As filed with the Securities and Exchange Commission on April 21, 1998
1940 Act File No. 811-07939
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 1
MERRIMAC FUNDS
(Exact Name of Registrant as Specified in Charter)
200 Clarendon Street, Boston, Massachusetts 02116
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (888) 637-7622
Susan C. Mosher, Secretary
Merrimac Funds
200 Clarendon Street
Boston, Massachusetts 02116
(Name and Address of Agent for Service)
Copy to:
Philip H. Newman
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
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MERRIMAC FUNDS
EXPLANATORY NOTE
This Registration Statement has been filed by the Registrant pursuant to Section
8(b) of the Investment Company Act of 1940, as amended (the "1940 Act").
However, beneficial interests in the Registrant are not being registered under
the Securities Act of 1933, as amended (the "1933 Act") since such interests
will be issued solely in private placement transactions which do not involve any
"public offering" within the meaning of Section 4(2) of the 1933 Act.
Investments in the Registrant's series may only be made by "accredited
investors" within the meaning of Regulation D under the 1933 Act which generally
includes institutional investors and high net worth individuals. This
Registration Statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any beneficial interests in any series of the Registrant.
Pursuant to General Instruction F3 of Form N-1A, a registration statement filed
under only the 1940 Act shall consist of the facing sheet of the Form, responses
to all items of Parts A and B except Items 1, 2, 3 and 5A of Part A thereof,
responses to all items of Part C except Items 24(b)(6), 24(b)(10), 24(b)(11) and
24(b)(12) required signatures, and all other documents that are required or
which the Registrant may file as part of the registration statement.
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PART A
April 21, 1998
Responses to Items 1 through 3 and 5A have been omitted pursuant to paragraph 3
of Instruction F of the General Instructions to Form N-1A.
Item 4. General Description of Registrant
The Merrimac Funds (the "Trust") is an open-end management investment company
registered with the Securities and Exchange Commission (the "SEC") under the
1940 Act. The Trust was organized as a business trust under the laws of the
State of Delaware on October 30, 1996. The Trust has established two series:
Merrimac Cash Fund (the "Cash Fund") and Merrimac Treasury Fund (the "Treasury
Fund") (collectively, the "Funds" and singly, a "Fund"). The shares of
beneficial interest in each series shall hereinafter be referred to as "shares"
and holders of such interests shall hereinafter be referred to as
"shareholders." Each Fund is diversified within the meaning of the 1940 Act.
Beneficial interests in each Fund are issued solely in private placement
transactions which do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. Investments in a Fund may only be made by
investors that qualify as "accredited investors" within the meaning of
Regulation D under the 1933 Act, which generally includes institutional
investors and high net worth individuals ("Eligible Investors"), seeking
liquidity, preservation of capital and current income, and for whom growth of
capital is not a consideration. This Registration Statement does not constitute
an offer to sell, or the solicitation of an offer to buy, any "security" within
the meaning of the 1933 Act.
Each Fund offers three classes of shares to investors: namely Institutional
Class, Premium Class and Placement Class shares, which each represent interests
in such Fund. The three classes differ in (i) the imposition of a shareholder
servicing fee for Institutional Class shares equal to a maximum of 0.25% of
average daily net assets of the Institutional Class shares; (ii) the imposition
of a shareholder servicing fee and a placement fee each equal to a maximum of
0.25% of average daily net assets of the Placement Class shares; and (iii) the
maximum initial investment for each Class.
Investment Objective
The investment objective of each Fund is to obtain as high a level of current
income as is consistent with the preservation of capital and liquidity. Unlike
other mutual funds which directly acquire and manage their own portfolios of
securities, the Cash Fund and the Treasury Fund each seek to achieve its
investment objective by investing all of their investable assets in the Merrimac
Cash Portfolio (the "Cash Portfolio" or a "Portfolio") and the Merrimac Treasury
Portfolio (the "Treasury Portfolio" or a "Portfolio"), respectively, which are
each a series of the Merrimac Master Portfolio (the "Portfolio Trust"), an
open-end management investment company established as a New York common law
trust on October 30, 1996. Each Portfolio Trust is treated as a partnership for
federal tax purposes. Each Portfolio has the same investment objective and
policies as its corresponding Fund. There is no assurance that either Fund or
either Portfolio will achieve its investment objective. Each Fund's and each
Portfolio's investment objective and investment policies (other than the
policies identified in Item 13, Part B of this Registration Statement) are not
fundamental and may be changed at any time by the Board of Trustees of the Trust
or the Portfolio Trust, respectively, upon at least 30 days prior written notice
to shareholders of the particular Fund or Portfolio.
Investment Policies
Each Portfolio seeks to achieve the same objective as its corresponding Fund by
investing in high quality U.S. dollar denominated money market instruments.
Since the characteristics of the Funds will correspond directly to those of
their Portfolio, the following is a discussion of the various investment
policies of the Portfolios. Except as otherwise provided below, the Funds'
investment policies are not "fundamental policies" as such term is defined in
the 1940 Act and may therefore be changed by the Trust's Board of Trustees
without a shareholder vote.
The Cash Portfolio may invest in U.S. Treasury bills, notes and bonds, and
instruments issued by U.S. Government agencies or instrumentalities ("U.S.
Government Securities"); securities of U.S. and non-U.S. banks or thrift
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organizations (such as bankers' acceptances, time deposits and certificates of
deposit); corporate debt obligations, including commercial paper, notes and
bonds and other money market instruments; asset-backed securities; and variable
rate obligations (defined as a security whose coupon rate resets at least every
six months). The Cash Portfolio also may invest in repurchase agreements that
are collateralized by the securities listed above with no restrictions on the
maturity of obligations collateralizing such repurchase agreements.
The Treasury Portfolio will invest substantially all, but not less than 65% of
its assets in U.S. Government Securities which are backed by the "full faith and
credit" of the U.S. Government. To maximize the tax-effective yield for
shareholders, under normal circumstances, the Treasury Portfolio will invest
primarily in obligations that qualify for the exemption from state taxation.
The Cash Portfolio and the Treasury Portfolio will each operate as a "money
market mutual fund" and all investments will qualify as "eligible securities"
within the meaning of Rule 2a-7 under the 1940 Act. Consistent with Rule 2a-7,
the Cash Portfolio and the Treasury Portfolio will not purchase securities of
any issuer (except securities issued or guaranteed by the United States
Government, its agencies or instrumentalities and with respect to the Cash
Portfolio, repurchase agreements involving such securities) if as a result more
than 5% of the total assets of the Portfolio would be invested in the securities
of such issuer or the Portfolio would own more than 10% of the outstanding
voting securities of such issuer.
Additional Investment Policies
Maturity and Quality. Each Portfolio will manage interest rate risk by
maintaining a dollar-weighted average maturity of 90 days or less and will not
invest in securities with remaining maturities of more than 397 days (as
determined in accordance with Rule 2a-7 under the 1940 Act.) Each Portfolio may
invest in variable or floating rate securities which bear interest at rates
subject to periodic adjustment or which provide for periodic recovery of
principal on demand. Each Portfolio intends to incur only minimal credit risk.
The Portfolios may only purchase securities, in addition to U.S. Government
Securities, that are rated in the highest or second highest rating categories
for short-term obligations by at least two nationally recognized statistical
rating organizations ("NRSROs"). As a matter of operating policy, however, the
Portfolios will only invest in securities, exclusive of U.S. Government
Securities, that are rated in the highest rating category for short-term
obligations by at least two NRSROs. Investments in high quality, short term
instruments may, in many circumstances, result in a lower yield than would be
available from investments in instruments with a lower quality or a longer term.
Investment Restrictions. Part B of this Registration Statement contains a list
of specific investment restrictions which govern the investment policies of the
Funds and the Portfolios. These specific restrictions are "fundamental policies"
and may not be changed without shareholder approval. Except as otherwise
indicated, each Fund's and each Portfolio's investment policies may be changed
at any time by the respective Board of Trustees upon at least 30 days prior
written notice to shareholders of the particular Fund or Portfolio. If a
percentage or rating restriction is adhered to at the time an investment is
made, a later change in percentage caused by a change in the Portfolio's asset
size or rating resulting from changes made subsequently by NRSROs will not be a
violation of policy.
Investment Practices
Money Market Instruments. An investment in a Portfolio is subject to interest
rate risk and credit risk of the issuers of the money market instruments. All
money market instruments can change in value when interest rates or an issuer's
creditworthiness changes, or if an issuer or guarantor of a security fails to
pay interest or principal when due.
U.S. Government Securities. Each Portfolio may invest in U.S. Government
Securities. Not all U.S. Government Securities are backed by the full faith and
credit of the United States. For example, securities issued by the Federal Farm
Credit Bank or by the Federal National Mortgage Association are supported by the
agency's right to borrow money from the U.S. Treasury under certain
circumstances. Securities issued by the Federal Home Loan Bank are supported
only by the credit of the agency. There is no guarantee that the U.S. Government
will support these types of securities, and therefore they involve more risk
than "full faith and credit" Government Securities. The Treasury Portfolio will
primarily invest in "full faith and credit" U.S. Government Securities.
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Bankers' Acceptances. The Cash Portfolio may invest in bankers' acceptances
which are bills of exchange or time drafts drawn on and accepted by a commercial
bank. They are used by corporations to finance the shipment and storage of goods
and to furnish dollar exchange. Maturities are generally six months or less.
Time Deposits. The Cash Portfolio may invest in time deposits ("TDs"), which are
non-negotiable receipts issued by a bank in exchange for the deposit of funds.
Like a certificate of deposit, a TD earns a specified rate of interest over a
definite period of time; however, it cannot be traded in the secondary market.
Certificates of Deposit. The Cash Portfolio also may invest in certificates of
deposit ("CDs"), which are negotiable interest bearing instruments with a
specific maturity. CDs are issued by banks and thrift institutions in exchange
for the deposit of funds and normally can be traded in the secondary market
prior to maturity. Commercial Paper. The Cash Portfolio may invest in commercial
paper, which is the term used to designate unsecured short-term promissory notes
issued by corporations and other entities. Maturities on these issues vary from
a few days to nine months.
Corporate Debt Obligations. Subject to their respective credit quality and
maturity limitations, the Cash Portfolio may invest in corporate bonds,
including obligations of industrial, utility, banking and other financial
issuers. Corporate bonds are subject to the risk of an issuer's inability to
meet principal and interest payments and may also be subject to price volatility
due to such factors as market interest rates, market perception of the credit
worthiness of the issuer and general market liquidity.
Asset-Backed Securities. The Cash Portfolio also may invest in asset-backed
securities, which consist of securities secured by company receivables, home
equity loans, truck and auto loans, leases, credit card receivables and other
securities backed by other types of receivables or other assets. Credit support
for asset-backed securities may be based on the underlying assets and/or
provided through credit enhancements such as letters of credit, insurance bonds,
limited issuer guarantees, senior-subordinated structures and over
collateralization. Asset-backed securities are normally traded over-the-counter
and typically have a short-intermediate maturity structure depending on the
paydown characteristics of the underlying financial assets which are passed
through to the security holder. Asset-backed securities may be subject to
prepayment risk, particularly in a period of declining interest rates.
Prepayments, which occur when unscheduled payments are made on the underlying
debt instruments, may shorten the effective maturities of these securities and
may lower their total returns. Asset-backed securities generally do not have the
benefit of a security interest in collateral that is comparable to mortgage
assets and there is the possibility that recoveries on repossessed collateral
may not be available to support payments on these securities. There is no limit
on the extent to which the Cash Portfolio may invest in asset-backed securities;
however, the Cash Portfolio will only invest in asset-backed securities that
carry a rating in the highest category from at least two NRSROs.
Eurodollar and Yankee Dollar Investments. The Cash Portfolio may invest in
Eurodollar and Yankee Dollar instruments. Eurodollar instruments are bonds of
foreign corporate and government issuers that pay interest and principal in U.S.
dollars held in banks outside the United States, primarily in Europe. Yankee
Dollar instruments are U.S. dollar denominated bonds typically issued in the
U.S. by foreign governments and their agencies and foreign banks and
corporations. The Cash Portfolio may invest in Eurodollar Certificates of
Deposit ("ECDs"), Eurodollar Time Deposits ("ETDs") and Yankee Certificates of
Deposit ("Yankee CDs"). ECDs are U.S. dollar-denominated certificates of deposit
issued by foreign branches of domestic banks; ETDs are U.S. dollar-denominated
deposits in a foreign branch of a U.S. bank or in a foreign bank; and Yankee CDs
are U.S. dollar-denominated certificates of deposit issued by a U.S. branch of a
foreign bank and held in the U.S. These investments involve risks that are
different from investments in securities issued by U.S. issuers, including
potential unfavorable political and economic developments, foreign withholding
or other taxes, seizure of foreign deposits, currency controls, interest
limitations or other governmental restrictions which might affect payment of
principal or interest.
When-Issued and Delayed Delivery Transactions. Each Portfolio may invest in
when-issued and delayed delivery securities, which are securities purchased for
delivery beyond the normal settlement date at a stated price and yield, thereby
involving the risk that the yield obtained will be less than that available in
the market at delivery. Although the purchase of securities on a when-issued
basis is not considered leveraging, it has the effect of leveraging. When such a
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security is purchased, the Custodian will set aside cash or liquid securities to
satisfy the purchase commitment unless the relevant Portfolio has entered into
an offsetting agreement to sell the securities. These segregated securities will
be valued at market and additional cash or securities will be segregated if
necessary so that the market value of the account will continue to satisfy the
purchase commitment. A Portfolio generally will not pay for such securities or
earn interest on them until received. Commitments to purchase when-issued
securities will not, under normal market conditions, exceed 25% of the
Portfolio's total assets, and a commitment will not exceed 90 days. A Portfolio
will only purchase when-issued securities for the purpose of acquiring portfolio
securities and not for speculative purposes. However, a Portfolio may sell these
securities or dispose of the commitment before the settlement date if it is
deemed advisable as a matter of investment strategy. The market value of
when-issued or delayed delivery securities when they are delivered may be less
than the amount the Portfolios paid for them.
Variable and Floating Rate Instruments. Certain of the obligations purchased by
the Portfolios may carry variable or floating rates of interest and may include
variable rate master demand notes. A floating rate security provides for the
automatic adjustment of its interest rate whenever a specified interest rate
changes. A variable rate security provides for the automatic establishment of a
new interest rate on set dates. Variable and floating rate instruments may
include variable amount master demand notes that permit the indebtedness
thereunder to vary in addition to providing for periodic adjustments in the
interest rate. There may be no active secondary market with respect to a
particular variable or floating rate instrument. Nevertheless, the periodic
readjustments of their interest rates tend to assure that their value to a
Portfolio will approximate their par value. Further, some of the demand
instruments purchased by a Portfolio derive their liquidity from the ability of
the holder to demand repayment from the issuer or from a third party providing
credit support. The creditworthiness of issuers of variable and floating rate
instruments and their ability to repay principal and interest will be
continuously monitored by each Portfolio's investment adviser or sub-adviser.
Repurchase Agreements. The Cash Portfolio may enter into repurchase agreements,
which are agreements by which a person obtains a security and simultaneously
commits to return the security to the seller at an agreed upon price (including
principal and interest) on an agreed upon date within a number of days from the
date of purchase. In substance, a repurchase agreement is a loan by the
Portfolio collateralized with securities. The lending Portfolio's Custodian or
its agent will hold the security as collateral for the repurchase agreement. All
repurchase transactions must be collateralized initially at a value at least
equal to 102% of the repurchase price and counterparties are required to deliver
additional collateral in the event the market value of the collateral falls
below 100%. The Portfolios bear the risk of loss in the event the other party
defaults on its obligations and the Portfolio is delayed or prevented from its
right to dispose of the collateral securities or if the Portfolio realizes a
loss on the sale of the collateral securities. The Cash Portfolio will enter
into repurchase agreements with financial institutions deemed to present minimal
risk of bankruptcy during the term of the agreement based on guidelines
established and periodically reviewed by the Trustees. The Cash Portfolio will
not invest more than 10% of its net assets in repurchase agreements maturing in
more than seven days because such agreements would be considered "illiquid
securities" see also Private Placements and Illiquid Securities" below.
Reverse Repurchase Agreements. The Cash Portfolio may borrow funds for temporary
purposes by entering into reverse repurchase agreements. Pursuant to such
agreements, the Cash Portfolio would sell the securities to financial
institutions such as banks and broker-dealers and agree to repurchase them at a
mutually agreed-upon date and price. The Cash Portfolio will enter into reverse
repurchase agreements to avoid otherwise selling securities during unfavorable
market conditions to provide cash to satisfy redemption requests. At the time
the Cash Portfolio enters into a reverse repurchase agreement, it would place in
a segregated custodial account, assets such as cash or liquid securities,
consistent with the Cash Portfolio's investment restrictions and having a value
equal to the repurchase price (including accrued interest), and would
subsequently monitor the account to ensure that such equivalent value was
maintained. Reverse repurchase agreements involve the risk that the counterparty
may default at a time when the market value of securities sold by the Cash
Portfolio have increased in value. Reverse repurchase agreements are considered
by the SEC to be borrowings by the Portfolio under the 1940 Act.
Restricted and Illiquid Securities. Each Portfolio may invest up to 10% of its
net assets in illiquid securities. Illiquid securities are those that are not
readily marketable, repurchase agreements maturing in more than seven days, time
deposits with a notice or demand period of more than seven days and certain
restricted securities. Based
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upon continuing review of the trading markets for a specific restricted
security, the security may be determined to be eligible for resale to qualified
institutional buyers pursuant to Rule 144A under the Securities Act of 1933 and,
therefore, to be liquid. Also, certain illiquid securities may be determined to
be liquid if they are found to satisfy certain relevant liquidity requirements.
The Board of Trustees of the Portfolio Trust have adopted guidelines and
delegated to each Portfolio's investment adviser or sub-adviser, as applicable,
the daily function of determining and monitoring the liquidity of portfolio
securities, including restricted and illiquid securities. Each Portfolio's Board
of Trustees, however, retains oversight and is ultimately responsible for such
determinations. The purchase price and subsequent valuation of illiquid
securities normally reflect a discount, which may be significant, from the
market price of comparable securities for which a liquid market exists.
Short-Term Trading. Although the Portfolios usually intend to hold securities
purchased until maturity, at which time they will be redeemable at their full
principal value plus accrued interest, they may, at times, engage in short-term
trading to attempt to take advantage of yield variations in the short-term
market. Each Portfolio also may sell portfolio securities prior to maturity
based on a revised evaluation of the creditworthiness of the issuer or to meet
redemptions. In the event there are unusually heavy redemption requests due to
changes in interest rates or otherwise, a Portfolio may have to sell a portion
of its investment portfolio at a time when it may be disadvantageous to do so.
However, each Portfolio believes that its ability to borrow funds to accommodate
redemption requests may mitigate in part the necessity for such portfolio sales
during these periods.
Risk Factors
The shares of the Funds have not been registered under the 1933 Act and, because
they will be offered only to accredited investors, it is anticipated that they
will be exempt from the registration provisions thereof. Shares of the Funds may
not be transferred or resold without registration under the 1933 Act or pursuant
to an exemption from such registration.
Investments in Fund shares or Portfolio shares are neither insured nor
guaranteed by the government. Although the policies of the Cash Fund, the
Treasury Fund, the Cash Portfolio and the Treasury Portfolio are designed to
maintain a stable net asset value of $1.00 per share, all money market
instruments can change in value when interest rates or an issuer's
creditworthiness changes, or if an issuer or guarantor of a security fails to
pay interest or principal when due. If these changes in value were substantial,
the Cash Fund or the Treasury Fund's net asset value could deviate from $1.00.
Shares of either Fund and either Portfolio are not deposits or obligations of,
or guaranteed or endorsed by, Investors Bank & Trust Company ("Investors Bank")
or The Bank of New York ("BNY"), and shares are not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
agency, and involve investment risks including the possible loss of principal.
A Fund may withdraw its investment from its corresponding Portfolio at any time,
if the Fund's Board of Trustees determines that it is in the best interest 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 of the
investable assets of the Fund in another pooled investment entity having
substantially 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 herein. In the event the Fund's Trustees were unable to find
a substitute investment company in which to invest the Fund's assets or were
unable to secure directly the services of an investment adviser, the Trustees
would determine the best course of action under the circumstances.
Additional Information Concerning Investment Structure
Unlike other mutual funds which directly acquire and manage their own portfolio
securities, the Funds seek to achieve their investment objective by investing
all of their investable assets in their corresponding Portfolio, each of which
is registered as an open-end investment management company under the 1940 Act.
The Portfolios have the same investment objective and policies as their
corresponding Fund. In addition to selling its beneficial interests or shares to
the Fund, a Portfolio may sell shares to other mutual funds, collective
investment vehicles, or institutional investors. These investors will invest in
the Portfolio on the same terms and conditions and will pay a proportionate
share of such Portfolio's expenses. However, these other investors may be
subject to different operating expenses than those of the
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Funds. Therefore, investors in each Fund should be aware that these differences
may result in differences in returns experienced by investors in the different
funds and other pooled investment vehicles that invest in the Portfolio and
investors investing in different funds and other pooled investment vehicles that
invest in a Portfolio. Such differences in returns are also present in other
mutual fund structures.
Certain changes in a Portfolio's investment objective, policies or restrictions
may preclude its corresponding Fund from investing its investable assets in the
Portfolio and/or require the Fund to withdraw its interest in the Portfolio. Any
such withdrawal could result in an "in kind" distribution of 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. The in-kind distribution may result in the Fund having 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.
Smaller funds investing in a Portfolio may be materially affected by the actions
of larger funds investing in a Portfolio. For example, if a large fund withdraws
from the Portfolio, the remaining funds may subsequently experience higher
pro-rata operating expenses, thereby producing lower returns. Additionally,
because the Portfolio would become smaller, it may become less diversified,
resulting in increased portfolio risk; however, these possibilities exist for
traditionally structured funds which have large or institutional investors who
may withdraw from a fund. Also, funds with a greater pro-rata ownership in a
Portfolio could have effective voting control of the operations of the
Portfolio. Except as permitted by the SEC, if a Fund is requested to vote on
matters pertaining to its corresponding Portfolio (other than a vote by the Fund
to continue the operation of the Portfolio upon the withdrawal of another
investor in the Portfolio), the Fund will hold a meeting of its shareholders and
will cast all of its votes proportionately as instructed by such shareholders. A
Fund will vote the shares held by Fund shareholders who do not give voting
instructions in the same proportion as the shares of Fund shareholders who do
give voting instructions. Shareholders of a Fund who do not vote will have no
effect on the outcome of such matters.
In addition, each Fund offers three classes of shares to investors, Premium
Class, Institutional Class and Placement Class shares, all three of which
represent interests in such Fund. The three classes differ in that (i) the
Institutional Class shares impose a shareholder servicing fee equal to a maximum
of .25% of average daily net assets of the Institutional Class shares; (ii) the
Placement Class shares impose a shareholder servicing fee equal to a maximum of
.25% of average daily net assets and a placement fee equal to a maximum of .25%
of average daily net assets of the Placement Class shares and (iii) the Premium
Class shares charge no shareholder servicing or placement fees but require a
much higher initial investment than the other classes.
Item 5. Management of the Funds and the Portfolios
The Board of Trustees of the Trust and the Portfolio Trust
The business and affairs of each Fund are managed under the direction of the
Board of Trustees of the Trust. The business and affairs of the Cash Portfolio
and the Treasury Portfolio are managed under the direction of the Board of
Trustees of the Portfolio Trust. Each Board of Trustees approves all significant
agreements between each Fund or Portfolio and the persons and companies that
furnish services to each Fund or Portfolio, including (when applicable)
agreements with its investment adviser, administrator, fund accountant,
custodian and transfer agent. The day-to-day operations of each Fund are
delegated to its corresponding Portfolio's investment manager and such Fund's
officers. More information regarding the Trustees and officers of the Trust and
the Portfolio Trust appear in Part B of this Registration Statement.
The Adviser
The Board of Trustees of the Portfolio Trust have authorized Investors Bank to
serve as the investment adviser to each Portfolio of the Portfolio Trust
pursuant to an Investment Adviser Agreement (the "Adviser Agreement"). Under the
Adviser Agreement, Investors Bank continuously reviews and supervises each
Portfolio's investment program. Investors Bank discharges its responsibilities
subject to the supervision of, and policies established by, the Trustees of the
Portfolio Trust. Investors Bank was organized in 1969 as a
Massachusetts-chartered trust company and provides
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domestic and global custody, multi currency accounting, institutional transfer
agency, performance measurement, foreign exchange, securities lending and mutual
fund administration services to a variety of financial asset managers, including
mutual fund complexes, investment advisers, banks and insurance companies.
Investors Bank is a wholly-owned subsidiary of Investors Financial Services
Corp., a publicly-held corporation and holding company registered under the Bank
Holding Company Act of 1956. The business address of Investors Bank is 200
Clarendon Street, Boston, Massachusetts 02116. Investors Bank began acting as
investment adviser at the commencement of operations of the Cash Portfolio
(November 21, 1996) but otherwise has no previous experience in providing
investment advisory services.
The Sub-Advisers
BNY serves as the Cash Portfolio's sub-adviser pursuant to its Investment
Sub-Adviser Agreement (the "BNY Sub-Adviser Agreement") with Investors Bank.
Under the BNY Sub-Adviser Agreement, BNY manages the Portfolio, selects
investments and places all orders for the purchase and sale of the Portfolio's
securities, subject to the general supervision of the Portfolio Trust's Board of
Trustees and Investors Bank and in accordance with the Portfolio's and Fund's
investment objective, policies and restrictions. BNY is a wholly owned
subsidiary of The Bank of New York Company, Inc. BNY has discretionary
investment authority for the short-term money management of accounts exceeding
$50 billion. The business address of BNY is 48 Wall Street, New York, New York
10286. For its services to the Portfolio, BNY is paid by Investors Bank a
monthly fee computed at an annual rate of 0.08% of the average daily net assets
of the Cash Portfolio.
Aeltus Investment Management, Inc. ("Aeltus") serves as the Treasury Portfolio's
sub-adviser pursuant to its Investment Sub-Adviser Agreement (the "Aeltus
Sub-Adviser Agreement") with Investors Bank. Under the Aeltus Sub-Adviser
Agreement, Aeltus manages the Portfolio, selects investments and places all
orders for the purchase and sale of the Portfolio's securities, subject to the
general supervision of the Portfolio Trust's Board of Trustees and Investors
Bank and in accordance with the Portfolio's and Fund's investment objective,
policies and restrictions. Aeltus is an indirect wholly owned subsidiary of
Aetna Inc. As of December 31, 1997, Aeltus managed approximately $ 44.6 billion
in assets for various individual and institutional accounts, including
registered investment companies. The business address of Aeltus is 242 Trumbull
Street, Hartford, Connecticut 06103-1205. For its services to the Treasury
Portfolio, Aeltus is paid by Investors Bank a monthly fee computed at an annual
rate of 0.08% of the average daily net assets of the Treasury Portfolio.
The Administrator, Transfer Agent, Custodian and Fund Accountant
Investors Bank serves as Administrator to the Funds and IBT Trust & Custodial
Services (Ireland) LMTD ("IBT Ireland"), a subsidiary of Investors Bank, serves
as Administrator to the Cash Portfolio and the Treasury Portfolio. The services
provided by Investors Bank and IBT Ireland include certain accounting, clerical
and bookkeeping services, corporate secretarial services and assistance in the
preparation and filing of tax returns and reports to shareholders and the SEC.
Investors Bank also acts as transfer agent for each Fund and IBT Fund Services
(Canada) Inc. ("IBT Canada"), a subsidiary of Investors Bank, acts as transfer
agent for the Portfolios. As transfer agent, Investors Bank is responsible for
the issuance, transfer and redemption of shares and the establishment and
maintenance of shareholder accounts for each Fund and IBT Canada is responsible
for maintaining records of holders in interest for each Portfolio. IBT Canada
also serves as fund accountant to the Funds and the Portfolios. In such
capacity, IBT Canada performs certain accounting, clerical and bookkeeping
services, and the daily calculation of net asset value for each Portfolio and
Fund.
Investors Bank acts as custodian for each Fund and each Portfolio. As custodian,
Investors Bank holds cash, securities and other assets of the Funds and the
Portfolios as required by the 1940 Act.
For its services under the Adviser Agreement, Administration Agreement, Transfer
Agency Agreement, Custodian Agreement and the Fund Accounting Agreement, the
Cash Portfolio and the Treasury Portfolio each pay Investors Bank an aggregate
fee which is calculated daily and paid monthly, at an annual rate of 0.17% of
the average daily net assets of such Portfolio. For its services under the
Administration Agreement, Transfer Agency Agreement, Custodian
A-7
<PAGE>
Agreement and Fund Accounting Agreement, the Cash Fund and the Treasury Fund
each pay Investors Bank a fee which is calculated daily and paid monthly, at an
annual rate of 0.01% of the average daily net assets of such Fund. Investors
Bank is solely responsible for the payment of all fees to BNY, Aeltus and to its
subsidiaries. For the fiscal year ended December 31, 1997, the compensation paid
to Investors Bank by the Cash Fund, the Cash Portfolio, the Treasury Fund and
the Treasury Portfolio was 0.01%, 0.14%, 0.01% and 0.17%, respectively, of the
Funds' and Portfolios' average net assets.
Trust and Portfolio Trust Expenses
The Trust and the Portfolio Trust will each pay all of their expenses other than
those expressly assumed by Investors Bank. The principal expenses of the Trust
and the Portfolio Trust are the fees for advisory services (for the Portfolio
Trust only), administration, custody, fund accounting and transfer agency
services, all of which are payable to Investors Bank. Other expenses include:
(i) amortization of deferred organizational costs; (ii) taxes, if any; (iii)
expenses for legal, auditing and financial accounting services; (iv) expense of
preparing (including typesetting, printing and mailing) reports and notices to
existing shareholders; (v) expense of issuing and redeeming Trust and Portfolio
Trust, shares; (vi) the fees, travel expenses and other out-of-pocket expenses
of the independent Trustees of the respective Board; (vii) extraordinary
expenses as may arise, including expenses incurred in connection with litigation
proceedings and claims and the legal obligations of the Trust and the Portfolio
Trust, respectively, to indemnify the Trustees, shareholders and agents of the
Trust and the Portfolio Trust, respectively; and (viii) other expenses properly
payable by the Trust or the Portfolio Trust, as the case may be.
Item 6. Capital Stock and Other Securities
Attributes of Fund Shares
Investments in the Funds have no preferences, pre-emptive or conversion or
similar rights and are fully paid and nonassessable, by the Trust. Neither Fund
is required and neither has a current intention to hold annual meetings of
shareholders. Special meetings of shareholders may be called by the Board of
Trustees of the Trust from time to time for the purpose of taking action upon
any matter requiring the vote or authority of the shareholders as provided in
the Trust's Master Trust Agreement or as deemed necessary or desirable by the
Trustees. Changes in fundamental policies will be submitted to shareholders.
Shareholders have under certain circumstances (e.g., upon the application and
submission of certain specified documents to the Trustees by a specified
percentage of the aggregate value of the Trust's outstanding shares (or of a
Fund's outstanding shares on matters relating solely to one Fund) the right to
communicate with other shareholders in connection with requesting a meeting of
shareholders for the purpose of removing one or more Trustees. Shareholders also
have the right to remove one or more Trustees without a meeting by a declaration
in writing by a specified number of shareholders. Upon liquidation or
dissolution of a Fund, shareholders would be entitled to share pro rata in the
net assets of the Fund available for distribution to shareholders.
The Trust is organized as a business trust under the laws of the State of
Delaware. Under the Master Trust Agreement, dated October 30, 1996 and amended
February 6, 1997 and November 5, 1997, the Trustees are authorized to issue
shares (i.e., beneficial interests) in the Funds. Each Fund share entitles the
shareholder of record to one vote. Investments in a Fund may not be transferred,
but a shareholder may withdraw all or any portion of its investment at any time
at net asset value. If a Fund is requested to vote on any matter pertaining to a
Portfolio (other than a vote to continue the operation of the Portfolio upon the
withdrawal of another investor in the Portfolio), the Trust will (i) call a
meeting of shareholders of the Fund for the purpose of seeking instructions from
shareholders regarding such matters, (ii) vote the Fund's interest in the
Portfolio proportionally as instructed by shareholders of the Fund, and (iii)
vote the Fund's interest in the Portfolio with respect to shares held by
shareholders of the Fund who do not give voting instructions in the same
proportion as the shares of shareholders of the Fund who do give voting
instructions.
Fund shares are not registered under the 1933 Act and are sold in reliance upon
an exemption from registration. Shares may not be transferred or resold without
registration under the 1933 Act, except pursuant to an exemption from
registration. However, Fund shares may be redeemed on any day that the New York
Stock Exchange is open for business (a "Business Day").
A-8
<PAGE>
Control Persons -
As of April 1, 1998, BNY As Agent For Its Securities Lending Customers and
Investors Bank As Security Lending Agent FBO, each beneficially owned more than
25% of the voting securities of the Premium Class of the Cash Fund and therefore
each controls, as such term is defined under the 1940 Act, the Premium Class of
the Cash Fund. As of April 1, 1998, Saturn & Co, C/O Investors Bank,
beneficially owned more than 25% of the voting securities of the Institutional
Class of the Cash Fund and therefore controls, as such term is defined under the
1940 Act, the Institutional Class of the Cash Fund.
Shareholder Inquiries
All shareholder inquiries should be directed to Merrimac Funds c/o Investors
Bank.
Dividends and Distributions
Each Fund intends to declare as a dividend substantially all of its net
investment income at the close of each Business Day to such Fund's shareholders
of record at 2:00 p.m., Eastern time on that day, and will pay such dividends
monthly. Distributions of net long term capital gains, if any, for the year are
made at least annually. Dividends and/or capital gain distributions will be
reinvested automatically in additional shares of a Fund at net asset value and
such shares will be automatically credited to a shareholder's account, unless a
shareholder elects to receive either dividends or capital gains distributions
(or both) in cash. Shareholders may change their distribution option at any time
by notification to Investors Bank prior to the record date of any such dividend
or distribution.
It is intended that each Portfolio's assets, income sources and dividend and
capital gain distributions will be managed in such a way that each Fund, as a
shareholder in a Portfolio, will be able to satisfy the requirements of
Subchapter M of the Code to be treated as a "regulated investment company",
assuming that the Fund invested all of its investable assets in the Portfolio
and met its Fund specific qualification requirements, although no assurance can
be given in this regard. As a regulated investment company, each Fund would not
be liable for U.S. Federal income taxes on its net investment income and capital
gains to the extent such amounts are distributed to Shareholders in accordance
with the Code .
Item 7. Purchase of Securities Being Offered
Shares of each Fund are sold at the net asset value next computed after the
purchase order is received in good order by the Trust for shares received by
Investors Bank, the Fund's Custodian. The net asset value of each Fund's share
will be determined at 2:00 p.m. (ET) on each Business Day.
Shares of each Fund are sold on a private placement basis in accordance with
Regulation D under the 1933 Act, directly by the Fund without a distributor and
are not subject to a sales load or redemption fee; assets of the Institutional
Class of shares of each Fund are subject to a shareholder servicing fee of up to
0.25% of average daily net assets. The assets of the Placement Class of shares
of each Fund are subject to a shareholder servicing fee of up to 0.25% of
average daily net assets and a placement fee of up to 0.25% of average daily net
assets. The assets of the Premium Class of shares are not subject to a Rule
12b-1 or shareholder servicing fee. Shares of each Fund may be purchased by
Eligible Investors that have opened accounts with the Fund. The minimum initial
investment for Institutional Class shares and Placement Class shares is $10,000.
The minimum initial investment for Premium Class shares is $10 million.
Institutions may satisfy the minimum investment by aggregating their fiduciary
accounts. Subsequent purchases may be in any amount. Each Fund reserves the
right to waive the minimum initial investment. If an account balance falls below
$1 million for Premium Class and $10,000 for Institutional Class and Placement
Class due to redemption, a Fund may close the account. Investors will be
notified if the minimum balance is not being maintained and will be allowed 60
days to make additional investments before the account is closed.
Share purchase orders are effective on the date a Fund receives a completed
Subscription Agreement (and other required documents) and immediately available
funds are received by the Fund in the Fund's account with Investors Bank, the
Fund's transfer agent and dividend-disbursing agent. Purchases may be made only
by wire.
A-9
<PAGE>
A bank may impose a charge to execute a wire transfer. A purchaser must call
Investors Bank at 1-888-MERRMAC to notify the transfer agent of an incoming wire
transfer. A purchase order for shares received in proper form by 2:00 p.m.,
Eastern time, on a Business Day will be executed at the net asset value per
share next determined after receipt of the order and will receive the dividend
declared on the day of purchase, provided that Investors Bank receives the wire
by the close of the Federal Reserve wire system on the day the purchase order is
received.
Each Fund reserves the right to reject any purchase order. Purchase orders may
be refused if, for example, they are of a size that could disrupt management of
a Portfolio.
Item 8. Redemption or Repurchase
Shareholders may redeem all or a portion of their shares on any Business Day.
Redemptions will be made at the net asset value next determined after Investors
Bank has received a proper notice of redemption. If notice of redemption is
received prior to 2:00 p.m., Eastern time, on any Business Day, the redemption
will be effective on the date of receipt and the shareholder will not receive
the dividend for that day. Proceeds of the redemption will ordinarily be made by
wire on the same Business Day, but in any event within seven Business Days from
the date of receipt. Shareholders liquidating their account after 2:00 p.m.
Eastern time, on any Business Day will receive upon redemption all dividends
reinvested through the date preceding the effective date of redemption and
payment will ordinarily be made by wire on the next Business Day, but, in any
case, within seven Business Days from the date of receipt of a proper notice of
redemption.
A shareholder may elect to receive payment in the form of a wire or check. There
is no charge imposed by either Fund to redeem; however, in the case of
redemption by wire, a shareholder's bank may impose its own wire transfer fee
for receipt of the wire.
Item 9. Pending Legal Proceedings
None.
A-10
<PAGE>
Item 10. Cover Page
MERRIMAC FUNDS
PART B
APRIL 21, 1998
Merrimac Funds (the "Trust") is a registered open-end investment company
organized as a Delaware business trust offering beneficial interests in two
series: Merrimac Cash Fund (the "Cash Fund") and Merrimac Treasury Fund (the
"Treasury Fund"). Each Fund is diversified as defined in the Investment Company
Act of 1940 (the "1940 Act").
This Part B supplements information concerning the Trust, the Cash Fund and the
Treasury Fund contained in Part A of the Trust's Registration Statement dated
April 21, 1998. This Part B should be read in conjunction with Part A, which
may be obtained by telephoning or writing the Trust at 200 Clarendon Street,
Boston, Massachusetts 02116, telephone 1-888-MERRMAC.
B-1
<PAGE>
Item 11. Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
General Information and History B-4
Investment Objectives and Policies B-4
Management of the Funds and the Portfolios B-7
Control Persons and Principal Holders of Securities B-8
Investment Advisory and Other Services B-9
Brokerage Allocation and Other Practices B-11
Capital Stock and Other Securities B-12
Purchase, Redemption and Pricing of Securities
Being Offered B-13
Tax Status B-14
Underwriters B-15
Calculation of Performance Data B-15
Financial Statements B-16
</TABLE>
B-2
<PAGE>
Item 12. General Information and History
The Trust has no prior business history.
Item 13. Investment Objectives and Policies
Part A contains additional information about the investment objectives and
policies of the Portfolios. This Part B should be read only in conjunction with
Part A.
Investment Limitations
As noted in Part A, each Fund will invest all of its investable assets in its
corresponding series (the "Portfolio") of the Merrimac Master Portfolio (the
"Portfolio Trust"). The following investment limitations are fundamental
policies applicable to the Portfolios. These fundamental investment restrictions
may not be changed except by the affirmative vote of a majority of the
Portfolios' outstanding voting securities as defined in the 1940 Act. Under the
1940 Act, a "vote of the majority of the outstanding voting securities" means
the vote, at the annual or a special meeting of security holders duly called,
(i) of 67% or more of the voting securities present at the meeting if the
holders of more than 50% of the outstanding voting securities are present or
represented by proxy or (ii) of more than 50% of the outstanding voting
securities, whichever is less. Under these restrictions, a Portfolio may not:
(1) purchase any securities that would cause more than 25% of the
total assets of the Portfolio at the time of such purchase to be
invested in securities of one or more issuers conducting their
principal business activities in the same industry, provided that
there is no limitation with respect to U.S. Government Obligations
or to bank obligations or with respect to repurchase agreements
collateralized by any of such obligations;
(2) borrow money, except as a temporary measure for extraordinary
or emergency purposes or to facilitate redemptions, provided that
borrowing does not exceed an amount equal to 33 1/3% of the current
value of the Portfolio's assets taken at market value, less
liabilities, other than borrowings;
(3) purchase securities on margin (except for delayed delivery or
when-issued transactions or such short-term credits as are
necessary for the clearance of transactions);
(4) make loans to any person or firm; provided, however, that the
making of a loan shall not include entering into repurchase
agreements, and provided further that the Cash Portfolio may lend
its portfolio securities to broker-dealers or other institutional
investors if the aggregate value of all securities loaned does not
exceed 33 1/3% of the value of the Portfolio's total assets;
(5) engage in the business of underwriting the securities issued by
others, except that the Portfolio will not be deemed to be engaging
in the business of underwriting with respect to the purchase or
sale of securities subject to legal or contractual restrictions on
disposition;
(6) issue senior securities, except as permitted by its investment
objective, policies and restrictions, and except as permitted by
the 1940 Act; and
(7) purchase or sell real estate, commodities, or commodity
contracts unless acquired as a result of ownership of securities,
and provided further that the Portfolio may invest in securities
backed by real estate and in financial futures contracts and
options thereon.
The foregoing percentages will apply at the time of the purchase of a security.
The above limitations also apply to each Fund, with the exception that a Fund
may invest all of its investable assets without limitation in its respective
Portfolio.
B-3
<PAGE>
Investment Policies
See Item 4 in Part A for a description of the Portfolio's investment policies.
Description of Ratings
Description of Commercial Paper Ratings
The following descriptions of short-term debt ratings have been published by
Standard & Poor's Rating Service, a division of McGraw-Hill Companies ("S&P"),
Moody's Investors Service Inc.("Moody's"), Fitch's Investors Service ("Fitch"),
Duff and Phelps ("Duff"), and IBCA Limited ("IBCA"), respectively. These
obligations have an original maturity not exceeding thirteen months, unless
explicitly noted.
An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt considered short-term in the relevant market. Commercial
paper issues rated A-1 by S&P reflect a very strong degree of safety of timely
payment. Commercial paper issues rated A-2 reflect a strong degree of safety of
timely payment but not as strong as for issues designated A-1.
Commercial paper issues rated Prime-1 by Moody's are judged by Moody's to be of
the "highest" quality on the basis of relative repayment capacity with a
superior ability for repayment of senior short-term debt obligations. Commercial
paper issues rated Prime-2 are judged by Moody's to be of the "second highest"
quality with a strong ability for repayment of senior short-term debt
obligations.
The rating Fitch-1 (Highest Grade) is the highest commercial rating assigned by
Fitch. Paper rated Fitch-1 is regarded as having the strongest degree of
assurance for timely payment.
Commercial paper issues rated Fitch-2 are regarded as having only a slightly
less assurance of timely payment than those issues rated Fitch-1.
The rating Duff-1 is the highest commercial paper rating assigned by Duff. Paper
rated Duff-1 is regarded as having very high certainty of timely payment with
excellent liquidity factors that are supported by ample asset protection. Risk
factors are minor. The rating Duff-2 is regarded as having good certainty of
timely payment with sound liquidity factors supported by good asset protection.
Risk factors are small.
The designation A1 by IBCA indicates that the obligation is supported by a very
strong capacity for timely repayment. The designation A2 by IBCA indicates that
the obligation is supported by a strong capacity for timely repayment.
Description of Long-Term Debt Ratings
The following is a description of Moody's debt instrument ratings:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than the Aaa securities.
Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification. The modifier 1 indicates that the obligation ranks in the higher
end of its generic rating category; the modifier 2 indicates a midrange ranking;
and the modifier 3 indicates a ranking in the lower end of that generic rating
category.
B-4
<PAGE>
The following is a description of S&P's debt instrument ratings:
S&P's ratings are based, in varying degrees, on the following considerations:
(i) the likelihood of default -- capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance with the
terms of the obligations; (ii) the nature of and provisions of the obligation;
and (iii) the protection afforded by, and relative position of, the obligation
in the event of bankruptcy, reorganization, or other arrangement under the laws
of bankruptcy and other laws affecting creditors' rights.
AAA -- Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA -- Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
Plus (+) or minus (-): The ratings may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.
Item 14. Management of the Funds and the Portfolios
The business and affairs of each Fund are managed under the direction of the
Board of Trustees of the Trust. The business and affairs of each Portfolio are
managed under the direction of the Board of Trustees of the Portfolio Trust.
Each Board of Trustees approves all significant agreements between the Trust or
Portfolio Trust (on behalf of each Fund or Portfolio) and the persons and
companies that furnish services to the particular Fund or Portfolio, including
(when applicable) agreements with its investment adviser, administrator, fund
accountant, custodian and transfer agent. The day-to-day operations of each Fund
are delegated to its corresponding Portfolio's investment manager and such
Fund's administrator.
The following are the names, addresses and dates of birth of the Trustees and
officers of the Trust and the Portfolio Trust, their positions with the Trust
and the Portfolio Trust, and their present and principal occupations during the
past five years. An asterisk (*) indicates that a Trustee is an "interested
person" of the Trust and the Portfolio Trust, as defined in the 1940 Act.
Kevin J. Sheehan, Trustee* (06/22/51), Director since 1990, President since
1992, Chairman and Chief Executive Officer since June 1995, Investors Bank &
Trust Company. Chairman and Chief Executive Officer since June 1995, Investors
Financial Services Corp.
Francis J. Gaul, Jr., Trustee (09/25/43), Adviser, Triad Mutual Fund Investors
Corp. (Registered Investment Adviser) July 1996 - present; Vice President &
Resident Manager, Goldman Sachs & Co. (Investment Banking & Institutional Sales)
November 1987 - January 1996.
Edward F. Hines, Jr., Trustee (09/05/45), Partner 1977 - present, Managing
Partner 1983-87, Choate, Hall & Stewart.
Thomas E. Sinton, Trustee (08/26/32), Retired; Managing Director, Corporate
Accounting Policy, April 1993 - October 1996 and Consultant, November 1992 -
March 1993, Bankers Trust Company; General Partner, 1967 - 1992, Ernst & Young
LLP.
Sean P. Brennan, President (06/27/61), Director, Marketing, Investors Bank &
Trust Company, 1996 to present; Executive Vice President, Aspen Capital
Management, 1995-96; Director of International Mutual Funds, CS First Boston,
1993-94; Vice President of Sales, Concord Financial Corp. 1989-93.
Timothy J. Coyne, Vice President, (05/09/67); Director, Corporate Marketing,
Investors Bank & Trust Company, 1997-present; Vice President, Corporate Sales,
Dreyfus Corporation, 1995-97; Assistant Vice President, Concord Financial Corp.
1992-95.
B-5
<PAGE>
Paul J. Jasinski, Treasurer and Chief Financial Officer (02/17/47), Managing
Director, Investors Bank & Trust Company, 1990 - present.
Christopher J. Quinn, Assistant Vice President, (05/06/66), Manager, Advisory
Client Services, Investors Bank & Trust Company, 1996-present; Service
Specialist - Mutual Funds, Fleet Bank, 1994-96; Executive Sales Assistant,
Concord Financial Corp., 1993-94.
Susan C. Mosher, Secretary (01/29/55), Director, Mutual Fund Administration -
Legal Administration, Investors Bank & Trust Company, 1995 - present; Associate
Counsel, 440 Financial Group of Worcester, Inc., 1993 - 95; Associate and
Partner, Gallagher, Callahan & Gartrell, P.A., 1986 - 1992.
Andrew S. Josef, Assistant Secretary, (02/25/64), Director, Mutual Fund
Administration - Legal Administration, Investors Bank & Trust Company,
1997-present; Senior Associate, Sullivan & Worcester LLP, 1995-97; Associate,
Goodwin, Proctor & Hoar, 1993-95; Associate, Simpson Thacher & Bartlett,
1989-93.
Raymond O'Neill, Assistant Treasurer and Assistant Secretary (Portfolio Trust
only) (04/12/62), Managing Director, Dublin, IBT Trust & Custodial Services
(Ireland) LMTD 1994 - present; Vice President, Atlantic Corporate Management
Limited, 1991-1994.
Compensation
The following table describes the compensation received by the Trustees for the
fiscal year ended December 31, 1997 (with the exception of Mr. Sheehan, who
receives no remuneration from the Funds or the Portfolios) for the fiscal year
ended December 31, 1997.
<TABLE>
<CAPTION>
Name of Aggregate Pension or Estimated Annual Total
Person, Compensa- Retirement Benefits Upon Compensation
Position tion From Benefits Accrued Retirement From Registrant
- -------- Registrant As Part of Portfolio ---------- and Fund
---------- Expenses Complex* Paid
-------- to Trustees
-----------
<S> <C> <C> <C> <C>
Francis J. Gaul, Jr., $5,000 None None $25,000
Trustee
Edward F. Hines, Jr., $5,000 None None $25,000
Trustee
Thomas E. Sinton, $5,000 None None $25,000
Trustee
</TABLE>
* The term "Fund Complex" refers to the series of the Trust, the series of the
Portfolio Trust and Merrimac Global Cash Fund (a Cayman company established in
1997).
Item 15. Control Persons and Principal Holders of Securities
As of April 1, 1998, Capital Network Services, One Bush Street, 11th Floor, San
Francisco, California held of record or beneficially owned 5% or more of the
shares of the Institutional Class of the Cash Fund.
As of April 1, 1998, BNY As Agent For Its Securities Lending Customers and
Investors Bank As Security Lending Agent FBO, each beneficially owned more than
25% of the voting securities of the Premium Class of the Cash Fund and therefore
each controls, as such term is defined under the 1940 Act, the Premium Class of
the Cash Fund. As of April 1, 1998, Saturn & Co, C/O Investors Bank,
beneficially owned more than 25% of the voting securities of the
B-6
<PAGE>
Institutional Class of the Cash Fund and the Institutional Class and the Premium
Class of the Treasury Fund and therefore controls, as such term is defined under
the 1940 Act, the Institutional Class of the Cash Fund and the Institutional
Class and the Premium Class of the Treasury Fund.
The Trustees and officers of the Trust and the Portfolio Trust, as a group, own
less than 1% of the Funds' and the Portfolios' beneficial interests,
respectively.
Item 16. Investment Advisory and Other Services
Most of the Funds' or the Portfolios' day-to-day operations are performed by
separate business organizations under contractual agreement with the Portfolios
or the Portfolio Trust, as the case may be. The principal service providers are:
<TABLE>
<S> <C>
Investment Adviser (Portfolios) Investors Bank & Trust Company
Investment Sub-Adviser (Cash Portfolio) The Bank of New York
Investment Sub-Adviser (Treasury Portfolio) Aeltus Investment Management, Inc.
Administrator (Funds) Investors Bank & Trust Company
Administrator (Portfolios) IBT Trust & Custodial Services (Ireland)
LMTD
Transfer Agent (Funds) Investors Bank & Trust Company
Transfer Agent (Portfolios) IBT Fund Services (Canada) Inc.
Custodian Investors Bank & Trust Company
Independent Auditors Ernst & Young LLP
</TABLE>
Adviser
Each Portfolio and Investors Bank & Trust Company ("Investors Bank") have
entered into an investment adviser agreement (the "Adviser Agreement"). Under
the Adviser Agreement, Investors Bank continuously reviews and supervises the
Portfolio's investment program. Investors Bank discharges its responsibilities
subject to the supervision of, and policies established by, the Trustees of the
Portfolio Trust. Investors Bank was organized in 1969 as a
Massachusetts-chartered trust company and provides domestic and global custody,
multi currency accounting, institutional transfer agency, performance
measurement, foreign exchange, securities lending and mutual fund administration
services to a variety of financial asset managers, including mutual fund
complexes, investment advisers, banks and insurance companies. Investors Bank is
a wholly-owned subsidiary of Investors Financial Services Corp., a publicly-held
corporation and holding company registered under the Bank Holding Company Act of
1956. The business address of Investors Bank is 200 Clarendon Street, Boston,
Massachusetts 02116. Investors Bank began acting as an investment adviser at the
commencement of operations of the Cash Portfolio (November 21, 1996) but
otherwise has no previous experience in providing investment advisory services.
Sub-Advisers
The Bank of New York ("BNY") serves as the Cash Portfolio's sub-adviser pursuant
to its Investment Sub-Adviser Agreement (the "BNY Sub-Adviser Agreement") with
Investors Bank. Under the BNY Sub-Adviser Agreement, BNY manages the Portfolio,
selects investments and places all orders for the purchase and sale of the
Portfolio's securities, subject to the general supervision of the Trust's Board
of Trustees and Investors Bank and in accordance with the Portfolio's investment
objective, policies and restrictions. BNY is a wholly owned subsidiary of The
Bank of New York Company, Inc. BNY has discretionary investment authority for
the short-term money management of accounts exceeding $50 billion. The business
address of BNY is 48 Wall Street, New York, New York 10286. For its services to
the Portfolio, BNY is paid by Investors Bank a monthly fee computed at an annual
rate of .08% of the average daily net assets of the Cash Portfolio.
Aeltus Investment Management, Inc. ("Aeltus") serves as the Treasury Portfolio's
sub-adviser pursuant to its Investment Sub-Adviser Agreement (the "Aeltus
Sub-Adviser Agreement") with Investors Bank. Under the Aeltus Sub-Adviser
Agreement, Aeltus manages the Portfolio, selects investments and places all
orders for the purchase and sale of the Portfolio's securities, subject to the
general supervision of the Trust's Board of Trustees and Investors Bank and in
accordance with the Portfolio's investment objective, policies and restrictions.
Aeltus is an indirect wholly owned subsidiary of Aetna Inc. As of December 31,
1997, Aeltus managed approximately $ 44.6 billion in assets for various
individual and institutional accounts, including registered investment
companies. The business address of Aeltus is 242
B-7
<PAGE>
Trumbull Street, Hartford, Connecticut 06103-1205. For its services to the
Treasury Portfolio, Aeltus is paid by Investors Bank a monthly fee computed at
an annual rate of .08% of the average daily net assets of the Treasury
Portfolio.
Administrator
Each Portfolio and each Fund employs IBT Trust & Custodial Services (Ireland)
LMTD ("IBT Ireland"), a subsidiary of Investors Bank, and Investors Bank,
respectively, as Administrators under Administration Agreements (the
"Administration Agreements") to provide certain administrative services. The
services provided by IBT Ireland and Investors Bank include certain accounting,
clerical and bookkeeping services, Blue Sky (for the Funds only), corporate
secretarial services and assistance in the preparation and filing of tax returns
and reports to shareholders and the Securities and Exchange Commission.
Investors Bank also assists the Funds in preparing state "blue sky" filings and
otherwise assists the Funds in complying with state securities law requirements.
Transfer Agent
Investors Bank acts as transfer agent for each Fund and IBT Fund Services
(Canada) Inc. ("IBT Canada"), a subsidiary of Investors Bank, acts as transfer
agent for each Portfolio pursuant to Transfer Agency Agreements. As transfer
agent, Investors Bank is responsible for the issuance, transfer and redemption
of shares and the establishment and maintenance of shareholders accounts for
each Fund, and IBT Canada is responsible for maintaining records of shareholder
interests for each Portfolio.
Custodian and Fund Accountant
Investors Bank acts as custodian for each Fund and each Portfolio and IBT Canada
acts as fund accountant for the Portfolios. As custodian, Investors Bank holds
cash, securities and other assets of each Fund and each Portfolio as required by
the 1940 Act. As fund accountant for each Fund and each Portfolio, IBT Canada
performs certain accounting, clerical and bookkeeping services, and the daily
calculation of net asset value for each Portfolio and Fund.
For its services under the Adviser Agreement, Administration Agreement, Transfer
Agency Agreement, Custodian Agreement and the Fund Accounting Agreement, each
Portfolio pays Investors Bank an aggregate fee which is calculated daily and
paid monthly, at an annual rate of 0.17% of the average daily net assets of the
particular Portfolio. For its services under the Administration Agreement, the
Transfer Agency Agreement, the Custodian Agreement and the Fund Accounting
Agreement, each Fund pays Investors Bank an aggregate fee which is calculated
daily and paid monthly, at an annual rate of .01% of the average daily net
assets of the Fund. Investors Bank is solely responsible for the payment of all
fees to BNY, Aeltus and to its subsidiaries.
For the last two fiscal periods ended December 31, 1997, the fee paid to
Investors Bank by the Trust (on behalf of the Cash Fund) for all services
rendered by Investors Bank to the Cash Fund was $ 6,416 and $133,615,
respectively.
For the fiscal period ended December 31, 1997, the fee paid to Investors Bank by
the Trust (on behalf of the Treasury Fund) for all services rendered by
Investors Bank to the Treasury Fund was $4,640.
Independent Auditors
For the period ended December 31, 1996, the Boston, Massachusetts office of
Ernst & Young LLP ("Ernst & Young LLP") served as independent auditors to the
Trust and the Portfolio Trust. For the fiscal year ended December 31, 1997, the
Grand Cayman office of Ernst & Young ("Ernst & Young") served as independent
auditors to the Trust and the Portfolio Trust. Ernst & Young LLP and Ernst &
Young are responsible for performing, for the respective periods noted above,
annual audits of the financial statements and financial highlights in accordance
with generally accepted accounting standards, a review of the Federal tax
returns. Additionally, pursuant to Rule 17f-2 of the 1940 Act, three security
counts are performed for the Portfolio Trust.
B-8
<PAGE>
The mailing address of Ernst & Young LLP is 200 Clarendon Street, Boston,
Massachusetts 02116. The mailing address of Ernst & Young is One Capital Place,
Shedden Road, Georgetown, Grand Cayman, Cayman Islands, British West Indies.
Item 17. Brokerage Allocation and Other Practices
Each Portfolio's purchases and sales of portfolio securities usually are
principal transactions. Portfolio securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities. There
usually are no brokerage commissions paid for such purchases. The Portfolios do
not anticipate paying brokerage commissions. Any transaction for which a
Portfolio pays a brokerage commission will be effected at the best price and
execution available. Subject to this requirement, securities may be bought from
or sold to brokers or dealers who have furnished statistical, research and other
information or services to Investors Bank, BNY or Aeltus. Purchases from
underwriters of portfolio securities include a commission or concession paid by
the issuer to the underwriter, and purchases from dealers serving as market
makers include the spread between the bid and asked price.
Allocation of transactions, including their frequency, to various dealers is
determined by BNY and Aeltus in their best judgment and in a manner deemed to be
in the best interest of shareholders of the particular Portfolio rather than by
any formula. The primary consideration is prompt execution of orders in an
effective manner at the most favorable price.
Investment decisions for each Portfolio will be made independently from those
for any other account that is or may in the future become managed by BNY or
Aeltus. If, however, a Portfolio and other accounts managed by BNY or Aeltus are
contemporaneously engaged in the purchase or sale of the same security, the
transactions may be averaged as to price and allocated equitably to each
account. In some cases, this policy might adversely affect the price paid or
received by a Portfolio or the size of the position obtainable for the
Portfolio. In addition, when purchases or sales of the same security for the
Portfolio and for other accounts managed by BNY or Aeltus occur
contemporaneously, the purchase or sale orders may be aggregated in order to
obtain any price advantages available to large denomination purchases or sales.
For the fiscal year ended December 31, 1997, the Cash Portfolio and the Treasury
Portfolio paid no brokerage commissions.
No transactions are executed with BNY, Aeltus or Investors Bank, or with any
affiliate of either entity, acting either as principal or as broker.
Item 18. Capital Stock and Other Securities
The Trust was organized as a Delaware business trust on October 30, 1996 and
operates under a Master Trust Agreement, dated October 30, 1996 and amended
February 6, 1997 and November 5, 1997. The Trust is authorized to issue
beneficial interests only to accredited investors, as such term is defined under
Rule 501 of the Securities Act of 1933. The beneficial interests of each series
shall hereinafter be referred to as "shares" and the holders of such interests
shall hereinafter be referred to as "shareholders." The Trustees shall have the
authority to establish series, each of which shall be a separate subtrust and
the shares of which shall be separate and distinct from the shares of any other
series and shall evidence ownership interest in a different investment portfolio
(hereinafter referred to as a "Series"). The shares in each Series may have such
rights as the Trustees may establish from time to time, including with respect
to price, terms and manner of purchase and redemption, dividends and other
distributions, rights on liquidation, sinking or purchase fund provisions,
conversion rights and conditions under which the shareholders of the several
Series shall have separate voting rights or no voting rights.
As of the date of this Part B, the Trust is comprised of the following Series,
each of which commenced operations on the date set forth opposite the Fund's
name:
<TABLE>
<S> <C>
Merrimac Cash Fund November 12, 1996
Merrimac Treasury Fund April 2, 1997
</TABLE>
B-9
<PAGE>
The Trust is authorized, without shareholder approval, to divide shares of any
Series into two or more classes, each class having such different dividend,
liquidation, voting and other rights as the Trustees may determine. Currently,
the Funds offer three classes of shares, the Premium Class, the Institutional
Class and the Placement Class, which are described in Part A.
The Trustees may, without any vote of the shareholders, amend or otherwise
supplement the Master Trust Agreement by an instrument in writing executed by a
majority of the Trustees, provided that shareholders shall have the right to
vote with respect to the election or removal of Trustees, any investment
advisory contract, any dissolution of a Series, certain amendments to this
Master Trust Agreement, any merger, consolidation or sale of assets, such
additional matters relating to the Trust as may be required by the 1940 Act or
otherwise required or authorized by law or by any registration statement of the
Trust filed with the SEC, or as the Trustees may consider desirable.
Under Delaware law and the Master Trust Agreement, shareholders of a Series may
not be held liable for the obligations of a Series, although there can be no
assurance that such provisions of law will be respected in all jurisdictions. If
any present or past shareholder of any Series of the Trust is charged or held
personally liable for any obligation or liability of the Trust solely by reason
of being or having been a shareholder and not because of such shareholder's acts
or omissions or for some other reason, the Series, upon request, shall assume
the defense against such charge and satisfy any judgment thereon, and the
shareholder or former shareholder shall be entitled out of the assets of such
Series, to be held harmless from and indemnified against all loss and expense
arising from such liability. Thus, the risk to shareholders of incurring
financial loss beyond their investment is limited to circumstances in which a
jurisdiction does not respect the limitation of liability provisions of Delaware
law and the Master Trust Agreement and the Series itself is unable to meet its
obligations.
The Trust will not have an Annual Meeting of Shareholders. Special Meetings may
be convened: (i) by the Board of Trustees; (ii) upon written request to the
Board of Trustees by the holders of at least 10% of the outstanding shares of
the Trust (if such matter relates to the Trust as a whole) or a Fund (if such
matter relates only to such Fund); or (iii) upon the Board of Trustee's failure
to honor the shareholder's request described above, by shareholders of at least
10% of the outstanding shares giving notice of the Special Meeting to the
shareholders.
Item 19. Purchase, Redemption and Pricing of Securities Being Offered
Manner In Which Shares Are Offered
Shares of each Fund and each Portfolio are issued solely in private placement
transactions which do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. Investments in a Portfolio may only be made by
"accredited investors" within the meaning of Regulation D under the 1933 Act.
Fund Shares are sold directly by the Trust without a distributor and are not
subject to a sales load or redemption fee; assets of the Premium Class are not
subject to a Rule 12b-1 or shareholder servicing fee while assets of the
Institutional Class are subject to shareholder servicing fee of up to 0.25% of
average daily net assets and the assets of the Placement Class are subject to a
shareholder servicing fee of up to 0.25% of average daily net assets and a
placement fee of up to 0.25% of average daily net assets. Portfolio Shares are
sold directly by the Portfolio Trust without a distributor and are not subject
to a sales load or redemption fee; assets of the Portfolio Trust are not subject
to a Rule 12b-1 or shareholder servicing fee.
Valuation of Shares
The net asset value per share of each Fund is determined each day that the New
York Stock Exchange ("NYSE") is open (a "Business Day"). This determination is
made once each day as of 2:00 p.m., Eastern time.
The assets in each Fund are valued based upon the amortized cost method which
involves valuing a security at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium. Although the amortized cost
method provides consistency in valuation, it may result in periods during which
the stated value of a security is higher or lower than the price the Portfolio
would receive if the security were sold. This method of valuation is used in
order to stabilize the net asset value of shares of a Fund at $1.00; however,
there can be no assurance that a Fund's net asset value will always remain at
$1.00 per share.
B-10
<PAGE>
The net asset value per share of the Fund is determined by dividing the value of
the Fund's net assets (i.e., its value of its investment in the Portfolio and
other assets, including accrued but undistributed net investment income less
liabilities) by the total number of the shares of the Fund outstanding. As a
result of the Portfolio's use of the amortized cost method, it is anticipated
that the Fund's net asset value per share will be stabilized at $1.00; however
there can be no assurance that the Fund's net asset value per share will always
remain at $1.00.
Item 20. Tax Status
Each Fund intends to annually 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"). If it so qualifies, a Fund will not be subject to U.S.
federal income taxes on its net investment income (i.e., its investment company
taxable income, as that term is defined in the Code, determined without regard
to the deduction for dividends paid) and net long-term capital gain (the excess
of net realized long-term capital gain over net realized short-term capital
loss), if any, that it distributes to its shareholders in each taxable year,
provided that it distributes to its shareholders at least 90% of its net
investment income for such taxable year. If in any year a Fund fails to qualify
as a regulated investment company, the Fund would incur regular corporate
federal income tax on its taxable income for that year and be subject to certain
additional distribution requirements upon requalification.
Each Fund is subject to a nondeductible 4% excise tax calculated as a percentage
of certain undistributed amounts of ordinary income and capital gain net income.
To the extent possible, each Fund intends to make sufficient distributions to
avoid the application of both the corporate income and excise taxes.
All dividends and distributions to shareholders of each Fund of investment
company taxable income will be taxable to shareholders whether paid in cash or
reinvested in additional shares. For federal income tax purposes, distributions
of net investment income, which includes the excess of a Fund's net realized
short-term capital gains over net realized long-term capital losses, are taxable
to shareholders as ordinary income.
Distributions of net realized long-term capital gains designated by a Fund as
"capital gain dividends" will be taxable as long-term capital gains, whether
paid in cash or additional shares, regardless of how long the shares have been
held by such shareholders, and such distributions will not be eligible for the
dividends received deduction. Generally, no portion of a Fund's dividends will
qualify for the dividends received deduction available to corporations.
Long-term capital gains currently are taxed at the same federal income tax rates
as ordinary income and short-term capital gains.
Gain or loss, if any, recognized on the sale or other disposition of shares of a
Fund will be taxed as capital gain or loss if the shares are capital assets in
the shareholder's hands. Generally, a shareholder's gain or loss will be a long
term gain or loss if the shares have been held for more than one year. If a
shareholder sells or otherwise disposes of shares of a Fund before holding them
for more than six months, any loss on the sale or other disposition of such
shares shall be treated as a long-term capital loss to the extent of any capital
gain dividends received by the shareholder with respect to such shares. A loss
realized on a sale or exchange of shares may be disallowed if other shares are
acquired within a 61-day period beginning 30 days before and ending 30 days
after the date that the shares are sold.
The above discussion does not address the special tax rules applicable to
certain classes of investors, such as tax-exempt entities, insurance companies,
and financial institutions, or the state, local, or foreign tax laws that may be
applicable to certain investors. Investors should consult their own tax advisers
with respect to the special tax rules that may apply in their particular
situations, as well as the state, local, or foreign tax consequences to them of
investing in a Fund.
Item 21. Underwriters
Not Applicable.
B-11
<PAGE>
Item 22. Calculation of Performance Data
The yield for each Fund is calculated daily based upon the seven days ending on
the date of calculation ("base period"). The yield is computed by determining
the net change, exclusive of capital changes and income other than investment
income, in the value of a hypothetical pre-existing account having a balance of
one share at the beginning of the base period, subtracting a hypothetical charge
reflecting deductions from shareholder accounts and dividing the difference by
the value of the account at the beginning of the base period to obtain the base
period return, and then multiplying the base period return by (365/7) with the
resulting yield figure carried to the nearest hundredth of one percent. An
effective yield is computed by determining the net change, exclusive of capital
changes and income other than investment income, in the value of a hypothetical
pre-existing account having a balance of one share at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from shareholder
accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return, and then
compounding the base period return by adding 1, raising the sum to a power equal
to 365 divided by 7, and subtracting 1 from the result, according to the
following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN +1) [SUP{365/7}]]-1
The following are the current yields and effective yields for the Cash Fund and
the Treasury Fund for the seven-day period ended December 31, 1997:
<TABLE>
<CAPTION>
Cash Fund Treasury Fund
<S> <C>
Premium Class Yield 5.66% Premium Class Yield 4.99%
Premium Class Effective Yield 5.82% Premium Class Effective Yield 5.11%
Institutional Class Yield 5.41% Institutional Class Yield 4.74%
Institutional Class Effective Yield 5.55% Institutional Class Effective Yield 4.85%
</TABLE>
The Placement Class has not yet commenced operations.
The yields quoted are not indicative of future results. Yields of a Fund will
depend on the type, quality, maturity, and interest rate of money market
instruments held by the respective Portfolio in which such Fund invests.
Item 23. Financial Statements
The financial statements contained in the Annual Report of the Cash Fund and the
Treasury Fund (Accession Number 0001029869-98-000355) for the fiscal year ended
December 31, 1997 (and filed via the SEC's EDGAR electronic filing system on
March 6, 1998) are incorporated by reference into this Part B.
B-12
<PAGE>
PART C
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Financial Statements included in PART A of this Registration Statement:
None
(2) Financial Statements included in PART B of this Registration Statement:
Portfolio of Investments at December 31, 1997*
Statements of Assets and Liabilities at December 31, 1997*
Statements of Operations of the Cash Fund for the year ended December 31,
1997 and of the Treasury Fund for the period April 2, 1997 (Commencement of
Operations) to December 31, 1997*
Statements of Changes in Net Assets of the Cash Fund for the period November
12, 1996 (Commencement of Operations) to December 31, 1996 and for the year
ended December 31, 1997 and of the Treasury Fund for the period April 2,
1997 (Commencement of Operations) to December 31, 1997*
Financial Highlights of the Cash Fund for the period from November 12, 1996
(commencement of operations) to December 31, 1996 and the year ended
December 31, 1997*
Financial Highlights of the Treasury Fund for the period from April 2, 1997
(commencement of operations) to December 31, 1997*
Supplementary Data*
Notes to Financial Statements - December 31, 1997*
Independent Auditors' Report - February 13, 1998*
*Incorporated herein by reference to the Annual Report of the Registrant for
the fiscal year ended December 31, 1997, filed with the Securities and
Exchange Commission on the EDGAR system on March 6, 1998 (Accession Number
0001029869-98-000355)
(b) Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
1(a) Master Trust Agreement, effective as of October 30,
1996(1)
1(b) Amendment No. 1 to the Master Trust Agreement(1)
1(c) Amendment No. 2 to the Master Trust Agreement
2 By-Laws(1)
3 None
<PAGE>
4 None
5(a) Investment Adviser Agreement between Merrimac Master
Portfolio and Investors Bank & Trust Company
("Investors Bank")(1)
5(b) Investment Sub-Adviser Agreement between Investors
Bank and The Bank of New York(1)
5(c) Investment Sub-Adviser Agreement between Investors
Bank and Aeltus Investment Management, Inc.(1)
6 *
7 Not Applicable
8 Custodian Agreement between Registrant and Investors
Bank(1)
9(a) Administration Agreement between Registrant and
Investors Bank(1)
9(b) Transfer Agency Agreement between Registrant and
Investors Bank(1)
10 *
11 *
12 *
13 None
14 Not Applicable
15(a) Shareholder Servicing Plan (Institutional Class(1)
15(b) Shareholder Servicing Plan (Placement Class)
15(c) Shareholder Servicing Agreement (Institutional
Class)(1)
15(d) Shareholder Servicing Agreement (Placement Class)
15(e) Plan of Distribution (Placement Class)
15(f) Private Placement Agent Agreement (Placement Class)
16 Not Applicable
17 Financial Data Schedules
18(a) Multiple Class Expense Allocation Plan (Rule 18f-3)(1)
18(b) First Amended and Restated Multiple Class Expense
Allocation Plan
</TABLE>
<PAGE>
(1) Incorporated by reference to the Registrant's Registration Statement on Form
N-1A filed April 1, 1997 (Accession No. 0001029869-97-000412).
*Pursuant to General Instructions F3 of Form N-1A, a registration statement
filed under only the Investment Company Act of 1940 shall consist of the facing
sheet of the Form, responses to all items of Part A and B except Items 1, 2, 3,
and 5A of Part A thereof, responses to all items of Part C except Items
24(b)(6), 24(b)(10) and 24(b)(11) , required signatures and all other documents
that are required or which the Registrant may file as part of the registration
statement.
Item 25. Persons Controlled by or Under Common Control with Registrant
As of the close of business on April 1, 1998, the following are owners of 25% or
more of the value of the outstanding shares of the Merrimac Cash Fund and the
Merrimac Treasury Fund.
<TABLE>
<CAPTION>
Merrimac Cash Fund (Premium Class)
- ----------------------------------
Record Owner Percent Ownership
------------ -----------------
<S> <C>
The Bank of New York 64.99%
As Agent for its Securities Lending
Customers
101 Barclay Street
New York, NY 10286
Investors Bank & Trust Company 34.44%
As Security Lending Agent FBO
200 Clarendon Street
Boston, MA 02116
Merrimac Cash Fund (Institutional Class)
----------------------------------------
Record Owner Percent Ownership
------------ -----------------
Saturn & Co 92.13%
C/O Investors Bank & Trust Company
P.O. Box 9130
Boston, MA 02117--9130
Merrimac Treasury Fund (Premium Class)
- --------------------------------------
Record Owner Percent Ownership
------------ -----------------
Saturn & Co. 100.00%
C/O Investors Bank & Trust Company
P.O. Box 9130
Boston, MA 02117-9130
<PAGE>
Merrimac Treasury Fund (Institutional Class)
- --------------------------------------------
Record Owner Percent Ownership
------------ -----------------
Saturn & Co. 100.00%
C/O Investors Bank & Trust Company
P.O. Box 9130
Boston, MA 02117-9130
</TABLE>
Since, as of April 1, 1998, the Merrimac Cash Fund is the owner of greater than
25% of the interests in the Merrimac Cash Portfolio, a series of the Merrimac
Master Portfolio, it controls the Merrimac Cash Portfolio and the shareholders
listed above may also be deemed to control the Merrimac Cash Portfolio.
Item 26. Number of Holders of Securities
As of April 1, 1998, the record holders of each class of Registrant's securities
were as follows:
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>
Merrimac Cash Fund (Premium Class) 4
Merrimac Cash Fund (Institutional Class) 3
Merrimac Cash Fund (Placement Class) 0
Merrimac Treasury Fund (Premium Class) 1
Merrimac Treasury Fund (Institutional Class) 1
Merrimac Treasury Fund (Placement Class) 0
</TABLE>
Item 27. Indemnification
Under Article V of the Registrant's Declaration of Trust, the Trust shall
indemnify, to the fullest extent permitted by law (including the 1940 Act), each
Trustee, officer or employee of the Trust (including any Person who serves at
the Trust's request as a director, officer or trustee of another organization in
which the Trust has any interest as a shareholder, creditor or otherwise)
against all liabilities and expenses (including amounts paid in satisfaction of
judgments, in compromise, as fines and penalties, and as counsel fees)
reasonably incurred by such Person in connection with the defense or disposition
of any action, suit or other proceeding, whether civil or criminal, in which
such Person may be involved or with which such Person may be threatened, while
in office or thereafter, by reason of such Person being or having been such a
Trustee, officer, employee, except with respect to any matter as to which such
Person shall have been adjudicated to have acted with bad faith, willful
misfeasance, gross negligence or reckless disregard of such Person's duties,
such liabilities and expenses being liabilities only of the Portfolio Series out
of which such claim for indemnification arises; provided, however, that as to
any matter disposed of by a compromise payment by such Person, pursuant to a
consent decree or otherwise, no indemnification either for such payment of for
any other expenses shall be provided unless there has been a determination that
such Person did not engage in willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of such Person's
office (i) by the court or other body approving the settlement or other
disposition; or (ii) based upon a review of readily available facts (as opposed
to a full trial-type inquiry), by written opinion from independent legal counsel
approved by the Trustees; or (iii) by a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the matter, based upon a review
of readily available facts (as opposed to a full trial-type inquiry).
Item 28. Business and Other Connections of Investment Adviser
Investors Bank serves as investment adviser to the Merrimac Cash Portfolio (in
which the Merrimac Cash Fund has invested all of its assets) and the Merrimac
Treasury Portfolio (in which the Merrimac Treasury Fund has invested all of its
assets). Investors Bank was organized in 1969 as a Massachusetts-chartered trust
company and provides domestic and global custody, multi-currency accounting,
institutional transfer agency, performance measurement, foreign exchange,
securities lending and mutual fund administration services to a variety of
financial asset managers, including
<PAGE>
mutual fund complexes, investment advisers, banks and insurance companies. The
business, profession, vocation or employment of a substantial nature that each
director or officer of Investors Bank is or has been, at any time during the
past two fiscal years, engaged in for his own account or in the capacity of
director, officer, employee, partner or trustee, is as follows:
<TABLE>
<CAPTION>
Business and Other
Positions Within
Name Position With Adviser Last Two Years
- ---- --------------------- --------------
<S> <C> <C>
Kevin J. Sheehan President & Chief Executive Officer Chief Executive Officer since
June 1995;
President since June 1992
Michael F. Rogers Executive Vice President since September 1993
Karen C. Keenan Senior Vice President, Chief Treasurer since September
Financial Officer and Treasurer 1997; Senior Vice President
and Chief Financial Officer
since June 1995
Edmund J. Maroney Senior Vice President, Technology since July 1991
Robert D. Mancuso Senior Vice President, Marketing since September 1993
Client Services
David F. Flynn Senior Vice President-Lending since April 1992
John E. Henry General Counsel & Secretary since January 1997; General
Counsel & Assistant Secretary
since February 1996
James M. Oates Director Chairman of IBEX Capital
Markets, LLC since 1996;
Managing Director of The
Wydown Group 1994-1996
Thomas P. McDermott Director Managing Director of TPM
Associates since 1994
Frank B. Condon Director Chief Executive Officer &
Chairman of The Woodstock
Corporation from 1993 to
April 1997
Phyllis S. Swersky Director President of The Meltech
Group since 1995; President &
Chief Executive Officer of
The NET Collaborative from
1996 to 1997.
Donald G. Friedl Director President of All Seasons
from 1986 until January 1997
<PAGE>
Robert B. Fraser Director Retired, Formerly, Chairman
of Goodwin,
Procter & Hoar,
L.L.P.
</TABLE>
Item 29. Principal Underwriters
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 locations set forth below. (The Merrimac
Cash Fund and the Merrimac Treasury Fund are referred to as the "Funds" and the
Merrimac Cash Portfolio and the Merrimac Treasury Portfolio are referred to as
the Portfolios.)
Investors Bank & Trust Company
200 Clarendon Street
Boston, MA 02116
(Investment Adviser to the Portfolios; Administrator,
and Transfer Agent for the Funds; Custodian for the Funds and the Portfolios)
The Bank of New York
48 Wall Street
New York, NY 10286
(Investment Sub-Adviser to the Merrimac Cash Portfolio)
Aeltus Investment Management, Inc.
242 Trumbull Street
Hartford, CT 06103
(Investment Sub-Adviser to the Merrimac Treasury Portfolio)
IBT Trust & Custodial Services (Ireland) LMTD
Deloitte & Touche House
29 Earlsfort Terrace
Dublin 2, Ireland
(Administrator to the Portfolios)
IBT Fund Svs (Canada) Inc.
1 First Canadian, King Street West
Suite 2800 P.O. Box 231
Toronto, CA M5X1C8
(Transfer Agent for the Portfolios and Fund Accountant
for the Portfolios and the Funds)
Item 31. Management Services
Not Applicable
Item 32. Undertakings
Not Applicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, as amended,
the Registrant has duly caused this Amendment No. 1 to the 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 as of
the 21st day of April, 1998.
MERRIMAC FUNDS
/s/ Sean P. Brennan
------------------
Sean P. Brennan
President
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
1(c) Amendment No. 2 to Master Trust Agreement
15(b) Shareholder Servicing Plan (Placement Class)
15(d) Form of Shareholder Servicing Agreement (Placement Class)
15(e) Plan of Distribution
15(f) Form of Private Placement Agent Agreement (Placement Class)
17 Financial Data Schedules
18(b) First Amended and Restated Multiple Class Expense Allocation Plan
</TABLE>
MERRIMAC FUNDS
Amendment No. 2 to
MASTER TRUST AGREEMENT
Pursuant to Article IV, Section 4.2 of the Master Trust Agreement of
the Merrimac Funds (the "Trust"), dated as of October 30, 1996 (the "Trust
Agreement"), and pursuant to authorization by the Trustees of the Trust at a
meeting duly called and held for such purpose on August 6, 1997, the following
Series of the Trust is established and designated:
Merrimac Short-Term Asset Reserve Fund
Pursuant to Article IV, Section 4.2 of the Trust Agreement of the
Trust, the Merrimac Short-Term Asset Reserve Fund shall consist of three classes
of Shares identified as the "Premium Class", the "Institutional Class" and the
"Placement Class" Shares.
The Interests in the above Series and classes thereof shall have the
relative rights and preferences as set forth in subsections (a) - (m) of Section
4.2 of the Trust Agreement and shall be effective as of the date set forth
below.
Pursuant to Article IV, Section 4.2 of the Trust Agreement of the
Trust, an additional class of Shares of the Merrimac Cash Fund and the Merrimac
Treasury Fund, identified as the "Placement Class", is established and approved.
Dated as of November 20, 1997
/s/ Susan C. Mosher
-------------------
Susan C. Mosher
Secretary
Merrimac Funds
Duly Authorized
MERRIMAC FUNDS
(Placement Class Shares)
Shareholder Servicing Plan
WHEREAS, Merrimac Funds, an unincorporated association of the type
commonly known as a business trust organized under the laws of the State of
Delaware (the "Trust"), engages in business as an open-end management investment
company and is registered as such under the Investment Company Act of 1940, as
amended (the "Act");
WHEREAS, the Trust is authorized (i) to issue shares of beneficial
interest in separate series, with the shares of each such series representing
the interests in a separate portfolio of securities and other assets, and (ii)
to divide the shares within each such series into two or more classes;
WHEREAS, the Trust has established two portfolio series, Merrimac Cash
Fund and Merrimac Treasury Fund (the Merrimac Cash Fund and Merrimac Treasury
Fund being referred to herein as the "Initial Series" -- such series, together
with all other series subsequently established by the Trust and made subject to
this Plan, being referred to herein individually as a "Series" and collectively
as the "Series");
WHEREAS, the Trust has established three classes of shares, such
classes being referred to as the "Institutional Class," the "Premium Class" and
the "Placement Class"; and
WHEREAS, the Trust desires to adopt a Shareholder Servicing Plan and
has adopted a related form of Shareholder Servicing Agreement with respect to
the Placement Class shares (the "Shares") of the Initial Series for certain
service organizations that wish to act as agent of their customers (the "Agent")
(respectively, the "Plan" and the "Agreement"); and
WHEREAS, the Board of Trustees as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the Act) and who have no direct
or indirect financial interest in the operation of this Plan or the Agreement
and any agreements relating to it (the "Qualified Trustees"), having determined,
in the exercise of their reasonable business judgment and in light of their
fiduciary duties under state law and in keeping with the requirements of Section
36(a) and (b) of the Act, that there is a reasonable likelihood that this Plan
and the Agreement will benefit the Placement Class shares of the Initial Series
and its shareholders, have accordingly approved this Plan and the Agreement on
behalf of the Initial Series by votes cast in person at a meeting called for the
purpose of voting on this Plan and the Agreement and any agreements related
thereto.
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NOW, THEREFORE, the Trust hereby adopts this Plan on the following
terms and conditions:
1. Shareholder Servicing Activities. Subject to the supervision of the
Board of Trustees, the Trust may engage, directly or indirectly, in financing
any activities relating to shareholder account administrative and servicing
functions, including without limitation making payments to Agents for one or
more of the following activities: (a) answering inquiries regarding account
status and history, the manner in which purchases and redemptions of the Shares
may be effected, and certain other matters pertaining to the Trust; (b)
assisting in designating and changing dividend options, account designations and
addresses; (c) providing necessary personnel and facilities to establish and
maintain certain shareholder accounts and records, as requested from time to
time by the Trust; (d) assisting in processing purchase and redemption
transactions; (e) arranging for the wiring of funds; (f) transmitting and
receiving funds in connection with orders to purchase or redeem Shares; (g)
verifying and guaranteeing signatures in connection with redemption orders,
transfers among and changes in designated accounts; (h) providing periodic
statements showing account balances and, to the extent practicable, integration
of such information with other client transactions otherwise effected with or
through the Agent; (i) furnishing (either separately or on an integrated basis
with other reports sent by the Agent) monthly and annual statements and
confirmations of all purchases and redemptions of Shares in an account; (j)
transmitting proxy statements, annual reports, prospectuses and other
communications from the Trust; (k) receiving, tabulating and transmitting to the
Trust proxies executed with respect to special meetings of shareholders of the
Trust; and (l) providing such other related services as the Trust or customers
of the Agent may reasonably request.
The Trust is authorized to engage in the activities listed above either
directly or through other persons with which the Trust has entered into
Agreements pursuant to the Plan.
2. Maximum Expenditures. The expenditures to be made by the Initial
Series pursuant to this Plan and the basis upon which payment of such
expenditures will be made shall be determined from time to time by the Trustees,
but in no event may such expenditures exceed the following: (i) with respect to
Shares of the Initial Series, an annual rate of .25% of the average daily value
of net assets represented by such Shares, and (ii) with respect to Shares of any
Series subsequently established by the Trust and made subject to this Agreement,
the annual rate as agreed upon and specified in an addendum hereto. The
expenditures to be made pursuant to this Plan shall commence with respect to
Shares of a Series as of the date on which this Plan becomes effective with
respect to each such Series.
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3. Payments. Pursuant to this Plan, the Trust shall make periodic
payments to the Agent at the annual rate provided for in the Agreement with
respect to the Shares of each Series. The servicing expenses of a particular
class will be borne solely by that class and no Series will use fees charged to
one class within a Series to support the marketing or servicing relating to any
other class within that Series or any other Series.
4. Term and Termination.
(a) Initial Series. This Plan shall become effective with
respect to the Shares of the Initial Series as of the later of (i) the date
hereof, or (ii) the date on which the Initial Series commences offering the
Shares to investors and shall continue in effect with respect to the Shares
(subject to Section 4(c) hereof) until one year from the date of such
effectiveness, unless the continuation of this Plan shall have been approved
with respect to the Shares in accordance with the provisions of Section 4(c)
hereof.
(b) Additional Series. This Plan shall become effective with
respect to the Shares of each additional Series established by the Trust after
the date hereof and made subject to this Plan upon commencement of the offering
thereof to investors (provided that the Plan has previously been approved with
respect to the Series by votes of a majority of both (i) the Board of Trustees
of the Trust and (ii) the Qualified Trustees, cast in person at a meeting held
before the initial public offering of such additional Series thereof and called
for the purpose of voting on such approval), and shall continue in effect with
respect to each such additional Series (subject to Section 4(c) hereof) for one
year thereafter, unless the continuation of this Plan shall have been approved
with respect to such additional Series in accordance with the provisions of
Section 4(c) hereof.
(c) Continuation. This Plan and the Agreement shall continue
in effect with respect to each Series subsequent to the initial term specified
in Section 4(a) and (b) for so long as such continuance is specifically approved
at least annually by votes of a majority of both (i) the Board of Trustees of
the Trust and (ii) the Qualified Trustees, cast in person at a meeting called
for the purpose of voting on this Plan, subject to any shareholder approval
requirements existing under applicable law.
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(d) Termination.
(i) This Plan may be terminated at any time with
respect to the Trust or any Series thereof, as the case may be, by vote
of a majority of the Qualified Trustees, or by vote of a majority of
the outstanding voting Shares of any class of Shares of that Series to
which this Plan applies. For purposes of this Agreement, the term "vote
of a majority of the outstanding voting Shares" of any Series shall
mean the vote of the lesser of (A) 67 percent or more of the
outstanding voting Shares of a class of Shares to which this plan
applies present at such meeting, if the holders of more than 50 percent
of the outstanding voting Shares of such class are present and
represented by proxy; or (B) 50 percent or more of the Shares. The Plan
may remain in effect with respect to a Series even if it has been
terminated in accordance with this Section 4(d) with respect to one or
more other Series of the Trust to which this plan applies.
(ii) The Agreement may be terminated at any time,
without penalty, with respect to any class of Shares to which this Plan
applies of any Series by vote of a majority of the Qualified Trustees
or by vote of a majority of the outstanding voting Shares such a class
to which this Plan applies of that Series on sixty days' written notice
to the Agent.
5. Amendments. This Plan may not be amended to increase materially the
amount of expenditures provided for in Section 2 hereof unless such amendment is
approved by a vote of a majority of the outstanding Shares to which this Plan
applies of each Series with respect to which a material increase in the amount
of distribution expenditures is proposed, and no material amendment to the Plan
shall be made unless approved in the manner provided for annual renewal in
Section 4(c) hereof. Otherwise, this Plan may be amended with respect to a class
of the Shares to which this Plan applies of a Series by vote of a majority of
the Qualified Trustees or the outstanding voting of such a class of Shares of
that Series.
6. Independent Trustees. While this Plan is in effect with respect to
any Series, the selection and nomination of Trustees who are not interested
persons (as defined in the Act) of the Trust shall be committed to the
discretion of the Trustees who are not interested persons.
7. Quarterly Reports. The Treasurer of the Trust shall provide to the
Trustees of the Trust and the Trustees shall review, at least quarterly, a
written report of the amounts expended pursuant to this Plan and the purposes
for which such expenditures were made.
8. Recordkeeping. The Trust shall preserve copies of this Plan, the
Agreement and any related agreements and all reports made pursuant to Section 7
hereof, for a period of not less than six years from the date of this Plan and
the Agreement, the agreements or such reports, as the case may be, the first two
years in an easily accessible place.
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Dated: August 6, 1997
[Letterhead of Merrimac Funds]
Form of
Shareholder Servicing Agreement
Boston, Massachusetts
Gentlemen:
We are hereby inviting you, subject to the terms and conditions set
forth below, to serve as the agent of your customers ("Customers") for purposes
of performing certain administrative functions in connection with purchases and
redemptions of Placement Class shares of beneficial interest ("Shares") of
Merrimac Funds (the "Trust") from time to time upon the order and for the
account of Customers, and to provide related services to your Customers in
connection with their investments in the Trust.
1. Appointment. You hereby agree to perform certain services for
Customers as hereinafter set forth. Your appointment hereunder is non-exclusive,
and the parties recognize and agree that, from time to time, the Trust may enter
into other shareholder servicing agreements, with other financial institutions.
2. Services to be Performed. You shall be responsible for performing
shareholder account administrative and servicing functions, which shall include,
without limitation, one or more of the following activities: (a) answering
Customer inquiries regarding account status and history, the manner in which
purchases and redemptions of the Shares may be effected, and certain other
matters pertaining to the Trust; (b) assisting Customers in designating and
changing dividend options, account designations and addresses; (c) providing
necessary personnel and facilities to establish and maintain certain shareholder
accounts and records, as requested from time to time by the Trust; (d) assisting
in processing purchase and redemption transactions; (e) arranging for the wiring
of funds; (f) transmitting and receiving funds in connection with Customer
orders to purchase or redeem Shares; (g) verifying and guaranteeing Customer
signatures in connection with redemption orders, transfers among and changes in
Customer-designated accounts; (h) providing periodic statements showing a
Customer's account balances and, to the extent practicable, integration of such
information with other client transactions otherwise effected with or through
you; (i) furnishing (either separately or on an integrated basis with other
reports sent to a Customer by you) monthly and annual statements and
confirmations of all purchases and redemptions of Shares in a Customer's
account; (j) transmitting proxy statements, annual reports, prospectuses and
other communications from the Trust to Customers; (k) receiving, tabulating and
transmitting to the Trust proxies executed by Customers with respect to special
meetings of shareholders of the Trust; and (l) providing such other related
services as the Trust or a Customer may reasonably request. You shall provide
all personnel and facilities necessary in order for you to perform one or more
of the functions described in this paragraph with respect to your Customers. You
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shall exercise reasonable care in performing all such services and shall be
liable for any failure to exercise such reasonable care.
3. Fees.
3.1. Fees from the Trust. In consideration for the services
described in section 2 hereof and the incurring of expenses in connection
therewith, you shall receive fees at an annual rate of 0.25% of the average
daily value of all Shares owned by or for all Customers with whom you maintain a
servicing relationship, such fee to be paid in arrears at the end of each
calendar quarter.
3.2. Fees from Customers. It is agreed that you may impose
certain conditions on Customers, in addition to or different from those imposed
by the Trust, such as requiring a minimum initial investment or charging
Customers direct fees for the same or similar services as are provided hereunder
by you (which fees may either relate specifically to your services with respect
to the Trust or generally cover services not limited to those with respect to
the Trust). You shall bill Customers directly for such fees. In the event you
charge Customers such fees, you shall make appropriate prior written disclosure
(such disclosure to be in accordance with all applicable laws) to Customers both
of any direct fees charged to the Customer and of the fees received or to be
received by you from the Trust pursuant to section 3.1 of this Agreement. It is
understood, however, that in no event shall you have recourse or access to the
account of any shareholder of the Trust except to the extent expressly
authorized by law or by the Trust or by such shareholder for payment of any
direct fees referred to in this section 3.2.
4. Capacity and Authority to Act. You and your officers, employees and
agents are not authorized to make any representations concerning the Trust or
the Shares to Customers or prospective Customers, excepting only accurate
communication of factual information contained in the then-current prospectus
and statement of additional information or such other communications as may be
expressly authorized by the Trust. In performing your services under this
Agreement, you shall act as agent for the Customer and shall have no authority
to act as agent for the Trust. Upon request by the Trust, you shall provide the
Trust with copies of any materials which are generally circulated by you to your
Customers or prospective Customers.
5. Use of the Agent's Name. The Trust shall not use your name in any
prospectus, sales literature or other material relating to the Trust in a manner
not approved by you prior thereto in writing; provided, however, that your
approval shall not be required for any use of its name which merely refers
accurately to your appointment hereunder or which is required by the Securities
and Exchange Commission or any state securities authority or any other
appropriate regulatory, governmental or judicial authority; provided, further,
that in no event shall such approval be unreasonably withheld or delayed.
6. Use of the Trust's Name. You shall not use the name of the Trust
(other than for internal use in connection with performing its duties under this
agreement) in a manner not approved by the Trust prior thereto in writing;
provided, however, that the approval of the Trust shall not be required for the
use of the Trust's name in connection with communications permitted by section 4
hereof or for any use of the Trust's name which merely refers accurately to your
role hereunder or which is required by the Securities and Exchange Commission or
any
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state securities authority or any other appropriate regulatory, governmental or
judicial authority; provided, further, that in no event shall such approval be
unreasonably withheld or delayed.
7. Security. You represent and warrant that, to the best of your
knowledge, the various procedures and systems which you have implemented
(including provision for twenty-four hours a day restricted access) with regard
to safeguarding from loss or damage attributable to fire, theft or any other
cause the Trust's records and other data and your records, data, equipment,
facilities and other property used in the performance of your obligations
hereunder are adequate and that you will make such changes therein from time to
time as in its judgment are required for the secure performance of your
obligations hereunder. The parties shall review such systems and procedures on a
periodic basis, and the Trust may from time to time specify the types of records
and other data of the Trust to be safeguarded in accordance with this section 7.
8. Compliance with Laws; Etc. You shall comply with all applicable
federal and state laws and regulations, including securities laws. You hereby
agree to maintain all records required by law relating to transactions on the
Shares, and upon our request, or of the Trust, promptly make such of these
records available to us or the Trust's administrator as are requested. In
addition, you hereby agree to establish appropriate procedures and reporting
forms and/or mechanisms and schedules in conjunction with us and the Trust's
administrator, to enable the Trust to identify the location, type of, and sales
to all accounts opened and maintained by your customers or by you on behalf of
your customers. You represent and warrant to the Trust that the performance of
all its obligations hereunder will comply with all applicable laws and
regulations, the provisions of your charter documents and by-laws and all
material contractual obligations binding upon you. You furthermore undertake
that you will promptly inform the Trust of any change in applicable laws or
regulations (or interpretations thereof) or in your charter or by-laws or
material contracts which would prevent or impair full performance of any of your
obligations hereunder.
9. Reports. To the extent requested by the Trust from time to time, you
agree that you will provide the Trust with a written report of the amounts
expended by you pursuant to this Agreement and the purposes for which such
expenditures were made. Such written reports shall be in a form satisfactory to
the Trust and shall supply all information necessary for the Trust to discharge
its responsibilities under applicable laws and regulations.
10. Record Keeping.
10.1. Section 31(a), Etc. You shall maintain records in a form
acceptable to the Trust and in compliance with applicable laws and the rules and
regulations of the Securities and Exchange Commission, including but not limited
to the record-keeping requirements of section 31(a) of the Investment Company
Act 1940, as amended (the "1940 Act"), and the rules thereunder. Such records
shall be deemed to be the property of the Trust and will be made available, at
the Trust's reasonable request, for inspection and use by the Trust,
representatives of the Trust and governmental authorities. You agree that, for
so long as you retain any records of the Trust, you will meet all reporting
requirements pursuant to the 1940 Act with respect to such records.
<PAGE>
10.2. Transfer of Customer Data. In the event this Agreement
is terminated or a successor to you is appointed, you shall, at the expense of
the Trust, transfer to such designee as the Trust may direct a certified list of
the shareholders of the Trust serviced by you (with name, address and tax
identification or Social Security number), a complete record of the account of
each such shareholder and the status thereof, and all other relevant books,
records, correspondence and other data established or maintained by you under
this Agreement. In the event this Agreement is terminated, you will use your
best efforts to cooperate in the orderly transfer of such duties and
responsibilities, including assistance in the establishment of books, records
and other data by the successor.
10.3. Survival of Record-Keeping Obligations. The
record-keeping obligations imposed in this section 10 shall survive the
termination of this Agreement.
11. Force Majeure. You shall not be liable or responsible for delays or
errors by reason of circumstances beyond your control, including, but not
limited to, acts of civil or military authority, national emergencies, labor
difficulties, fire, mechanical breakdown, flood or catastrophe, Acts of God,
insurrection, war, riots or failure of communication or power supply.
12. Indemnification.
12.1. Indemnification of the Agent. The Trust shall indemnify
and hold you harmless from and against any and all losses, claims, damages,
liabilities and expenses incurred by you and resulting from any claim, demand,
action or suit (collectively, "Claims") brought against you and arising out of
or in connection with the performance of your obligations hereunder, other than
any Claim resulting from (i) the bad faith or negligence of you, your officers,
employees or agents, or (ii) any breach of your obligation under this Agreement
or applicable law by you, your officers, employees or agents, or (iii) any false
or misleading statement contained in any communication by you to any Customer or
prospective Customer not prepared by or expressly authorized by the Trust for
your use.
In any case in which the Trust may be asked to indemnify or hold you
harmless, the Trust shall be advised of all pertinent facts concerning the
situation in question and you shall use reasonable care to identify and notify
the Trust promptly concerning any situation which presents or appears likely to
present a claim for indemnification against the Trust. The Trust shall have the
option to defend you against any Claim which may be the subject of
indemnification hereunder. In the event that the Trust elects to defend against
such claim the defense shall be conducted by counsel chosen by the Trust and
satisfactory to you. You may retain additional counsel at its expense. Except
with the prior written consent of the Trust, you shall not confess any Claim or
make any compromise in any case in which the Trust will be asked to indemnify
you.
12.2. Indemnification of the Trust. You shall indemnify and
hold the Trust harmless from and against any and all losses, claims, damages,
liabilities and expenses incurred by the Trust and resulting from any Claim
brought against the Trust and resulting from (i) the bad faith or negligence of
you, your officers, employees or agents, or (ii) any breach of your obligations
under this Agreement or applicable law by you, your officers, employees or
agents, or (iii) any false or misleading statement contained in any
communication by you to any Customer or prospective Customer not prepared by or
expressly authorized by the Trust for your use.
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In any case in which you may be asked to indemnify or hold the Trust
harmless, you shall be advised of all pertinent facts concerning the situation
in question and the Trust shall use reasonable care to identify and notify you
promptly concerning any situation which presents or appears likely to present a
claim for indemnification against you. You shall have the option to defend the
Trust against any Claim which may be the subject of indemnification hereunder.
In the event that you elect to defend against such Claim, the defense shall be
conducted by counsel chosen by you and satisfactory to the Trust. The Trust may
retain additional counsel at its expense. Except with the prior written consent
of the agent, the Trust shall not confess any Claim or make any compromise in
any case in which you will be asked to indemnify the Trust.
12.3. Survival of Indemnities. The indemnities granted by the
parties in this section 12 shall survive the termination of this Agreement.
13. Insurance. You shall maintain reasonable insurance coverage against
any and all liabilities which may arise in connection with the performance of
your duties hereunder. You shall provide information with respect to the extent
of such coverage upon our request.
14. Notices. All notices or other communications hereunder to either
party shall be in writing and shall be deemed sufficient if mailed to such party
at the address of such party set forth in this Agreement or at such other
address as such party may have designated by written notice to the other.
15. Further Assurances. Each party agrees to perform such further acts
and execute such further documents as are necessary to effectuate the purposes
hereof.
16. Termination. This Agreement may be terminated by the Trust, without
the payment of any penalty, at any time upon not more than 60 days' nor less
than 30 days' notice to you, by a vote of a majority of the Board of Trustees of
the Trust who are not "interested persons" of the Trust (as defined in the 1940
Act) and have no direct or indirect financial interest in the operation of the
Trust's Shareholder Servicing Plan (the "Plan"), this Agreement or any other
agreement related to such Plan, or by "a vote of a majority of the outstanding
voting securities" (as defined in the 1940 Act) of the Trust. You may terminate
this Agreement upon not more than 60 days' nor less than 30 days' notice to the
Trust. Notwithstanding anything herein to the contrary, this Agreement may not
be assigned and shall terminate automatically without notice to either party
upon any assignment. Upon termination hereof, the Trust shall pay such
compensation as may be due you as of the date of such termination.
17. Changes; Amendments. This Agreement may be changed or amended only
by written instrument signed by both parties.
18. Limitation of Liability. The First Amended and Restated Master
Trust Agreement dated October 30, 1996, as amended from time to time,
establishing the Trust, which is hereby referred to and a copy of which is on
file at the offices of the Trust, provides that the name of the Trust means the
Trustees from time to time serving (as Trustees but not personally) under said
Master Trust Agreement. It is expressly acknowledged and agreed that the
obligations of the Trust hereunder shall not be binding upon any of the
shareholders, Trustees, officers, employees or agents of the Trust, personally,
but shall bind only the trust property of the Trust, as provided in its Master
Trust Agreement. The execution and delivery
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of this Agreement have been authorized by the Trustees of the Trust and signed
by an officer of the Trust, acting as such, and neither such authorization by
such Trustees nor such execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any liability on any of
them personally, but shall bind only the trust property of the Trust as provided
in its Master Trust Agreement.
19. Miscellaneous. This Agreement shall be construed and enforced in
accordance with and governed by the laws of The Commonwealth of Massachusetts
without giving effect to the conflicts of laws provisions thereof. The captions
in this Agreement are included for convenience of reference only and in no way
define or limit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement has been executed on behalf of the Trust
by the undersigned not individually, but in the capacity indicated. This
Agreement shall be effective when accepted by you below.
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Please confirm your agreement hereto by signing and returning the
enclosed counterpart of this Agreement at once to: Merrimac Funds, 200 Clarendon
Street, Boston, Massachusetts 02111, Attention: President. Upon receipt thereof,
this Agreement and such signed duplicate copy will evidence the agreement
between us.
Merrimac Funds
By:___________________________________
Name:
Title:
ACCEPTED:
[ ]
(Shareholder Servicing Agent)
By:__________________________________
Name:
Title:
Dated:_________________________________
MERRIMAC FUNDS
(Placement Class)
Plan of Distribution Adopted Pursuant to Rule 12b-1
WHEREAS, Merrimac Funds, an unincorporated association of the type
commonly known as a business trust organized under the laws of the state of
Delaware (the "Trust"), engages in business as an open-end management investment
company and is registered as such under the Investment Company Act of 1940, as
amended (the "Act");
WHEREAS, the Trust is authorized (i) to issue shares of beneficial
interest in separate series, with the shares of each such series representing
the interests in a separate portfolio of securities and other assets, and (ii)
to divide the shares within each such series into two or more classes;
WHEREAS, the Trust has established two portfolio series, Merrimac Cash
Fund and Merrimac Treasury Fund (such funds being referred to herein as the
"Initial Series" -- such series, together with all other series subsequently
established by the Trust and made subject to this Plan, being referred to herein
individually as a "Series" and collectively as the "Series");
WHEREAS, the Trust has established three classes of shares, such
classes being referred to as the "Institutional Class," the "Premium Class" and
the "Placement Class"; and
WHEREAS, the Trust may be deemed a distributor of the Shares within the
meaning of Rule 12b-1 under the Act, and desires to adopt a Plan of Distribution
with respect to the Placement Class of shares (the "Shares") of the Initial
Series pursuant to such Rule (the "Plan"); and
WHEREAS, the Trust may enter into one or more agreements (each, an
"Agreement") for the sale of the Shares with one or more underwriters,
distributors, dealers, brokers or private placement agents (each, a
"Distribution Agent"); and
WHEREAS, the Board of Trustees as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the Act) and who have no direct
or indirect financial interest in the operation of this Plan or any Agreement
with any Distribution Agent and any agreements relating to such Agreements (the
"Qualified Trustees"), having determined, in the exercise of their reasonable
business judgment and in light of their fiduciary duties under state law and
under Section 36(a) and (b) of the Act, that there is a reasonable likelihood
that this Plan and such Agreements will benefit the Placement Class of the
Initial Series and their shareholders, have accordingly approved this Plan and
the Agreements by votes cast in person at a meeting
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called for the purpose of voting on this Plan and the Agreements and any
agreements related thereto.
NOW, THEREFORE, the Trust hereby adopts this Plan in accordance with
Rule 12b-1 under the Act, on the following terms and conditions:
1. Distribution/Private Placement Activities. Subject to the
supervision of the Board of Trustees, the Trust may engage, directly or
indirectly, in financing any activities primarily intended to result in the sale
of Shares, including, but not limited to, the following: (1) making payments to
Distribution Agents or others engaged in the sale of Shares whether by means of
a private placement or a public offering, including payments to the Distribution
Agents to be used to compensate or reimburse such persons for engaging in such
activities and (2) providing reimbursement of direct out-of-pocket expenditures
incurred by the Distribution Agents in connection with the offer or sale of
Shares, including expenses relating to the formulation and implementation of
strategies and promotional activities such as the preparation, printing and
distribution of sales literature and reports for recipients other than existing
shareholders of the Trust, and obtaining such information, analyses and reports
with respect to promotional activities and investor accounts as the Trust may,
from time to time, deem advisable. The Trust and the Series are authorized to
engage in the activities listed above, and in other activities primarily
intended to result in the sale of Shares, either directly or through other
persons with which the Trust has entered into Agreements pursuant to the Plan.
2. Maximum Expenditures. The expenditures to be made by the Initial
Series pursuant to this Plan and the basis upon which payment of such
expenditures will be made shall be determined from time to time by the Trustees,
but in no event may such expenditures exceed the following: (i) with respect to
Shares of the Initial Series, an annual rate of .25% of the average daily value
of net assets represented by such Shares, and (ii) with respect to Shares of any
Series subsequently established by the Trust and made subject to this Agreement,
the annual rate as agreed upon and specified in an addendum hereto; plus such
amounts as the Distribution Agent may expend from general revenues, profits and
other sources from time to time in accordance with the last sentence of Section
1. The expenditures to be made pursuant to this Plan shall commence with respect
to Shares of a Series as of the date on which this Plan becomes effective with
respect to each such Series.
3. Payments. Pursuant to this Plan, the Trust shall make periodic
payments to the Distribution Agents at the annual rate provided for in the
Agreements with such Distribution Agents with respect to the Shares of each
Series. The Distribution Agents may in turn remit to and allocate among selected
agents (including affiliates of the Distribution Agents) in consideration of and
as reimbursement for expenses incurred in the provision of distribution
services, such amounts as the Distribution Agents shall determine. Any amounts
received by the Distribution Agents
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and not so allocated may be retained by the Distribution Agents as compensation
to the Distribution Agents for providing services under the Agreement and/or as
reimbursement for expenses incurred in connection with the distribution and
promotion of the sale of the Shares and the servicing of investor accounts as
contemplated by Section 1 hereof.
4. Term and Termination.
(a) Initial Series. This Plan shall become effective with
respect to the Shares of the Initial Series as of the the date on which the
Initial Series commences offering the Shares to investors and shall continue in
effect with respect to the Shares (subject to Section 4(c) hereof) until one
year from the date of such effectiveness, unless the continuation of this Plan
shall have been approved with respect to the Shares in accordance with the
provisions of Section 4(c) hereof.
(b) Additional Series. This Plan shall become effective with
respect to the Shares of each additional Series established by the Trust after
the date hereof and made subject to this Plan upon commencement of the offering
thereof to investors (provided that the Plan has previously been approved with
respect to the Series by votes of a majority of both (i) the Board of Trustees
of the Trust and (ii) the Qualified Trustees, cast in person at a meeting held
before the initial offering of such additional Series thereof and called for the
purpose of voting on such approval), and shall continue in effect with respect
to each such additional Series or class (subject to Section 4(c) hereof) for one
year thereafter, unless the continuation of this Plan shall have been approved
with respect to such additional Series in accordance with the provisions of
Section 4(c) hereof. The Distribution Agent and the Trust on behalf of each such
additional Series shall each sign an addendum hereto agreeing to be bound hereby
and setting forth such specific and different terms as the parties may agree
upon, including, without implied limitation, the amount and purpose of payments
to be made hereunder, subject to any shareholder approval requirements existing
under applicable law.
(c) Continuation. This Plan and the Agreements shall continue
in effect with respect to each Series subsequent to the initial term specified
in Section 4(a) and (b) for so long as such continuance is specifically approved
at least annually by votes of a majority of both (i) the Board of Trustees of
the Trust and (ii) the Qualified Trustees, cast in person at a meeting called
for the purpose of voting on this Plan, subject to any shareholder approval
requirements existing under applicable law.
<PAGE>
(d) Termination.
(i) This Plan may be terminated at any time with
respect to the Shares of any Series thereof by vote of a majority of
the Qualified Trustees, or by vote of a majority of the outstanding
voting Shares of that Series. For purposes of this Agreement, the term
"vote of a majority of the outstanding voting Shares" of any Series
shall mean the vote of the lesser of (A) 67 percent or more of the
outstanding voting Shares present at such meeting, if the holders of
more than 50 percent of the outstanding voting Shares are present and
represented by proxy; or (B) 50 percent or more of the Shares. The Plan
may remain in effect with respect to a Series even if it has been
terminated in accordance with this Section 4(d) with respect to one or
more other Series of the Trust.
(ii) The Agreements may be terminated at any time,
without penalty, with respect to the Shares of any Series by vote of a
majority of the Qualified Trustees or by vote of a majority of the
outstanding voting Shares of that Series on sixty days' written notice
to the Distribution Agent. In addition, the Agreements provide for
automatic termination in the event of their assignment.
5. Amendments. This Plan may not be amended to increase materially the
amount of expenditures provided for in Section 2 hereof unless such amendment is
approved by a vote of a majority of the outstanding Shares of each Series with
respect to which a material increase in the amount of distribution expenditures
is proposed, and no material amendment to the Plan shall be made unless approved
in the manner provided for annual renewal in Section 4(c) hereof. Otherwise,
this Plan may be amended with respect to the Shares of a Series by vote of a
majority of the Qualified Trustees or the outstanding voting Shares of that
Series.
6. Independent Trustees. While this Plan is in effect with respect to
any Series, the selection and nomination of Trustees who are not interested
persons (as defined in the Act) of the Trust shall be committed to the
discretion of the Trustees who are not interested persons.
7. Quarterly Reports. The Treasurer of the Trust and the Treasurer of
the Distribution Agent shall provide to the Trustees of the Trust and the
Trustees shall review, at least quarterly, a written report of the amounts
expended for the distribution of the Shares pursuant to this Plan and the
purposes for which such expenditures were made.
8. Recordkeeping. The Trust shall preserve copies of this Plan, the
Agreements and any related agreements and all reports made pursuant to Section 7
hereof, for a period of not less than six years from the date of this Plan and
the
<PAGE>
Agreements (including any related agreements) or such reports, as the case
may be, the first two years in an easily accessible place.
Dated: August 5, 1997
[Letterhead of Merrimac Funds]
Form of
Private Placement Agent Agreement
Boston, Massachusetts
Gentlemen:
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, Merrimac Funds (the "Trust"), an open-end
diversified investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), which has been organized as a Delaware
business trust in series form, has agreed that ____________________ shall act as
an agent (the "Private Placement Agent") on behalf of the Trust for the private
placement of the Placement Class Shares of the series of the Trust (the
"Shares").
1. Appointment. The Private Placement Agent hereby agrees to perform
certain services as hereinafter set forth. Such appointment hereunder is
non-exclusive, and the parties recognize and agree that, from time to time, the
Trust may enter into other Private Placement Agreements, with other financial
institutions.
2. Services to be Performed as Private Placement Agent.
2.1 The Private Placement Agent undertakes to use its best
efforts, consistent with its other business, to secure purchasers of the Shares
on behalf of the Trust. Neither the Private Placement Agent nor any employees,
officers or agents thereof shall make any offer or sale of the Shares in a
manner that would require the Shares to be registered under the Securities Act
of 1933, as amended (the "1933 Act") or any of the laws governing the sale of
securities in the various states (the "Blue Sky Laws").
2.2 All activities by the Private Placement Agent and its
employees, officers and agents undertaken in the private placement of the Shares
shall comply with all applicable, laws, rules and regulations, including,
without limitation, all rules and regulations
<PAGE>
adopted pursuant to the 1933 Act and the 1940 Act by the Securities and
Exchange Commission (the "Commission").
2.3 Nothing herein shall be construed to require the Trust or
the Private Placement Agent to accept any offer to purchase any shares.
Acceptance of such offers shall at all times be subject to the approval of the
officers of the Trust, who may act on the advice of counsel to the Trust, and
any purchases of Shares may be subject to rescission if such purchases would
require the Trust to register its shares under the 1933 Act or any applicable
Blue Sky Law.
2.4 The Trust shall furnish from time to time for use in
connection with the sale of the Shares such information with respect to the
Trust and the Shares as the Private Placement Agent may reasonably request.
2.5 The Trust represents to the Private Placement Agent that
all registration statements filed by the Trust with the Commission under the
1940 Act have been prepared in conformity with the requirements of such statute
and the rules and regulations promulgated by the Commission thereunder. As used
in this Agreement, the term "registration statement" shall mean any registration
statement filed with the Commission, as modified by any amendments thereto, that
at any time shall have been filed with the Commission by or on behalf of the
Trust. The Trust represents and warrants to the Private Placement Agent that the
registration statement shall contain all statements required to be stated
therein in conformity with both the 1933 Act, the 1940 Act and the rules and
regulations promulgated thereunder; that all statements of fact in any
registration statement shall be true and correct in all material respects at the
time of filing such registration statement or amendment thereto; and that no
registration statement will include an untrue statement or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading to a purchaser of the Shares. The Trust shall not file
any material amendment to any registration statement without giving the Private
Placement Agent advance notice; provided, however, that nothing contained in
this Agreement shall in any way limit the Trust's right to file at any time such
amendment to any registration statement as the Trust may deem necessary or
advisable, such right being in all respects absolute and unconditional.
2.6 The Trust agrees to indemnify and hold harmless the
Private Placement Agent and each of its directors and officers and each person,
if any, who controls the Private Placement Agent within the meaning of Section
15 of the 1933 Act against any loss, liability, claim, damages or expense
(including the reasonable cost of investigating or defending any alleged loss,
liability, claim, damages, or expense and reasonable counsel fees incurred in
connection therewith) arising out of or based upon: (i) any violation of the
Trust's representations or covenants herein contained; (ii) any allegation of
any wrongful act of the Trust or any of its representatives (other than the
Private Placement Agent or any of its employees or representatives or any other
person for whose acts the Private Placement Agent is responsible or is alleged
to be responsible (including any selected dealer or person through whom sales
are made pursuant to an agreement with the Private Placement Agent)); (iii) any
allegation of any person acquiring any Shares, based upon the 1933 Act or any
other statute or common law, that the registration statements, Confidential
Offering Circulars or shareholder reports of the Trust included an untrue
statement of a material fact or omitted to state a material fact required to be
stated or necessary in order to make the statements not misleading, except to
the extent the statement or omission was made in reliance upon, and in
conformity with, information furnished in writing to the Trust by or on behalf
of the Private Placement Agent; or (iv) any allegation that any promotional
material included an untrue statement of a material fact or omitted to state a
material fact required to be stated or necessary in order to make the statements
not misleading, to the extent that such statement or omission was made in
reliance
<PAGE>
upon, and in conformity with, information furnished in writing to the Private
Placement Agent by the Trust. In no case (i) is the indemnity of the Trust in
favor of the Private Placement Agent or any person indemnified to be deemed to
protect the Private Placement Agent or any person against any liability to the
Trust or its security holders to which the Private Placement Agent or such
person would otherwise be subject by reason of willful misfeasance, bad faith or
ordinary negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this agreement, or (ii)
is the Trust to be liable under its indemnity agreement contained in this
Section 2.6 with respect to any claim made against the Private Placement Agent
or any person indemnified unless the Private Placement Agent or person, as the
case may be, shall have notified the Trust in writing of the claim within a
reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon the Private
Placement Agent or any such person or after the Private Placement Agent or such
person shall have received notice of service on any designated agent. However,
except to the extent the Trust is harmed thereby, failure to notify the Trust of
any claim shall not relieve the Trust from any liability which it may have to
the Private Placement Agent or any person against whom such action is brought
other than on account of its indemnity agreement contained in this Section 2.6.
The Trust shall be entitled to participate at its own expense in the defense,
or, if it so elects, to assume the defense of any suit brought to enforce any
claims, but if the Trust elects to assume the defense, the defense shall be
conducted by counsel chosen by it and satisfactory to the Private Placement
Agent, or person or persons, defendant or defendants in the suit. In the event
the Trust elects to assume the defense of any suit and retain counsel, the
Private Placement Agent, officers or directors or controlling person(s) or
defendant(s) in the suit, shall bear the fees and expenses of any additional
counsel retained by them. If the Trust does not elect to assume the defense of
any suit, it will reimburse the Private Placement Agent, officers or directors
or controlling person(s) or defendant(s) in the suit, for the reasonable fees
and expenses of any counsel retained by them. The Trust agrees to notify the
Private Placement Agent promptly of the commencement of any litigation or
proceedings against it or any of its officers or Trustees in connection with the
issuance or sale of any of the Shares.
2.7 The Private Placement Agent agrees to indemnify and hold
harmless the Trust and each of its Trustees and officers and each person, if
any, who controls the Trust within the meaning of Section 15 of the 1933 Act,
against any loss, liability, damages, claim or expense (including the reasonable
cost of investigating or defending any alleged loss, liability, damages, claim
or expense and reasonable counsel fees incurred in connection therewith) arising
out of or based upon: (i) any violation of any of its representations or
covenants herein contained; (ii) any allegation of any wrongful act of the
Private Placement Agent or any of its employees or representatives or any other
person for whose acts the Private Placement Agent is responsible or is alleged
to be responsible (including any selected dealer or person through whom sales
are made pursuant to an agreement with the Private Placement Agent); (iii) any
allegation of any person acquiring any Shares, based on the 1933 Act or any
other statute or common law, that the registration statements, Confidential
Offering Circulars or shareholder reports included an untrue statement of a
material fact or omitted to state a material fact required to be stated or
necessary in order to make the statements not misleading, to the extent that
such statement or omission was made in reliance upon, and in conformity with,
information furnished in writing to the Trust by or on behalf of the Private
Placement Agent; or (iv) any allegation that any promotional material included
an untrue statement of a material fact or omitted to state a material fact
required to be stated or necessary in order to make the statements not
misleading, except to the extent that such statement or omission was made in
reliance upon, and in conformity with, information furnished in writing to the
Private Placement Agent by the Trust. In no case (i) is the indemnity of the
Private Placement Agent in favor of the Trust or any person indemnified to be
deemed to protect the Trust or any person against any liability to which the
Trust or such person would otherwise be subject by reason of
<PAGE>
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
under this Agreement, or (ii) is the Private Placement Agent to be liable under
its indemnity agreement contained in this Section 2.7 with respect to any claim
made against the Trust or any person indemnified unless the Trust or person, as
the case may be, shall have notified the Private Placement Agent in writing of
the claim within a reasonable time after the summons or other first written
notification giving information of the nature of the claim shall have been
served upon the Trust or any such person or after the Trust or such person shall
have received notice of service on any designated agent. However, failure to
notify the Private Placement Agent of any claim shall not relieve the Private
Placement Agent from any liability which it may have to the Trust or any person
against whom the action is brought other than on account of its indemnity
agreement contained in this Section 2.7. In the case of any notice to the
Private Placement Agent, it shall be entitled to participate, at its own
expense, in the defense, or, if it so elects, to assume the defense of any suit
brought to enforce any claims, but if the Private Placement Agent elects to
assume the defense, the defense shall be conducted by counsel chosen by it and
satisfactory to the Trust, to its officers and Trustees and to any controlling
person(s) or any defendants(s) in the suit. In the event the Private Placement
Agent elects to assume the defense of any suit and retain counsel, the Trust or
controlling person(s) or defendant(s) in the suit shall bear the fees and
expenses of any additional counsel retained by them. If the Private Placement
Agent does not elect to assume the defense of any suit, it will reimburse the
Trust, its officers or Trustees, controlling person(s) or defendant(s) in the
suit, for the reasonable fees and expenses of any counsel retained by them. The
Private Placement Agent agrees to notify the Trust promptly of the commencement
of any litigation or proceedings against it in connection with the issue and
sale of any of the Shares.
2.8 The indemnities granted by the parties in this Section 2
shall survive the termination of this Agreement.
2.9 If and whenever the determination of net asset value is
suspended and until such suspension is terminated, no further orders for shares
shall be processed by the Private Placement Agent except for such unconditional
orders as placed with the Private Placement Agent before it had knowledge of the
suspension. In addition, the Trust reserves the right to suspend sales and the
Private Placement Agents authority to sell Shares if, in the judgement of the
Trust, it is in the best interests of the Trust to do so. Suspension will
continue for such period as may be determined by the Trust.
2.10 Except as otherwise noted in the Trust's Confidential
Offering Circular with respect to Placement Class Shares, as amended or
supplemented from time to time, all Placement Class Shares sold to investors by
the Private Placement Agent or the Trust will be sold at the offering price plus
any applicable sales charges described therein. The offering price for all
accepted subscriptions will be the net asset value per share, determined in the
manner described in the Trust's then current Confidential Offering Circular with
respect to the applicable series. The Trust shall in all cases receive the net
asset value per share on all sales and the Private Placement Agent shall be
entitled to the fees described below.
3. Fees. In consideration for the services described in Section 2
hereof and the incurring of expenses in connection therewith, the Private
Placement Agent shall receive fees at an annual rate of [0.25%] of the average
daily value of all Shares sold by the Private Placement Agent, such fee to be
paid in arrears at the end of each calendar quarter.
4. Capacity and Authority to Act. The Private Placement Agent and its
officers, employees and agents are not authorized to make any representations
concerning the Trust or the Shares to investors or prospective investors,
excepting only accurate communication of
<PAGE>
factual information contained in the then-current Confidential Offering Circular
or such other communications as may be expressly authorized by the Trust. In
performing the services under this Agreement, the Private Placement Agent shall
act as an agent for the Trust. Upon request by the Trust, the Private Placement
Agent shall provide the Trust with copies of any materials which are generally
circulated by it to or prospective investors in the Trust.
5. Use of the Agent's Name. The Trust shall not use the Private
Placement Agent's name in any Confidential Offering Circular, sales literature
or other material relating to the Trust in a manner not approved by the Private
Placement Agent prior thereto in writing; provided, however, that the Private
Placement Agent's approval shall not be required for any use of its name which
merely refers accurately to the Private Placement Agent's appointment hereunder
or which is required by the Securities and Exchange Commission or any other
appropriate regulatory, governmental or judicial authority; provided, further,
that in no event shall such approval be unreasonably withheld or delayed.
6. Use of the Trust's Name. The Private Placement Agent shall not use
the name of the Trust (other than for internal use in connection with performing
its duties under this agreement) in a manner not approved by the Trust prior
thereto in writing; provided, however, that the approval of the Trust shall not
be required for the use of the Trust's name in connection with communications
permitted by Section 4 hereof or for any use of the Trust's name which merely
refers accurately to the Private Placement Agent's role hereunder or which is
required by the Securities and Exchange Commission or any other appropriate
regulatory, governmental or judicial authority; provided, further, that in no
event shall such approval be unreasonably withheld or delayed.
7. Security. The Private Placement Agent represents and warrants that,
to the best of its knowledge, the various procedures and systems which it has
implemented (including provision for twenty-four hours a day restricted access)
with regard to safeguarding from loss or damage attributable to fire, theft or
any other cause the Trust's records and other data and its records, data,
equipment, facilities and other property used in the performance of your
obligations hereunder are adequate and that the Private Placement Agent will
make such changes therein from time to time as in its judgment are required for
the secure performance of its obligations hereunder. The parties shall review
such systems and procedures on a periodic basis, and the Trust may from time to
time specify the types of records and other data of the Trust to be safeguarded
in accordance with this Section 7.
8. Compliance with Laws; Etc. The Private Placement Agent shall comply
with all applicable federal and state laws and regulations, including securities
laws. The Private Placement Agent hereby agrees to maintain all records required
by law relating to transactions on the Shares, and upon the Trust's request
promptly make such of these records available to the Trust's administrator as
are requested. The Private Placement Agent represents and warrants to the Trust
that the performance of all its obligations hereunder will comply with all
applicable laws and regulations, including, without limitation, the requirements
of the Securities Exchange Act of 1934, as amended (the "1934 Act"), and the
rules promulgated by the National Association of Securities Dealers (the "NASD")
the provisions of the Private Placement Agent's charter documents and by-laws
and all material contractual obligations binding upon it. The Private Placement
Agent furthermore undertakes that it will promptly inform the Trust of any
change in applicable laws or regulations (or interpretations thereof) or in its
charter or by-laws or material contracts which would prevent or impair full
performance of any of its obligations hereunder.
9. Broker-Dealer Registration. At all times during the term of this
Agreement, the Private Placement Agent (and each representative and agent
thereof) shall remain registered
<PAGE>
and in good standing as a broker dealer (or representative or agent thereof)
with the Commission and any and all applicable jurisdictions in which the Shares
are sold whose Blue Sky Laws require the registration of the Private Placement
Agent as a broker dealer or the registration of its representatives or agents
operating in the relevant jurisdiction. The Private Placement Agent shall
immediately notify the Trust if any regulatory agency or other governmental
entity takes any action that would adversely affect its continued status as a
registered broker-dealer (or representative or agent thereof) in good standing
with any such regulatory ageny or governmental entity, including, but not
limited to, the Commission. This Section 9 shall in no way be construed to limit
or otherwise modify the Private Placement Agent's obligation to comply with all
applicable laws as stated in Section 8 above.
10. Reports. To the extent requested by the Trust from time to time,
the Private Placement Agent agrees that it will provide the Trust with a written
report of the amounts expended by it pursuant to this Agreement and the purposes
for which such expenditures were made. Such written reports shall be in a form
satisfactory to the Trust and shall supply all information necessary for the
Trust to discharge its responsibilities under applicable laws and regulations.
11. Record Keeping.
11.1. Section 31(a), Etc. The Private Placement Agent shall
maintain records in a form acceptable to the Trust and in compliance with
applicable laws and the rules and regulations of the Securities and Exchange
Commission, including but not limited to the record-keeping requirements of
section 31(a) of the Investment Company Act 1940, as amended (the "1940 Act"),
and the rules thereunder. Such records shall be deemed to be the property of the
Trust and will be made available, at the Trust's reasonable request, for
inspection and use by the Trust, representatives of the Trust and governmental
authorities. The Private Placement Agent agrees that, for so long as it retains
any records of the Trust, it will meet all reporting requirements pursuant to
the 1940 Act with respect to such records.
11.2. Transfer of Customer Data. In the event this Agreement
is terminated or a successor to the Private Placement Agent is appointed, the
Private Placement Agent shall, at the expense of the Trust, transfer to such
designee as the Trust may direct a certified list of the shareholders of the
Trust serviced by the Private Placement Agent (with name, address and tax
identification or Social Security number), a complete record of the account of
each such shareholder and the status thereof, and all other relevant books,
records, correspondence and other data established or maintained by the Private
Placement Agent under this Agreement. In the event this Agreement is terminated,
the Private Placement Agent will use its best efforts to cooperate in the
orderly transfer of such duties and responsibilities, including assistance in
the establishment of books, records and other data by the successor.
11.3. Survival of Record-Keeping Obligations. The
record-keeping obligations imposed in this Section 11 shall survive the
termination of this Agreement.
12. Force Majeure. The Private Placement Agent shall not be liable or
responsible for delays or errors by reason of circumstances beyond its control,
including, but not limited to, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdown, flood or
catastrophe, Acts of God, insurrection, war, riots or failure of communication
or power supply.
<PAGE>
13. Insurance. The Private Placement Agent shall maintain reasonable
insurance coverage against any and all liabilities which may arise in connection
with the performance of its duties hereunder. The Private Placement Agent shall
provide information with respect to the extent of such coverage upon the Trust's
request.
14. Notices. All notices or other communications hereunder to either
party shall be in writing and shall be deemed sufficient if mailed to such party
at the address of such party set forth in this Agreement or at such other
address as such party may have designated by written notice to the other.
15. Further Assurances. Each party agrees to perform such further acts
and execute such further documents as are necessary to effectuate the purposes
hereof.
16. Termination. This Agreement may be terminated by the Trust, without
the payment of any penalty, at any time upon not more than 60 days' nor less
than 30 days' notice to you, by a vote of a majority of the Board of Trustees of
the Trust who are not "interested persons" of the Trust (as defined in the 1940
Act) and have no direct or indirect financial interest in the operation of the
Trust's Plan of Distribution (the "Plan"), this Agreement or any other agreement
related to such Plan, or by "a vote of a majority of the outstanding voting
securities" (as defined in the 1940 Act) of the Trust. The Private Placement
Agent may terminate this Agreement upon not more than 60 days' nor less than 30
days' notice to the Trust. Notwithstanding anything herein to the contrary, this
Agreement may not be assigned and shall terminate automatically without notice
to either party upon any assignment. Upon termination hereof, the Trust shall
pay such compensation as may be due the Private Placement Agent as of the date
of such termination.
17. Changes; Amendments. This Agreement may be changed or amended only
by written instrument signed by both parties.
18. Limitation of Liability. The Master Trust Agreement dated October
30, 1996, as amended from time to time, establishing the Trust, which is hereby
referred to and a copy of which is on file at the offices of the Trust, provides
that the name of the Trust means the Trustees from time to time serving (as
Trustees but not personally) under said Master Trust Agreement. It is expressly
acknowledged and agreed that the obligations of the Trust hereunder shall not be
binding upon any of the shareholders, Trustees, officers, employees or agents of
the Trust, personally, but shall bind only the trust property of the Trust, as
provided in its Master Trust Agreement. The execution and delivery of this
Agreement have been authorized by the Trustees of the Trust and signed by an
officer of the Trust, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Trust as provided in
its Master Trust Agreement.
19. Series. The Trust is a series trust with multiple series and has
entered into this agreement on behalf of those series, as amended from time to
time on notice to the Private Placement Agent. With respect to any obligation of
the Trust on behalf of any series arising hereunder, the Private Placement Agent
shall look for payment or satisfaction of such obligations solely to the assets
and property of the series to which such obligation relates as though the Trust
had separately contracted with the Private Placement Agent by separate written
instrument with respect to each Private Placement Agent. In addition, this
agreement may be terminated with respect to one or more Private Placement Agent
without affecting the rights, duties or obligations of any of the other Private
Placement Agent.
<PAGE>
20. Miscellaneous. This Agreement shall be construed and enforced in
accordance with and governed by the laws of The Commonwealth of Massachusetts
without giving effect to the conflicts of laws provisions thereof. The captions
in this Agreement are included for convenience of reference only and in no way
define or limit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement has been executed on behalf of the Trust
by the undersigned not individually, but in the capacity indicated. This
Agreement shall be effective when accepted by you below.
[Remainder of page intentionally left blank.]
<PAGE>
Please confirm your agreement hereto by signing and returning the
enclosed counterpart of this Agreement at once to: Merrimac Funds, 200 Clarendon
Street, Boston, Massachusetts 02111, Attention: President. Upon receipt thereof,
this Agreement and such signed duplicate copy will evidence the agreement
between us.
Merrimac Funds
By:___________________________________
Name:
Title:
ACCEPTED:
[ ]
(Private Placement Agent)
By:__________________________________
Name:
Title:
Dated:_________________________________
First Amended and Restated
Multiple Class Expense Allocation Plan
Adopted Pursuant to Rule 18f-3
WHEREAS, Merrimac Funds, an unincorporated association of the type
commonly known as a business trust organized under the laws of the State of
Delaware (the "Trust"), engages in business as an open-end management investment
company and is or will be registered as such under the Investment Company Act of
1940, as amended (the "Act");
WHEREAS, the Trust is authorized to (i) issue shares of beneficial
interest ("Shares") in separate series, with the Shares of each such series
representing the interests in a separate portfolio of securities and other
assets, and (ii) divide the Shares within each such series into two or more
classes;
WHEREAS, the Trust has established one or more portfolio series as of
the date hereof (such portfolios being referred to collectively herein as the
"Initial Series" -- such series, together with all other series subsequently
established by the Trust and made subject to this Amended and Restated Plan,
being referred to herein individually as a "Series" and collectively as the
"Series"), and three classes thereof designated as the "Institutional Class,"
"Premium Class" and "Placement Class" shares; and
WHEREAS, the Trustees have determined to operate pursuant to Rule 18f-3
under the Act and pursuant to such Rule the Board of Trustees as a whole, and
the Trustees who are not interested persons of the Trust (as defined in the Act)
(the "Qualified Trustees"), has determined in the exercise of their reasonable
business judgment that this Amended and Restated Plan is in the best interest of
each class of the Initial Series individually and the Initial Series as a whole.
NOW, THEREFORE, the Trust hereby adopts this Amended and Restated Plan
in accordance with Rule 18f-3 under the Act, on the following terms and
conditions:
1. Class Differences. Each class of Shares of each Initial Series shall
represent interests in the same portfolio of investments of the Initial Series
and shall be identical in all respects, and except as otherwise set forth in
this Amended and Restated Plan, shall differ solely with respect to: (i)
arrangements for shareholder and distribution services, or both, as provided for
in Sections 2 and 3 of this Amended and Restated Plan; (ii) the exclusive right
of a class to vote on certain matters relating to any Shareholder Servicing Plan
or Plan of Distribution adopted by the Trust with respect to such class; (iii)
such differences relating to purchase minimums, sales charges and eligible
investors as may be set forth in the prospectuses and Statement of Additional
Information of the Initial Series, as the same may be amended or supplemented
from time to time (the "Prospectuses" and "SAI"); (iv) the differences in any
exchange privileges or conversion features of the classes of Shares in effect
from time to time; and (v) the designation of each class of shares.
<PAGE>
2. Differences in Shareholder and Distribution Services. Each class of
Shares of the Initial Series shall have a different arrangement for shareholder
and distribution services, or both, as follows:
Premium Class Shares shall be sold without a sales charge and
such Shares shall not be subject to a shareholder servicing fee. Institutional
Class Shares shall be sold without a sales charge, shall not be subject to a
12b-1 fee, but shall be subject to a shareholder servicing fee of up to 0.25% of
the nets assets of the Initial Series allocable to such class of Shares.
Placement Class Shares shall be sold without a sales charge but shall be subject
to a shareholder servicing fee of up to 0.25% of the nets assets of the Initial
Series allocable to such class of Shares and a 12b-1 fee of up to 0.25% of the
nets assets of the Initial Series allocable to such class of Shares.
3. Allocation of Expenses. Expenses of the Series shall be allocated as
follows:
(a) Class Expenses. Expenses relating to different
arrangements for shareholder and distribution services shall be allocated to and
paid by that class.
(b) Other Allocations. All expenses of the Series not
allocated to a particular class pursuant to Sections 2 and 3(a) of this Amended
and Restated Plan shall be allocated to each class on the basis of the net asset
value of that class in relation to the net asset value of the Series.
Notwithstanding the foregoing, the underwriter, adviser, or other provider of
services to a Series may waive or reimburse the expenses of a specific class or
classes to the extent permitted under Rule 18f-3 under the Act; provided,
however, that the Board shall monitor the use of such waivers or reimbursements
intended to differ by class.
4. Term and Termination.
(a) Initial Series. This Amended and Restated Plan shall
become effective with respect to the Initial Series as of August 5, 1997, and
shall continue in effect with respect to each class of Shares of the Initial
Series (subject to Section 4(c) hereof) until terminated in accordance with the
provisions of Section 4(c) hereof.
(b) Additional Series or Classes. This Amended and Restated
Plan shall become effective with respect to any class of the Initial Series
other than the Institutional, Premium Class and Placement Class shares and with
respect to each additional Series or class thereof established by the Trust
after the date hereof and made subject to this Amended and Restated Plan, upon
commencement of operations thereof or as otherwise determined, and shall
continue in effect with respect to each such additional Series or class (subject
to Section 4(c) hereof) until terminated in accordance with the provisions of
Section 4(c) hereof. An addendum hereto setting forth such specific and
different terms of such additional series of classes shall be attached to this
Amended and Restated Plan.
2
<PAGE>
(c) Termination. This Amended and Restated Plan may be
terminated at any time with respect to the Trust or any Series or class thereof,
as the case may be, by vote of a majority of both the Trustees of the Trust and
the Qualified Trustees. The Amended and Restated Plan may remain in effect with
respect to a Series or class thereof even if it has been terminated in
accordance with this Section 4(c) with respect to one or more other Series of
the Trust.
5. Amendments. Any material amendment to this Amended and Restated Plan
shall require the affirmative vote of a majority of both the Trustees of the
Trust and the Qualified Trustees.
Dated: August 5, 1997
3
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from Merrimac Treasury Fund Premium Class,
form N-SAR for the period ended December 31, 1997
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> Merrimac Treasury Fund Premium Class
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 73,916,346
<INVESTMENTS-AT-VALUE> 73,916,346
<RECEIVABLES> 0
<ASSETS-OTHER> 18,455
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 73,934,801
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 315,992
<TOTAL-LIABILITIES> 315,992
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 73,621,399
<SHARES-COMMON-STOCK> 24,999,121
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 73,621,399
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,005,414
<OTHER-INCOME> 0
<EXPENSES-NET> 67,212
<NET-INVESTMENT-INCOME> 938,202
<REALIZED-GAINS-CURRENT> (879)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 937,323
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 938,202
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25,000,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 25,000,000
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 163,965
<AVERAGE-NET-ASSETS> 25,000,000
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.038
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.038)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from Merrimac Treasury Fund Institutional Class,
form N-SAR for the period ended December 31, 1997
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> Merrimac Treasury Fund Institutional Class
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 73,916,346
<INVESTMENTS-AT-VALUE> 73,916,346
<RECEIVABLES> 0
<ASSETS-OTHER> 18,455
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 73,934,801
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 315,992
<TOTAL-LIABILITIES> 315,992
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 73,621,399
<SHARES-COMMON-STOCK> 48,619,688
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 73,621,399
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,490,642
<OTHER-INCOME> 0
<EXPENSES-NET> 165,990
<NET-INVESTMENT-INCOME> 1,324,652
<REALIZED-GAINS-CURRENT> (1,711)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,322,941
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,324,652
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 230,160,513
<NUMBER-OF-SHARES-REDEEMED> 181,741,406
<SHARES-REINVESTED> 202,292
<NET-CHANGE-IN-ASSETS> 48,621,399
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 163,965
<AVERAGE-NET-ASSETS> 37,349,341
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.036
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.036)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from Merrimac Cash Fund Premium Class,
form N-SAR for the period ended December 31, 1997
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> Merrimac Cash Fund Premium Class
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 1,324,587,060
<INVESTMENTS-AT-VALUE> 1,324,587,060
<RECEIVABLES> 0
<ASSETS-OTHER> 79,950
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,324,667,010
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,684,168
<TOTAL-LIABILITIES> 6,684,168
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,317,982,842
<SHARES-COMMON-STOCK> 1,119,556,178
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,317,982,842
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 66,829,105
<OTHER-INCOME> 0
<EXPENSES-NET> 2,094,050
<NET-INVESTMENT-INCOME> 64,735,055
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 64,735,055
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 64,735,055
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,359,423,000
<NUMBER-OF-SHARES-REDEEMED> 1,116,106,470
<SHARES-REINVESTED> 303,648
<NET-CHANGE-IN-ASSETS> 243,620,178
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,357,044
<AVERAGE-NET-ASSETS> 1,179,522,791
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.055
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.055)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.18
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from Merrimac Cash Fund Institutional Class,
form N-SAR for the period ended December 31, 1997
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> Merrimac Cash Fund Institutional Class
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 1,324,587,060
<INVESTMENTS-AT-VALUE> 1,324,587,060
<RECEIVABLES> 0
<ASSETS-OTHER> 79,950
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,324,667,010
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,684,168
<TOTAL-LIABILITIES> 6,684,168
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,317,982,842
<SHARES-COMMON-STOCK> 25,000,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,317,982,842
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,498,248
<OTHER-INCOME> 0
<EXPENSES-NET> 630,244
<NET-INVESTMENT-INCOME> 7,868,004
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 7,868,004
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7,868,004
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 772,206,146
<NUMBER-OF-SHARES-REDEEMED> 702,544,276
<SHARES-REINVESTED> 1,354,860
<NET-CHANGE-IN-ASSETS> 71,016,730
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,357,044
<AVERAGE-NET-ASSETS> 146,848,004
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.052
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.052)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.43
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
