DSI250
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 18, 1996
FILE NO. 811-_____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
DOMINI INSTITUTIONAL TRUST
(Exact Name of Registrant as Specified in Charter)
6 ST. JAMES AVENUE, BOSTON, MASSACHUSETTS 02116
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 617-423-0800
THOMAS M. LENZ
SIGNATURE BROKER-DEALER SERVICES, INC.
6 ST. JAMES AVENUE
BOSTON, MASSACHUSETTS 02116
(Name and Address of Agent for Service)
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EXPLANATORY NOTE
This Registration Statement has been filed by Domini Institutional
Trust (the "Registrant") pursuant to Section 8(b) of the Investment Company Act
of 1940, as amended. However, shares of beneficial interest of Domini
Institutional Social Equity Fund (the "Fund"), the sole active series of the
Registrant, are not being registered under the Securities Act of 1933 (the
"Securities Act") since such shares will be issued by the Registrant solely in
private placement transactions which do not involve any "public offering" within
the meaning of Section 4(2) of the 1933 Act. Shares of the Fund may only be
purchased by "accredited investors," as that term is defined in Rule 501(a) of
Regulation D under the Securities Act. This Registration Statement does not
constitute an offer to sell, or the solicitation of an offer to buy, any shares
of beneficial interest of the Fund.
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PART A
Responses to Items 1 through 3 and 5A have been omitted pursuant to
paragraph 4 of Instruction F of the General Instructions to Form N-1A.
Item 4. General Description of Registrant.
See "Investment Objective and Policies" in the Private Placement
Memorandum which is attached hereto.
Item 5. Management of the Fund.
See "Summary of Expenses," "Management" and "Service Organizations,
Transfer Agent and Custodian" in the Private Placement Memorandum attached
hereto.
Item 6. Capital Stock and Other Securities.
See "Other Information Concerning Shares of the Funds" and "Tax
Matters" in the Private Placement Memorandum attached hereto.
Item 7. Purchase of Securities Being Offered.
See "Purchases and Redemptions of Shares" in the Private Placement
Memorandum attached hereto.
Item 8. Redemption or Repurchase.
See "Purchases and Redemptions of Shares" in the Private Placement
Memorandum attached hereto.
Item 9. Pending Legal Proceedings.
Not applicable.
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Dated: April 18, 1996 No. ______
CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM
DOMINI INSTITUTIONAL SOCIAL EQUITY FUND
6 St. James Avenue
Boston, Massachusetts 02116
SHARES OF BENEFICIAL INTEREST
THE OFFERING OF SHARES OF BENEFICIAL INTEREST (PAR VALUE $0.01 PER
SHARE) ("SHARES") IN DOMINI INSTITUTIONAL SOCIAL EQUITY FUND (THE "FUND") WILL
NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). SHARES WILL BE OFFERED FOR INVESTMENT ONLY TO QUALIFYING RECIPIENTS OF
THIS PRIVATE PLACEMENT MEMORANDUM PURSUANT TO THE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY SECTION 4(2)
THEREOF. THE FUND IS A SERIES OF DOMINI INSTITUTIONAL TRUST (THE "TRUST"), A
MANAGEMENT INVESTMENT COMPANY REGISTERED AS AN OPEN-END COMPANY UNDER THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "1940 ACT"). AS AN OPEN-END
COMPANY, THE TRUST WILL PROMPTLY REDEEM SHARES OF THE FUND TENDERED FOR
REDEMPTION UPON RECEIPT OF A REDEMPTION REQUEST IN GOOD ORDER, SUBJECT TO
CERTAIN RESTRICTIONS DESCRIBED IN THIS PRIVATE PLACEMENT MEMORANDUM. NO RESALE
OF SHARES MAY BE MADE UNLESS THE SHARES ARE SUBSEQUENTLY REGISTERED UNDER THE
SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
THIS PRIVATE PLACEMENT MEMORANDUM HAS BEEN PREPARED ON A CONFIDENTIAL
BASIS SOLELY FOR THE INFORMATION OF THE RECIPIENT AND MAY NOT BE REPRODUCED,
PROVIDED TO OTHERS OR USED FOR ANY OTHER PURPOSE. PROSPECTIVE INVESTORS ARE NOT
TO CONSTRUE THE CONTENTS OF THIS MEMORANDUM AS LEGAL, BUSINESS OR TAX ADVICE.
EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN ADVISERS AS TO LEGAL, TAX AND
RELATED MATTERS CONCERNING AN INVESTMENT IN THE TRUST.
NO PERSON HAS BEEN AUTHORIZED TO MAKE REPRESENTATIONS OR GIVE ANY
INFORMATION WITH RESPECT TO THE SHARES, EXCEPT THE INFORMATION CONTAINED HEREIN
OR IN THE TRUST'S REGISTRATION STATEMENT FILED UNDER THE 1940 ACT.
INVESTORS WILL BE REQUIRED TO REPRESENT THAT THEY MEET CERTAIN
FINANCIAL REQUIREMENTS AND THAT THEY ARE FAMILIAR WITH AND UNDERSTAND THE TERMS,
RISKS AND MERITS OF AN INVESTMENT IN THE TRUST.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD, EXCEPT TO THE TRUST OR AS PERMITTED
UNDER THE SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM.
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DOMINI INSTITUTIONAL SOCIAL EQUITY FUND
The investment objective of the Domini Institutional Social Equity Fund
(the "Fund") is to provide its shareholders with long-term total return which
corresponds to the total return performance of the Domini Social IndexSM, an
index comprised of stocks selected according to social criteria. "DominiSM" and
"Domini Social IndexSM" are service marks of Kinder, Lydenberg, Domini & Co.,
Inc. ("KLD"). The Fund is a no-load, diversified, open-end management investment
company. The Fund is a series of shares of beneficial interest of Domini
Institutional Trust (the "Trust"), a business trust organized under the laws of
the Commonwealth of Massachusetts (commonly known as a "Massachusetts business
trust") on April 1, 1996.
UNLIKE OTHER MUTUAL FUNDS WHICH DIRECTLY ACQUIRE AND MANAGE THEIR OWN
PORTFOLIO OF SECURITIES, THE TRUST SEEKS TO ACHIEVE THE INVESTMENT OBJECTIVE OF
THE FUND BY INVESTING ALL OF THE FUND'S INVESTABLE ASSETS IN THE DOMINI SOCIAL
INDEX PORTFOLIO (THE "PORTFOLIO"), A DIVERSIFIED OPEN-END MANAGEMENT INVESTMENT
COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AS THE FUND. THE INVESTMENT
PERFORMANCE OF THE FUND WILL CORRESPOND DIRECTLY TO THE INVESTMENT PERFORMANCE
OF THE PORTFOLIO. The Fund invests in the Portfolio through Signature Financial
Group, Inc.'s Hub and Spoke(R) master-feeder investment fund structure. "Hub and
Spoke(R)" is a registered service mark of Signature Financial Group, Inc. See
"Special Information Concerning the Hub and Spoke" Master-Feeder Structure
herein. The Portfolio invests in the common stocks included in the Domini Social
Index.
The investment adviser of the Portfolio (the "Adviser") is KLD. The
Adviser determines the composition of the Domini Social Index (which determines
the composition of the Portfolio's securities). The following persons are
primarily responsible for the development and maintenance of the Domini Social
Index: Steven D. Lydenberg, Director of Research, KLD, since 1990; and Peter D.
Kinder, President, KLD, since 1988. The investment manager (the "Manager") of
the Portfolio is Mellon Equity Associates ("Mellon Equity"). The Manager manages
the investments of the Portfolio from day to day in accordance with the
Portfolio's investment objective and policies.
Shares of the Fund are issued solely in private placement transactions
which do not involve any "public offering" within the meaning of Section 4(2) of
the Securities Act. Shares of the Fund may only be purchased by an "accredited
investor", as that term is defined in Rule 501(a) of Regulation D under the
Securities Act. See "Purchases and Redemptions of Shares."
The minimum initial investment amount is $2,000,000. The Trust offers
to buy back (redeem) shares of the Fund from its shareholders at any time at net
asset value. Shares of the Fund are sold continuously by Signature Broker-Dealer
Services, Inc. ("Signature"), the Trust's exclusive private placement agent (the
"Placement Agent"). Signature also serves as the administrator of the Trust (the
"Administrator") and of the Portfolio (the "Portfolio Administrator"), and in
such capacities supervises the overall administration of the Trust and of the
Portfolio, respectively. The Boards of Trustees of the Trust and of the
Portfolio provide broad supervision over the affairs of the Trust and of the
Portfolio, respectively. For further information about the Trustees of the Trust
and the Portfolio, see "Management" herein and in Part B of the current
registration statement filed by the Trust with respect to the Fund (the
"Registration Statement"). A majority of the Trust's Trustees are not affiliated
with the Adviser.
The Fund is obligated to pay a fee to the Administrator at an annual
rate equal to 0.15% of the Fund's average daily net assets, and the Fund may pay
a fee to the Placement Agent at an annual
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rate of up to 0.25% of the Fund's average daily net assets, in each case for the
Fund's then-current fiscal year. The Portfolio is obligated to pay a fee to the
Portfolio Administrator at an annual rate equal to 0.05% of the Portfolio's
average daily net assets, a fee to the Adviser at an annual rate equal to 0.05%
of the Portfolio's average daily net assets, and a fee to the Manager equal on
an annual basis to 0.15% of the Portfolio's average daily net assets, in each
case for the Portfolio's then-current fiscal year. The Fund and the Portfolio
must also pay all of their respective other expenses. See "Management" herein
and in Part B of the Trust's Registration Statement for more detailed
information on the fees and other expenses of the Fund and the Portfolio.
TABLE OF CONTENTS
PAGE
Summary of Expenses 1
Investment Objective and Policies 2
Management 7
Purchases and Redemptions of Shares 9
Tax Matters 12
Other Information Concerning Shares of the Fund 13
Service Organizations, Transfer Agent and Custodian 17
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SUMMARY OF EXPENSES
The following table provides a summary of expenses relating to
purchases and sales of shares of the Fund, and the aggregate annual operating
expenses for the Fund and the Portfolio, as a percentage of average net assets
of the Fund.
SHAREHOLDER TRANSACTION EXPENSES None
ANNUAL OPERATING EXPENSES:
Advisory and Management Fees 0.20%
Other Expenses:
- Administrative Services Fees 0.20%
- Expense Payment Fees 0.12%
Total Operating Expenses 0.52%
The purpose of the expense table provided above is to help investors
understand the various costs and expenses that a shareholder will bear directly
or indirectly. Pursuant to expense payment arrangements between Signature and
each of the Trust and the Portfolio, Signature pays all of the operating
expenses of the Fund and the P rtfolio, including the advisory, management and
administrative services fees. Under these arrangements, Signature receives
expense payment fees (i) from the Fund at an annual rate equal to 0.02% of the
Fund's average daily net assets for its then-current fiscal year, and (ii) from
the Portfolio at an annual rate equal to 0.50% of the Portfolio's average daily
net assets for its then-current fiscal year. As a result, the aggregate annual
operating expenses (including amortization of organization expenses) of the Fund
and the Portfolio will not exceed 0.52% of the average daily net assets of the
Fund. All of the advisory, management and administrative services fees shown
above are paid through the expense payment arrangements. After the expense
payment arrangements terminate on December 31, 1999, the dollar-based expenses
of the Fund and the Portfolio will each be paid directly. For more information
with respect to the expenses of the Fund and the Portfolio, see "Management"
herein.
The Fund may pay the Placement Agent fee at an annual rate of up to
0.25% of the Fund's average daily net assets in reimbursement of, or in
anticipation of, expenses incurred by the Placement Agent in connection with the
sale of shares of the Fund. The Fund may pay fees to Service Organizations (as
defined below) in amounts up to an annual rate of 0.25% of the daily net asset
value of shares of the Fund owned by shareholders with whom the Service
Organization has a servicing relationship. The Trust does not currently intend
to enter into agreements with and pay fees to Service Organizations with respect
to the Fund, but it may do so in the future. See "Other Information Concerning
Shares of the Fund - Placement Plan and Agreement" and "Service Organizations,
Transfer Agent and Custodian" herein.
The Trust's Trustees believe that the aggregate per share expenses of
the Fund and the Portfolio will be less than or approximately equal to the
expenses which the Fund would incur if it retained the services of an investment
adviser and an investment manager and invested directly in the types of
securities being held by the Portfolio. See "Other Information Concerning Shares
of the Fund - Expenses" herein for further discussion of Fund and Portfolio
expenses.
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INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE - The investment objective of the Fund is to
provide its shareholders with long-term total return (reflecting both dividend
and price performance of the Fund) which corresponds to the total return
performance of the Domini Social Index (sometimes referred to herein as the
"Index"). There can, of course, be no assurance that the Fund will achieve its
investment objective. The investment objective of the Fund may be changed
without approval by the Fund's shareholders.
INVESTMENT POLICIES - The Trust seeks to achieve the investment
objective of the Fund by investing all of the Fund's investable assets in the
Portfolio, which has the same investment objective as the Fund. The Portfolio
seeks to achieve its investment objective by investing in the common stocks
comprising the Domini Social Index. The Portfolio will approximate the
weightings of securities held by the Portfolio to the weightings of the stocks
in the Index, except as described below, and will seek a correlation between the
weightings of securities held by the Portfolio and the weightings of the stocks
in the Index of 0.95 or better. A figure of 1.0 would indicate a perfect
correlation. As of March 31, 1996, the correlation between the weightings of
securities held by the Portfolio and the weightings of the stocks in the Index
was 0.99. To the extent practicable, the Portfolio will attempt to be fully
invested. The ability of the Fund to duplicate the performance of the Domini
Social Index by investing in the Portfolio will depend to some extent on the
size and timing of cash flows into and out of the Fund and the Portfolio as well
as the Fund's and the Portfolio's expenses. Adjustments in the securities
holdings of the Portfolio to accommodate cash flows will track the Domini Social
Index to the extent practicable, but this will result in brokerage expenses.
SOCIAL CRITERIA - The Domini Social Index is a common stock index
developed and maintained by the Adviser comprised of the common stocks of
approximately 400 companies which meet certain social criteria. The weightings
of the stocks comprising the Index are based upon market capitalization. The
criteria used in developing and maintaining the Domini Social Index involve
subjective judgment by the Adviser. The Adviser seeks to exclude companies
which, based on data available to the Adviser, derive more than 2% of their
gross revenues from the sale of military weapons; derive any revenues from the
manufacture of tobacco products or alcoholic beverages; derive any revenues from
gambling enterprises; or own directly or operate nuclear power plants or
participate in businesses related to the nuclear fuel cycle. In evaluating
stocks for inclusion in the Index, the Adviser considers criteria such as a
company's environmental performance, particularly in taking positive initiatives
in environmental matters; its employee relations; its corporate citizenship; and
the quality of a company's products and its attitudes with regard to consumer
issues. Environmental performance includes a company's record on waste disposal,
toxic emissions, fines or penalties, and efforts in waste and emissions
reductions, recycling, and the use of environmentally beneficial fuels.
Corporate citizenship includes a company's record on philanthropic activities
and its interaction with the communities it affects. Employee relations includes
a company's record with regard to labor matters, its commitment to work place
safety and to equal employment opportunity (reflected, for example, in the
number of women and minorities in executive positions), the breadth, quality and
innovation of its employee benefit programs, and its commitment to provide
employees with a meaningful participation in company profits either through
stock purchase or profit sharing plans.
The Adviser intends to vote proxies of companies included in the
Portfolio consistent with the social criteria used in developing and maintaining
the Index.
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INDEX MANAGEMENT - The Portfolio is not managed in the traditional
investment sense, since changes in the composition of its securities holdings
are made in order to track the changes in the composition of securities included
in the Index. Moreover, inclusion of a stock in the Domini Social Index does not
imply an opinion by the Adviser as to the merits of that specific stock as an
investment. However, the Adviser believes that enterprises which exhibit a
social awareness, based on the criteria described above, should be better
prepared to meet future societal needs for goods and services and may also be
less likely to incur certain legal liabilities that may be incurred when a
product or service is determined to be harmful, and that such enterprises should
over the longer term be able to provide a positive return to investors.
In selecting stocks for inclusion in the Index:
1. The Adviser evaluated, in accordance with the social criteria
described above, each of the companies the stocks of which comprise the S&P 500.
If a company whose stock was included in the S&P 500 met the Adviser's social
criteria and met the Adviser's further criteria for industry diversification,
financial solvency, market capitalization, and minimal portfolio turnover, it
was included in the Domini Social Index. As of March 31, 1996, of the 500
companies whose stocks comprised the S&P 500, approximately 50% were included
in the Index.
2. The remaining stocks comprising the Domini Social Index (I.E., those
which are not included in the S&P 500) were selected based upon the Adviser's
evaluation of the social criteria described above, as well as upon the Adviser's
criteria for industry diversification, financial solvency, market
capitalization, and minimal portfolio turnover. Because of the social criteria
applied in the selection of stocks comprising the Domini Social Index, industry
sector weighting in the Domini Social Index may vary materially from the
industry weightings in other stock indices, including the S&P 500, and certain
industry sectors will be excluded altogether.
The component stocks of the S&P 500 are chosen by Standard & Poor's
Corporation ("S&P") solely with the aim of achieving a distribution by broad
industry groupings that approximates the distribution of these groupings in the
New York Stock Exchange common stock population, taken as the assumed model for
the composition of the total market. Construction of the S&P 500 by S&P proceeds
from industry groups to the whole. Since some industries are characterized by
companies of relatively small stock capitalization, the S&P 500 does not
comprise the 500 largest companies listed on the New York Stock Exchange. Not
all stocks included in the S&P 500 are listed on the New York Stock Exchange.
However, the total market value of the S&P 500 as of March 31, 1996
represented 79% of the aggregate market value of common stocks traded on the
New York Stock Exchange.
Inclusion of a stock in the S&P 500 Index in no way implies an opinion
by S&P as to its attractiveness as an investment, nor is S&P a sponsor of or
otherwise affiliated with the Fund or the Portfolio.
Some of the stocks included in the Domini Social Index may be stocks of
foreign issuers (provided that the stocks are traded in the United States in the
form of American Depositary Receipts or similar instruments the market for which
is denominated in United States dollars). Securities of foreign issuers may
represent a greater degree of risk (I.E., as a result of exchange rate
fluctuation, tax provisions, war or expropriation) than do securities of
domestic issuers.
The weightings of stocks in the Domini Social Index are based on each
stock's relative total market capitalization, (I.E., market price per share
times the number of shares outstanding). Because
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of this weighting, as of March 31, 1996 approximately 39% of the Domini
Social Index was comprised of the 20 largest companies in that Index.
The Adviser may exclude from the Domini Social Index stocks issued by
companies which are in bankruptcy or whose bankruptcy the Adviser believes may
be imminent.
The Portfolio intends to readjust its securities holdings periodically
such that those holdings will correspond, to the extent reasonably practicable,
to the Domini Social Index both in terms of composition and weighting. The
timing and extent of adjustments in the holdings of the Portfolio, and the
extent of the correlation of the holdings of the Portfolio with the Domini
Social Index, will reflect the Manager's judgment as to the appropriate balance
between the goal of correlating the holdings of the Portfolio with the
composition of the Index, and the goals of minimizing transaction costs and
keeping sufficient reserves available for anticipated redemptions of shares. To
the extent practicable, the Portfolio will seek a correlation between the
weightings of securities held by the Portfolio to the weightings of the
securities in the Index of 0.95 or better. Subject to the goal of achieving a
0.95 or better correlation between the weightings of the securities held by the
Portfolio and the weightings of the securities in the Index, the Manager may
slightly overweight and/or underweight certain holdings of the Portfolio
compared to the Index in an effort to enhance the performance of the Portfolio
to help offset the expenses of the Portfolio and the Fund and the effect of the
size and timing of cash flows into and out of the Portfolio and the Fund. There
can be no assurances, of course, that such portfolio enhancement strategies will
be successful, and the performance of the Portfolio may as a result be worse
than if such strategies were not undertaken. The Board of Trustees of the
Portfolio will receive and review, at least quarterly, a report prepared by the
Manager comparing the performance of the Fund and the Portfolio with that of the
Index, and comparing the composition and weighting of the Portfolio's holdings
with those of the Index, and will consider what action, if any, should be taken
in the event of a significant variation between the performance of the Fund or
the Portfolio, as the case may be, and that of the Index, or between the
composition and weighting of the Portfolio's securities holdings with those of
the stocks comprising the Index. If the correlation between the weightings of
securities held by the Portfolio and the weightings of the stocks in the Index
falls below 0.95, the Board of Trustees will review with the Manager methods for
increasing such correlation, such as through adjustments in securities holdings
of the Portfolio.
The Portfolio may invest cash reserves in short-term debt securities
(I.E., securities having a remaining maturity of one year or less) issued by
agencies or instrumentalities of the United States Government, bankers'
acceptances, commercial paper or certificates of deposit, provided that the
issuer satisfies the Adviser's social criteria. The Portfolio does not currently
intend to invest in direct obligations of the United States Government.
Short-term debt securities purchased by the Portfolio will be rated at least
Prime-1 by Moody's Investors Service, Inc. or A-1+ or A-1 by S&P or, if not
rated, determined to be of comparable quality by the Portfolio's Board of
Trustees. The Portfolio's policy is to hold its assets in such securities
pending readjustment of its portfolio holdings of stocks comprising the Domini
Social Index and in order to meet anticipated redemption requests. Such
investments are not intended to be used for defensive purposes in periods of
anticipated market decline.
Frequent changes in the Portfolio's holdings may result from the policy
of attempting to correlate the Portfolio's securities holdings with the
composition of the Index, and the frequency of such changes will increase as the
rate and volume of purchases and redemptions of shares of the Portfolio
increases. The annual portfolio turnover rates of the Portfolio for the fiscal
years ended July 31, 1994 and July 31, 1995 were 8% and 6%, respectively.
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The Portfolio's primary consideration in placing securities
transactions with broker-dealers for execution is to obtain, and maintain the
availability of, execution at the most favorable prices and in the most
effective manner possible. Neither the Portfolio nor the Fund will engage in
brokerage transactions with the Adviser, the Manager or the Administrator or any
of their respective affiliates or any affiliate of the Fund or the Portfolio.
For further discussion regarding securities trading by the Portfolio, see Part B
of the Registration Statement.
Consistent with applicable regulatory policies, including those of the
Board of Governors of the Federal Reserve System and the Securities and Exchange
Commission, the Portfolio may make loans of its securities to member banks of
the Federal Reserve System and to broker-dealers. Such loans would be required
to be secured continuously by collateral and cash or cash equivalents maintained
on a current basis at an amount at least equal to the market value of the
securities loaned. The Portfolio would have the right to call a loan and obtain
the securities loaned at any time on five days' notice. During the existence of
a loan, the Portfolio would continue to collect the equivalent of the dividends
paid by the issuer on the securities loaned and would also receive interest on
investment of cash collateral. The Portfolio may pay finder's and other fees in
connection with securities loans. Loans of securities involve a risk that the
borrower may fail to return the securities or may fail to provide additional
collateral.
Although it has no current intention to do so, the Portfolio may make
short sales of securities or maintain a short position, if at all times when a
short position is open the Portfolio owns an equal amount of such securities, or
securities convertible into such securities.
SPECIAL INFORMATION CONCERNING THE HUB AND SPOKE(R) MASTER-FEEDER
STRUCTURE - The Trust and the Portfolio are utilizing certain proprietary
rights, know-how and financial services referred to as the Hub and Spoke(R)
master-feeder investment structure from Signature Financial Group, Inc., of
which the Administrator is a wholly owned subsidiary. "Hub and Spoke(R)" is a
registered service mark of Signature Financial Group, Inc.
Unlike other mutual funds which directly acquire and manage their own
portfolio securities, the Trust seeks to achieve the investment objective of the
Fund by investing all of the Fund's investable assets in the Portfolio, a
separate registered investment company with the same investment objective as the
Fund. In addition to selling a beneficial interest to the Fund, the Portfolio
may sell beneficial interests to other mutual funds or institutional investors.
Such investors will invest in the Portfolio on the same terms and conditions as
the Fund and will pay a proportionate share of the Portfolio's expenses.
However, the other investors investing in the Portfolio are not required to sell
their shares at the same public offering price as the Fund due to variations in
sales commissions and other operating expenses. Therefore, investors in the Fund
should be aware that these differences may result in differences in returns
experienced by investors in the different funds that invest in the Portfolio.
Such differences in returns are also present in other mutual fund structures.
Information concerning other holders of interests in the Portfolio is available
from the Administrator at (617) 423- 0800. The Hub and Spoke investment fund
structure has been developed relatively recently, so shareholders should
carefully consider this investment approach.
The investment objective of the Fund may be changed without the
approval of the Fund's shareholders, but not without written notice thereof to
shareholders thirty days prior to implementing the change. If there were a
change in the Fund's investment objective, shareholders should consider whether
the Fund remains an appropriate investment in light of their then-current
financial positions and needs. The investment objective of the Portfolio may
also be changed without the approval of the investors in the Portfolio, but not
without written notice thereof to the investors in the Portfolio
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(and notice by the Fund to its shareholders) 30 days prior to implementing the
change. There can, of course, be no assurance that the investment objective of
either the Fund or the Portfolio will be achieved. See "Investment Restrictions"
in Part B of the Registration Statement for a description of the fundamental
policies of the Fund and of the Portfolio that cannot be changed without
approval by the holders of a "majority of the outstanding voting securities" (as
defined in the 1940 Act) of the Fund or the Portfolio, respectively. Except as
stated otherwise, all investment guidelines, policies and restrictions described
herein and in Part B of the Registration Statement are non-fundamental.
Smaller funds investing in the Portfolio may be materially affected by
the actions of larger funds investing in the Portfolio. For example, if a large
fund withdraws from the Portfolio, the remaining funds may experience higher pro
rata operating expenses, thereby producing lower returns. Additionally, the
Portfolio may become less diverse, resulting in increased portfolio risk.
(However, this possibility exists as well for traditionally structured funds
which have large or institutional investors.) Also, funds with a greater pro
rata ownership in the Portfolio could have effective voting control of the
operations of the Portfolio. Subject to exceptions that are not inconsistent
with applicable rules or policies of the Securities and Exchange Commission,
whenever the Trust is requested to vote on matters pertaining to the Portfolio,
the Trust will hold a meeting of shareholders of the Fund and will cast all of
its votes in the same proportion as the votes of the Fund's shareholders. Fund
shareholders who do not vote will not affect the Trust's votes at the Portfolio
meeting. The percentage of the Trust's votes representing Fund shareholders not
voting will be voted by the Trustees of the Trust in the same proportion as the
Fund shareholders who do, in fact, vote. Certain changes in the Portfolio's
investment objective, policies or restrictions may require the Fund to withdraw
its interest in the Portfolio. Any such withdrawal could result in a
distribution "in kind" of portfolio securities (as opposed to a cash
distribution from the Portfolio). If securities are distributed, the Fund could
incur brokerage, tax or other charges in converting the securities to cash. In
addition, the distribution in kind may result in a less diversified portfolio of
investments or adversely affect the liquidity of the Fund. Notwithstanding the
above, there are other means for meeting shareholder redemption requests, such
as borrowing.
The Trust may withdraw the Fund's investment from the Portfolio at any
time, if the Board of Trustees of the Trust determines that it is in the best
interests of the Fund to do so. Upon any such withdrawal, the Board of Trustees
would consider what action might be taken, including the investment of all the
assets of the Fund in another pooled investment entity having the same
investment objective as the Fund or the retention of an investment adviser to
manage the Fund's assets in accordance with the investment policies described
above with respect to the Portfolio. In the event the Trustees of the Trust were
unable to find a substitute investment company in which to invest the Fund's
assets and were unable to secure directly the services of an investment adviser
and investment manager, the Trustees will seek to determine the best course of
action.
For more information about the Portfolio's policies, management and
expenses see "Investment Objective and Policies," "Management," and "Other
Information Concerning Shares of the Fund - Expenses." For information about the
Portfolio's investment restrictions see Part B of the Registration Statement.
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As a matter of fundamental policy, the Trust will invest all of the
investable assets of the Fund (either directly or through the Portfolio) in one
or more of: (i) stocks comprising an index of securities selected applying
social criteria, which initially will be the Domini Social Index, (ii)
short-term debt securities of issuers which meet social criteria, (iii) cash,
and (iv) options on equity securities. This fundamental policy cannot be changed
without the approval of the holders of a
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majority of the Fund's shares (which, as used in this Prospectus, means the
lesser of (a) more than 50% of the outstanding shares of the Fund, or (b) 67% or
more of the outstanding shares of the Fund present at a meeting at which holders
of more than 50% of the Fund's outstanding shares are represented in person or
by proxy). Except for this fundamental policy, investor approval is not required
to change the Fund's or the Portfolio's investment objective or any of the
investment policies described above.
Part B of the Trust's Registration Statement filed with the Securities
and Exchange Commission includes a discussion of other investment policies and a
listing of specific investment restrictions which govern the Portfolio's and the
Fund's investment policies. Certain of the investment restrictions listed in
Part B of the Registration Statement may not be changed by the Portfolio without
the approval of the shareholders of the Fund and the other investors in the
Portfolio or by the Trust without the approval of the shareholders of the Fund.
If a percentage or rating restriction on investment or utilization of assets is
adhered to at the time an investment is made or assets are so utilized, a later
change in percentage resulting from changes in the Portfolio's total assets or
the value of the Portfolio's securities or a later change in the rating of a
security held by the Portfolio will not be considered a violation of policy.
Expenses of the Portfolio with respect to investment advisory services,
investment management services and administration services are described herein
under "Management - Adviser, - Manager and - Administrator," respectively.
MANAGEMENT
The Boards of Trustees of the Trust and the Portfolio provide broad
supervision over the affairs of the Trust and the Portfolio, respectively. The
Trust has retained the services of Signature as administrator, but has not
retained the services of an investment adviser or investment manager since the
Trust seeks to achieve the investment objective of the Fund by investing all of
the Fund's investable assets in the Portfolio. The Portfolio has retained the
services of Signature as administrator, KLD as investment adviser, and Mellon
Equity as investment manager.
ADVISER
KLD provides advice to the Portfolio pursuant to an Investment Advisory
Agreement (the "Advisory Agreement"). The services provided by the Adviser
consist of determining the stocks to be included in the Index and evaluating, in
accordance with the Adviser's social criteria, debt securities which may be
purchased by the Portfolio. For its services under the Advisory Agreement, the
Adviser receives from the Portfolio a fee accrued daily and paid monthly at an
annual rate equal to 0.05% of the Portfolio's average daily net assets, on an
annualized basis for the Portfolio's then-current fiscal year.
Amy Lee Domini is a principal executive officer of KLD. Ms. Domini is a
Chartered Financial Analyst and has been in the investment field for twenty
years. She has co-authored three books on social investing, ETHICAL INVESTING
(Addison-Wesley, 1986), INVESTING FOR GOOD (Herbert Collins, 1993) and THE
SOCIAL INVESTMENT ALMANAC (Henry Holt Reference Books, 1992), and is currently a
trustee of Loring, Wolcott & Coolidge, a firm of private trustees. Ms. Domini
serves on the Governing Board of the Interfaith Center on Corporate
Responsibility and is a former member of the Board of the National Association
of Community Development Loan Funds. She is a member of both the Committee on
Trust Funds and the Church Pension Fund at the Episcopal Church
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(USA). Ms. Domini has worked to promote both shareholder activism and community
development investing which, in combination with the integration of social
criteria into investment decisions, in her view serve to encourage the business
community to accept more responsibility for its impact on society.
Peter D. Kinder, president of KLD, received his training as a lawyer
and has practiced in both the public and private sectors with a particular
emphasis on administrative law. He co-authored LAW AND BUSINESS (McGraw-Hill,
1990 [3d ed.]), ETHICAL INVESTING (Addison-Wesley, 1986), INVESTING FOR GOOD
(Herbert Collins, 1993) and THE SOCIAL INVESTMENT ALMANAC (Henry Holt Reference
Books, 1992). As a member of the Board of the Social Investment Forum, Mr.
Kinder participated in the Forum's CERES Project which developed the Valdez
Principles proposing environmental standards to be adopted by U.S. corporations.
Steven D. Lydenberg, Director of Research of KLD, has been active in
social research for nineteen years. For twelve years he served the Council on
Economic Priorities, ultimately as Director of Corporate Accountability
Research. From 1987 to 1989, Mr. Lydenberg was an investment associate with
Franklin Research and Development, where he edited Franklin's newsletter,
INVESTING FOR A BETTER WORLD. Mr. Lydenberg has authored numerous publications
on issues of corporate social responsibility, including RATING AMERICA'S
CORPORATE CONSCIENCE (Addison-Wesley, 1986) and THE SOCIAL INVESTMENT ALMANAC
(Henry Holt Reference Books, 1992), as well as co-authored INVESTING FOR GOOD
(Herbert Collins, 1993). He is a Chartered Financial Analyst.
"DominiSM" and "Domini Social IndexSM" are service marks of Kinder,
Lydenberg, Domini & Co., Inc. Pursuant to agreements with the Trust and the
Portfolio, the Portfolio will be required to discontinue use of such service
marks if KLD ceases to be the investment adviser of the Portfolio, and the Trust
will be required to discontinue the use of such service marks if either KLD
ceases to be the investment adviser of the Portfolio or the Trust ceases to
invest all of the Fund's investable assets in the Portfolio.
MANAGER
Mellon Equity manages the Portfolio on a day-to-day basis pursuant to
an Investment Management Agreement (the "Management Agreement"). Mellon Equity
does not determine the composition of the Domini Social Index.
Under the Management Agreement, the Portfolio pays Mellon Equity an
investment management fee equal on an annual basis to the following percentages
of the Portfolio's average daily net assets for its then-current fiscal year:
0.10% of such assets up to $50 million, 0.30% of such assets between $50 million
and $100 million, 0.20% of such assets between $100 million and $500 million.
Mellon Equity is a Pennsylvania business trust whose beneficial owners
are Mellon Bank, N.A. and MMIP, Inc. Mellon Equity has been registered as an
investment adviser under the Investment Advisers Act of 1940 since 1986. Prior
to 1987, the Manager was part of the Equity Management Group of Mellon Bank
Corporation's Trust and Investment Department, which has managed pension assets
since 1947. As of September 30, 1995, the Manager had approximately $7.6 billion
in assets under management.
Mellon Equity believes that its performance of investment management
services for the Portfolio will not violate the Glass-Steagall Act or other
applicable banking laws or regulations. However, future statutory or regulatory
changes, as well as future judicial or administrative decisions
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and interpretations of present and future statutes and regulations, could
prevent Mellon Equity from continuing to perform such services for the
Portfolio. If Mellon Equity were prohibited from acting as investment manager to
the Portfolio, it is expected that the Trustees would recommend to shareholders
approval of a new investment management agreement with another qualified
investment manager selected by the Trustees, or that the Trustees would
recommend other appropriate action.
ADMINISTRATOR
Pursuant to Administrative Services Agreements, Signature provides the
Trust and the Portfolio with general office facilities and supervises the
overall administration of the Trust and the Portfolio, including, among other
responsibilities, the negotiation of contracts and fees with, and the monitoring
of performance and billings of, the independent contractors and agents of the
Trust or the Portfolio; the preparation and filing of all documents required for
compliance by the Trust or the Portfolio with applicable laws and regulations;
and arranging for the maintenance of books and records of the Trust and the
Portfolio. Signature provides persons satisfactory to the Board of Trustees of
the Trust or the Portfolio to serve as officers of the Trust or the Portfolio.
Such officers, as well as certain other employees and Trustees of the Trust or
the Portfolio, may be directors, officers or employees of Signature or its
affiliates. For these services and facilities, Signature receives fees computed
and paid monthly from the Fund at an annual rate equal to 0.15% of the average
daily net assets of the Fund, and from the Portfolio at an annual rate equal to
0.05% of the average daily net assets of the Portfolio, in each case on an
annualized basis for the Fund's or the Portfolio's then-current fiscal year.
Pursuant to a Sub-Administrative Services Agreement between Signature
and KLD, KLD serves as Sub-Administrator of the Trust. In such capacity, KLD
performs certain administrative services requested by the Administrator,
including assisting personnel of the Administrator in answering questions from
the general public, the media and investors in the Fund regarding the securities
holdings of the Portfolio. For these services, KLD receives from the
Administrator such compensation as they may agree on from time to time.
PURCHASES AND REDEMPTIONS OF SHARES
Shares of the Fund are issued solely in private placement transactions
which do not involve any "public offering" within the meaning of Section 4(2) of
the Securities Act. Shares of the Fund may only be purchased by an "accredited
investor," as that term is defined in Rule 501(a) of Regulation D under the
Securities Act to include the following categories of persons:
(1) Any bank as defined in section 3(a)(2) of the Securities Act, or
any savings and loan association or other institution as defined in section
3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary
capacity; any broker or dealer registered pursuant to section 15 of the
Securities Exchange Act of 1934; any insurance company as defined in section
2(13) of the Securities Act; any investment company registered under the
Investment Company Act of 1940 or a business development company as defined in
section 2(a)(48) of that Act; any Small Business Investment Company licensed by
the U.S. Small Business Administration under section 301(c) or (d) of the Small
Business Investment Act of 1958; any plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees,
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if such plan has total assets in excess of $5,000,000; any employee benefit plan
within the meaning of the Employee Retirement Income Security Act of 1974 if the
investment decision is made by a plan fiduciary, as defined in section 3(21) of
such act, which is either a bank, savings and loan association, insurance
company, or registered investment adviser, or if the employee benefit plan has
total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited investors;
(2) Any private business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940;
(3) Any organization described in section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000;
(4) Any director, executive officer, or general partner of the issuer
of the securities being offered or sold, or any director, executive officer, or
general partner of a general partner of that issuer;
(5) Any natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of his purchase exceeds $1,000,000;
(6) Any natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year;
(7) Any trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in Sec. 230.506(b)(2)(ii); or
(8) Any entity in which all of the equity owners are accredited
investors.
PURCHASES
Shares of the Fund may be purchased without a sales load at the net
asset value next determined after an order for shares is received in good order
and accepted by the Trust, provided such order is received and accepted prior to
the close of the New York Stock Exchange on any day the New York Stock Exchange
is open for trading (a "Fund Business Day"). The minimum initial investment in
the Fund is $2,000,000. The Fund in its sole discretion may permit purchases for
lesser amounts.
For each shareholder of record, the Fund establishes an open account to
which all shares purchased are credited together with any dividends and capital
gains distributions which are paid in additional shares. See "Other Information
Concerning Shares of the Fund - Dividends and Capital Gains Distributions". No
share certificates will be issued.
Shares may be purchased directly from the Placement Agent or through
Service Organizations (see "Service Organizations" below) by clients of those
Service Organizations. If an investor purchases shares through a Service
Organization, the Service Organization must promptly transmit such order to the
Fund so that the order receives the net asset value next determined following
receipt of the order. Service Organizations may impose minimum customer account
and other requirements in addition to those imposed by the Fund. Investors
wishing to purchase shares through a Service Organization should contact that
organization directly for appropriate instructions. Investors making purchases
through a Service Organization should be aware that it is the responsibility of
the Service Organization to transmit orders for purchases of shares by its
customers
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to the Transfer Agent and to deliver required funds on a timely basis, in
accordance with the procedures stated above. Other investors may purchase Fund
shares in the manner described below.
Investors desiring to purchase shares of the Fund must complete, sign
and return to the Placement Agent the Subscription Agreement and appropriate
Investor Questionnaire accompanying this Private Placement Memorandum to the
following address:
Domini Institutional Social Equity Fund
P.O. Box 117
New York, New York 10274-0117
The Subscription Agreement contains certain representations and
warranties by the investor. A Subscription Agreement executed by an investor
will be binding, unless rejected by the Fund. Checks should be made payable in
U.S. dollars to "Domini Institutional Social Equity Fund." Shares may also be
purchased by wire transfer of funds. To obtain wire transfer instructions,
please contact Fundamental Shareholder Services, Inc., the Trust's transfer
agent (the "Transfer Agent"), at 1-800- 782-4165. The Trust reserves the right
to reject any subscriptions, in whole or in part. For further information on how
to purchase shares of the Fund, an investor should contact the Placement Agent
(see back cover for address and phone number).
REDEMPTIONS
A shareholder may redeem all or any portion of the shares in its
account at any time at the net asset value next determined after a redemption
request in proper form is furnished by the shareholder to the Fund. Redemptions
will therefore be effected on the same day the redemption order is received by
the Fund provided such order is received and accepted prior to the close of the
Fund Business Day. The proceeds of a redemption will be paid by the Fund in
federal funds normally on the next Fund Business Day, but in any event within
seven days if all checks in payment for the purchase of shares to be redeemed
have been cleared by the Fund (which may take up to 15 days). Redemptions may be
made by letter to the Fund specifying the dollar amount or number of shares to
be redeemed and the account number. The letter must be signed in exactly the
same way the account is registered and the signatures must be guaranteed by a
member firm of the New York, American, Boston, Midwest, Philadelphia or Pacific
Stock Exchange or by a commercial bank (not a savings bank) which is a member of
the Federal Deposit Insurance Corporation. In some cases the Fund may require
the furnishing of additional documents.
An investor may redeem shares in any amount by written or telephonic
request. Written requests should be mailed to the Fund at the following address:
Domini Institutional Social Equity Fund
P.O. Box 117
New York, New York 10274-0117
An investor may redeem shares by wire or telephone if the appropriate
portion of the Account Application has been completed. Redemptions may be paid
by the Fund by check or by wire transfer.
The Trust, Transfer Agent and Placement Agent reserve the right to
refuse wire or telephone redemptions. Procedures for redeeming shares by wire or
telephone may be modified or terminated at any time by the Trust or the
Placement Agent. The Trust, Transfer Agent and Placement Agent
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will not be liable for any loss, liability, cost or expense for acting upon
telephone instructions believed to be genuine. Accordingly, shareholders will
bear the risk of loss. The Trust will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine, including, without
limitation, recording telephone instructions and/or requiring the caller to
provide some form of personal identification. Failure to employ reasonable
procedures may make the Fund liable for any losses due to unauthorized or
fraudulent telephone instructions. The following information must be supplied by
the shareholder or broker at the time a request for a telephone redemption is
made: (1) the shareholder's account number; (2) the shareholder's social
security number; and (3) the name and account number of the shareholder's
designated securities dealer or bank.
A Service Organization may request a wire redemption provided the
appropriate form is on file with the Trust. The proceeds of a wire redemption
will be sent to an account with a Service Organization designated on the
appropriate form. The Trust reserves the right to restrict or terminate wire
redemption privileges. Proceeds of wire redemptions will be transferred within
seven days after receipt of the request.
The value of shares redeemed may be more or less than the shareholder's
cost, depending on the Fund's performance during the period the shareholder
owned its shares. Redemptions of shares are taxable events on which the
shareholder may recognize a gain or a loss.
The right of any shareholder to receive payment with respect to any
redemption may be suspended or the payment of the redemption proceeds postponed
during any period in which the New York Stock Exchange is closed (other than
weekends or holidays) or trading on such Exchange is restricted, or, to the
extent otherwise permitted by the 1940 Act, if an emergency exists.
TAX MATTERS
Each year the Fund intends to qualify and elect to be treated as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended (the "Code"). Provided the Fund meets all income, distribution and
diversification requirements of the Code, and distributes all of its net
investment income and realized capital gains to shareholders in accordance with
the timing requirements imposed by the Code, the Fund will not be required to
pay any federal income or excise taxes. The Portfolio will also not be required
to pay any federal income or excise taxes. However, shareholders of the Fund
normally will have to pay federal income taxes, and any state or local taxes, on
the dividends and any capital gains distributions they receive from the Fund.
After the end of each calendar year, each shareholder receives information for
tax purposes on the dividends and any capital gains distributions received
during that calendar year including the portion taxable as ordinary income, the
portion taxable as long-term capital gains, the portion, if any, representing a
return of capital (which generally is free of current taxes but results in a
basis reduction), the amount, if any, of federal income tax withheld, and the
amount of any dividends eligible for the dividends-received deduction for
corporations.
Dividends and distributions to shareholders will be treated in the same
manner for federal income tax purposes whether received in cash or reinvested in
additional shares of the Fund. Distributions of net capital gains (I.E., the
excess of net long-term capital gains over net short-term capital losses) will
cause any short-term capital loss realized on the disposition by a Fund's
shareholder of Fund shares held for six or fewer months to be recharacterized,
to the extent of those distributions, as long-term capital loss.
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Under the back-up withholding rules of the Code, certain shareholders
may be subject to 31% withholding of federal income tax on distributions and
payments made by the Fund. Generally, shareholders are subject to back-up
withholding if they have not provided the Fund with a correct taxpayer
identification number and certain other certifications.
The Trust is organized as a Massachusetts business trust and, under
current law, the Fund is not liable for any income or franchise tax in the
Commonwealth of Massachusetts as long as the Fund qualifies as a regulated
investment company under the Code.
The foregoing discussion is intended for general information only. A
prospective shareholder should consult with its own tax advisor as to the tax
consequences of an investment in the Fund, including the status of distributions
from the Fund under applicable state or local law.
OTHER INFORMATION CONCERNING SHARES OF THE FUND
NET ASSET VALUE
The Trust determines the net asset value of each of the Fund's shares
on each Fund Business Day. This determination is made once during each such day
as of the close of regular trading on the New York Stock Exchange by deducting
the amount of the Fund's liabilities from the value of its assets and dividing
the difference by the number of shares of the Fund outstanding. A share's net
asset value is effective for orders received by the Placement Agent prior to the
close of the Fund Business Day on which such net asset value is determined.
Since the Trust will invest all of the Fund's investable assets in the
Portfolio, the value of the Fund's investable assets will be equal to the value
of its beneficial interest in the Portfolio. The net asset value of the
Portfolio is determined as of the close of regular trading on the New York Stock
Exchange on each Fund Business Day, by deducting the amount of the Portfolio's
liabilities from the value of its assets. At the close of each such Fund
Business Day, the value of the Fund's beneficial interest in the Portfolio will
be determined by multiplying the net asset value of the Portfolio by the
percentage, effective for that day, which represents the Fund's share of the
aggregate beneficial interests in the Portfolio. (See "Description of Shares,
Voting Rights and Liabilities" below.)
Equity securities held by the Portfolio are valued at the last sale
price on the exchange on which they are primarily traded or on the NASDAQ system
for unlisted national market issues, or at the last quoted bid price for
securities in which there were no sales during the day or for unlisted
securities not reported on the NASDAQ system. If the Portfolio purchases option
contracts, such option contracts which are traded on commodities or securities
exchanges are normally valued at the settlement price on the exchange on which
they are traded. Short-term obligations with remaining maturities of less than
sixty days are valued at amortized cost, which constitutes fair value as
determined by the Board of Trustees of the Portfolio. Portfolio securities
(other than short-term obligations with remaining maturities of less than sixty
days) for which there are no such quotations or valuations are valued at fair
value as determined in good faith by or at the direction of the Portfolio's
Board of Trustees.
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DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
Substantially all of the Fund's net income from dividends and interest
is paid to the Fund's shareholders semi-annually (in the months of June and
December) as a dividend. For this purpose, the Fund's "net income from dividends
and interest" consists of all income from dividends and interest accrued on the
assets of the Fund (I.E., the Fund's share of the Portfolio's net income from
dividends and interest), less all actual and accrued expenses of the Fund
determined in accordance with generally accepted accounting principles.
The Fund also declares a long-term capital gains distribution to its
shareholders on an annual basis, usually in December, if the Fund's share of the
Portfolio's profits during the year from the sale of securities held for longer
than the applicable long-term capital gains holding period exceeds the Fund's
share of the Portfolio's losses during such year from the sale of securities
together with the Fund's share of the Portfolio's net capital losses carried
forward from prior years (to the extent not used to offset short-term capital
gains). The Fund's share of the Portfolio's net short-term capital gains
realized during each fiscal year will also be distributed at that time.
The Fund will also make additional distributions to its shareholders to
the extent necessary to avoid application of the 4% nondeductible excise tax
created by the Tax Reform Act of 1986 on certain undistributed income and net
capital gains of mutual funds.
A shareholder of the Fund may elect to receive dividends and capital
gains distributions in either cash or additional shares. Unless otherwise
specified in writing by a shareholder, all dividends and capital gains
distributions will be reinvested in additional shares.
EXPENSES
The Fund and the Portfolio each are responsible for all of their
respective expenses, including the compensation of their respective Trustees who
are not affiliated with the Administrator or the Adviser; governmental fees;
interest charges; taxes; membership dues in the Investment Company Institute
allocable to the Fund or the Portfolio; fees and expenses of independent
auditors, of legal counsel and of any transfer agent, custodian, registrar or
dividend disbursing agent of the Fund or the Portfolio; insurance premiums; and
expenses of calculating the net asset value of the Portfolio and of shares of
the Fund.
The Fund is also responsible for all fees under its Administrative
Services Plan; expenses of distributing and redeeming shares and servicing
shareholder accounts; expenses of preparing, printing and mailing private
placement memoranda, reports, notices, proxy statements and reports to
shareholders and to governmental offices and commissions; expenses of
shareholder meetings; and expenses relating to the issuance, registration (if
applicable) and qualification of shares of the Fund and the preparation,
printing and mailing of private placement memoranda for such purposes.
The Portfolio is also responsible for the expenses connected with the
execution, recording and settlement of security transactions; fees and expenses
of the Portfolio's custodian for all services to the Portfolio, including
safekeeping of funds and securities and maintaining required books and accounts;
expenses of preparing and mailing reports to investors and to governmental
offices and commissions; expenses of meetings of investors; and the advisory
fees payable to the Adviser under the Advisory Agreement, the management fees
payable to the Manager under the Management Agreement and the administrative
fees payable to the Portfolio Administrator.
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Pursuant to expense payment arrangements between Signature and each of
the Trust with respect to the Fund (effective April 1, 1996) and the Portfolio
(effective January 1, 1995), Signature has agreed to pay all of the operating
expenses of the Fund and the Portfolio. The arrangements will terminate on
December 31, 1999 unless sooner terminated by mutual agreement of the parties.
Under these arrangements Signature receives expense payment fees computed and
paid monthly (i) from the Fund, at an annual rate equal to 0.02% of the Fund's
average daily net assets for its then-current fiscal year, and (ii) from the
Portfolio, at an annual rate equal to 0.50% of the Portfolio's average daily net
assets for its then-current fiscal year. See "Management of the Trust and the
Portfolio" in Part B of the Registration Statement for more information
regarding expense payment arrangements.
PLACEMENT PLAN AND AGREEMENT
The Trustees of the Trust have adopted a Placement Plan (the "Placement
Plan") in accordance with Rule 12b-1 under the 1940 Act after having concluded
that there is a reasonable likelihood that the Placement Plan will benefit the
Fund and its shareholders. As contemplated by the Placement Plan, Signature, as
the Placement Agent, acts as agent of the Fund in connection with the offering
of shares of the Fund pursuant to an Exclusive Private Placement Agreement with
the Trust. Signature, as the Placement Agent, also acts as the principal
underwriter of shares of the Fund and bears the expenses related to the
compensation of personnel necessary to provide such services and all costs of
travel, office expenses (including rent and overhead) and equipment.
Under the Placement Plan, Signature may receive a fee from the Fund at
an annual rate not to exceed 0.25% of the Fund's average daily net assets in
anticipation of, or as reimbursement for, costs and expenses incurred in
connection with the sale of shares of the Fund, such as the expenses of printing
and distributing private placement memoranda and reports used for sales purposes
and other distribution-related expenses. Signature will provide to the Trustees
of the Trust a quarterly written report of amounts expended by it under the
Placement Plan and the purposes for which such expenditures were made.
No payments under the Placement Plan are made to any Service
Organizations, although Service Organizations may receive payments under the
Administrative Services Plan. (See "Service Organizations" below.)
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust's Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional Shares of Beneficial Interest (par value
$0.01 per share) and to divide or combine the shares into a greater or lesser
number of shares without thereby changing the proportionate beneficial interests
in the Fund. Each share represents an equal proportionate interest in the Fund
with each other share. Shares have no preemptive or conversion rights. Shares
when issued are fully paid and nonassessable, except as set forth below.
Shareholders are entitled to one vote for each share held. The Trust is not
required to hold annual meetings of shareholders of the Fund but the Trust will
hold special meetings of shareholders of the Fund when in the judgment of the
Trustees it is necessary or desirable to submit matters for a shareholder vote.
Upon liquidation of the Fund, shareholders would be entitled to share pro rata
in the net assets of the Fund available for distribution to shareholders.
Shareholders have under certain circumstances the right to communicate with
other shareholders in connection with requesting a meeting of shareholders for
the purpose of removing
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one or more Trustees. Shareholders also have under certain circumstances the
right to remove one or more Trustees without a meeting.
The Trust reserves the right to create and issue any number of series
of shares, in which case the shares of each series would participate equally in
the earnings, dividends and assets of the particular series (except for
differences among any classes of shares of any series). Currently, the Trust has
only one series of shares, all of which are of the same class. The Trust may
establish additional classes of any series of shares. For example, the Fund may
offer another class of shares that has lower annual placement fees or
shareholder servicing fees. Prior to offering another class of shares, the Trust
would either issue a new private placement memorandum and a corresponding Part B
to its Registration Statement or amend this Private Placement Memorandum and its
corresponding Part B to reflect such issuance.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust". Under Massachusetts law, shareholders of such a business trust
may, under certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
The Portfolio, in which all of the investable assets of the Fund are
invested, is organized as a trust under the laws of the State of New York. The
Portfolio's Declaration of Trust provides that the Trust and other entities
investing in the Portfolio (I.E., other investment companies, insurance company
separate accounts and common and commingled trust funds) will each be liable for
all obligations of the Portfolio. However, the risk of the Trust incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance existed and the Portfolio itself was unable to meet
its obligations. Accordingly, the Trust's Trustees believe that neither the Fund
nor its shareholders will be adversely affected by reason of the Fund's
investing in the Portfolio. In addition, whenever the Trust is requested to vote
on a fundamental policy of the Portfolio, the Trust will hold a meeting of the
Fund's shareholders and will cast its vote as instructed by its shareholders.
Each investor in the Portfolio, including the Fund, may add to or
reduce its investment in the Portfolio on each Fund Business Day. At the close
of each such Fund Business Day, the value of each investor's beneficial interest
in the Portfolio will be determined by multiplying the net asset value of the
Portfolio by the percentage, effective for that day, which represents that
investor's share of the aggregate beneficial interests in the Portfolio. Any
additions or withdrawals, which are to be effected as of the close of business
on that day, will then be effected. The investor's percentage of the aggregate
beneficial interests in the Portfolio will then be recomputed as the percentage
equal to the fraction (i) the numerator of which is the value of such investor's
investment in the Portfolio as of the close of business on such day plus or
minus, as the case may be, the amount of any additions to or withdrawals from
the investor's investment in the Portfolio effected as of the close of business
on such day, and (ii) the denominator of which is the aggregate net asset value
of the Portfolio as of the close of business on such day plus or minus, as the
case may be, the amount of the net additions to or withdrawals from the
aggregate investments in the Portfolio by all investors in the Portfolio. The
percentage so determined will then be applied to determine the value of the
investor's interest in the Portfolio as of the close of business on the
following Fund Business Day.
16
<PAGE>
SERVICE ORGANIZATIONS, TRANSFER AGENT AND CUSTODIAN
ADMINISTRATIVE SERVICES PLAN
The Trust has adopted an Administrative Services Plan (the
"Administrative Plan") which provides that the Trust may obtain the services of
an administrator, shareholder servicing organizations, a transfer agent and a
custodian and may enter into agreements providing for the payment of fees for
such services. See "Management - Administrator" above "Service Organizations"
and "Transfer Agent and Custodian" below. The Portfolio has also adopted an
Administrative Services Plan which provides that the Portfolio may obtain the
services of an administrator, a transfer agent and a custodian, and may enter
into agreements providing for the payment of fees for such services.
SERVICE ORGANIZATIONS
The Trust may also contract with various banks, trust companies (other
than Mellon Equity), broker-dealers (other than Signature) or other financial
organizations (collectively, "Service Organizations") to provide administrative
services for the Trust, such as maintaining shareholder accounts and records.
The Fund may pay fees to Service Organizations (which may vary depending upon
the services provided) in amounts up to an annual rate of 0.25% of the daily net
asset value of the shares of the Fund owned by shareholders with which the
Service Organization has a servicing relationship.
Some Service Organizations may impose additional or different
conditions on their clients such as requiring their clients to invest more than
the minimum initial investment specified by the Fund or charging a direct fee
for servicing. If imposed, these fees would be in addition to any amounts which
might be paid to the Service Organization by the Fund. Each Service Organization
has agreed to transmit to its clients a schedule of any such fees. Shareholders
using Service Organizations are urged to consult them regarding any such fees or
conditions.
The Trust does not currently intend to enter into agreements with and
pay fees to Service Organizations, but it may do so in the future.
The Glass-Steagall Act and other applicable laws, among other things,
prohibit banks from engaging in the business of underwriting, selling or
distributing securities. There is currently no precedent prohibiting banks from
performing administrative and shareholder servicing functions as Service
Organizations. However, judicial or administrative decisions or interpretations
of such laws, as well as changes in either federal or state statutes or
regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, could prevent a bank Service Organization from
continuing to perform all or a part of its servicing activities. If a bank were
prohibited from so acting, its shareholder clients would be permitted to remain
shareholders of the Fund and alternative means for continuing the servicing of
such shareholders would be sought. It is not expected that shareholders would
suffer any adverse financial consequences as a result of any of these
occurrences.
TRANSFER AGENT AND CUSTODIAN
The Trust has entered into a Transfer Agency Agreement with Fundamental
Shareholder Services, Inc. ("FSSI"), pursuant to which FSSI acts as Transfer
Agent for the Trust. The Transfer Agent maintains an account for each
shareholder of the Fund, performs other transfer agency
17
<PAGE>
functions and acts as dividend disbursing agent for the Fund. Pursuant to
Custodian Agreements, Investors Bank & Trust Company ("IBT") acts as the
custodian of the Trust's assets (I.E., cash and the Fund's interest in the
Portfolio) and as the custodian of the Portfolio's assets (the "Custodian"). The
Custodian's responsibilities include safeguarding and controlling the
Portfolio's cash and securities, handling the receipt and delivery of
securities, determining income and collecting interest on the Portfolio's
investments, maintaining books of original entry for portfolio and fund
accounting and other required books and accounts, and calculating the daily net
asset value of shares of the Portfolio. Securities held by the Portfolio may be
deposited into certain securities depositaries. The Custodian does not determine
the investment policies of the Portfolio or decide which securities the
Portfolio will buy or sell. The Portfolio may, however, invest in securities of
the Custodian and may deal with the Custodian as principal in securities
transactions. IBT also serves as transfer agent for the Portfolio. For their
services, FSSI and IBT will receive such compensation as may from time to time
be agreed upon by each of them and the Fund or the Portfolio.
-----------
Part B of the Trust's Registration Statement filed with the Securities
and Exchange Commission contains more detailed information about the Trust and
the Portfolio, including information related to (i) investment policies and
restrictions of the Fund and the Portfolio, (ii) the Trustees, officers,
investment adviser, investment manager and administrator of the Trust and the
Portfolio, (iii) portfolio transactions, (iv) the Fund's shares, including
rights and liabilities of shareholders, (v) determination of the net asset value
of shares of the Fund, and (vi) the audited financial statements of the
Portfolio at July 31, 1995 and unaudited financial statements of the Portfolio
at January 31, 1996.
18
<PAGE>
PART B
ITEM 10. COVER PAGE.
Not applicable.
ITEM 11. TABLE OF CONTENTS.
PAGE
General Information and History 1
Investment Objectives and Policies 2
Management of the Trust and the Portfolio 7
Control Persons and Principal Holders of Securities 9
Investment Advisory, Management and Other Services 9
Portfolio Transactions and Brokerage Commissions 13
Capital Stock and Other Securities 15
Purchase, Redemption and Pricing of Securities 16
Tax Status 18
Underwriters 19
Calculations of Performance Data 20
Financial Statements 20
ITEM 12. GENERAL INFORMATION AND HISTORY.
Not applicable.
ITEM 13. INVESTMENT OBJECTIVES AND POLICIES.
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide its shareholders
with long-term total return (reflecting both dividend and price performance of
the Fund) which corresponds to the performance of the Domini Social Index
(sometimes referred to herein as the "Index"). There can, of course, be no
assurance that the Fund will achieve its investment objective. The investment
objective of the Fund may be changed without approval by the Fund's
shareholders.
INVESTMENT POLICIES
The Trust seeks to achieve the investment objective of he Fund by
investing all of the Fund's investable assets in the Portfolio, which has the
same investment objective as the Fund. The Trust may withdraw the Fund's
investment in the Portfolio at any time if the Board of Trustees of the Trust
determines that it is in the best interests of the Fund to do so. Upon any such
withdrawal, the Board of Trustees would consider what action might be taken,
including the investment of all the investable assets of the Fund in another
pooled investment entity having the same investment objective as the Fund, or
the retaining of an investment adviser to manage the Fund's assets in accordance
with the investment policies described below with respect to the Portfolio. The
approval of the Fund's shareholders would not be required to change any of the
Fund's investment policies.
The following supplements the information concerning the Portfolio's
investment policies contained in the Private Placement Memorandum and should
only be read in conjunction therewith.
1
<PAGE>
A company which is not included in the Standard & Poor's 500 Composite
Stock Price Index (the "S&P 500") may be included in the Domini Social Index
primarily in order to afford representation to an industrial sector which would
otherwise be under-represented in the Index. Because of the social criteria
applied in the selection of stocks comprising the Domini Social Index, industry
sector weighting in the Domini Social Index may vary materially from the
industry weightings in other stock indices, including the S&P 500.
The Portfolio does not purchase securities which the Portfolio
believes, at the time of purchase, will be subject to exchange controls or
foreign withholding taxes; however, there can be no assurance that such laws may
not become applicable to certain of the Portfolio's investments. In the event
unforeseen exchange controls or foreign withholding taxes are imposed with
respect to any of the Portfolio's investments, the effect may be to reduce the
income received by the Portfolio on such investments.
Although neither the Fund nor the Portfolio has any current intention
to do so, the Fund and the Portfolio may invest in securities which may be
resold pursuant to Rule 144A under the Securities Act of 1933 (the "Securities
Act").
It is a fundamental policy of the Portfolio and the Fund that neither
the Portfolio nor the Fund may invest more than 25% of the total assets of the
Portfolio or the Fund, respectively, in any one industry, although the Fund will
invest all of its investable assets in the Portfolio, and the Portfolio may and
would invest more than 25% of its assets in an industry if stocks in that
industry were to comprise more than 25% of the Domini Social Index. Based on the
current composition of the Index, this is considered highly unlikely. If the
Portfolio were to concentrate its investments in a single industry, the
Portfolio and the Fund would be more susceptible to any single economic,
political or regulatory occurrence than would be another investment company
which was not so concentrated.
LOANS OF SECURITIES: The Portfolio may lend its securities to brokers,
dealers and financial institutions, provided that (1) the loan is secured
continuously by collateral, consisting of U.S. Government securities or cash or
letters of credit, which is marked to the market daily to ensure that each loan
is fully collateralized at all times; (2) the Portfolio may at any time call the
loan and obtain the return of the securities loaned within five business days;
(3) the Portfolio will receive any interest or dividends paid on the securities
loaned; and (4) the aggregate market value of securities loaned will not at any
time exceed 30% of the total assets of the Portfolio.
The Portfolio will earn income for lending its securities because cash
collateral pursuant to these loans will be invested in short-term money market
instruments. Loans of securities involve a risk that the borrower may fail to
return the securities or may fail to provide additional collateral.
In connection with lending securities, the Portfolio may pay reasonable
finders, administrative and custodial fees. No such fees will be paid to any
person if it or any of its affiliates is affiliated with the Portfolio, the
Adviser or the Manager.
Although the Portfolio reserves the right to lend its securities, it
has no current intention of doing so in the foreseeable future.
RISK FACTORS INVOLVED IN OPTION CONTRACTS: Although it has no current
intention to do so, the Portfolio may in the future enter into certain
transactions in stock options for the purpose of hedging against possible
increases in the value of securities which are expected to be purchased by
2
<PAGE>
the Portfolio or possible declines in the value of securities which are expected
to be sold by the Portfolio. Generally, the Portfolio would only enter into such
transactions on a short-term basis pending readjustment of its holdings of
underlying stocks.
The purchase of an option on an equity security provides the holder
with the right, but not the obligation, to purchase the underlying security, in
the case of a call option, or to sell the underlying security, in the case of a
put option, for a fixed price at any time up to a stated expiration date. The
holder is required to pay a non-refundable premium, which represents the
purchase price of the option. The holder of an option can lose the entire amount
of the premium, plus related transaction costs, but not more. Upon exercise of
the option, the holder is required to pay the purchase price of the underlying
security in the case of a call option, or deliver the security in return for the
purchase price in the case of a put option.
Prior to exercise or expiration, an option position may be terminated
only by entering into a closing purchase or sale transaction. This requires a
secondary market on the exchange on which the position was originally
established. While the Portfolio would establish an option position only if
there appears to be a liquid secondary market therefor, there can be no
assurance that such a market will exist for any particular option contract at
any specific time. In that event, it may not be possible to close out a position
held by the Portfolio, and the Portfolio could be required to purchase or sell
the instrument underlying an option, make or receive a cash settlement or meet
ongoing variation margin requirements. The inability to close out option
positions also could have an adverse impact on the Portfolio's ability
effectively to hedge its portfolio.
Each exchange on which option contracts are traded has established a
number of limitations governing the maximum number of positions which may be
held by a trader, whether acting alone or in concert with others. The Adviser
does not believe that these trading and position limits would have an adverse
impact on the possible use of hedging strategies by the Portfolio.
The approval of the Fund and of the other investors in the Portfolio is
not required to change the investment objective or any of the investment
policies discussed above, including those concerning security transactions.
INVESTMENT RESTRICTIONS
The Trust and the Portfolio have each adopted the following policies
which may not be changed without approval by holders of a "majority of the
outstanding shares" of the Fund or the Portfolio, respectively, which as used in
this Part B means the vote of the lesser of (i) 67% or more of the outstanding
"voting securities" of the Fund or the Portfolio, respectively, present at a
meeting, if the holders of more than 50% of the outstanding "voting securities"
of the Fund or the Portfolio, respectively, are present or represented by proxy,
or (ii) more than 50% of the outstanding "voting securities" of the Fund or the
Portfolio, respectively. The term "voting securities" as used in this paragraph
has the same meaning as in the Investment Company Act of 1940, as amended (the
"1940 Act").
Except as described below, whenever the Trust is requested to vote on a
change in the investment restrictions of the Portfolio, the Trust will hold a
meeting of shareholders of the Fund and will cast its vote proportionately as
instructed by the Fund's shareholders. However, subject to applicable statutory
and regulatory requirements, the Trust would not request a vote of shareholders
of the Fund with respect to (i) any proposal relating to the Portfolio, which
proposal, if made with
3
<PAGE>
respect to the Fund, would not require the vote of the shareholders of the Fund,
or (ii) any proposal with respect to the Portfolio that is identical in all
material respects to a proposal that has previously been approved by
shareholders of the Fund. Any proposal submitted to holders in the Portfolio,
and that is not required to be voted on by shareholders of the Fund, would
nevertheless be voted on by the Trustees of the Trust.
Neither the Fund nor the Portfolio may:
(1) borrow money, except that as a temporary measure for extraordinary
or emergency purposes either the Fund or the Portfolio may borrow an amount not
to exceed 1/3 of the current value of the net assets of the Fund or the
Portfolio, respectively, including the amount borrowed (moreover, neither the
Fund nor the Portfolio may purchase any securities at any time at which
borrowings exceed 5% of the total assets of the Fund or the Portfolio,
respectively, taken in each case at market value) (it is intended that the
Portfolio would borrow money only from banks and only to accommodate requests
for the withdrawal of all or a portion of a beneficial interest in the Portfolio
while effecting an orderly liquidation of securities); for additional related
restrictions, see clause (i) under the caption "Non-Fundamental State and
Federal Restrictions" below;
(2) purchase any security or evidence of interest therein on margin,
except that either the Fund or the Portfolio may obtain such short-term credit
as may be necessary for the clearance of purchases and sales of securities and
except that either the Fund or the Portfolio may make deposits of initial
deposit and variation margin in connection with the purchase, ownership, holding
or sale of options;
(3) write any put or call option or any combination thereof, provided
that this shall not prevent (i) the purchase, ownership, holding or sale of
warrants where the grantor of the warrants is the issuer of the underlying
securities, or (ii) the purchase, ownership, holding or sale of options on
securities;
(4) underwrite securities issued by other persons, except that the Fund
may invest all or any portion of its assets in the Portfolio and except insofar
as either the Fund or the Portfolio may technically be deemed an underwriter
under the Securities Act in selling a security;
(5) make loans to other persons except (a) through the lending of
securities held by either the Fund or the Portfolio and provided that any such
loans not exceed 30% of its total assets (taken in each case at market value),
or (b) through the use of repurchase agreements or the purchase of short-term
obligations and provided that not more than 10% of its net assets will be
invested in repurchase agreements maturing in more than seven days; for
additional related restrictions, see paragraph (6) immediately following;
(6) invest in securities which are subject to legal or contractual
restrictions on resale (other than repurchase agreements maturing in not more
than seven days and other than securities which may be resold pursuant to Rule
144A under the Securities Act if the Board of Trustees determines that a liquid
market exists for such securities) if, as a result thereof, more than 10% of its
net assets (taken at market value) would be so invested (including repurchase
agreements maturing in more than seven days), except that the Fund may invest
all or any portion of its assets in the Portfolio;
(7) purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity contracts in
the ordinary course of business (the Fund and Portfolio reserve the freedom of
action to hold and to sell real estate acquired as a result of the ownership of
securities by the Fund or the Portfolio);
(8) make short sales of securities or maintain a short position, unless
at all times when a short position is open the Fund or the Portfolio, as
applicable, owns an equal amount of such securities or securities convertible
into or exchangeable, without payment of any further consideration, for
securities of the same issue as, and equal in amount to, the securities sold
short, and unless not more
4
<PAGE>
than 5% of the Fund's or the Portfolio's, as applicable, net assets (taken in
each case at market value) is held as collateral for such sales at any one time
(it is the present intention of the Portfolio and the Fund to make such sales
only for the purpose of deferring realization of gain or loss for federal income
tax purposes);
(9) issue any senior security (as that term is defined in the 1940 Act)
if such issuance is specifically prohibited by the 1940 Act or the rules and
regulations promulgated thereunder, except as appropriate to evidence a debt
incurred without violating paragraph (1) above;
(10) as to 75% of its assets, purchase securities of any issuer if such
purchase at the time thereof would cause more than 5% of the Portfolio's or the
Fund's, as applicable, assets (taken at market value) to be invested in the
securities of such issuer (other than securities or obligations issued or
guaranteed by the United States or any agency or instrumentality of the United
States), except that for purposes of this restriction the issuer of an option
shall not be deemed to be the issuer of the security or securities underlying
such contract and except that the Fund may invest all or any portion of its
assets in the Portfolio; or
(11) invest more than 25% of its assets in any one industry unless the
stocks in a single industry were to comprise more than 25% of the Domini Social
Index, in which case the Portfolio or the Fund, as applicable, will invest more
than 25% of its assets in that industry, and except that the Fund may invest all
of its assets in the Portfolio.
NON-FUNDAMENTAL STATE AND FEDERAL RESTRICTIONS: In order to comply with
certain state and federal statutes and regulatory policies, neither the Fund nor
the Portfolio will as a matter of operating policy:
(i) borrow money for any purpose in excess of 10% of the total assets of
the Fund or the Portfolio, respectively (taken in each case at cost) (moreover,
neither the Fund nor the Portfolio will purchase any securities at any time at
which borrowings exceed 5% of its total assets (taken at market value)),
(ii) pledge, mortgage or hypothecate for any purpose in excess of 10% of
the net assets of the Fund or the Portfolio, respectively (taken in each case at
market value), provided that collateral arrangements with respect to options,
including deposits of initial deposit and variation margin, are not considered a
pledge of assets for purposes of this restriction,
(iii) sell any security which it does not own unless by virtue of its
ownership of other securities it has at the time of sale a right to obtain
securities, without payment of further consideration, equivalent in kind and
amount to the securities sold, and provided that if such right is conditional
the sale is made upon the same conditions,
(iv) invest for the purpose of exercising control or management, except
that all of the assets of the Fund may be invested in the Portfolio,
(v) purchase securities issued by any registered investment company,
except that the Fund may invest all its assets in the Portfolio and except by
purchase in the open market where no commission or profit to a sponsor or dealer
results from such purchase other than the customary broker's commission, or
except when such purchase, though not made in the open market, is part of a plan
of merger or consolidation; provided, however, that (except for the Fund's
investment in the Portfolio) the Fund and the Portfolio will not purchase the
securities of any registered investment company if such purchase at the time
thereof would cause more than 10% of the total assets of the Fund or the
Portfolio, respectively (taken at the greater of cost or market value) to be
invested in the securities of such issuers or would cause more than 3% of the
outstanding voting securities of any such issuer to be held by the Fund or the
Portfolio, respectively; and provided, further, that (except for the Fund's
investment in the Portfolio) the Fund and the Portfolio shall not purchase
securities issued by any open-end investment company,
5
<PAGE>
(vi) invest more than 10% of the net assets of the Fund or the
Portfolio, respectively (taken at the greater of cost or market value), in
securities (excluding Rule 144A securities) that are restricted as to resale
under the Securities Act,
(vii) invest more than 15% of the net assets of the Fund or the
Portfolio, respectively (taken at the greater of cost or market value), (a) in
securities that are restricted as to resale by the Securities Act, and (b) in
securities that are issued by issuers which (including the period of operation
of any predecessor company or unconditional guarantor of such issuer) have been
in operation less than three years, provided, however, that no more than 5% of
the net assets of the Fund or the Portfolio, respectively, are invested in
securities issued by issuers which (including predecessors) have been in
operation less than three years,
(viii) purchase puts, calls, straddles, spreads and any combination
thereof if the value of its aggregate investment in such securities will exceed
5% of the Fund's or the Portfolio's total assets at the time of such purchase,
(ix) purchase securities of any issuer if such purchase at the time
thereof would cause it to hold more than 10% of any class of securities of such
issuer, for which purposes all indebtedness of an issuer shall be deemed a
single class and all preferred stock of an issuer shall be deemed a single
class, except that option contracts shall not be subject to this restriction,
and except that the Fund may invest all or any portion of its assets in the
Portfolio,
(x) purchase or retain any securities issued by an issuer any of whose
officers, directors, trustees or security holders is an officer or Trustee of
the Fund or the Portfolio, as the case may be, or is an officer or director of
the Adviser or the Manager, if after the purchase of the securities of such
issuer by the Fund or the Portfolio, as the case may be, one or more of such
persons owns beneficially more than 1/2 of 1% of the shares or securities, or
both, all taken at market value, of such issuer, and such persons owning more
than 1/2 of 1% of such shares or securities together own beneficially more than
5% of such shares or securities, or both, all taken at market value, except that
the Fund may invest all or any portion of its assets in the Portfolio,
(xi) invest more than 5% of the Fund's or the Portfolio's net assets in
warrants (valued at the lower of cost or market), but not more than 2% of the
Fund's or the Portfolio's net assets may be invested in warrants not listed on
the New York Stock Exchange Inc. ("NYSE") or the American Stock Exchange, or
(xii) make short sales of securities or maintain a short position,
unless at all times when a short position is open, the Fund or the Portfolio
owns an equal amount of such securities or securities convertible into or
exchangeable, without payment of any further consideration, for securities of
the same issue and equal in amount to the securities sold short, and unless not
more than 10% of the Fund's or the Portfolio's, respectively, net assets (taken
at market value) is represented by such securities, or securities convertible
into or exchangeable for such securities, at any one time (neither the Fund nor
the Portfolio has any current intention to engage in short selling).
Restrictions (i) through (xii) are not fundamental and may be changed
with respect to the Fund by the Fund without approval by the Fund's shareholders
or with respect to the Portfolio by the Portfolio without the approval of the
Fund or its other investors. The Fund will comply with the state securities laws
and regulations of all states in which it is registered. The Portfolio will
comply with the applicable investment limitations found in the state securities
laws and regulations of all states in which the Fund is registered.
PERCENTAGE RESTRICTIONS: If a percentage restriction or rating
restriction on investment or utilization of assets set forth above or referred
to in the Private Placement Memorandum is adhered to at the time an investment
is made or assets are so utilized, a later change in percentage resulting from
changes in the value of the securities held by the Fund or the Portfolio or a
later change in the rating of a security held by the Fund or the Portfolio will
not be considered a violation of policy; provided that if at any time the ratio
of borrowings of the Fund or the Portfolio to the net asset value
6
<PAGE>
of the Fund or the Portfolio, respectively, exceeds the ratio permitted by
Section 18(f) of the 1940 Act, the Fund or the Portfolio as the case may be,
will take the corrective action required by Section 18(f).
ITEM 14. MANAGEMENT OF THE TRUST AND THE PORTFOLIO.
The Trustees and officers of the Trust and the Portfolio and their
principal occupations during the past five years are set forth below. Their
titles may have varied during that period. Each Trustee and officer of the Trust
also serves the Portfolio in the same capacity. Asterisks indicate those
Trustees and officers who are "interested persons" (as defined in the 1940 Act)
of the Trust. Unless otherwise indicated below, the address of each Trustee and
officer is 6 St. James Avenue, Boston, Massachusetts 02116.
TRUSTEES
AMY LEE DOMINI* -- Chair and Trustee of the Trust and the Portfolio;
Officer of Kinder, Lydenberg, Domini & Co., Inc.; Trustee, Loring, Wolcott &
Coolidge (since 1987).
PHILIP W. COOLIDGE* -- President and Trustee of the Trust and the
Portfolio; Chairman, Chief Executive Officer and President, Signature Financial
Group, Inc. (since December, 1988) and Signature Broker-Dealer Services, Inc.
(since April, 1989).
ALLEN M. MAYES -- 7985 Willow Creek Drive, Beaumont, Texas 77707;
Trustee of the Trust and the Portfolio; Senior Associate General Secretary of
the General Board of Pensions of the United Methodist Church (since May, 1982);
Member of the Board of Directors of Investor Responsibility Research Center
(since January, 1989); Member of Board of Trustees of Wiley College (since
November, 1969).
TIMOTHY SMITH -- Interfaith Center for Corporate Responsibility, 475
Riverside Drive, New York, New York 10115; Trustee of the Trust and the
Portfolio; Executive Director of the Interfaith Center on Corporate
Responsibility (since 1974).
FREDERICK C. WILLIAMSON -- 5 Roger Williams Green, Providence, Rhode
Island 02904; Trustee of the Trust and the Portfolio; Rhode Island State
Historic Preservation Officer (since 1969); Trustee, National Park Trust (since
April 1992); Trustee, National Parks and Conservation Association (since 1986);
Chairman, Governor's Advisory Committee on Home Heating; Corporation Board,
Harvard Community Health Plan; President Emeritus, National Conference of State
Historic Preservation Officers; Trustee Emeritus, National Trust for Historic
Preservation; Treasurer and Past Chairman, R.I. Black Heritage Society.
Each Trustee is paid an annual fee as follows for serving as Trustee of
the Trust and the Portfolio and is reimbursed for expenses incurred in
connection with service as a Trustee. The compensation expected to be paid to
the Trustees for the fiscal year ending July 31, 1995 is set forth below. The
Trustees may hold various other directorships unrelated to the Trust or
Portfolio.
7
<PAGE>
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
AGGREGATE FROM THE
COMPENSATION TRUST
FROM THE AND THE
TRUST PORTFOLIO
<S> <C> <C>
Amy Lee Domini*, Chair and Trustee None None
Philip E. Coolidge*, President and None None
Trustee
Allen M. Mayes, Trustee $1,200 $1,200
Timothy Smith, Trustee $1,200 $1,200
Frederick C. Williamson, Sr., Trustee $1,200 $1,200
</TABLE>
OFFICERS
PETER D. KINDER -- Vice President of the Trust and the Portfolio;
Officer of Kinder, Lydenberg, Domini & Co., Inc. (since March, 1988).
STEVEN D. LYDENBERG -- Vice President of the Trust and the Portfolio;
Director of Research of Kinder, Lydenberg, Domini & Co., Inc. (since January,
1990); Investment Associate, Franklin Research and Development (from 1987 to
1989).
JOHN R. ELDER -- Treasurer of the Trust and the Portfolio; Vice
President, Signature Financial Group, Inc. (since April, 1995); Treasurer,
Phoenix Family of Mutual Funds (prior to April, 1995); Audit Manager, Price
Waterhouse (prior to 1983).
THOMAS M. LENZ -- Secretary of the Trust and the Portfolio; Vice
President and Associate General Counsel, Signature Financial Group, Inc. (since
November, 1989); Assistant Secretary, Signature Broker-Dealer Services, Inc.
(since February, 1991).
DAVID G. DANIELSON--Assistant Treasurer of the Trust and the Portfolio;
Assistant Manager, Signature Financial Group, Inc. (since May 1991); Graduate
Student, Northeastern University (from April 1990 to March 1991).
LINDA T. GIBSON -- Assistant Secretary of the Trust and the Portfolio;
Legal Counsel and Assistant Secretary, Signature Financial Group, Inc. (since
June, 1991); Assistant Secretary, Signature Broker-Dealer Services, Inc. (since
November, 1992); law student, Boston University School of Law (prior to May,
1992).
MOLLY S. MUGLER -- Assistant Secretary of the Trust and the Portfolio;
Legal Counsel and Assistant Secretary, Signature Financial Group, Inc. (since
December, 1988); Assistant Secretary, Signature Broker-Dealer Services, Inc.
(since April, 1989).
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BARBARA M. O'DETTE -- Assistant Treasurer of the Trust and the
Portfolio; Assistant Treasurer, Signature Financial Group, Inc. (since December,
1988) and Signature Broker-Dealer Services, Inc. (since April, 1989).
ANDRES E. SALDANA -- Assistant Secretary of the Trust and the
Portfolio; Legal Counsel and Assistant Secretary, Signature Financial Group,
Inc. (since November, 1992); Assistant Secretary, Signature Broker-Dealer
Services, Inc. (since September, 1993); Attorney, Ropes & Gray (September, 1990
to November, 1992).
DANIEL E. SHEA--Assistant Treasurer of the Trust and the Portfolio;
Assistant Manager of Fund Administration, Signature Financial Group, Inc., since
November 1993; Supervisor and Senior Technical Advisor, Putnam Investments,
since prior to 1990.
Messrs. Coolidge, Elder, Lenz, Danielson, Saldana and Shea and Mss.
Gibson, Mugler and O'Dette also hold similar positions for other investment
companies for which Signature or an affiliate serves as the principal
underwriter.
Any conflict of interest between the Trust and the Portfolio will be
resolved by the Trustees in accordance with their fiduciary obligations and in
accordance with the 1940 Act. The Trust's Declaration of Trust provides that it
will indemnify its Trustees and officers (the "Indemnified Parties") against
liabilities and expenses incurred in connection with litigation in which they
may be involved because of their offices with the Trust, unless, as to liability
to the Trust or Fund shareholders, it is finally adjudicated that the
Indemnified Parties engaged in wilful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in their offices, or unless with
respect to any other matter it is finally adjudicated that the Indemnified
Parties did not act in good faith in the reasonable belief that their actions
were in the best interests of the Trust. In case of settlement, such
indemnification will not be provided unless it has been determined by a court or
other body approving the settlement or other disposition, or by a reasonable
determination, based upon a review of readily available facts, by vote of a
majority of disinterested Trustees or in a written opinion of independent
counsel, that such Indemnified Parties have not engaged in wilful misfeasance,
bad faith, gross negligence or reckless disregard of their duties.
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
As of April 1, 1996 all Trustees and officers of the Trust and the
Portfolio as a group owned less than 1% of the Fund's outstanding shares. As of
the same date, there were no shareholders of record of the Fund.
ITEM 16. INVESTMENT ADVISORY, MANAGEMENT AND OTHER SERVICES.
ADVISER AND MANAGER
KLD provides advise to the Portfolio pursuant to an Investment Advisory
Agreement (the "Advisory Agreement"). The services provided by the Adviser
consist of determination of the stocks to be included in the Index and
evaluating, in accordance with the Adviser's social criteria, debt securities
which may be purchased by the Portfolio. The Adviser furnishes at its own
expense all facilities and personnel necessary in connection with providing
these services. The Advisory Agreement will continue in effect if such
continuance is specifically approved at least annually by the Portfolio's Board
of Trustees or by a majority of the outstanding voting securities
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of the Portfolio at a meeting called for the purpose of voting on the Advisory
Agreement (with the vote of each being in proportion to the amount of their
investment), and, in either case, by a majority of the Portfolio's Trustees who
are not parties to the Advisory Agreement or interested persons of any such
party at a meeting called for the purpose of voting on the Advisory Agreement.
The Advisory Agreement provides that the Adviser may render services to
others and may permit other investment companies in addition to the Portfolio
and the Trust to use the name "DominiSM" or "Domini Social IndexSM" in their
names. Pursuant to agreements with the Trust and the Portfolio, if KLD ceases to
be the investment adviser of the Portfolio, the Portfolio will be required to
discontinue the use of such service marks, and if either KLD ceases to be the
investment adviser of the Portfolio or the Trust ceases to invest all of the
Fund's assets in the Portfolio, the Trust will be required to discontinue the
use of such service marks. The Advisory Agreement is terminable without penalty
on not more than 60 days' nor less than 30 days' written notice by the Portfolio
when authorized either by majority vote of the shareholders of the Trust and of
the other investors in the Portfolio (with the vote of each being in proportion
to the amount of their investment) or by a vote of a majority of its Board of
Trustees, or by the Adviser, and will automatically terminate in the event of
its assignment. The Advisory Agreement provides that neither the Adviser nor its
personnel shall be liable for any error of judgment or mistake of law or for any
loss arising out of any investment or for any act or omission in its services to
the Portfolio, except for wilful misfeasance, bad faith or gross negligence or
reckless disregard of its or their obligations and duties under the Advisory
Agreement.
The Fund's Private Placement Memorandum contains a description of fees
payable to the Adviser for services under the Advisory Agreement. For the fiscal
years ended July 31, 1993, 1994 and 1995, the Adviser voluntarily waived all of
its advisory fees.
Mellon Equity manages the assets of the Portfolio pursuant to an
Investment Management Agreement (the "Management Agreement"). The Manager
furnishes at its own expense all services, facilities and personnel necessary in
connection with managing the Portfolio's investments and effecting securities
transactions for the Portfolio. The Management Agreement will continue in effect
if such continuance is specifically approved at least annually by the
Portfolio's Board of Trustees or by a majority vote of the shareholders of the
Trust and of the other investors in the Portfolio at a meeting called for the
purpose of voting on the Management Agreement (with the vote of each being in
proportion to the amount of their investment), and, in either case, by a
majority of the Portfolio's Trustees who are not parties to the Management
Agreement or interested persons of any such party at a meeting called for the
purpose of voting on the Management Agreement.
The Management Agreement provides that the Manager may render services
to others. The Management Agreement is terminable without penalty upon not more
than 60 days' nor less than 30 days' written notice by the Portfolio when
authorized either by majority vote of the shareholders of the Trust and of the
other investors in the Portfolio (with the vote of each being in proportion to
the amount of their investment) or by a vote of the majority of its Board of
Trustees, or by the Manager, and will automatically terminate in the event of
its assignment. The Management Agreement provides that neither the Manager nor
its personnel shall be liable for any error of judgment or mistake of law or for
any loss arising out of any investment or for any act or omission in its
services to the Portfolio, except for wilful misfeasance, bad faith or gross
negligence or reckless disregard for its or their obligations and duties under
the Management Agreement.
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The Fund's Private Placement Memorandum contains a description of fees
payable to the Manager for services under the Management Agreement. Prior to
November 21, 1994, State Street Bank and Trust Company (the "Former Manager")
served as investment manager to the Portfolio. For the fiscal year ended July
31, 1993, the Former Manager voluntarily waived all of its management fees. For
the fiscal year ended July 31, 1994, the Portfolio incurred $16,986 in
management fees to the Former Manager. For the period August 1, 1994 through
November 20, 1994, the Portfolio incurred $10,180 in management fees to the
Former Manager. For the period November 21, 1994 through July 31, 1995, the
Portfolio incurred $29,409 in management fees to the Manager.
ADMINISTRATOR
Pursuant to Administrative Services Agreements, Signature provides the
Trust and the Portfolio with general office facilities and supervises the
overall administration of the Trust and the Portfolio, including, among other
responsibilities, the negotiation of contracts and fees with, and the monitoring
of performance and billings of, the independent contractors and agents of the
Trust or the Portfolio; the preparation and filing of all documents required for
compliance by the Trust and the Portfolio with applicable laws and regulations;
and arranging for the maintenance of books and records of the Trust and the
Portfolio. The Administrator provides persons satisfactory to the Board of
Trustees of the Trust or the Portfolio to serve as officers of the Trust or the
Portfolio. Such officers, as well as certain other employees and Trustees of the
Trust or the Portfolio, may be directors, officers or employees of the
Administrator or its affiliates.
Pursuant to a Sub-Administrative Services Agreement between Signature
and KLD, KLD serves as Sub-Administrator of the Trust. In such capacity, KLD
performs certain administrative services requested by the Administrator,
including assisting personnel of the Administrator in answering questions from
the general public, the media and investors in the Trust regarding the
securities holdings of the Portfolio. For these services, KLD receives from the
Administrator such compensation as they may agree on from time to time.
The Fund's Private Placement Memorandum contains a description of the
fees payable to the Administrator by the Fund or payable to Signature, as the
administrator of the Portfolio (the "Portfolio Administrator") by the Portfolio,
as the case may be, under the Administrative Services Agreements. For the fiscal
years ended July 31, 1993, 1994 and 1995, the Portfolio Administrator
voluntarily waived all of its administrative services fees from the Portfolio.
The Administrative Services Agreement with the Trust provides that
Signature may render administrative services to others. The Administrative
Services Agreement with the Trust also provides that neither the Administrator
nor its personnel shall be liable for any error of judgment or mistake of law or
for any act or omission in the administration or management of the Trust, except
for wilful misfeasance, bad faith or gross negligence in the performance of its
or their duties or by reason of reckless disregard of its or their obligations
and duties under the Trust's Administrative Services Agreement.
The Administrative Services Agreement with the Portfolio provides that
Signature may render administrative services to others. The Administrative
Services Agreement with the Portfolio terminates automatically if it is assigned
and may be terminated without penalty by majority vote of the shareholders of
the Trust and of the other investors in the Portfolio (with the vote of each
being in proportion to the amount of their investment) or by either party on not
more than 60 days' nor less than 30 days' written notice. The Administrative
Services Agreement
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with the Portfolio also provides that neither Signature, as the Portfolio's
Administrator, nor its personnel shall be liable for any error of judgment or
mistake of law or for any act or omission in the administration or management of
the Portfolio, except for wilful misfeasance, bad faith or gross negligence in
the performance of its or their duties or by reason of reckless disregard of its
or their obligations and duties under the Portfolio's Administrative Services
Agreement.
ADMINISTRATIVE SERVICES PLANS; TRANSFER AGENT,
CUSTODIAN AND SERVICE ORGANIZATIONS
The Trust has adopted an Administrative Services Plan (the
"Administrative Plan") which provides that the Trust may obtain the services of
an administrator, one or more service organizations, a transfer agent and a
custodian, and may enter into agreements providing for the payment of fees for
such services. The Administrative Plan will continue in effect indefinitely if
such continuance is specifically approved at least annually by a vote of both a
majority of the Trust's Trustees and a majority of the Trust's Trustees who are
not "interested persons" of the Trust and who have no direct or indirect
financial interest in the operation of the Administrative Plan or in any
agreement related to such Plan ("Qualified Trustees"). The Administrative Plan
requires that the Trust shall provide to the Trust's Board of Trustees and the
Trust's Board of Trustees shall review, at least quarterly, a written report of
the amounts expended (and the purposes therefor) under the Administrative Plan.
The Administrative Plan may be terminated at any time by a vote of a majority of
the Trust's Qualified Trustees or with respect to the Fund by a majority vote of
the shareholders of the Fund. The Administrative Plan may not be materially
amended without a vote of the majority of both the Trust's Trustees and the
Trust's Qualified Trustees.
The Trust has entered into a Transfer Agency Agreement with Fundamental
Shareholder Services, Inc. ("FSSI") pursuant to which FSSI acts as the transfer
agent for the Trust. The Trust has entered into a Custodian Agreement with
Investors Bank & Trust Company ("IBT") pursuant to which IBT acts as custodian
for the Trust. The Portfolio has entered into a Transfer Agency Agreement with
IBT pursuant to which IBT acts as transfer agent for the Portfolio. The
Portfolio has entered into a Custodian Agreement with IBT pursuant to which IBT
acts as custodian for the Portfolio. For additional information, see "Transfer
Agent and Custodian" in the Private Placement Memorandum.
The Trust may from time to time enter into agreements with various
banks, trust companies (other than Mellon Equity), broker-dealers (other than
Signature) or other financial organizations to provide administrative services
for the Trust, such as maintaining shareholder accounts and records. For
additional information, see "Service Organizations, Transfer Agent and
Custodian--Service Organizations" in the Private Placement Memorandum.
The Portfolio has also adopted an Administrative Services Plan (the
"Portfolio Administrative Plan") which provides that the Portfolio may obtain
the services of an administrator, a transfer agent and a custodian, and may
enter into agreements providing for the payment of fees for such services. The
Portfolio Administrative Plan will continue in effect indefinitely if such
continuance is specifically approved at least annually by a vote of both a
majority of the Portfolio's Trustees and a majority of the Portfolio's Trustees
who are not "interested persons" of the Portfolio and who have no direct or
indirect financial interest in the operation of the Portfolio Administrative
Plan or in any agreement related to such Plan ("Qualified Trustees"). The
Portfolio Administrative Plan requires that the Portfolio shall provide to the
Portfolio's Board of Trustees and the Portfolio's Board of Trustees shall
review, at
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least quarterly, a written report of the amounts expended (and the purposes
therefor) under the Portfolio Administrative Plan. The Portfolio Administrative
Plan may be terminated at any time by a vote of a majority of the Portfolio's
Qualified Trustees or by a majority of the outstanding voting securities of the
Portfolio. The Portfolio Administrative Plan may not be amended to increase
materially the amount of permitted expenses thereunder without the approval of a
majority of the outstanding voting securities of the Portfolio and may not be
materially amended in any case without a vote of the majority of both the
Portfolio's Trustees and the Portfolio's Qualified Trustees.
EXPENSES
Pursuant to expense payment arrangements between Signature and each of
the Trust with respect to the Fund (effective April 8, 1996) and the Portfolio
(effective January 1, 1995), Signature has agreed to pay all of the operating
expenses of the Fund and the Portfolio. The arrangements will terminate on
December 31, 1999 unless sooner terminated by mutual agreement of the parties.
Under these arrangements, Signature receives expense payment fees computed and
paid monthly (i) from the Fund, at an annual rate equal to 0.02% of the Fund's
average daily net assets for its then-current fiscal year, and (ii) from the
Portfolio, at an annual rate equal to 0.50% of the Portfolio's average daily net
assets for its then-current fiscal year.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP are the independent auditors for the Trust and
for the Portfolio, providing audit services, tax return preparation, and
assistance and consultation with respect to the preparation of filings with the
Securities and Exchange Commission.
ITEM 17. PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS.
Specific decisions to purchase or sell securities for the Portfolio are
made by a portfolio manager who is an employee of the Manager and who is
appointed and supervised by its senior officers. Changes in the Portfolio's
investments are reviewed by its Board of Trustees. The portfolio manager of the
Portfolio may serve other clients of the Manager in a similar capacity.
The Portfolio's primary consideration in placing securities
transactions with broker-dealers for execution is to obtain and maintain the
availability of execution at the most favorable prices and in the most effective
manner possible. The Manager attempts to achieve this result by selecting
broker-dealers to execute transactions on behalf of the Portfolio and other
clients of the Manager on the basis of their professional capability, the value
and quality of their brokerage services, and the level of their brokerage
commissions. In the case of securities traded in the over-the-counter market
(where no stated commissions are paid but the prices include a dealer's markup
or markdown), the Manager normally seeks to deal directly with the primary
market makers, unless in its opinion, best execution is available elsewhere. In
the case of securities purchased from underwriters, the cost of such securities
generally includes a fixed underwriting commission or concession. From time to
time, soliciting dealer fees are available to the Manager on the tender of the
Portfolio's securities in so-called tender or exchange offers. Such soliciting
dealer fees are in effect recaptured for the Portfolio by the Manager. At
present no other recapture arrangements are in effect. Consistent with the
foregoing primary consideration, the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. and such other policies as the Trustees
of the Portfolio may determine, the Manager may consider sales of shares
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of the Fund and of securities of other investors in the Portfolio as a factor in
the selection of broker-dealers to execute the Portfolio's securities
transactions.
Under the Management Agreement and as permitted by Section 28(e) of the
Securities Exchange Act of 1934, the Manager may cause the Portfolio to pay a
broker-dealer acting on an agency basis which provides brokerage and research
services to the Manager or the Adviser an amount of commission for effecting a
securities transaction for the Portfolio in excess of the amount other broker-
dealers would have charged for the transaction if the Manager determines in good
faith that the greater commission is reasonable in relation to the value of the
brokerage and research services provided by the executing broker-dealer viewed
in terms of either a particular transaction or the Manager's or the Adviser's
overall responsibilities to the Portfolio or to its other clients. Not all of
such services are useful or of value in advising the Portfolio.
The term "brokerage and research services" includes advice as to the
value of securities, the advisability of investing in, purchasing, or selling
securities, and the availability of securities or of purchasers or sellers of
securities; furnishing analyses and reports concerning issues, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts; and effecting securities transactions and performing functions
incidental thereto such as clearance and settlement. However, because of the
Portfolio's policy of investing in accordance with the Domini Social Index, the
Manager and the Adviser currently intend to make only a limited use of such
brokerage and research services.
Although commissions paid on every transaction will, in the judgment of
the Manager, be reasonable in relation to the value of the brokerage services
provided, commissions exceeding those which another broker might charge may be
paid to broker-dealers who were selected to execute transactions on behalf of
the Portfolio and the Manager's or the Adviser's other clients, in part for
providing advice as to the availability of securities or of purchasers or
sellers of securities and services in effecting securities transactions and
performing functions incidental thereto such as clearance and settlement.
Certain broker-dealers may be willing to furnish statistical, research and other
factual information or services to the Manager or the Adviser for no
consideration other than brokerage or underwriting commissions.
The Manager and the Adviser attempt to evaluate the quality of research
provided by brokers. The Manager and the Adviser sometimes use evaluations
resulting from this effort as a consideration in the selection of brokers to
execute portfolio transactions. However, neither the Manager nor the Adviser is
able to quantify the amount of commissions which are paid as a result of such
research because a substantial number of transactions are effected through
brokers which provide research but which are selected principally because of
their execution capabilities.
The fees that the Portfolio pays to the Manager and the Adviser will
not be reduced as a consequence of the Portfolio's receipt of brokerage and
research services. To the extent the Portfolio's securities transactions are
used to obtain brokerage and research services, the brokerage commissions paid
by the Portfolio will exceed those that might otherwise be paid for such
portfolio transactions and research, by an amount which cannot be presently
determined. Such services may be useful and of value to the Manager or the
Adviser in serving both the Portfolio and other clients and, conversely, such
services obtained by the placement of brokerage business of other clients may be
useful to the Manager or the Adviser in carrying out its obligations to the
Portfolio. While such services are not expected to reduce the expenses of the
Manager or the Adviser, the Manager or the Adviser would, through use of the
services, avoid the additional expenses which would be incurred if it should
attempt to develop comparable
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information through its own staff. For the fiscal years ended July 31, 1993,
1994 and 1995, the Portfolio paid brokerage commissions of $8,000, $13,000 and
$15,222, respectively.
In certain instances there may be securities which are suitable for the
Portfolio as well as for one or more of the Manager's or the Adviser's other
clients. Investment decisions for the Portfolio and for the Manager's or the
Adviser's other clients are made with a view to achieving their respective
investment objectives. It may develop that a particular security is bought or
sold for only one client even though it might be held by, or bought or sold for,
other clients. Likewise, a particular security may be bought for one or more
clients when one or more clients are selling that same security. Some
simultaneous transactions are inevitable when several clients receive investment
advice from the same investment adviser, particularly when the same security is
suitable for the investment objectives of more than one client. When two or more
clients are simultaneously engaged in the purchase or sale of the same security,
the securities are allocated among clients in a manner believed to be equitable
to each. It is recognized that in some cases this system could have a
detrimental effect on the price or volume of the security as far as the
Portfolio is concerned. However, it is believed that the ability of the
Portfolio to participate in volume transactions will produce better executions
for the Portfolio.
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.
The Trust is a Massachusetts business trust established under a
Declaration of Trust dated as of April 1, 1996. Its authorized capital consists
of an unlimited number of shares of beneficial interest of $0.01 par value,
issued in separate series, or series. Each share of each series represents an
equal proportionate interest in that series with each other share of that
series.
The assets of the Trust received for the issue or sale of the shares of
each fund and all income, earnings, profits and proceeds thereof, subject only
to the rights of creditors, are specifically allocated to such series and
constitute the underlying assets of such series. The underlying assets of each
series are segregated on the books of account, and are to be charged with the
liabilities in respect to such series and with such a share of the general
liabilities of the Trust. If a series were unable to meet its obligations, the
assets of all other series might be available to creditors for that purpose, in
which case the assets of such other series could be used to meet liabilities
which are not otherwise properly chargeable to them. Expenses with respect to
any two or more series are to be allocated in proportion to the asset value of
the respective series except where allocations of direct expenses can otherwise
be fairly made. The officers of the Trust, subject to the general supervision of
the Trustees, have the power to determine which liabilities are allocable to a
given series, or which are general or allocable to two or more series. In the
event of the dissolution or liquidation of the Trust or any series, the holders
of the shares of any series are entitled to receive as a class the value of the
underlying assets of such shares available for distribution to shareholders.
Shares of the Trust entitle their holder to one vote per share;
however, separate votes are taken by each series on matters affecting an
individual series. For example, a change in investment policy for a series would
be voted upon only by shareholders of the series involved. The Trust's
Declaration of Trust provides that, at any meeting of shareholders of the Trust
or of any series, a Shareholder Servicing Agent may vote any shares as to which
such Shareholder Servicing Agent is the agent of record and which are not
represented in person or by proxy at the meeting, proportionately in accordance
with the votes cast by holders of all shares otherwise represented at the
meeting in person or by proxy as to which such Shareholder Servicing Agent is
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the agent of record. Any shares so voted by a Shareholder Servicing Agent will
be deemed represented at the meeting for purposes of quorum requirements.
The Trustees of the Trust have the authority to designate additional
series and to designate the relative rights and preferences as between the
different series. There is presently one series so designated. All shares issued
and outstanding will be fully paid and nonassessable by the Trust, and
redeemable as described in this Part B and in the Private Placement Memorandum.
The Declaration of Trust provides that obligations of the Trust are not
binding upon the Trustees individually but only upon the property of the Trust,
that the Trustees and officers will not be liable for errors of judgment or
mistakes of fact or law, and that the Trust will indemnify its Trustees and
officers against liabilities and expenses incurred in connection with litigation
in which they may be involved because of their offices with the Trust unless, as
to liability to Trust or Fund shareholders, it is finally adjudicated that they
engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in their offices, or unless with respect to any
other matter it is finally adjudicated that they did not act in good faith in
the reasonable belief that their actions were in the best interests of the
Trust. In the case of settlement, such indemnification will not be provided
unless it has been determined by a court or other body approving the settlement
or other disposition, or by a reasonable determination, based upon a review of
readily available facts, by vote of a majority of disinterested Trustees or in a
written opinion of independent counsel, that such officers or Trustees have not
engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of their duties.
Under Massachusetts law, shareholders of a Massachusetts business trust
may, under certain circumstances, be held personally liable as partners for its
obligations and liabilities. However, the Declaration of Trust contains an
express disclaimer of shareholder liability for acts or obligations of the Fund
and provides for indemnification and reimbursement of expenses out of Fund
property for any shareholder held personally liable for the obligations of the
Fund. The Declaration of Trust also provides for the maintenance, by or on
behalf of the Trust and the Fund, of appropriate insurance (for example,
fidelity bonding and errors and omissions insurance) for the protection of the
Fund and its shareholders and the Trust's Trustees, officers, employees and
agents covering possible tort and other liabilities. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which both inadequate insurance existed and the Fund
itself was unable to meet its obligations.
ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES.
The net asset value of each share of the Fund is determined each day on
which the NYSE is open for trading ("Fund Business Day"). (As of the date of
this Part B, the NYSE is open for trading every weekday except for the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day). This
determination of net asset value of shares of the Fund is made once during each
such day as of the close of the NYSE by dividing the value of the Fund's net
assets (i.e., the value of its investment in the Portfolio and any other assets
less its liabilities, including expenses payable or accrued) by the number of
shares outstanding at the time the determination is made. Purchases and
redemptions will be effected at the time of determination of net asset value
next following the receipt of any purchase or redemption order deemed to be in
good order. See "Purchases and Redemptions of Shares" in the Private Placement
Memorandum.
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The value of the Portfolio's net assets (i.e., the value of its
securities and other assets less its liabilities, including expenses payable or
accrued) is determined at the same time and on the same day as the Fund
determines its net asset value per share. The net asset value of the Fund's
investment in the Portfolio is equal to the Fund's pro rata share of the total
investment of the Fund and of other investors in the Portfolio less the Fund's
pro rata share of the Portfolio's liabilities. Equity securities held by the
Portfolio are valued at the last sale price on the exchange on which they are
primarily traded or on the NASDAQ system for unlisted national market issues, or
at the last quoted bid price for securities in which there were no sales during
the day or for unlisted securities not reported on the NASDAQ system. If the
Portfolio purchases option contracts, such option contracts which are traded on
commodities or securities exchanges are normally valued at the settlement price
on the exchange on which they are traded. Short-term obligations with remaining
maturities of less than sixty days are valued at amortized cost, which
constitutes fair value as determined by the Board of Trustees of the Portfolio.
Portfolio securities (other than short-term obligations with remaining
maturities of less than sixty days) for which there are no such quotations or
valuations are valued at fair value as determined in good faith by or at the
direction of the Portfolio's Board of Trustees.
A determination of value used in calculating net asset value must be a
fair value determination made in good faith utilizing procedures approved by the
Portfolio's Board of Trustees. While no single standard for determining fair
value exists, as a general rule, the current fair value of a security would
appear to be the amount which the Portfolio could expect to receive upon its
current sale. Some, but not necessarily all, of the general factors which may be
considered in determining fair value include: (i) the fundamental analytical
data relating to the investment; (ii) the nature and duration of restrictions on
disposition of the securities; and (iii) an evaluation of the forces which
influence the market in which these securities are purchased and sold. Without
limiting or including all of the specific factors which may be considered in
determining fair value, some of the specific factors include: type of security,
financial statements of the issuer, cost at date of purchase, size of holding,
discount from market value, value of unrestricted securities of the same class
at the time of purchase, special reports prepared by analysts, information as to
any transactions or offers with respect to the security, existence of merger
proposals or tender offers affecting the security, price and extent of public
trading in similar securities of the issuer or comparable companies, and other
relevant matters.
Interest income on short-term obligations held by the Portfolio is
determined on the basis of interest accrued less amortization of premium.
Each investor in the Portfolio, including the Fund, may add to or
reduce its investment in the Portfolio on each Fund Business Day. At the close
of each such business day, the value of each investor's interest in the
Portfolio will be determined by multiplying the net asset value of the Portfolio
by the percentage representing that investor's share of the aggregate beneficial
interests in the Portfolio effective for that day. Any additions or withdrawals,
which are to be effected as of the close of business on that day, will then be
effected. The investor's percentage of the aggregate beneficial interests in the
Portfolio will then be re-computed as the percentage equal to the fraction (i)
the numerator of which is the value of such investor's investment in the
Portfolio as of the close of business on such day plus or minus, as the case may
be, the amount of any additions to or withdrawals from the investor's investment
in the Portfolio effected as of the close of business on such day, and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of the
close of business on such day plus or minus, as the case may be, the amount of
the net additions to or withdrawals from the aggregate investments in the
Portfolio by
17
<PAGE>
all investors in the Portfolio. The percentage so determined will then be
applied to determine the value of the investor's interest in the Portfolio as of
the close of business on the following Fund Business Day.
ITEM 20. TAX STATUS.
Each year the Fund intends to qualify and elect to be treated as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"), by meeting all applicable requirements of
Subchapter M, including requirements (applied through the Fund's proportionate
interest in the Portfolio) as to the nature of the Fund's gross income, the
amount of Fund distributions and the composition and holding period of the
Fund's portfolio assets. Because the Fund intends to distribute all of its net
investment income and net realized capital gains to shareholders in accordance
with the timing requirements imposed by the Code, it is not expected that the
Fund will be required to pay any federal income or excise taxes. If the Fund
should fail to qualify as a "regulated investment company" in any year, the Fund
would incur a regular corporate federal income tax upon its taxable income and
Fund distributions would generally be taxable as ordinary dividend income to the
shareholders. As long as it qualifies as a "regulated investment company" under
the Code, the Fund will not be required to pay Massachusetts income or excise
taxes.
Under interpretations of the Internal Revenue Service, (i) the
Portfolio will be treated for federal income tax purposes as a partnership and
(ii) for purposes of determining whether the Fund satisfies the income and
diversification requirements to maintain its status as a regulated investment
company, the Fund, as an investor in the Portfolio, will be deemed to own a
proportionate share of the Portfolio's assets and will be deemed to be entitled
to the Portfolio's income or loss attributable to that share. The Portfolio has
advised the Fund that it intends to conduct its operations so as to enable its
investors, including the Fund, to satisfy those requirements.
Shareholders of the Fund normally will have to pay federal income taxes
and any state or local income taxes on the dividends and capital gain
distributions they receive from the Fund. Dividends from ordinary income and any
distributions from net short-term capital gains are taxable to shareholders as
ordinary income for federal income tax purposes, whether the distributions are
made in cash or in additional shares. A portion of the Fund's ordinary income
dividends (but none of the Fund's capital gains) is normally eligible for the
dividends received deduction for corporations if the recipient otherwise
qualifies for that deduction with respect to its holding of Fund shares.
Availability of the deduction for a particular corporate shareholder is subject
to certain limitations, and deducted amounts may be subject to the alternative
minimum tax and result in certain basis adjustments. Distributions of net
capital gains (i.e., the excess of net long-term capital gains over net
short-term capital losses), whether made in cash or in additional shares, are
taxable to shareholders as long-term capital gains for federal income tax
purposes without regard to the length of time the shareholders have held their
shares.
Amounts not distributed on a timely basis in accordance with the
calendar year distribution requirement are subject to a nondeductible 4% excise
tax. To prevent imposition of the excise tax, the Fund must, and intends to,
distribute during each calendar year substantially all of its ordinary income
for that year and substantially all of its capital gain in excess of its capital
losses for that year, plus any undistributed ordinary income and capital gains
from previous years. Any Fund dividend that is declared in October, November, or
December of any calendar year,
18
<PAGE>
that is payable to shareholders of record in such a month, and that is paid the
following January will be treated as if received by the shareholders on December
31 of the year in which the divided is declared. The Fund will notify
shareholders regarding the federal tax status of its distributions after the end
of each calendar year. Any Fund distribution will have the effect of reducing
the per share net asset value of shares in the Fund by the amount of the
distribution. Shareholders purchasing shares shortly before the record date of
any distribution may thus pay the full price for the shares and then effectively
receive a portion of the purchase price back as a taxable distribution.
In general, any gain or loss realized upon a taxable disposition of
shares of the Fund by a shareholder that holds such shares as a capital asset
will be treated as long-term capital gain or loss if the shares have been held
for more than twelve months and otherwise as a short-term capital gain or loss.
However, any loss realized upon a disposition of shares in the Fund held for six
months or less will be treated as a long-term capital loss to the extent of any
distributions of net capital gain made with respect to those shares. Any loss
realized upon a disposition of shares may also be disallowed under rules
relating to wash sales.
The Trust anticipates that the Portfolio will be treated as a
partnership for federal income tax purposes. As such, the Portfolio is not
subject to federal income taxation. Instead, the Fund must take into account, in
computing its federal income tax liability, its share of the Portfolio's income,
gains, losses, deductions, credits and tax preference items, without regard to
whether it has received any cash distributions from the Portfolio. Withdrawals
by the Fund from the Portfolio generally will not result in the Fund recognizing
any gain or loss for federal income tax purposes, except that (i) gain will be
recognized to the extent that any cash distributed exceeds the basis of the
Fund's interest in the Portfolio prior to the distribution, (ii) income or gain
will be realized if the withdrawal is in liquidation of the Fund's entire
interest in the Portfolio and includes a disproportionate share of any
unrealized receivables held by the Portfolio, and (iii) loss will be recognized
if the distribution is in liquidation of that entire interest and consists
solely of cash and/or unrealized receivables. The basis of the Fund's interest
in the Portfolio generally equals the amount of cash and the basis of any
property that the Fund invests in the Portfolio, increased by the Fund's share
of income from the Portfolio and decreased by the Fund's share of losses from
the Portfolio and the amount of any cash distributions and the basis of any
property distributed from the Portfolio.
The Portfolio is organized as a New York trust. The Portfolio is not
subject to any income or franchise tax in the State of New York or the
Commonwealth of Massachusetts. The investment by the Fund in the Portfolio does
not cause the Fund to be liable for any income or franchise tax in the State of
New York.
Fund shareholders may be subject to state and local taxes on Fund
distributions to them. Shareholders are advised to consult with their tax
advisers with respect to the particular tax consequences to them of an
investment in the Fund.
ITEM 21. UNDERWRITERS.
The Trust has adopted a Placement Plan which provides that the Fund may
pay the Placement Agent a fee not to exceed 0.25% per annum of the Fund's
average daily net assets in anticipation of, or as reimbursement for, expenses
incurred in connection with the sale of shares of the Fund, such as payments to
broker-dealers who advise shareholders regarding the purchase,
19
<PAGE>
sale or retention of shares of the Fund, payments to employees of the Placement
Agent, advertising expenses (if any) and the expenses of printing and
distributing prospectuses or offering memoranda and reports used for sales
purposes, expenses of preparing and printing sales literature and other
distribution-related expenses. No payments under the Placement Plan will be made
to Service Organizations, although Service Organizations may receive payments
under the Administrative Services Plan referred to below.
The Placement Plan will continue in effect indefinitely if such
continuance is specifically approved at least annually by a vote of both a
majority of the Trust's Trustees and a majority of the Trust's Trustees who are
not "interested persons" of the Trust and who have no direct or indirect
financial interest in the operation of the Placement Plan or in any agreement
related to such Plan ("Qualified Trustees"). The Placement Agent will provide to
the Trustees of the Trust a quarterly written report of amounts expended by it
under the Placement Plan and the purposes for which such expenditures were made.
The Placement Plan further provides that the selection and nomination of the
Trust's Qualified Trustees shall be committed to the discretion of the
disinterested Trustees of the Trust. The Placement Plan may be terminated at any
time by a vote of a majority of the Trust's Qualified Trustees or with respect
to the Fund by a vote of the shareholders of the Fund. The Placement Plan may
not be amended to increase materially the amount of permitted expenses
thereunder with respect to the Fund without the approval of shareholders and may
not be materially amended in any case without a vote of the majority of both the
Trust's Trustees and the Trust's Qualified Trustees. The Placement Agent will
preserve copies of any plan, agreement or report made pursuant to the Placement
Plan for a period of not less than six (6) years from the date of the Placement
Plan, and for the first two (2) years the Placement Agent will preserve such
copies in an easily accessible place.
The Trust has entered into an Exclusive Placement Agent Agreement with
Signature as Placement Agent. Under the Exclusive Placement Agent Agreement, the
Placement Agent acts as the agent of the Trust in connection with the offering
of shares of the Fund.
ITEM 22. CALCULATIONS OF PERFORMANCE DATA.
Not applicable.
ITEM 23. FINANCIAL STATEMENTS.
The audited financial statements of the Portfolio dated as of July 31, 1995
now follow. The unaudited financial statements of the Portfolio dated as of
January 31, 1996 are hereby incorporated herein by reference from the
semi-annual report of the Portfolio (SEC File No. 811-5824) as filed with the
U.S. Securities and Exchange Commission pursuant to Section 30(b) of the 1940
Act and Rule 30b2-1 thereunder; a copy of such report will be provided, without
charge, to each person receiving this Part B.
20
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
(SHOWING PERCENTAGE OF INVESTMENTS TO NET ASSETS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ISSUER SHARES VALUE
- -------------------------------- ---------- -----------
<S> <C> <C>
COMMON STOCKS -- 97.9%
APPAREL -- 0.9%
Brown Group Inc............ 400 $ 9,950
Hartmarx Corp*............. 600 3,675
Lands' End Inc............. 800 12,300
Liz Claiborne, Inc......... 2,000 45,750
Nike Inc. (Class B)........ 1,900 171,713
Oshkosh B' Gosh, Inc....... 300 5,100
Phillips-Van Heusen
Corp...................... 600 9,450
Reebok International
Ltd....................... 2,200 78,925
Russell Corp............... 1,000 28,250
Stride Rite Corp........... 1,200 13,350
VF Corp.................... 1,600 88,400
-----------
466,863
-----------
COMMERCIAL PRODUCTS & SERVICES -- 1.9%
Autodesk Inc............... 1,200 54,300
Cintas Corp................ 1,200 45,000
Deluxe Corp................ 2,000 64,250
Donnelley, R.R. & Sons
Co........................ 3,900 145,762
Harland (J.H.) Co.......... 900 19,912
HON Industries Inc......... 800 21,800
Kelly Services (Class A)... 975 26,568
Miller, (Herman) Inc....... 800 19,200
Moore Corp., Ltd........... 2,400 52,800
National Service
Industries, Inc........... 1,300 38,350
New England Business
Service Inc............... 300 6,412
Pitney Bowes Inc........... 3,800 152,475
Standard Register Co. ..... 700 14,962
Wallace Computer Services,
Inc....................... 500 29,188
Xerox Corp................. 2,700 321,634
-----------
1,012,613
-----------
CONSTRUCTION -- 0.3%
Centex Corp................ 900 25,200
Fleetwood Enterprises
Inc....................... 1,300 26,813
Graco Inc.................. 200 5,800
Kaufman & Broad Home
Corp...................... 800 11,500
Rouse Co................... 1,200 25,200
Sherwin-Williams Co. ...... 2,200 80,300
TJ International Inc....... 400 8,350
-----------
183,163
-----------
<CAPTION>
ISSUER SHARES VALUE
- -------------------------------- ---------- -----------
<S> <C> <C>
CONSUMER PRODUCTS & SERVICES -- 0.2%
Avery Dennison Corp........ 1,400 $ 56,175
C C H Inc.................. 700 14,875
ISCO Inc. ................. 200 2,050
Tennant Co................. 200 5,000
Zurn Industries Inc........ 200 4,375
-----------
82,475
-----------
ENERGY -- 4.0%
Amoco Corp................. 12,600 847,350
Anadarko Petroleum Corp.... 1,600 68,000
Apache Corp................ 1,900 52,013
Atlantic Richfield Co...... 4,100 472,525
Consolidated Natural Gas
Co. ...................... 2,400 90,000
ENERGEN Corp............... 300 6,600
Enron Corp................. 6,550 227,612
Helmerich & Payne Inc...... 600 17,250
Louisiana Land &
Exploration Co. .......... 900 35,775
Oryx Energy Co.*........... 2,600 37,375
Pennzoil Co. .............. 1,300 60,938
Rowan Companies Inc.*...... 1,800 13,050
Santa Fe Energy Resources
Inc.*..................... 2,500 23,438
Sun Company................ 3,000 88,125
Williams Companies Inc.
(The)..................... 2,800 103,600
-----------
2,143,651
-----------
FINANCIAL -- 10.6%
Ahmanson (H.F.) & Co....... 3,000 67,125
American Express Co. ...... 12,700 488,950
Banc One Corporation....... 10,223 324,587
Bank of Boston Corp........ 2,850 123,619
BankAmerica Corp........... 9,600 518,400
Bankers Trust (N.Y.)
Corp...................... 2,000 129,000
Barnett Banks Inc.......... 2,500 138,750
Beneficial Corp............ 1,400 66,325
Block (H. & R.), Inc....... 2,800 105,000
Cincinnati Financial
Corp...................... 1,305 70,470
CoreStates Financial
Corp...................... 3,700 135,050
Dime Bancorp Inc.*......... 2,600 27,625
Edwards (A.G.), Inc........ 1,525 37,362
Federal National Mortgage
Association............... 6,900 646,013
Fifth Third Bancorp........ 1,700 96,900
</TABLE>
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS -- CONTINUED
JULY 31, 1995
(SHOWING PERCENTAGE OF INVESTMENTS TO NET ASSETS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ISSUER SHARES VALUE
- -------------------------------- ---------- -----------
FINANCIAL -- CONTINUED
<S> <C> <C>
First Chicago Corp......... 2,300 $ 139,725
First Fed Financial
Corp.*.................... 200 3,000
First Fidelity
Bancorporation............ 2,050 129,150
Golden West Financial
Corp...................... 1,500 70,125
Great Western Financial
Corp...................... 3,600 76,950
Household International
Inc....................... 2,500 131,250
Mellon Bank Corp........... 3,750 150,469
Merrill Lynch & Co.,
Inc....................... 4,550 252,525
Morgan (J.P.) & Co.,
Inc....................... 4,700 343,687
NBD Bancorp Inc............ 4,100 139,400
Norwest Corp............... 8,400 237,300
PNC Bank Corp.............. 5,800 142,825
Piper Jaffray Inc.......... 300 5,063
ReliaStar Financial
Corp...................... 900 34,312
Shawmut National Corp...... 3,350 103,431
Student Loan Marketing
Association............... 1,950 105,056
SunTrust Banks, Inc........ 3,000 181,125
Transamerica Corp.......... 1,750 108,281
Value Line Inc............. 300 8,925
Vermont Financial Services
Corp...................... 100 2,750
Wachovia Corp.............. 4,400 167,750
Wells Fargo & Co........... 1,250 227,969
Wesco Financial Corp....... 150 19,350
-----------
5,755,594
-----------
FOOD & BEVERAGES -- 10.2%
Archer-Daniels-Midland
Co........................ 13,425 221,512
Ben & Jerry's (Class A)*... 100 1,400
CPC International Inc...... 3,800 234,650
Campbell Soup Co........... 6,450 301,537
Coca-Cola Company.......... 32,400 2,134,350
Fleming Cos., Inc.......... 1,200 31,650
General Mills, Inc......... 4,150 216,837
Heinz (H.J.) Company....... 6,200 268,926
Hershey Foods Corp......... 2,300 132,537
Kellogg Co................. 5,600 402,501
PepsiCo, Inc............... 20,200 946,833
Quaker Oats Co............. 3,500 121,625
Ralston Purina Group....... 2,550 136,425
Smucker (J.M.) Co. (Class
A)........................ 1,000 21,875
Super Valu Inc............. 1,900 58,425
Sysco Corp................. 4,700 146,288
TCBY Enterprises, Inc...... 500 2,938
Tootsie Roll Industries,
Inc....................... 618 22,254
<CAPTION>
ISSUER SHARES VALUE
- -------------------------------- ---------- -----------
<S> <C> <C>
FOOD & BEVERAGES -- CONTINUED
Wrigley, (Wm.) Jr. Co...... 3,000 $ 133,500
-----------
5,536,063
-----------
HEALTHCARE -- 8.0%
Acuson Corp.*.............. 1,000 11,500
Allergan Inc............... 1,700 51,425
Alza Corp.*................ 2,400 61,800
Angelica Corp.............. 300 7,575
Apogee Enterprises, Inc.... 300 5,194
Becton Dickinson &
Company................... 1,800 105,975
Bergen Brunswig Corp.
(Class A)................. 945 20,436
Biomet Inc.*............... 2,900 44,225
Community Psychiatric
Centers*.................. 1,000 12,750
Forest Laboratories,
Inc.*..................... 1,250 55,468
Humana Inc.*............... 4,000 77,500
Johnson & Johnson.......... 16,500 1,183,867
Manor Care Inc............. 1,550 50,181
Medtronic Inc.............. 2,900 237,800
Merck & Co., Inc........... 31,600 1,631,350
Mylan Laboratories Inc..... 2,200 66,275
Schering-Plough Corp....... 9,600 446,400
St. Jude Medical Inc....... 1,100 60,225
Stryker Corp............... 1,200 52,500
Sunrise Medical Inc.*...... 600 16,425
United American
Healthcare*............... 200 3,550
US Health Care Inc......... 4,300 135,988
-----------
4,338,409
-----------
HOUSEHOLD GOODS -- 4.8%
Alberto Culver Co. (Class
B)........................ 700 21,175
Avon Products, Inc......... 1,700 115,600
Bassett Furniture
Industries, Inc........... 300 7,500
Church & Dwight Co.,
Inc....................... 400 8,400
Clorox Co.................. 1,400 91,875
Colgate-Palmolive Co....... 3,700 259,000
Handleman Co............... 700 7,262
Harman International
Industries, Inc. ......... 600 23,625
Hasbro Inc................. 2,150 66,919
Leggett & Platt Inc........ 1,050 48,694
Mattel, Inc................ 5,669 160,149
Maytag Corp................ 2,900 47,488
Newell Co.................. 4,200 106,575
</TABLE>
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS -- CONTINUED
JULY 31, 1995
(SHOWING PERCENTAGE OF INVESTMENTS TO NET ASSETS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ISSUER SHARES VALUE
- -------------------------------- ---------- -----------
HOUSEHOLD GOODS -- CONTINUED
<S> <C> <C>
Oneida, Ltd................ 200 $ 3,000
Procter & Gamble Co. ...... 17,600 1,212,200
Rubbermaid Inc............. 4,100 121,975
Shaw Industries............ 3,400 57,375
Snap-On Tools Corp......... 1,000 41,750
Springs Industries, Inc.
(Class A)................. 600 23,550
Stanhome, Inc.............. 400 12,850
Stanley Works (The)........ 1,200 47,550
Thomas Industries.......... 200 3,525
Whirlpool Corp............. 1,900 109,725
Zenith Electronics
Corp.*.................... 1,600 14,000
-----------
2,611,762
-----------
INSURANCE -- 6.0%
Aetna Life & Casualty
Co........................ 2,900 179,438
Alexander & Alexander
Services Inc. ............ 1,100 25,300
Allstate Corp.............. 1 20
American General Corp...... 5,200 189,150
American International
Group, Inc................ 12,100 907,541
Chubb Corp................. 2,200 184,800
CIGNA Corp................. 1,900 153,188
GEICO Corp................. 1,700 94,775
General Re Corp............ 2,100 278,513
Hartford Steam Boiler...... 600 26,700
Jefferson-Pilot Corp....... 1,300 72,637
Lincoln National Corp...... 2,400 98,700
Marsh & McLennan Companies,
Inc....................... 1,900 150,100
Providian Corp............. 2,500 89,688
SAFECO Corp................ 1,600 93,600
St. Paul Companies......... 2,100 102,375
Torchmark Corp............. 1,800 69,300
Travelers Corp............. 8,209 388,859
UNUM Corp.................. 1,900 91,912
USF&G Corp................. 2,600 42,900
USLIFECorp................. 500 20,875
-----------
3,260,371
-----------
MANUFACTURING -- 1.6%
Applied Materials, Inc.*... 2,300 237,800
Briggs & Stratton Corp..... 800 26,700
Cincinnati Milacron Inc.... 900 28,125
Clarcor Inc................ 300 6,937
<CAPTION>
ISSUER SHARES VALUE
- -------------------------------- ---------- -----------
<S> <C> <C>
MANUFACTURING -- CONTINUED
Dionex Corp.*.............. 200 9,625
Fastenal Co................ 1,200 $ 40,200
Goulds Pumps, Inc.......... 600 13,200
Hunt Manufacturing Co...... 400 5,600
Illinois Tool Works Inc.... 2,850 168,150
James River Corp. of
Virginia.................. 2,000 66,750
Lawson Products, Inc. ..... 300 8,063
Millipore Corp............. 1,200 41,400
Modine Manufacturing Co.... 800 25,000
Nordson Corp............... 500 27,875
Thermo Electron Corp....... 2,250 96,188
Watts Industries Inc.
(Class A)................. 1,000 23,250
Wellman Inc................ 1,000 26,875
-----------
851,738
-----------
MEDIA -- 7.6%
BET Holdings Inc. (Class
B)*....................... 400 7,100
CBS, Inc................... 1,600 124,200
Capital Cities/ABC, Inc.... 3,900 455,325
Comcast Corp. (Class A).... 5,900 119,475
Disney (Walt) Company
(The)..................... 13,300 779,716
Dow Jones & Co. Inc........ 2,600 92,300
Frontier Corp.............. 2,300 61,813
Gannett Co., Inc........... 3,700 202,575
King World Productions
Inc.*..................... 900 37,688
Knight-Ridder Inc.......... 1,250 70,312
Lee Enterprises Inc........ 500 18,875
McGraw-Hill Inc............ 1,300 99,937
Media General Inc. (Class
A)........................ 600 20,400
Meredith Corp.............. 600 17,250
New York Times Co. (The)
(Class A)................. 2,500 63,750
Nynex Corp................. 10,800 445,500
SBC Communications......... 15,500 745,937
Scholastic Inc.*........... 500 32,875
Tele-Communications, Inc.
(Class A)*................ 16,400 410,000
Times Mirror Co. (Class
A)........................ 3,100 89,125
Turner Broadcasting System
Inc. (Class A)............ 2,200 47,850
Viacom, Inc.*.............. 1,800 91,575
Washington Post Co. (The)
(Class B)................. 300 81,300
-----------
4,114,878
-----------
</TABLE>
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS -- CONTINUED
JULY 31, 1995
(SHOWING PERCENTAGE OF INVESTMENTS TO NET ASSETS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ISSUER SHARES VALUE
- -------------------------------- ---------- -----------
MISCELLANEOUS -- 2.0%
<S> <C> <C>
Alco Standard Corp......... 1,350 $ 109,856
Allwaste, Inc.*............ 1,200 6,750
American Greetings Corp.
(Class A)................. 2,050 62,013
Avnet, Inc................. 1,000 52,000
Bemis Co., Inc............. 1,400 39,725
CPI Corp................... 400 8,700
Cross, A.T. Co. (Class
A)........................ 500 7,875
DeVRY INC.*................ 400 9,100
Fedders Corp............... 750 5,063
Fuller (H.B.) Co........... 500 17,625
General Signal Corp........ 1,250 46,094
Groundwater Technology,
Inc.*..................... 200 2,650
Harcourt General Inc....... 1,900 85,500
Hillenbrand Industries
Inc....................... 1,700 50,575
Ionics Inc.*............... 400 15,250
Jostens Inc................ 1,400 31,850
KENETECH Corp.*............ 900 10,800
Marriott International
Inc....................... 3,100 112,375
National Education
Corp.*.................... 600 3,225
Omnicom Group, Inc......... 1,000 60,375
Polaroid Corporation....... 1,150 49,306
Premier Industrial Corp.... 2,350 58,162
Sealed Air Corp.*.......... 500 25,375
Service Corp.
International............. 2,350 80,194
Sonoco Products Co......... 2,205 56,228
Toro Co. (The)............. 300 8,587
Whitman Corp............... 2,600 50,700
-----------
1,065,953
-----------
RESOURCE DEVELOPMENT -- 3.2%
Air Products & Chemicals,
Inc....................... 2,900 162,400
Aluminum Co. of America.... 4,600 261,625
ARCO Chemical Co........... 2,450 117,600
Battle Mountain Gold
Co. ...................... 1,800 17,100
Betz Laboratories, Inc..... 700 31,588
Cabot Corp................. 1,200 67,650
Calgon Carbon Corp......... 1,200 14,250
Consolidated Papers Inc.... 1,100 65,313
Cyprus Amax Minerals Co. .. 2,600 72,475
Echo Bay Mines Ltd......... 3,000 27,562
Inland Steel Industries
Inc....................... 1,200 34,500
Mead Corp.................. 1,400 82,425
Morton International
Inc....................... 3,900 117,000
Nalco Chemical Co.......... 1,650 58,781
<CAPTION>
ISSUER SHARES VALUE
- -------------------------------- ---------- -----------
<S> <C> <C>
RESOURCE DEVELOPMENT -- CONTINUED
Nucor Corp................. 2,300 $ 123,625
Praxair Inc. .............. 3,700 103,600
Scott Paper Company........ 3,800 174,325
Sigma-Aldrich
Corporation............... 1,300 65,325
Westvaco Corp.............. 1,800 81,450
Worthington Industries,
Inc....................... 2,250 46,969
-----------
1,725,563
-----------
RETAIL -- 11.6%
Albertson's, Inc........... 6,400 190,400
American Stores Co......... 3,800 111,625
Bob Evans Farms, Inc....... 1,200 23,400
Charming Shoppes Inc. ..... 2,000 9,750
Circuit City Stores Inc.... 2,500 92,813
Claire's Stores Inc. ...... 500 10,000
Dayton-Hudson Corp. ....... 1,800 136,125
Dillard Department
Stores.................... 2,900 89,900
Dollar General Corp. ...... 1,656 55,898
Egghead Inc.*.............. 300 3,938
Gap, Inc. (The)............ 3,800 132,525
Giant Food Inc. (Class
A)........................ 1,400 42,700
Gibson Greetings Inc....... 500 7,375
Great Atlantic & Pacific
Tea Co., Inc.............. 1,200 33,450
Hannaford Brothers Co...... 1,300 34,938
Hechinger Co. (Class A).... 800 5,300
Home Depot, Inc. (The)..... 12,033 528,030
Huffy Corp................. 300 3,750
International Dairy Queen,
Inc. (Class A)*........... 600 12,600
K-Mart Corp................ 11,400 179,550
Kroger Company*............ 2,800 87,150
Lillian Vernon Corp........ 200 3,700
Limited, Inc. (The)........ 8,950 183,475
Longs Drug Stores, Inc..... 500 18,312
Lowe's Companies, Inc...... 4,000 147,500
Luby's Cafeterias, Inc..... 500 9,875
May Department Stores Co... 6,300 273,263
McDonald's Corp............ 17,800 687,608
Melville Corp.............. 2,650 95,400
Mercantile Stores Co.,
Inc....................... 1,000 46,625
Morrison Restaurants
Inc....................... 750 17,531
Nordstrom Inc.............. 2,100 84,525
Penney, J.C. Co., Inc...... 5,950 287,831
Pep Boys - Manny, Moe &
Jack...................... 1,450 40,781
Petrie Stores Corp. ....... 1,200 8,400
</TABLE>
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS -- CONTINUED
JULY 31, 1995
(SHOWING PERCENTAGE OF INVESTMENTS TO NET ASSETS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ISSUER SHARES VALUE
- -------------------------------- ---------- -----------
RETAIL -- CONTINUED
<S> <C> <C>
Price/Costco Inc.*......... 4,765 $ 85,472
Ryan's Family Steak Houses,
Inc.*..................... 1,300 9,100
Sears Roebuck & Co......... 9,900 322,987
Skyline Corp............... 200 3,350
Specs Music Inc.*.......... 200 700
TJX Companies Inc. (The)... 2,000 29,250
Tandy Corp................. 1,900 112,813
Toys 'R' Us, Inc.*......... 6,950 194,600
Wal-Mart Stores, Inc....... 58,800 1,565,550
Walgreen Co................ 3,200 165,600
Whole Foods Market*........ 300 4,575
Woolworth (F.W.) Co........ 3,500 54,688
-----------
6,244,728
-----------
TECHNOLOGIES -- 14.9%
Advanced Micro Devices,
Inc.*..................... 2,650 86,456
Amdahl Corp.*.............. 3,000 29,813
American Power Conversion
Corp.*.................... 2,400 45,000
Analog Devices, Inc.*...... 1,850 67,062
Apple Computer, Inc........ 3,200 144,000
Automatic Data Processing,
Inc....................... 3,700 236,800
Baldor Electric Co......... 400 13,050
Borland International,
Inc.*..................... 600 7,500
Cisco Systems, Inc.*....... 7,000 390,250
Compaq Computer Corp.*..... 6,700 340,025
Computer Assoc.
International Inc......... 4,100 300,837
Cooper Industries Inc. .... 2,900 108,388
DSC Communications Corp.*.. 3,050 163,937
Digital Equipment Corp.*... 3,800 145,825
Grainger, (W.W.) Inc. ..... 1,300 76,213
Hewlett-Packard Co......... 13,100 1,020,163
Hubbell Inc. (Class B)..... 830 48,762
Intel Corp................. 21,300 1,384,563
International Business
Machines Inc.............. 15,000 1,633,125
MCI Communications Corp.... 17,200 412,800
Micron Technology, Inc..... 5,300 331,229
Novell Inc.*............... 9,300 168,562
Perkin-Elmer Corp.......... 1,100 37,262
Quarterdeck Corp.*......... 400 5,875
Raychem Corp............... 1,200 45,600
<CAPTION>
ISSUER SHARES VALUE
- -------------------------------- ---------- -----------
<S> <C> <C>
TECHNOLOGIES -- CONTINUED
Shared Medical Systems
Corp...................... 600 $ 24,975
Solectron Corp.*........... 1,200 43,650
Sprint Corp................ 8,900 304,825
Stratus Computer Inc.*..... 700 18,200
Sun Microsystems Inc.*..... 2,400 115,500
Tandem Computers Inc.*..... 2,900 38,063
Tektronix, Inc............. 850 40,906
Tellabs, Inc.*............. 2,300 102,350
Thomas & Betts Corp........ 500 33,813
Xilinx Inc.*............... 600 71,925
-----------
8,037,304
-----------
TRANSPORTATION -- 2.5%
AMR Corp.*................. 2,000 150,000
Airborne Freight Corp...... 400 8,550
Alaska Air Group, Inc.*.... 300 5,775
CSX Corp................... 2,700 226,463
Conrail Inc................ 2,100 129,675
Consolidated Freightways,
Inc....................... 1,100 26,263
Delta Air Lines, Inc....... 1,300 103,025
Federal Express Corp.*..... 1,450 97,875
GATX Corp.................. 600 30,225
Norfolk Southern Corp...... 3,400 246,925
Roadway Services........... 1,100 55,550
Ryder System, Inc.......... 1,950 48,506
Santa Fe Pacific Corp...... 2,656 75,696
Southwest Airlines Inc..... 3,800 109,250
UAL Corp.*................. 350 52,281
Yellow Corp................ 600 9,075
-----------
1,375,134
-----------
UTILITIES -- 7.0%
American Water Works Co.,
Inc....................... 900 27,563
Ameritech Corp............. 14,100 682,087
Atlanta Gas & Light Co. ... 700 24,500
Bell Atlantic Corp......... 11,200 641,200
BellSouth Corp............. 12,700 860,425
Brooklyn Union Gas Company
(The)..................... 1,250 30,469
California Energy Co.,
Inc.*..................... 1,200 22,950
Citizens Utilities Co.
(Class A)*................ 5,695 64,074
Connecticut Energy Corp.... 200 3,900
Eastern Enterprises........ 500 15,125
</TABLE>
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS -- CONTINUED
JULY 31, 1995
(SHOWING PERCENTAGE OF INVESTMENTS TO NET ASSETS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ISSUER SHARES VALUE
- -------------------------------- ---------- -----------
UTILITIES -- CONTINUED
<S> <C> <C>
El Paso Natural Gas Co..... 1,000 $ 25,375
Equitable Resources Inc.... 800 22,200
Idaho Power Co............. 1,000 24,250
LG & E Energy Corp......... 900 34,762
MCN Corp. ................. 1,700 32,300
NICOR Inc. ................ 1,200 30,450
Noram Energy Corp.......... 3,400 23,375
Northwestern Public Service
Co. ...................... 200 5,200
Oklahoma Gas & Electric
Co........................ 1,000 34,000
ONEOK Inc.................. 700 16,275
Pacific Enterprises........ 2,200 53,075
Pacific Telesis Group...... 10,800 305,100
Peoples Energy Corp........ 900 23,625
Potomac Electric Power
Co........................ 2,800 58,100
Public Service Co. of
Colorado.................. 1,600 50,600
Southern New England
Telecom................... 1550 53,087
Telephone & Data Systems... 1,500 58,125
US West Inc................ 11,900 510,213
Washington Gas Light Co.... 1,200 21,900
-----------
3,754,305
-----------
VEHICLE COMPONENTS -- 0.6%
Cooper Tire & Rubber Co.... 2,150 55,363
Cummins Engine Co., Inc.... 1,150 48,300
Dana Corp.................. 2,600 76,700
Federal-Mogul Corp. ....... 800 17,100
Genuine Parts.............. 3,200 120,800
SPX Corp................... 200 2,875
<CAPTION>
ISSUER SHARES VALUE
- -------------------------------- ---------- -----------
<S> <C> <C>
VEHICLE COMPONENTS -- CONTINUED
Smith, A.O................. 400 $ 10,900
Spartan Motors Inc.*....... 300 3,038
Worldway Corp.*............ 200 2,175
-----------
337,251
-----------
Total Common Stocks (Cost
$43,200,668)....................... 52,897,818
-----------
PREFERRED STOCK -- 0.6%
FEDERAL SPONSORED CREDIT -- 0.6%
Federal Home Loan Mortgage
Corp...................... 4,600 301,300
-----------
Total Preferred Stock (Cost
239,422)........................... 301,300
-----------
TOTAL INVESTMENTS -- 98.5%
(COST, $43,440,090)(A)................. 53,199,118
OTHER ASSETS, LESS LIABILITIES --
1.5%................................... 803,670
-----------
NET ASSETS -- 100.0%.................... $54,002,788
-----------
-----------
</TABLE>
- ------------
*Non-income producing security.
(a)The aggregate cost for federal income tax purposes is $43,453,725, the
aggregate gross unrealized appreciation is $10,474,465, and the aggregate
gross unrealized depreciation is $729,072, resulting in net unrealized
appreciation of $9,745,393.
See Notes to Financial Statements
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments at value (Cost $43,440,090) (Note 1).......................... $53,199,118
Cash...................................................................... 813,520
Dividends receivable...................................................... 99,082
Deferred organization expenses (Note 1)................................... 8,657
-----------
Total Assets.......................................................... 54,120,377
-----------
LIABILITIES:
Expenses payable (Note 2)................................................. 21,045
Payable for securities purchased.......................................... 96,544
-----------
Total Liabilities..................................................... 117,589
-----------
NET ASSETS APPLICABLE TO INVESTORS' BENEFICIAL INTERESTS...................... $54,002,788
-----------
-----------
NET ASSETS CONSIST OF:
Paid-in capital........................................................... $54,002,788
-----------
-----------
</TABLE>
See Notes to Financial Statements
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends.................................................................. $ 902,936
EXPENSES (NOTES 1 AND 2):
Investment management fee...................................... $ 39,589
Investment advisory fee........................................ 19,795
Administration fee............................................. 19,795
Expense reimbursement fee...................................... 118,532
Amortization of organization expenses.......................... 10,359
----------
Total Expenses............................................. 208,070
Less: Waiver of expenses....................................... (39,590)
----------
Net Expenses........................................................... 168,480
----------
NET INVESTMENT INCOME.......................................................... 734,456
NET REALIZED GAIN ON INVESTMENTS (NOTE 3):
Proceeds from sales............................................ 2,483,407
Cost of securities sold........................................ 2,077,980
----------
Net realized gain on investments....................................... 405,427
NET UNREALIZED APPRECIATION OF INVESTMENTS:
Beginning of year.............................................. 1,029,594
End of year.................................................... 9,759,028
----------
Net change in unrealized appreciation.................................. 8,729,434
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................... $9,869,317
----------
----------
</TABLE>
See Notes to Financial Statements
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JULY 31,1995 JULY 31, 1994
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income....................................................... $ 734,456 $ 545,816
Net realized gain on investments............................................ 405,427 207,560
Net change in unrealized appreciation....................................... 8,729,434 (216,317)
-------------- --------------
Net Increase in Net Assets Resulting from Operations.................... 9,869,317 537,059
-------------- --------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS:
Additions................................................................... 14,888,452 14,967,462
Reductions.................................................................. (2,076,641) (1,377,702)
-------------- --------------
Net increase in Net Assets from Transactions in Investors'
Beneficial Interests................................................... 12,811,811 13,589,760
-------------- --------------
Total Increase in Net Assets........................................ 22,681,128 14,126,819
NET ASSETS:
Beginning of year........................................................... 31,321,660 17,194,841
-------------- --------------
End of year................................................................. $ 54,002,788 $ 31,321,660
-------------- --------------
-------------- --------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
FOR THE PERIOD
AUGUST 10,
YEAR ENDED 1990***
---------------------------------------------------------- TO JULY 31,
JULY 31, 1995 JULY 31, 1994 JULY 31, 1993 JULY 31, 1992 1991
------------- ------------- ------------- ------------- ---------------
FINANCIAL HIGHLIGHTS:
<S> <C> <C> <C> <C> <C>
Net investment
income to average
net assets*........ 1.85% 2.13% 1.88% 1.99% 1.85%**
Expenses to average
net assets*........ 0.43% 0.29% 0.29% 0.29% 0.29%**
Portfolio turnover
rate............... 6% 8% 4% 3% --
</TABLE>
- --------------------------------------------------------------------------------
*Reflects a voluntary waiver of fees by the Administrator and Adviser. Due to
the limitations set forth in the expense payment arrangements, had the
Administrator and Adviser not waived their fees, the ratios of net investment
income and expenses to average net assets as stated would not have changed
for the periods ended July 31, 1993, 1992 and 1991. For the years ended July
31, 1995 and 1994, the ratios of net investment income and expenses to
average net assets would have been 1.75% and 0.53% and 2.00% and 0.42%,
respectively. (See Note 2.)
**Annualized.
***Commencement of operations.
See Notes to Financial Statements
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES. Domini Social Index Portfolio (the
"Portfolio") is registered under the Investment Company Act of 1940 (the "Act")
as a no-load, diversified, open-end management investment company which was
organized as a trust under the laws of the State of New York on June 7, 1989.
The Portfolio intends to correlate its investment portfolio as closely as is
practicable with the Domini Social Index (the "Index"), which is a common stock
index developed and maintained by Kinder, Lydenberg, Domini & Co., Inc. ("KLD"),
the Portfolio's Adviser. The Declaration of Trust permits the Trustees to issue
an unlimited number of beneficial interests in the Portfolio. The Portfolio
commenced operations upon effectiveness on August 10, 1990 and began investment
operations on June 3, 1991. The following is a summary of the significant
accounting policies of the Portfolio:
A. VALUATION OF INVESTMENTS. The Portfolio values securities at the last
reported sale price, or at the last reported bid price if no sales are reported.
B. DIVIDEND INCOME. Dividend income is recorded on the ex-dividend date.
C. FEDERAL TAXES. The Portfolio's policy is to comply with the applicable
provisions of the Internal Revenue Code. Accordingly, no provision for Federal
taxes is necessary.
D. DEFERRED ORGANIZATION EXPENSE. Expenses incurred by the Portfolio in
connection with its organization are being amortized by the Portfolio on a
straight-line basis over a five-year period.
E. OTHER. Investment transactions are accounted for on the trade date.
Gains and losses are determined on the basis of identified cost.
2. TRANSACTIONS WITH AFFILIATES.
A. INVESTMENT ADVISORY FEES. The Portfolio has retained KLD as the
Investment Adviser of the Portfolio. The services provided by KLD consist of the
determination of the stocks to be included in the Index and evaluating, in
accordance with KLD's criteria, debt securities which may be purchased by the
Portfolio. For its services under the Investment Advisory Agreement, KLD
receives from the Portfolio a fee accrued daily at an annual rate equal to 0.05%
of the Portfolio's average daily net assets. For the year ended July 31, 1995,
KLD voluntarily waived all of its fees.
B. INVESTMENT MANAGEMENT FEES. For the period August 1, 1994 through
November 20, 1994, the Portfolio retained State Street Bank and Trust Company
("State Street") as the Investment Manager of the Portfolio. State Street did
not determine the composition of the Index. For its services under the prior
Management Agreement, State Street received from the Portfolio a fee accrued
daily at an annual rate equal to 0.10% of the Portfolio's average daily net
assets. For the period August 1, 1994 through November 20, 1994, the Portfolio
accrued and paid investment management fees of $10,180 to State Street.
On October 5, 1994, the Board of Trustees of the Portfolio voted to
terminate the investment management agreement between the Portfolio and State
Street. Termination was effective as of November 21, 1994, at which time Mellon
Equity Associates ("MEA") assumed responsibility for the management of the
Portfolio's assets. MEA does not determine the composition of the Index. Under
the new Management Agreement, the Portfolio pays MEA an investment management
fee equal on an annual basis to the following percentages of the Portfolio's
average daily net assets for its then-current fiscal year: 0.10% of assets up to
$50 million; 0.30% of assets between $50 million and $100 million; 0.20% of
assets between $100 million and $500 million; and 0.15% of assets over $500
million. For the period November 21, 1994 through July 31, 1995, the Portfolio
accrued and paid investment management fees of $29,409 to MEA.
C. EXPENSE PAYMENT AGREEMENTS. Pursuant to expense payment arrangements
between Signature and each of the Fund and the Portfolio effective January 1,
1995, Signature has agreed to pay all of the operating expenses of the Fund and
the Portfolio, including the advisory and management fees of the Portfolio and
the administration fees of the Fund and the Portfolio. Under these arrangements,
Signature receives expense payment fees (i) from the Fund, at an annual rate
equal to 0.48% of the Fund's average daily net assets for its then-current
fiscal year, and (ii) from the Portfolio, at an annual rate equal to 0.50% of
the Portfolio's average daily net assets for its then-current fiscal year. As a
result, the aggregate annual operating expenses (including amortization of
organization expenses) of the Fund and the Portfolio will not exceed 0.98% of
the average daily net assets of the Fund. After the expense payment arrangements
terminate on December 31, 1999, the dollar-based expenses of the Fund and the
Portfolio will each be paid directly. Prior to January 1, 1995, the Fund and the
Portfolio each had entered into expense reimbursement agreements (the "Prior
Agreements") with Signature pursuant to which the aggregate annual operating
expenses (including amortization of an organization expenses) of the Fund and
the Portfolio would not exceed 0.98% of the Fund's average daily net assets for
its then-current fiscal year. Under the Prior Agreements, Signature agreed to
pay the expenses of the Fund and the Portfolio (except for fees payable under
each of the Administrative Services Agreements, the Distribution Agreement, the
Management Agreement, the Advisory Agreement and expenses related to the
organization of the Fund and the Portfolio) until April 30, 2000, all subject to
reimbursement by the Fund or the Portfolio, as the case may be. For the year
ended July 31, 1995, Signature incurred approximately $90,542 in expenses on
behalf of the Portfolio.
D. REIMBURSEMENT OF EXPENSES. The Administrator has agreed to pay certain
expenses of the Domini Social Equity Fund (the "Fund"), formerly the Domini
Social Index Trust, and the Portfolio subject to reimbursement. To accomplish
such reimbursement, the Administrator may either receive an expense
reimbursement fee from the Fund and the
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JULY 31, 1995
- --------------------------------------------------------------------------------
Portfolio or may reimburse the Fund and the Portfolio directly for expenses
incurred such that after such reimbursement the aggregate expenses of the Fund
and the Portfolio will not exceed 0.98% of the average daily net assets of the
Fund. For the period August 1, 1994 through December 31, 1994, the aggregate
expenses of the Fund and the Portfolio were limited to 0.75% of the average
daily net assets of the Fund. The expense reimbursement fee agreement will
terminate on the earlier of April 30, 2000, or the date on which the cumulative
reimbursement fee equals the cumulative payments of such reimbursable expenses
made by the Administrator. For the year ended July 31, 1995, the Administrator
incurred approximately $90,542 in expenses on behalf of the Portfolio.
3. INVESTMENT TRANSACTIONS. Purchase and sales of investments, other than U.S.
Government securities and short-term obligations, aggregated $15,541,954 and
$2,483,407, respectively.
<PAGE>
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Trustees and Shareholders
Domini Social Index Portfolio:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of the Domini Social Index Portfolio as
of July 31, 1995, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the years in the
two-year period then ended and the financial highlights for each of the years in
the four-year period then ended and for the period from August 10, 1990
(commencement of operations) to July 31, 1991. These financial statements and
financial highlights are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1995 by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Domini Social Index Portfolio as of July 31, 1995, the results of its operations
for the year then ended, the changes in its net assets for each of the years in
the two-year period then ended and financial highlights for each of the years in
the four-year period then ended and for the period from August 10, 1990 to July
31, 1991, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
August 25, 1995
<PAGE>
PART C
Item 24. Financial Statements and Exhibits.
(a) Financial Statements.
The following financial statements are included in Part A: Not
applicable.
The following financial statements are included in Part B:
Domini Social Index Portfolio
Portfolio Investments at July 31, 1995
Statement of Assets and Liabilities at July 31, 1995
Statement of Operations at July 31, 1995
Statement of Changes in Net Assets for the fiscal years ended July 31, 1995 and
July 31, 1994
Financial Highlights
Notes to Financial Statements at July 31, 1995
Report of Independent Auditors
The following financial statements are incorporated by reference into
Part B:
Domini Social Index Portfolio
Portfolio Investments at January 31, 1995
Statement of Assets and Liabilities at January 31, 1995
Statement of Operations at January 31, 1995
Statement of Changes in Net Assets for the year ended July 31, 1995
and January 31, 1996
Notes to Financial Statements, January 31, 1995
(b) Exhibits filed herewith:
1. Declaration of Trust.
2. By-Laws.
8. Custody Agreement between the Registrant and Fundamental Shareholder
Services, Inc.
9(a). Administrative Services Agreement between the Registrant and Signature, as
administrator.
9(b) Transfer Agency Agreement between the Registrant and Investors Bank &
Trust Company.
9(c) Administrative Services Plan.
15. Placement Plan.
Item 25. Persons Controlled by or under Common Control with Registrant.
Not applicable.
Item 26. Number of Holders of Securities.
(1) (2)
Title of Class Number of Record Holders
(par value $0.01 per share) (as of April 10, 1996)
Domini Institutional Social Equity Fund 0
Item 27. Indemnification.
Reference is hereby made to Article V of the Registrant's Declaration
of Trust, filed as an exhibit to the Registration Statement.
The Trustees and officers of the Registrant and the personnel of the
Registrant's administrator are insured under an errors and omissions liability
insurance policy. The Registrant and its officers are also insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.
Item 28. Business and Other Connections of Investment Adviser.
Not Applicable.
Item 29. Principal Underwriters.
(a) Signature is the exclusive placement agent for the Registrant.
Signature and its affiliates serve as the placement agent or distributor for
other registered investment companies.
(b) The information required by this Item 29 with respect to each
director or officer of Signature is hereby incorporated herein by reference from
Schedule A of Form BD (File No. 8- 41134) as filed by Signature pursuant to the
Securities Exchange Act of 1934.
(c) Not Applicable.
Item 30. Location of Accounts and Records.
The accounts and records of the Registrant are located, in whole or in
part, at the office of the Registrant and the following locations:
Name Address
Kinder, Lydenberg, Domini & Co., Inc. 127 Mt. Auburn Street
(subadministrator) Cambridge, MA 02138
Fundamental Shareholder Services, Inc. 90 Washington Street
(transfer agent) New York, New York 10006
Signature Broker-Dealer Services, Inc. 6 St. James Avenue
(administrator and exclusive Boston, MA 02116
placement agent)
Investors Bank & Trust Company 89 South Street
(custodian) Boston, MA 02111
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this registration statement on Form N-1A to be signed
on its behalf by the undersigned, thereto duly authorized in the City of Boston,
and Commonwealth of Massachusetts on the 18th day of April, 1996.
DOMINI INSTITUTIONAL TRUST
By: /S/ PHILIP W. COOLIDGE
Philip W. Coolidge
President
DSI250
<PAGE>
Index to Exhibits
NO. DESCRIPTION OF EXHIBIT
1. Declaration of Trust.
2. By-Laws.
8. Custody Agreement between the Registrant and Fundamental Shareholder
Services, Inc.
9(a). Administrative Services Agreement between the Registrant and Signature, as
administrator.
9(b) Transfer Agency Agreement between the Registrant and Investors Bank &
Trust Company.
9(c) Administrative Services Plan.
15. Placement Plan.
DSI226A
DOMINI INSTITUTIONAL TRUST
DECLARATION OF TRUST
Dated as of April 1, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I--Name and Definitions 1
Section 1.1 Name 1
Section 1.2 Definitions 1
ARTICLE II--Trustees 3
Section 2.1 Number of Trustees 3
Section 2.2 Term of Office of Trustees 3
Section 2.3 Resignation and Appointment of Trustees 3
Section 2.4 Vacancies 4
Section 2.5 Delegation of Power to Other Trustees 4
ARTICLE III--Powers of Trustees 4
Section 3.1 General 4
Section 3.2 Investments 5
Section 3.3 Legal Title 6
Section 3.4 Issuance and Repurchase of Securities 6
Section 3.5 Borrowing Money; Lending Trust Property 6
Section 3.6 Delegation; Committees 6
Section 3.7 Collection and Payment 6
Section 3.8 Expenses 7
Section 3.9 Manner of Acting; By-Laws 7
Section 3.10 Miscellaneous Powers 7
Section 3.11 Principal Transactions 8
Section 3.12 Trustees and Officers as Shareholders 8
ARTICLE IV--Investment Adviser, Distributor, Administrator, Transfer
Agent and Shareholder Servicing Agents 9
Section 4.1 Investment Adviser 9
Section 4.2 Distributor 9
Section 4.3 Administrator 9
Section 4.4 Transfer Agent and Shareholder Servicing Agents 9
Section 4.5 Parties to Contract 10
ARTICLE V--Limitations of Liability of Shareholders, Trustees and Others 10
Section 5.1 No Personal Liability of Shareholders,
Trustees, etc. 10
Section 5.2 Non-Liability of Trustees, etc. 11
Section 5.3 Mandatory Indemnification; Insurance 11
Section 5.4 No Bond Required of Trustees 12
Section 5.5 No Duty of Investigation; Notice in Trust
Instruments, etc. 13
Section 5.6 Reliance on Experts, etc. 13
i
<PAGE>
ARTICLE VI--Shares of Beneficial Interest 13
Section 6.1 Beneficial Interest 13
Section 6.2 Rights of Shareholders 13
Section 6.3 Trust Only 14
Section 6.4 Issuance of Shares 14
Section 6.5 Register of Shares 14
Section 6.6 Transfer of Shares 14
Section 6.7 Notices 15
Section 6.8 Voting Powers 15
Section 6.9 Series and Class Designation 16
ARTICLE VII--Redemptions 18
Section 7.1 Redemptions 18
Section 7.2 Suspension of Right of Redemption 18
Section 7.3 Disclosure of Holding 19
Section 7.4 Redemptions of Accounts of Less than
Minimum Amount 19
ARTICLE VIII--Determination of Net Asset Value, Net Income and
Distributions 20
ARTICLE IX--Duration; Termination of Trust; Amendment; Mergers, etc. 20
--------------------------------------------------------
Section 9.1 Duration 20
Section 9.2 Termination of Trust 20
Section 9.3 Amendment Procedure 21
Section 9.4 Merger, Consolidation and Sale of Assets 22
Section 9.5 Incorporation, Reorganization 22
Section 9.6 Incorporation or Reorganization of Series 23
ARTICLE X--Reports to Shareholders and Shareholder Communications 23
------------------------------------------------------
ARTICLE XI--Miscellaneous 23
Section 11.1 Filing 23
Section 11.2 Governing Law 24
Section 11.3 Counterparts 24
Section 11.4 Reliance by Third Parties 24
Section 11.5 Provisions in Conflict with Law or Regulations 24
Section 11.6 Principal Office 25
ii
<PAGE>
DSI226A
DECLARATION OF TRUST
OF
DOMINI INSTITUTIONAL TRUST
Dated as of April 1, 1996
WHEREAS, the Trustees desire to establish a trust for the investment and
reinvestment of funds contributed thereto; and
WHEREAS, the Trustees desire that the beneficial interest in the trust
assets be divided into transferable shares of beneficial interest (par value
$0.01 per share) ("Shares") issued in one or more series, which series may be
divided into one or more classes, as hereinafter provided and
NOW THEREFORE, the Trustees hereby declare that all money and property
contributed to the trust established hereunder shall be held and managed in
trust for the benefit of holders, from time to time, of the Shares issued
hereunder and subject to the provisions hereof.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. Name. The name of the trust created hereby is "Domini
Institutional Trust."
Section 1.2. Definitions. Wherever they are used herein, the following
terms have the following respective meanings:
(a) "Administrator" means a party furnishing services to the Trust
pursuant to any contract described in Section 4.3 hereof.
(b) "By-Laws" means the By-laws referred to in Section 3.9 hereof, as
from time to time amended.
(c) "Commission" has the meaning given that term in the 1940 Act.
(d) "Custodian" means a party employed by the Trust to furnish services
as described in Article X of the By-Laws.
(e) "Declaration" means this Declaration of Trust as amended from time
to time. Reference in this Declaration of Trust to "Declaration", "hereof",
"herein", and "hereunder" shall be deemed to refer to this Declaration rather
than the article or section in which such words appear.
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(f) "Distributor" means a party furnishing services to the Trust
pursuant to any contract described in Section 4.2 hereof.
(g) "Interested Person" has the meaning given that term in the 1940 Act.
(h) "Investment Adviser" means a party furnishing services to the Trust
pursuant to any contract described in Section 4.1 hereof.
(i) "Majority Shareholder Vote" has the same meaning as the phrase "vote
of a majority of the outstanding voting securities" as defined in the 1940 Act,
except that such term may be used herein with respect to the Shares of the Trust
as a whole or the Shares of any particular series, or class of any series, as
the context may require.
(j) "1940 Act" means the Investment Company Act of 1940 and the rules
and regulations thereunder, as amended from time to time.
(k) "Person" means and includes individuals, corporations, partnerships,
trusts, associations, joint ventures and other entities, whether or not legal
entities, and governments and agencies and political subdivisions thereof,
whether domestic or foreign.
(l) "Shareholder" means a record owner of outstanding Shares.
(m) "Shares" means the shares of beneficial interest into which the
beneficial interest in the Trust shall be divided from time to time or, when
used in relation to any particular series or class of Shares established by the
Trustees pursuant to Section 6.9 hereof, equal proportionate transferable units
into which such series or class of Shares shall be divided from time to time.
The term "Shares" includes fractions of Shares as well as whole Shares.
(n) "Shareholder Servicing Agent" means a party furnishing services to
the Trust pursuant to any shareholder servicing contract described in Section
4.4 hereof.
(o) "Transfer Agent" means a party furnishing services to the Trust
pursuant to any transfer agency contract described in Section 4.4 hereof.
(p) "Trust" means the trust created hereby.
(q) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees, including, without limitation, any and all property
allocated or belonging to any series of Shares pursuant to Section 6.9 hereof.
(r) "Trustees" means the persons who have signed the Declaration, so
long as they shall continue in office in accordance with the terms hereof, and
all other persons who may from time to time be duly elected or appointed,
qualified and serving as Trustees in accordance with the provisions hereof, and
reference herein to a Trustee or the Trustees shall refer to such person or
persons in their capacity as trustees hereunder.
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ARTICLE II
TRUSTEES
Section 2.1. Number of Trustees. The number of Trustees shall be such
number as shall be fixed from time to time by a written instrument signed by a
majority of the Trustees, provided, however, that the number of Trustees shall
in no event be less than three nor more than 15.
Section 2.2. Term of Office of Trustees. Subject to the provisions of
Section 16(a) of the 1940 Act, the Trustees shall hold office during the
lifetime of this Trust and until its termination as hereinafter provided; except
that (a) any Trustee may resign his trust (without need for prior or subsequent
accounting) by an instrument in writing signed by him and delivered to the other
Trustees, which shall take effect upon such delivery or upon such later date as
is specified therein; (b) any Trustee may be removed with cause, at any time by
written instrument signed by at least two-thirds of the remaining Trustees,
specifying the date when such removal shall become effective; (c) any Trustee
who has attained a mandatory retirement age established pursuant to any written
policy adopted from time to time by at least two thirds of the Trustees shall,
automatically and without action of such Trustee or the remaining Trustees, be
deemed to have retired in accordance with the terms of such policy, effective as
of the date determined in accordance with such policy; (d) any Trustee who has
become incapacitated by illness or injury as determined by a majority of the
other Trustees, may be retired by written instrument signed by a majority of the
other Trustees, specifying the date of his retirement; and (e) a Trustee may be
removed at any meeting of Shareholders by a vote of two thirds of the
outstanding Shares of each series. For purposes of the foregoing clause (b), the
term "cause" shall include, but not be limited to, failure to comply with such
written policies as may from time to time be adopted by at least two thirds of
the Trustees with respect to the conduct of Trustees and attendance at meetings.
Upon the resignation, retirement or removal of a Trustee, or his otherwise
ceasing to be a Trustee, he shall execute and deliver such documents as the
remaining Trustees shall require for the purpose of conveying to the Trust or
the remaining Trustees any Trust Property held in the name of the resigning,
retiring or removed Trustee. Upon the incapacity or death of any Trustee, his
legal representative shall execute and deliver on his behalf such documents as
the remaining Trustees shall require as provided in the preceding sentence.
Section 2.3. Resignation and Appointment of Trustees. In case of the
declination, death, resignation, retirement, removal or inability of any of the
Trustees, or in case a vacancy shall, by reason of an increase in number, or for
any other reason, exist, the remaining Trustees shall fill such vacancy by
appointing such other individual as they in their discretion shall see fit. Such
appointment shall be evidenced by a written instrument signed by a majority of
the Trustees in office. Any such appointment shall not become effective,
however, until the person named in the written instrument of appointment shall
have accepted in writing such appointment and agreed in writing to be bound by
the terms of the Declaration. Within twelve months of such appointment, the
Trustees shall cause notice of such appointment to be mailed to each Shareholder
at his address as recorded on the books of the Trustees. An appointment of a
Trustee may be made by the Trustees then in office and notice thereof mailed to
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Shareholders as aforesaid in anticipation of a vacancy to occur by reason of
retirement, resignation or increase in number of Trustees effective at a later
date, provided that said appointment shall become effective only at or after the
effective date of said retirement, resignation or increase in number of
Trustees. The power of appointment is subject to the provisions of Section 16
(a) of the 1940 Act.
Section 2.4. Vacancies. The death, declination, resignation, retirement,
removal or incapacity of the Trustees, or any one of them, shall not operate to
annul the Trust or to revoke any existing agency created pursuant to the terms
of this Declaration. Whenever a vacancy in the number of Trustees shall occur,
until such vacancy is filled as provided in Section 2.3, the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by the Declaration.
A written instrument certifying the existence of such vacancy signed by a
majority of the Trustees shall be conclusive evidence of the existence of such
vacancy.
Section 2.5. Delegation of Power to Other Trustees. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six months at
any one time to any other Trustee or Trustees; provided that in no case shall
fewer than two Trustees personally exercise the powers granted to the Trustees
under the Declaration except as herein otherwise expressly provided.
ARTICLE III
POWERS OF TRUSTEES
Section 3.1. General. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the same
extent as if the Trustees were the sole owners of the Trust Property and
business in their own right, but with such powers of delegation as may be
permitted by the Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the Commonwealth of Massachusetts,
in any and all states of the United States of America, in the District of
Columbia, and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities of the United States of America and
of foreign governments, and to do all such other things and execute all such
instruments as the Trustees deem necessary, proper or desirable in order to
promote the interests of the Trust although such things are not herein
specifically mentioned. Any determination as to what is in the interests of the
Trust made by the Trustees in good faith shall be conclusive. In construing the
provisions of the Declaration, the presumption shall be in favor of a grant of
power to the Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
Section 3.2. Investments. (a) The Trustees shall have the power:
(i) to conduct, operate and carry on the business of an investment
company;
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(ii) to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, own, hold, pledge, sell, assign, transfer, exchange, distribute, lend
or otherwise deal in or dispose of U.S. and foreign currencies, any form of gold
or other precious metal, commodity contracts, any form of option contract,
contracts for the future acquisition or delivery of fixed income or other
securities, shares of, or any other interest in, any investment company as
defined in the 1940 Act, and securities and related derivatives of every nature
and kind, including, without limitation, all types of bonds, debentures, stocks,
negotiable or non-negotiable instruments, obligations, evidences of
indebtedness, certificates of deposit or indebtedness, commercial paper,
repurchase agreements, bankers' acceptances, and other securities of any kind,
issued, created, guaranteed or sponsored by any and all Persons, including,
without limitation,
(A) states, territories and possessions of the United States and the
District of Columbia and any political subdivision, agency or instrumentality of
any such Person,
(B) the U.S. Government, any foreign government, any political
subdivision or any agency or instrumentality of the U.S. Government, any foreign
government or any political subdivision of the U.S. Government or any foreign
government,
(C) any international or supranational instrumentality,
(D) any bank or savings institution, or
(E) any corporation, trust, partnership or other organization organized
under the laws of the United States or of any state, territory or possession
thereof, or under any foreign law;
or in "when issued" contracts for any such securities, to retain Trust assets in
cash and from time to time to change the securities or obligations in which the
assets of the Trust are invested; and to exercise any and all rights, powers and
privileges of ownership or interest in respect of any and all such investments
of every kind and description, including, without limitation, the right to
consent and otherwise act with respect thereto, with power to designate one or
more Persons to exercise any of said rights, powers and privileges in respect of
any of said investments; and
(iii) to carry on any other business in connection with or incidental to
any of the foregoing powers, to do everything necessary, proper or desirable for
the accomplishment of any purpose or the attainment of any object or the
furtherance of any power hereinbefore set forth, and to do every other act or
thing incidental or appurtenant to or connected with the aforesaid purposes,
objects or powers.
(b) The Trustees shall not be limited to investing in securities or
obligations maturing before the possible termination of the Trust, nor shall the
Trustees be limited by any law limiting the investments which may be made by
fiduciaries.
(c) Notwithstanding any other provision of this Declaration to the
contrary, the Trustees shall have the power in their discretion without any
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requirement of approval by shareholders to either invest all or a portion of the
Trust Property, or sell all or a portion of the Trust Property and invest the
proceeds of such sales, in another investment company that is registered under
the 1940 Act.
Section 3.3. Legal Title. Legal title to all Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust, or in the name of any
other Person or nominee, on such terms as the Trustees may determine. The right,
title and interest of the Trustees in the Trust Property shall vest
automatically in each Person who may hereafter become a Trustee. Upon the
resignation, removal or death of a Trustee, such Trustee shall automatically
cease to have any right, title or interest in any of the Trust Property, and the
right, title and interest of such Trustee in the Trust Property shall vest
automatically in the remaining Trustees. Such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed and
delivered.
Section 3.4. Issuance and Repurchase of Securities. The Trustees shall
have the power to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares and,
subject to the provisions set forth in Articles VII, VIII and IX and Section 6.9
hereof, to apply to any such repurchase, redemption, retirement, cancellation or
acquisition of Shares any funds of the Trust or other Trust Property whether
capital or surplus or otherwise, to the full extent now or hereafter permitted
by the laws of the Commonwealth of Massachusetts governing business
corporations.
Section 3.5. Borrowing Money; Lending Trust Property. The Trustees shall
have power to borrow money or otherwise obtain credit and to secure the same by
mortgaging, pledging or otherwise subjecting as security the Trust Property, to
endorse, guarantee, or undertake the performance of any obligation, contract or
engagement of any other Person and to lend Trust Property.
Section 3.6. Delegation; Committees. The Trustees shall have power to
delegate from time to time to such of their number or to officers, employees or
agents of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient.
Section 3.7. Collection and Payment. Subject to Section 6.9 hereof, the
Trustees shall have power to collect all property due to the Trust; to pay all
claims, including taxes, against the Trust Property; to prosecute, defend,
compromise or abandon any claims relating to the Trust Property; to foreclose
any security interest securing any obligations, by virtue of which any property
is owed to the Trust; and to enter into releases, agreements and other
instruments.
Section 3.8. Expenses. Subject to Section 6.9 hereof, the Trustees shall
have the power to incur and pay any expenses which in the opinion of the
Trustees are necessary or incidental to carry out any of the purposes of the
Declaration, and to pay reasonable compensation from the funds of the Trust to
themselves as Trustees. The Trustees shall fix the compensation of all officers,
employees and Trustees.
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Section 3.9. Manner of Acting; By-Laws. Except as otherwise provided
herein or in the By-Laws, any action to be taken by the Trustees may be taken by
a majority of the Trustees present at a meeting of Trustees at which a quorum is
present, including any meeting held by means of a conference telephone circuit
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, or by written consents of a majority of the
Trustees. The Trustees may adopt By-Laws not inconsistent with this Declaration
to provide for the conduct of the business of the Trust and may amend or repeal
such By-Laws to the extent such power is not reserved to the Shareholders.
Section 3.10. Miscellaneous Powers. The Trustees shall have the power
to: (a) employ or contract with such Persons as the Trustees may deem desirable
for the transaction of the business of the Trust; (b) enter into joint ventures,
partnerships and any other combinations or associations; (c) remove Trustees or
fill vacancies in or add to their number, elect and remove such officers and
appoint and terminate such agents or employees as they consider appropriate, and
appoint from their own number, and terminate, any one or more committees which
may exercise some or all of the power and authority of the Trustees as the
Trustees may determine; (d) purchase, and pay for out of Trust Property,
insurance policies insuring the Shareholders, the Administrator, Trustees,
officers, employees, agents, the Investment Adviser, the Distributor, selected
dealers or independent contractors of the Trust against all claims arising by
reason of holding any such position or by reason of any action taken or omitted
by any such Person in such capacity, whether or not constituting negligence, or
whether or not the Trust would have the power to indemnify such Person against
such liability; (e) establish pension, profit-sharing, Share purchase, and other
retirement, incentive and benefit plans for any Trustees, officers, employees or
agents of the Trust; (f) to the extent permitted by law, indemnify any person
with whom the Trust has dealings, including any Investment Adviser,
Administrator, Custodian, Distributor, Transfer Agent, Shareholder Servicing
Agent and any dealer, to such extent as the Trustees shall determine; (g)
guarantee indebtedness or contractual obligations of others; (h) determine and
change the fiscal year of the Trust and the method by which its accounts shall
be kept; and (i) adopt a seal for the Trust, provided, that the absence of such
seal shall not impair the validity of any instrument executed on behalf of the
Trust.
Section 3.11. Principal Transactions. Except in transactions permitted
by the 1940 Act, or any order of exemption issued by the Commission, the
Trustees shall not, on behalf of the Trust, buy any securities (other than
Shares) from or sell any securities (other than Shares) to, or lend any assets
of the Trust to, any Trustee or officer of the Trust or any firm of which any
such Trustee or officer is a member acting as principal, or have any such
dealings with any Investment Adviser, Administrator, Shareholder Servicing
Agent, Custodian, Distributor or Transfer Agent or with any Interested Person of
such Person; but the Trust may, upon customary terms, employ any such Person, or
firm or company in which such Person is an Interested Person, as broker, legal
counsel, registrar, transfer agent, dividend disbursing agent or custodian.
Section 3.12. Trustees and Officers as Shareholders. Except as
hereinafter provided, no officer, Trustee or member of any advisory board of the
Trust, and no member, partner, officer, director or trustee of the Investment
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Adviser, Administrator or of the Distributor, and no Investment Adviser,
Administrator or Distributor of the Trust, shall take long or short positions in
the securities issued by the Trust. The foregoing provision shall not prevent:
(a) The Distributor from purchasing Shares from the Trust if such
purchases are limited (except for reasonable allowances for clerical errors,
delays and errors of transmission and cancellation of orders) to purchases for
the purpose of filling orders for Shares received by the Distributor and
provided that orders to purchase from the Trust are entered with the Trust or
the Custodian promptly upon receipt by the Distributor of purchase orders for
Shares, unless the Distributor is otherwise instructed by its customer;
(b) The Distributor from purchasing Shares as agent for the account of
the Trust;
(c) The purchase from the Trust or from the Distributor of Shares by any
officer, Trustee or member of any advisory board of the Trust or by any member,
partner, officer, director or trustee of the Investment Adviser or of the
Distributor at a price not lower than the net asset value of the Shares at the
moment of such purchase, provided that any such sales are only to be made
pursuant to a uniform offer described in the current prospectus or offering
memorandum or statement of additional information for the Shares being
purchased; or
(d) The Investment Adviser, the Distributor, the Administrator, or any
of their officers, partners, directors or trustees from purchasing Shares prior
to the effective date of the Trust's registration statement under the Securities
Act of 1933, as amended, relating to the Shares.
ARTICLE IV
INVESTMENT ADVISER, DISTRIBUTOR, ADMINISTRATOR, TRANSFER AGENT
AND SHAREHOLDER SERVICING AGENTS
Section 4.1. Investment Adviser. Subject to a Majority Shareholder Vote
of the Shares of each series affected thereby, the Trustees may in their
discretion from time to time enter into one or more investment advisory or
management contracts whereby the other party to each such contract shall
undertake to furnish the Trust such management, investment advisory, statistical
and research facilities and services, promotional activities, and such other
facilities and services, if any, with respect to one or more series of Shares,
as the Trustees shall from time to time consider desirable and all upon such
terms and conditions as the Trustees may in their discretion determine.
Notwithstanding any provision of the Declaration, the Trustees may delegate to
the Investment Adviser authority (subject to such general or specific
instructions as the Trustees may from time to time adopt) to effect purchases,
sales, loans or exchanges of assets of the Trust on behalf of the Trustees or
may authorize any officer, employee or Trustee to effect such purchases, sales,
loans or exchanges pursuant to recommendations of the Investment Adviser (and
all without further action by the Trustees). Any of such purchases, sales, loans
or exchanges shall be deemed to have been authorized by all the Trustees. Such
services may be provided by one or more Persons.
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Section 4.2. Distributor. The Trustees may in their discretion from time
to time enter into one or more contracts providing for the sale of Shares
whereby the Trust may either agree to sell the Shares to the other party to any
such contract or appoint any such other party its sales agent for such Shares.
In either case, any such contract shall be on such terms and conditions as the
Trustees may in their discretion determine, provided that such terms and
conditions are not inconsistent with the provisions of the Declaration or the
By-Laws; and such contract may also provide for the repurchase or sale of Shares
by such other party as principal or as agent of the Trust and may provide that
such other party may enter into selected dealer and sales agreements with
registered securities dealers and depository institutions to further the purpose
of the distribution or repurchase of the Shares. Such services may be provided
by one or more Persons.
Section 4.3. Administrator. The Trustees may in their discretion from
time to time enter into one or more administrative services contracts whereby
the other party to each such contract shall undertake to furnish such
administrative services to the Trust as the Trustees shall from time to time
consider desirable and all upon such terms and conditions as the Trustees may in
their discretion determine, provided that such terms and conditions are not
inconsistent with the provisions of this Declaration or the By-Laws. Such
services may be provided by one or more Persons.
Section 4.4. Transfer Agent and Shareholder Servicing Agents. The
Trustees may in their discretion from time to time enter into one or more
transfer agency and shareholder servicing contracts whereby the other party to
each such contract shall undertake to furnish such transfer agency and/or
shareholder services to the Trust or to shareholders of the Trust as the
Trustees shall from time to time consider desirable and all upon such terms and
conditions as the Trustees may in their discretion determine, provided that such
terms and conditions are not inconsistent with the provisions of this
Declaration or the By-Laws. Such services may be provided by one or more
Persons. Except as otherwise provided in the applicable shareholder servicing
contract, a Shareholder Servicing Agent shall be deemed to be the record owner
of outstanding Shares beneficially owned by customers of such Shareholder
Servicing Agent for whom it is acting pursuant to such shareholder servicing
contract.
Section 4.5. Parties to Contract. Any contract of the character
described in Section 4.1, 4.2, 4.3 or 4.4 of this Article IV or any Custodian
contract as described in Article X of the By-Laws may be entered into with any
Person, although one or more of the Trustees or officers of the Trust may be an
officer, partner, director, trustee, shareholder, or member of such other party
to the contract, and no such contract shall be invalidated or rendered voidable
by reason of the existence of any such relationship; nor shall any Person
holding such relationship be liable merely by reason of such relationship for
any loss or expense to the Trust under or by reason of any such contract or
accountable for any profit realized directly or indirectly therefrom, provided
that the contract when entered into was not inconsistent with the provisions of
this Article IV or the By-Laws. The same Person may be the other party to
contracts entered into pursuant to Sections 4.1, 4.2, 4.3 and 4.4 above or any
Custodian contract as described in Article X of the By-Laws, and any individual
may be
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financially interested or otherwise affiliated with Persons who are parties to
any or all of the contracts mentioned in this Section 4.5.
ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
Section 5.1. No Personal Liability of Shareholders, Trustees, etc. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust Property or the acts, obligations or affairs of the
Trust. No Trustee, officer, employee or agent of the Trust shall be subject to
any personal liability whatsoever to any Person, other than the Trust or its
Shareholders, in connection with Trust Property or the affairs of the Trust,
save only that arising from bad faith, wilful misfeasance, gross negligence or
reckless disregard for his duty to such Person; and all such Persons shall look
solely to the Trust Property for satisfaction of claims of any nature arising in
connection with the affairs of the Trust. If any Shareholder, Trustee, officer,
employee, or agent, as such, of the Trust, is made a party to any suit or
proceeding to enforce any such liability, he shall not, on account thereof, be
held to any personal liability. The Trust shall indemnify and hold each
Shareholder harmless from and against all claims and liabilities to which such
Shareholder may become subject by reason of his being or having been a
Shareholder, and shall reimburse such Shareholder for all legal and other
expenses reasonably incurred by him in connection with any such claim or
liability. The rights accruing to a Shareholder under this Section 5.1 shall not
exclude any other right to which such Shareholder may be lawfully entitled, nor
shall anything herein contained restrict the right of the Trust to indemnify or
reimburse a Shareholder in any appropriate situation even though not
specifically provided herein. Notwithstanding any other provision of this
Declaration to the contrary, no Trust Property shall be used to indemnify or
reimburse any Shareholder of any Shares of any series or class thereof other
than Trust Property allocated or belonging to that series, or allocable to the
class thereof.
Section 5.2. Non-Liability of Trustees, etc. No Trustee, officer,
employee or agent of the Trust shall be liable to the Trust or to any
Shareholder, Trustee, officer, employee, or agent thereof for any action or
failure to act (including without limitation the failure to compel in any way
any former or acting Trustee to redress any breach of trust) except for his own
bad faith, wilful misfeasance, gross negligence or reckless disregard of his
duties.
Section 5.3. Mandatory Indemnification; Insurance. (a) Subject to the
exceptions and limitations contained in paragraph (b) below:
(i) every person who is or has been a Trustee or officer of the Trust
shall be indemnified by the Trust, to the fullest extent permitted by law
(including the 1940 Act) as currently in effect or as hereafter amended, against
all liability and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having been a Trustee
or officer and against amounts paid or incurred by him in the settlement
thereof;
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(ii) the words "claim", "action", "suit", or "proceeding" shall apply to
all claims, actions, suits or proceedings (civil, criminal, administrative or
other, including appeals), actual or threatened; and the words "liability" and
"expenses" shall include, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or
officer:
(i) against any liability to the Trust or the Shareholders by reason of
a final adjudication by the court or other body before which the proceeding was
brought that he engaged in wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Trust; or
(iii) in the event of a settlement involving a payment by a Trustee or
officer or other disposition not involving a final adjudication as provided in
paragraph (b) (i) or (b) (ii) above resulting in a payment by a Trustee or
officer, unless there has been either a determination that such Trustee or
officer did not engage in wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office by the
court or other body approving the settlement or other disposition or by a
reasonable determination, based upon a review of readily available facts (as
opposed to a full trial-type inquiry) that he did not engage in such conduct:
(a) by vote of a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees then in office
act on the matter); or
(b) by written opinion of independent legal counsel.
(c) Subject to the provisions of the 1940 Act, the Trust may maintain
insurance for the protection of the Trust Property, its Shareholders, Trustees,
officers, employees and agents in such amount as the Trustees shall deem
adequate to cover possible tort liability (whether or not the Trust would have
the power to indemnify such Persons against such liability), and such other
insurance as the Trustees in their sole judgment shall deem advisable.
(d) The rights of indemnification herein provided shall be severable,
shall not affect any other rights to which any Trustee or officer may now or
hereafter be entitled, shall continue as to a Person who has ceased to be such a
Trustee or officer and shall inure to the benefit of the heirs, executors and
administrators of such Person. Nothing contained herein shall affect any rights
to indemnification to which personnel other than Trustees and officers may be
entitled by contract or otherwise under law.
(e) Expenses of preparation and presentation of a defense to any claim,
action, suit, or proceeding of the character described in paragraph (a) of this
Section 5.3 shall be advanced by the Trust prior to final disposition thereof
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upon receipt of an undertaking by or on behalf of the recipient to repay such
amount if it is ultimately determined that he is not entitled to indemnification
under this Section 5.3, provided that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising out of
any such advances; or
(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act on
the matter) or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.
As used in this Section 5.3 a "Disinterested Trustee" is one (i) who is
not an "Interested Person" of the Trust (including anyone who has been exempted
from being an "Interested Person" by any rule, regulation or order of the
Commission), and (ii) 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 had been pending.
Section 5.4. No Bond Required of Trustees. No Trustee shall be obligated
to give any bond or other security for the performance of any of his duties
hereunder.
Section 5.5. No Duty of Investigation; Notice in Trust Instruments, etc.
No purchaser, lender, Shareholder Servicing Agent, Transfer Agent or other
Person dealing with the Trustees or any officer, employee or agent of the Trust
shall be bound to make any inquiry concerning the validity of any transaction
purporting to be made by the Trustees or by said officer, employee or agent or
be liable for the application of money or property paid, loaned, or delivered to
or on the order of the Trustees or of said officer, employee or agent. Every
obligation, contract, instrument, certificate, Share, other security of the
Trust or undertaking, and every other act or thing whatsoever executed in
connection with the Trust shall be conclusively presumed to have been executed
or done by the executors thereof only in their capacity as Trustees under the
Declaration or in their capacity as officers, employees or agents of the Trust.
Every written obligation, contract, instrument, certificate, Share, other
security of the Trust or undertaking made or issued by the Trustees shall recite
that the same is executed or made by them not individually, but as Trustees
under the Declaration, and that the obligations of any such instrument are not
binding upon any of the Trustees or Shareholders individually, but bind only the
trust estate, and may contain any further recital which they or he may deem
appropriate, but the omission of such recital shall not operate to bind any of
the Trustees or Shareholders individually. The Trustees shall at all times
maintain insurance for the protection of the Trust Property, Shareholders,
Trustees, officers, employees and agents in such amount as the Trustees shall
deem adequate to cover possible tort liability, and such other insurance as the
Trustees in their sole judgment shall deem advisable.
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Section 5.6. Reliance on Experts, etc. Each Trustee and officer or
employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
of the Trust, upon an opinion of counsel, or upon reports made to the Trust by
any of its officers or employees or by the Investment Adviser, the Distributor,
Transfer Agent, any Shareholder Servicing Agent, selected dealers, accountants,
appraisers or other experts or consultants selected with reasonable care by the
Trustees, officers or employees of the Trust, regardless of whether such counsel
or expert may also be a Trustee.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 6.1. Beneficial Interest. The interest of the beneficiaries
hereunder may be divided into transferable Shares, which may be divided into one
or more series as provided in Section 6.9 hereof. Each such series shall have
such class or classes of Shares as the Trustees may from time to time determine.
The number of Shares authorized hereunder is unlimited. All Shares issued
hereunder including, without limitation, Shares issued in connection with a
dividend in Shares or a split of Shares, shall be fully paid and non-assessable.
Section 6.2. Rights of Shareholders. The ownership of the Trust Property
of every description and the right to conduct any business hereinbefore
described are vested exclusively in the Trustees, and the Shareholders shall
have no interest therein other than the beneficial interest conferred by their
Shares, and they shall have no right to call for any partition or division of
any property, profits, rights or interests of the Trust nor can they be called
upon to assume any losses of the Trust or suffer an assessment of any kind by
virtue of their ownership of Shares. The Shares shall be personal property
giving only the rights specifically set forth in the Declaration. The Shares
shall not entitle the holder to preference, preemptive, appraisal, conversion or
exchange rights, except as the Trustees may determine with respect to any series
or class of Shares.
Section 6.3. Trust Only. It is the intention of the Trustees to create
only the relationship of trustee and beneficiary between the Trustees and the
Shareholders. 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 trust. Nothing in the Declaration
shall be construed to make the Shareholders, either by themselves or with the
Trustees, partners or members of a joint stock association.
Section 6.4. Issuance of Shares. The Trustees, in their discretion may,
from time to time without vote of the Shareholders, issue Shares, in addition to
the then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount and type of consideration, including cash
or property, and on such terms as the Trustees may deem best, and may in such
manner acquire other assets (including the acquisition of assets subject to, and
in connection, with the assumption of liabilities) and businesses. In connection
with any issuance of Shares, the Trustees may issue fractional Shares. The
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Trustees may from time to time divide or combine the Shares of any series into a
greater or lesser number without thereby changing their proportionate beneficial
interests in Trust Property allocated or belonging to such series. Contributions
to the Trust may be accepted for, and Shares shall be redeemed as, whole Shares
and/or fractions of a Share.
Section 6.5. Register of Shares. A register or registers shall be kept
at the principal office of the Trust or at an office of the Transfer Agent
(and/or any sub-transfer agent which may be a Shareholder Servicing Agent) which
register or registers, taken together, shall contain the names and addresses of
the Shareholders and the number of Shares held by them respectively and a record
of all transfers thereof. Such register or registers shall be conclusive as to
who are the holders of the Shares and who shall be entitled to receive dividends
or distributions or otherwise to exercise or enjoy the rights of Shareholders.
No Shareholder shall be entitled to receive payment of any dividend or
distribution, nor to have notice given to him as herein or in the By-Laws
provided, until he has given his address to the Transfer Agent, a sub-transfer
agent, or such other officer or agent of the Trustees as shall keep the said
register for entry thereon. It is not contemplated that certificates will be
issued for the Shares; however, the Trustees, in their discretion, may authorize
the issuance of Share certificates and promulgate appropriate rules and
regulations as to their use.
Section 6.6. Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by his agent thereunto
duly authorized in writing, upon delivery to the Trustees, the Transfer Agent or
a sub-transfer agent, of a duly executed instrument of transfer, together with
any certificate or certificates (if issued) for such Shares and such evidence of
the genuineness of each such execution and authorization and of other matters as
may reasonably be required. Upon such delivery the transfer shall be recorded on
the register of the Trust. Until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor any Transfer Agent, a sub-transfer agent or registrar
nor any officer, employee or agent of the Trust shall be affected by any notice
of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees, the Transfer
Agent or a sub-transfer agent; but until such record is made, the Shareholder of
record shall be deemed to be the holder of such Shares for all purposes
hereunder and neither the Trustees nor any Transfer Agent, sub-transfer agent or
registrar nor any officer or agent of the Trust shall be affected by any notice
of such death, bankruptcy or incompetence, or other operation of law.
Section 6.7. Notices. Any and all notices to which any Shareholder may
be entitled and any and all communications shall be deemed duly served or given
if mailed, postage prepaid, addressed to any Shareholder of record at his last
known address as recorded on the register of the Trust.
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Section 6.8. Voting Powers. The Shareholders shall have power to vote
only (i) for the removal of Trustees as provided in Section 2.2 hereof, (ii)
with respect to any investment advisory or management contract as provided in
Section 4.1 hereof, (iii) with respect to termination of the Trust as provided
in Section 9.2 hereof, (iv) with respect to any amendment of this Declaration to
the extent and as provided in Section 9.3 hereof, (v) with respect to any
merger, consolidation or sale of assets as provided in Sections 9.4 and 9.6
hereof, (vi) with respect to incorporation of the Trust or any series to the
extent and as provided in Sections 9.5 and 9.6 hereof, (vii) to the same extent
as the stockholders of a Massachusetts business corporation as to whether or not
a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or the
Shareholders, and (viii) with respect to such additional matters relating to the
Trust as may be required by the Declaration, 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. Each whole Share shall be entitled
to one vote as to any matter on which it is entitled to vote and each fractional
Share shall be entitled to a proportionate fractional vote, except that Shares
held in the treasury of the Trust shall not be voted. Shares shall be voted by
individual series or class on any matter submitted to a vote of the Shareholders
of the Trust except as provided in Section 6.9(g) hereof. There shall be no
cumulative voting in the election of Trustees. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any action
required by law, the Declaration or the By-Laws to be taken by Shareholders. At
any meeting of Shareholders of the Trust or of any series or class of the Trust,
a Shareholder Servicing Agent may vote any shares as to which such Shareholder
Servicing Agent is the agent of record and which are not otherwise represented
in person or by proxy at the meeting, proportionately in accordance with the
votes cast by beneficial owners of all shares otherwise represented at the
meeting in person or by proxy as to which such Shareholder Servicing Agent is
the agent of record. Any shares so voted by a Shareholder Servicing Agent will
be deemed represented at the meeting for quorum purposes. The By-Laws may
include further provisions for Shareholder votes and meetings and related
matters.
Section 6.9. Series and Class Designation. As set forth in Appendix I
hereto, the Trustees have authorized the division of Shares into series and
classes, as designated and established pursuant to the provisions of Appendix I
and this Section 6.9. The Trustees, in their discretion, may authorize the
division of Shares into one or more additional series, which may be divided into
one or more classes, and the different series and classes shall be established
and designated, and the variations in the relative rights, privileges and
preferences as between the different series and classes shall be fixed and
determined by the Trustees upon and subject to the following provisions:
(a) All Shares shall be identical except that there may be such
variations as shall be fixed and determined by the Trustees between different
series and different classes thereof as to purchase price, right of redemption
and the price, terms and manner of redemption, and special and relative rights
as to dividends and on liquidation.
(b) The number of authorized Shares and the number of Shares of each
series or classes that may be issued shall be unlimited. The Trustees may
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classify or reclassify any unissued Shares or any Shares previously issued and
reacquired of any series or classes into one or more series or classes that may
be established and designated from time to time. The Trustees may hold as
treasury shares (of the same or some other series or class), reissue for such
consideration and on such terms as they may determine, or cancel any Shares of
any series or class reacquired by the Trust at their discretion from time to
time.
(c) All consideration received by the Trust for the issuance or sale of
Shares of a particular series, together with all assets in which such
consideration is invested or reinvested, all income and earnings thereon,
profits therefrom, 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
irrevocably belong to that series for all purposes, subject only to the rights
of creditors of such series, and shall be so recorded upon the books of account
of the Trust. In the event that there are any assets, income, earnings, profits,
proceeds, funds or payments which are not readily identifiable as belonging to
any particular series, the Trustees shall allocate them to and among any one or
more of the series established and designated from time to time in such manner
and on such basis as the Trustees, in their sole discretion, deem fair and
equitable. Each such allocation by the Trustees shall be conclusive and binding
upon the Shareholders of all series for all purposes. No Shareholder of any
particular series shall have any claim on or right to any assets allocated or
belonging to any other series of Shares.
(d) The assets belonging to each particular series shall be charged with
the liabilities of the Trust in respect of that series, and all expenses, costs,
charges and reserves attributable to that series, and any general liabilities,
expenses, costs, charges or reserves of the Trust which are not readily
identifiable as belonging to any particular series shall be allocated and
charged by the Trustees to and among any one or more of the series established
and designated from time to time in such manner and on such basis as the
Trustees, in their sole discretion, deem fair and equitable. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all series and classes for all
purposes. The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, 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. Under no circumstances
shall the assets allocated or belonging to any particular series be charged with
liabilities, expenses, costs, charges or reserves attributable to any other
series. All Persons who have extended credit which has been allocated to a
particular series, or who have a claim or contract which has been allocated to
any particular series, shall look only to the assets of that particular series
for payment of such credit, claim or contract.
(e) The power of the Trustees to invest and reinvest the Trust Property
allocated or belonging to any particular series shall be governed by Section 3.2
hereof unless otherwise provided in the instrument of the Trustees establishing
such series which is hereinafter described.
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(f) Each Share of a series shall represent a beneficial interest in the
net assets allocated or belonging to such series only, and such interest shall
not extend to the assets of the Trust generally. Dividends and distributions on
Shares of a particular series or of any class thereof may be paid with such
frequency as the Trustees may determine, which may be monthly or otherwise,
pursuant to a standing vote or votes adopted only once or with such frequency as
the Trustees may determine, to the Shareholders of that series or class only,
from such of the income and capital gains, accrued or realized, from the assets
belonging to that series, or allocable to that class, as the Trustees may
determine, after providing for actual and accrued liabilities belonging to that
series or allocable to that class. All dividends and distributions on Shares of
a particular series or class thereof shall be distributed pro rata to the
Shareholders of that series in proportion to the number of Shares of that series
or class held by such Shareholders at the date and time of record established
for the payment of such dividends or distributions. Shares of any particular
series of the Trust may be redeemed solely out of Trust Property allocated or
belonging to that series. Upon liquidation or termination of a series of the
Trust, Shareholders of such series shall be entitled to receive a pro rata share
of the net assets of such series (or allocable to that series) only.
(g) Notwithstanding any provision hereof to the contrary, on any matter
submitted to a vote of the Shareholders of the Trust, all Shares then entitled
to vote shall be voted by individual series or class, except that (i) when
required by the 1940 Act to be voted in the aggregate, Shares shall not be voted
by individual series or classes, and (ii) subject to the foregoing clause (i),
when the Trustees have determined that the matter affects only the interests of
Shareholders of one or more series or classes, only Shareholders of such series
or classes shall be entitled to vote thereon.
(h) The establishment and designation of any series or class of Shares
shall be effective upon the execution by a majority of the Trustees of an
instrument setting forth such establishment and designation and the relative
rights and preferences of such series or class, or as otherwise provided in such
instrument, or upon a resolution adopted by a majority of the Trustees and the
execution by an officer of the Trust on behalf of the Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of such series or class, or as otherwise provided in such
instrument. At any time that there are no Shares outstanding of any particular
series or class previously established and designated, the Trustees may by an
instrument executed by a majority of their number abolish that series or class
and the establishment and designation thereof. Each instrument referred to in
this paragraph shall have the status of an amendment to this Declaration.
ARTICLE VII
REDEMPTIONS
Section 7.l Redemptions. In case any Shareholder at any time desires to
dispose of his Shares, he may deposit his certificate or certificates therefor,
duly endorsed in blank or accompanied by an instrument of transfer executed in
blank, or if the Shares are not represented by any certificate, a written
request
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or other such form of request as the Trustees may from time to time authorize,
at the office of the Transfer Agent, or at the office of any bank or trust
company, either in or outside of the Commonwealth of Massachusetts, which is a
member of the Federal Reserve System and which the said Transfer Agent has
designated in writing for that purpose, together with an irrevocable offer in
writing in a form acceptable to the Trustees to sell the Shares represented
thereby to the Trust at the net asset value per Share thereof, next determined
after such deposit as provided in Section 8.1 hereof. Payment for said Shares
shall be made to the Shareholder within seven days after the date on which the
deposit is made, unless (i) the date of payment is postponed pursuant to Section
7.2 hereof, or (ii) the receipt, or verification of receipt, of the purchase
price for the Shares to be redeemed is delayed, in either of which events
payment may be delayed beyond seven days.
Section 7.2 Suspension of Right of Redemption. The Trust may declare a
suspension of the right of redemption or postpone the date of payment of the
redemption proceeds for the whole or any part of any period (i) during which the
New York Stock Exchange is closed other than customary week-end and holiday
closings, (ii) during which trading on the New York Stock Exchange is
restricted, (iii) during which an emergency exists as a result of which disposal
by the Trust of securities owned by it is not reasonably practicable or it is
not reasonably practicable for the Trust fairly to determine the value of its
net assets, or (iv) during which the Commission for the protection of
Shareholders by order permits the suspension of the right of redemption or
postponement of the date of payment of the redemption proceeds; provided that
applicable rules and regulations of the Commission shall govern as to whether
the conditions prescribed in (ii), (iii) or (iv) exist. Such suspension shall
take effect at such time as the Trust shall specify but not later than the close
of business on the business day next following the declaration of suspension,
and thereafter there shall be no right of redemption or payment of the
redemption proceeds until the Trust shall declare the suspension at an end,
except that the suspension shall terminate in any event on the first day on
which said stock exchange shall have reopened or the period specified in (ii) or
(iii) shall have expired (as to which, in the absence of an official ruling by
the Commission, the determination of the Trust shall be conclusive). In the case
of a suspension of the right of redemption, a Shareholder may either withdraw
his request for redemption or receive payment based on the net asset value
existing after the termination of the suspension.
Section 7.3. Disclosure of Holding. The Shareholders of the Trust shall
upon demand disclose to the Trustees in writing such information with respect to
direct and indirect ownership of Shares of the Trust as the Trustees deem
necessary to comply with the provisions of the Code, or to comply with the
requirements of any other authority. Upon the failure of a Shareholder to
disclose such information and to comply with such demand of the Trustees, the
Trust shall have the power to redeem such Shares at a redemption price
determined in accordance with Section 7.1 hereof.
Section 7.4 Redemptions of Accounts of Less than Minimum Amount. The
Trustees shall have the power, and any Shareholder Servicing Agent with whom the
Trust has so agreed (or a subcontractor of such Shareholder Servicing Agent)
shall have the power, at any time to redeem Shares of any Shareholder at a
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redemption price determined in accordance with Section 7.l hereof if at such
time the aggregate net asset value of the Shares owned by such Shareholder is
less than a minimum amount as determined from time to time and disclosed in a
prospectus or offering memorandum of the Trust or in the Shareholder Servicing
Agent's (or sub-contractor's) agreement with its customer. A Shareholder shall
be notified that the aggregate value of his Shares is less than such minimum
amount and allowed 60 days to make an additional investment before redemption is
processed.
ARTICLE VIII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
The Trustees, in their absolute discretion, may prescribe and shall set
forth in the By-Laws or in a duly adopted vote or votes of the Trustees such
bases and times for determining the per Share net asset value of the Shares or
net income, or the declaration and payment of dividends and distributions, as
they may deem necessary or desirable.
ARTICLE IX
DURATION; TERMINATION OF TRUST;
AMENDMENT; MERGERS, ETC.
Section 9.1. Duration. The Trust shall continue without limitation of
time but subject to the provisions of this Article IX.
Section 9.2. Termination of Trust. (a) The Trust may be terminated (i)
by a Majority Shareholder Vote of its Shareholders, or (ii) by the Trustees by
written notice to the Shareholders. Any series or class of the Trust may be
terminated (i) by a Majority Shareholder Vote of the Shareholders of that series
or class, or (ii) by the Trustees by written notice to the Shareholders of that
series or class.
(A) Upon the termination of the Trust or any series of the Trust:
(i) The Trust or series of the Trust shall carry on no business except
for the purpose of winding up its affairs;
(ii) The Trustees shall proceed to wind up the affairs of the Trust or
series of the Trust and all the powers of the Trustees under this Declaration
shall continue until the affairs of the Trust or series of the Trust shall have
been wound up, including the power to fulfill or discharge the contracts of the
Trust, collect the assets of the Trust or series of the Trust, sell, convey,
assign, exchange, transfer or otherwise dispose of all or any part of the
remaining Trust Property of the Trust or series of the Trust to one or more
Persons at public or private sale for consideration which may consist in whole
or in part of cash, securities or other property of any kind, discharge or pay
the liabilities of the Trust or series of the Trust, and to do all other acts
appropriate to liquidate the business of the Trust or series of the Trust;
provided, that any sale, conveyance, assignment, exchange, transfer or other
disposition of all or substantially all of the Trust Property of the Trust or
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series of the Trust as a whole to any Person proposing to carry on the business
of the Trust or such series shall require Shareholder approval in accordance
with Section 9.4 or 9.6 hereof, respectively; and
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property of the Trust or series of the Trust, in
cash or in kind or partly in cash and partly in kind, among the Shareholders of
the Trust or series of the Trust or of any class thereof according to their
respective rights.
(B) Upon the termination of any class of Shares (unless such termination
is in conjunction with the termination of the Trust or of the applicable series
of the Trust, in which case the provisions of the foregoing clause (A) shall
apply), the Trust shall redeem the outstanding Shares of such class, in cash or
in kind or partly in cash and partly in kind, in accordance with Section 7.1 of
this Declaration and the applicable rights of shareholders of that class.
(C) After termination of the Trust or any series or class of the Trust
and distribution to the Shareholders of the Trust, series or class of the Trust
as herein provided, a majority of the Trustees shall execute and lodge among the
records of the Trust an instrument in writing setting forth the fact of such
termination, and the Trustees shall thereupon be discharged from all further
liabilities and duties hereunder with respect to the Trust, series or class of
the Trust, and the rights and interests of all Shareholders of the Trust, series
or class of the Trust shall thereupon cease.
Section 9.3. Amendment Procedure. (a) This Declaration may be amended by
a Majority Shareholder Vote of the Shareholders or by any instrument in writing,
without a meeting, signed by a majority of the Trustees and consented to by the
holders of not less than a majority of the Shares of the Trust. The Trustees may
also amend this Declaration without the vote or consent of Shareholders to
designate series in accordance with Section 6.9 hereof, to change the name of
the Trust, to supply any omission, to cure, correct or supplement any ambiguous,
defective or inconsistent provision hereof, or to conform this Declaration to
the requirements of applicable federal laws or regulations or the requirements
of the regulated investment company provisions of the Internal Revenue Code of
1986, as amended, or to (i) change the state or other jurisdiction designated
herein as the state or other jurisdiction whose laws shall be the governing law
hereof, (ii) effect such changes herein as the Trustees find to be necessary or
appropriate (A) to permit the filing of this Declaration under the laws of such
state or other jurisdiction applicable to trusts or voluntary associations, (B)
to permit the Trust to elect to be treated as a "regulated investment company"
under the applicable provisions of the Internal Revenue Code of 1986, as
amended, or (C) to permit the transfer of shares (or to permit the transfer of
any other beneficial interests or shares in the Trust, however denominated), and
(iii) in conjunction with any amendment contemplated by the foregoing clause (i)
or the foregoing clause (ii) to make any and all such further changes or
modifications to this Declaration as the Trustees find to be necessary or
appropriate, any finding of the Trustees referred to in the foregoing clause
(ii) or clause (iii) to be conclusively evidenced by the
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execution of any such amendment by a majority of the Trustees, but the Trustees
shall not be liable for failing so to do.
(b) Notwithstanding paragraph (a) of this Section 9.3, any amendment
which the Trustees have determined would affect the rights, privileges or
interests of holders of a particular series or class of Shares, but not the
rights, privileges or interests of holders of all series or classes of Shares
generally, and which would otherwise require a Majority Shareholder Vote under
paragraph (a) of this Section 9.3, may be made with the vote or consent by a
Majority Shareholder Vote of Shareholders of such series or class.
(c) Notwithstanding any other provision of this Declaration to the
contrary, the Trustees shall have the power in their discretion without any
requirement of approval by shareholders to either invest all or a portion of the
Trust Property, or sell all or a portion of the Trust Property and invest the
proceeds of such sales, in another investment company that is registered under
the 1940 Act.
(d) Notwithstanding any other provision hereof, no amendment may be made
under this Section 9.3 which would change any rights with respect to the Shares,
or any series or class of Shares, by reducing the amount payable thereon upon
liquidation of the Trust or by diminishing or eliminating any voting rights
pertaining thereto, except with the Majority Shareholder Vote of the Shares or
that series or class of Shares. Nothing contained in this Declaration shall
permit the amendment of this Declaration to impair the exemption from personal
liability of the Shareholders, Trustees, officers, employees and agents of the
Trust or to permit assessments upon Shareholders.
(e) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders or by the
Trustees as aforesaid, and executed by a majority of the Trustees, shall be
conclusive evidence of such amendment when lodged among the records of the
Trust.
(f) Notwithstanding any other provision hereof, until such time as a
registration statement under the Securities Act of 1933, as amended, covering
the first public offering of Shares of the Trust shall have become effective,
this Declaration may be amended in any respect by the affirmative vote of a
majority of the Trustees or by an instrument signed by a majority of the
Trustees.
Section 9.4. Merger, Consolidation and Sale of Assets. The Trust may
merge or consolidate with any other corporation, association, trust or other
organization or may sell, lease or exchange all or substantially all of the
Trust Property (or all or substantially all of the Trust Property allocated or
belonging to a particular series of the Trust) including its good will, upon
such terms and conditions and for such consideration when and as authorized at
any meeting of Shareholders called for such purpose by the vote of the holders
of two-thirds of the outstanding Shares of all series of the Trust voting as a
single class, or of the affected series of the Trust, as the case may be, or by
an instrument or instruments in writing without a meeting, consented to by the
vote of the holders of two-thirds of the outstanding Shares of all series of the
Trust voting as a single class, or of the affected series of the Trust, as the
case may be; provided, however, that if such merger, consolidation, sale, lease
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or exchange is recommended by the Trustees, the vote or written consent by
Majority Shareholder Vote shall be sufficient authorization; and any such
merger, consolidation, sale, lease or exchange shall be deemed for all purposes
to have been accomplished under and pursuant to the statutes of the Commonwealth
of Massachusetts. Nothing contained herein shall be construed as requiring
approval of Shareholders for any sale of assets in the ordinary course of the
business of the Trust.
Section 9.5. Incorporation, Reorganization. With the approval of the
holders of a majority of the Shares outstanding and entitled to vote, the
Trustees may cause to be organized or assist in organizing a corporation or
corporations under the laws of any jurisdiction, or any other trust, unit
investment trust, partnership, association or other organization to take over
all of the Trust Property or to carry on any business in which the Trust shall
directly or indirectly have any interest, and to sell, convey and transfer the
Trust Property to any such corporation, trust, partnership, association or
organization in exchange for the shares or securities thereof or otherwise, and
to lend money to, subscribe for the shares or securities of, and enter into any
contracts with any such corporation, trust, partnership, association or
organization in which the Trust holds or is about to acquire shares or any other
interest. Subject to Section 9.4 hereof, the Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to the
extent permitted by law. Nothing contained in this Section 9.5 shall be
construed as requiring approval of Shareholders for the Trustees to organize or
assist in organizing one or more corporations, trusts, partnerships,
associations or other organizations and selling, conveying or transferring a
portion of the Trust Property to such organization or entities.
Section 9.6. Incorporation or Reorganization of Series. With the
approval of a Majority Shareholder Vote of any series, the Trustees may sell,
lease or exchange all of the Trust Property allocated or belonging to that
series, or cause to be organized or assist in organizing a corporation or
corporations under the laws of any other jurisdiction, or any other trust, unit
investment trust, partnership, association or other organization, to take over
all of the Trust Property allocated or belonging to that series and to sell,
convey and transfer such Trust Property to any such corporation, trust, unit
investment trust, partnership, association, or other organization in exchange
for the shares or securities thereof or otherwise.
ARTICLE X
REPORTS TO SHAREHOLDERS AND SHAREHOLDER COMMUNICATIONS
The Trustees shall at least semi-annually submit to the Shareholders a
written financial report of the transactions of the Trust, including financial
statements which shall at least annually be certified by independent public
accountants.
ARTICLE XI
MISCELLANEOUS
<PAGE>
23
Section 11.1. Filing. This Declaration and any amendment hereto shall be
filed in the office of the Secretary of the Commonwealth of Massachusetts and in
such other place or places as may be required under the laws of the Commonwealth
of Massachusetts and may also be filed or recorded in such other places as the
Trustees deem appropriate. Each amendment so filed shall state or be accompanied
by a certificate signed and acknowledged by a Trustee stating that such action
was duly taken in the manner provided herein, and unless such amendment or such
certificate sets forth some later time for the effectiveness of such amendment,
such amendment shall be effective upon its filing. A restated Declaration,
integrating into a single instrument all of the provisions of the Declaration
which are then in effect and operative, may be executed from time to time by a
majority of the Trustees and shall, upon filing with the Secretary of the
Commonwealth of Massachusetts, be conclusive evidence of all amendments
contained therein and may thereafter be referred to in lieu of this original
Declaration and the various amendments thereto.
Section 11.2. Governing Law. This Declaration is executed by the
Trustees and delivered in the Commonwealth of Massachusetts and with reference
to the laws thereof, and the rights of all parties and the validity and
construction of every provision hereof shall be subject to and construed
according to the laws of said Commonwealth.
Section 11.3. Counterparts. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
Section 11.4. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust, is a Trustee hereunder
certifying to: (i) the number or identity of Trustees or Shareholders, (ii) the
due authorization of the execution of any instrument or writing, (iii) the form
of any vote passed at a meeting of Trustees or Shareholders, (iv) the fact that
the number of Trustees or Shareholders present at any meeting or executing any
written instrument satisfies the requirements of this Declaration, (v) the form
of any By-Laws adopted by or the identity of any officers elected by the
Trustees, or (vi) the existence of any fact or facts which in any manner relates
to the affairs of the Trust, shall be conclusive evidence as to the matters so
certified in favor of any Person dealing with the Trustees and their successors.
Section 11.5. Provisions in Conflict with Law or Regulations. (a) The
provisions of this Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any such provision is in conflict
with the 1940 Act, the regulated investment company provisions of the Internal
Revenue Code of 1986, as amended, or with other applicable laws and regulations,
the conflicting provision shall be deemed never to have constituted a part of
this Declaration; provided however, that such determination shall not affect any
of the remaining provisions of this Declaration or render invalid or improper
any action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
<PAGE>
24
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 the
Declaration in any jurisdiction.
Section 11.6. Principal Office. The principal office of the Trust is
6 St. James Avenue, 9th Floor, Boston, Massachusetts 02116.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
the 1st day of April, 1996.
Thomas M. Lenz
as Trustee
and not individually
6 St. James Avenue
Boston, Massachusetts
Suzan M. Barron
as Trustee
and not individually
6 St. James Avenue
Boston, Massachusetts
Andres E. Saldana
as Trustee
and not individually
6 St. James Avenue
Boston, Massachusetts
DSI226A
<PAGE>
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, SS.
April 1, 1996
Then personally appeared the above-named Thomas M. Lenz, Suzan M. Barron
and Andres E. Saldana, who severally acknowledged the foregoing instrument to be
their free act and deed.
Before me,
Notary Public
<PAGE>
DSI226A Appendix I
DOMINI INSTITUTIONAL TRUST
Establishment and
Designation of Series of Shares of
Beneficial Interest (par value $0.01 per share)
Pursuant to Section 6.9 of Declaration of Trust, dated as of April 1,
1996 (the "Declaration of Trust"), of Domini Institutional Trust (the "Trust"),
the Trustees of the Trust hereby establish and designate one initial series of
Shares (as defined in the Declaration of Trust) (the "Fund") to have the
following special and relative rights:
1. The Fund shall be designated as follows:
Domini Institutional Social Equity Fund
2. The Fund shall be authorized to hold cash, invest in securities,
instruments and other properties and use investment techniques as from time to
time described in the Trust's registration statement under the Investment
Company Act of 1940, as amended (the "1940 Act"), as such registration statement
may be amended from time to time, to the extent pertaining to such Fund. Each
Share of a Fund shall be redeemable, shall be entitled to one vote (or fraction
thereof in respect of a fractional share) on matters on which Shares of the Fund
shall be entitled to vote, shall represent a pro rata beneficial interest in the
assets allocated or belonging to the Fund, and shall be entitled to receive its
pro rata share of the net assets of the Fund upon liquidation of the Fund, all
as provided in Section 6.9 of the Declaration of Trust. The proceeds of sales of
Shares of a Fund, together with any income and gain thereon, less any diminution
or expenses thereof, shall irrevocably belong to that Fund, unless otherwise
required by law.
3. Shareholders of the Fund shall vote separately as a class on any
matter to the extent required by, and any matter shall be deemed to have been
effectively acted upon with respect to the Fund as provided in, Rule 18f-2, as
from time to time in effect, under the 1940 Act, or any successor rule, and by
the Declaration of Trust.
4. The assets and liabilities of the Trust shall be allocated among the
Fund and any other series of Shares of the Trust as set forth in Section 6.9 of
the Declaration of Trust.
5. Subject to the provisions of Section 6.9 and Article IX of the
Declaration of Trust, the Trustees (including any successor Trustees) shall have
the right at any time and from time to time to reallocate assets and expenses,
to change the designation of the Fund or any other series of Shares of the
Trust, or otherwise to change the special and relative rights of the Fund or any
series of Shares of the Trust.
<PAGE>
Domini Institutional Trust
6 St. James Avenue, 9th Floor
Boston, Massachusetts 02116
(617) 423-0800
Initial Trustee Residence
Thomas M. Lenz 8 Mt. Ida Street, #5
Newton, MA 02158
Suzan M. Barron 1792 Columbia Road
South Boston, MA 02127
Andres E. Saldana 51 Oakwood Road
Auburndale, MA 02166
Principal Contact: Andres E. Saldana
Assistant Secretary
Domini Institutional Trust
c/o Signature Broker-Dealer Services, Inc.
6 St. James Avenue
Boston, MA 02116
(617) 423-0800
DSI225
BY-LAWS
OF
DOMINI INSTITUTIONAL TRUST
ARTICLE I
DEFINITIONS
The terms "COMMISSION", "DECLARATION", "DISTRIBUTOR", "INVESTMENT
ADVISER", "MAJORITY SHAREHOLDER VOTE", "1940 ACT", "SHAREHOLDER", "SHARES",
"TRANSFER AGENT", "TRUST", "TRUST PROPERTY" and "TRUSTEES" have the respective
meanings given them in the Declaration of Trust of Domini Institutional Trust
dated as of April 1, 1996.
ARTICLE II
OFFICES
SECTION 1. PRINCIPAL OFFICE. Until changed by the Trustees, the
principal office of the Trust in the Commonwealth of Massachusetts shall be in
the City of Boston, County of Suffolk.
SECTION 2. OTHER OFFICES. The Trust may have offices in such other
places without as well as within the Commonwealth as the Trustees may from time
to time determine.
ARTICLE III
SHAREHOLDERS
SECTION 1. MEETINGS. A meeting of Shareholders may be called at any time
by a majority of the Trustees and shall be called by any Trustee upon written
request, which shall specify the purpose or purposes for which such meeting is
to be called, of Shareholders holding in the aggregate not less than 10% of the
outstanding Shares entitled to vote on the matters specified in such written
request. Any such meeting shall be held within or without the Commonwealth of
Massachusetts on such day and at such time as the Trustees shall designate. The
holders of a majority of outstanding Shares entitled to vote present in person
or by proxy shall constitute a quorum at any meeting of the Shareholders. In the
absence of a quorum, a majority of outstanding Shares entitled to vote present
in person or by proxy may adjourn the meeting from time to time until a quorum
shall be present.
Whenever a matter is required to be voted by Shareholders of the Trust
in the aggregate under Section 6.8 and Section 6.9 and Section 6.9(g) of the
Declaration, the Trust may either hold a meeting of Shareholders of all series
<PAGE>
2
and classes, as established and designated pursuant to Section 6.9 of
the Declaration, to vote on such matter, or hold separate meetings of
shareholders of each of the individual series and/or classes to vote on such
matter, PROVIDED THAT (i) such separate meetings shall be held within one year
of each other, (ii) a quorum consisting of the holders of the majority of
outstanding Shares of the individual series and/or classes entitled to vote
present in person or by proxy shall be present at each such separate meeting and
(iii) a quorum consisting of the holders of a majority of all Shares of the
Trust entitled to vote present in person or by proxy shall be present in the
aggregate at such separate meetings, and the votes of Shareholders at all such
separate meetings shall be aggregated in order to determine if sufficient votes
have been cast for such matter to be voted.
SECTION 2. NOTICE OF MEETINGS Notice of all meetings of Shareholders,
stating the time, place and purposes of the meeting, shall be given by the
Trustees by mail to each Shareholder entitled to vote at such meeting at his
address as recorded on the register of the Trust, mailed at least 10 days and
not more than 60 days before the meeting. Only the business stated in the notice
of the meeting shall be considered at such meeting. Any adjourned meeting may be
held as adjourned without further notice. No notice need be given to any
Shareholder who shall have failed to inform the Trust of his current address or
if a written waiver of notice, executed before or after the meeting by the
Shareholder or his attorney thereunto authorized, is filed with the records of
the meeting.
Where separate meetings are held for Shareholders of each of the
individual series and/or classes to vote on a matter required to be voted on by
Shareholders of the Trust in the aggregate, as provided in Article III, Section
1 above, notice of each such separate meeting shall be provided in the manner
described above in this Section 2.
SECTION 3. RECORD DATE. For the purpose of determining the Shareholders
who are entitled to notice of and to vote at any meeting, or to participate in
any distribution, or for the purpose of any other action, the Trustees may from
time to time close the transfer books for such period, not exceeding 30 days, as
the Trustees may determine; or without closing the transfer books the Trustees
may fix a date not more than 60 days prior to the date of any meeting of
Shareholders or distribution or other action as a record date for the
determination of the persons to be treated as Shareholders of record for such
purpose.
Where separate meetings are held for Shareholders of each of the
individual series to vote on a matter required to be voted on by Shareholders of
the Trust in the aggregate, as provided in Article III, Section 1 above, the
record date of each such separate meeting shall be determined in the manner
described above in this Section 3.
SECTION 4. PROXIES. At any meeting of Shareholders, any holder of Shares
entitled to vote thereat may vote by proxy, provided that no proxy shall be
voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent of the Trust as the Secretary may
direct, for verification prior to the time at which such vote shall be taken.
Pursuant to
<PAGE>
3
a vote of a majority of the Trustees, proxies may be solicited in the name of
the Trust or one or more Trustees or officers of the Trust. Only Shareholders of
record shall be entitled to vote. Each full Share shall be entitled to one vote
and fractional Shares shall be entitled to a vote of such fraction. When any
Share is held jointly by several persons, any one of them may vote at any
meeting in person or by proxy in respect of such Share, but if more than one of
them 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 to be cast, such vote
shall not be received in respect of such Share. 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. If the holder of any such Share is a minor or a
person of unsound mind, and subject to guardianship or to the legal control of
any other person as regards the charge or management of such Share, such Share
may be voted by such guardian or such other person appointed or having such
control, and such vote may be given in person or by proxy.
SECTION 5. INSPECTION OF RECORDS. The records of the Trust shall be open
to inspection by Shareholders to the same extent as is permitted shareholders of
a Massachusetts business corporation.
SECTION 6. ACTION WITHOUT MEETING. Any action which may be 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 law, the Declaration or these By-Laws for approval of such matter)
consent to the action in writing and the 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.
ARTICLE IV
TRUSTEES
SECTION 1. MEETINGS OF THE TRUSTEES. The Trustees may in their
discretion provide for regular or stated meetings of the Trustees. Notice of
regular or stated meetings need not be given. Meetings of the Trustees other
than regular or stated meetings shall be held whenever called by the Chairman or
by any Trustee. Notice of the time and place of each meeting other than regular
or stated meetings shall be given by the Secretary or an Assistant Secretary or
by the officer or Trustee calling the meeting and shall be mailed to each
Trustee at least two days before the meeting, or shall be telegraphed, cabled,
or wirelessed to each Trustee at his business address, or personally delivered
to him at least one day before the meeting. Notice of a meeting need not be
given to any Trustee if a written waiver of notice, executed by him before or
after the meeting, is filed with the records of the meeting, or to any Trustee
who attends the meeting without protesting prior thereto or at its commencement
the lack of notice to him. A notice or waiver of notice need not specify the
purpose of any meeting. The Trustees may meet by means of a telephone conference
circuit or similar communications equipment by means of which all persons
participating in the meeting can hear each other, which telephone conference
meeting shall be deemed to have been held at a place designated by the Trustees
at the meeting. Participation in a telephone conference meeting shall constitute
presence in
<PAGE>
4
person at such meeting. Any action required or permitted to be taken at any
meeting of the Trustees may be taken by the Trustees without a meeting if all
the Trustees consent to the action in writing and the written consents are filed
with the records of the Trustees' meetings. Such consents shall be treated as a
vote for all purposes.
SECTION 2. QUORUM AND MANNER OF ACTING. A majority of the Trustees
present in person at any regular or special meeting of the Trustees shall
constitute a quorum for the transaction of business at such meeting and (except
as otherwise required by law, the Declaration or these By-Laws) the act of a
majority of the Trustees present at any such meeting, at which a quorum is
present, shall be the act of the Trustees. In the absence of a quorum, a
majority of the Trustees present may adjourn the meeting from time to time until
a quorum shall be present. Notice of an adjourned meeting need not be given.
ARTICLE V
COMMITTEES AND ADVISORY BOARD
SECTION 1. EXECUTIVE AND OTHER COMMITTEES. The Trustees by vote of a
majority of all the Trustees may elect from their own number an Executive
Committee to consist of not less than three Trustees to hold office at the
pleasure of the Trustees. While the Trustees are not in session, the Executive
Committee shall have the power to conduct the current and ordinary business of
the Trust, including the purchase and sale of securities and the designation of
securities to be delivered upon redemption of Shares of the Trust, and such
other powers of the Trustees as the Trustees may, from time to time, delegate to
the Executive Committee except those powers which by law, the Declaration or
these By-Laws the Trustees are prohibited from so delegating. The Trustees may
also elect from their own number other Committees from time to time, the number
comprising such Committees, the powers conferred upon the same (subject to the
same limitations as with respect to the Executive Committee) and the term of
membership on such Committees to be determined by the Trustees. The Trustees may
designate a chairman of any such Committee. In the absence of such designation a
Committee may elect its own chairman.
SECTION 2. MEETING, QUORUM AND MANNER OF ACTING. The Trustees may (i)
provide for stated meetings of any Committee, (ii) specify the manner of calling
and notice required for special meetings of any Committee, (iii) specify the
number of members of a Committee required to constitute a quorum and the number
of members of a Committee required to exercise specified powers delegated to
such Committee, (iv) authorize the making of decisions to exercise specified
powers by written assent of the requisite number of members of a Committee
without a meeting, and (v) authorize the members of a Committee to meet by means
of a telephone conference circuit.
Each Committee shall keep regular minutes of its meetings and records
of decisions taken without a meeting and cause them to be recorded in a book
designated for that purpose and kept in the office of the Trust.
<PAGE>
5
SECTION 3. ADVISORY BOARD. The Trustees may appoint an Advisory Board
to consist in the first instance of not less than three members. Members of such
Advisory Board shall not be Trustees or officers and need not be Shareholders. A
member of such Advisory Board shall hold office for such period as the Trustees
may by vote provide and may resign therefrom by a written instrument signed by
him which shall take effect upon its delivery to the Trustees. The Advisory
Board shall have no legal powers and shall not perform the functions of Trustees
in any manner, such Advisory Board being intended merely to act in an advisory
capacity. Such Advisory Board shall meet at such times and upon such notice as
the Trustees may by vote provide.
SECTION 4. CHAIRMAN. The Trustees may, by a majority vote of all the
Trustees, elect from their own number a Chairman, to hold office until his
successor shall have been duly elected and qualified. The Chairman shall not
hold any other office. The Chairman may be, but need not be, a Shareholder. The
Chairman shall preside at all meetings of the Trustees and shall have such other
duties as from time to time may be assigned to him by the Trustees.
ARTICLE VI
OFFICERS
SECTION 1. GENERAL PROVISIONS. The officers of the Trust shall be a
President, a Treasurer and a Secretary, each of whom shall be elected by the
Trustees. The Trustees may elect or appoint such other officers or agents as the
business of the Trust may require, including one or more Vice Presidents, one or
more Assistant Treasurers, and one or more Assistant Secretaries. The Trustees
may delegate to any officer or committee the power to appoint any subordinate
officers or agents.
SECTION 2. TERM OF OFFICE AND QUALIFICATIONS. Except as otherwise
provided by law, the Declaration or these By-Laws, the President, the Treasurer
and the Secretary shall hold office until his respective successor shall have
been duly elected and qualified, and all other officers shall hold office at the
pleasure of the Trustees. The Secretary and Treasurer may be the same person. A
Vice President and the Treasurer or a Vice President and the Secretary may be
the same person, but the offices of Vice President, Secretary and Treasurer
shall not be held by the same person. The President shall not hold any other
office. Except as above provided, any two offices may be held by the same
person. Any officer may be, but does not need be, a Trustee or Shareholder.
SECTION 3. REMOVAL. The Trustees, at any regular or special meeting of
the Trustees, may remove any officer with or without cause by a vote of a
majority of the Trustees. Any officer or agent appointed by any officer or
committee may be removed with or without cause by such appointing officer or
committee.
SECTION 4. POWERS AND DUTIES OF THE PRESIDENT. The President, unless
the Chairman, if any, is so appointed by the Trustees, shall be the principal
executive officer of the Trust. Subject to the control of the Trustees and any
committee of the Trustees, the President shall at all times exercise a general
<PAGE>
6
supervision and direction over the affairs of the Trust. The President shall
have the power to employ attorneys and counsel for the Trust and to employ such
subordinate officers, agents, clerks and employees as he may find necessary to
transact the business of the Trust. The President shall also have the power to
grant, issue, execute or sign such powers of attorney, proxies or other
documents as may be deemed advisable or necessary in the furtherance of the
interests of the Trust. The President shall have such other powers and duties
as, from time to time, may be conferred upon or assigned to him by the Trustees.
SECTION 5. POWERS AND DUTIES OF VICE PRESIDENTS. In the absence or
disability of the President, the Vice President or, if there are more than one
Vice President, any Vice President designated by the Trustees shall perform all
the duties and may exercise any of the powers of the President, subject to the
control of the Trustees. Each Vice President shall perform such other duties as
may be assigned to him from time to time by the Trustees or the President.
SECTION 6. POWERS AND DUTIES OF THE TREASURER. The Treasurer shall be
the principal financial and accounting officer of the Trust. The Treasurer shall
deliver all funds of the Trust which may come into his hands to such custodian
as the Trustees may employ pursuant to Article X hereof. The Treasurer shall
render a statement of condition of the finances of the Trust to the Trustees as
often as they shall require the same and shall in general perform all the duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned to him by the Trustees. The Treasurer shall give a bond for the
faithful discharge of his duties, if required to do so by the Trustees, in such
sum and with such surety or sureties as the Trustees shall require.
SECTION 7. POWERS AND DUTIES OF THE SECRETARY. The Secretary shall keep
the minutes of all meetings of the Shareholders in proper books provided for
that purpose; shall keep the minutes of all meetings of the Trustees; shall have
custody of the seal of the Trust; and shall have charge of the Share transfer
books, lists and records unless the same are in the charge of the Transfer
Agent. The Secretary shall attend to the giving and serving of all notices by
the Trust in accordance with the provisions of these By-Laws and as required by
law; and subject to these By-Laws, shall in general perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the Trustees.
SECTION 8. POWERS AND DUTIES OF ASSISTANT TREASURERS. In the absence or
disability of the Treasurer, any Assistant Treasurer designated by the Trustees
shall perform all the duties, and may exercise any of the powers, of the
Treasurer. Each Assistant Treasurer shall perform such other duties as from time
to time may be assigned to him by the Trustees. Each Assistant Treasurer shall
give a bond for the faithful discharge of his duties, if required to do so by
the Trustees, in such sum and with such surety or sureties as the Trustees shall
require.
SECTION 9. POWERS AND DUTIES OF ASSISTANT SECRETARIES. In the absence
or disability of the Secretary, any Assistant Secretary designated by the
Trustees shall perform all of the duties, and may exercise any of the powers, of
the Secretary. Each Assistant Secretary shall perform such other duties as from
time to time may be assigned to him by the Trustees.
<PAGE>
7
SECTION 10. COMPENSATION OF OFFICERS AND TRUSTEES AND MEMBERS OF THE
ADVISORY BOARD. Subject to any applicable law or provision of the Declaration,
the compensation of the officers and Trustees and members of the Advisory Board
shall be fixed from time to time by the Trustees or, in the case of officers, by
any committee of officers upon whom such power may be conferred by the Trustees.
No officer shall be prevented from receiving such compensation as such officer
by reason of the fact that he is also a Trustee.
ARTICLE VII
FISCAL YEAR
The fiscal year of each series of the Trust shall be determined by the
Trustees, and the Trustees may from time to time change any fiscal year.
ARTICLE VIII
SEAL
The Trustees may adopt a seal which shall be in such form and shall
have such inscription thereon as the Trustees may from time to time prescribe.
ARTICLE IX
WAIVERS OF NOTICE
Whenever any notice is required to be given by law, the Declaration or
these By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent thereto. A notice shall be deemed to have been telegraphed,
cabled or wirelessed for the purposes of these By-Laws when it has been
delivered to a representative of any telegraph, cable or wireless company with
instruction that it be telegraphed, cabled or wirelessed. Any notice shall be
deemed to be given at the time when the same shall be mailed, telegraphed,
cabled or wirelessed.
ARTICLE X
CUSTODIAN
SECTION 1. APPOINTMENT AND DUTIES. The Trustees shall at all times
employ a bank or trust company having a capital, surplus and undivided profits
of at least $5,000,000 as custodian with authority as its agent, but subject to
such restrictions, limitations and other requirements, if any, as may be
contained in the Declaration, these By-Laws and the 1940 Act:
(i) to hold the securities owned by the Trust and deliver the
same upon written order; (ii) to receive and receipt for any
monies due to the Trust and deposit the same in its own
banking department
<PAGE>
8
or elsewhere as the Trustees may direct; (iii) to disburse
such funds upon orders or vouchers; (iv) if authorized by the
Trustees, to keep the books and accounts of the Trust and
furnish clerical and accounting services; and (v) if
authorized by the Trustees, to compute the net income of the
Trust and the net asset value of Shares;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian and upon such terms and conditions as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees. Subject to the
approval of the Trustees, the custodian may enter into arrangements with
securities depositories. All such custodial, sub-custodial and depository
arrangements shall be subject to, and comply with, the provisions of the 1940
Act and the rules and regulations promulgated thereunder.
SECTION 2. CENTRAL CERTIFICATE SYSTEM. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct the
custodian to deposit all or any part of the securities owned by the Trust in a
system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, or with such other person
as may be permitted by the Commission, or otherwise in accordance with the 1940
Act, pursuant to which system all securities of any particular class or series
of any issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust or its custodian.
SECTION 3. ACCEPTANCE OF RECEIPTS IN LIEU OF CERTIFICATES. Subject to
such rules, regulations and orders as the Commission may adopt, the Trustees may
direct the custodian to accept written receipts or other written evidences
indicating purchases of securities held in book-entry form in the Federal
Reserve System in accordance with regulations promulgated by the Board of
Governors of the Federal Reserve System and the local Federal Reserve Banks in
lieu of receipt of certificates representing such securities.
ARTICLE XI
AMENDMENTS
These By-Laws, or any of them, may be altered, amended or repealed, or
new By-Laws may be adopted (a) by the Shareholders by a Majority Shareholder
Vote, or (b) by the Trustees, provided, however, that no By-Law may be amended,
adopted or repealed by the Trustees if such amendment, adoption or repeal
requires, pursuant to law, the Declaration or these By-Laws, a vote of the
Shareholders.
CUSTODIAN AGREEMENT
between
DOMINI INSTITUTIONAL TRUST
and
INVESTORS BANK & TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
----
1. Bank Appointed Custodian..................................... 1
2. Definitions.................................................. 1
2.1 Authorized Person.............................. 1
2.2 Board ........................................ 1
2.3 Security....................................... 1
2.4 Portfolio Security............................. 1
2.5 Officers' Certificate.......................... 2
2.6 Book-Entry System.............................. 2
2.7 Depository..................................... 2
2.8 Proper Instructions............................ 2
2.9 Foreign Securities............................. 2
3. Separate Accounts............................................ 2
4. Certification as to Authorized Persons....................... 3
5. Custody of Cash.............................................. 3
5.1 Purchase of Securities......................... 3
5.2 Redemptions ................................. 3
5.3 Distributions and Expenses of Fund............. 3
5.4 Payment in Respect of Securities............... 4
5.5 Repayment of Loans............................. 4
5.6 Repayment of Cash.............................. 4
5.7 Foreign Exchange Transactions.................. 4
5.8 Other Authorized Payments...................... 4
5.9 Termination.................................... 4
6. Securities................................................... 4
6.1 Segregation and Registration................... 4
6.2 Voting and Proxies............................. 5
6.3 Book-Entry System.............................. 5
6.4 Use of a Depository............................ 6
6.5 Use of Book-Entry System for Commercial Paper.. 7
6.6 Use of Immobilization Programs................. 8
6.7 Eurodollar CDs................................. 8
6.8 Options and Futures Transactions............... 9
6.9 Segregated Account............................. 10
6.10 Interest Bearing Call or Time Deposits......... 11
6.11 Transfer of Securities......................... 11
7. Redemptions ............................................... 13
8. Merger, Dissolution, etc. of Fund............................ 13
9. Actions of Bank Without Prior Authorization.................. 13
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Page
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10. Collections and Defaults..................................... 14
11. Maintenance of Records and Accounting Services.............. 14
12. Fund Evaluation and Yield Calculation........................ 15
12.1 Fund Evaluation................................ 15
12.2 Yield Calculation.............................. 15
13. Concerning the Bank ........................................ 16
13.1 Performance of Duties and
Standard of Care.............................. 16
13.2 Agents and Subcustodians....................... 17
13.3 Duties of the Bank with Respect to Property
Held Outside of the United States............ 18
13.4 Insurance...................................... 21
13.5 Fees and Expenses of Bank...................... 21
13.6 Advances by Bank.............................. 21
14. Termination.................................................. 21
15. Confidentiality.............................................. 22
16. Notices...................................................... 22
17. Amendments................................................... 23
18. Parties...................................................... 23
19. Governing Law................................................ 23
20. Counterparts................................................. 23
21. Limitation of Liability ..................................... 23
<PAGE>
CUSTODIAN AGREEMENT
AGREEMENT made as of this [ ] day of [ ], 1996, between Domini
Institutional Trust, a Massachusetts business trust (the "Fund") and INVESTORS
BANK & TRUST COMPANY (the "Bank").
The Fund, an open-end management investment company, desires to place
and maintain all of its portfolio securities and cash in the custody of the
Bank. The Bank has at least the minimum qualifications required by Section
17(f)(1) of the Investment Company Act of 1940, as amended, (the "1940 Act") to
act as custodian of the portfolio securities and cash of the Fund, and has
indicated its willingness to so act, subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. BANK APPOINTED CUSTODIAN. The Fund hereby appoints the Bank as custodian
of its portfolio securities and cash delivered to the Bank as hereinafter
described and the Bank agrees to act as such upon the terms and conditions
hereinafter set forth.
2. DEFINITIONS. Whenever used herein, the terms listed below will have the
following meaning:
2.1 AUTHORIZED PERSON. Authorized Person will mean any of the persons
duly authorized to give Proper Instructions or otherwise act on behalf of the
Fund by appropriate resolution of its Board, and set forth in a certificate as
required by Section 4 hereof.
2.2 BOARD. Board will mean the Board of Directors or the Board of
Trustees of the Fund, as the case may be.
2.3 SECURITY. The term security as used herein will have the same
meaning as when such term is used in the Securities Act of 1933, as amended,
including, without limitation, any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in any profit
sharing agreement, collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, voting-trust certificate,
certificate of deposit for a security, fractional undivided interest in oil,
gas, or other mineral rights, any put, call, straddle, option, or privilege on
any security, certificate of deposit, or group or index of securities (including
any interest therein or based on the value thereof), or any put, call, straddle,
option, or privilege entered into on a national securities exchange relating to
a foreign currency, or, in general, any interest or instrument commonly known as
a "security", or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or right to
subscribe to, or option contract to purchase or sell any of the foregoing, and
futures, forward contracts and options thereon.
2.4 PORTFOLIO SECURITY. Portfolio Security will mean any security owned
by the Fund.
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2.5 OFFICERS' CERTIFICATE. Officers' Certificate will mean, unless
otherwise indicated, any request, direction, instruction, or certification in
writing signed by any two Authorized Persons of the Fund.
2.6 BOOK-ENTRY SYSTEM. Book-Entry System shall mean the Federal
Reserve-Treasury Department Book-Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank, its
successor or successors and its nominee or nominees.
2.7 DEPOSITORY. Depository shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934 ("Exchange
Act"), its successor or successors and its nominee or nominees. The term
"Depository" shall further mean and include any other person authorized to act
as a depository under the 1940 Act, its successor or successors and its nominee
or nominees, specifically identified in a certified copy of a resolution of the
Board.
2.8 PROPER INSTRUCTIONS. Proper Instructions shall mean (i)
instructions regarding the purchase or sale of Portfolio Securities, and
payments and deliveries in connection therewith, given by an Authorized Person
as shall have been designated in an Officers' Certificate, such instructions to
be given in such form and manner as the Bank and the Fund shall agree upon from
time to time, and (ii) instructions (which may be continuing instructions)
regarding other matters signed or initialed by such one or more persons from
time to time designated in an Officers' Certificate as having been authorized by
the Board. Oral instructions will be considered Proper Instructions if the Bank
reasonably believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. The Fund shall cause all
oral instructions to be promptly confirmed in writing. The Bank shall act upon
and comply with any subsequent Proper Instruction which modifies a prior
instruction and the sole obligation of the Bank with respect to any follow-up or
confirmatory instruction shall be to make reasonable efforts to detect any
discrepancy between the original instruction and such confirmation and to report
such discrepancy to the Fund. The Fund shall be responsible, at the Fund's
expense, for taking any action, including any reprocessing, necessary to correct
any such discrepancy or error, and to the extent such action requires the Bank
to act the Fund shall give the Bank specific Proper Instructions as to the
action required. Upon receipt of an Officers' Certificate as to the
authorization by the Board accompanied by a detailed description of procedures
approved by the Fund, Proper Instructions may include communication effected
directly between electro-mechanical or electronic devices provided that the
Board and the Bank are satisfied that such procedures afford adequate safeguards
for the Fund's assets.
2.9 FOREIGN SECURITIES. The term Foreign Securities as used herein will
have the same meaning as when such term is used in Rule 17f-5 of the 1940 Act.
3. SEPARATE ACCOUNTS. If the Fund has more than one series or portfolio,
the Bank will segregate the assets of each series or portfolio to which this
Agreement relates into a separate account for each such series or portfolio
containing the assets of such series or portfolio (and all investment earnings
thereon). Unless the context otherwise requires, any reference in this Agreement
to any actions to be taken by the Fund shall be deemed to refer to the Fund
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acting on behalf of one or more of its series, any reference in this Agreement
to any assets of the Fund, including, without limitation, any portfolio
securities and cash and earnings thereon, shall be deemed to refer only to
assets of the applicable series, any duty or obligation of the Bank hereunder to
the Fund shall be deemed to refer to duties and obligations with respect to the
individual series and any obligation or liability of the Fund hereunder shall be
binding only with respect to the individual series, and shall be discharged only
out of the assets of such series.
4. CERTIFICATION AS TO AUTHORIZED PERSONS. The Secretary or Assistant
Secretary of the Fund will at all times maintain on file with the Bank his or
her certification to the Bank, in such form as may be acceptable to the Bank, of
(i) the names and signatures of the Authorized Persons and (ii) the names of the
Board, it being understood that upon the occurrence of any change in the
information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or Assistant
Secretary of the Fund, will sign a new or amended certification setting forth
the change and the new, additional or omitted names or signatures. The Bank will
be entitled to rely and act upon any Officers' Certificate given to it by the
Fund which has been signed by Authorized Persons named in the most recent
certification.
5. CUSTODY OF CASH. As custodian for the Fund, the Bank will open and
maintain a separate account or accounts in the name of the Fund or in the name
of the Bank, as Custodian of the Fund, and will deposit to the account of the
Fund all of the cash of the Fund, except for cash held by a subcustodian
appointed pursuant to Sections 13.2 or 13.3 hereof, including borrowed funds,
delivered to the Bank, subject only to draft or order by the Bank acting
pursuant to the terms of this Agreement. Upon receipt by the Bank of Proper
Instructions (which may be continuing instructions) or in the case of payments
for redemptions and repurchases of outstanding shares of common stock of the
Fund, notification from the Fund's transfer agent as provided in Section 7,
requesting such payment, designating the payee or the account or accounts to
which the Bank will release funds for deposit, and stating that it is for a
purpose permitted under the terms of this Section 5, specifying the applicable
subsection, the Bank will make payments of cash held for the accounts of the
Fund, insofar as funds are available for that purpose, only as permitted in
subsections 5.1-5.9 below.
5.1 PURCHASE OF SECURITIES. Upon the purchase of securities for the
Fund, against contemporaneous receipt of such securities by the Bank registered
in the name of the Fund or in the name of, or properly endorsed and in form for
transfer to, the Bank, or a nominee of the Bank, or receipt for the account of
the Bank pursuant to the provisions of Section 6 below, each such payment to be
made at the purchase price shown on a broker's confirmation (or transaction
report in the case of Book Entry Paper) of purchase of the securities received
by the Bank before such payment is made, as confirmed in the Proper Instructions
received by the Bank before such payment is made.
5.2 REDEMPTIONS. In such amount as may be necessary for the repurchase
or redemption of common shares of the Fund offered for repurchase or redemption
in accordance with Section 7 of this Agreement.
5.3 DISTRIBUTIONS AND EXPENSES OF FUND. For the payment on the account
of the Fund of dividends or other distributions to shareholders as may from time
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to time be declared by the Board, interest, taxes, management or supervisory
fees, distribution fees, fees of the Bank for its services hereunder and
reimbursement of the expenses and liabilities of the Bank as provided hereunder,
fees of any transfer agent, fees for legal, accounting, and auditing services,
or other operating expenses of the Fund.
5.4 PAYMENT IN RESPECT OF SECURITIES. For payments in connection with
the conversion, exchange or surrender of Portfolio Securities or securities
subscribed to by the Fund held by or to be delivered to the Bank.
5.5 REPAYMENT OF LOANS. To repay loans of money made to the Fund, but,
in the case of final payment, only upon redelivery to the Bank of any Portfolio
Securities pledged or hypothecated therefor and upon surrender of documents
evidencing the loan;
5.6 REPAYMENT OF CASH. To repay the cash delivered to the Fund for the
purpose of collateralizing the obligation to return to the Fund certificates
borrowed from the Fund representing Portfolio Securities, but only upon
redelivery to the Bank of such borrowed certificates.
5.7 FOREIGN EXCHANGE TRANSACTIONS. For payments in connection with
foreign exchange contracts or options to purchase and sell foreign currencies
for spot and future delivery which may be entered into by the Bank on behalf of
the Fund upon the receipt of Proper Instructions, such Proper Instructions to
specify the currency broker or banking institution (which may be the Bank, or
any other subcustodian or agent hereunder, acting as principal) with which the
contract or option is made, and the Bank shall have no duty with respect to the
selection of such currency brokers or banking institutions with which the Fund
deals or for their failure to comply with the terms of any contract or option.
5.8 OTHER AUTHORIZED PAYMENTS. For other authorized transactions of the
Fund, or other obligations of the Fund incurred for proper Fund purposes;
provided that before making any such payment the Bank will also receive a
certified copy of a resolution of the Board signed by an Authorized Person
(other than the Person certifying such resolution) and certified by its
Secretary or Assistant Secretary, naming the person or persons to whom such
payment is to be made, and either describing the transaction for which payment
is to be made and declaring it to be an authorized transaction of the Fund, or
specifying the amount of the obligation for which payment is to be made, setting
forth the purpose for which such obligation was incurred and declaring such
purpose to be a proper corporate purpose.
5.9 TERMINATION. Upon the termination of this Agreement as hereinafter
set forth pursuant to Section 8 and Section 14 of this Agreement.
6. SECURITIES.
6.1 SEGREGATION AND REGISTRATION. Except as otherwise provided herein,
and except for securities to be delivered to any subcustodian appointed pursuant
to Sections 13.2 or 13.3 hereof, the Bank as custodian, will receive and hold
pursuant to the provisions hereof, in a separate account or accounts and
physically segregated at all times from those of other persons, any and all
4
<PAGE>
Portfolio Securities which may now or hereafter be delivered to it by or for the
account of the Fund. All such Portfolio Securities will be held or disposed of
by the Bank for, and subject at all times to, the instructions of the Fund
pursuant to the terms of this Agreement. Subject to the specific provisions
herein relating to Portfolio Securities that are not physically held by the
Bank, the Bank will register all Portfolio Securities (unless otherwise directed
by Proper Instructions or an Officers' Certificate), in the name of a registered
nominee of the Bank as defined in the Internal Revenue Code and any Regulations
of the Treasury Department issued thereunder, and will execute and deliver all
such certificates in connection therewith as may be required by such laws or
regulations or under the laws of any state. The Bank will use its best efforts
to the end that the specific Portfolio Securities held by it hereunder will be
at all times identifiable.
The Fund will from time to time furnish to the Bank appropriate
instruments to enable it to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee, any Portfolio Securities which
may from time to time be registered in the name of the Fund.
6.2 VOTING AND PROXIES. Neither the Bank nor any nominee of the Bank
will vote any of the Portfolio Securities held hereunder, except in accordance
with Proper Instructions or an Officers' Certificate. The Bank will execute and
deliver, or cause to be executed and delivered, to the Fund all notices, proxies
and proxy soliciting materials with respect to such Securities, such proxies to
be executed by the registered holder of such Securities (if registered otherwise
than in the name of the Fund), but without indicating the manner in which such
proxies are to be voted.
6.3 BOOK-ENTRY SYSTEM. Provided (i) the Bank has received a certified
copy of a resolution of the Board specifically approving deposits of Fund assets
in the Book-Entry System, and (ii) for any subsequent changes to such
arrangements following such approval, the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may keep Portfolio Securities in the Book-Entry
System provided that such Portfolio Securities are represented in an account
("Account") of the Bank (or its agent) in such System which shall not include
any assets of the Bank (or such agent) other than assets held as a fiduciary,
custodian, or otherwise for customers;
(b) The records of the Bank (and any such agent) with respect to
the Fund's participation in the Book-Entry System through the Bank (or any such
agent) will identify by book entry Portfolio Securities which are included with
other securities deposited in the Account and shall at all times during the
regular business hours of the Bank (or such agent) be open for inspection by
duly authorized officers, employees or agents of the Fund. Where securities are
transferred to the Fund's account, the Bank shall also, by book entry or
otherwise, identify as belonging to the Fund a quantity of securities in
fungible bulk of securities (i) registered in the name of the Bank or its
nominee, or (ii) shown on the Bank's account on the books of the Federal Reserve
Bank;
(c) The Bank (or its agent) shall pay for securities purchased for
the account of the Fund or shall pay cash collateral against the return of
Portfolio Securities loaned by the Fund upon (i) receipt of advice from the
Book-Entry System that such Securities have been transferred to the Account, and
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(ii) the making of an entry on the records of the Bank (or its agent) to reflect
such payment and transfer for the account of the Fund. The Bank (or its agent)
shall transfer securities sold or loaned for the account of the Fund upon
(i) receipt of advice from the Book-Entry System that payment
for securities sold or payment of the initial cash collateral against the
delivery of securities loaned by the Fund has been transferred to the Account;
and
(ii) the making of an entry on the records of the Bank (or
its agent) to reflect such transfer and payment for the account of the Fund.
Copies of all advices from the Book- Entry System of transfers of securities for
the account of the Fund shall identify the Fund, be maintained for the Fund by
the Bank and shall be provided to the Fund at its request. The Bank shall send
the Fund a confirmation, as defined by Rule 17f-4 of the 1940 Act, of any
transfers to or from the account of the Fund;
(d) The Bank will promptly provide the Fund with any report
obtained by the Bank or its agent on the Book-Entry System's accounting system,
internal accounting control and procedures for safeguarding securities deposited
in the Book-Entry System; and
(e) The Bank shall be liable to the Fund for any loss or damage to
the Fund resulting from use of the Book-Entry System by reason of any gross
negligence, willful misfeasance or bad faith of the Bank or any of its agents or
of any of its or their employees or from any reckless disregard by the Bank or
any such agent of its duty to use its best efforts to enforce such rights as it
may have against the Book-Entry System; at the election of the Fund, it shall be
entitled to be subrogated for the Bank in any claim against the Book-Entry
System or any other person which the Bank or its agent may have as a consequence
of any such loss or damage if and to the extent that the Fund has not been made
whole for any loss or damage.
6.4 USE OF A DEPOSITORY. Provided (i) the Bank has received a certified
copy of a resolution of the Board specifically approving deposits in DTC or
other such Depository and (ii) for any subsequent changes to such arrangements
following such approval, the Board has reviewed and approved the arrangement and
has not delivered an Officer's Certificate to the Bank indicating that the Board
has withdrawn its approval:
(a) The Bank may use a Depository to hold, receive, exchange,
release, lend, deliver and otherwise deal with Portfolio Securities including
stock dividends, rights and other items of like nature, and to receive and remit
to the Bank on behalf of the Fund all income and other payments thereon and to
take all steps necessary and proper in connection with the collection thereof;
(b) Registration of Portfolio Securities may be made in the name
of any nominee or nominees used by such Depository;
(c) Payment for securities purchased and sold may be made through
the clearing medium employed by such Depository for transactions of participants
acting through it. Upon any purchase of Portfolio Securities, payment will be
made only upon delivery of the securities to or for the account of the Fund and
6
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the Fund shall pay cash collateral against the return of Portfolio Securities
loaned by the Fund only upon delivery of the Securities to or for the account of
the Fund; and upon any sale of Portfolio Securities, delivery of the Securities
will be made only against payment thereof or, in the event Portfolio Securities
are loaned, delivery of Securities will be made only against receipt of the
initial cash collateral to or for the account of the Fund; and
(d) The Bank shall be liable to the Fund for any loss or damage to
the Fund resulting from use of a Depository by reason of any gross negligence,
willful misfeasance or bad faith of the Bank or its employees or from any
reckless disregard by the Bank of its duty to use its best efforts to enforce
such rights as it may have against a Depository. In this connection, the Bank
shall use its best efforts to ensure that:
(i) the Depository obtains replacement of any certificated
Portfolio Security deposited with it in the event such Security is lost,
destroyed, wrongfully taken or otherwise not available to be returned to the
Bank upon its request;
(ii) any proxy materials received by a Depository with
respect to Portfolio Securities deposited with such Depository are forwarded
immediately to the Bank for prompt transmittal to the Fund;
(iii) such Depository immediately forwards to the Bank
confirmation of any purchase or sale of Portfolio Securities and of the
appropriate book entry made by such Depository to the Fund's account;
(iv) such Depository prepares and delivers to the Bank such
records with respect to the performance of the Bank's obligations and duties
hereunder as may be necessary for the Fund to comply with the recordkeeping
requirements of Section 31(a) of the 1940 Act and Rule 31(a) thereunder; and
(v) such Depository delivers to the Bank and the Fund all
internal accounting control reports, whether or not audited by an independent
public accountant, as well as such other reports as the Fund may reasonably
request in order to verify the Portfolio Securities held by such Depository.
6.5 USE OF BOOK-ENTRY SYSTEM FOR COMMERCIAL PAPER. Provided (i) the
Bank has received a certified copy of a resolution of the Board specifically
approving participation in a system maintained by the Bank for the holding of
commercial paper in book-entry form ("Book-Entry Paper") and (ii) for each year
following such approval the Board has received and approved the arrangements,
upon receipt of Proper Instructions and upon receipt of confirmation from an
Issuer (as defined below) that the Fund has purchased such Issuer's Book-Entry
Paper, the Bank shall issue and hold in book-entry form, on behalf of the Fund,
commercial paper issued by issuers with whom the Bank has entered into a
book-entry agreement (the "Issuers"). In maintaining its Book-Entry Paper
System, the Bank agrees that:
(a) the Bank will maintain all Book-Entry Paper held by the Fund
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in an account of the Bank that includes only assets held by it for customers;
(b) the records of the Bank with respect to the Fund's purchase of
Book-Entry Paper through the Bank will identify, by book-entry, Commercial Paper
belonging to the Fund which is included in the Book-Entry Paper System and shall
at all times during the regular business hours of the Bank be open for
inspection by duly authorized officers, employees or agents of the Fund;
(c) The Bank shall pay for Book-Entry Paper purchased for the
account of the Fund upon contemporaneous (i) receipt of advice from the Issuer
that such sale of Book-Entry Paper has been effected, and (ii) the making of an
entry on the records of the Bank to reflect such payment and transfer for the
account of the Fund;
(d) The Bank shall cancel such Book-Entry Paper obligation upon
the maturity thereof upon contemporaneous (i) receipt of advice that payment for
such Book-Entry Paper has been transferred to the Fund, and (ii) the making of
an entry on the records of the Bank to reflect such payment for the account of
the Fund;
(e) the Bank shall transmit to the Fund a transaction journal
confirming each transaction in Book-Entry Paper for the account of the Fund on
the next business day following the transaction; and
(f) the Bank will send to the Fund such reports on its system of
internal accounting control with respect to the Book-Entry Paper System as the
Fund may reasonably request from time to time.
6.6 USE OF IMMOBILIZATION PROGRAMS. Provided (i) the Bank has received
a certified copy of a resolution of the Board specifically approving the
maintenance of Portfolio Securities in an immobilization program operated by a
bank which meets the requirements of Section 26(a)(1) of the 1940 Act, and (ii)
for each year following such approval the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval, the Bank shall enter into
such immobilization program with such bank acting as a subcustodian hereunder.
6.7 EURODOLLAR CDS. Any Portfolio Securities which are Eurodollar CDs
may be physically held by the European branch of the U.S. banking institution
that is the issuer of such Eurodollar CD (a "European Branch"), provided that
such Securities are identified on the books of the Bank as belonging to the Fund
and that the books of the Bank identify the European Branch holding such
Securities. Notwithstanding any other provision of this Agreement to the
contrary, except as stated in the first sentence of this subsection 6.7, the
Bank shall be under no other duty with respect to such Eurodollar CDs belonging
to the Fund, and shall have no liability to the Fund or its shareholders with
respect to the actions, inactions, whether negligent or otherwise of such
European Branch in connection with such Eurodollar CDs, except for any loss or
damage to the Fund resulting from the Bank's own gross negligence, willful
misfeasance or bad faith in the performance of its duties hereunder.
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6.8 OPTIONS AND FUTURES TRANSACTIONS.
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ or
Over-the-Counter.
1. The Bank shall take action as to put options ("puts") and call
options ("calls") purchased or sold (written) by the Fund regarding escrow or
other arrangements (i) in accordance with the provisions of any agreement
entered into upon receipt of Proper Instructions between the Bank, any
broker-dealer registered under the Exchange Act and a member of the National
Association of Securities Dealers, Inc. (the "NASD"), and, if necessary, the
Fund relating to the compliance with the rules of the Options Clearing
Corporation and of any registered national securities exchange, or of any
similar organization or organizations.
2. Unless another agreement requires it to do so, the Bank shall
be under no duty or obligation to see that the Fund has deposited or is
maintaining adequate margin, if required, with any broker in connection with any
option, nor shall the Bank be under duty or obligation to present such option to
the broker for exercise unless it receives Proper Instructions from the Fund.
The Bank shall have no responsibility for the legality of any put or call
purchased or sold on behalf of the Fund, the propriety of any such purchase or
sale, or the adequacy of any collateral delivered to a broker in connection with
an option or deposited to or withdrawn from a Segregated Account (as defined in
subsection 6.9 below). The Bank specifically, but not by way of limitation,
shall not be under any duty or obligation to: (i) periodically check or notify
the Fund that the amount of such collateral held by a broker or held in a
Segregated Account is sufficient to protect such broker of the Fund against any
loss; (ii) effect the return of any collateral delivered to a broker; or (iii)
advise the Fund that any option it holds, has or is about to expire. Such duties
or obligations shall be the sole responsibility of the Fund.
(b) Puts, Calls and Futures Traded on Commodities Exchanges
1. The Bank shall take action as to puts, calls and futures
contracts ("Futures") purchased or sold by the Fund in accordance with the
provisions of any agreement among the Fund, the Bank and a Futures Commission
Merchant registered under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading Commission and/or any Contract
Market, or any similar organization or organizations, regarding account deposits
in connection with transactions by the Fund.
2. The responsibilities and liabilities of the Bank as to futures,
puts and calls traded on commodities exchanges, any Futures Commission Merchant
account and the Segregated Account shall be limited as set forth in subparagraph
(a)(2) of this Section 6.8 as if such subparagraph referred to Futures
Commission Merchants rather than brokers, and Futures and puts and calls thereon
instead of options.
6.9 SEGREGATED ACCOUNT. The Bank shall upon receipt of Proper
Instructions establish and maintain a Segregated Account or Accounts for and on
behalf of the Fund, into which Account or Accounts may be transferred upon
receipt of Proper Instructions cash and/or Portfolio Securities:
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(a) in accordance with the provisions of any agreement among the
Fund, the Bank and a broker-dealer registered under the Exchange Act and a
member of the NASD or any Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with the rules of the Options
Clearing Corporation and of any registered national securities exchange or the
Commodity Futures Trading Commission or any registered Contract Market, or of
any similar organizations regarding escrow or other arrangements in connection
with transactions by the Fund;
(b) for the purpose of segregating cash or securities in
connection with options purchased or written by the Fund or commodity futures
purchased or written by the Fund;
(c) for the deposit of liquid assets, such as cash, U.S.
Government securities or other high grade debt obligations, having a market
value (marked to market on a daily basis) at all times equal to not less than
the aggregate purchase price due on the settlement dates of all the Fund's then
outstanding forward commitment or "when-issued" agreements relating to the
purchase of Portfolio Securities and all the Fund's then outstanding commitments
under reverse repurchase agreements entered into with broker-dealer firms;
(d) for the deposit of any Portfolio Securities which the Fund has
agreed to sell on a forward commitment basis, all in accordance with Investment
Company Act Release No. 10666;
(e) for the purposes of compliance by the Fund with the procedures
required by Investment Company Act Release No. 10666, or any subsequent release
or releases of the Securities and Exchange Commission relating to the
maintenance of Segregated Accounts by registered investment companies;
(f) for other proper corporate purposes, but only, in the case of
this clause (e), upon receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board, or of the Executive Committee
signed by an officer of the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such Segregated Account and
declaring such purposes to be proper corporate purposes; and
(g) assets may be withdrawn from the Segregated Account pursuant
to Proper Instructions only
(i) with respect to assets deposited in accordance with the
provisions of any agreements referenced in (a) or (b) above, in
accordance with the provisions of such agreements;
(ii) with respect to assets deposited pursuant to (c) or (d)
above, for sale or delivery to meet the Fund's obligations under
outstanding firm commitment when issued agreements for the
purchase of Portfolio Securities and under reverse repurchase
agreements;
(iii) for exchange for other liquid assets of equal or
greater value deposited in the Segregated Account;
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(iv) to the extent that the Fund's outstanding forward
commitment or when- issued agreements for the purchase of
portfolio securities or reverse repurchase agreements are sold to
other parties or the Fund's obligations thereunder are met from
assets of the Fund other than those in the Segregated Account;
(v) for delivery upon settlement of a forward commitment
agreement for the sale of Portfolio Securities; or
(vi) with respect to assets deposited pursuant to (e) above,
in accordance with the purposes of such account as set forth in
Proper Instructions.
6.10 INTEREST BEARING CALL OR TIME DEPOSITS. The Bank shall, upon
receipt of Proper Instructions relating to the purchase by the Fund of
interest-bearing fixed-term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank or banks as shall be indicated in
such Proper Instructions. The Bank shall include in its records with respect to
the assets of the Fund appropriate notation as to the amount of each such
deposit, the banking institution with which such deposit is made (the "Deposit
Bank"), and shall retain such forms of advice or receipt evidencing the deposit,
if any, as may be forwarded to the Bank by the Deposit Bank. Such deposits shall
be deemed Portfolio Securities of the Fund and the responsibility of the Bank
therefore shall be the same as and no greater than the Bank's responsibility in
respect of other Portfolio Securities of the Fund.
6.11 TRANSFER OF SECURITIES. The Bank will transfer, exchange, deliver
or release Portfolio Securities held by it hereunder, insofar as such Securities
are available for such purpose, provided that before making any transfer,
exchange, delivery or release under this Section the Bank will receive Proper
Instructions requesting such transfer, exchange or delivery stating that it is
for a purpose permitted under the terms of this Section 6.11, specifying the
applicable subsection, or describing the purpose of the transaction with
sufficient particularity to permit the Bank to ascertain the applicable
subsection, only
(a) upon sales of Portfolio Securities for the account of the
Fund, against contemporaneous receipt by the Bank of payment therefor in full,
each such payment to be in the amount of the sale price shown in a broker's
confirmation of sale of the Portfolio Securities received by the Bank before
such payment is made, as confirmed in the Proper Instructions received by the
Bank before such payment is made;
(b) in exchange for or upon conversion into other securities alone
or other securities and cash pursuant to any plan of merger, consolidation,
reorganization, share split-up, change in par value, recapitalization or
readjustment or otherwise, upon exercise of subscription, purchase or sale or
other similar rights represented by such Portfolio Securities, or for the
purpose of tendering shares in the event of a tender offer therefor, provided
however that in the event of an offer of exchange, tender offer, or other
exercise of rights requiring the physical tender or delivery of Portfolio
Securities, the Bank shall have no liability for failure to so tender in a
timely manner unless such Proper Instructions are received by the Bank at least
two business days prior to the date required for tender, and unless the Bank (or
its agent or subcustodian hereunder) has actual possession of such Security at
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least two business days prior to the date of tender;
(c) upon conversion of Portfolio Securities pursuant to their
terms into other securities;
(d) for the purpose of redeeming in kind shares of the Fund upon
authorization from the Fund;
(e) in the case of option contracts owned by the Fund, for
presentation to the endorsing broker;
(f) when such Portfolio Securities are called, redeemed or retired
or otherwise become payable;
(g) for the purpose of effectuating the pledge of Portfolio
Securities held by the Bank in order to collateralize loans made to the Fund by
any bank, including the Bank; provided, however, that such Portfolio Securities
will be released only upon payment to the Bank for the account of the Fund of
the moneys borrowed, except that in cases where additional collateral is
required to secure a borrowing already made, and such fact is made to appear in
the Proper Instructions, further Portfolio Securities may be released for that
purpose without any such payment. In the event that any such pledged Portfolio
Securities are held by the Bank, they will be so held for the account of the
lender, and after notice to the Fund from the lender in accordance with the
normal procedures of the lender, that an event of deficiency or default on the
loan has occurred, the Bank may deliver such pledged Portfolio Securities to or
for the account of the lender;
(h) for the purpose of releasing certificates representing
Portfolio Securities, against contemporaneous receipt by the Bank of the fair
market value of such security, as set forth in the Proper Instructions received
by the Bank before such payment is made;
(i) for the purpose of delivering securities lent by the Fund to a
bank or broker dealer, but only against receipt in accordance with street
delivery custom except as otherwise provided herein, of adequate collateral as
agreed upon from time to time by the Fund and the Bank, and upon receipt of
payment in connection with any repurchase agreement relating to such securities
entered into by the Fund;
(j) for other authorized transactions of the Fund or for other
proper corporate purposes; provided that before making such transfer, the Bank
will also receive a certified copy of resolutions of the Board, signed by an
authorized officer of the Fund (other than the officer certifying such
resolution) and certified by its Secretary or Assistant Secretary, specifying
the Portfolio Securities to be delivered, setting forth the transaction in or
purpose for which such delivery is to be made, declaring such transaction to be
an authorized transaction of the Fund or such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made; and
(k) upon termination of this Agreement as hereinafter set forth
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pursuant to Section 8 and Section 14 of this Agreement.
As to any deliveries made by the Bank pursuant to subsections (a), (b),
(c), (e), (f), (g), (h) and (i) securities or cash receivable in exchange
therefor shall be delivered to the Bank.
7. REDEMPTIONS. In the case of payment of assets of the Fund held by the
Bank in connection with redemptions and repurchases by the Fund of outstanding
common shares, the Bank will rely on notification by the Fund's transfer agent
of receipt of a request for redemption and certificates, if issued, in proper
form for redemption before such payment is made. Payment shall be made in
accordance with the Articles and By-laws of the Fund, from assets available for
said purpose.
8. MERGER, DISSOLUTION, ETC. OF FUND. In the case of the following
transactions, not in the ordinary course of business, namely, the merger of the
Fund into or the consolidation of the Fund with another investment company, the
sale by the Fund of all, or substantially all, of its assets to another
investment company, or the liquidation or dissolution of the Fund and
distribution of its assets, the Bank will deliver the Portfolio Securities held
by it under this Agreement and disburse cash only upon the order of the Fund set
forth in an Officers' Certificate, accompanied by a certified copy of a
resolution of the Board authorizing any of the foregoing transactions. Upon
completion of such delivery and disbursement and the payment of the fees,
disbursements and expenses of the Bank, this Agreement will terminate.
9. ACTIONS OF BANK WITHOUT PRIOR AUTHORIZATION. Notwithstanding anything
herein to the contrary, unless and until the Bank receives an Officers'
Certificate to the contrary, it will without prior authorization or instruction
of the Fund or the transfer agent:
(a) Endorse for collection and collect on behalf of and in the name of
the Fund all checks, drafts, or other negotiable or transferable instruments or
other orders for the payment of money received by it for the account of the Fund
and hold for the account of the Fund all income, dividends, interest and other
payments or distribution of cash with respect to the Portfolio Securities held
thereunder;
(b) Present for payment all coupons and other income items held by it
for the account of the Fund which call for payment upon presentation and hold
the cash received by it upon such payment for the account of the Fund;
(c) Receive and hold for the account of the Fund all securities
received as a distribution on Portfolio Securities as a result of a stock
dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any Portfolio Securities held by it hereunder.
(d) Execute as agent on behalf of the Fund all necessary ownership and
other certificates and affidavits required by the Internal Revenue Code or the
regulations of the Treasury Department issued thereunder, or by the laws of any
state, now or hereafter in effect, inserting the Fund's name on such
certificates as the owner of the securities covered thereby, to the extent it
may lawfully do so and as may be required to obtain payment in respect thereof.
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The Bank will execute and deliver such certificates in connection with Portfolio
Securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any State;
(e) Present for payment all Portfolio Securities which are called,
redeemed, retired or otherwise become payable, and hold cash received by it upon
payment for the account of the Fund; and
(f) Exchange interim receipts or temporary securities for definitive
securities.
10. COLLECTIONS AND DEFAULTS. The Bank will use all reasonable efforts to
collect any funds which may to its knowledge become collectible arising from
Portfolio Securities, including dividends, interest and other income, and to
transmit to the Fund notice actually received by it of any call for redemption,
offer of exchange, right of subscription, reorganization or other proceedings
affecting such Securities. If Portfolio Securities upon which such income is
payable are in default or payment is refused after due demand or presentation,
the Bank will notify the Fund in writing of any default or refusal to pay within
two business days from the day on which it receives knowledge of such default or
refusal. In addition, the Bank will send the Fund a written report once each
month showing any income on any Portfolio Security held by it which is more than
ten days overdue on the date of such report and which has not previously been
reported.
11. MAINTENANCE OF RECORDS AND ACCOUNTING SERVICES. The Bank will maintain
records with respect to transactions for which the Bank is responsible pursuant
to the terms and conditions of this Agreement, and in compliance with the
applicable rules and regulations of the 1940 Act and will furnish the Fund daily
with a statement of condition of the Fund. The Bank will furnish to the Fund at
the end of every month, and at the close of each quarter of the Fund's fiscal
year, a list of the Portfolio Securities and the aggregate amount of cash held
by it for the Fund. The books and records of the Bank pertaining to its actions
under this Agreement and reports by the Bank or its independent accountants
concerning its accounting system, procedures for safeguarding securities and
internal accounting controls will be open to inspection and audit at reasonable
times by officers of or auditors employed by the Fund and will be preserved by
the Bank in the manner and in accordance with the applicable rules and
regulations under the 1940 Act.
The Bank shall perform fund accounting (including Hub and Spoke book and
tax allocations) and shall keep the books of account and render statements or
copies from time to time as reasonably requested by the Treasurer or any
executive officer of the Fund.
The Bank shall assist generally in the preparation of reports to
shareholders and others, audits of accounts, and other ministerial matters of
like nature.
12. FUND EVALUATION AND YIELD CALCULATION.
12.1 FUND EVALUATION. The Bank shall compute and, unless otherwise
directed by the Board, determine as of the close of regular trading on the New
York Stock Exchange on each day on which said Exchange is open for unrestricted
trading and as of such other days, or hours, if any, as may be authorized by the
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Board, the net asset value and the public offering price of a share of capital
stock of the Fund, such determination to be made in accordance with the
provisions of the Articles and By-laws of the Fund and Prospectus and Statement
of Additional Information relating to the Fund, as they may from time to time be
amended, and any applicable resolutions of the Board at the time in force and
applicable; and promptly to notify the Fund, the proper exchange and the NASD or
such other persons as the Fund may request of the results of such computation
and determination. In computing the net asset value hereunder, the Bank may rely
in good faith upon information furnished to it by any Authorized Person in
respect of (i) the manner of accrual of the liabilities of the Fund and in
respect of liabilities of the Fund not appearing on its books of account kept by
the Bank, (ii) reserves, if any, authorized by the Board or that no such
reserves have been authorized, (iii) the source of the quotations to be used in
computing the net asset value, (iv) the value to be assigned to any security for
which no price quotations are available, and (v) the method of computation of
the public offering price on the basis of the net asset value of the shares, and
the Bank shall not be responsible for any loss occasioned by such reliance or
for any good faith reliance on any quotations received from a source pursuant to
(iii) above.
12.2. YIELD CALCULATION. The Bank will compute the performance results
of the Fund (the "Yield Calculation") in accordance with the provisions of
Release No. 33-6753 and Release No. IC- 16245 (February 2, 1988) (the
"Releases") promulgated by the Securities and Exchange Commission, and any
subsequent amendments to, published interpretations of or general conventions
accepted by the staff of the Securities and Exchange Commission with respect to
such releases or the subject matter thereof ("Subsequent Staff Positions"),
subject to the terms set forth below:
(a) The Bank shall compute the Yield Calculation for the Fund for
the stated periods of time as shall be mutually agreed upon, and communicate in
a timely manner the result of such computation to the Fund.
(b) In performing the Yield Calculation, the Bank will derive from
the records it generates and maintains for the Fund pursuant Section 11 hereof,
the items of data necessary for the computation. The Bank shall have no
responsibility to review, confirm, or otherwise assume any duty or liability
with respect to the accuracy or correctness of any such data supplied to it by
the Fund, any of the Fund's designated agents or any of the Fund's designated
third party providers.
(c) At the request of the Bank, the Fund shall provide, and the
Bank shall be entitled to rely on, written standards and guidelines to be
followed by the Bank in interpreting and applying the computation methods set
forth in the Releases or any Subsequent Staff Positions as they specifically
apply to the Fund. In the event that the computation methods in the Releases or
the Subsequent Staff Positions or the application to the Fund of a standard or
guideline is not free from doubt or in the event there is any question of
interpretation as to the characterization of a particular security or any aspect
of a security or a payment with respect thereto (e.g., original issue discount,
participating debt security, income or return of capital, etc.) or otherwise or
as to any other element of the computation which is pertinent to the Fund, the
Fund or its designated agent shall have the full responsibility for making the
determination of how the security, or payment is to be treated for purposes of
the computation and how the computation is to be made and shall inform the Bank
thereof on a timely basis. The Bank shall have no responsibility to make
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independent determinations with respect to any item which is covered by this
Section, and shall not be responsible for its computations made in accordance
with such determinations so long as such computations are mathematically
correct.
(d) The Fund shall keep the Bank informed of all publicly
available information and of any non-public advice, or information obtained by
the Fund from its independent auditors or by its personnel or the personnel of
its investment adviser, or Subsequent Staff Positions related to the
computations to be undertaken by the Bank pursuant to this Agreement and the
Bank shall not be deemed to have knowledge of such information (except as
contained in the Releases) unless it has been furnished to the Bank in writing.
13. CONCERNING THE BANK.
13.1 PERFORMANCE OF DUTIES AND STANDARD OF CARE. In performing its
duties hereunder and any other duties listed on any Schedule hereto, if any, the
Bank will be entitled to receive and act upon the advice of independent counsel
of its own selection, which may be counsel for the Fund, and will be without
liability for any action taken or thing done or omitted to be done in accordance
with this Agreement in good faith in conformity with such advice. In the
performance of its duties hereunder, the Bank will be protected and not be
liable, and will be indemnified and held harmless for any action taken or
omitted to be taken by it in good faith reliance upon the terms of this
Agreement, any Officers' Certificate, Proper Instructions, resolution of the
Board, telegram, notice, request, certificate or other instrument reasonably
believed by the Bank to be genuine and for any other loss to the Fund except in
the case of its gross negligence, willful misfeasance or bad faith in the
performance of its duties or reckless disregard of its obligations and duties
hereunder.
The Bank will be under no duty or obligation to inquire into and will
not be liable for:
(a) the validity of the issue of any Portfolio Securities
purchased by or for the Fund, the legality of the purchases thereof or the
propriety of the price incurred therefor;
(b) the legality of any sale of any Portfolio Securities by or for
the Fund or the propriety of the amount for which the same are sold;
(c) the legality of an issue or sale of any common shares of the
Fund or the sufficiency of the amount to be received therefor;
(d) the legality of the repurchase of any common shares of the
Fund or the propriety of the amount to be paid therefor;
(e) the legality of the declaration of any dividend by the Fund or
the legality of the distribution of any Portfolio Securities as payment in kind
of such dividend; and
(f) any property or moneys of the Fund unless and until received
by it, and any such property or moneys delivered or paid by it pursuant to the
terms hereof.
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Moreover, the Bank will not be under any duty or obligation to
ascertain whether any Portfolio Securities at any time delivered to or held by
it for the account of the Fund are such as may properly be held by the Fund
under the provisions of its Articles, By-laws, any federal or state statutes or
any rule or regulation of any governmental agency.
Notwithstanding anything in this Agreement to the contrary, in no event
shall the Bank be liable hereunder or to any third party:
(a) for any losses or damages of any kind resulting from acts of
God, earthquakes, fires, floods, storms or other disturbances of nature,
epidemics, strikes, riots, nationalization, expropriation, currency
restrictions, acts of war, civil war or terrorism, insurrection, nuclear fusion,
fission or radiation, the interruption, loss or malfunction of utilities,
transportation, or computers (hardware or software) and computer facilities, the
unavailability of energy sources and other similar happenings or events except
as results from the Bank's own gross negligence; or
(b) for special, punitive or consequential damages arising from
the provision of services hereunder, even if the Bank has been advised of the
possibility of such damages.
13.2 AGENTS AND SUBCUSTODIANS WITH RESPECT TO PROPERTY OF THE FUND HELD
IN THE UNITED STATES. The Bank may employ agents in the performance of its
duties hereunder and shall be responsible for the acts and omissions of such
agents as if performed by the Bank hereunder. Without limiting the foregoing,
certain duties of the Bank hereunder may be performed by one or more affiliates
of the Bank.
Upon receipt of Proper Instructions, the Bank may employ subcustodians,
provided that any such subcustodian meets at least the minimum qualifications
required by Section 17(f)(1) of the 1940 Act to act as a custodian of the Fund's
assets with respect to property of the Fund held in the United States. The Bank
shall have no liability to the Fund or any other person by reason of any act or
omission of any subcustodian and the Fund shall indemnify the Bank and hold it
harmless from and against any and all actions, suits and claims, arising
directly or indirectly out of the performance of any subcustodian. Upon request
of the Bank, the Fund shall assume the entire defense of any action, suit, or
claim subject to the foregoing indemnity. The Fund shall pay all fees and
expenses of any subcustodian.
13.3 DUTIES OF THE BANK WITH RESPECT TO PROPERTY OF THE FUND HELD
OUTSIDE OF THE UNITED STATES.
(a) APPOINTMENT OF FOREIGN SUB-CUSTODIANS. The Fund hereby
authorizes and instructs the Bank to employ as sub-custodians for the Fund's
Portfolio Securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated on
the Schedule attached hereto (each, a "Selected Foreign Sub-Custodian"). Upon
receipt of Proper Instructions, together with a certified resolution of the
Fund's Board of Trustees, the Bank and the Fund may agree to designate
additional foreign banking institutions and foreign securities depositories to
act as Selected Foreign Sub-Custodians hereunder. Upon receipt of Proper
Instructions, the Fund may instruct the Bank to cease the employment of any one
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or more such Selected Foreign Sub-Custodians for maintaining custody of the
Fund's assets, and the Bank shall so cease to employ such sub-custodian as soon
as alternate custodial arrangements have been implemented.
(b) FOREIGN SECURITIES DEPOSITORIES. Except as may otherwise be
agreed upon in writing by the Bank and the Fund, assets of the Fund shall be
maintained in foreign securities depositories only through arrangements
implemented by the foreign banking institutions serving as Selected Foreign
Sub-Custodians pursuant to the terms hereof. Where possible, such arrangements
shall include entry into agreements containing the provisions set forth in
subparagraph (d) hereof. Notwithstanding the foregoing, except as may otherwise
be agreed upon in writing by the Bank and the Fund, the Fund authorizes the
deposit in Euro-clear, the securities clearance and depository facilities
operated by Morgan Guaranty Trust Company of New York in Brussels, Belgium, of
Foreign Securities eligible for deposit therein and to utilize such securities
depository in connection with settlements of purchases and sales of securities
and deliveries and returns of securities, until notified to the contrary
pursuant to subparagraph (a) hereunder.
(c) SEGREGATION OF SECURITIES. The Bank shall identify on its
books as belonging to the Fund the Foreign Securities held by each Selected
Foreign Sub-Custodian. Each agreement pursuant to which the Bank employs a
foreign banking institution shall require that such institution establish a
custody account for the Bank and hold in that account, Foreign Securities and
other assets of the Fund, and, in the event that such institution deposits
Foreign Securities in a foreign securities depository, that it shall identify on
its books as belonging to the Bank the securities so deposited.
(d) AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each of the
agreements pursuant to which a foreign banking institution holds assets of the
Fund (each, a "Foreign Sub- Custodian Agreement") shall be substantially in the
form previously made available to the Fund and shall provide that: (a) the
Fund's assets will not be subject to any right, charge, security interest, lien
or claim of any kind in favor of the foreign banking institution or its
creditors or agent, except a claim of payment for their safe custody or
administration (including, without limitation, any fees or taxes payable upon
transfers or reregistration of securities); (b) beneficial ownership of the
Fund's assets will be freely transferable without the payment of money or value
other than for custody or administration (including, without limitation, any
fees or taxes payable upon transfers or reregistration of securities); (c)
adequate records will be maintained identifying the assets as belonging to Bank;
(d) officers of or auditors employed by, or other representatives of the Bank,
including to the extent permitted under applicable law, the independent public
accountants for the Fund, will be given access to the books and records of the
foreign banking institution relating to its actions under its agreement with the
Bank; and (e) assets of the Fund held by the Selected Foreign Sub-Custodian will
be subject only to the instructions of the Bank or its agents.
(e) ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND. Upon request of
the Fund, the Bank will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of any
foreign banking institution employed as a Selected Foreign Sub-Custodian insofar
as such books and records relate to the performance of such foreign banking
institution under its Foreign Sub-Custodian Agreement.
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(f) REPORTS BY BANK. The Bank will supply to the Fund from time to
time, as mutually agreed upon, statements in respect of the securities and other
assets of the Fund held by Selected Foreign Sub-Custodians, including but not
limited to an identification of entities having possession of the Foreign
Securities and other assets of the Fund.
(g) TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. Transactions with
respect to the assets of the Fund held by a Selected Foreign Sub-Custodian shall
be effected pursuant to Proper Instructions from the Fund to the Bank and shall
be effected in accordance with the applicable Foreign Sub-Custodian Agreement.
If at any time any Foreign Securities shall be registered in the name of the
nominee of the Selected Foreign Sub-Custodian, the Fund agrees to hold any such
nominee harmless from any liability by reason of the registration of such
securities in the name of such nominee.
Notwithstanding any provision of this Agreement to the contrary,
settlement and payment for Foreign Securities received for the account of the
Fund and delivery of Foreign Securities maintained for the account of the Fund
may be effected in accordance with the customary established securities trading
or securities processing practices and procedures in the jurisdiction or market
in which the transaction occurs, including, without limitation, delivering
securities to the purchaser thereof or to a dealer therefor (or an agent for
such purchaser or dealer) against a receipt with the expectation of receiving
later payment for such securities from such purchaser or dealer.
In connection with any action to be taken with respect to the Foreign
Securities held hereunder, including, without limitation, the exercise of any
voting rights, subscription rights, redemption rights, exchange rights,
conversion rights or tender rights, or any other action in connection with any
other right, interest or privilege with respect to such Securities
(collectively, the "Rights"), the Bank shall promptly transmit to the Fund such
information in connection therewith as is made available to the Bank by the
Foreign Sub-Custodian, and shall promptly forward to the applicable Foreign
Sub-Custodian any instructions, forms or certifications with respect to such
Rights, and any instructions relating to the actions to be taken in connection
therewith, as the Bank shall receive from the Fund pursuant to Proper
Instructions. Notwithstanding the foregoing, the Bank shall have no further duty
or obligation with respect to such Rights, including, without limitation, the
determination of whether the Fund is entitled to participate in such Rights
under applicable U.S. and foreign laws, or the determination of whether any
action proposed to be taken with respect to such Rights by the Fund or by the
applicable Foreign Sub-Custodian will comply with all applicable terms and
conditions of any such Rights or any applicable laws or regulations, or market
practices within the market in which such action is to be taken or omitted.
(h) LIABILITY OF SELECTED FOREIGN SUB-CUSTODIANS. Each Foreign
Sub-Custodian Agreement with a foreign banking institution shall require the
institution to exercise reasonable care in the performance of its duties and to
indemnify, and hold harmless, the Bank and each Fund from and against certain
losses, damages, costs, expenses, liabilities or claims arising out of or in
connection with the institution's performance of such obligations, all as set
forth in the applicable Foreign Sub-Custodian Agreement. The Fund acknowledges
that the Bank, as a participant in Euro- clear, is subject to the Terms and
Conditions Governing the Euro-Clear System, a copy of which has been made
available to the Fund. The Fund acknowledges that pursuant to such Terms and
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Conditions, Morgan Guaranty Brussels shall have the sole right to exercise or
assert any and all rights or claims in respect of actions or omissions of, or
the bankruptcy or insolvency of, any other depository, clearance system or
custodian utilized by Euro-clear in connection with the Fund's securities and
other assets.
(i) LIABILITY OF BANK. The Bank shall have no more or less
responsibility or liability on account of the acts or omissions of any Selected
Foreign Sub-Custodian employed hereunder than any such Selected Foreign
Sub-Custodian has to the Bank and, without limiting the foregoing, the Bank
shall not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions, or acts of
war or terrorism, political risk (including, but not limited to, exchange
control restrictions, confiscation, insurrection, civil strife or armed
hostilities) other losses due to Acts of God, nuclear incident or any loss where
the Selected Foreign Sub-Custodian has otherwise exercised reasonable care.
(j) MONITORING RESPONSIBILITIES. The Bank shall furnish annually
to the Fund, information concerning the Selected Foreign Sub-Custodians employed
hereunder for use by the Fund in evaluating such Selected Foreign Sub-Custodians
to ensure compliance with the requirements of Rule 17f-5 of the Act. In
addition, the Bank will promptly inform the Fund in the event that the Bank is
notified by a Selected Foreign Sub-Custodian that there appears to be a
substantial likelihood that its shareholders' equity will decline below $200
million (U.S. dollars or the equivalent thereof) or that its shareholders'
equity has declined below $200 million (in each case computed in accordance with
generally accepted U.S. accounting principles) or any other capital adequacy
test applicable to it by exemptive order, or if the Bank has actual knowledge of
any material loss of the assets of the Fund held by a Foreign Sub-Custodian.
(k) TAX LAW. The Bank shall have no responsibility or liability
for any obligations now or hereafter imposed on the Fund or the Bank as
custodian of the Fund by the tax laws of any jurisdiction, and it shall be the
responsibility of the Fund to notify the Bank of the obligations imposed on the
Fund or the Bank as the custodian of the Fund by the tax law of any non-U.S.
jurisdiction, including responsibility for withholding and other taxes,
assessments or other governmental charges, certifications and governmental
reporting. The sole responsibility of the Custodian with regard to such tax law
shall be to use reasonable efforts to assist the Fund with respect to any claim
for exemption or refund under the tax law of jurisdictions for which the Fund
has provided such information.
13.4 INSURANCE. The Bank shall use the same care with respect to the
safekeeping of Portfolio Securities and cash of the Fund held by it as it uses
in respect of its own similar property but it need not maintain any special
insurance for the benefit of the Fund.
13.5. FEES AND EXPENSES OF BANK. The Fund will pay or reimburse the
Bank from time to time for any transfer taxes payable upon transfer of Portfolio
Securities made hereunder, and for all necessary proper disbursements, expenses
and charges made or incurred by the Bank in the performance of this Agreement
(including any duties listed on any Schedule hereto, if any) including any
indemnities for any loss, liabilities or expense to the Bank as provided above.
For the services rendered by the Bank hereunder, the Fund will pay to the Bank
such compensation or fees at such rate and at such times as shall be agreed upon
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in writing by the parties from time to time. The Bank will also be entitled to
reimbursement by the Fund for all reasonable expenses incurred in conjunction
with termination of this Agreement.
13.6 ADVANCES BY BANK. The Bank may, in its sole discretion, advance
funds on behalf of the Fund to make any payment permitted by this Agreement upon
receipt of any proper authorization required by this Agreement for such payments
by the Fund. Should such a payment or payments, with advanced funds, result in
an overdraft (due to insufficiencies of the Fund's account with the Bank, or for
any other reason) this Agreement deems any such overdraft or related
indebtedness, a loan made by the Bank to the Fund payable on demand and bearing
interest at the current rate charged by the Bank for such loans unless the Fund
shall provide the Bank with agreed upon compensating balances. The Fund agrees
that the Bank shall have a continuing lien and security interest to the extent
of any overdraft or indebtedness, in and to any property at any time held by it
for the Fund's benefit or in which the Fund has an interest and which is then in
the Bank's possession or control (or in the possession or control of any third
party acting on the Bank's behalf). The Fund authorizes the Bank, in its sole
discretion, at any time to charge any overdraft or indebtedness, together with
interest due thereon against any balance of account standing to the credit of
the Fund on the Bank's books.
14. TERMINATION.
(a) This Agreement may be terminated at any time after three years from
the date of this Agreement without penalty upon sixty days written notice
delivered by either party to the other by means of registered mail, and upon the
expiration of such sixty days this Agreement will terminate; provided, however,
that the effective date of such termination may be postponed to a date not more
than ninety days from the date of delivery of such notice (i) by the Bank in
order to prepare for the transfer by the Bank of all of the assets of the Fund
held hereunder, and (ii) by the Fund in order to give the Fund an opportunity to
make suitable arrangements for a successor custodian. At any time after the
termination of this Agreement, the Fund will, at its request, have access to the
records of the Bank relating to the performance of its duties as custodian.
(b) In the event of the termination of this Agreement, the Bank will
immediately upon receipt or transmittal, as the case may be, of notice of
termination, commence and prosecute diligently to completion the transfer of all
cash and the delivery of all Portfolio Securities duly endorsed and all records
maintained under Section 11 to the successor custodian when appointed by the
Fund. The obligation of the Bank to deliver and transfer over the assets of the
Fund held by it directly to such successor custodian will commence as soon as
such successor is appointed and will continue until completed as aforesaid. If
the Fund does not select a successor custodian within ninety (90) days from the
date of delivery of notice of termination the Bank may, subject to the
provisions of subsection 14(c), deliver the Portfolio Securities and cash of the
Fund held by the Bank to a bank or trust company of its own selection which
meets the requirements of Section 17(f)(1) of the 1940 Act and has a reported
capital, surplus and undivided profits aggregating not less than $2,000,000, to
be held as the property of the Fund under terms similar to those on which they
were held by the Bank, whereupon such bank or trust company so selected by the
Bank will become the successor custodian of such assets of the Fund with the
same effect as though selected by the Board.
21
<PAGE>
(c) Prior to the expiration of ninety (90) days after notice of
termination has been given, the Fund may furnish the Bank with an order of the
Fund advising that a successor custodian cannot be found willing and able to act
upon reasonable and customary terms and that there has been submitted to the
shareholders of the Fund the question of whether the Fund will be liquidated or
will function without a custodian for the assets of the Fund held by the Bank.
In that event the Bank will deliver the Portfolio Securities and cash of the
Fund held by it, subject as aforesaid, in accordance with one of such
alternatives which may be approved by the requisite vote of shareholders, upon
receipt by the Bank of a copy of the minutes of the meeting of shareholders at
which action was taken, certified by the Fund's Secretary and an opinion of
counsel to the Fund in form and content satisfactory to the Bank.
15. CONFIDENTIALITY. Both parties hereto agree than any non-public
information obtained hereunder concerning the other party is confidential and
may not be disclosed to any other person without the consent of the other party,
except as may be required by applicable law or at the request of a governmental
agency. The parties further agree that a breach of this provision would
irreparably damage the other party and accordingly agree that each of them is
entitled, without bond or other security, to an injunction or injunctions to
prevent breaches of this provision.
16. NOTICES. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and mailed or delivered to it at
its office at the address set forth below; namely:
(a) In the case of notices sent to the Fund to:
Domini Institutional Trust
c/o Signature Financial Group Inc.
6 St. James Avenue
Boston, MA 02116
Attn: Philip W. Coolidge
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
Attention: Carol Lowd
or at such other place as such party may from time to time designate in
writing.
22
<PAGE>
17. AMENDMENTS. This Agreement may not be altered or amended, except by an
instrument in writing, executed by both parties, and in the case of the Fund,
such alteration or amendment will be authorized and approved by its Board.
18. PARTIES. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Fund
without the written consent of the Bank or by the Bank without the written
consent of the Fund, authorized and approved by its Board; and provided further
that termination proceedings pursuant to Section 14 hereof will not be deemed to
be an assignment within the meaning of this provision.
19. GOVERNING LAW. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts.
20. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
21. LIMITATION OF LIABILITY. A copy of the Declaration of Trust of the Fund
is on file with the Secretary of State of the Commonwealth of Massachusetts and
notice is hereby given that this Agreement has been executed on behalf of the
Fund by an officer of the Fund as an officer and not individually and the
obligations of the Fund arising out of this Agreement are not binding upon any
of the trustees, officers or investors of the Fund individually but are binding
only upon the assets and property of the Fund.
23
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the day and year
first written above.
Domini Institutional Trust
By:
Name:
Title:
ATTEST:
INVESTORS BANK & TRUST COMPANY
By:
Name:
Title:
ATTEST:
DATE:
ADMINISTRATIVE SERVICES AGREEMENT
ADMINISTRATIVE SERVICES AGREEMENT, dated as of April 8, 1996, by and
between Domini Institutional Trust, a Massachusetts business trust (the
"Trust"), and Signature Broker-Dealer Services, Inc., a Delaware corporation
("SBDS").
W I T N E S S E T H:
WHEREAS, the Trust is engaged in business as an open-end investment
company;
WHEREAS, the Trust wishes to engage SBDS to provide certain
administrative and management services with respect to all currently existing or
future series (each a "Fund") of the Trust, and SBDS is willing to provide such
services to the Trust, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Administrative Duties. Subject to the direction and control of the
Board of Trustees of the Trust (the "Board"), SBDS shall perform such
administrative and management services as may from time to time be reasonably
requested by the Trust, which shall include without limitation: (a) providing
office space, equipment and clerical personnel necessary for performing the
administrative and management functions herein set forth; (b) arranging, if
desired by the Trust, for directors, officers or employees of SBDS to serve as
Trustees, officers or agents of the Trust if duly elected or appointed to such
positions and subject to their individual consent and to any limitations imposed
by law; (c) supervising the overall administration of the Trust, including the
updating of corporate organizational documents, and the negotiation of contracts
and fees with and the monitoring and coordinating of performance and billings of
the Trust's transfer agent, custodian, shareholder servicing agents and other
independent contractors or agents; (d) preparing and, if applicable, filing all
documents required for compliance by the Trust with applicable laws and
regulations (including state "blue sky" laws and regulations), including
registration statements on Form N-1A, offering memoranda, prospectuses and
statements of additional information, or similar forms, as applicable, and
semi-annual and annual reports to the Trust's shareholders and reviewing
(including coordinating the preparing of, but not preparing) tax returns; (e)
preparation of agendas and supporting documents for and minutes of meetings of
Trustees, committees of Trustees and preparation of notices, proxy statements
and minutes of meetings of one or more Funds' shareholders; (f) arranging for
maintenance of books and records of the Trust; (g) maintaining telephone
coverage to respond to shareholder inquiries regarding matters to which this
Agreement pertains to which the transfer agent is unable to respond; (h)
providing monitoring reports and assistance regarding the Funds' compliance with
securities and tax laws; (i) arranging for dissemination of yield and other
performance information to newspapers and tracking services; (j) arranging for
and preparing annual renewals for fidelity bond and errors and omissions
insurance coverage; and (k) developing a budget for the Trust, establishing the
rate of expense accruals and arranging for the payment of all fixed and
management expenses. Notwithstanding the foregoing, SBDS shall not be deemed to
have assumed any duties with respect to, and shall not be responsible for, the
management of the Trust's assets or the
<PAGE>
2
rendering of investment advice and supervision with respect thereto or the
distribution of shares of beneficial interest ("Shares") of the Funds, nor shall
SBDS be deemed to have assumed or have any responsibility with respect to
functions specifically assumed by any transfer agent or custodian of the Trust.
2. Allocation of Charges and Expenses. SBDS shall pay the entire
salaries and wages of all of the Trust's Trustees, officers and agents who
devote part or all of their time to the affairs of SBDS or its affiliates, and
the wages and salaries of such persons shall not be deemed to be expenses
incurred by the Trust for purposes of this Section 2. Except as provided in the
foregoing sentence, the Trust shall pay all of its own expenses including,
without limitation, compensation of Trustees not affiliated with SBDS; all
out-of-pocket expenses and disbursements for the benefit of a Fund, including,
but not limited to, legal fees incurred by SBDS pursuant to Section 4 herein,
photocopying and courier (including express mail) charges, governmental fees;
interest charges; taxes; membership dues in the Investment Company Institute
allocable to the Trust; fees and expenses of the Trust's independent auditors,
of legal counsel and of any custodian, any transfer agent, distributor or
registrar or dividend disbursing agent of the Trust; expenses of distributing
and redeeming Shares and servicing shareholder accounts; expenses of preparing,
printing and mailing offering memoranda, prospectuses and statements of
additional information, reports, notices, proxy statements to the Funds'
shareholders and governmental officers and commissions and the costs of
producing and distributing copies of such documents to others; expenses of
reproducing and distributing materials for the Board and other attendees of
Board meetings; expenses connected with the execution, recording and settlement
of security transactions; insurance premiums; expenses of meetings of
shareholders of the Funds and expenses relating to the registration of the Trust
and the issuance of Shares of the Funds.
3. Compensation of SBDS. For the services to be rendered and the
facilities to be provided by SBDS hereunder, the Trust shall pay to SBDS an
administrative services fee computed and paid monthly equal on an annual basis
to 0.15% of each Fund's average daily net assets for that Fund's then-current
fiscal year.
If SBDS serves under this Agreement for less than the whole of any
month, the compensation to SBDS hereunder shall be prorated. For purposes of
computing the fees payable to SBDS hereunder, the net asset value of each Fund
shall be computed in the manner specified in the Fund's then-current prospectus
and statement of additional information.
4. Limitation of Liability of SBDS. SBDS shall not be liable for any
error of judgment or mistake of law or for any act or omission in the
administration or management of the Trust or the performance of its duties
hereunder, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of the reckless disregard of its
obligations and duties hereunder. As used in this Section 4, the term "SBDS"
shall include SBDS and/or any of its affiliates and/or subcontractors as
provided for in Section 7 and the Directors, officers and employees of SBDS
and/or any of its affiliates and/or subcontractors as provided for in Section 7.
5. Activities of SBDS. The services of SBDS to the Trust are not to be
deemed to be exclusive, SBDS being free to render administrative and/or other
<PAGE>
3
services to other parties. It is understood that Trustees, officers, and
shareholders of a Fund are or may become interested in SBDS and/or any of its
affiliates, as Directors, officers, employees, or otherwise, and that Directors,
officers and employees of SBDS and/or any of its affiliates are or may become
similarly interested in the Trust and that SBDS and/or any of its affiliates may
be or become interested in the Trust as a shareholder of a Fund or otherwise.
6. Duration, Termination and Amendments of this Agreement. This
Agreement shall become effective as of the day and year first above written and
shall govern the relations between the parties hereto thereafter, unless
terminated as set forth in this Section 6.
This Agreement may not be altered or amended, except by an instrument in
writing, and executed by both parties. This Agreement may be terminated at any
time without the payment of any penalty, with respect to any Fund or the Trust,
by the Board of the Trust, or by SBDS, in each case on not less than 60 days'
written notice to the other party.
7. Subcontracting by SBDS. SBDS may subcontract for the performance of
SBDS's obligations hereunder with any one or more persons; provided, however,
that SBDS shall not enter into any such subcontract unless the Trustees of the
Trust shall have found the subcontracting party to be qualified to perform the
obligations sought to be subcontracted; and provided, further, that, unless the
Trust otherwise expressly agrees in writing, SBDS shall be as fully responsible
to the Trust for the acts and omissions of any subcontractor as it would be for
its own acts or omissions.
8. Severability. If any provision of this Agreement shall become or
shall be found to be invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby.
9. Notice. Any notices under this Agreement shall be in writing
addressed and delivered personally (or by telecopy) or mailed postage-paid, to
the other party at such address as such other party may designate in accordance
with this paragraph for the receipt of such notice. Until further notice to the
other party, it is agreed that the address of the Trust and of SBDS shall be 6
St. James Avenue, 9th Floor, Boston, Massachusetts 02116.
10. Miscellaneous. Each party agrees to perform such further actions and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced and interpreted in
accordance with and governed by the laws of the Commonwealth of Massachusetts
without reference to principles of conflicts of law. The captions in this
Agreement are included for convenience only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but such counterparts shall, together, constitute only
one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written. The
undersigned has executed this Agreement not individually, but as an officer
under
<PAGE>
4
the Trust's Declaration of Trust, and the obligations of this Agreement are not
binding upon the Trust's Trustees, its officers, or shareholders of the Funds
individually, but bind only the Trust estate.
DOMINI INSTITUTIONAL TRUST
By
Name:
Title:
SIGNATURE BROKER-DEALER SERVICES, INC.
By
Name:
Title:
DSI236
DSI245
SUB-ADMINISTRATIVE SERVICES AGREEMENT
SUB-ADMINISTRATIVE SERVICES AGREEMENT, dated as of April 8, 1996 by and
between SIGNATURE BROKER-DEALER SERVICES, INC., a Delaware corporation ("SBDS"
or the "Administrator"), and KINDER, LYDENBERG, DOMINI & CO., INC., ("KLD" or
the "Sub-Administrator").
W I T N E S S E T H:
WHEREAS, SBDS has entered into an Administrative Services Agreement (the
"Administrative Agreement") with Domini Institutional Trust (the "Trust"); and
WHEREAS, as permitted by Section 7 of the Administrative Agreement, SBDS
desires to subcontract some or all of the performance of the Administrator's
obligations thereunder to KLD, and KLD desires to accept such obligations; and
WHEREAS, SBDS wishes to engage KLD to provide certain administrative
services on the terms and conditions hereinafter set forth, so long as the
Trustees of the Trust shall have found KLD to be qualified to perform the
obligations sought to be subcontracted.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. DUTIES OF THE SUB-ADMINISTRATOR. The Sub-Administrator shall perform
such administrative and management services as may from time to time be agreed
to between the Administrator and the Sub-Administrator so long as the Trustees
of the Trust shall have found the Sub-Administrator to be qualified to perform
the obligations sought to be subcontracted, which may include assisting
personnel of the Administrator in answering questions from the general public,
the media and investors in the Trust regarding the securities holdings of the
Trust or of any limits in which the Trust invests. Notwithstanding the
foregoing, the Sub- Administrator under this Agreement shall not be deemed to
have assumed any duties with respect to, and shall not be responsible for, the
management of the Trust with respect thereto or the distribution of Shares of
Beneficial Interest (without par value) of the Trust ("Shares"), nor shall the
Sub-Administrator under this Agreement be deemed to have assumed or have any
responsibility with respect to functions specifically assumed by any transfer
agent, custodian or servicing organization of the Trust.
2. COMPENSATION OF ADMINISTRATOR. For the services to be rendered and
the facilities to be provided by the Sub-Administrator hereunder, the Sub-
Administrator shall be paid an administrative fee as may from time to time be
agreed to between the Administrator and the Sub-Administrator.
3. ADDITIONAL TERMS AND CONDITIONS. The parties may amend this
agreement and include such other terms and conditions as may from time to time
be agreed to between the Administrator and the Sub-Administrator, so long as the
Trustees
<PAGE>
of the Trust shall have found the subcontracting party to be qualified to
perform the obligations sought to be subcontracted.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
SIGNATURE
BROKER-DEALER SERVICES, INC.
By: _____________________________________
Title:
KINDER, LYDENBERG, DOMINI & CO., INC.
By: _____________________________________
Title:
DSI245
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT effective as of the 8th day of April, 1996 by and between DOMINI
INSTITUTIONAL TRUST, a Massachusetts business trust (the "Company"), and
FUNDAMENTAL SHAREHOLDER SERVICES, INC., a New York Corporation ("FSSI").
WITNESSETH:
WHEREAS, the Company desires to appoint FSSI as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities,
and FSSI desires to accept such appointment;
WHEREAS, FSSI is duly registered as a transfer agent as provided in Section
17A(c) of the Securities Exchange Act of 1934, as amended (the "1934 Act");
WHEREAS, the Company is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets;
WHEREAS, the Company currently offers shares in one portfolio ("series"),
with one class of shares.
o Domini Institutional Social Equity Fund
(such series, together with all other series subsequently established by the
Company and made subject to this Agreement in accordance with Article 17, being
herein referred to as the "Fund(s)");
NOW, THEREFORE, in consideration of the mutual covenants herein set forth,
the Company and FSSI agree as follows:
ARTICLE 1. Terms of Appointment; Duties of FSSI
1.01 Subject to the terms and conditions set forth in this Agreement, the
Company on behalf of the Funds, hereby employs and appoints FSSI to act as, and
FSSI agrees to act as, transfer agent for each of the Fund(s)' authorized and
issued shares of beneficial interest ("Shares"), dividend disbursing agent and
agent in connection with any accumulation, open- account or similar plans
provided to the shareholders of the Company ("Shareholders") and set out in the
currently effective private placement memorandum, as each may be amended from
time to time (the "Memorandum") of the Fund(s), including without limitation any
periodic investment plan or periodic withdrawal program.
1.02 FSSI agrees that it will perform the following services:
(a) In connection with procedures established from time to time by
agreement
1
<PAGE>
between the Company and FSSI, FSSI shall:
(i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation therefor to
the custodian of the Fund(s) appointed by the Board of Trustees of
the Company (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance, redemption requests and redemption
directions and deliver the appropriate documentation therefor to
the Custodian;
(iv) At the appropriate time as and when it receives monies paid
to it by the Custodian with respect to any redemption, pay over or
cause to be paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders;
(v) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions subject to receipt of an
opinion of counsel for the Company that such transfer need not be
registered;
(vi) Prepare and transmit payments for dividends and
distributions declared by the Company on behalf of a Fund; and
(vii) Create and maintain all necessary records including those
specified in Article 10 hereof, in accordance with all applicable
laws, rules and regulations, including but not limited to records
required by Section 31(a) of the Investment Company Act of 1940,
as amended (the "1940 Act"), and those records pertaining to the
various functions performed by it hereunder. All records shall be
available for inspection and use by the Company. Where applicable,
such records shall be maintained by FSSI for the periods and in
the places required by Rule 31a-2 under the 1940 Act.
(viii) Make available during regular business hours all records
and other data created and maintained pursuant to this Agreement
for reasonable audit and inspection by the Company, or any person
retained by the Company. Upon reasonable notice by the Company,
FSSI shall make available during regular business hours its
facilities and premises employed in connection with the
performance of its duties under this Agreement for reasonable
visitation by the Company, or any person retained by the Company.
(ix) At the expense of the Company, FSSI shall maintain an
adequate supply of blank Share certificates for each Fund
providing for the issuance of certificates to meet FSSI's
requirements therefor. Such Share certificates shall be properly
2
<PAGE>
signed by facsimile. The Company agrees that, notwithstanding the
death, resignation, or removal of any officer of the Company whose
signature appears on such certificates, FSSI may continue to
countersign certificates which bear such signatures until
otherwise directed by the Company. Share certificates may be
issued and accounted for entirely by FSSI and do not require a
third party registrar or other endorsing party.
(x) Issue replacement Share certificates in lieu of certificates
which have been lost, stolen, mutilated or destroyed, without any
further action by the Board of Trustees or any officer of the
Company, upon receipt by FSSI of properly executed affidavits and
lost certificate bonds, in form satisfactory to FSSI, with the
Company and FSSI as obligees under the bond. At the discretion of
FSSI, and at its sole risk, FSSI may issue replacement
certificates without requiring the affidavits and lost certificate
bonds described above and FSSI agrees to indemnify the Company
against any and all losses or claims which may arise by reason of
the issuance of such new certificates in the place of the ones
allegedly lost, stolen or destroyed.
(xi) Record the issuance of Shares of the Fund(s) and maintain,
pursuant to Rule 17Ad-10(e) under the 1934 Act, a record of the
total number of Shares of each Fund which are authorized, based
upon data provided to it by the Company, and issued and
outstanding. FSSI shall also provide the Company on a regular
basis with the total number of Shares which are authorized and
issued and outstanding and shall have no obligation, when
recording the issuance of Shares, to monitor the issuance of such
Shares or to take cognizance of any laws relating to the issuance
or sale of such Shares, which functions shall be the sole
responsibility of the Company.
(b) In addition to and not in lieu of the services set forth in the
above paragraph (a) or in any Schedule hereto, FSSI shall: (i) perform all of
the customary services of a transfer agent, dividend disbursing agent and, as
relevant, agent in connection with accumulation, open-account or similar plans
(including without limitation any periodic withdrawal program); including but
not limited to: maintaining all Shareholder accounts, preparing Shareholder
meeting lists, coordinating the mailing, receiving and tabulating of proxies,
coordinating the mailing of Shareholder reports (semi-annually) and Memorandum
(annually) to current Shareholders, withholding taxes on all accounts, including
nonresident alien accounts, preparing and filing U.S. Treasury Department Forms
1099 with respect to dividends and distributions, preparing and mailing activity
statements for Shareholders, and providing Shareholder account information; and
(ii) provide a system or reports which will enable the Company to monitor the
total number of Shares of each Fund sold in each State. The Company shall
identify to FSSI in writing those transaction types to be treated as exempt from
blue sky reporting. The responsibility of FSSI for a Fund's blue sky state
registration status is solely limited to the initial establishment of
transaction types subject to blue sky compliance by the Company and the
reporting of such transactions to the
3
<PAGE>
Company as provided above.
(c) FSSI may also provide such additional services and functions not
specifically described herein as may be mutually agreed upon between FSSI and
the Company and set forth in writing. Procedures applicable to certain of these
services may be established from time to time by agreement between the Company
and FSSI.
ARTICLE 2. Sale of Company Shares
2.01 Whenever the Company shall sell or cause to be sold any Shares of a
Fund, the Company shall deliver or cause to be delivered to FSSI a document duly
specifying: (i) the name of the Fund whose Shares were sold; (ii) the number of
Shares sold, trade date, and price; (iii) the amount of money to be delivered to
the Custodian for the sale of such Shares and specifically allocated to such
Fund; and (iv) in the case of a new account, a new account application or
sufficient information to establish an account.
2.02 FSSI will, upon receipt by it of a check or other payment identified
by it as an investment in Shares of one of the Funds and drawn or endorsed to
FSSI as agent for, or identified as being for the account of, one of the Funds,
promptly deposit such check or other payment to the appropriate account and make
the appropriate postings necessary to reflect the investment. FSSI will notify
the Company, or its designee, and the Custodian of all purchases and related
account adjustments.
2.03 Under procedures as established by mutual agreement between the
Company and FSSI, FSSI shall issue to the purchaser or his or her authorized
agent such Shares, computed to the nearest three decimal places, as the
purchaser is entitled to receive, based on the appropriate net asset value of
the Fund's Shares, determined in accordance with the Memorandum and applicable
Federal law or regulation. In issuing Shares to a purchaser or his or her
authorized agent, FSSI shall be entitled to rely upon the latest directions, if
any, previously received by FSSI from the purchaser or his authorized agent
concerning the delivery of such Shares.
2.04 FSSI shall not be required to issue any Shares of any Fund where it
has received a written instruction from the Company or written notification from
any appropriate federal or state authority that the sale of the Shares of the
Fund(s) in question has been suspended or discontinued, and FSSI shall be
entitled to rely upon such written instructions or written notification.
2.05 Upon the issuance of any Shares of any Fund(s) in accordance with the
foregoing provisions of this Section, FSSI shall not be responsible for the
payment of any original issue or other taxes, if any, required to be paid by the
Company in connection with such issuance.
2.06 FSSI may establish such additional rules and regulations governing the
transfer or registration of Shares as it may deem advisable and consistent with
such rules and
4
<PAGE>
regulations generally adopted by transfer agents, or with the written consent of
the Company, any other rules and regulations.
ARTICLE 3. Returned Checks
3.01 In the event that any check or other order for the transfer of money
is returned unpaid for any reason, FSSI will take such steps as FSSI may, in its
discretion, deem appropriate to protect the Company from financial loss or as
the Company or its designee may instruct. Provided that the standard procedures,
as agreed upon from time to time between the Company and FSSI, are adhered to by
FSSI, FSSI shall not be liable for any loss suffered by a Fund as a result of
returned or unpaid purchase or redemption transactions. Legal or other expenses
incurred to collect amounts owed to a Fund as a consequence of returned or
unpaid purchase or redemption transactions shall be an expense of that Fund.
ARTICLE 4. Redemptions
4.01 Shares of any Fund may be redeemed in accordance with the procedures
set forth in the Memorandum of that Fund and FSSI will duly process all
redemption requests.
ARTICLE 5. Transfers and Exchanges
5.01 FSSI is authorized to review and process transfers of Shares of each
Fund, exchanges between Funds on the records of the Funds maintained by FSSI,
and exchanges between the Funds and any other entity as may be permitted by the
Memorandum of the Fund. If Shares to be transferred are represented by
outstanding certificates, FSSI will, upon surrender to it of the certificates in
proper form for transfer, and upon cancellation thereof, countersign and issue
new certificates for a like number of Shares and deliver the same. If the Shares
to be transferred are not represented by outstanding certificates, FSSI will,
upon an order therefor by or on behalf of the registered holder thereof in
proper form, credit the same to the transferee on its books. If Shares are to be
exchanged for Shares of another Fund, FSSI will process such exchange in the
same manner as a redemption and sale of Shares, except that it may in its
discretion waive requirements for information and documentation.
ARTICLE 6. Right to Seek Assurances
6.01 FSSI reserves the right to refuse to transfer or redeem Shares until
it is satisfied that the requested transfer or redemption is legally authorized,
and it shall incur no liability for the refusal, in good faith, to make
transfers or redemptions which FSSI, in its judgment, deems improper or
unauthorized, or until it is satisfied that there is no basis for any claims
adverse to such transfer or redemption. FSSI may, in effecting transfers, rely
upon the Uniform Commercial Code, as the same may be amended from time to time,
which in the opinion of legal counsel for the Company or of its own legal
counsel protect it in not
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requiring certain documents in connection with the transfer or redemption of
Shares of any Fund, and the Company shall indemnify FSSI for any act or omission
by it in reliance upon such law or opinion of legal counsel of the Company or of
its own counsel.
ARTICLE 7. Distributions
7.01 The Company will promptly notify FSSI of the declaration of any
dividend or distribution. The Company shall furnish to FSSI a resolution of the
Board of Trustees of the Company certified by the Secretary (a "Certificate"):
(i) authorizing the declaration of dividends on a specified basis and
authorizing FSSI to rely on oral instructions or a Certificate specifying the
date and the total amount payable on the payment date; or (ii) setting forth the
date of the declaration of any dividend or distribution by a Fund, the date of
payment thereof, the record date as of which Shareholders entitled to payment
shall be determined, and the amount payable per share to the Shareholders of
record as of that date and the total amount payable on the payment date.
7.02 The Company or FSSI, on behalf of the Company, shall instruct the
Custodian to place in a dividend disbursing account funds equal to the cash
amount of any dividend or distribution to be paid out. FSSI will calculate,
prepare and mail checks to (at the address as it appears on the records of
FSSI), or (where appropriate) credit such dividend or distribution to the
account of, Fund Shareholders, and maintain and safeguard all underlying
records.
7.03 FSSI will replace lost checks at its discretion and in conformity with
regular business practices.
7.04 FSSI will maintain all records necessary to reflect the crediting of
dividends which are reinvested in Shares of the Fund, including without
limitation daily dividends.
7.05 FSSI shall not be liable for any improper payments made in accordance
with a resolution of the Board of Trustees of the Company.
7.06 If FSSI shall not receive from the Custodian sufficient cash to make
payment to all Shareholders of the Fund as of the record date, FSSI shall, upon
notifying the Company, withhold payment to all Shareholders of record as of the
record date until sufficient cash is provided to FSSI.
ARTICLE 8. Other Duties
8.01 In addition to the duties expressly provided for herein, FSSI shall
perform such other duties and functions and shall be paid such amounts therefor
as may from time to time be agreed to in writing.
ARTICLE 9. Taxes
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9.01 It is understood that FSSI shall file such information returns
concerning the payment of dividends and capital gain distributions and tax
withholding with the proper federal, state and local authorities as are required
by law to be filed by the Company and shall withhold such sums as are required
to be withheld by applicable law.
ARTICLE 10. Books and Records
10.01 FSSI shall maintain confidential records showing for each
Shareholder's account the following: (i) names, addresses and tax identification
numbers; (ii) numbers of Shares held; (iii) historical information (as available
from prior transfer agents) regarding the account of each Shareholder, including
dividends paid and date and price of all transactions in a Shareholder's
account; (iv) any stop or restraining order placed against a Shareholder's
account; (v) information with respect to withholdings; (vi) any capital gain or
dividend reinvestment order, plan application, dividend address and
correspondence relating to the current maintenance of a Shareholder's account;
(vii) certificate numbers and denominations for any Shareholders holding
certificates; (viii) any information required in order for FSSI to perform the
calculations contemplated or required by this Agreement; and (ix) such other
information and data as may be required by applicable law.
10.02 Any records required to be maintained by Rule 31a-1 under the 1940
Act will be preserved for the periods prescribed in Rule 31a-2 under the 1940
Act. Such records may be inspected by the Company at reasonable times. FSSI may,
at its option at any time, and shall forthwith upon the Company's demand, turn
over to the Company and cease to retain in FSSI's files, records and documents
created and maintained by FSSI in performance of its service of for its
protection. At the end of such retention periods, such documents will either be
turned over to the Company, or destroyed in accordance with the Company's
authorization.
10.03 Procedures applicable to the services to be performed hereunder may
be established from time to time by agreement between the Company and FSSI. FSSI
shall have the right to utilize any shareholder accounting and recordkeeping
system which, in its opinion, qualifies to perform any services to be performed
hereunder. FSSI shall keep records relating to the services performed hereunder,
in the form and manner as it may deem advisable.
ARTICLE 11. Fees and Expenses
11.01 For performance by FSSI pursuant to this Agreement, the Company
agrees to pay FSSI certain fees as set out in the initial fee schedule attached
hereto. Such fees and out-of-pocket expenses and advances identified under
Section 11.02 below, are subject to certain terms set forth in this agreement
and the initial fee schedule, and may be changed from time to time subject to
mutual agreement between the Company and FSSI.
11.02 In addition to the fee paid under Section 11.01 above, the Company
agrees to
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reimburse FSSI for out-of-pocket expenses or advances incurred by FSSI. In
addition, any other expenses incurred by FSSI at the request or with the consent
of the Company including, without limitation, any equipment, supplies, or
services specifically ordered by the Company or required by the Company to be
purchased, will be reimbursed by the Fund(s).
11.03 The Company agrees to pay all fees and reimbursable expenses within
30 days following the mailing of the respective billing notice. Postage for
mailing dividends, proxies, Fund reports and other mailings to all shareholder
accounts shall be advanced to FSSI by the Company at least seven days prior to
the mailing date of such material.
ARTICLE 12. Representations and Warranties of FSSI
FSSI represents and warrants to the Company that:
12.01 It is a corporation duly organized and existing and in good standing
under the laws of the State of New York.
12.02 It is empowered under applicable federal laws and by its charter and
by-laws to enter into and perform this Agreement.
12.03 All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.
12.04 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
ARTICLE 13. Representations and Warranties of the Company
The Company represents and warrants to FSSI that:
13.01 It is a business trust duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
13.02 It is empowered under applicable laws and by its charter documents
and by-laws to enter into and perform this Agreement.
13.03 All proceedings required by said charter documents and by-laws have
been taken to authorize it to enter into and perform this Agreement.
13.04 It is an open-end investment company registered under the 1940 Act.
13.05 A registration statement on Form N-1A (including a prospectus and
statement of additional information) under the Securities Act of 1933 and the
1940 Act, or the appropriate filings are currently effective and will remain
effective, and appropriate state
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securities law filings have been made and will continue to be made, with respect
to all Shares of the Funds being offered for sale.
13.06 When Shares are hereafter issued in accordance with the terms of the
Memorandum, such Shares shall be validly issued, fully paid and nonassessable by
the Fund(s).
ARTICLE 14. Indemnification
14.01 Except as set forth in subparagraph (f) hereof, FSSI shall not be
responsible for, and the Company shall indemnify and hold FSSI harmless from and
against, any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to:
(a) All actions taken or omitted to be taken by FSSI or its agents or
subcontractors in good faith in reliance on or use by FSSI or its agents or
subcontractors of information, records and documents which (i) are received by
FSSI or its agents or subcontractors from or on behalf of the Company, (ii) have
been prepared and/or maintained by the Company or any other person or firm on
behalf of the Company, and (iii) were received by FSSI or its agents or
subcontractors from a prior transfer agent.
(b) Any action taken or omitted to be taken by FSSI in connection with
its appointment in good faith in reliance upon any law, act, regulation or
interpretation of the same even though the same may thereafter have been
altered, changed, amended or repealed.
(c) The Company's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Company's lack of good faith, negligence or
willful misconduct or which arise out of the breach of any representation or
warranty of the Company hereunder.
(d) The reliance on, or the carrying out by FSSI or its agents or
subcontractors of any instructions or requests, whether written or oral, of the
Company.
(e) The offer or sale of Shares by the Company in violation of any
requirement under the federal securities laws or regulations or the securities
laws or regulations of any state that such Shares be registered in such state or
in violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state.
(f) In addition to any other limitation provided herein, or by law,
indemnification under this Agreement shall not apply to actions or omissions of
FSSI or its directors, officers, employees, agents or subcontractors in cases of
its own negligence, willful misconduct, bad faith, reckless disregard of its
duties or their own duties hereunder, knowing violation of law or fraud.
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14.02 FSSI shall indemnify and hold the Fund(s) harmless from and against
any and all losses, damages, costs, charges, counsel fees, payments, expenses
and liability arising out of or attributed to any action or failure or omission
to act by FSSI as a result of FSSI's lack of good faith, negligence, willful
misconduct, knowing violation of law or fraud.
14.03 At any time FSSI may apply to any officer of the Company for
instructions, and may consult with legal counsel for the Company with respect to
any matter arising in connection with the services to be performed by FSSI under
this Agreement, and FSSI and its agents or subcontractors shall not be liable
and shall be indemnified by the Company for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel except for a
knowing violation of law. FSSI, its agents and subcontractors shall be protected
and indemnified in acting upon any paper or document furnished by or on behalf
of the Company, reasonably believed to be genuine and to have been signed by the
proper person or persons, or upon any instruction, information, data, records or
documents provided to FSSI or its agents or subcontractors by machine readable
input, telex, telephonic or electronic information delivery, CRT data entry or
other similar means authorized by the Company, and shall not be held to have
notice of any change of authority of any person, until receipt of written notice
thereof from the Company. FSSI, its agents and subcontractors shall also be
protected and indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of officers of the
Company, and one proper countersignature of any former transfer agent or
registrar, or of a co-transfer agent or co-registrar.
14.04 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, interruption of
electrical power or other utilities, equipment or transmission failure or damage
reasonably beyond its control, or other causes reasonably beyond its control,
such party shall not be liable to the other for any damages resulting from such
failure to perform or otherwise from such causes.
14.05 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any act
or failure to act hereunder as contemplated by this Agreement.
14.06 In order that the indemnification provisions contained in this
Article 14 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking the indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent, which consent shall not be unreasonably
withheld.
ARTICLE 15. Covenants of the Company and FSSI
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15.01 The Company shall promptly furnish to FSSI the following:
(a) A certified copy of the resolution of the Trustees of the Company
authorizing the appointment of FSSI and the execution and delivery of this
Agreement.
(b) A copy of the charter documents and by-laws of the Company and all
amendments thereto.
(c) Copies of each resolution of the Trustees of the Company designating
authorized persons to give instructions to FSSI, and a Certificate providing
specimen signatures for such authorized persons.
(d) Certificates as to any change of any Officer or Trustee of the
Company.
(e) If applicable a specimen of the certificate representing Shares in
each Fund of the Company in the form approved by the Trustees, with a
Certificate as to such approval.
(f) Specimens of all new certificates representing Shares, accompanied
by the Trustees' resolutions approving such forms.
(g) All account application forms and other documents relating to
Shareholder accounts or relating to any plan, program or service offered by the
Company.
(h) A list of all Shareholders of the Fund(s) with the name, address and
tax identification number of each Shareholder, and the number of Shares of the
Fund(s) held by each, certificate numbers and denominations (if any certificates
have been issued), a list of any accounts against which stops have been placed,
together with the reasons for said stops, and the number of Shares redeemed by
the Fund(s).
(i) An opinion of counsel for the Company with respect to the validity
of the issuance of the Shares and the status of the Shares under the Securities
Act of 1933 or other applicable regulation.
(j) A copy of the Company's registration statement on Form N-1A as
amended and declared effective by the Securities and Exchange Commission and all
post-effective amendments thereto.
(k) Such other certificates, documents or opinions as may mutually be
deemed necessary or appropriate for FSSI in the proper performance of its
duties.
15.02 FSSI hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Company for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
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15.03 FSSI shall keep records relating to the services performed hereunder,
in the form and manner as it may deem acceptable. To the extent required by
Section 31 of the 1940 Act and the Rules thereunder, FSSI agrees that all such
records prepared or maintained by FSSI relating to the services to be performed
by FSSI hereunder are the confidential property of the Company and will be
preserved, maintained and made available in accordance with such Section and
Rules, and will be surrendered to the Company on and in accordance with its
request.
15.04 FSSI and the Company agree that all books, records, information and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation of or the carrying out of this Agreement
shall remain confidential, and shall not be voluntarily disclosed to any other
person, except as may be required by law.
15.05 In case of any requests or demands for the inspection of the
Shareholder records of the Company, FSSI shall notify the Company and endeavor
to secure instructions from an authorized officer of the Company as to such
inspection. FSSI reserves the right, however, to exhibit the Shareholder records
to any person whenever it is advised by its counsel that it may be held liable
for the failure to exhibit the Shareholder records to such person.
ARTICLE 16. Term of Agreement
16.01 This Agreement shall become effective on the date hereof (the
"Effective Date") and shall continue in effect for 24 months from the Effective
Date (the "Initial Term") and from year to year thereafter with respect to each
Fund, provided that at any time during or subsequent to the Initial Term, this
Agreement may be terminated by either party at any time without payment of any
penalty upon 90 days written notice to the other. In the event such notice is
given by the Company, it shall be accompanied by a resolution of the Board of
Trustees, certified by the Secretary, electing to terminate this Agreement and
designating a successor transfer agent.
16.02 Should the Company exercise its right to terminate, the Company must
notify FSSI in writing via registered mail. All out-of-pocket and ancillary
expenses associated with the movement of records, data, and material will be
borne by the Company. Additionally, FSSI reserves the right to withhold records,
data, or other material pending receipt of any fees, charges or reimbursements
due from the Company.
ARTICLE 17. Additional Funds
17.01 In the event that the Company establishes one or more series of
Shares in addition to the initial series with respect to which it desires to
have FSSI render services as transfer agent under the terms hereof, it shall so
notify FSSI in writing, and if FSSI agrees in writing to provide such services,
such series of Shares shall become a Fund hereunder.
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ARTICLE 18. Assignment
18.01 Except as provided in Section 18.03 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
18.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
18.03 FSSI may, without further consent on the part of the Company,
subcontract for the performance of any of the services to be provided hereunder
to third parties, including any affiliate of FSSI, provided that FSSI shall
remain liable hereunder for any acts or omissions of any subcontractor as if
performed by FSSI.
ARTICLE 19. Amendment
19.01 This Agreement may be amended or modified by a written agreement
executed by both parties.
ARTICLE 20. New York Law to Apply
20.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of New York.
ARTICLE 21. Merger of Agreement and Severability
21.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
21.02 In the event any provision of this Agreement shall be held
unenforceable or invalid for any reason, the remainder of this Agreement shall
remain in full force and effect.
21.03 This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original; but such counterparts shall together,
constitute only one instrument.
21.04 The Company agrees that prior to effecting any change in the
Memorandum which would increase or alter the duties and obligations of FSSI
hereunder, it shall advise FSSI of such proposed change at least 60 days prior
to the intended date of the same, and shall proceed with such change only if it
shall have received the written consent of FSSI thereto.
21.05 Neither party shall have any duties or responsibilities whatsoever
except such
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duties and responsibilities as are specifically set forth in this Agreement, and
no covenant or obligation shall be implied in this Agreement against any party.
ARTICLE 22. Notices
22.01 Any notice or other instrument in writing authorized or required by
this Agreement to be given to either party hereto will be sufficiently given if
addressed to such party and mailed or delivered to it at its office at the
address set forth below:
For the Company: Domini Institutional Trust
6 St. James Avenue, Suite 900
Boston, MA 02116
Attn: President
For FSSI: FUNDAMENTAL SHAREHOLDER SERVICES, INC.
90 Washington Street, 19th Floor
New York, New York 10006
Attn: President
ARTICLE 23. Limitation of Liability. A copy of the Declaration of Trust of the
Fund is on file with the Secretary of State of the Commonwealth of Massachusetts
and notice is hereby given that this Agreement has been executed on behalf of
the Fund by an officer of the Fund as an officer and not individually and the
obligations of the Fund arising out of this Agreement are not binding upon any
of the trustees, officers or investors of the Fund individually but are binding
only upon the assets and property of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and the year first above written.
DOMINI INSTITUTIONAL TRUST
---------------------------------------
Name: Date
Title:
FUNDAMENTAL SHAREHOLDER SERVICES, INC.
---------------------------------------
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Name: David P. Wieder Date
Title: President
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Fundamental Shareholder Services, Inc.
Transfer Agency Services and Fees for
Domini Institutional Trust
Transfer Agency and Shareholder Servicing Fees
Portfolios: Domini Institutional Social Equity Fund
Overriding Minimum Fee
Minimum annual fee of $24,000. per portfolio.
Annual Account Maintenance and Processing - Base Fees
Asset Based Fee
3 1/2 Basis Points of average net assets per annum
Individual Retirement Arrangement account processing fees (which can be
charged directly to shareowners) are as follows:
Acceptance fee $10.00 per account
Annual Maintenance fee $10.00 per account
Distribution fee $10.00 per transaction
Annual fees are calculated and billed monthly at 1/12th of the annual stated
rate. The charges for printing, mailing, postage, banking services, and other
out of pocket and ancillary charges; including charges related to, conversion,
custom programming, time and materials are in addition to the fees set forth
above.
March 20, 1996
DSI243
16
DSI234
ADMINISTRATIVE SERVICES PLAN
ADMINISTRATIVE SERVICES PLAN, dated as of April 8, 1996, of DOMINI
INSTITUTIONAL TRUST, a Massachusetts business trust (the "Trust").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940
(collectively with the rules and regulations promulgated thereunder, the ("1940
Act"); and
WHEREAS, the Trust desires to adopt this Administrative Services Plan
(the "Plan") in order to provide for certain administrative services to the
Trust and holders of Shares of Beneficial Interest of the Trust (the "Shares");
and
WHEREAS, the Trust desires to enter into a transfer agency agreement
(in such form as may from time to time be approved by the Board of Trustees of
the Trust (the "Transfer Agency Agreement")) with a financial institution, as
transfer agent for the Trust (the "Transfer Agent"), whereby the Transfer Agent
will provide transfer agency services to the Trust; and
WHEREAS, the Trust desires to enter into a custodian agreement (in such
form as may from time to time be approved by the Board of Trustees of the Trust
(the "Custodian Agreement")) with a financial institution, as custodian for the
Trust (the "Custodian"), whereby the Custodian will provide custodial services
to the Trust; and
WHEREAS, the Trust desires to enter into an administrative services
agreement (in such form as may from time to time be approved by the Board of
Trustees of the Trust (the "Administrative Services Agreement")) with Signature
Broker-Dealer Services, Inc., a Delaware corporation, as administrator of the
Trust (the "Administrator"), whereby the Administrator will provide certain
administrative and management services to the Trust; and
WHEREAS, the Trust also desires to enter into shareholder servicing
agreements (in such form as may from time to time be approved by the Board of
Trustees of the Trust (the "Shareholder Servicing Agreements")) with certain
financial institutions, as shareholder servicing agents ("Shareholder Servicing
Agents"), whereby each Shareholder Servicing Agent will, as agent for its
customers, provide certain services to shareholders of the Trust; and
WHEREAS, the Board of Trustees of the Trust, in considering whether the
Trust should adopt and implement this Plan, has evaluated such information as it
deemed necessary to an informed determination as to whether this Plan should be
adopted and implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of each Fund for such
purposes and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Trust and each Fund
and its shareholders.
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NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this
Plan for the Trust, on the following terms and conditions:
1. As specified in the Transfer Agency Agreement, the Transfer Agent
shall act as dividend disbursing agent for the Trust and perform transfer agency
functions for each Fund. The Trust shall pay to the Transfer Agent such
compensation from the assets of each Fund as may from time to time be agreed to
by the Trust and the Transfer Agent.
2. As specified in the Custodian Agreement, the Custodian shall
safeguard and control the cash and securities of each Fund, handle receipt and
delivery of securities for each Fund, determine income and collect interest on
the investments of each Fund, maintain books of original entry for the Trust and
Fund accounting and other required books and accounts, calculate the daily net
asset value of Shares of each Fund and, in general, act as the custodian of the
assets of the Trust pertaining to each Fund, but the Custodian shall have no
power to determine the investment policies of the Trust or to determine which
securities the Trust will buy or sell on behalf of any Fund. The Trust shall pay
to the Custodian such compensation as may from time to time be agreed to by the
Trust and the Custodian.
3. As specified in the Administrative Services Agreement, the
Administrator shall perform certain administrative and management services on
behalf of the Trust, including: providing office space, equipment and clerical
personnel necessary for maintaining the organization of the Trust and for
providing the administrative and management services to be performed by the
Administrator; arranging, if desired by the Trust, for directors, officers and
employees of the Administrator to serve as Trustees, officers or agents of the
Trust if duly elected or appointed to such positions and subject to their
individual consent and to any limitations imposed by law; supervising the
overall administration of the Trust, including negotiation of contracts and fees
with and the monitoring of performance and billings of the Trust's Transfer
Agent, Shareholder Servicing Agents, Custodian and other independent contractors
or agents; preparing and, if applicable, filing all documents required for
compliance by the Trust with applicable laws and regulations, including
registration statements, offering circulars, prospectuses, statements of
additional information, semiannual and annual reports to shareholders, proxy
statements and tax returns; preparation of agendas and supporting documents for
and minutes of meetings of Trustees, committees of the Board of Trustees and
shareholders; arranging for computation of performance statistics with respect
to each Fund and arranging for publication of current price information in
newspapers and other publications; and arranging for maintenance of books and
records of the Trust and each Fund. As consideration for services performed
under the Administrative Services Agreement, the Trust shall, subject to
paragraph 5 hereof, periodically pay to the Administrator such fee from the
assets of each Fund as may from time to time be agreed to by the Trust and the
Administrator.
4. As specified in each Shareholder Servicing Agreement, each
Shareholder Servicing Agent shall, with respect to one or more Funds, as agent
for its customers who purchase Shares, perform certain shareholder account,
administrative and service functions for such customers, including among others:
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answering customer inquiries regarding the manner in which purchases and
redemptions of Shares may be effected, and with regard to certain other matters
pertaining to the Trust or such Fund; assisting customers in designating and
changing dividend options, account designations and addresses; providing
necessary personnel and facilities to maintain certain shareholder accounts and
records, as specified from time to time by the Trust; assisting in processing
purchase and redemption transactions; arranging for the wiring of funds;
transmitting and receiving funds in connection with customer orders to purchase
and redeem Shares; verifying and guaranteeing shareholder signatures in
connection with redemption orders and transfers and changes in shareholder-
designated accounts; furnishing periodic statements showing customer account
balances, monthly and annual statements and confirmations of purchases and
redemptions of Shares in a customer's account; transmitting proxy statements,
annual reports, updating prospectuses and offering memoranda, statements of
additional information and other communications from the Trust to shareholders
of such Fund; and providing such other related services as the Trust or a
shareholder may request. Each Shareholder Servicing Agreement shall provide that
the Shareholder Servicing Agent shall provide all personnel and facilities
necessary in order for it to perform the functions described in this paragraph
with respect to its customers who purchase Shares. As consideration for services
performed under the Shareholder Servicing Agreements, the Trust shall, subject
to paragraph 5 hereof, periodically pay to each Shareholder Servicing Agent such
fee from the assets of each such Fund as may from time to time be agreed to by
the Trust and such Shareholder Servicing Agent. Each Shareholder Servicing Agent
will be permitted to charge its customers direct fees for the same or similar
services as provided pursuant to a Shareholder Servicing Agreement.
5. Notwithstanding paragraphs 3 and 4 hereof, the aggregate of the fee
payable from a Fund to the Administrator pursuant to the Administrative Services
Agreement, the fees payable from such Fund to the Shareholder Servicing Agents
pursuant to the Shareholder Servicing Agreements and the placement fees (as
defined in the Trust's Placement Plan) payable from such Fund to the Distributor
pursuant to the Trust's Placement Plan may not exceed an amount equal to 0.40%
of such Fund's average daily net assets on an annualized basis for the Fund's
then-current fiscal year.
6. Nothing herein contained shall be deemed to require the Trust to
take any action contrary to its Trust Instrument or By-Laws or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Board of Trustees of the Trust of the
responsibility for and control of the conduct of the affairs of the Trust.
7. This Plan shall become effective upon (a) approval by a vote of at
least a "majority of the outstanding voting securities" of each Fund, and (b)
approval by a vote of the Board of Trustees of the Trust and vote of a majority
of the Trustees who are not "interested persons" of the Trust and who have no
direct or indirect financial interest in the operation of the Plan or in any of
the agreements related to the Plan (the "Qualified Trustees"), such votes to be
cast in person at a meeting called for the purpose of voting on this Plan.
8. This Plan shall continue in effect indefinitely, provided that
such continuance is subject to annual approval by a vote of the Board of
Trustees of
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the Trust and a majority of the Qualified Trustees, such votes to be cast in
person at a meeting called for the purpose of voting on continuance of this
Plan. If such annual approval is not obtained, this Plan shall expire on the
date which is 15 months after the date of the last approval.
9. This Plan may be amended at any time by the Board of Trustees of the
Trust, provided that (a) any amendment to increase materially the amount to be
expended from the assets of any Fund for the services described herein shall be
effective only upon approval by a vote of a "majority of the outstanding voting
securities" of such Fund, and (b) any material amendment of this Plan shall be
effective only upon approval by a vote of the Board of Trustees of the Trust and
a majority of the Qualified Trustees, such votes to be cast in person at a
meeting called for the purpose of voting on such amendment. This Plan may be
terminated at any time with respect to any Fund by vote of a majority of the
Qualified Trustees or by a vote of a "majority of the outstanding voting
securities" of such Fund.
10. The Treasurer of the Trust shall provide the Board of Trustees of
the Trust, and the Board of Trustees of the Trust shall review, at least
quarterly, a written report of the amounts expended under the Plan and the
purposes for which such expenditures were made.
11. While this Plan is in effect, the selection and nomination of
Qualified Trustees shall be committed to the discretion of the Trustees who are
not "interested persons" of the Trust.
12. For the purposes of this Plan, the terms "interested person" and
"majority of the outstanding voting securities" are used as defined in the 1940
Act. In addition, for purposes of determining the fees payable to the
Administrator and each Shareholder Servicing Agent, the value of a Fund's net
assets shall be computed in the manner specified in the Trust's then-current
prospectus and statement of additional information and/or offering circular
applicable to that Fund for the computation of the net asset value of Shares of
that Fund.
13. The Fund shall preserve copies of this Plan, and each agreement
related hereto and each report referred to in paragraph 10 hereof (collectively
the "Records"), for a period of six years from the end of the fiscal year in
which such Record was made and each such Record shall be kept in an easily
accessible place for the first two years of said record-keeping.
14. This Plan shall be construed in accordance with the laws of
the Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.
15. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.
DSI234
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DSI233
PLACEMENT PLAN
PLACEMENT PLAN, dated as of April 8, 1996, of Domini Institutional
Trust, a Massachusetts business trust (the "Trust").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940
(collectively with the rules and regulations promulgated thereunder, the "1940
Act"); and
WHEREAS, the Shares of Beneficial Interest (par value $0.01 per share)
of the Trust (the "Shares") are divided into separate actual or potential
series, of which series the following is covered by the terms of this Agreement:
Domini Institutional Social Equity Fund (the "Fund"); and
WHEREAS, the Trust intends to issue and sell the Shares of the Fund in
accordance with Rule 12b-1 under the 1940 Act ("Rule 12b-1"), and desires to
adopt this Placement Plan (the "Plan") as a plan pursuant to such Rule; and
WHEREAS, the Trust desires to engage Signature Broker-Dealer Services,
Inc. a Delaware corporation ("SBDS"), to provide certain placement services for
the Trust (the "Placement Agent); and
WHEREAS, the Trust desires to enter into an exclusive placement agent
agreement (in such form as may from time to time be approved by the Board of
Trustees of the Trust in the manner specified in Rule 12b-1) with the Placement
Agent, whereby the Placement Agent will provide facilities and personnel and
render services to the Trust in connection with the offering and sale of the
Shares of the Fund (the "Placement Agency Agreement"); and
WHEREAS, the Trust recognizes and agrees that the Placement Agent may
retain the services of any one or more broker-dealers registered as such under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to act as
dealers of the Shares of the Fund in connection with the private placement of
Shares of the Fund, and the Placement Agent may make periodic payments, out of
the fee paid to the Placement Agent, its profits or any other source available
to it, to such broker-dealers for such services; and
WHEREAS, the Board of Trustees of the Trust, in considering whether the
Trust should adopt and implement this Plan, has evaluated such information as it
deemed necessary to an informed determination as to whether this Plan should be
adopted and implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of the Fund for such
purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Trust and the Fund and
its shareholders.
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NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this
Plan for the Trust in accordance with Rule 12b-1, on the following terms and
conditions:
1. As specified in the Placement Agency Agreement, the Placement Agent shall
provide facilities, personnel and a program with respect to the offering and
sale of Shares of the Fund to customers of financial institutions which have
entered into shareholder servicing agreements with the Trust applicable to the
Fund. Among other things, the Placement Agent shall be responsible for all
expenses of printing (excluding typesetting) and circulating offering or private
placement memoranda or other offering documents and, upon request, copies of the
Trust's registration statement under the 1940 Act to prospective shareholders of
the Fund and providing such other related services as are reasonably necessary
in connection therewith.
2. The Placement Agent shall bear all sales-related expenses described in
paragraph 1, including without limitation, the compensation of personnel
necessary to provide such services and all costs of travel, office expenses
(including rent and overhead), equipment, printing, delivery and mailing costs.
3. As consideration for all services performed and expenses incurred in the
performance of its obligations under the Placement Agency Agreement, the Trust
shall pay the Placement Agent from the assets of the Fund such fee as may be
determined from time to time by the Placement Agent and the Trust, provided that
such fee shall not exceed 0.25% per annum of the aggregate average daily net
assets of the Fund.
4. The Trust understands that an agreement between the Placement Agent and any
broker-dealer registered as such under the Exchange Act may provide for a
portion (which may be substantially all) of the fees payable to the Placement
Agent under the Placement Agency Agreement to be paid by the Placement Agent to
such broker-dealer in consideration of such broker-dealer's services as the
dealer of the Shares of the Fund. Nothing in this Plan shall be construed as
requiring the Trust to make any payment to any such broker-dealer or to have any
obligation to such broker-dealer in connection with its services as dealer. Any
agreement entered into between the Placement Agent and any such broker-dealer
shall provide that such broker-dealer shall look solely to the Placement Agent
for compensation for its services thereunder and that in no event shall such
broker-dealer seek any payment from the Trust or its shareholders.
5. The Trust shall pay all fees and expenses of any independent auditor, legal
counsel, administrator, transfer agent, custodian, shareholder servicing agent,
registrar or dividend disbursing agent of the Trust; expenses of selling and
redeeming Shares and servicing shareholder accounts; expenses of preparing,
printing and mailing offering or private placement memoranda or other offering
documents, shareholder reports, notices, proxy statements and reports to
governmental officers and commissions and to shareholders of the Trust except
that the Placement Agent shall be responsible for the expenses of printing
(excluding typesetting) and distributing offering or private placement memoranda
or other offering documents to prospective shareholders as provided in
paragraphs 1 and 2 hereof; expenses connected with the execution, recording and
settlement of portfolio security transactions; insurance premiums; expenses of
calculating
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the net asset value of Shares; expenses of shareholder meetings; and expenses
relating to the issuance, registration and qualification of Shares.
6. Nothing herein contained shall be deemed to require the Trust to take any
action contrary to its Trust Instrument or By-Laws or any applicable statutory
or regulatory requirement to which it is subject or by which it is bound, or to
relieve or deprive the Board of Trustees of the responsibility for and control
of the conduct of the affairs of the Trust.
7. This Plan shall become effective upon (a) approval by a vote of at least a
"majority of the outstanding voting securities" of the Fund, and (b) approval by
a vote of the Board of Trustees and vote of a majority of the Trustees who are
not "interested persons" of the Trust and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related to
the Plan (the "Qualified Trustees"), such votes to be cast in person at a
meeting called for the purpose of voting on this Plan.
8. This Plan shall continue in effect indefinitely; provided, however, that such
continuance is subject to annual approval by a vote of the Board of Trustees of
the Trust and a majority of the Qualified Trustees, such votes to be cast in
person at a meeting called for the purpose of voting on continuance of this
Plan. If such annual approval is not obtained, this Plan shall expire on the
later to occur of May 1, 1997 or the date which is 15 months after the date of
the last approval.
9. This Plan may be amended at any time by the Board of Trustees of the Trust,
provided that (a) any amendment to increase materially the amount to be expended
from the assets of the Fund for the services described herein shall be effective
only upon approval by a vote of a "majority of the outstanding voting
securities" of the Fund, and (b) any material amendment of this Plan shall be
effective only upon approval by a vote of the Board of Trustees of the Trust and
a majority of the Qualified Trustees, such votes to be cast in person at a
meeting called for the purposes of voting on such amendment. This Plan may be
terminated at any time with respect to the Fund by vote of a majority of the
Qualified Trustees or by a vote of a "majority of the outstanding voting
securities" of the Fund.
10. The Trust and the Placement Agent each shall provide the Board of Trustees
of the Trust, and the Board of Trustees of the Trust shall review, at least
quarterly, a written report of the amounts expended under the Plan and the
purposes for which such expenditures were made.
11. While this Plan is in effect, the selection and nomination of Qualified
Trustees shall be committed to the discretion of the Trustees who are not
"interested persons" of the Trust.
12. For the purposes of this Plan, the terms, "interested persons" and "majority
of the outstanding voting securities" are used as defined in the 1940 Act. In
addition, for purposes of determining the fees payable to the Placement Agent,
the value of the net assets of the Fund shall be computed in the manner
specified in the Trust's registration statement under the 1940 Act as then in
effect applicable to the Fund for computation of the net asset value applicable
to Shares of the Fund.
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13. The Trust shall preserve copies of this Plan, and each agreement related
hereto and each report referred to in paragraph 10 hereof (collectively, the
"Records") for a period of six years from the end of the fiscal year in which
such Record was made and each such Record shall be kept in an easily accessible
place for the first two years of said record-keeping.
14. This Plan shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.
15. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not be
affected thereby.
DSI233
4
