which books or a copy thereof shall be kept at the principal office of
the Trust. In the absence of the Secretary from any meeting of the Shareholders
or Trustees or any committees of Trustees, an Assistant Secretary, or if there
be none or if he or she is absent, a temporary secretary chosen at such meeting
shall record the proceedings thereof in the aforesaid books.
3.10 ASSISTANT SECRETARY. The Assistant Secretary, or if there be more
than one, the Assistant Secretaries in the order determined by the Trustees (or
if there be no determination, then in the order of their election), shall, in
the absence of the Secretary or in the event of his or her inability or refusal
to act, perform the duties and exercise the powers of the Secretary and shall
perform such other duties and have such other powers as the Trustees may from
time to time prescribe.
3.11 RESIGNATION AND REMOVAL. Any Trustee or officer may resign at any
time by written instrument signed by him or her and delivered or mailed to the
Chairman, the President or the Secretary or to a meeting of the Trustees. Such
resignation shall be effective upon receipt unless specified to be effective at
some later date. The Trustees may remove at any time, with or without cause, any
officer elected by them. Except to the extent expressly provided in a written
agreement with the Trust, no Trustee or officer resigning and no officer removed
shall have any right to any compensation for any period following his or her
resignation or removal, or any right to damages on account of such removal.
ARTICLE 4
COMMITTEES
4.1 GENERAL. The Trustees, by vote of a majority of the Trustees then in
office, may elect from their number an Executive Committee or other committees
and may delegate thereto some or all of their powers except those which by law,
by the Declaration of Trust, or by these By-Laws may not be delegated. Except as
the Trustees may otherwise determine, any such committee may make rules for the
conduct of its business, but unless otherwise provided by the Trustees or in
such rules, its business shall be conducted so far as possible in the same
manner as is provided by these By-Laws for the Trustees themselves. All members
of such committees shall hold such offices at the pleasure of the Trustees. The
Trustees may discharge any such committee at any time. Any committee to which
the Trustees delegate any of their powers or duties shall keep records of its
meetings and shall report its actions to the Trustees. The Trustees shall have
power to rescind any action of any committee, but no such rescission shall have
retroactive effect.
ARTICLE 5
REPORTS
5.1 GENERAL. The Trustees and officers shall render reports at the time
and in the manner required by the Declaration of Trust or any applicable law.
Officers and committees shall render such additional reports as they may deem
desirable or as may from time to time be required by the Trustees.
ARTICLE 6
FISCAL YEAR
6.1 GENERAL. The fiscal year of the Trust shall be fixed by resolution
of the Trustees.
<PAGE>
ARTICLE 7
SEAL
7.1 GENERAL. The seal of the Trust shall consist of a flat-faced die
with the word "Delaware", together with the name of the Trust and the year of
its organization cut or engraved thereon, but, unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on, and its absence shall
not impair the validity of, any document, instrument or other paper executed and
delivered by or on behalf of the Trust.
ARTICLE 8
EXECUTION OF PAPERS
8.1 GENERAL. Except as the Trustees may generally or in particular cases
authorize the execution thereof in some other manner, all deeds, leases,
contracts, notes and other obligations made by the Trustees shall be signed by
the President, any Vice President, or by the Treasurer and need not bear the
seal of the Trust.
ARTICLE 9
ISSUANCE OF SHARE CERTIFICATES
9.1 SHARE CERTIFICATES. In lieu of issuing certificates for shares of
the Trust, the Trustees or the transfer agent may either issue receipts therefor
or may keep accounts upon the books of the Trust for the record holders of such
shares, who shall in either case be deemed, for all purposes hereunder, to be
the holders of certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof.
The Trustees may at any time authorize the issuance of share
certificates either in limited cases or to all Shareholders. In that event, a
Shareholder may receive a certificate stating the number of shares owned by him
or her, in such form as shall be prescribed from time to time by the Trustees.
Such share certificate shall be signed by the President or a Vice President and
by the Treasurer or Assistant Treasurer. Such signatures may be authorized
facsimiles if the certificate is signed by a transfer agent, or by a registrar,
other than a Trustee, officer or employee of the Trust. In the event that any
officer who has signed or whose facsimile signature has been placed on such
certificate shall cease to be such officer before such certificate is issued, it
may be issued by the Trust with the same effect as if he or she were such
officer at the time of its issue.
9.2 LOSS OF CERTIFICATES. In case of the alleged loss or destruction or
the mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe. The Trust may
require the owner of the lost, destroyed or mutilated share certificate, or his
or her legal representative, to give the Trust a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
destruction or mutilation of such certificate or the issuance of such new
certificate.
9.3 ISSUANCE OF NEW CERTIFICATE TO PLEDGEE. A pledgee of shares
transferred as collateral security shall be entitled to a new certificate if the
instrument of transfer substantially describes the debt or duty that is intended
to be secured thereby upon such terms as the Trustees shall prescribe. Such new
certificate shall express on its face that it is held as collateral security,
and the name of the pledgor shall be stated thereon, who alone shall be liable
as a Shareholder, and entitled to vote thereon.
9.4 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees may at any
time discontinue the issuance of share certificates and may, by written notice
to each Shareholder, require the surrender of shares certificates to the Trust
for cancellation. Such surrender and cancellation shall not affect the ownership
of shares in the Trust.
<PAGE>
ARTICLE 10
DEALINGS WITH TRUSTEES AND OFFICERS
10.1 GENERAL. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of shares of the Trust to the same extent as if he or
she were not a Trustee, officer or agent; and the Trustees may accept
subscriptions to purchase shares or repurchase shares from any firm or company
in which any Trustee, officer or other agent of the Trust may have an interest.
ARTICLE 11
AMENDMENTS TO THE BY-LAWS
11.1 GENERAL. These By-Laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority. The Trustees
shall in no event adopt By-Laws which are in conflict with the Declaration of
Trust, the Delaware Business Trust Act, the Investment Company Act of 1940 or
applicable federal securities laws.
<PAGE>
EXHIBIT 5
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 20th day of December 1995, between Peregrine Asset
Management (Hong Kong) Limited (formerly known as Falcon Strategies Limited), a
corporation organized under the laws of Hong Kong and having its principal place
of business in Hong Kong (the "Advisor") and Peregrine Funds, a Delaware
business trust, having its principal place of business in New York, New York
(the "Trust").
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is so registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Advisor is engaged principally in the business of rendering
investment management services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial interest in
separate series, with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Trust intends to offer its shares in one such series, namely, Asia
Pacific Growth Fund (the "Fund") and in order to invest the proceeds in
securities and other assets the Trust desires to retain the Advisor to render
investment advisory and other services hereunder and with respect to which the
Advisor is willing to do so.
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties hereto
as follows:
1. APPOINTMENT OF ADVISOR.
The Trust hereby appoints the Advisor to act as investment advisor to
the Fund for the period and on the terms herein set forth. The Advisor
accepts such appointment and agrees to render the services herein set
forth, for the compensation herein provided.
2. DUTIES OF ADVISOR.
The Advisor, at its own expense, shall furnish the following services
and facilities to the Trust:
(a) INVESTMENT PROGRAM. The Advisor will (i) furnish continuously an
investment program for the Fund, (ii) determine (subject to the overall
supervision and review of the Board of Trustees of the Trust) which
investments shall be purchased, held, sold or exchanged and what
portion, if any, of the assets of the Fund shall be held uninvested,
and (iii) make changes on behalf of the Fund in the investments. The
<PAGE>
Advisor will provide the services hereunder in accordance with the
Fund's investment objectives, policies and restrictions as stated in
the then-current prospectus and statement of additional information
which is part of the Trust's Registration Statement filed with the
Securities and Exchange Commission, as amended from time to time. The
Advisor also will manage, supervise and conduct such other affairs and
business of the Trust and matters incidental thereto, as the Advisor
and the Trust agree, subject always to the control of the Board of
Trustees of the Trust and to the provisions of the Master Trust
Agreement of the Trust, the Trust's By-Laws and the 1940 Act and the
Rules thereunder.
(b) OFFICE SPACE AND FACILITIES. The Advisor will arrange to furnish
office space, all necessary office facilities, simple business
equipment, supplies, utilities, and telephone service required for
managing the investments of the Trust.
(c) PERSONNEL. The Advisor shall provide executive and clerical
personnel for managing the investments of the Trust, and shall
compensate officers and Trustees of the Fund or Trust if such persons
are also employees of the Advisor or its affiliates, except as
otherwise provided herein.
(d) PORTFOLIO TRANSACTIONS. The Advisor shall place all orders for the
purchase and sale of portfolio securities for the account of the Fund
with brokers or dealers selected by the Advisor, although the Fund will
pay the actual brokerage commissions on portfolio transactions in
accordance with Section 3(d). In executing portfolio transactions and
selecting brokers or dealers, the Advisor will use its best efforts to
seek on behalf of the Fund the best overall terms available. In
assessing the best overall terms available for any transaction, the
Advisor shall consider all factors it deems relevant, including,
without limitation, the breadth of the market in the security, the
price of the security, the financial condition and execution capability
of the broker or dealer, and the reasonableness of the commission, if
any (for the specific transaction and on a continuing basis). In
evaluating the best overall terms available, and in selecting the
broker or dealer to execute a particular transaction, the Advisor may
also consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934)
provided to the Trust and/or the other accounts over which the Advisor
or an affiliate of the Advisor exercises investment discretion. The
Advisor is authorized to pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if
the Advisor determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of that
particular transaction or in terms of all of the accounts over which
investment discretion is so exercised by the Advisor or its affiliates.
Nothing in this Agreement shall preclude the combining of orders for
the sale or purchase of securities or other investments with other
accounts managed by the Advisor or its affiliates provided that the
Advisor does not favor any account over any other account and provided
<PAGE>
that any purchase or sale orders executed contemporaneously shall be
allocated in a manner the Advisor deems equitable among the accounts
involved.
3. EXPENSES OF THE TRUST
The Advisor shall not bear the responsibility for expenses associated
with operational, accounting or administrative services on behalf of
the Trust not directly related to providing an investment program for
the Fund. The expenses to be borne by the Trust include, without
limitation:
(a) charges and expenses of any registrar, stock,
transfer or dividend disbursing agent, custodian,
depository or other agent appointed by the Trust for
the safekeeping of its cash, portfolio securities and
other property;
(b) general operational, administrative and accounting
costs, such as the fees and expenses of the portfolio
administrator, costs of calculating the Fund's net
asset value, the preparation of the Trust's tax
filings with relevant authorities and of compliance
with any and all regulatory authorities;
(c) charges and expenses of independent auditors and
outside legal counsel;
(d) brokerage commissions for executing portfolio
transactions in the portfolio securities of the
Trust;
(e) all taxes, including issuance and transfer taxes,
and fees payable by the Trust to Federal, state
or other U.S. or foreign governmental agencies;
(f) the cost of stock certificates representing shares of
the Trust;
(g) expenses involved in registering, qualifying and
maintaining registrations of the Trust and of its
shares with the Securities and Exchange Commission
and various states and other jurisdictions, if
applicable;
(h) all expenses of shareholders' and Trustees' meetings,
including meetings of committees, and of preparing,
setting in type, printing and mailing proxy
statements, quarterly reports, semi-annual reports,
annual reports and other communications to
shareholders;
<PAGE>
(i) all expenses of preparing and setting in type
offering documents, and expenses of printing and
mailing the same to shareholders (not including
expenses of printing and mailing of offering
documents and literature used for any promotional
purposes);
(j) compensation and travel expenses of Trustees who
are not "interested persons" of the Advisor within
the meaning of the 1940 Act;
(k) the expense of furnishing, or causing to be
furnished, to each shareholder statements of
account;
(l) charges and expenses of legal counsel in connection
with matters relating to the Trust, including,
without limitation, legal services rendered in
connection with the Trust's corporate and financial
structure, day-to-day legal affairs of the Trust and
relations with its shareholders, issuance of Trust
shares, and registration and qualification of
securities under Federal, state and other laws;
(m) the expenses of attendance at professional meetings
of organizations such as the Investment Company
Institute by officers and Trustees of the Trust, and
the membership or association dues of such
organizations;
(n) the expense of maintaining the books and records of
the Trust;
(o) the expense of obtaining and maintaining a fidelity
bond as required by Section 17(g) of the 1940 Act and
the expense of obtaining and maintaining an insurance
policy covering errors and omissions;
(p) interest payable on Trust borrowing;
(q) postage; and
(r) any other costs and expenses incurred by the Advisor
for Trust operations and activities, including, but
not limited to, the organizational costs of the Trust
if initially paid by the Advisor.
4. ADVISORY FEE.
(a) For the services and facilities to be provided to the
Trust by the Advisor as provided in Section 2 hereof,
the Trust shall pay the Advisor a fee, payable
monthly, at the annual rate of 1% of the Trust's
<PAGE>
average daily net assets, as determined by the Trust
or its third party administrator in accordance with
procedures established from time to time by or under
the direction of the Board of Trustees of the Trust.
The foregoing fee shall be pro-rated for any month
during which this Agreement is in effect for only a
portion of the month.
(b) If, in any fiscal year, the sum of the Fund's
expenses (including the fee payable pursuant to this
Section 4, but excluding taxes, interest, brokerage
commissions relating to the purchase or sale of
portfolio securities, distribution expenses and
extraordinary expenses such as for litigation)
exceeds the expense limitations, if any, applicable
to the Fund imposed by state securities
administrators, as such limitations may be modified
from time to time, the Advisor shall reimburse the
Fund in the amount of its applicable proportionate
share of such excess to the extent required by such
expense limitations, provided that the amount of such
reimbursement shall not exceed the amount of the
Advisor's fee during such fiscal year.
(c) In addition to the foregoing, the Advisor may from
time to time agree not to impose all or a portion of
its fee otherwise payable hereunder (in advance of
the time such fee or portion thereof would otherwise
accrue) and/or undertake to pay or reimburse the Fund
for all or a portion of its expenses not otherwise
required to be borne or reimbursed by the Advisor.
Any such fee reduction or undertaking may be
discontinued or modified by the Advisor at any time.
5. TRUST TRANSACTIONS.
The Advisor agrees that neither it nor any of its officers, directors,
employees or agents will take any long- or short-term position in the
shares of the Trust; provided, however, that such prohibition shall not
prevent the purchase of shares of the Trust by any of the persons
described above for their account and for investment at the price (net
asset value) at which such shares are available to the public at the
time of purchase or as part of the initial capital of the Trust.
6. RELATIONS WITH TRUST.
Subject to and in accordance with the Master Trust Agreement and
By-Laws of the Trust and the Articles of Incorporation and By-Laws of
the Advisor, respectively, it is understood (i) that Trustees,
officers, agents and shareholders of the Trust are or may be interested
in the Advisor (or any successor thereof) as directors, officers, or
otherwise; (ii) that directors, officers, agents and shareholders of
the Advisor are or may be interested in the Trust as Trustees,
officers, shareholders or otherwise; and (iii) that the Advisor (or any
<PAGE>
such successor) is or may be interested in the Trust as a shareholder
or otherwise and that the effect of any such adverse interests shall be
governed by said Master Trust Agreement and By-Laws.
7. LIABILITY OF ADVISOR AND OFFICERS AND TRUSTEES OF THE
TRUST.
(a) Neither the Advisor nor any of its officers,
directors, employees, agents or controlling persons
or assigns shall be liable for any error of judgment
or law, or for any loss suffered by the Trust or its
shareholders in connection with the matters to which
this Agreement relates, except that no provision of
this Agreement shall be deemed to protect the Advisor
or such persons against any liability to the Trust or
its shareholders to which the Advisor might otherwise
be subject by reason of any willful misfeasance, bad
faith or gross negligence in the performance of its
duties or the reckless disregard of its obligations
and duties under this Agreement (hereinafter
"Disabling Conduct").
(b) The Trust will indemnify the Advisor against, and
hold it harmless from, any and all losses, claims,
damages, liabilities or expenses (including
reasonable counsel fees and expenses) not resulting
from Disabling Conduct by the Advisor.
Indemnification shall be made only following: (i) a
final decision on the merits by a court or other body
before whom the proceeding was brought that the
Advisor was not liable by reason of Disabling Conduct
or (ii) in the absence of such a decision, a
reasonable determination, based upon a review of the
facts, that the Advisor was not liable by reason of
Disabling Conduct by (A) the vote of a majority of a
quorum of Trustees of the Trust who are neither
"interested persons" of the Trust nor parties to the
proceeding ("disinterested non-party Trustees") or
(B) an independent legal counsel in a written
opinion. The Advisor shall be entitled to advances
from the Trust for payment of the reasonable expenses
incurred by it in connection with the matter as to
which it is seeking indemnification in the manner and
to the fullest extent permissible under applicable
law. The Advisor shall provide to the Trust a written
affirmation of its good faith belief that the
standard of conduct necessary for indemnification by
the Fund has been met and a written undertaking to
repay any such advance if it should ultimately be
determined that the standard of conduct has not been
met. In addition, at least one of the following
additional conditions shall be met: (x) the Advisor
shall provide security in form and amount acceptable
to the Trust for its undertaking; (y) the Trust is
insured against losses arising by reason of the
advance; or (z) a majority of a quorum of
<PAGE>
disinterested non-party Trustees, or independent
legal counsel, in a written opinion, shall have
determined, based on a review of facts readily
available to the Trust at the time the advance is
proposed to be made, that there is reason to believe
that the Adviser will ultimately be found to
be entitled to indemnification.
(c) No provision of this Agreement shall be construed to
protect the Adviser from liability in violation of
Section 17(i) of the 1940 Act.
8. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) DURATION. This Agreement shall become effective on
the date hereof. Unless terminated as herein
provided, this Agreement shall remain in full force
and effect until December 20, 1997, and shall
continue in full force and effect for periods of one
year thereafter so long as such continuance is
approved at least annually (i) by either the Trustees
of the Trust or by vote of a majority of the
outstanding voting shares (as defined in the 1940
Act) of the Trust, and (ii) in either event by the
vote of a majority of the Trustees of the Trust who
are not parties to this Agreement or "interested
persons" (as defined in the 1940 Act) of any such
party, cast in person at a meeting called for the
purpose of voting on such approval.
(b) TERMINATION. This Agreement may be terminated at any
time, without payment of any penalty, by vote of the
Trustees of the Trust or by vote of a majority of the
outstanding voting shares (as defined in the 1940
Act) of the Fund, or by the Advisor, on sixty (60)
days written notice to the other party.
(c) AUTOMATIC TERMINATION. This Agreement shall
automatically and immediately terminate in the event
of its assignment.
9. PRIOR AGREEMENT SUPERSEDED.
This Agreement supersedes any prior agreement relating to the subject
matter hereof between the parties.
<PAGE>
10. SERVICES NOT EXCLUSIVE.
The services of the Advisor to the Trust hereunder are not to be deemed
exclusive, and the Advisor shall be free to render similar services to
others and to engage in other activities.
11. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York
without regard for choice of laws principles
thereunder.
(b) If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not
be affected thereby.
12. USE OF NAME.
It is understood that the name Peregrine Asset Management (Hong Kong)
Limited, or any derivative thereof or logo associated with that name,
is the valuable property of the Advisor and its affiliates, and that
the Trust and/or the Fund have the right to use such name (or
derivative or logo) only with the approval of the Advisor and only so
long as the Advisor is adviser to the Fund. Upon termination of this
Agreement, the Trust and/or the Fund shall forthwith cease to use such
name (or derivative or logo).
13. CONFIDENTIALITY
Subject to the duty of the Advisor and the Trust to comply with
applicable law, including any demand of any regulatory or taxing
authority having jurisdiction, the parties hereto shall treat as
confidential all information pertaining to the Trust and the actions of
the Advisor and the Trust in respect thereof.
14. LIMITATION OF LIABILITY.
The term "Peregrine Funds" means and refers to the Trustees from time
to time serving under the Master Trust Agreement of the Trust dated as
of December 1, 1995 as the same may subsequently thereto have been, or
subsequently hereto be amended. It is expressly agreed that the
obligations of the Trust hereunder shall not be binding upon any
Trustees, shareholders, nominees, officers, agents or employees of the
Trust, personally, but bind only the assets and property of the Trust,
as provided in the Master Trust Agreement of the Trust. The execution
and delivery of this Agreement have been authorized by the Trustees and
<PAGE>
the Trust, acting as such, and neither such authorization by such
officer shall be deemed tohave been made by any of them personally, but
shall bind only the assets and property of the Trust as provided in its
Master Trust Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
Attest: PEREGRINE FUNDS
__________________________________ By:__________________________________
Name:_____________________________ Name:________________________________
Title:_______________________________
Attest: PEREGRINE ASSET MANAGEMENT
(HONG KONG) LIMITED
By:________________________________
Name:_____________________________ Name:______________________________
Title:_____________________________
<PAGE>
EXHIBIT 6
<PAGE>
DISTRIBUTION AGREEMENT
THIS AGREEMENT made as of the 20th day of December, 1995 by and between
PEREGRINE FUNDS (the "Trust), a business trust established and existing under
the laws of the State of Delaware and engaged in the business of an open-end
management investment company and VAN ECK SECURITIES CORPORATION (the
"Distributor"), a corporation organized and existing under the laws of the State
of Delaware.
WHEREAS, the Trust proposes to offer shares of beneficial interest in
the Asia Pacific Growth Fund series of the Trust and from time to time hereafter
established additional different series representing interests in different
portfolios of assets (each series being referred to herein as a "Fund" or
collectively as the "Funds").
NOW, THEREFORE, in consideration of the mutual convenants hereinafter
contained, the parties hereto agree as follows:
Section 1. APPOINTMENT OF THE DISTRIBUTOR. The Trust hereby appoints
the Distributor as its exclusive agent to sell and distribute shares of each
Fund of the Trust then in existence (the "Shares") for the account and risk of
the Trust during the continuous offering of such Shares, on the terms and for
the period set forth in this Agreement, and the Distributor hereby accepts such
appointment and agrees to act hereunder. It is understood that purchases of
Shares of any Fund may be made through other broker-dealers who are members in
good standing of the National Association of Securities Dealers, Inc. ("NASD")
in connection with the offering and sale of the Shares, in which case the
Distributor shall enter into dealer agreements ("Dealer Agreements") in
substantially the form attached hereto or amend existing Dealer Agreements with
such broker-dealers to conform therewith and directly through the Trust's
Transfer Agent in the manner set forth in a Fund's Prospectus.
Section 2. SERVICES AND DUTIES OF THE DISTRIBUTOR.
(a) The Distributor agrees to arrange to sell, as exclusive
agent for the Trust, from time to time during the term of this Agreement, Shares
of any Fund upon the terms described in such Fund's Prospectus. As used in this
agreement, the term "Prospectus" shall mean a prospectus and the term "Statement
of Additional Information" shall mean the statement of additional information
included in the Trust's Registration Statement and the term "Registration
Statement" shall mean the Registration Statement, including exhibits and
financial statements, most recently filed by the Trust with the Securities and
Exchange Commission and effective under the Securities Act of 1933, as amended
(the "1933 Act") and the Investment Company Act of 1940, as amended (the "1940
Act"), as such Registration Statement is amended by any amendments thereto at
the time in effect.
(b) Upon commencement of the continuous public offering of
Shares of any Fund of the Trust, the Distributor will hold itself available to
receive orders, satisfactory to the Distributor, for the purchase of Shares of
such Fund and will accept such orders on behalf of the Trust as of the time of
<PAGE>
receipt of such orders and will transmit such orders as are so accepted to the
Trust's Transfer Agent as promptly as practicable. Purchase orders shall be
deemed effective at the time and in the manner set forth in a Fund's Prospectus.
(c) The Distributor, as agent for the Trust and in its
discretion, may enter into Dealer Agreements (or amend existing Dealer
Agreements to conform therewith) with such registered and qualified retail
broker-dealers as it may select pursuant to which such broker-dealers may also
arrange for the sale or sell Shares of any Fund.
(d) The offering price of the Shares of a Fund shall be the
net asset value (as described in the Master Trust Agreement of the Trust, as
amended from time to time and determined as set forth in the Prospectus and the
Statement of Additional Information of such Fund) per Share for such Fund next
determined following receipt of an order plus the applicable sales charge, if
any, calculated in the manner set forth in the Fund's Prospectus. The
Distributor shall receive the entire amount of the sales charge, if any, as
compensation for its services under this Agreement; however, the Distributor may
reallow all or any portion of such sales charge to broker-dealers entering into
Dealer Agreements (or amending existing Dealer Agreements) with the Distributor
to sell Shares of such Fund. Shares of a Fund may be sold at prices that reflect
scheduled variations in, or elimination of, the sales charge to particular
classes of investors or transactions in accordance with a Fund's Prospectus and
Statement of Additional Information. The Trust shall furnish the Distributor,
with all possible promptness, advice of each computation of the net asset value
of a Fund. The Distributor shall also be entitled, subject to the terms and
conditions of the Trust's Plan of Distribution pursuant to Rule 12b-1 under the
Investment Company Act of 1940 to amounts payable by a Fund thereunder.
(e) The Distributor shall use its best efforts to obtain from
investors unconditional orders for Shares and shall not be obligated to arrange
for sales of any certain number of Shares of a Fund and the services of the
Distributor to the Trust hereunder shall not be deemed to be exclusive, and the
Distributor shall be free to (i) render similar services to, and act and
underwriter or distributor in connection with the distribution of shares of
other investment companies, and (ii) engage in any other businesses and
activities from time to time.
(f) The Distributor is authorized on behalf of the Trust to
repurchase Shares of the Fund presented to it by dealers at the price determined
in accordance with, and in the manner set for in, the Prospectus of such Fund.
(g) Unless otherwise notified by the Trust, any right granted
to the Distributor to accept orders for Shares or to make sales on behalf of the
Trust or to purchase Shares for resale will not apply to (i) Shares issued in
connection with the merger or consolidation of any other investment company with
the Trust or its acquisition, by purchase or otherwise, of all or substantially
all of the assets of any investment company or substantially all of the
outstanding Shares of any such company and (ii) Shares that may be offered by
the Trust to shareholders of the Trust by virtue of their being such
shareholders.
(h) If and whenever the determination of net asset value is
suspended and until such suspension be terminated, no further order for Shares
shall be accepted by the Distributor after it has received advance written of
such suspension except unconditional orders placed with the Distributor before
receipt of notice of the suspension. In addition, the Trust reserves the right
<PAGE>
to suspend sales and the Distributor's authority to accept orders for Shares on
behalf of the Trust if, in the judgment of a majority of the Board of Trustees
or a majority of the Executive Committee of such Board, if such body exists, it
is in the best interests of the Trust to do so, such suspension to continue for
such period as may be determined by such majority; and in that event, no Shares
will be sold by the Distributor on behalf of the Trust after the Distributor has
received advance written notice while such suspension remains in effect except
for Shares necessary to cover unconditional orders accepted by the Distributor
before receipt of notice of the suspension.
Section 3. DUTIES OF THE TRUST.
(a) The Trust agrees to sell Shares of its Funds so long as it
has Shares available for sale and, if the Trust has made a determination to
issue Share certificates, to cause its Transfer Agent to issue, if requested by
the Purchaser, certificates for Shares of its Funds, registered in such names
and amounts as promptly as practicable after receipt by the Trust of the net
asset value thereof.
(b) The Trust shall keep the Distributor fully informed with
regard to its affairs and shall furnish to the Distributor copies of all
information, financial statements and other papers which the Distributor may
reasonably request for use in connection with the distribution of Shares of the
Funds. This shall include, without limitation, one certified copy of all
financial statements of each of the Funds prepared by independent accountants
and such reasonable number of copies of a Fund's most current Prospectus, the
Statement of Additional Information and annual and interim reports as the
Distributor may request. The Trust shall cooperate fully in the efforts of the
Distributor to arrange for the sale of Shares of the Funds and in the
performance of the Distributor under this Agreement.
(c) The Trust shall take, from time to time, all necessary
action to register the Shares of the Funds under the 1933 Act, including
payments of the related filing fees, so that there will be available for sale
such number of Shares of the Funds as the Distributor may be expected to sell.
The Trust agrees to file from time to time such amendments, reports and other
documents as may be necessary in order that there may be no untrue statement of
a material fact in the Registration Statement or Prospectus of a Fund, or
necessary in order that there may be no omission to state a material fact in the
Registration Statement or Prospectus of a Fund, which omission would make the
statements therein, in light of the circumstances under which they were made,
misleading.
(d) The Trust shall notify the Distributor of the states and
jurisdictions in which shares are qualified for sale and represents and warrants
that it shall continue to qualify and maintain the registration and
qualification of an appropriate number of Shares of the Fund for sale under the
securities laws of such states and jurisdictions as the Distributor and the
Trust shall mutually agree, and, if necessary or appropriate in connection
therewith, to qualify and maintain the qualification of the Trust as a
broker-dealer in such states. The Distributor shall furnish such information and
other material relating to its affairs and activities as may be requested by the
Trust in connection with such qualifications.
<PAGE>
Section 4. EXPENSES
(a) The Trust shall bear all costs and expenses of the
continuous offering the Shares of the Fund in connection with: (i) fees and
disbursements of its counsel and auditors, (ii) the preparation, filing and
printing of any Registration Statements and/or Prospectuses and Statements of
Additional Information required by and under federal and state securities laws,
(iii) the preparation and mailing of annual and interim reports and proxy
materials, if any, to shareholders (iv) the qualification of the Shares of the
Funds for sale and of the Trust as a broker-dealer under the securities laws of
such states or other jurisdictions as shall be selected by the Distributor
pursuant to Section 3(d) hereof and the cost and expenses payable to each such
state for continuing qualification therein, and (v) the costs associated in
transmitting orders to, and processing by the Funds' transfer agent, charges of
clearing corporations, and any similar costs.
(b) The Distributor shall bear (i) the costs and expenses of
preparing, printing and distributing any materials not prepared by the Trust and
other materials used by the Distributor in connection with its offering of
Shares of the Funds for sale to the public (including the additional costs of
printing copies of the Prospectus and of annual and interim reports) to
shareholders other than copies thereof required for distribution to existing
shareholders or for filing with any federal and state securities authorities,
(ii) any expenses of advertising incurred by the Distributor in connection with
such offering and (iii) the expenses of registration or qualification of the
Distributor as a broker-dealer under federal or state laws, if necessary, and
the expenses of continuing such registration or qualification. It is understood
and agreed that so long as any Plan of Distribution as to a Fund of the Trust
pursuant to Rule 12b-1 under the 1940 Act continues in effect, any expenses
incurred by the Distributor hereunder may be paid from amounts received by it
from a Fund under such plan.
Section 5. INDEMNIFICATION.
(a) The Trust agrees to indemnify, defend and hold the
Distributor, its officers, directors, employees and agents and any person who
controls the Distributor within the meaning of Section 15 of the 1933 Act or
Section 20 of the Securities Exchange Act of 1934, as amended ( the "1934 Act"),
free and harmless from and against any and all losses, claims, damages,
liabilities and expenses (including the cost of investigating or defending such
claims, damages or liabilities and any counsel fees incurred in connection
therewith) which the Distributor, its officers, directors, employees and agents
or any such controlling person may incur under the 1933 Act, the 1934 Act, or
under common law or otherwise, which (i) may be based upon any wrongful act by
the Trust or any or its employees, or representatives, or (ii) which may arise
out of or may be based upon any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement, Prospectus, or
Statement of Additional Information of a Fund or arising out of or based upon
the omission or any alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such claims, damages, liabilities or expenses arise out of or
are based upon any such untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with information furnished
in writing by the Distributor to the Trust for use in the Registration Statement
of such Fund Prospectus or Statement of Additional Information; PROVIDED,
HOWEVER, that in no case is the Trust's indemnity deemed to protect the
<PAGE>
Distributor, its officers, directors, employees, agents or any person who
controls the Distributor within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any liability to which any such person would
otherwise be subject by reason of wilful misfeasance, bad faith or gross
negligence in the performance of his duties or by reason of his reckless
disregard of obligations and duties under this Agreement. The Distributor agrees
to promptly notify the Trust of any event giving rise to right of
indemnification hereunder, including any action brought against the Distributor,
its officers, directors, employees and agents or any such controlling person,
such notification to be given by letter or telegram addressed to the Trust at
its principal business office, but the Distributor's failure so to notify the
Trust shall not relieve the Trust from any obligation it may have to indemnify
the Distributor hereunder or otherwise. The Trust will be entitled to
participate at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce any such liability, but if the Trust
elects to assume the defense, such defense shall be conducted by counsel chosen
by it and satisfactory to the Distributor, its officers, directors or
controlling person or persons, defendant or defendants in the suit. In the event
that the Trust elects to assume the defense of any such suit and retain such
counsel, the Distributor, its officers, directors or controlling person or
persons, defendant or defendants in the suit, shall bear the fees and expenses
of any additional counsel retained by them, but, in case the Trust does not
elect to assume the defense of any such suit, it will reimburse the Distributor
or such, officers, directors or controlling person or persons, defendant or
defendants in the suit, for the reasonable fees and expenses of any counsel
retained by them. The Trust agrees promptly to notify the Distributor of the
commencement of any litigation or proceedings against it or any of its officers
or Trustees in connection with the issuance or sale of any Shares.
The Distributor agrees to indemnify, defend and hold the Trust, its
Trustees and officers and any person who controls the Trust, if any, within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, free and
harmless from and against any and all losses, claims, damages, liabilities and
expenses (including the cost of investigating or defending such claims, damages
or liabilities and any counsel fees incurred in connection therewith) which the
Trust, its Trustees or officers or any such controlling person may incur under
the 1933 Act, the 1934 Act, or under common law or otherwise, but only to the
extent that such liability or expense incurred by the Trust, its Trustees or
officers or such controlling person arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in
information furnished in writing by the Distributor to the Trust for use in the
Registration Statement, Prospectus or Statement of Additional Information of a
Fund; PROVIDED, HOWEVER, that in no case is the Distributor's indemnity deemed
to protect a Trustee or officer or any person who controls the Trust within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any
liability to which any such person would otherwise be subject by reason of
wilful misfeasance, bad faith, or gross negligence in the performance of his
duties or by reason of his reckless disregard of obligations and duties under
this Agreement. The Trust agrees to promptly notify the Distributor of any event
giving rise to rights of indemnification hereunder, including any action brought
against the Trust, its Trustees or officers or any such controlling persons,
such notification being given to the Distributor at is principal business
office, but the Trust's failure so to notify the Distributor shall not relieve
the Distributor from any obligation it may have to indemnify the Trust hereunder
or otherwise. The Distributor shall be entitled to participate, at its own
expense, in the defense, or if it so elects, to assume the defense of any suit
brought to enforce any such liability, but if the Distributor elects to assume
the defense, such defense shall be conducted by counsel chosen by the
<PAGE>
Distributor and satisfactory to the Trust, to its officers and Trustees, or to
any controlling person or persons, defendant or defendants in the suit. In the
event that the Distributor elects to assume the defense of any such suit and
retain such counsel, the Trust, such officers and Trustees or controlling person
or persons, defendant or defendants in the suit shall bear the fees and expenses
of any additional counsel retained by them, but, in case the Distributor does
not elect to assume the defense of any such suit, the Distributor will reimburse
the Trust, such officers and Trustees or controlling person or persons,
defendant or defendants in such suit for the reasonable fees and expenses of any
counsel retained by them. The Distributor agrees promptly to notify the Trust of
the commencement of any litigation or proceedings against it in connection with
the issue and sale of any Shares.
Section 6. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in the
first paragraph of Section 5 is for any reason held to be unavailable from the
Trust, the Trust and the Distributor shall contribute to the aggregate losses,
claims, damages, liabilities or expenses (including the reasonable costs of
investigating or defending such claims, damages or liabilities but after
deducting any contribution received by the Trust from persons other than
Distributor who may also be liable for contribution, such as persons who control
the Trust within the meaning of the 1933 Act, officers of the Trust who signed
the applicable Registration Statement and Trustees) to which the Trust and the
Distributor may be subject in such proportion so that the Distributor is
responsible for that portion represented by the percentage of the sales charge
appearing in the Prospectus of the Fund bears to the public offering price
appearing therein and the Trust is responsible for the balance; provided,
however, that (i) in no case shall the Distributor be responsible for any amount
in excess of the portion of the Sales Charge received and retained by it in
respect of the Shares of a Fund purchased through it hereunder and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this Section 6,
each person, if any, who controls the Distributor within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Distributor. Each party who may seek contribution under this
Section 6 shall, promptly after receipt of notice of commencement of any action,
suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section 6,
give written notice of the commencement of such action, suit or proceeding to
the party or parties from whom such contribution may be sought, but the omission
so to notify such contributing party or parties shall not relieve the party or
parties from whom contribution may be sought from any other obligation it or
they may have otherwise than on account of this Section 6.
Section 7. COMPLIANCE WITH SECURITIES LAWS. The Trust represents that
it is registered as a diversified, open-end management investment company under
the 1940 Act, and agrees that it will comply with all of the provisions of the
1940 Act and of the rules and regulations thereunder. The Trust and the
Distributor each agree to comply with all of the applicable terms and provisions
of the 1940 Act, the 1933 Act and, subject to the provisions of Section 3(d),
all applicable state "Blue Sky" laws. The Distributor agrees to comply with all
of the applicable terms and provisions of the 1934 Act and the rules and
regulations of the NASD, of which it is a member.
<PAGE>
Section 8. TERMS OF CONTRACT. This Agreement shall go into effect on
the date hereof and shall continue in effect until December 20, 1997, and
thereafter for successive periods of one year each if such continuance is
approved at least annually thereafter (i) either by an affirmative vote of a
majority of the outstanding shares of the Trust or by the Board of Trustees of
the Trust, and (ii) in either case by a majority of the Trustees of the Trust
who are not interested persons of the Distributor or (otherwise than as
Trustees) of the Trust (The "12b-1 Trustees"), cast in person at a meeting
called for the purpose of voting on such approval. This Agreement may be
terminated at any time without the payment of a penalty, by a majority of the
12b-1 Trustees, by the vote of a majority of the outstanding shares of the
Trust, or by the Distributor on sixty (60) days' written notice to the other
party.
Section 9. ASSIGNMENT. This Agreement may not be assigned by the
Distributor and shall automatically terminate in the event of an attempted
assignment by the Distributor; provided, however, that the Distributor may
employ or enter into agreements with such other person, persons, corporation, or
corporations, as it shall determine in order to assist it in carrying out this
Agreement.
Section 10. AMENDMENT. This Agreement may be amended or modified at any
time by mutual agreement in writing of the parties hereto, provided that any
such amendment is approved by a majority of the Trustees of the Trust who are
not interested persons of the Distributor or by the holders of a majority of the
outstanding Shares of the Trust. If the Trust should at any time deem it
necessary or advisable in the best interests of the Trust that any amendment of
this Agreement be made in order to comply with the recommendations or
requirements of the SEC or other governmental authority or to obtain any
advantage under state or federal tax laws and should notify the Distributor of
the form of such amendment, and the reasons therefor, and if the Distributor
should decline to assent to such amendment, the Trust may terminate this
Agreement forthwith. If the Distributor should at any time request that a change
be made in the Trust's Master Trust Agreement or By-Laws or in its methods of
doing business, in order to comply with any requirements of federal law or
regulations of the SEC or of a national securities association of which the
Distributor is or may be a member relating to the sale of Shares of the Fund,
and the Trust should not make such necessary change within a reasonable time,
the Distributor may terminate this Agreement forthwith.
Section 11. GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of New York without regard
for choice of laws principles thereunder.
Section 12. AUTHORIZED REPRESENTATIONS.
(a) The Trust is not authorized to give any information or to
make any representations on behalf of the Distributor other than the information
and representations contained in a Registration Statement (including a
prospectus or statement of additional information) covering Shares, as such
Registration Statement and prospectus may be amended or supplemented from time
to time.
(b) The Distributor is not authorized to give any information
or to make any representations on behalf of the Trust or in connection with the
<PAGE>
sale of Shares other than the information and representations contained in a
Registration Statement (including a prospectus or statement of additional
information) covering Shares, as such Registration Statement may be amended or
supplemented from time to time. No person other than the Distributor is
authorized to act as principal underwriter (as such term is defined in the 1940
Act) for the Trust.
Section 13. PRIOR AGREEMENT SUPERSEDED. This Agreement supersedes any
prior agreement relating to the subject matter hereof between the parties.
Section 14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 15. MISCELLANEOUS.
(a) The captions in this Agreement are included for ease of
reference only, and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
(b) If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
(c) The provisions of Section 5 hereof shall survive the
termination of this Agreement.
Section 16. NON-LIABILITY OF SHAREHOLDERS, TRUSTEES, OFFICERS,
EMPLOYEES, REPRESENTATIVES AND AGENTS. Copies of the Master Trust Agreement, as
amended, establishing the Trust are on file with the Secretary of State of
Delaware, and notice is hereby given that this Agreement is executed on behalf
of the Trust by officers of the Trust as officers and not individually and that
the obligation of or arising out of this Agreement are not binding upon any of
the Trustees, officers, shareholders, employees or agents of the Trust
individually but are binding only upon the assets and property of the Trust. No
Fund of the Trust shall be liable for any claims against any other Fund of the
Trust.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
PEREGRINE FUNDS
By:_____________________________________
Name:___________________________________
Title:__________________________________
VAN ECK SECURITIES CORPORATION
By:______________________________________
Name:____________________________________
Title:___________________________________
<PAGE>
EXHIBIT 9(B)
<PAGE>
PORTFOLIO ACCOUNTING AND ADMINISTRATIVE SERVICES AGREEMENT
THIS AGREEMENT is made as of the 20th day of December, 1995, by and
between PEREGRINE FUNDS, a Delaware business trust having its principal place of
business in New York, New York (the "Trust") and VAN ECK ASSOCIATES CORPORATION
(the "Administrator"), a Delaware corporation having its principal place of
business in New York, New York.
W I T N E S S E T H :
WHEREAS, the Trust is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act");
WHEREAS, the Trust wishes to retain the Administrator to provide
certain accounting and administrative services to a series thereof, namely Asia
Pacific Growth Fund and any other series as may, from time to time, be included
in Exhibit A hereto, (individually or collectively, as the case may require, the
"Series"), and the Administrator is willing to furnish such services; and
WHEREAS, the Trust may, from time to time, issue separate series or
classes or classify and reclassify shares of such series or classes;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT.
The Trust hereby appoints the Administrator to provide certain accounting and
administrative services to the Series with respect to its investment portfolio
for the period and on the terms set forth in this Agreement. The Administrator
accepts such appointment and agrees to furnish the services herein set forth.
The Administrator shall identify to each series or class of shares of the Trust
property belonging to such series or class and shall prepare such reports,
confirmations and notices to the Trust called for under this Agreement and shall
identify the series or class of shares to which such report, confirmation or
notice pertains in the event it is engaged by the Trust to perform the services
herein contained respecting such series or class of shares.
2. DELIVERY OF DOCUMENTS.
The Trust has furnished or, where applicable, will furnish the Administrator
with properly certified or authenticated copies of such documents, resolutions
and agreements and any amendments or supplements thereto, as the Administrator
may, from time to time, request.
3. ACCOUNTING AND ADMINISTRATIVE SERVICES.
(a) The Administrator will perform the following accounting functions on an
ongoing basis:
(i) Journalize the Series' investment, capital share and income
and expense activities;
(ii) Maintain individual ledgers for investment securities;
(iii) Maintain historical tax lots for each security;
<PAGE>
(iv) Reconcile cash and investment balances of the Series with the
Trust's custodian, and provide each Series' investment adviser
with the beginning cash balance available for investment
purposes;
(v) Post to and prepare each Series' Statement of Assets and
Liabilities and the Statement of Operations;
(vi) Calculate various contractual expenses (e.g., transfer agency
fees of the Series);
(vii) Control all disbursements from the Series and authorize such
disbursements upon written instructions from authorized Series
officers and agents;
(viii) Calculate the Series' capital gains and losses;
(ix) Determine the Series' net income;
(x) Compute the net asset value on each business day of the
Series, utilizing security market quotes obtained at the
Series' expense and risk from commercially available pricing
services or, if such quotes are unavailable, obtain such
prices from the Series' investment adviser or from brokers or
market-makers in such securities;
(xi) Deliver a copy of the applicable daily portfolio valuation to
the Series' investment adviser;
(xii) Compute each Series' yields, total return, expense ratios and
portfolio turnover rate;
(xiii) Monitor the expense accruals and notify the Trust of any
proposed adjustments; and
(xiv) Prepare periodic unaudited financial statements, as
required under applicable law.
(b) In addition to the accounting services described in the foregoing
Section 3(a), the Administrator will provide, assist third-parties in
providing or arrange for the following services:
(i) Preparation of periodic audited financial statements, as
required under applicable law;
(ii) Provision of various statistical data as requested by the
Board of Trustees of the Trust;
(iii) Preparation for execution and filing of the Series' Federal
and state tax returns;
(iv) Preparation and filing of the Series' Semi-Annual Reports
with the Securities and Exchange Commission ("SEC") on Form
N-SAR;
(v) Preparation and filing with the SEC the Trust's annual,
semi-annual, and quarterly shareholder reports;
(vi) Filing of registration statements on Form N-1A and other
filings relating to the registration of shares of the Trust;
(vii) Monitoring the Trust's status as a regulated investment
company under Sub-chapter M of the Internal Revenue Code of
1986, as amended;
<PAGE>
(viii) Periodic review of the Trust's fidelity bond as required by
the 1940 Act;
(ix) Preparation of materials for and recording the proceedings of,
in conjunction with the officers of the Trust, the meetings
of the Trust's Board of Trustees and the Trust's shareholders;
(x) Maintaining the Trust's existence and good standing under
state law;
(xi) Review and negotiation on behalf of the Trust or the Series
of normal course of business contracts and agreements;
(xii) Coordination of purchase and redemption orders with the
Series' transfer agent.
(xiii) Assist the Trust in developing and maintaining a compliance
program; and
(xiv) To the extent not provided by the investment adviser to the
Series, furnishing the office space in the offices of the
Administrator, or in such other place or places as may be
agreed upon from time to time, and all necessary office
facilities, simple business equipment, supplies, utilities,
and telephone service for administering the affairs and
investments of the Trust (which services are exclusive of the
necessary services and records of any dividend disbursing
agent, transfer agent, registrar or custodian, and accounting
and bookkeeping services which may be provided by the
custodian);
(xv) Providing executive and clerical personnel for administering
the affairs of the Trust, and compensating officers and
Trustees of the Trust if such persons are also employees of
the Administrator or its affiliates, except as provided in
Section 3(a); and
(xvi) Preparation of any other regulatory reports to and for any
Federal, local, state or foreign governmental agency or
regulatory body as may be required.
(c) The Administrator shall provide such other services and assistance
relating to the affairs of the Series as the Trust or such Series'
investment adviser may, from time to time, reasonably request.
(d) In carrying out its duties hereunder, as well as any other activities
undertaken on behalf of the Trust or the Series pursuant to this
Agreement, the Administrator shall at all times be subject to the
control and direction of the Board of Trustees of the Trust.
4. EXPENSES OF THE ADMINISTRATOR AND THE TRUST.
(a) EXPENSES OF THE ADMINISTRATOR.
The Administrator shall bear the ordinary and usual expenses of
providing the services set forth in Section 3(a) of this Agreement
(except such expenses which are expressly excluded) and in Section 3(b)
(iv) - (xi) (which shall include the salary costs and related expenses
of the Administrator's employees, but shall exclude all reasonable
out-of-pocket expenses incurred by or on behalf of the Administrator
for the benefit of the Trust). All costs and expenses not expressly
assumed by the Administrator and all extraordinary expenses associated
with the services hereunder shall be borne by the Trust or the Series.
<PAGE>
(b) EXPENSES OF THE TRUST.
The Administrator shall be responsible for providing or arranging for a
third party to provide the services set forth herein. Unless expressly
set forth in this Agreement the Administrator shall not bear the
responsibility for, or expenses associated with, operational,
accounting or administrative services on behalf of the Trust, which
expenses are to be borne by the Trust and include, without limitation:
(i) The charges and expenses of any registrar, stock, transfer or
dividend disbursing agent, custodian, depository or other
agent appointed by the Series for the safekeeping of its cash,
portfolio securities and other property;
(ii) Except as provided in Section 4(a) hereof, general
operational, administrative and accounting costs, such as the
costs incident in calculating the Series' net asset value, the
preparation of the Series' tax filings with relevant
authorities and of compliance with any and all regulatory
authorities;
(iii) The charges and expenses of auditors and outside accountants
of the Trust;
(iv) Brokerage commissions for transactions in the portfolio
securities of the Series;
(v) All taxes, including issuance and transfer taxes, and
corporate fees payable by the Trust to Federal, state or other
U.S. or foreign governmental agencies;
(vi) The cost of the Series' stock certificates;
(vii) Expenses involved in registering and maintaining registrations
of the Trust and of its shares with the SEC and various states
and other jurisdictions, if applicable;
(viii) All expenses of shareholders' and Trustees' meetings,
including meetings of committees, and of preparing, setting in
type, printing and mailing proxy statements, quarterly
reports, semi-annual reports, annual reports and other
communications to shareholders;
(ix) All expenses of preparing and setting in type offering
documents, and expenses of printing and mailing the same to
shareholders;
(x) Compensation and travel expenses of Trustees who are not
"interested persons" of the Administrator within the meaning
of the 1940 Act and travel expenses of Trustees who are
"interested persons" of the Administrator and officers and
employees of the Administrator when traveling on Trust
business, such as attending shareholders' or Trustees'
meetings, beyond one hundred miles from such persons principal
place of business;
(xi) The expense of furnishing, or causing to be furnished, to
each shareholder, statements of account;
(xii) Charges and expenses of legal counsel in connection with
matters relating to the Trust, including, without limitation,
legal services rendered in connection with the Trust's
corporate and financial structure, day-to-day legal affairs of
the Trust and relations with its shareholders, issuance of
Trust shares, and registration and qualification of securities
under Federal, state and other laws;
<PAGE>
(xiii) An equitable portion of expenses of attendance at meetings of
professional and trade organizations, such as the Investment
Company Institute and regulatory agencies, by officers and
Trustees of the Trust, and the membership or association dues
of such organizations;
(xiv) The cost and expense of maintaining the books and records of
the Trust; except those costs and expenses expressly assumed
by the Administrator under this Agreement,
(xv) The expense of obtaining and maintaining a fidelity bond as
required by Rule 17(g)-1 of the 1940 Act, the expense of
obtaining and maintaining an errors and omissions policy and
other insurance as may be appropriate;
(xvi) Interest payable on Trust borrowing;
(xvii) Postage; and
(xviii) Any other reasonable costs and expenses incurred by the
Administrator for Trust operations and activities.
5. RECORDS.
The Administrator shall keep the books and records with respect to each Series'
books of account as may be required in discharging its duties hereunder. The
books and records pertaining to the Trust or the Series which are in the
possession of the Administrator shall be the property of the Trust. Such books
and records shall be prepared and maintained, as required by the 1940 Act and
other applicable securities laws, rules and regulations. The Trust, or the
Trust's authorized representatives, shall have access to such books and records
at all times during the Administrator's normal business hours. Upon the
reasonable request of the Trust, copies of any such books and records shall be
provided by the Administrator to the Trust or its authorized representative at
the Trust's expense.
6. LIAISON WITH ACCOUNTANTS.
The Administrator shall act as liaison with the Trust's independent public
accountants and shall provide account analyses, fiscal year summaries, and other
audit-related schedules. The Administrator shall take all reasonable action in
the performance of its obligations under this Agreement to assure that the
necessary information is made available to such accountants for the expression
of their opinion, as such may be required by the Trust from time to time.
7. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE TRUST. If the Administrator shall be in doubt as to any
action to be taken or omitted by it, the Administrator may request, and
shall receive, from the Series directions or advice from the Trust.
(b) ADVICE OF COUNSEL. If the Administrator or the Series shall be in doubt
as to any question of law involved in any action to be taken or omitted
by the Administrator, it may request advice at the Series' cost from
counsel of its own choosing (who may be counsel for the Administrator
or the Trust, at the option of the Administrator).
(c) PROTECTION OF THE ADMINISTRATOR. The Administrator shall be protected
in any action which it takes or does not take in reliance upon any
<PAGE>
directions or advice received pursuant to subsections (a) or (b) which
the Administrator, after receipt of any such directions or advice, in
good faith believes to be consistent with such directions or advice, as
the case may be. However, nothing in this paragraph shall be construed
as imposing upon the Administrator any obligation (i) to seek such
directions, or advice or (ii) to act in accordance with such directions
or advice when received. Nothing in this subsection shall excuse the
Administrator when an action or omission on the part of the
Administrator constitutes willful misfeasance, bad faith, gross
negligence or reckless disregard by the Administrator of its duties
under this Agreement.
8. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
The Trust and the Administrator each agree to comply with all applicable
requirements of the Securities Act of 1933 ( the "1933 Act"), the Securities
Exchange Act of 1934 (" the 1934 Act"), the 1940 Act, and any applicable laws,
rules and regulations of governmental authorities having jurisdiction with
respect to all duties to be performed hereunder.
9. COMPENSATION.
As compensation for the services rendered by the Administrator during the term
of this Agreement, the Trust will pay to the Administrator an annual fee
calculated and payable monthly, in arrears, at the annual rate of .25 of 1% of
the average daily net assets of the Series, or at a fixed annual rate of
$75,000.00, whichever is greater. In addition, with respect to the initial
Series, the Administrator shall be entitled to a fee of $50,000.00 for services
provided in organizing and registering the Trust.
10. INDEMNIFICATION.
The Trust agrees to indemnify and hold harmless the Administrator and its
employees, agents and nominees from all taxes, charges, expenses, assessments,
claims and liabilities (including, without limitation, liabilities arising under
the 1933 Act, the 1934 Act, the 1940 Act, and any state and foreign securities
and blue sky laws, as such laws are or may herefter be amended and expenses,
including,without limitation, attorneys' fees and disbursements, arising
directly or indirectly from any action or thing which the Administrator takes or
does not take (i) at the request or on the direction of or in reliance on the
advice of the Trust, (ii) upon oral or written instruction, or (iii) otherwise
in connection with this Agreement, PROVIDED, that neither the Administrator nor
any of its nominees shall be indemnified against any liability to the Trust or
to Trust shareholders (or any expenses incident to such liability) arising out
of the Administrator's own willful misfeasance, bad faith, gross negligence or
reckless disregard of its duties and obligations under this Agreement.
11. RESPONSIBILITY OF THE ADMINISTRATOR.
The Administrator shall be under no duty to take any action on behalf of the
Trust except as specifically set forth herein or as may be specifically agreed
to by the Administrator in writing. In the performance of its duties hereunder,
the Administrator shall be obligated to exercise care and diligence and to act
in good faith and to use its best efforts, within reasonable limits, in
performing services provided for under this Agreement, but the Administrator
shall not be liable for any act or omission which does not constitute willful
misfeasance, bad faith or gross negligence on the part of the Administrator or
reckless disregard by the Administrator of its duties under this Agreement.
Without limiting the generality of the foregoing or of any other provision of
this Agreement, the Administrator, in connection with its duties under this
Agreement, shall not be under any duty or obligation to inquire into and shall
not be liable for or in respect of (a) the validity or invalidity or authority
or lack thereof of any oral or written instruction, notice or other instrument
which conforms to the applicable requirements of this Agreement, and which the
Administrator reasonably believes to be genuine; or (b) delays or errors or loss
of data occurring by reason of circumstances beyond the Administrator's control,
<PAGE>
including acts of civil or military authority, national emergencies, labor
difficulties, fire, mechanical breakdown, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
12. DISASTER RECOVERY.
The Administrator shall, on behalf of the Trust (and the Trust shall bear an
equitable portion of related costs), enter into and shall maintain in effect
with appropriate parties one or more agreements making reasonable provision of
emergency use of electronic data processing equipment to the extent appropriate
equipment is available. In the event of equipment failures beyond the
Administrator's control, the Administrator shall, at no additional expense to
the Trust, take reasonable steps to minimize service interruptions but shall
have no liability with respect thereto.
13. CONFIDENTIALITY.
The Administrator agrees to keep confidentiall all records of the Trust and the
Series and information relating to the Trust and its shareholders (past, present
and potential), unless the release of such records or information is otherwise
consented to, in writing, by the Trust. The Trust agrees that such consent shall
not be unreasonably withheld. The Trust further agrees that, should the
Administrator be requred to provide such information or records to duly
constituted authorities (who may institute civil or criminal contempt
proceedings for failure to comply), the Administrator shall not be required to
seek the Trust's consent prior to disclosing such information.
14. DURATION AND TERMINATION.
This Agreement shall continue until termination by either party on sixty (60)
days written notice to the other party.
15. ASSIGNMENT: DELEGATION.
This Agreement may be assigned, in whole or in part with the prior written
approval of the Trust or so long as such assignment does not result in a change
of personnel; and the Administrator may employ or enter into agreements with
such other person, persons, corporation, or corporations, as it shall determine
in order to assist it in carrying out its responsibilities under the Agreement;
provided, however, that any such assignment shall not relieve the Administrator
from any of its duties, responsibilities or liabilities hereunder, unless the
Trust agrees in writing to the contrary.
16. NOTICES.
All notices and other communications shall be in writing or by confirming
telegram, cable, telex, or facsimile sending device. If notice is sent by
confirming telegram, cable, telex or fasimile sending device, it shall be deemed
to have been given immediately. If notice is sent by first-class mail, it shall
be deemed to have been given three days after it has been mailed. If notice is
sent by messenger, it shall be deemed to have been given on the day it is
delivered. Notices shall be addressed (a) if to the Administrator at the
Administrator's address, 99 Park Avenue, 8th Floor, New York, New York 10016;
(b) if to the Trust, c/o Van Eck Associates Corporation, 99 Park Avenue, 8th
Floor, New York, New York 10016; or (c) if to neither of the foregoing, at such
other address as shall have been notified to the sender of any such notice or
other communication.
<PAGE>
17. FURTHER ACTION.
Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof.
18. AMENDMENTS.
This Agreement or any part hereof may be changed or waived only by an instrument
in writing signed by the party against which enforcement of such change or
waiver is sought.
19. MISCELLANEOUS.
(a) This Agreement embodies the entire agreement and understanding between
the parties hereto, and supersedes all prior agreements and
understandings, relating to the subject matter hereof, provided that
the parties hereto may embody in one or more separate documents their
agreement, if any, with respect to delegation and/or oral instructions.
(b) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(c) The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect.
(d) This Agreement shall be deemed to be a contract made in New York and
shall be governed by and construed in accordance with the laws of the
State of New York, without regard for choice of laws priciples
thereunder.
(e) If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
(f) This Agreement shall be binding and shall inure to the benefit
of the parties hereto and their respective successors.
(g) The provisions of Section 13 hereof shall survive the termination of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
[SEAL] PEREGRINE FUNDS
Attest:__________________________ By:___________________________
President
[SEAL] VAN ECK ASSOCIATES CORPORATION
Attest:__________________________ By:___________________________
<PAGE>
EXHIBIT 10
<PAGE>
December 26, 1995
To the Board of Trustees
of Peregrine Funds
We have acted as counsel for Peregrine Funds (the "Trust") in connection
with the proposed offering of an unlimited number of shares of beneficial
interest, par value $.001 per share (the "Shares"). On the basis of such
investigation as we have deemed reasonably necessary, including examination of
the Trust's Master Trust Agreement, dated as of December 1, 1995, the Trust's
By-Laws, a unanimous resolution of the Trust's Board of Trustees dated December
19, 1995, and the Registration Statement on Form N-1A (File Nos. 33-64191 and
811-07425) filed in connection with the offering of the Shares with the
Securities and Exchange Commission on November 13, 1995, Pre-Effective Amendment
No. 1 thereto filed on November 29, 1995, and Pre-Effective Amendment No. 2
thereto to be filed on December 26, 1995 (the "Registration Statement"), we are
of the opinion that the Shares, when sold, will be validly issued, fully paid
and non-assessable.
We express no opinion herein as to the laws of any jurisdiction, except the
Federal laws of the United States and the laws of the State of Delaware. The
opinion expressed herein has been rendered at your request and is solely for
your benefit and may not be relied upon in any manner by any other person or by
you for any other purpose.
We consent to the filing of this opinion as an Exhibit to the Registration
Statement and to the reference to us under the heading "Additional
Information-Counsel" in the Prospectus constituting Part A of that Registration
Statement.
Very truly yours,
MAYER, BROWN & PLATT
<PAGE>
EXHIBIT 11
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Pre-Effective Amendment No. 2 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
December 22, 1995, relating to the Statement of Assets and Liabilities of The
Asia Pacific Growth Fund, which appears in such Statement of Additional
Information. We also consent to the reference to us under the heading
"Additional Information-Independent Accountants" in the Prospectus which
constitutes part of this Registration Statement.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
December 22, 1995
<PAGE>
EXHIBIT 18
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee of Peregrine Funds (the "Trust") hereby appoint
Thaddeus Leszczynski and Bruce J. Smith, and either of them, my true and lawful
attorneys to execute in my name and place the Trust's Registration Statement for
the purpose of filing the Trust's Registration Statement on Form N-1A, which
Registration Statement shall be filed pursuant to the requirements of the
Securities Act of 1933 and the Investment Company Act of 1940, any and all
amendments to the Trust's Registration Statement on Form N-1A, and all other
instruments necessary or incidental in connection therewith, with the Securities
and Exchange Commission; and Thaddeus Leszczynski and Bruce J. Smith shall have
the power to act hereunder and have full power and authority to do and perform
in my name and on my behalf every act whatsoever requisite or necessary to be
done, as fully and to all intents and purposes as the undersigned might or could
do in person. Either of said attorneys shall have full power and authority to do
and act hereunder with or without the other.
\s\ Gary Greenberg
- -----------------------------
Gary Greenberg
Date: December 26, 1995
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee of Peregrine Funds (the "Trust") hereby appoint
Thaddeus Leszczynski and Bruce J. Smith, and either of them, my true and lawful
attorneys to execute in my name and place the Trust's Registration Statement for
the purpose of filing the Trust's Registration Statement on Form N-1A, which
Registration Statement shall be filed pursuant to the requirements of the
Securities Act of 1933 and the Investment Company Act of 1940, any and all
amendments to the Trust's Registration Statement on Form N-1A, and all other
instruments necessary or incidental in connection therewith, with the Securities
and Exchange Commission; and Thaddeus Leszczynski and Bruce J. Smith shall have
the power to act hereunder and have full power and authority to do and perform
in my name and on my behalf every act whatsoever requisite or necessary to be
done, as fully and to all intents and purposes as the undersigned might or could
do in person. Either of said attorneys shall have full power and authority to do
and act hereunder with or without the other.
\s\ Richard Stamberger
- -----------------------------
Richard Stamberger
Date: December 19, 1995
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee of Peregrine Funds (the "Trust") hereby appoint
Thaddeus Leszczynski and Bruce J. Smith, and either of them, my true and lawful
attorneys to execute in my name and place the Trust's Registration Statement for
the purpose of filing the Trust's Registration Statement on Form N-1A, which
Registration Statement shall be filed pursuant to the requirements of the
Securities Act of 1933 and the Investment Company Act of 1940, any and all
amendments to the Trust's Registration Statement on Form N-1A, and all other
instruments necessary or incidental in connection therewith, with the Securities
and Exchange Commission; and Thaddeus Leszczynski and Bruce J. Smith shall have
the power to act hereunder and have full power and authority to do and perform
in my name and on my behalf every act whatsoever requisite or necessary to be
done, as fully and to all intents and purposes as the undersigned might or could
do in person. Either of said attorneys shall have full power and authority to do
and act hereunder with or without the other.
\s\ Wesley G. McCain
- -----------------------------
Wesley G. McCain
Date: December 19, 1995
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
</LEGEND>
<CIK> 0001003309
<NAME> ASIA PACIFIC GROWTH FUND
<SERIES>
<NUMBER> 1
<NAME> ASIA PACIFIC GROWTH FUND
<MULTIPLIER> 1
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 0
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 195,000
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 195,000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 95,000
<TOTAL-LIABILITIES> 95,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 100,000
<SHARES-COMMON-STOCK> 10,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 100,000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.00
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
