AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 24, 1997
File No. 333-_____
File No. 811-_____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 /X/
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/
FLEMING CAPITAL MUTUAL FUND GROUP
(Exact Name of Registrant as Specified in Charter)
c/o 320 Park Avenue
New York, New York 10022
(Address of Principal Executive Offices, Zip Code)
Registrant's Telephone Number, including Area Code (212) 508-3600
Steven J. Paggioli
Investment Company Administration Corporation
479 West 22nd Street
New York, New York 10011
(Name and Address of Agent for Service)
Copies to:
RICHARD F. JACKSON, ESQUIRE
Morgan, Lewis & Bockius LLP
1800 M STREET, NW
WASHINGTON, DC 20036
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/X/ Approximate date of Proposed Public Offering:
As soon as practicable after the
effective date of this Registration Statement
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Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a)
may determine.
Pursuant to the provisions of Rule 24f-2 under the Investment Act of 1940, an
indefinite number of units of beneficial interest is being registered by this
Registration Statement.
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FLEMING CAPITAL MUTUAL FUND GROUP
CROSS REFERENCE SHEET
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N-1A ITEM NO. LOCATION
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PART A -
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Item 1. Cover Page Cover Page
Item 2. Synopsis Summary; Expense Summary
Item 3. Condensed Financial Information *
Item 4. General Description of Registrant The Trust and the Funds; Investment Objectives;
Investment Policies; Risk Factors; Investment Limita
tions; General Information - The Trust; Description of
Permitted Investments & Risk Factors
Item 5. Management of the Fund The Adviser; The Administrator; The Transfer Agent;
The Distributor; Portfolio Transactions; Expense
Summary; General Information - Trustees of the Trust
Item 5A. Management's Discussion of Fund *
Performance
Item 6. Capital Stock and Other Securities General Information - Voting Rights; General
Information - Shareholder Inquiries; General
Information - Dividends and Distributions; Taxes
Item 7. Purchase of Securities Being Offered Purchase and Redemption of Shares
Item 8. Redemption or Repurchase Purchase and Redemption of Shares
Item 9. Pending Legal Proceedings *
PART B -
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History *
Item 13. Investment Objectives and Policies Investment Objectives (Prospectus); Investment Policies
(Prospectus); Investment Limitations; Description of
Permitted Investments
Item 14. Management of the Fund General Information - Trustees of the Trust (Pros
pectus); Trustees and Officers of the Trust
Item 15. Control Persons and Principal Holders of Trustees and Officers of the Trust
Securities
Item 16. Investment Advisory and Other Services The Adviser (Prospectus and Statement of Additional
Information); The Administrator (Prospectus and
Statement of Additional Information); The Distributor
(Prospectus and Statement of Additional Information);
The Transfer Agent (Prospectus); General Information -
Counsel and Independent Public Accountants
(Prospectus); General Information - Custodian
(Prospectus)
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Item 17. Brokerage Allocation Portfolio Transactions (Prospectus); Portfolio
Transactions
Item 18. Capital Stock and Other Securities Description of Shares; Shareholder Liability
Item 19. Purchase, Redemption, and Pricing of Purchase and Redemption of Shares (Prospectus);
Securities Being Offered Purchase and Redemption of Shares; Determination of
Net Asset Value
Item 20. Tax Status Taxes (Prospectus); Taxes
Item 21. Underwriters The Distributor
Item 22. Calculation of Performance Data Computation of Yield and Total Return
Item 23. Financial Statements *
PART C -
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C of this Registration Statement.
* Not Applicable
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FLEMING CAPITAL MUTUAL FUND GROUP
Investment Adviser:
ROBERT FLEMING, INC.
The Fleming Capital Mutual Fund Group (the "Trust") provides a convenient and
economical means of investing in professionally managed portfolios of
securities. This Prospectus offers shares of the following mutual funds (each a
"Fund" and, together, the "Funds"), each of which is a separate series of the
Trust:
FLEMING FUND
FLEMING FLEDGLING FUND
This Prospectus concisely sets forth the information about the Trust and the
Funds that a prospective investor should know before investing. Investors are
advised to read this Prospectus and retain it for future reference. A Statement
of Additional Information dated , 1997 has been filed with the
Securities and Exchange Commission, and is available without charge by calling .
The Statement of Additional Information is incorporated into this Prospectus by
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
_______________ , 1997
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TABLE OF CONTENTS
SUMMARY ......................................................................3
EXPENSE SUMMARY................................................................5
INVESTMENT POLICIES............................................................6
RISK FACTORS...................................................................7
INVESTMENT LIMITATIONS.........................................................8
THE ADVISER....................................................................8
THE DISTRIBUTOR...............................................................10
THE ADMINISTRATOR.............................................................10
THE TRANSFER AGENT............................................................11
PORTFOLIO TRANSACTIONS........................................................11
PURCHASE AND REDEMPTION OF SHARES.............................................11
PERFORMANCE...................................................................15
TAXES .....................................................................16
GENERAL INFORMATION...........................................................17
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS.........................19
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SUMMARY
The following provides basic information about the Fleming Fund (the "Fleming
Fund") and Fleming Fledgling Fund (the "Fledgling Fund") (each a "Fund" and,
collectively, the "Funds"). The Funds are the two mutual funds comprising the
Fleming Capital Mutual Fund Group (the "Trust") and are advised by Robert
Fleming, Inc. (the "Adviser"). This summary is qualified in its entirety by
reference to the more detailed information provided elsewhere in this Prospectus
and in the Statement of Additional Information.
What is each Fund's investment objective and primary policies?
The Fleming Fund seeks growth from capital appreciation and income. It invests
primarily in a diversified portfolio of common stock and preferred stock of
issuers the Adviser believes have above average growth potential.
The Fledgling Fund seeks growth through capital appreciation. It invests
primarily in a diversified portfolio of common stock and preferred stock of
issuers with market capitalizations of not more than $3.0 billion that are
quoted on a stock exchange or traded on an over-the-counter market (OTC) that
the Adviser believes offer strong earnings growth potential.
What are the risks involved with investing in the Funds? The investment policies
of each Fund entail certain risks and considerations of which investors should
be aware. Each Fund invests in securities that fluctuate in value, and investors
should expect each Fund's net asset value per share to fluctuate in value. The
value of equity securities may be affected by the financial markets as well as
by developments impacting specific issuers. The Funds may enter into futures and
options transactions and may purchase zero coupon securities. Investments in
these instruments involve certain other risks.
For more information about each Fund, see "Investment Objectives," "Investment
Policies," "Risk Factors," and "Description of Permitted Investments and Risk
Factors."
Who is the Adviser? Robert Fleming, Inc. serves as the investment adviser to
each Fund. See "Expense Summary" and "The Adviser."
Who is the Administrator? Investment Company Administration Corporation (the
"Administrator") serves as the administrator for the Funds. See "Expense
Summary" and "The Administrator."
Who is the Distributor? First Fund Distributors, Inc. (the "Distributor") serves
as the distributor of the Funds' shares. See "The Distributor."
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Who is the Transfer Agent? [ ] serves as the transfer agent and dividend
disbursing agent for the Trust. See "The Transfer Agent."
Is there a sales load? No, shares of each Fund are offered on a no-load basis.
Is there a minimum investment? The Funds require a minimum initial investment
for each Fund of $1,000,000, which the Adviser may waive at its discretion.
How do I purchase and redeem shares? Purchases and redemptions may be made
through the Transfer Agent on each day that the New York Stock Exchange is open
for business ("Business Day"). A purchase order will be effective as of the
Business Day received by the Transfer Agent if the Transfer Agent (or its
authorized agent) receives the order and payment, by check or in readily
available funds, prior to 4:00 p.m. Eastern time. Redemption orders received by
the Transfer Agent prior to 4:00 p.m. Eastern time on any Business Day will be
effective that day. The purchase and redemption price for shares is the net
asset value per share determined as of the end of the day the order is
effective. See "Purchase and Redemption of Shares."
How are distributions paid? Each Fund distributes substantially all of its net
investment income (exclusive of capital gains) in the form of periodic
dividends. Any capital gain is distributed at least annually. Distributions are
paid in additional shares unless the shareholder elects to take the payment in
cash. See "Dividends and Distributions."
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EXPENSE SUMMARY
This table is designed to help a shareholder understand the costs of investing
in the Funds.
SHAREHOLDER TRANSACTION EXPENSES
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Sales Load Imposed on Purchases.............................................None
Sales Load Imposed on Reinvested Dividends..................................None
Deferred Sales Load.........................................................None
Redemption Fees (1).........................................................None
Exchange Fees...............................................................None
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(1) A wire redemption charge, currently [ ] is deducted from the amount
of a Federal Reserve wire redemption payment made at the request of a
shareholder.
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
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Fleming Fund Fledgling Fund
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Advisory Fees(1) .90% 1.00%
12b-1 Fees None None
Other Expenses(2) .35% .35%
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Total Operating Expenses (after fee
waivers or reimbursements) (3) 1.25% 1.35%
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(1) Although not required to do so, the Adviser has agreed to waive its
advisory fee or reimburse each Fund to the extent necessary so that the
ratio of total operating expenses to average net assets will not exceed
1.25% and 1.35% for the Fleming Fund and Fledgling Fund, respectively.
In subsequent years, overall Fund operating expenses will not fall
below the applicable percentage limitation until the Advisor has been
fully reimbursed for fees forgone and expenses paid. The Adviser
reserves the right to terminate the waivers or discontinue
reimbursements at any time in its sole discretion.
(2) "Other Expenses" are estimated for the current fiscal year.
(3) Absent fee waivers and expense reimbursements, estimated "Total
Operating Expenses" for the Fleming and Fledgling Funds would be 2.55%
and 2.65%, respectively.
EXAMPLE
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Your would pay the following expenses on a $1,000 1 year 3 years
investment in a Fund assuming (1) a 5% annual return ------ -------
and (2) redemption at the end of each time period.
Fleming Fund $13 $40
Fledgling Fund $14 $43
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The example is based upon total operating expenses of each Fund after waivers
and reimbursements, if any, as shown in the expense table. The example should
not be considered a representation of past or future expenses. Actual expenses
may be greater or less than those shown. The purpose of the expense table and
example is to assist the investor in understanding the various costs and
expenses that may be directly or indirectly borne by shareholders of the Funds.
Additional information may be found under "The Adviser" and "The Administrator."
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THE TRUST AND THE FUNDS
Fleming Capital Mutual Fund Group (the "Trust") offers shares in two
separately-managed mutual funds, each of which is a separate series of the
Trust. Each share of each mutual fund represents an undivided, proportionate
interest in that mutual fund. This Prospectus offers shares of the Trust's
Fleming Fund (the "Fleming Fund") and Fledgling Equity Fund (the "Fledgling
Fund") (each a "Fund" and, together, the "Funds").
INVESTMENT OBJECTIVES
Fleming Fund -- The Fleming Fund seeks growth from capital appreciation and
income.
Fledgling Fund -- The Fledgling Fund seeks growth through capital appreciation.
There can be no assurance that any Fund will achieve its investment objective.
INVESTMENT POLICIES
Fleming Fund
The Fleming Fund invests primarily (and, under normal conditions, at least 80%
of its total assets) in a diversified portfolio of common stocks and preferred
stock of issuers that the Adviser believes to have above average growth
potential. Any remaining assets may be invested in ADRs, warrants and rights,
securities convertible into common stock, debt securities and other investment
companies. The Fund only will purchase securities that are traded on registered
exchanges or the over-the-counter market in the United States.
Fledgling Fund
The Fledgling Fund invests primarily (and, under normal conditions, at least 80%
of its total assets) in a diversified portfolio of common stocks of issuers with
market capitalizations of not more than $3.0 billion that the Adviser believes
to have strong earnings growth potential. The Fund may invest in warrants and
rights to purchase common stocks, securities convertible into common stock, debt
securities, other investment companies, and ADRs. The Fund only will purchase
securities that are traded on registered exchanges or the over-the-counter
market in the United States.
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All Funds
Each Fund may purchase securities on a when-issued basis.
Each Fund may enter into futures and options transactions.
Each Fund may invest up to 15% of its net assets in illiquid securities.
Each Fund may purchase convertible securities.
Each Fund may, for temporary defensive purposes, invest up to 100% of its total
assets in money market instruments (including certain U.S. Government and U.S.
Treasury securities, bank obligations, commercial paper and other short-term
debt securities rated at the time of purchase in the top two categories by an
NRSRO, repurchase agreements involving the foregoing securities), shares of
money market investment companies and cash.
For a further description of these types of instruments see "Description of
Permitted Investments and Risk Factors" in the Statement of Additional
Information.
RISK FACTORS
Equity Securities -- Investments in equity securities in general are subject to
market risks that may cause their prices to fluctuate over time. The value of
securities convertible into equity securities, such as warrants or convertible
debt, is also affected by prevailing interest rates, the credit quality of the
issuer and any call provision. Fluctuations in the value of equity securities in
which a Fund invests will cause the net asset value of that Fund to fluctuate.
An investment in such Funds may be more suitable for long-term investors who can
bear the risk of short-term principal fluctuations.
The Fledgling Fund invests to a significant degree in equity securities of
smaller companies. The Fleming Fund may invest in the securities of small and
medium capitalization companies. Any investment in smaller or medium
capitalization companies involves greater risk than that customarily associated
with investments in larger, more established companies. This increased risk may
be due to the greater business risks of smaller size, limited markets and
financial resources, narrow product lines and lack of depth of management. The
securities of smaller companies are often traded in the over-the-counter market
and, if listed on a national securities exchange, may not be traded in volumes
typical for that exchange. Thus, the securities of smaller- sized companies are
likely to be less liquid, and subject to more abrupt or erratic market movements
than securities of larger, more established growth companies.
Portfolio Turnover -- Under normal circumstances, the portfolio turnover rate
for each Fund is not expected to exceed 75%. See Taxes.
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INVESTMENT LIMITATIONS
The investment objective of each Fund and certain of the investment limitations
set forth here and in the Statement of Additional Information are fundamental
policies of that Fund. Fundamental policies cannot be changed without the
consent of the holders of a majority of that Fund's outstanding shares.
1. No Fund may (i) purchase securities of any issuer (except securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities and
repurchase agreements involving such securities) if, as a result, more than 5%
of the total assets of the Fund would be invested in the securities of such
issuer; or (ii) acquire more than 10% of the outstanding voting securities of
any one issuer. This restriction applies to 75% of each Fund's total assets.
2. No Fund may purchase any securities which would cause 25% or more of the
total assets of the Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry, provided
that this limitation does not apply to investments in obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities and
repurchase agreements involving such securities.
The foregoing percentages will apply at the time of the purchase of a security.
THE ADVISER
Robert Fleming, Inc. is a professional investment management firm and broker
dealer founded in 1968. The Adviser is an indirect, wholly-owned subsidiary of
Robert Fleming Holdings, a merchant bank based in London. As of [ ], the
Adviser had discretionary management authority with respect to approximately
[$ ] billion of assets. The Adviser has, since 1985, provided investment
advisory and subadvisory services to foreign investment companies and other
clients investing in securities in the U.S. The principal business address of
the Adviser is 320 Park Avenue, New York, New York 10022.
The Adviser serves as the investment adviser for each Fund under an investment
advisory agreement (the "Advisory Agreement"). Under the Advisory Agreement, the
Adviser makes the investment decisions for the assets of each Fund and
continuously reviews, supervises and administers each Fund's investment program,
subject to the supervision of, and policies established by, the Trustees of the
Trust.
For its services, the Adviser is entitled to a fee, which is calculated daily
and paid monthly, at an annual rate of .90% of the average daily net assets of
the Fleming and 1.00% of those of the Fledgling Fund. Although not required to
do so, the Adviser has voluntarily agreed to waive all or a portion of its fee
and to reimburse expenses of the Fleming and Fledgling Funds in order to limit
their total operating expenses (as a percentage of average daily net assets on
an annualized basis) to not more than 1.25% and 1.35%, respectively. In
subsequent years, overall Fund
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operation expenses will not fall below the applicable percentage limitations
until the Adviser has been fully reimbursed for fees forgone and expenses paid.
Any reductions made by the Adviser in its fees or payments or reimbursement of
expenses which are a Fund's obligation are subject to reimbursement by the Fund.
The Adviser believes that it is likely that the Funds will be of a sufficient
size to permit the reimbursements of any such reductions or payments. A
description of any such reimbursements and amounts paid will be set forth in the
Financial Statements that will be included in the Funds' Annual and Semi-Annual
Reports to shareholders. The Adviser reserves the right, in its sole discretion,
to terminate these voluntary fee waivers and reimbursements at any time.
Jonathan Kendrew Llewelyn Simon, serves as portfolio manager to the Fleming
Fund. Mr. Simon has worked with various affiliates of the Adviser since 1980 and
is currently Director of Robert Fleming Inc. Mr. Simon is head of the Adviser's
Large Cap Investment Team.
Christopher Mark Vyvyan Jones, serves as portfolio manager to the Fledgling
Fund. Mr. Jones has worked with various affiliates of the Adviser since 1982 and
is currently Director of Robert Fleming Inc. Mr. Jones is head of the Adviser's
Fledgling Investment Team.
Performance of the Adviser
At _______________ the Adviser managed over $___ million of assets for pension
plans, corporations, limited partnerships, and foreign investment companies with
objectives, policies, and strategies that are substantially similar to each of
the Funds. The accounts which comprise the [Fleming Composite] have investment
objectives similar to that of the Fleming Fund and the accounts which comprise
the [Fledgling Composite] have investment objectives that are similar to that of
the Fledgling Fund. The following tables depict the Adviser's total return
record with respect to these accounts or vehicles for the periods shown. The
performance information set forth below is not indicative of the future
performance of either Fund.
Average Annual
Total Return Total Return Return
[since [one [since
inception] year] inception]
---------- ----- ----------
Fleming Composite (1) ____% ____% ____%
Index ____% ____% ____%
[ ]
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Average Annual
Total Return Total Return Return
[since [one [since
inception] year] inception]
---------- ----- ----------
Fleming Fledgling Composite ____% ____% ____%
(1)
Index ____% ____% ____%
Notes:
(1) Each composite depicts the net-of-fees performance of all fee
paying discretionary accounts with similar objectives managed by the Adviser
during the periods noted, and does not include the performance of any
partnership managed by the Adviser which paid the Adviser a performance fee tied
to realized and unrealized gains and losses.
THE DISTRIBUTOR
First Fund Distributors, Inc. (the "Distributor"),4455 E. Camelback Road, Suite
261E, Phoenix, Arizona 85018, an affiliate of the Administrator, acts as the
Trust's distributor pursuant to a distribution agreement (the "Distribution
Agreement"). The Distribution Agreement provides the Distributor with the right
to distribute shares of Funds through other broker-dealers or financial
institutions with whom the Distributor has entered into selected broker
agreements.
THE ADMINISTRATOR
Investment Company Administration Corporation (the "Administrator"), 2025 E.
Financial Way, Suite 101, Glendora, California 91741, an affiliate of the
Distributor, provides the Trust with administrative services.
The Administrator, pursuant to an administration agreement with the Trust,
supervises the overall administration of the Funds including, among other
responsibilities, the preparation and filing of all documents required for
compliance by the Trust or the Funds with applicable laws and regulations,
arranging for the maintenance of books and records of the Trust and the Funds,
and supervision of other organizations that provide services to the Trust and
the Funds. Certain officers of the Funds may be provided by the Administrator.
Under the terms of the agreement, each Fund will pay the Administrator an annual
fee of 0.10% of the first $200 million of average daily net assets, 0.05% of the
next $300 million, and 0.03% of assets over $500 million, payable monthly and
subject to an annual minimum of $40,000.
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THE TRANSFER AGENT
[ ], [address] (the "Transfer Agent") serves as the transfer agent and
dividend disbursing agent for the Trust under a transfer agency agreement with
the Trust.
PORTFOLIO TRANSACTIONS
Each Fund may execute brokerage or other agency transactions through the Adviser
or its affiliates for which the Adviser or its affiliates may receive usual and
customary compensation. The investment advisory agreement authorizes the Adviser
to select the brokers or dealers that will execute the purchases and sales of
investment securities for a Fund and directs the Adviser to use its best efforts
to obtain the best execution with respect to all transactions for the Fund. In
doing so, a Fund may pay higher commission rates than the lowest available when
the Adviser believes it is reasonable to do so in light of the value of the
research, statistical, and pricing services provided by the broker effecting the
transaction. The Adviser is not in the practice of allocating brokerage or
principal business on the basis of sales of the Funds' shares which may be made
through intermediary brokers or dealers. However, the Adviser may place Fund
orders with qualified broker-dealers who recommend a Fund or who act as agents
in the purchase of shares of a Fund for their clients.
PURCHASE AND REDEMPTION OF SHARES
Purchases and redemptions may be made through the Transfer Agent on each day
that the New York Stock Exchange is open for business ("Business Day").
Investors may purchase and redeem shares of each Fund directly through the
Transfer Agent at: [ ], by mail or wire transfer. Purchases and
redemptions of shares of the Fund may be made on any Business Day. All
shareholders may place orders by telephone; when market conditions are extremely
busy, it is possible that investors may experience difficulties placing orders
by telephone and may wish to place orders by mail.
The minimum initial investment in each Fund is $1,000,000, and subsequent
purchases must be at least $10,000. The Adviser may waive these minimums at its
discretion. No minimum applies to subsequent purchases effected by dividend
reinvestment. Employees of the Adviser and certain of its affiliates may invest
in the Funds subject to certain conditions, including a lower minimum
investment, established by the Adviser.
Certain brokers assist their clients in the purchase or redemption of shares and
charge a fee for this service in addition to a Fund's public offering price.
Purchases by Mail
An account may be opened by mailing a check or other negotiable bank draft
(payable to the name of the appropriate Fund) for $1 million or more, together
with a completed Account Application
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to: [ ]. When purchases are made by check (including certified
or cashier's checks), redemption proceeds will not be forwarded until the
investment being redeemed has been in the account for [15] days. Subsequent
investments may also be mailed directly to the Transfer Agent.
Purchases by Wire Transfer
Shareholders having an account with a commercial bank that is a member of the
Federal Reserve System may purchase shares of the Fund by requesting their bank
to transmit funds by wire to: [ ], for Account Number [ ];
Further Credit: [___________ Fund]. The shareholder's name and account number
must be specified in the wire.
Initial Purchases: Before making an initial investment by wire, an investor must
first telephone [ ] to be assigned an account number. The investor's
name, account number, taxpayer identification number or Social Security number,
and address must be specified in the wire. In addition, an Account Application
should be promptly forwarded to: [ ].
Subsequent Purchases: Additional investments may be made at any time through the
wire procedures described above, which must include a shareholder's name and
account number. The investor's bank may impose a fee for investments by wire.
Purchasing with Securities
Shares may be purchased by tendering payment in kind in the form of marketable
securities, including, but not limited to, shares of common stock and debt
securities, provided the acquisition of such securities is consistent with the
Funds investment objective and otherwise acceptable to the Adviser.
Automatic Investment Plan ("AIP")
A shareholder or prospective shareholder may arrange for periodic investments in
a Fund through automatic deductions by ACH from a checking account by completing
the appropriate section on the application. There is no minimum initial
investment amount for AIPs; however, the minimum pre-authorized investment
amount if $50 per month per account. An Application Form may be obtained by
calling 1-800-________.
General Information Regarding Purchases
A purchase request will be effective as of the day received by the Transfer
Agent if the Transfer Agent (or its authorized agent) receives the purchase
request in good order and payment before 4:00 p.m., Eastern time. A purchase
request is in good order if it is complete and accompanied by the appropriate
documentation, including an Account Application and any additional documentation
required. Purchase requests in good order received after 4:00 p.m., Eastern
time,
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will be effective the next Business Day. Payment may be made by check or readily
available funds. The purchase price of shares of any Fund is that Fund's net
asset value per share next determined after a purchase order is effective.
Purchases will be made in full and fractional shares of each Fund calculated to
three decimal places.
If a check received for the purchase of shares does not clear, the purchase will
be canceled, and the investor could be liable for any losses or fees incurred.
The Trust reserves the right to reject a purchase order when the Trust
determines that it is not in the best interest of the Trust or its shareholders
to accept such order.
Exchanges
Shareholders of each Fund may exchange their shares for shares of the other Fund
if it is then offering its shares to the public. Exchanges are made at net asset
value. An exchange is considered a sale of shares and may result in capital gain
or loss for federal income tax purposes. The shareholder must have received a
current prospectus for the new Fund before any exchange will be effected. If the
Transfer Agent (or its authorized agent) receives exchange instructions in
writing or by telephone (an "Exchange Request") in good order by 4:00 p.m.,
Eastern time, on any Business Day, the exchange will be effected that day. The
liability of the Fund or the Transfer Agent for fraudulent or unauthorized
telephone instructions may be limited as described below. The Trust reserves the
right to modify or terminate this exchange offer on 60 days' notice.
Redemptions
Shareholders may request redemptions from a Fund either by mail, by writing
[ ], or by telephone.
The Transfer Agent may require that the signatures on the written request be
guaranteed. You should be able to obtain a signature guarantee from a bank,
broker, dealer, certain credit unions, securities exchange or association,
clearing agency or savings association. Notaries public cannot guarantee
signatures. The signature guarantee requirement will be waived if all of the
following conditions apply: (1) the redemption is for not more than $5,000 worth
of shares, (2) the redemption check is payable to the shareholder(s) of record,
and (3) the redemption check is mailed to the shareholder(s) at his or her
address of record. The Trust and the Transfer Agent reserve the right to amend
these requirements without notice.
Provided the telephone redemption option has been authorized by the shareholder
on the account registration form, a redemption of shares may be requested by
calling _____________ and requesting that the proceeds be mailed to the primary
registration address or wired per the authorized instructions designated on the
shareholder's account registration form. Shares cannot be redeemed by telephone
if share certificates are held for those shares. Shareholders may not close
their accounts by telephone.
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Redemption requests in good order received by the Transfer Agent (or its
authorized agent) prior to 4:00 p.m., Eastern time on any Business Day will be
effective that day. To redeem shares of the Fund, shareholders must place their
redemption orders with the Transfer Agent (or its authorized agent) prior to
4:00 p.m., Eastern time, on any Business Day. The redemption price of shares of
any Fund is the net asset value per share of that Fund next determined after the
redemption order is effective. Payment of redemption proceeds will be made as
promptly as possible and, in any event, within seven days after the redemption
order is received, provided, however, that redemption proceeds for shares
purchased by check (including certified or cashier's checks) will be forwarded
only upon collection of payment for such shares; collection of payment may take
up to 15 days.
Shareholders may receive redemption payments in the form of a check or by
Federal Reserve wire transfer. There is no charge for having a check for
redemption proceeds mailed. The Custodian will deduct a wire charge, currently
$[ ], from the amount of a Federal Reserve wire redemption payment made
at the request of a shareholder. Shareholders cannot redeem shares of a Fund by
Federal Reserve wire on Federal holidays restricting wire transfers.
Neither the Trust nor the Transfer Agent will be responsible for the
authenticity of instructions received by telephone if they reasonably believe
those instructions to be genuine. The Trust and the Transfer Agent will each
employ reasonable procedures to confirm that telephone instructions are genuine.
Such procedures may include the taping of telephone conversations.
The right of redemption may be suspended or the date of payment of redemption
proceeds postponed during certain periods as set forth more fully in the
Statement of Additional Information.
Systematic Withdrawal Plan
The Trust offers a Systematic Withdrawal Plan ("SWP") which may be utilized by
shareholders who wish to receive regular distributions from their account. Upon
commencement of the SWP, the account must have a current value of $_________ or
more. Shareholders may elect to receive automatic payments via check or ACH of
$______ or more on a monthly, quarterly, semi-annual, or annual basis. Automatic
withdrawals are normally processed on the __th day of the applicable month or,
if such day is not a business day, on the previous business day, and are paid
promptly thereafter. To arrange a SWP, complete the appropriate section on the
account registration form. Shareholders should realize that if withdrawals
exceed income dividends, their invested principal in the account will be
depleted. Thus, depending upon the frequency and amounts of the withdrawal
payments and/or any fluctuations in the net asset value per share, their
original investment could be exhausted entirely. To participate in the SWP,
shareholders must have their dividends automatically reinvested. Shareholders
may change or cancel the SWP at any time, upon written notice to the Transfer
Agent.
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Share Price
Shares of a Fund are purchased at the net asset value after an order in proper
from is received by the Transfer Agent. An order in proper form must include all
correct and complete information, documents and signatures required to process
your purchase, as well as a check or bank wire payment properly drawn and
collectable. Payment should be made by check drawn on a U.S. bank, savings and
loan, or credit union. The net asset value per share is determined as of the
close of trading of the New York Stock Exchange on each day the Exchange is open
for normal trading. Orders received before 4:00 PM (Eastern time) on a day when
the Exchange is open for normal trading will be processed as of the close of
trading on that day. Otherwise, processing will occur on the next business day.
The Distributor reserves the right to reject any purchase order.
Net Asset Value
The net asset value of each Fund is determined as of the close of trading
(currently 4:00 PM, Eastern time) on each day that the New York Stock Exchange
is open for trading (a "Business Day"). The net asset value per share of each
Portfolio is the value of the Fund's assets, less its liabilities, divided by
the number of outstanding shares of the Fund. Each Fund values its investments
on the basis of the market value of its securities. Securities and other assets
for which market prices are not readily available are valued at fair value as
determined in good faith in accordance with procedures approved by the Board of
Trustees. Debt securities with remaining maturities of 60 days or less are
normally valued at amortized cost, unless the Adviser in accordance with
procedures approved by the Board of Trustees determines that amortized cost does
not represent fair value. Cash and receivables will be valued at their face
amounts. Interest will be recorded as accrued, and dividends will be recorded on
their ex-dividend date.
Share Certificates
Shares are credited to your account and certificates are not issued unless
specifically requested. This eliminates the costly problem of lost or destroyed
certificates.
PERFORMANCE
From time to time, each Fund may advertise its total return and yield. These
figures will be based on historical earnings and are not intended to indicate
future performance. No representation can be made regarding actual future
returns or yields.
The total return of a Fund refers to the average compounded rate of return on a
hypothetical investment, for designated time periods (including but not limited
to the period from which the Fund commenced operations through the specified
date), assuming that the entire investment is redeemed at the end of each period
and assuming the reinvestment of all dividend and capital gain distributions.
The yield of a Fund refers to the annualized income generated by an investment
in
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the Fund over a specified 30-day period. The yield is calculated by assuming
that the same amount of income generated by the investment during that period is
generated in each 30-day period over one year and is shown as a percentage of
the investment.
A Fund may periodically compare its performance to that of other mutual funds as
reported by mutual fund rating services (such as Lipper Analytical Services,
Inc.), financial and business publications and periodicals, broad groups of
comparable mutual funds, unmanaged indices, which may assume investment of
dividends but generally do not reflect deductions for administrative and
management costs, or other investment alternatives. A Fund may quote
Morningstar, Inc., a service that ranks mutual funds on the basis of
risk-adjusted performance, and Ibbotson Associates of Chicago, Illinois, which
provides historical returns of the capital markets in the U.S. A Fund may also
quote the Frank Russell Company or Wilshire Associates consulting firms that
compile financial characteristics of common stocks and fixed income securities,
regarding non- performance-related attributes of a Fund's portfolio. The Fund
may use long-term performance of these capital markets to demonstrate general
long-term risk versus reward scenarios and could include the value of a
hypothetical investment in any of the capital markets. The Fund may also quote
financial and business publications and periodicals as they relate to fund
management, investment philosophy, and investment techniques.
A Fund may quote various measures of volatility and benchmark correlation in
advertising and may compare these measures to those of other funds. Measures of
volatility attempt to compare historical share price fluctuations or total
returns to a benchmark while measures of benchmark correlation indicate how
valid a comparative benchmark might be. Measures of volatility and correlation
are calculated using averages of historical data and cannot be calculated
precisely.
TAXES
The following summary of federal income tax consequences is based on current tax
laws and regulations, which may be changed by legislative, judicial or
administrative action. No attempt has been made to present a detailed
explanation of the federal income tax treatment of a Fund or its shareholders.
Shareholders are urged to consult their tax advisors regarding specific
questions as to federal, state and local income taxes. Further information
concerning taxes is set forth in the Statement of Additional Information.
Tax Status of the Funds:
Each Fund is treated as a separate entity for federal income tax purposes and is
not combined with the Trust's other portfolios. Each Fund intends to qualify or
to continue to qualify for the special tax treatment afforded regulated
investment companies as defined under Subchapter M of the Internal Revenue Code
of 1986, as amended. So long as a Fund qualifies for this special tax treatment,
it will be relieved of federal income tax on that part of its net investment
income and net capital gain (the excess of net long-term capital gain over net
short-term capital loss) which it distributes to shareholders.
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Tax Status of Distributions:
Each Fund will distribute all of its net investment income (including, for this
purpose, net short-term capital gain) to shareholders. Dividends from net
investment income will be taxable to shareholders as ordinary income whether
received in cash or in additional shares. Distributions from net investment
income will qualify for the dividends-received deduction for corporate
shareholders only to the extent such distributions are derived from dividends
paid by domestic corporations; however, such distributions which do qualify for
the dividends-received deduction may be subject to the corporate alternative
minimum tax. Any net capital gains will be distributed annually and will be
taxed to shareholders as long-term capital gains, regardless of how long the
shareholder has held shares. Each Fund will mail annual reports to shareholders
of the federal income tax status of all distributions, including the amount of
dividends eligible for the dividends-received deduction.
Certain securities purchased by a Fund are sold with original issue discount and
thus do not make periodic cash interest payments. Each Fund will be required to
include as part of its current income the accrued discount on such obligations
even though the Fund has not received any interest payments on such obligations
during that period. Because each Fund distributes all of its net investment
income to its shareholders, a Fund may have to sell portfolio securities to
distribute such accrued income, which may occur at a time when the Adviser would
not have chosen to sell such securities and which may result in a taxable gain
or loss.
Dividends declared by a Fund in October, November or December of any year and
payable to shareholders of record on a date in one of those months will be
deemed to have been paid by the Fund and received by the shareholders on
December 31 in the year declared, if paid by the Fund at any time during the
following January. Each Fund intends to make sufficient distributions prior to
the end of each calendar year to avoid liability for the federal excise tax
applicable to regulated investment companies.
Each sale, exchange or redemption of a Fund's shares is a taxable event to the
shareholder.
GENERAL INFORMATION
The Trust
The Trust, an open-end management investment company, was organized under
Massachusetts law as a business trust under a Declaration of Trust dated April
21, 1997. The Declaration of Trust permits the Trust to offer separate series
("portfolios") of shares. All consideration received by the Trust for shares of
any portfolio and all assets of such portfolio belong to that portfolio and are
subject to liabilities related thereto. The Trust reserves the right to create
and issue shares of additional portfolios.
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The Trust pays its operating expenses, including fees of its service providers,
audit and legal expenses, expenses of preparing prospectuses, proxy solicitation
material and reports to shareholders, costs of custodial services and
registering the shares under federal and state securities laws, pricing and
insurance expenses, and pays additional expenses including litigation and other
extraordinary expenses, brokerage costs, interest charges, taxes and
organization expenses.
Trustees of the Trust
The management and affairs of the Trust are supervised by the Trustees under the
laws of the Commonwealth of Massachusetts. The Trustees have approved contracts
under which, as described above, certain companies provide essential management
services to the Trust.
Voting Rights
Each share held entitles the shareholder of record to one vote. Shareholders of
each Fund will vote separately on matters pertaining solely to that Fund. As a
Massachusetts business trust, the Trust is not required to hold annual meetings
of Shareholders, but approval will be sought for certain changes in the
operation of the Trust and for the election of Trustees under certain
circumstances.
A Trustee may be removed by the remaining Trustees or by Shareholders at a
special meeting called upon written request of Shareholders owning at least 10%
of the outstanding shares of the Trust. If such a meeting is requested, the
Trust will provide appropriate assistance and information to the Shareholders
requesting the meeting.
Reporting
The Trust will issue unaudited financial information semiannually and audited
financial statements annually for each Fund. The Trust also may furnish periodic
reports and, as necessary, proxy statements to shareholders of record.
Shareholder Inquiries
Shareholder inquiries should be directed to [ ], or by calling
[ ]. Purchases, exchanges and redemptions of shares should be made
through the Transfer Agent by calling [ ].
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<PAGE>
Dividends and Distributions
The Fleming Fund and Fledgling Fund intend to pay dividends annually. Each Fund
makes distributions of its net capital gains, if any, at least annually. The
Board of Trustees may determine to declare dividends and make distributions more
frequently.
Shareholders automatically receive all income dividends and capital gain
distributions in additional shares, unless the shareholder has elected to take
such payment in cash. Shareholders may change their election by providing
written notice to the Transfer Agent at least 15 days prior to the distribution.
Shareholders may receive payments for cash distributions in the form of a check
or by Federal Reserve or ACH wire transfer.
Dividends and other distributions of each Fund are paid on a per share basis.
The value of each share will be reduced by the amount of the payment. If shares
are purchased shortly before the record date for a distribution of ordinary
income or capital gains, a shareholder will pay the full price for the shares
and receive some portion of the price back as a taxable distribution or
dividend.
Counsel and Independent Public Accountants
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. [ ]
serves as the independent public accountants for the Trust.
Custodian
[ ] serves as the custodian (the "Custodian") of the Trust. The
Custodian holds cash, securities and other assets of the Trust as required by
the Investment Company Act of 1940 (the "1940 Act").
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of permitted investments for one or more of the
Funds:
AMERICAN DEPOSITARY RECEIPTS ("ADRs") -- ADRs are securities, typically issued
by a U.S. financial institution (a "depositary"), that evidence ownership
interests in a security or a pool of securities issued by a foreign issuer and
deposited with the depositary. ADRs may be available through "sponsored" or
"unsponsored" facilities. A sponsored facility is established jointly by the
issuer of the security underlying the receipt and a depositary, whereas an
unsponsored facility may be established by a depositary without participation by
the issuer of the underlying security. Holders of unsponsored depositary
receipts generally bear all the costs of the unsponsored facility. The
depositary of an unsponsored facility frequently is under no obligation to
distribute shareholder communications received from the issuer of the deposited
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security or to pass through, to the holders of the receipts, voting rights with
respect to the deposited securities.
CONVERTIBLE SECURITIES -- Convertible securities are corporate securities that
are exchangeable for a set number of another security at a prestated price.
Convertible securities typically have characteristics similar to both
fixed-income and equity securities. Because of the conversion feature, the
market value of a convertible security tends to move with the market value of
the underlying stock. The value of a convertible security is also affected by
prevailing interest rates, the credit quality of the issuer, and any call
provisions.
FUTURES AND OPTIONS ON FUTURES -- Futures contracts provide for the future sale
by one party and purchase by another party of a specified amount of a specific
security at a specified future time and at a specified price. An option on a
futures contract gives the purchaser the right, in exchange for a premium, to
assume a position in a futures contract at a specified exercise price during the
term of the option. A Fund may use futures contracts and related options for
bona fide hedging purposes, to offset changes in the value of securities held or
expected to be acquired or be disposed of, to minimize fluctuations in foreign
currencies, or to gain exposure to a particular market or instrument. A Fund
will minimize the risk that it will be unable to close out a futures contract by
only entering into futures contracts that are traded on national futures
exchanges.
A stock index futures contract is a bilateral agreement pursuant to which two
parties agree to take or make delivery of an amount of cash equal to a specified
dollar amount times the difference between the stock index value at the close of
trading of the contract and the price at which the futures contract is
originally struck. No physical delivery of the stocks comprising the index is
made; generally contracts are closed out prior to the expiration date of the
contract.
In order to avoid leveraging and related risks, when a Fund purchases futures
contracts, it will collateralize its position by depositing an amount of cash or
liquid, high grade debt securities equal to the market value of the futures
positions held, less margin deposits, in a segregated account with the Trust's
Custodian. Collateral equal to the current market value of the futures position
will be marked to market on a daily basis.
A Fund may enter into futures contracts and options on futures contracts traded
on an exchange regulated by the Commodities Futures Trading Commission ("CFTC"),
so long as, to the extent that such transactions are not for "bona fide hedging
purposes," the aggregate initial margin and premiums on such positions
(excluding the amount by which such options are in the money) do not exceed 5%
of the Fund's net assets.
There are risks associated with these activities, including the following: (1)
the success of a hedging strategy may depend on an ability to predict movements
in the prices of individual securities, fluctuations in markets and movements in
interests rates, (2) there may be an imperfect or no correlation between the
changes in market value of the securities held by the Fund and the prices of
futures and options on futures, (3) there may not be a liquid secondary market
for a
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futures contract or option, (4) trading restrictions or limitations may be
imposed by an exchange, and (5) government regulations may restrict trading in
futures contracts and options on futures.
ILLIQUID SECURITIES -- Illiquid securities are securities that cannot be
disposed of within seven business days at approximately the price at which they
are being carried on the Fund's books. Illiquid securities include demand
instruments with demand notice periods exceeding seven days, securities for
which there is no active secondary market, and repurchase agreements with
durations or maturities over 7 days in length.
MONEY MARKET INSTRUMENTS -- Money market securities are high-quality, dollar-
denominated, short-term debt instruments. They consist of: (i) bankers'
acceptances, certificates of deposits, notes and time deposits of highly-rated
U.S. banks and U.S. branches of foreign banks; (ii) U.S. Treasury obligations
and obligations issued or guaranteed by the agencies and instrumentalities of
the U.S. Government; (iii) high-quality commercial paper issued by U.S. and
foreign corporations; (iv) debt obligations with a maturity of one year or less
issued by corporations with outstanding high-quality commercial paper ratings;
and (v) repurchase agreements involving any of the foregoing obligations entered
into with highly-rated banks and broker-dealers.
OPTIONS -- A put option gives the purchaser of the option the right to sell, and
the writer of the option the obligation to buy, the underlying security at any
time during the option period. A call option gives the purchaser of the option
the right to buy, and the writer of the option the obligation to sell, the
underlying security at any time during the option period. The premium paid to
the writer is the consideration for undertaking the obligations under the option
contract.
A Fund may purchase and write put and call options on indices and enter into
related closing transactions. Put and call options on indices are similar to
options on securities except that options on an index give the holder the right
to receive, upon exercise of the option, an amount of cash if the closing level
of the underlying index is greater than (or less than, in the case of puts) the
exercise price of the option. This amount of cash is equal to the difference
between the closing price of the index and the exercise price of the option,
expressed in dollars multiplied by a specified number. Thus, unlike options on
individual securities, all settlements are in cash, and gain or loss depends on
price movements in the particular market represented by the index generally,
rather than the price movements in individual securities.
All options written on indices must be covered. When a Fund writes an option on
an index or a foreign currency, it will establish a segregated account
containing cash or liquid, high grade debt securities with its Custodian in an
amount at least equal to the market value of the option and will maintain the
account while the option is open or will otherwise cover the transaction.
Risk Factors. Risks associated with options transactions include: (1) the
success of a hedging strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect correlation
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between the movement in prices of options and the securities underlying them;
(3) there may not be a liquid secondary market for options; and (4) while a Fund
will receive a premium when it writes covered call options, it may not
participate fully in a rise in the market value of the underlying security.
REPURCHASE AGREEMENTS -- Repurchase agreements are agreements by which a Fund
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. Repurchase
agreements are considered loans under the 1940 Act.
U.S. GOVERNMENT AGENCY OBLIGATIONS -- Certain Federal agencies, such as the
Government National Mortgage Association ("GNMA"), have been established as
instrumentalities of the U.S. Government to supervise and finance certain types
of activities. Issues of these agencies, while not direct obligations of the
U.S. Government, are either backed by the full faith and credit of the United
States (e.g., GNMA securities) or supported by the issuing agencies' right to
borrow from the Treasury. The issues of other agencies are supported by the
credit of the instrumentality (e.g., Fannie Mae securities).
U.S. GOVERNMENT SECURITIES -- Bills, notes and bonds issued by the U.S.
Government and backed by the full faith and credit of the United States.
U.S. TREASURY OBLIGATIONS -- Bills, notes and bonds issued by the U.S. Treasury,
and separately traded interest and principal component parts of such obligations
that are transferable through the Federal book-entry system known as Separately
Traded Registered Interested and Principal Securities ("STRIPS") and Coupon
Under Book Entry Safekeeping ("CUBES").
WARRANTS -- Warrants are instruments giving holders the right, but not the
obligation, to buy equity or fixed income securities of a company at a given
price during a specified period.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES -- When-issued or delayed delivery
transactions involve the purchase of an instrument with payment and delivery
taking place in the future. Delivery of and payment for these securities may
occur a month or more after the date of the purchase commitment. The Fund will
maintain with the Custodian a separate account with liquid, high grade debt
securities or cash in an amount at least equal to these commitments. The
interest rate realized on these securities is fixed as of the purchase date, and
no interest accrues to the Fund before settlement.
ZERO COUPON SECURITIES -- Zero coupon obligations are debt securities that do
not bear any interest, but instead are issued at a deep discount from par. The
value of a zero coupon obligation increases over time to reflect the interest
accreted. Such obligations will not result in the payment of interest until
maturity, and will have greater price volatility than similar securities that
are issued at par and pay interest periodically.
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Trust:
FLEMING CAPITAL MUTUAL FUND GROUP
Funds:
FLEMING FUND
FLEMING FLEDGLING FUND
Adviser:
ROBERT FLEMING, INC.
Distributor:
FIRST FUND DISTRIBUTORS, INC.
Administrator:
INVESTMENT COMPANY ADMINISTRATION CORPORATION
Legal Counsel:
MORGAN, LEWIS & BOCKIUS LLP
Independent Auditors:
[ ]
<PAGE>
Trust:
FLEMING CAPITAL MUTUAL FUND GROUP
Funds:
FLEMING FUND
FLEMING FLEDGLING FUND
Investment Adviser:
ROBERT FLEMING, INC.
This Statement of Additional Information is not a prospectus and relates only to
the Fleming Fledgling Fund (the "Fleming Fund") and Fledgling Fund (the
"Fledgling Fund") (each a "Fund" and, together, the "Funds"). It is intended to
provide additional information regarding the activities and operations of the
Fleming Capital Mutual Fund (the "Trust") and should be read in conjunction with
the Funds' Prospectus dated [ ]. The Prospectus may be obtained without
charge by calling [ ].
TABLE OF CONTENTS
THE TRUST...................................................................S-2
DESCRIPTION OF PERMITTED INVESTMENTS........................................S-3
INVESTMENT LIMITATIONS......................................................S-6
THE ADVISER.................................................................S-8
THE DISTRIBUTOR.............................................................S-9
TRUSTEES AND OFFICERS OF THE TRUST..........................................S-9
COMPUTATION OF YIELD AND TOTAL RETURN.......................................S-10
PURCHASE AND REDEMPTION OF SHARES...........................................S-10
DETERMINATION OF NET ASSET VALUE............................................S-11
TAXES ...................................................................S-11
PORTFOLIO TRANSACTIONS......................................................S-12
DESCRIPTION OF SHARES.......................................................S-14
SHAREHOLDER LIABILITY.......................................................S-14
LIMITATION OF TRUSTEES' LIABILITY...........................................S-15
5% SHAREHOLDERS.............................................................S-
FINANCIAL INFORMATION.......................................................S-
APPENDIX ...................................................................A-1
[ , 1997
<PAGE>
THE TRUST
This Statement of Additional Information relates only to the Fleming Fund (the
"Fleming Fund") and Fledgling Equity Fund (the "Fledgling Fund") (each a "Fund"
and, together, the "Funds"). Each Fund is a separate series of the Fleming
Capital Mutual Fund Group (the "Trust"), a diversified, open-end management
investment company established as a Massachusetts business trust under a
Declaration of Trust dated [ ]. The Declaration of Trust permits the
Trust to offer separate series ("portfolios") of shares of beneficial interest
("shares"). Each portfolio is a separate mutual fund, and each share of each
portfolio represents an equal proportionate interest in that portfolio. See
"Description of Shares." Capitalized terms not defined herein are defined in the
Prospectus offering shares of the Funds.
DESCRIPTION OF PERMITTED INVESTMENTS
Futures Contracts and Options on Futures Contracts
Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of a specific security at a specified future
time and at a specified price. An option on a futures contract gives the
purchaser the right, in exchange for a premium, to assume a position in a
futures contract at a specified exercise price during the term of the option. A
Fund may use futures contracts and related options for bona fide hedging
purposes, to offset changes in the value of securities held or expected to be
acquired or be disposed of, to minimize fluctuations in foreign currencies, or
to gain exposure to a particular market or instrument. A Fund will minimize the
risk that it will be unable to close out a futures contract by only entering
into futures contracts which are traded on national futures exchanges. In
addition, a Fund will only sell covered futures contracts and options on futures
contracts.
Stock and bond index futures are futures contracts for various stock and bond
indices that are traded on registered securities exchanges. Stock and bond index
futures contracts obligate the seller to deliver (and the purchaser to take) an
amount of cash equal to a specific dollar amount times the difference between
the value of a specific stock or bond index at the close of the last trading day
of the contract and the price at which the agreement is made.
Stock and bond index futures contracts are bilateral agreements pursuant to
which two parties agree to take or make delivery of an amount of cash equal to a
specified dollar amount times the difference between the stock or bond index
value at the close of trading of the contract and the price at which the futures
contract is originally struck. No physical delivery of the stocks or bonds
comprising the Index is made; generally contracts are closed out prior to the
expiration date of the contracts.
No price is paid upon entering into futures contracts. Instead, a Fund would be
required to deposit an amount of cash or U.S. Treasury securities known as
"initial margin." Subsequent payments, called "variation margin," to and from
the broker, would be
S-2
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made on a daily basis as the value of the futures position varies (a process
known as "marking to market"). The margin is in the nature of a performance bond
or good-faith deposit on a futures contract.
There are risks associated with these activities, including the following: (1)
the success of a hedging strategy may depend on an ability to predict movements
in the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect or no correlation between the
changes in market value of the securities held by the Fund and the prices of
futures and options on futures; (3) there may not be a liquid secondary market
for a futures contract or option; (4) trading restrictions or limitations may be
imposed by an exchange; and (5) government regulations may restrict trading in
futures contracts and futures options.
A Fund may enter into futures contracts and options on futures contracts traded
on an exchange regulated by the Commodities Futures Trading Commission ("CFTC"),
as long as, to the extent that such transactions are not for "bona fide hedging
purposes," the aggregate initial margin and premiums on such positions
(excluding the amount by which such options are in the money) do not exceed 5%
of a Fund's net assets. A Fund may buy and sell futures contracts and related
options to manage its exposure to changing interest rates and securities prices.
Some strategies reduce a Fund's exposure to price fluctuations, while others
tend to increase its market exposure. Futures and options on futures can be
volatile instruments and involve certain risks that could negatively impact a
Fund's return.
In order to avoid leveraging and related risks, when a Fund purchases futures
contracts, it will collateralize its position by depositing an amount of cash or
liquid, high grade debt securities, equal to the market value of the futures
positions held, less margin deposits, in a segregated account with its
custodian. Collateral equal to the current market value of the futures position
will be marked to market on a daily basis.
Investment Company Shares
Each Fund may invest in shares of other investment companies, to the extent
permitted by applicable law and subject to certain restrictions. These
investment companies typically incur fees that are separate from those fees
incurred directly by the Fund. A Fund's purchase of such investment company
securities results in the layering of expenses, such that shareholders would
indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees, in addition to paying Fund
expenses. Under applicable regulations, a Fund is prohibited from acquiring the
securities of another investment company if, as a result of such acquisition:
(1) the Fund owns more than 3% of the total voting stock of the other company;
(2) securities issued by any one investment company represent more than 5% of
the Fund's total assets; or (3) securities (other than treasury stock) issued by
all investment companies represent more than 10% of the total assets of the
Fund. See also "Investment Limitations."
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<PAGE>
Options
A put option gives the purchaser of the option the right to sell, and the writer
of the option the obligation to buy, the underlying security at any time during
the option period. A call option gives the purchaser of the option the right to
buy, and the writer of the option the obligation to sell, the underlying
security at any time during the option period. The premium paid to the writer is
the consideration for undertaking the obligations under the option contract. The
initial purchase (sale) of an option contract is an "opening transaction." In
order to close out an option position, a Fund may enter into a "closing
transaction," which is simply the sale (purchase) of an option contract on the
same security with the same exercise price and expiration date as the option
contract originally opened. If a Fund is unable to effect a closing purchase
transaction with respect to an option it has written, it will not be able to
sell the underlying security until the option expires or the Fund delivers the
security upon exercise.
A Fund may purchase put and call options to protect against a decline in the
market value of the securities in its portfolio or to anticipate an increase in
the market value of securities that the Fund may seek to purchase in the future.
A Fund purchasing put and call options pays a premium therefor. If price
movements in the underlying securities are such that exercise of the options
would not be profitable for the Fund, loss of the premium paid may be offset by
an increase in the value of the Fund's securities or by a decrease in the cost
of acquisition of securities by the Fund.
A Fund may write covered call options as a means of increasing the yield on its
fund and as a means of providing limited protection against decreases in its
market value. When a fund sells an option, if the underlying securities do not
increase or decrease to a price level that would make the exercise of the option
profitable to the holder thereof, the option generally will expire without being
exercised and the Fund will realized as profit the premium received for such
option. When a call option written by a Fund is exercised, the Fund will be
required to sell the underlying securities to the option holder at the strike
price, and will not participate in any increase in the price of such securities
above the strike price. When a put option written by a Fund is exercised, the
Fund will be required to purchase the underlying securities at the strike price,
which may be in excess of the market value of such securities.
A Fund may purchase and write options on an exchange or over-the-counter.
Over-the-counter options ("OTC options") differ from exchange-traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation, and therefore entail the risk of non-performance by the
dealer. OTC options are available for a greater variety of securities and for a
wider range of expiration dates and exercise prices than are available for
exchange-traded options. Because OTC options are not traded on an exchange,
pricing is done normally by reference to information from a market maker. It is
the position of the SEC that OTC options are generally illiquid.
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A Fund may purchase and write put and call options on foreign currencies (traded
on U.S. and foreign exchanges or over-the-counter markets) to manage its
exposure to exchange rates. Call options on foreign currency written by a Fund
will be "covered," which means that the Fund will own an equal amount of the
underlying foreign currency. With respect to put options on foreign currency
written by a Fund, the Fund will establish a segregated account with its
Custodian consisting of cash or liquid, high grade debt securities in an amount
equal to the amount the Fund would be required to pay upon exercise of the put.
A Fund may purchase and write put and call options on indices and enter into
related closing transactions. Put and call options on indices are similar to
options on securities except that options on an index give the holder the right
to receive, upon exercise of the option, an amount of cash if the closing level
of the underlying index is greater than (or less than, in the case of puts) the
exercise price of the option. This amount of cash is equal to the difference
between the closing price of the index and the exercise price of the option,
expressed in dollars multiplied by a specified number. Thus, unlike options on
individual securities, all settlements are in cash, and gain or loss depends on
price movements in the particular market represented by the index generally,
rather than the price movements in individual securities. A Fund may choose to
terminate an option position by entering into a closing transaction. The ability
of a Fund to enter into closing transactions depends upon the existence of a
liquid secondary market for such transactions.
All options written on indices must be covered. When a Fund writes an option on
an index, it will establish a segregated account containing cash or liquid, high
grade debt securities with its custodian in an amount at least equal to the
market value of the option and will maintain the account while the option is
open or will otherwise cover the transaction.
Risk Factors: Risks associated with options transactions include: (1) the
success of a hedging strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect correlation between the movement
in prices of options and the securities underlying them; (3) there may not be a
liquid secondary market for options; and (4) while a Fund will receive a premium
when it writes covered call options, it may not participate fully in a rise in
the market value of the underlying security.
Repurchase Agreements
Repurchase agreements are agreements by which a Fund obtains a security and
simultaneously commits to return the security to the seller (a member bank of
the Federal Reserve System or primary securities dealer as recognized by the
Federal Reserve Bank of New York) at an agreed upon price (including principal
and interest) on an agreed upon date within a number of days (usually not more
than seven) from the date of purchase. The resale price reflects the purchase
price plus an agreed upon market rate of interest which is unrelated to the
coupon rate or maturity of the
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underlying security. A repurchase agreement involves the obligation of the
seller to pay the agreed upon price, which obligation is in effect secured by
the value of the underlying security.
Repurchase agreements are considered to be loans by a Fund for purposes of its
investment limitations. The repurchase agreements entered into by a Fund will
provide that the underlying security at all times shall have a value at least
equal to 102% of the resale price stated in the agreement (the Adviser monitors
compliance with this requirement). Under all repurchase agreements entered into
by a Fund, the Trust's Custodian or its agent must take possession of the
underlying collateral. However, if the seller defaults, the Fund could realize a
loss on the sale of the underlying security to the extent that the proceeds of
sale, including accrued interest, are less than the resale price provided in the
agreement including interest. In addition, even though the Bankruptcy Code
provides protection for most repurchase agreements, if the seller should be
involved in bankruptcy or insolvency proceedings, a Fund may incur delay and
costs in selling the underlying security or may suffer a loss of principal and
interest if the Fund is treated as an unsecured creditor and is required to
return the underlying security to the seller's estate.
Securities Lending
In order to generate additional income, a Fund may lend its securities pursuant
to agreements that require that the loan be continuously secured by collateral
consisting of cash or securities of the U.S. Government or its agencies equal to
at least 100% of the market value of the loaned securities. A Fund continues to
receive interest on the loaned securities while simultaneously earning interest
on the investment of cash collateral. Collateral is marked to market daily.
There may be risks of delay in recovery of the securities or even loss of rights
in the collateral should the borrower of the securities fail financially or
become insolvent.
When-Issued and Delayed Delivery Securities
When-issued or delayed delivery securities are subject to market fluctuations
due to changes in market interest rates and it is possible that the market value
at the time of settlement could be higher or lower than the purchase price if
the general level of interest rates has changed. Although a Fund generally
purchases securities on a when-issued or forward commitment basis with the
intention of actually acquiring securities for its investment portfolio, a Fund
may dispose of a when-issued security or forward commitment prior to settlement
if it deems appropriate.
INVESTMENT LIMITATIONS
Fundamental Policies
The following investment limitations (and those set forth in the Prospectus) are
fundamental policies of each Fund which cannot be changed with respect to a Fund
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without the consent of the holders of a majority of that Fund's outstanding
shares. The term "majority of the outstanding shares" means the vote of (i) 67%
or more of a Fund's shares present at a meeting, if more than 50% of the
outstanding shares of a Fund are present or represented by proxy, or (ii) more
than 50% of a Fund's outstanding shares, whichever is less.
No Fund may:
1. Borrow money in an amount exceeding 33 1/3% of the value of its total
assets, provided that, for purposes of this limitation, investment
strategies which either obligate fund to purchase securities or require
a Fund to segregate assets are not considered to be borrowings. Asset
coverage of a least 300% is required for all borrowings, except where a
Fund has borrowed money for temporary purposes in amounts not exceeding
5% of its total assets. A Fund will not purchase securities while its
borrowings exceed 5% of its total assets.
2. Make loans if, as a result, more than 33 1/3% of its total assets would
be lent to other parties, except that each Fund may (i) purchase or
hold debt instruments in accordance with its investment objective and
policies; (ii) enter into repurchase agreements; and (iii) lend its
securities.
3. Purchase or sell real estate, physical commodities, or commodities
contracts, except that each Fund may purchase (i) marketable securities
issued by companies which own or invest in real estate (including real
estate investment trusts), commodities, or commodities contracts; and
(ii) commodities contracts relating to financial instruments, such as
financial futures contracts and options on such contracts.
4. Issue senior securities (as defined in the Investment Company Act of
1940 (the "1940 Act")) except as permitted by rule, regulation or order
of the Securities and Exchange Commission (the "SEC").
5. Act as an underwriter of securities of other issuers except as it may
be deemed an underwriter in selling a portfolio security.
The foregoing percentages (except with respect to the limitation on borrowing)
will apply at the time of the purchase of a security and shall not be considered
violated unless an excess or deficiency occurs immediately after or as a result
of a purchase of such security.
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Non-Fundamental Policies
The following investment limitations are non-fundamental policies of each Fund
and may be changed with respect to a Fund by the Board of Trustees.
No Fund may:
1. Pledge, mortgage or hypothecate assets except to secure borrowings
permitted by the Fund's fundamental limitation on borrowing, provided,
such Fund may segregate assets without limit in order to comply with
the SEC's position regarding the asset segregation requirements of
Section 18 of the 1940 Act.
2. Invest in companies for the purpose of exercising control.
3. Purchase securities on margin or effect short sales, except that each
Fund may (i) obtain short-term credits as necessary for the clearance
of security transactions; (ii) provide initial and variation margin
payments in connection with transactions involving futures contracts
and options on such contracts; and (iii) make short sales "against the
box" or in compliance with the SEC's position regarding the asset
segregation requirements of Section 18 of the 1940 Act.
4. Invest its assets in securities of any investment company, except as
permitted by the 1940 Act.
5. Purchase or hold illiquid securities, i.e., securities that cannot be
disposed of for their approximate carrying value in seven days or less
(which term includes repurchase agreements and time deposits maturing
in more than seven days) if, in the aggregate, more than 15% of its net
assets would be invested in illiquid securities.
6. Each Fund may not enter into a futures contract or options transaction
if the Fund's total outstanding obligations resulting from such futures
contract or option transaction would exceed ______% of the Fund's total
assets, and will maintain assets sufficient to meet its obligations
under such contracts or transactions with the Fund's custodian or will
otherwise comply with the SEC's position regarding the asset
segregation requirements of Section 18 of the 1940 Act.
THE ADVISER
The Trust and Robert Fleming, Inc. (the "Adviser") have entered into an advisory
agreement (the "Advisory Agreement"). The Advisory Agreement provides that the
Adviser shall not be protected against any liability to the Trust or its
shareholders by reason of willful misfeasance, bad faith or gross negligence on
its part in the perform ance of its duties or from reckless disregard of its
obligations or duties thereunder.
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The Adviser will not be required to bear expenses of any Fund to an extent which
would result in the Fund's inability to qualify as a regulated investment
company under provisions of the Internal Revenue Code of 1986, as amended (the
"Code").
The continuance of the Advisory Agreement as to any Fund after the first two
years must be specifically approved at least annually (i) by the vote of the
Trustees or by a vote of the shareholders of that Fund, and (ii) by the vote of
a majority of the Trustees who are not parties to the Advisory Agreement or
"interested persons" of any party thereto, cast in person at a meeting called
for the purpose of voting on such approval. The Advisory Agreement will
terminate automatically in the event of its assignment, and is terminable at any
time without penalty by the Trustees of the Trust or, with respect to any Fund,
by a majority of the outstanding shares of that Fund, on not less than 30 days'
nor more than 60 days' written notice to the Adviser, or by the Adviser on 90
days' written notice to the Trust.
THE DISTRIBUTOR
First Fund Distributors, Inc. (the "Distributor"), a Delaware corporation, and
the Trust are parties to a distribution agreement (the "Distribution
Agreement"). The Distributor receives no compensation for distribution of shares
of the Funds.
The Distribution Agreement shall remain in effect for a period of two years
after the effective date of the agreement and is renewable annually. The
Distribution Agreement may be terminated by the Distributor, by a majority vote
of the Trustees who are not interested persons and have no financial interest in
the Distribution Agreement, or by a majority vote of the outstanding securities
of the Trust upon not more than 60 days' written notice by either party or upon
assignment by the Distributor.
TRUSTEES AND OFFICERS OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws of the Commonwealth of Massachusetts. The Trustees and executive officers
of the Trust and their principal occupations for the last five years are set
forth below. Each may have held other positions with the named companies during
that period. The Trust pays the fees for unaffiliated Trustees.
The Trustees and Executive Officers of the Trust, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have held other positions with named companies during that
period. Unless otherwise noted, the business address of each Trustee and each
Executive Officer is [ ].
*interested persons
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COMPUTATION OF YIELD AND TOTAL RETURN
From time to time the Trust may advertise yield and total return of the Funds.
These figures will be based on historical earnings and are not intended to
indicate future performance. No representation can be made concerning actual
future yields or returns. The yield of a Fund refers to the annualized income
generated by an investment in the Fund over a specified 30-day period. The yield
is calculated by assuming that the income generated by the investment during
that 30-day period is generated in each period over one year and is shown as a
percentage of the investment. In particular, yield will be calculated according
to the following formula:
Yield = 2[((a-b)/cd + 1)6 - 1] where a = dividends and interest earned during
the period; b = expenses accrued for the period (net of reimbursement); c = the
current daily number of shares outstanding during the period that were entitled
to receive dividends; and d = the maximum offering price per share on the last
day of the period.
The total return of a Fund refers to the average compounded rate of return to a
hypothetical investment for designated time periods (including but not limited
to, the period from which the Fund commenced operations through the specified
date), assuming that the entire investment is redeemed at the end of each
period. In particular, total return will be calculated according to the
following formula: P (1 + T)n = ERV, where P = a hypothetical initial payment of
$1,000; T = average annual total return; n = number of years; and ERV = ending
redeemable value, as of the end of the designated time period, of a hypothetical
$1,000 payment made at the beginning of the designated time period.
PURCHASE AND REDEMPTION OF SHARES
Purchases and redemptions may be made through the Transfer Agent on days when
the New York Stock Exchange is open for business. Currently, the weekdays on
which the Fund is closed for business are: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. Shares of each Fund are offered on a continuous basis.
It is currently the Trust's policy to pay all redemptions in cash. The Trust
retains the right, however, to alter this policy to provide for redemptions in
whole or in part by a distribution in-kind of securities held by a Fund in lieu
of cash. Shareholders may incur brokerage charges on the sale of any such
securities so received in payment of redemptions.
The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading on
the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined
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by the SEC by rule or regulation) as a result of which disposal or valuation of
a Fund's securities is not reasonably practicable, or for such other periods as
the SEC has by order permitted. The Trust also reserves the right to suspend
sales of shares of any Fund for any period during which the New York Stock
Exchange, the Adviser, the Administrator, the Transfer Agent and/or the
Custodian are not open for business.
DETERMINATION OF NET ASSET VALUE
The securities of each Fund are valued by the [ ]. The [ ] may
use an independent pricing service to obtain valuations of securities. The
pricing service relies primarily on prices of actual market transactions as well
as on trade quotations obtained from third parties. The procedures of the
pricing service and its valuations are reviewed by the officers of the Trust
under the general supervision of the Trustees.
TAXES
The following is only a summary of certain tax considerations generally
affecting the Funds and their shareholders, and is not intended as a substitute
for careful tax planning. Shareholders are urged to consult their tax advisors
with specific reference to their own tax situations, including their state and
local tax liabilities.
Federal Income Tax
The following discussion of federal income tax consequences is based on the Code
and the regulations issued thereunder as in effect on the date of this Statement
of Additional Information. New legislation, as well as administrative changes or
court decisions, may significantly change the conclusions expressed herein, and
may have a retroactive effect with respect to the transactions contemplated
herein.
Each Fund intends to qualify as a "regulated investment company" ("RIC") as
defined under Subchapter M of the Code. By following such a policy, each Fund
expects to eliminate or reduce to a nominal amount the federal taxes to which it
may be subject.
In order to qualify for treatment as a RIC under the Code, each Fund must
distribute annually to its shareholders at least the sum of 90% of its net
interest income excludable from gross income plus 90% of its investment company
taxable income (generally, net investment income plus net short-term capital
gain) ("Distribution Requirement") and also must meet several additional
requirements. Among these requirements are the following: (i) at least 90% of
the Fund's gross income each taxable year must be derived from dividends,
interest, payments with respect to securities loans, gains from the sale or
other disposition of stock or securities, or certain other income (including
gains from options, futures or forward contracts); (ii) the Fund must derive
less than 30% of its gross income each taxable year from the sale or other
disposition of stocks or securities held for less than three months; (iii) at
the close of each quarter of the Fund's taxable year, at least 50% of the value
of its total assets
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must be represented by cash and cash items, U.S. Government securities,
securities of other RICs and other securities, with such other securities
limited, in respect to any one issuer, to an amount that does not exceed 5% of
the value of the Fund's assets and that does not represent more than 10% of the
outstanding voting securities of such issuer; and (iv) at the close of each
quarter of the Fund's taxable year, not more than 25% of the value of its assets
may be invested in securities (other than U.S. Government securities or the
securities of other RICs) of any one issuer, or of two or more issuers which are
engaged in the same, similar or related trades or business if the Fund owns at
least 20% of the voting power of such issuer.
Notwithstanding the Distribution Requirement described above, which requires
only that the Fund distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital gain
(the excess of net long-term capital gain over net short-term capital loss),
each Fund will be subject to a nondeductible 4% federal excise tax to the extent
it fails to distribute by the end of any calendar year 98% of its ordinary
income for that year and 98% of its capital gain net income (the excess of
short- and long-term capital gains over short-and long-term capital losses) for
the one-year period ending on October 31 of that year, plus certain other
amounts.
In certain cases, a Fund will be required to withhold, and remit to the United
States Treasury, 31% of any distributions paid to a shareholder who (1) has
failed to provide a correct taxpayer identification number, (2) is subject to
backup withholding by the Internal Revenue Service, or (3) has not certified to
that Fund that such shareholder is not subject to backup withholding.
If any Fund fails to qualify as a RIC for any taxable year, it will be taxable
at regular corporate rates. In such an event, all distributions (including
capital gains distributions) will be taxable as ordinary dividends to the extent
of the Fund's current and accumulated earnings and profits, and such
distributions will generally be eligible for the corporate dividends-received
deduction.
State Taxes
No Fund is liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for federal income tax purposes. Distributions by any Fund to
shareholders and the ownership of shares may be subject to state and local
taxes.
PORTFOLIO TRANSACTIONS
The Adviser is authorized to select brokers and dealers to effect securities
transactions for the Funds. The Adviser will seek to obtain the most favorable
net results by taking into account various factors, including price, commission,
if any, size of the transactions and difficulty of executions, the firm's
general execution and operational facilities and the firm's risk in positioning
the securities involved. While the Adviser generally seeks reasonably
competitive spreads or commissions, a Fund will not necessarily be paying
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the lowest spread or commission available. The Adviser seeks to select brokers
or dealers that offer a Fund best price and execution or other services which
are of benefit to the Fund.
The Adviser may, consistent with the interests of the Fund, select brokers on
the basis of the research services they provide to the Adviser. Such services
may include analyses of the business or prospects of a company, industry or
economic sector, or statistical and pricing services. Information so received by
the Adviser will be in addition to and not in lieu of the services required to
be performed by the Adviser under the Advisory Agreement. If, in the judgment of
the Adviser, a Fund or other accounts managed by the Adviser will be benefitted
by supplemental research services, the Adviser is authorized to pay brokerage
commissions to a broker furnishing such services which are in excess of
commissions which another broker may have charged for effecting the same
transaction. These research services include advice, either directly or through
publications or writings, as to the value of securities, the advisability of
investing in, purchasing or selling securities, and the availability of
securities or purchasers or sellers of securities; furnishing of analyses and
reports concerning issuers, securities or industries; providing information on
economic factors and trends; assisting in determining portfolio strategy;
providing computer software used in security analyses; and providing portfolio
performance evaluation and technical market analyses. The expenses of the
Adviser will not necessarily be reduced as a result of the receipt of such
supplemental information, such services may not be used exclusively, or at all,
with respect to the Fund or account generating the brokerage, and there can be
no guarantee that the Adviser will find all of such services of value in
advising that Fund.
It is expected that the Funds may execute brokerage or other agency transactions
through Robert Fleming Inc. or its affiliates, (each an "affiliated broker")
each of which is a registered broker-dealer, for a commission in conformity with
the 1940 Act, the Securities Exchange Act of 1934 and rules promulgated by the
SEC. Under these provisions, an affiliated broker is permitted to receive and
retain compensation for effecting portfolio transactions for a Fund on an
exchange if a written contract is in effect between the Trust and the affiliated
broker expressly permitting the affiliated broker to receive and retain such
compensation. These rules further require that commissions paid to the
affiliated broker by a Fund for exchange transactions not exceed "usual and
customary" brokerage commissions. The rules define "usual and customary"
commissions to include amounts which are "reasonable and fair compared to the
commission, fee or other remuneration received or to be received by other
brokers in connection with comparable transactions involving similar securities
being purchased or sold on a securities exchange during a comparable period of
time." The Trustees, including those who are not "interested persons" of the
Trust, have adopted procedures for evaluating the reasonableness of commissions
paid to the affiliated brokers and will review these procedures periodically.
Because no Fund markets its shares through intermediary brokers or dealers, it
is not the Funds' practice to allocate brokerage or principal business on the
basis of sales of
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its shares which may be made through such firms. However, the Adviser may place
portfolio orders with qualified broker-dealers who recommend a Fund's shares to
clients, and may, when a number of brokers and dealers can provide best net
results on a particular transaction, consider such recommendations by a broker
or dealer in selecting among broker-dealers.
The Adviser serves as investment adviser to other clients and investment
vehicles which may invest in securities of the same issuers as those in which
the Funds invest. The Adviser also may invest for its own account and for the
accounts of its affiliates. Certain of the Adviser's activities may cause it to
come into possession of material, nonpublic information ("inside information")
about an issuer. When the Adviser is in possession of inside information about
an issuer, the Adviser may be unable to cause the Funds to purchase or sell
securities of that issuer until the information is released to the public or is
no longer material. As a result, the Funds may be unable to purchase certain
suitable securities, or sell certain securities that it already owns, at the
most opportune time. In particular, a Fund's inability to sell a security that
it already owns may require the Fund to treat the security as an illiquid
security and may have a negative effect on the Fund's valuation of the security.
Should the Fund already own a significant amount of illiquid securities, it
could be forced to sell other illiquid securities at inopportune times and at
prices below what could theoretically be realized in order to comply with the
Fund's 15% limit on holding illiquid securities.
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number of
series and shares of each series. Each share of a series represents an equal
proportionate interest in that series with each other share. Shares are entitled
upon liquidation to a pro rata share in the net assets of the series.
Shareholders have no preemptive rights. All consideration received by the Trust
for shares of any series and all assets in which such consideration is invested
would belong to that series and would be subject to the liabilities related
thereto. Share certificates representing shares will not be issued unless
specifically requested.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust could, under
certain circumstances, be held personally liable as partners for the obligations
of the trust. Even if, however, the Trust were held to be a partnership, the
possibility of the shareholders' incurring financial loss for that reason
appears remote because the Trust's Declaration of Trust contains an express
disclaimer of shareholder liability for obligations of the Trust, and requires
that notice of such disclaimer be given in each agreement, obligation or
instrument entered into or executed by or on behalf of the Trust or the
Trustees, and because the Declaration of Trust provides for indemnification out
of the Trust property for any shareholder held personally liable for the
obligations of the Trust.
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LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for his
own willful defaults and, if reasonable care has been exercised in the selection
of officers, agents, employees or investment advisers, shall not be liable for
any neglect or wrongdoing of any such person. The Declaration of Trust also
provides that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with actual or threatened
litigation in which they may be involved because of their offices with the Trust
unless it is determined in the manner provided in the Declaration of Trust that
they have not acted in good faith in the reasonable belief that their actions
were in the best interests of the Trust. However, nothing in the Declaration of
Trust shall protect or indemnify a Trustee against any liability for his willful
misfeasance, bad faith, gross negligence or reckless disregard of his duties.
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APPENDIX
The following descriptions are summaries of published ratings.
DESCRIPTION OF CORPORATE BOND RATINGS
Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such a
rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA by S&P also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and differs from AAA issues only in
small degree. Debt rated A by S&P has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher rated
categories.
Bonds rated BBB by S&P are considered as medium-grade obligations (i.e., they
are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Bonds rated Aaa by Moody's 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 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. Bonds rated Aa by Moody's are
judged by Moody's to be of high quality by all standards. Together with bonds
rated Aaa, 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 in Aaa securities.
Bonds rated A by Moody's possess many favorable investment attributes and are to
be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future. Debt rated
Baa by Moody's is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.
Fitch uses plus and minus signs with a rating symbol to indicate the relative
position of a credit within the rating category. Plus and minus signs, however,
are not used in the AAA category. Bonds rated AAA by Fitch are considered to be
investment grade and of
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the highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events. Bonds rated AA by Fitch are considered to be investment
grade and of very high credit quality. The obligor's ability to pay interest and
repay principal is very strong, although not quite as strong as bonds rated AAA.
Because bonds rated in the AAA and AA categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these issuers
is generally rated F-1+. Bonds rated A by Fitch are considered to be investment
grade and of high credit quality. The obligor's ability to pay interest and
repay principal is considered to be strong, but may be more vulnerable to
adverse changes in economic conditions and circumstances than bonds with higher
ratings. Bonds rated BBB by Fitch are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for bonds with
higher ratings.
Bonds rated AAA by Duff are judged by Duff to be of the highest credit quality,
with negligible risk factors being only slightly more than for risk-free U.S.
Treasury debt. Bonds rated AA by Duff are judged by Duff to be of high credit
quality with strong protection factors and risk that is modest but that may vary
slightly from time to time because of economic conditions. Bonds rated A by Duff
are judged by Duff to have average but adequate protection factors. However,
risk factors are more variable and greater in periods of economic stress. Bonds
rated BBB by Duff are judged by Duff as having below average protection factors
but still considered sufficient for prudent investment, with considerable
variability in risk during economic cycles.
Obligations rated AAA by IBCA have the lowest expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial, such
that adverse changes in business, economic or financial conditions are unlikely
to increase investment risk significantly. Obligations for which there is a very
low expectation of investment risk are rated AA by IBCA. Capacity for timely
repayment of principal and interest is substantial. Adverse changes in business,
economic or financial conditions may increase investment risk albeit not very
significantly. Obligations for which there is a low expectation on investment
risk are rated A by IBCA. Capacity for timely repayment of principal and
interest is strong, although adverse changes in business, economic or financial
conditions may lead to increased investment risk. Obligations for which there is
currently a low expectation of investment risk are rated BBB by IBCA. Capacity
for timely repayment of principal and interest is adequate, although adverse
changes in business, economic or financial conditions are more likely to lead to
increased investment risk than for obligations in higher categories.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Commercial paper rated A by Standard & Poor's Corporation ("S&P") is regarded by
S&P as having the greatest capacity for timely payment. Issues rated A are
further
A-2
<PAGE>
refined by use of the numbers 1, 1 +, and 2 to indicate the relative degree of
safety. Issues rated A-1+ are those with an "overwhelming degree" of credit
protection. Those rated A-1, the highest rating category, reflect a "very
strong" degree of safety regarding timely payment. Those rated A-2, the second
highest rating category, reflect a satisfactory degree of safety regarding
timely payment but not as high as A-1.
Commercial paper issues rated Prime-1 or Prime-2 by Moody's Investors Service,
Inc. ("Moody's") are judged by Moody's to be of "superior" quality and "strong"
quality respectively on the basis of relative repayment capacity.
F-1+ (Exceptionally Strong) is the highest commercial paper rating Fitch
assigns; paper rated F-1+ is regarded as having the strongest degree of
assurance for timely payment. Paper rated F-1 (Very Strong) reflects an
assurance of timely payment only slightly less in degree than paper rated F-1+.
The rating F-2 (Good) reflects a satisfactory degree of assurance for timely
payment, but the margin of safety is not as great as for issues rated F-1+ or
F-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 which are supported by good fundamental protection
factors. Risk factors are minor. Duff has incorporated gradations of 1+ and 1-
to assist investors in recognizing quality differences within this highest tier.
Paper rated Duff-1+ has the highest certainty of timely payment, with
outstanding short-term liquidity and safety just below risk-free U.S. Treasury
short-term obligations. Paper rated Duff-1- has high certainty of timely payment
with strong liquidity factors which are supported by good fundamental protection
factors. Risk factors are very small. Paper rated Duff-2 is regarded as having
good certainty of timely payment, good access to capital markets (although
ongoing funding may enlarge total financing requirements) and sound liquidity
factors and company fundamentals. Risk factors are small.
The designation A1, the highest rating by IBCA, indicates that the obligation is
supported by a strong capacity for timely repayment. Those obligations rated A1+
are supported by the highest capacity for timely repayment. Obligations rated
A2, the second highest rating, are supported by a satisfactory capacity for
timely repayment, although such capacity may be susceptible to adverse changes
in business, economic or financial conditions.
A-3
<PAGE>
PART C: OTHER INFORMATION
Item 24. Financial Statements and Exhibits:
(a) Financial Statements
Not applicable.
(b) Additional Exhibits
1 Agreement and Declaration of Trust of the Registrant,
dated April 21, 1997, filed herewith.
2 By-Laws of the Registrant, filed herewith.
*5 Form of Investment Advisory Agreement between the
Registrant and Robert Fleming, Inc.
*6 Form of Distribution Agreement between the Registrant
and First Fund Distributors, Inc.
*8 Form of Custodian Agreement
*9(a) Form of Administration Agreement between the Registrant
and Investment Company Administration Corporation.
*9(b) Form of Transfer Agent Agreement
*10 Opinion and Consent of Counsel.
*11 Opinion and Consent of Independent Public Accountants
*16 Performance Calculations.
*24 Powers of Attorney.
* To be filed by amendment
Item 25. Persons Controlled by or under Common Control with Registrant:
Not applicable.
Item 26. Number of Holders of Securities: None
Item 27. Indemnification:
Article VIII of the Agreement of Declaration of Trust filed as Exhibit
1 to the Registration Statement is incorporated by reference. Insofar as
indemnification for liability arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the Declaration of Trust or otherwise, the Registrant is aware that
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Act and, therefore, is
unenforceable. In the event that a claim for
C-1
<PAGE>
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, directors, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such trustees, directors,
officers or controlling persons in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
Item 28. Business and Other Connections of Investment Adviser:
ADVISER
- -------
Robert Fleming, Inc. (the "Adviser") is the investment adviser for the Trust.
The principal address of the Adviser is 320 Park Avenue, New York, New York
10022. The Adviser is an investment adviser registered under the Advisers Act.
The list required by this Item 28 of officers and trustees of the Adviser,
together with information as to any other business profession, vocation or
employment of substantial nature engaged in by such officers and trustees during
the past two years is incorporated by reference to Schedules A and D of Form ADV
filed by the Adviser to the Advisers Act (SEC File No. 801-26297).
Item 29. Principal Underwriters:
(a) Furnish the name of each investment company (other than the Registrant)
for which each principal underwriter currently distributing the
securities of the Registrant also acts as a principal underwriter,
distributor or investment adviser.
Registrant's underwriter, First Fund Distributors, Inc. (the
"Distributor"), acts as distributor for:
Advisors Series Trust
Guinesss Flight Investment Funds, Inc.
Jurika & Voyles Mutual Funds
Hotchkis and Wiley Funds
PIC Investment Trust
Rainier Investment Management Mutual Funds
RNC Mutual Fund Group, Inc.
Kayne Anderson Mutual Funds
Masters' Select Equity Fund
Professionally Managed Portfolios
O'Shaughnessy Funds, Inc.
UBS Private Investor Funds
C-2
<PAGE>
(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named
in the answer to Item 21 of Part B.
<TABLE>
<CAPTION>
Name Principal Business Address Positions and Offices with Positions and Offices with
Principal Underwriter Registrant
<S> <C> <C> <C>
Robert W. Wadsworth 4455 E. Camelback Road President and Treasurer
Suite 261E
Phoenix, AZ 85018
Eric M. Banhazl 2025 E. Financial Way Vice President Asst. Treasurer
Glendora, CA 91741
Steven J. Paggioli 479 West 22nd Street Vice President and Asst. Secretary
New York, NY 10011 Secretary
</TABLE>
Item 30. Location of Accounts and Records:
Books or other documents required to be maintained by Section 31(a) of
the Investment Company Act of 1940, and the rules promulgated
thereunder, are maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3);
(6); (8); (12); and 31a-1(d), the required books and records will be
maintained at the offices of Registrant's Custodian:
___________________________________________
(b)/(c) With respect to Rules 31a-1(a); 31a-1(b),(4); (2)(C) and (D);
(4); and 31a-1(f), the required books and records are maintained at the
offices of Registrant's Administrator:
Investment Company Administration Corporation
2025 E. Financial Way
Suite 101
Glendora, CA 11741
(c) With respect to Rules 31a-1(b)(5), (6), (9), (10) and (11) and
31a-1(f), the required books and records are maintained at the
principal offices of the Registrant's Adviser:
Robert Fleming, Incorporated
320 Park Avenue
New York, NY 10022
C-3
<PAGE>
Item 31. Management Services: None.
Item 32. Undertakings:
Registrant hereby undertakes that whenever shareholders meeting the
requirements of Section 16(c) of the Investment Company Act of 1940 inform the
Board of Trustees of their desire to communicate with Shareholders of the
Corporation, the Trustees will inform such Shareholders as to the approximate
number of Shareholders of record and the approximate costs of mailing or afford
said Shareholders access to a list of Shareholders.
Registrant hereby undertakes to call a meeting of Shareholders for
the purpose of voting upon the question of removal of a Trustee(s) when
requested in writing to do so by the holders of at least 10% of Registrant's
outstanding shares and in connection with such meetings to comply with the
provisions of Section 16(c) of the Investment Company Act of 1940.
Registrant hereby undertakes to file a post-effective amendment,
including financial statements which need not be audited, within 4-6 months from
the effective date of the Registrant's 1933 Act Registration Statement.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement, thereunto duly authorized, in the City of New York, State of New York
on this 21st day of April, 1997.
Fleming Capital Mutual Fund Group
By: /s/ Arthur Levy
-------------------------------
Arthur Levy
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacity on the dates indicated.
By: /s/ Arthur Levy Sole Trustee, President, April 21, 1997
----------------------- and Chief Financial
Officer
C-5
<PAGE>
EXHIBIT INDEX
Name Exhibit Page
- ---- ------------
Agreement and Declaration of Trust of the Ex-99.B1
Registrant, dated April 21, 1997 filed herewith.
By-Laws of the Registrant, filed herewith. Ex-99.B2
C-6
FLEMING CAPITAL MUTUAL FUND GROUP
AGREEMENT AND DECLARATION OF TRUST
AGREEMENT AND DECLARATION OF TRUST, as of this 21st day of April, 1997, the
Trustees hereunder, and by the holders of Shares of beneficial interest to be
issued hereunder as hereinafter provided.
WITNESSETH that
WHEREAS, this Trust has been formed to carry on the business of an investment
company; and
WHEREAS, the Trustees elected in accordance with Article IV hereof have agreed
to manage all property coming into their hands as trustees of a Massachusetts
voluntary association with transferable Shares in accordance with the provisions
hereinafter set forth.
NOW, THEREFORE, the Trustees elected in accordance with Article IV hereof hereby
declare that they will hold all cash, securities and other assets, which they
may from time to time acquire in any manner as Trustees hereunder IN TRUST to
manage and dispose of the same for the pro rata benefit of the holders from time
to time of Shares in this Trust issued hereunder on the terms and conditions
hereinafter set forth.
ARTICLE I
Name, Principal Place of Business and Resident Agent, and Definitions
Name
- ----
Section 1. This Trust shall be known as Fleming Capital Mutual Fund Group and
the Trustees shall conduct the business of the Trust under that name or any
other name as they may from time to time determine.
Principal Place of Business and Resident Agent
- ----------------------------------------------
Section 2. The principal place of business of the Trust is 320 Park Avenue, New
York, New York 10022. The name of the Trust's resident agent in the Commonwealth
of Massachusetts is CT Corporation, 2 Oliver Street, Boston, Massachusetts.
<PAGE>
Definitions
- -----------
Section 3. Whenever used herein, unless otherwise required by the context or
specifically provided:
(a) The "Trust" refers to Fleming Capital Mutual Fund Group the trust
created hereby.
(b) "Trustee" or "Trustees" refers to the Trustees of the Trust named
herein or elected in accordance with Article IV hereof and then in
office.
(c) "Shares" refers to units of beneficial interest in the assets of the
Trust. When used in relation to any particular series established by
the Trustees hereunder, "Shares" refers to units of beneficial interest
in the assets specifically allocated to that series. "Shares" includes
fractional as well as whole Shares.
(d) The "1940 Act" refers to the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all as amended from time to time.
(e) "Shareholder" means a record owner of Shares.
(f) "Affiliated Person," "Assignment," "Commission," "Interested Person,"
and "Principal Underwriter" shall have the meanings given them in the
1940 Act.
(g) "Majority Shareholder Vote" shall have the same meaning as "vote of a
majority of the outstanding voting securities" as that phrase is
defined in the 1940 Act, provided that such majority shall be
calculated by reference to the number of votes represented by shares
entitled to vote and present at the meeting, either in person or by
proxy. Such term may be used herein with respect to the Shares of the
Trust as a whole or the Shares of a particular series, as the context
may require.
(h) "Declaration of Trust" shall mean this Agreement and Declaration of
Trust, as further amended or restated from time to time, provided that
reference made in this Agreement and Declaration of Trust and in any
amendment hereto to "hereby," "hereof," "herein," "hereunder" or
similar terms shall be deemed to refer to this Declaration of Trust, as
amended from time to time, rather than the Article or Section in which
such words appear, unless the context otherwise requires.
(i) "By-Laws" shall mean the By-Laws of the Trust referred to in Article
IV, Section 4 hereof, as amended from time to time.
(j) "Disinterested Trustees" shall mean Trustees who are not "interested
persons" as such term is defined in the 1940 Act (including any Trustee
who has been exempted from being an "interested person" by any rule,
regulation or order of the Commission). In
2
<PAGE>
limitation of the foregoing, however, as used in Article VIII hereof, a
"Disinterested Trustee" shall mean a Disinterested Trustee against
whom, at the time of the votes to be taken pursuant to said Article
VIII, none of the actions, suits or other proceedings referred to in
such Article VIII, nor any other action, suit or other proceeding on
the same or similar grounds, is or has been pending.
ARTICLE II
Purpose
The purpose of the Trust is to provide investors with one or more
managed investment portfolio(s) consisting primarily of securities, including
debt instruments and other instruments and rights of a financial character.
ARTICLE III
Shares
Division of Beneficial Interest
- -------------------------------
Section 1. The Trustees may divide the beneficial interest in the Trust
into an unlimited number of Shares, authorize the issuance of Shares without
prior Shareholder approval, and may in their discretion provide in a By-Law or
otherwise that Shares may have voting rights based upon the value thereof.
Shares may be issued in series and, if so, Shares of any series will constitute
units of beneficial interest in assets of the Trust specifically allocated to
such series. Shares of the Trust, or any series thereof, shall have a par value
of $.001, shall represent equal and proportionate interests in the Trust, or
such series, with none having priority or preference over any other except as
specifically set forth in this Article III, and shall be transferable. All
Shares issued hereunder, including any Shares issued in payment of dividends or
other distributions or in connection with any split of Shares, shall be fully
paid and non-assessable. Shares of the Trust or of any series may be issued in
two or more classes, as the Trustees may, without Shareholder approval,
authorize, and Shares of any class shall be identical to those of any other
class of the Trust or such series except that, if the Trustees have authorized
the issuance of Shares of any particular series in two or more classes, then
such classes may, consistent with the 1940 Act, or pursuant to any exemptive
order issued by the Commission and other applicable law, have such variations as
to dividends, redemption charges, conversion, voting rights, net asset value,
expenses borne by the class, and other matters as the Trustees shall have
determined. The Trustees may from time to time, without Shareholder approval,
divide or combine the Shares of a series into a greater or lesser number without
thereby changing their proportionate beneficial interests in assets allocated to
such series.
3
<PAGE>
Ownership of Shares
- -------------------
Section 2. The ownership of Shares shall be recorded on the books of
the Trust or its transfer or similar agent, which books shall be maintained
separately for the Shares of each series. No certificates certifying the
ownership of Shares shall be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the transfer of Shares and
similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent of the Trust, as the case may be, shall be conclusive
as to who are the Shareholders of each series or class and as to the number of
Shares of each series or class held from time to time by each Shareholder.
Investments in the Trust; Assets of the Series
- -----------------------------------------------
Section 3. The Trustees may accept investments in the Trust from such
persons and on such terms and, subject to any requirements of law, for such
consideration, which may consist of cash or tangible or intangible property or a
combination thereof, as they may from time to time authorize.
All consideration received by the Trust for the issue or sale of Shares
of each series, together with all income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or liquidation
thereof, and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall irrevocably belong to the
series of Shares with respect to which the same were received by the Trust for
all purposes, subject only to the rights of creditors, and shall be so recorded
upon the books of account of the Trust and are herein referred to as "assets of"
such series. In addition, any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable as belonging to
any particular series shall be allocated by the Trustees between and among one
or more of the series in such manner as they, in their sole discretion, deem
fair and equitable. Each such allocation to any series shall be conclusive and
binding upon the Shareholders of all series for all purposes, and shall be
referred to as assets belonging to that series. No holder of Shares of any
particular series shall have any claim on or right to any assets allocated or
belonging to any other series.
Establishment of Class or Series
- --------------------------------
Section 4. The establishment and designation of any class or series of
Shares shall be effective upon the adoption of a resolution by a majority of the
Trustees (or of a committee thereof) setting forth such establishment and
designation and the relative rights and preferences of the Shares of such class
or series. Such establishment and designation shall not constitute an amendment
to this Declaration of Trust, although the Trustees may, at their option, set
forth such establishment and designation in a written instrument signed by them
or by an officer of the Trust. The Trustees (or a committee thereof) may by
majority vote amend such establishment and designation. At any time, if no
Shares are outstanding of a particular class
4
<PAGE>
or series previously so established and designated, the Trustees (or a committee
thereof) may by majority vote abolish such class or series and said
establishment and designation thereof.
No Preemptive Rights
- --------------------
Section 5. Shareholders shall have no preemptive or other right to
receive, purchase or subscribe for any additional Shares or other securities
issued by the Trust, except as otherwise provided herein or as the Trustees in
their sole discretion shall have determined by resolution.
Status of Shares and Limitation of Personal Liability
- -----------------------------------------------------
Section 6. Shares shall be deemed to be personal property giving only
the rights provided in this instrument. Every Shareholder by virtue of having
become a Shareholder shall be held to have expressly assented and agreed to the
terms of this Declaration of Trust and to have become a party hereto. The death
of a Shareholder during the continuance of the Trust shall not operate to
terminate the same nor entitle the representative of any deceased Shareholder to
an accounting or to take any action in court or elsewhere against the Trust or
the Trustees, but only to the rights of said decedent under this Trust.
Ownership of Shares shall not entitle the Shareholder to any title in or to the
whole or any part of the Trust property or right to call for a partition or
division of the same or for an accounting, nor shall the ownership of Shares
constitute the Shareholders partners. Neither the Trust nor the Trustees, nor
any officer, employee or agent of the Trust shall have any power to bind
personally any Shareholder, nor, except as specifically provided herein, to call
upon any Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time personally agree
to pay. A Shareholder, as such, shall not be personally liable for any act,
omission or obligation, of the Trustees or of the Trust.
Trustees and Officers as Shareholders
- -------------------------------------
Section 7. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of Shares of the Trust to the same extent as if he or
she were not a Trustee, officer or agent; and the Trustees may issue and sell or
cause to be issued and sold Shares to and buy such Shares from any such person
or any firm or company in which he is interested, subject only to the general
limitations herein contained as to the sale and purchase of such Shares; and all
subject to any restrictions which may be contained in the By-Laws.
Power of Trustees to Change Provisions Relating to Shares.
- ----------------------------------------------------------
Section 8. Notwithstanding any other provisions of this Declaration of
Trust and without limiting the power of the Trustees to amend the Declaration of
Trust as provided elsewhere herein, the Trustees shall have the power to amend
this Declaration of Trust, at any time and from time to time, in such manner as
the Trustees may determine in their sole discretion, without the need for
Shareholder action, so as to add to, delete, replace or otherwise modify any
5
<PAGE>
provisions relating to the Shares contained in this Declaration of Trust for the
purpose of responding to or complying with any regulations, orders, rulings or
interpretations of any governmental agency or any laws, now or hereafter
applicable to the Trust.
Without limiting the generality of the foregoing or of any other
provision of this Declaration of Trust , the Trustees may, for the purposes
stated above and in Section 4 of this Article III, amend the Declaration of
Trust to:
(a) Create one or more Series or classes of Shares (in addition to any
Series or classes already existing or otherwise) with such rights and
preferences and such eligibility requirements for investment therein as the
Trustees shall determine and reclassify any or all outstanding Shares as Shares
of particular Series or classes in accordance with such eligibility
requirements;
(b) Amend any of the provisions set forth in paragraphs (a) through (i)
of Section 9 of this Article III;
(c) Combine one or more Series or classes of Shares into a single
Series or class on such terms and conditions as the Trustees shall determine;
(d) Change or eliminate any eligibility requirements for investment in
Shares of any Series or class, including without limitation the power to provide
for the issue of Shares of any Series or class in connection with any merger or
consolidation of the Trust with another trust or company or any acquisition by
the Trust of part or all of the assets of another trust or company;
(e) Change the designation of any Series or class of Shares;
(f) Change the method of allocating dividends among the various Series
and classes of Shares;
(g) Allocate any specific assets or liabilities of the Trust or any
specific items of income or expense of the Trust to one or more Series or
classes of Shares;
(h) Specifically allocate assets to any or all Series or classes of
Shares or create one or more additional Series or classes of Shares which are
preferred over all other Series or classes of Shares in respect of assets
specifically allocated thereto or any dividends paid by the Trust with respect
to any net income, however determined, earned from the investment and
reinvestment of any assets so allocated or otherwise provide for any special
voting or other rights with respect to such Series or classes.
6
<PAGE>
ARTICLE IV
The Trustees
Qualification; Number of Trustees; Election
- -------------------------------------------
Section 1. Each Trustee shall be a natural person and may, but need
not, be a Shareholder. A Trustee may be elected either by the Trustees or the
Shareholders subject to the limitations of the 1940 Act. Each Trustee shall hold
office during the lifetime of this Trust until the election and qualification of
his or her successor, or until he or she sooner dies, resigns or is removed. The
number of Trustees shall be fixed from time to time by a vote of a majority of
the Trustees then in office, except that, commencing with the first
Shareholders' meeting at which Trustees are elected, there shall be not fewer
than three nor more than fifteen Trustees. The number of Trustees so fixed may
be increased either by the Shareholders of the Trust or by the Trustees by a
vote of a majority of the Trustees then in office. The number of Trustees so
fixed may be decreased either by the Shareholders of the Trust or by the
Trustees by vote of a majority of the Trustees then in office, but only to
eliminate vacancies existing by reason of the death, resignation or removal of
one or more Trustees.
In case of the declination, death, resignation, retirement, removal,
incapacity, or inability of any of the Trustees, or in case a vacancy shall
exist by reason of an increase in number, or for any other reason, the remaining
Trustees shall fill such vacancy by appointing such other person as they in
their discretion shall see fit consistent with the 1940 Act. Until any such
vacancy is filled as provided in this Section 1, the Trustees then in office
shall, regardless of their number, have all powers granted to and discharge all
duties imposed on the Trustees hereby. Such appointment shall be evidenced by a
written instrument signed by a majority of the Trustees in office, even though
less than a quorum, or by recording in the records of the Trust, and shall take
effect upon such signing or recording and the acceptance of such appointment by
the Trustee so appointed. An appointment of a Trustee may be made by the
Trustees then in office in anticipation of a vacancy to occur by reason of
retirement, resignation or increase in number of Trustees effective at a later
date, provided that said appointment shall become effective only at or after the
effective date of said retirement, resignation or increase in number of
Trustees.
Removal and Resignation
- -----------------------
Section 2. By vote of the Shareholders holding a majority of the shares
entitled to vote, the Shareholders may remove a Trustee with or without cause.
By vote of a majority of the Trustees then in office, the Trustees may remove a
Trustee with or without cause. Any Trustee may resign at any time by written
instrument signed by him or her and delivered to any officer of the Trust, to
each other Trustee or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some other time.
Except to the extent expressly provided in a written agreement with the Trust,
no Trustee resigning and no Trustee removed shall have any right to any
compensation for any period following his or her resignation or removal, or any
right to damages on account of such removal.
7
<PAGE>
Effect of Death, Resignation, Etc. of a Trustee
- -----------------------------------------------
Section 3. The death, declination, resignation, retirement, removal, or
incapacity of the Trustees, or any one of them, shall not operate to annul the
Trust or to revoke any existing agency created pursuant to the terms of this
Declaration of Trust.
Powers
- ------
Section 4. Subject to the provisions of this Declaration of Trust, the
Trustees shall manage the business of the Trust as an investment company, and
they shall have all powers necessary or convenient to carry out that
responsibility. Without limiting the foregoing, the Trustees may adopt By-Laws
not inconsistent with this Declaration of Trust providing for the conduct of the
business of the Trust and may amend and repeal them to the extent that such
By-Laws do not reserve that right to the Shareholders; they may fill vacancies
in their number, including vacancies resulting from increases in their number,
may remove from their number with or without cause, and may elect and remove
such officers and appoint and terminate such agents as they consider
appropriate; they may appoint from their own number, and terminate, any one or
more committees consisting of two or more Trustees, including an executive
committee which may, when the Trustees are not in session, exercise some or all
of the powers and authority of the Trustees as the Trustees may determine; they
may appoint an advisory board, the members of which shall not be Trustees and
need not be Shareholders; they may employ one or more investment advisers or
administrators as provided in Section 9 of this Article IV; they may employ one
or more custodians of the assets of the Trust and may authorize such custodians
to employ subcustodians and to deposit all or any part of such assets in a
system or systems for the central handling of securities, retain a transfer
agent or a shareholder servicing agent, or both, provide for the distribution of
Shares by the Trust through one or more principal underwriters or otherwise, set
record dates for the determination of Shareholders with respect to various
matters, and in general delegate such authority as they consider desirable to
any officer of the Trust, to any committee of the Trustees and to any agent or
employee of the Trust or to any such custodian or underwriter.
Without limiting the foregoing, the Trustees shall have power and
authority:
(a) To invest and reinvest cash, and to hold cash uninvested;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, write
options on, or lease any or all of the assets of the Trust;
(c) To vote or give assent, or exercise any rights of ownership,
with respect to stock or other securities or property, and to
execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting
to such person or persons such power and discretion with
relation to securities or property as the Trustees shall deem
proper;
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(d) To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable
form, or in the name of the Trustees or of the Trust or in the
name of a custodian, subcustodian or other depositary or a
nominee or nominees or otherwise;
(f) To establish separate and distinct series of shares with
separately defined investment objectives, policies and
purposes, and with separately defined relative powers, rights,
privileges and liabilities, and to allocate assets,
liabilities and expenses of the Trust to a particular series
of Shares or to apportion the same among two or more series,
provided that any liability or expense determined by the
Trustees to have been incurred by a particular series of
Shares shall be payable solely out of the assets of that
series and to establish separate classes of shares of each
series, all in accordance with Article III hereof;
(g) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or
issuer, any security or property of which is or was held in
the Trust; to consent to any contract, lease, mortgage,
purchase or sale of property by such corporation or issuer,
and to pay calls or subscriptions with respect to any security
held in the Trust;
(h) To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in
that connection to deposit any security with, or transfer any
security to, any such committee, depositary or trustee, and to
delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the
Trustees shall deem proper, and to agree to pay, and to pay,
such portion of the expenses and compensation of such
committee, depositary or trustee as the Trustees shall deem
proper;
(i) To compromise, arbitrate or otherwise adjust claims in favor
of or against the Trust or any matter in controversy,
including but not limited to claims for taxes;
(j) To enter into joint ventures, general or limited partnerships,
limited liability companies, and any other combinations or
associations;
(k) To borrow funds;
(l) To endorse or guarantee the payment of any notes or other
obligations of any person; to make contracts of guaranty or
suretyship, or otherwise assume liability for payment thereof;
and to mortgage and pledge the Trust property or any part
thereof to secure any or all of such obligations;
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(m) To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the
conduct of the business, including, without limitation,
insurance policies insuring the assets of the Trust and
payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisers or
administrators, principal underwriters, or independent
contractors of the Trust individually against all claims and
liabilities of every nature arising by reason of holding,
being or having held any such office or position, or by reason
of any action alleged to have been taken or omitted by any
such person as Shareholder, Trustee, officer, employee, agent,
investment adviser, administrator, principal underwriter, or
independent contractor, including any action taken or omitted
that may be determined to constitute negligence, whether or
not the Trust would have the power to indemnify such person
against such liability;
(n) To pay pensions, as deemed appropriate by the Trustees, and to
adopt, establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other retirement,
incentive and benefit plans, trusts and provisions, including
the purchasing of life insurance and annuity contracts as a
means of providing such retirement and other benefits, for any
or all of the Trustees, officers, employees and agents of the
Trust;
(o) To establish, from time to time, a minimum total investment
for Shareholders, and to require the redemption of the Shares
of any Shareholders whose investment is less than such minimum
upon giving notice to such Shareholder;
(p) To enter into contracts of any kind and description;
(q) To name, or to change the name or designation of the Trust or
any series or class of the Trust;
(r) To take whatever action may be necessary to enable the Trust
to comply with any applicable Federal, state or local statute,
rule or regulation; and
(s) To engage in any other lawful act or activity in which
corporations organized under the Massachusetts Business
Corporation Law may engage.
The Trustees shall not in any way be bound or limited by any present or
future law or custom in regard to investments by Trustees. The Trustees shall
not be required to obtain any court order to deal with any assets of the Trust
or take any other action hereunder.
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Manner of Acting
- ----------------
Section 5. Except as otherwise provided herein or from time to time in
the By-Laws, any action to be taken by the Trustees, or a committee thereof, may
be taken by a majority of the Trustees present at a meeting of Trustees, or of
the committee members present at a meeting of such committee (if in either case
a quorum be present), within or without Massachusetts, including any meeting
held by means of a conference telephone or other communications equipment by
means of which all persons participating in the meeting can communicate with
each other simultaneously and participation by such means shall constitute
presence in person at a meeting, or by written consent of a majority of the
Trustees, or members of such committee, then in office. At any meeting of the
Trustees, or a committee thereof, one third of the Trustees or members of such
committee, as the case may be, shall constitute a quorum. If a quorum is present
when a duly called or held meeting is convened, the Trustees present at such
meeting may, following the withdrawal of one or more Trustees originally
present, continue to transact business until adjournment thereof, even though
such Trustees would not otherwise constitute a quorum. Meetings of the Trustees,
or a committee thereof, may be called orally or in writing by the Chairman of
the Trustees or of such committee or by any two other Trustees or committee
members, as the case may be. Notice of the time, date and place of all meeting
of the Trustees, or a committee thereof, shall be given to each Trustee or
committee member as provided in the By-Laws.
Notice of any meeting need not be given to any Trustee (or committee
member) who attends that meeting without objecting to the lack of notice or who
executes a written waiver of notice with respect to the meeting. Subject to the
requirements of the 1940 Act, the Trustees by majority vote may delegate to any
one of their number the authority to approve particular matters or take
particular actions on behalf of the Trust.
Payment of Expenses by the Trust
- --------------------------------
Section 6. The Trustees are authorized to pay or to cause to be paid
out of the principal or income of the Trust, or partly out of principal and
partly out of income, as they deem fair, all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust, or in connection
with the management thereof, including, but not limited to, the Trustees'
compensation, as authorized pursuant to Article VII, Section 1 hereof, and
reimbursement for expenses and disbursements and such expenses and charges for
the services of the Trust's officers, employees, investment adviser,
administrator, principal underwriter, auditor, counsel, custodian, transfer
agent, shareholder servicing agent, and such other agents or independent
contractors and such other expenses and charges as the Trustees may deem
necessary or proper to incur, provided, however, that all expenses, fees,
charges, taxes and liabilities incurred or arising in connection with a
particular series of Shares or class as determined by the Trustees consistent
with applicable law, shall be payable solely out of the assets of that Series or
class. Any general liabilities, expenses, costs, charges or reserves of the
Trust which are not readily identifiable as belonging to any particular series
shall be allocated and charged by the Trustees between or
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among any one or more of the Series in such manner as the Trustees in their sole
discretion deem fair and equitable. Each such allocation shall be conclusive and
binding upon the Shareholders of all Series for all purposes. Any creditor of
any Series may look only to the assets of that series to satisfy such creditor's
debt.
Section 7. The Trustees shall have the power, as frequently as they may
determine, to cause each Shareholder, or each Shareholder of any particular
Series, to pay directly, in advance or arrears, for any and all expenses of the
Trust, an amount fixed from time to time by the Trustees, by setting off such
charges due from such Shareholder from declared but unpaid dividends owed such
Shareholder and/or by reducing the number of Shares in the account of such
Shareholder by that number of full and/or fractional Shares which represents the
outstanding amount of such charges due from such Shareholder.
Ownership of Assets of the Trust
- --------------------------------
Section 8. Title to all of the assets of each series of Shares and the
Trust shall at all times be considered as vested in the Trustees as joint
tenants. The right, title and interest of the Trustees in such assets shall vest
automatically in each person who may hereafter become a Trustee, and upon any
Trustees' death, resignation or removal, such Trustee shall automatically cease
to have any right, title or interest in such assets. Vesting and cessation of
title as set forth in this Section 8 shall be effective notwithstanding the
absence of execution and delivery of any conveyancing documents.
Advisory, Administration and Distribution Services
- --------------------------------------------------
Section 9. The Trustees may, at any time and from time to time,
contract with respect to the Trust or any series thereof for exclusive or
nonexclusive investment advisory and/or administration services with any
corporation, trust, association or other organization, every such contract to
comply with such requirements and restrictions as may be set forth in the
By-Laws; and any such contract may contain such other terms interpretive of or
in addition to said requirements and restrictions as the Trustees may determine,
including, without limitation, in the case of a contract for investment advisory
or sub-advisory services, authority to determine from time to time what
investments shall be purchased, held, sold or exchanged and what portion, if
any, of the assets of the Trust or any series thereof shall be held uninvested
and to make changes in the investments of the Trust or any series thereof. Any
contract for investment advisory services shall be subject to such Shareholder
approval as required by the 1940 Act. The Trustees may also, at any time and
from time to time, contract with any corporation, trust, association or other
organization, appointing it exclusive or nonexclusive distributor or principal
underwriter for the Shares, every such contract to comply with such requirements
and restrictions as may be set forth in the By-Laws; and any such contract may
contain such other terms interpretive of or in addition to said requirements and
restrictions as the Trustees may determine.
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The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is
a shareholder, director, officer, partner, trustee, employee,
administrator, investment adviser, principal underwriter,
distributor or affiliate or agent of or for any corporation,
trust, association, or other organization, or of or for any
parent or affiliate of any organization, with which an
investment advisory or administration or principal
underwriter's or distributor's contract, or transfer,
shareholder servicing or other agency contract may have been
or may hereafter be made, or that any such organization, or
any parent or affiliate thereof, is a Shareholder or has an
interest in the Trust, or that
(ii) any corporation, trust, association or other organization with
which an investment advisory or administration or principal
underwriter's or distributor's contract, or transfer,
Shareholder servicing or other agency contract may have been
or may hereafter be made also has an investment advisory or
administration contract, or principal underwriter's or
distributor's contract, or transfer, Shareholder servicing or
other agency contract with one or more other corporations,
trusts, associations, or other organizations, or has other
businesses or interests
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.
ARTICLE V
Shareholders' Voting Powers and Meetings
The Shareholders shall have power to vote only (i) for the election or
removal of Trustees as provided in Article IV, Section 1 hereof, (ii) with
respect to any investment adviser as provided in Article IV, Section 7 hereof,
(iii) with respect to any termination of the Trust or any series or class to the
extent and as provided in Article IX, Section 4 hereof, (iv) with respect to any
amendment of this Declaration of Trust to the extent and as provided in Article
IX, Section 9 hereof, (v) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding or claim should or should not be brought or maintained derivatively
or as a class action on behalf of the Trust or the Shareholders, (vi) with
respect to any merger, consolidation, sale of assets, or incorporation of the
Trust or any series to the extent and as provided in Article IX, Sections 6 and
7 hereof, and (vii) with respect to such additional matters relating to the
Trust as may be required by law, by this Declaration of Trust, by the ByLaws or
by any registration of the Trust with the Securities and Exchange Commission or
any state, or as the Trustees may consider necessary or desirable.
Notwithstanding any other provisions of this Declaration of Trust, on any matter
submitted to a vote of Shareholders, all Shares of the Trust then entitled to
vote shall be voted by individual
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series or class, except that (1) when so required by the 1940 Act, Shares shall
be voted in the aggregate and not by individual series or class, and (2) when
the Trustees have determined that the matter affects only the interests of one
or more series or class, then only Shareholders of such series or class(es)
shall be entitled to vote thereon. The Shareholders may hold meetings and take
action as provided in the By-Laws, subject to the requirements of the 1940 Act
where applicable. Each whole Share shall be entitled to one vote as to any
matter on which it is entitled to vote and each fractional share shall be
entitled to a proportionate fractional vote. There shall be no cumulative voting
in the election of Trustees. Shares may be voted in person or by proxy. A proxy
with respect to Shares held in the name of two or more persons shall be valid if
executed by any one of them, unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any one of them. A
proxy purporting to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. At any time when no Shares of a Series
are outstanding, the Trustees may exercise all rights of Shareholders of that
Series and may take any action required by law, this Declaration of Trust or the
By-Laws to be taken by Shareholders.
ARTICLE VI
Distributions, Redemptions, Repurchases
and Determination of Net Asset Value
Distributions
- -------------
Section 1. The Trustees may, but need not, distribute from time to
time to the Shareholders of each series such income and gains, accrued or
realized, as the Trustees may determine, after providing for actual and accrued
expenses and liabilities (including such reserves as the Trustees may establish)
determined in accordance with good accounting practices. The Trustees shall have
full discretion to determine which items shall be treated as income and which
items as capital and their determination shall be binding upon the Shareholders.
Distributions of each year's income of each series, if any be made, may be made
in one or more payments, which shall be in Shares, in cash or otherwise and on a
date or dates determined by the Trustees. At any time and from time to time in
their discretion, the Trustees may distribute to the Shareholders of any one or
more series as of a record date or dates determined by the Trustees, in Shares,
in cash or otherwise, all or part of any gains realized on the sale or
disposition of property of the series or otherwise, or all or part of any other
principal of the Trust attributable to the series. Each distribution pursuant to
this Section 1 shall be made ratably according to the number of Shares of the
series or class held by the several Shareholders on the applicable record date
thereof, provided that no distributions need be made on Shares purchased
pursuant to orders received, or for which payment is made, after such time or
times as the Trustees may determine. Any such distribution paid in Shares will
be paid at the net asset value thereof as determined in accordance with this
Declaration of Trust.
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Redemptions and Repurchases
- ---------------------------
Section 2. Any holder of Shares of the Trust may, by presentation of a
written request, together with his or her certificates, if any, for such Shares,
in proper form for transfer, at the office of the Trust, the adviser, the
underwriter or the distributors, or at a principal office of a transfer or
shareholder services agent appointed by the Trust (as the Trustees may
determine), or in accordance with such other procedures for redemption as the
Trustees may from time to time authorize, redeem his or her Shares in accordance
with the provisions of this Section 2 for the net asset value thereof determined
and computed in accordance with the By-Laws, less any redemption charge the
Trustees may establish, including any contingent deferred sales charge to which
redemption of such Shares may be subject. Upon receipt of such written request
for redemption of Shares by the Trust, the adviser, the underwriter or the
distributor, or the Trust's transfer or shareholder services agent, the Trust
shall purchase such Shares and shall pay therefor the net asset value thereof
next determined after such receipt or the net asset value thereof determined as
of such other time fixed by the Trustees, as may be permitted or required by the
1940 Act in each instance, less any applicable redemption charge.
The obligation of the Trust to redeem its Shares as set forth in this
Section 2 shall be subject to the condition that, during any time of emergency,
as hereinafter defined, such obligation may be suspended by the Trust by or
under authority of the Trustees for such period or periods during such time of
emergency as shall be determined by or under authority of the Trustees. If there
is such a suspension, any Shareholder may withdraw any demand for redemption and
any tender of Shares which has been received by the Trust during any such period
and any tender of Shares the applicable net asset value of which would but for
such suspension be calculated as of a time during such period. Upon such
withdrawal, the Trust shall return to the Shareholder the certificates therefor,
if any. Shareholders who do not so withdraw any such demand shall receive
payment based on the net asset value next determined after the termination of
such suspension. For the purposes of any such suspension "time of emergency"
shall mean, either with respect to all Shares or any series of Shares, as
appropriate, any period during which:
(a) the New York Stock Exchange is closed other than for customary
weekend and holiday closings; or
(b) the Trustees or authorized officers of the Trust shall have
determined, in compliance with any applicable rules and
regulations or orders of the Commission, either that trading
on the New York Stock Exchange is restricted, or that an
emergency exists as a result of which (i) disposal by the
Trust of securities owned by it is not reasonably practicable
or (ii) it is not reasonably practicable for the Trust fairly
to determine the current value of the net assets of the Trust
or of a series; or
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(c) the suspension or postponement of such obligations is
permitted by order of the Commission.
The Trust may also purchase, repurchase or redeem Shares in accordance
with such other methods, upon such other terms and subject to such other
conditions as the Trustees may from time to time authorize at a price not
exceeding the net asset value of such Shares in effect when the purchase or
repurchase or any contract to purchase or repurchase is made.
Payment in Kind
- ---------------
Section 3. Subject to any generally applicable limitation imposed by
the Trustees, any payment on redemption, purchase or repurchase by the Trust of
Shares may, if authorized by the Trustees, be made wholly or partly in kind,
instead of in cash. Such payment in kind shall be made by distributing
securities or other property, constituting, in the opinion of the Trustees, a
fair representation of the various types of securities and other property then
held by the series of Shares being redeemed, purchased or repurchased (but not
necessarily involving a portion of each of that series' holdings) and taken at
their value used in determining the net asset value of the Shares in respect of
which payment is made.
Additional Provisions Relating to Redemptions and Repurchases
- -------------------------------------------------------------
Section 4. The completion of redemption, purchase or repurchase of
Shares shall constitute a full discharge of the Trust and the Trustees with
respect to such Shares and the Trustees may require that any certificate or
certificates issued by the Trust to evidence the ownership of such Shares shall
be surrendered to the Trustees for cancellation or notation.
Assets Available for Dividends, Distributions, Redemptions and Repurchases
- --------------------------------------------------------------------------
Section 5. No dividend or distribution (including, without limitation,
any distribution paid upon termination of the Trust or of any series) with
respect to, nor any redemption or repurchase of, the Shares of any series shall
be effected by the Trust other than from the assets of such series.
Redemptions at the Option of the Trust
- --------------------------------------
Section 6. The Trustees shall have the power at any time to redeem
Shares, of any class or any series, of a Shareholder at a redemption price
determined in accordance with the provisions of Section 2 of this Article if at
such time the aggregate net asset value of the Shares of that class of that
series in such Shareholder's account is less than the minimum investment amount
established by the Trustees for that class of that series. A Shareholder shall
be notified prior to any such redemption and shall be allowed 60 days to make
additional investments in Shares of that class or that series before such
redemption is effected.
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ARTICLE VII
Compensation and Limitation
of Liability of Trustees
Compensation
- ------------
Section 1. The Trustees as such shall be entitled to reasonable
compensation from the Trust; they may fix the amount of their compensation.
Nothing herein shall in any way prevent the employment of any Trustee for
advisory, administration, legal, accounting, investment banking or other
services and payment for the same by the Trust.
Limitation of Liability
- -----------------------
Section 2. The Trustees shall not be responsible or liable in any
event for any neglect or wrongdoing of any officer, agent, employee, investment
adviser, administrator, principal underwriter or custodian, nor shall any
Trustee be responsible for any obligation of the Trust or the act or omission of
any other Trustee, but nothing herein contained shall protect any Trustee
against any liability to which he or she would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.
Every note, bond, contract, instrument, certificate, Share or
undertaking and every other act or thing whatsoever executed or done by or on
behalf of the Trust or the Trustees or any of them in connection with the Trust
shall be conclusively deemed to have been executed or done only in or with
respect to their or his or her capacity as Trustees or Trustee, and such
Trustees or Trustee shall not be personally liable thereon.
ARTICLE VIII
Indemnification
Trustees
- --------
Section 1. Subject to the exceptions and limitations contained in this
Article, every person who is, or has been, a Trustee or officer of the Trust
shall be indemnified by the Trust to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having been a Trustee
or officer and against amounts paid or incurred by him in settlement thereof.
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No indemnification shall be provided hereunder to a Trustee or
officer:
(a) against any liability to the Trust or its Shareholders by
reason of a final adjudication by the court or other body
before which the proceeding was brought that he engaged in
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office;
(b) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in the
reasonable belief that his action was in the best interests of
the Trust;
(c) in the event of a settlement or other disposition not
involving a final adjudication (as provided in paragraph (a)
or (b)) and resulting in a payment by a Trustee or officer,
unless there has been either a determination that such Trustee
or officer did not engage in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved
in the conduct of his office by the court or other body
approving the settlement or other disposition or a reasonable
determination, based on a review of readily available facts
(as opposed to a full trial-type inquiry) that he did not
engage in such conduct:
(i) by a vote of a majority of the Disinterested Trustees
acting on the matter (provided that a majority of the
Disinterested Trustees then in office act on the
matter); or
(ii) by written opinion of independent legal counsel.
The rights of indemnification hereinafter provided may be insured
against by policies maintained by the Trust, shall be severable, shall not
affect any other rights to which any Trustee or officer may now or hereafter be
entitled, shall continue as to a person who has ceased to be such Trustee or
officer and shall inure to the benefit of the heirs, executors and
administrators of such a person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel other than Trustees and
officers may be entitled by contract or otherwise under law.
Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in the next to the last
paragraph of this Article shall be advanced by the Trust prior to final
disposition thereof upon receipt of an undertaking by or on behalf of the
recipient to repay such amount if it is ultimately determined that he is not
entitled to indemnification under this Article, provided that either:
(a) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against
losses arising out of any such advances; or
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(b) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then
in office act on the matter) or independent legal counsel in a
written opinion shall determine, based upon a review of the
readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.
As used in this Article, the words "claim," "action," "suit" or
"proceeding" shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened; and the words
"liability" and "expenses" shall include without limitation, attorney's fees,
costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
Shareholders
- ------------
Section 2. In case any Shareholder or former Shareholder shall be held
to be personally liable solely by reason of his or her being or having been a
shareholder of the Trust or of a particular Series and not because of his or her
acts or omissions or for some other reason, the Shareholder or former
Shareholder (or his or her heirs, executors, administrators or other legal
representatives or in the case of a corporation or other entity, its corporate
or other general successor) shall be entitled to be held harmless from and
indemnified against all loss and expenses arising from such liability, but only
out of the assets of the particular Series of which he or she is or was a
Shareholder.
ARTICLE IX
Miscellaneous
Trustees, Shareholders, Etc. Not Personally Liable; Notice
- ----------------------------------------------------------
Section 1. All persons extending credit to, contracting with or having
any claim against the Trust or a particular series or class of Shares thereof
shall look only to the assets of the Trust, the assets of that particular series
the assets or attributable to that particular class, as the case may be for
payment under such credit, contract or claim; and neither the Shareholders nor
the Trustees, nor any of the Trust's officers, employees or agents, whether
past, present or future, shall be personally liable therefor. Nothing in this
Declaration of Trust shall protect any Trustee against any liability to which
such Trustee would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate or undertaking
made or issued by the Trustees or by any officers or officer shall give notice
that this Declaration of Trust is on file with the Secretary of the Commonwealth
of Massachusetts and shall recite that the same was executed or made by or on
behalf of the Trust or by them as Trustees or Trustee or as officers or
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officer and not individually and that the obligations of such instrument are not
binding upon any of them or the Shareholders individually but are binding only
upon the assets and property of the Trust, or upon the assets belonging to the
relevant Series or attributable to the relevant class of Shares for the benefit
of which the Trustees have caused the note, land, content, instrument,
certificate or undertaking to be issued or made, and may contain such further
recital as he, she or they may deem appropriate, but the omission of any such
recital shall not operate to bind any Trustees or Trustee or officers or officer
or Shareholders or Shareholder or any other person individually.
Trustees' Good Faith Action, Expert Advice; No Bond or Surety
- -------------------------------------------------------------
Section 2. The exercise by the Trustees of their powers and discretion
hereunder shall be binding upon everyone interested. A Trustee shall be liable
for his or her own willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustee, and
for nothing else, and shall not be liable for errors of judgment or mistakes of
fact or law. The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust, and shall be
under no liability for any act or omission in accordance with such advice or for
failing to follow such advice. The Trustees shall not be required to give any
bond as such, nor any surety if a bond is required.
Liability of Third Persons Dealing with Trustees
- ------------------------------------------------
Section 3. No person dealing with the Trustees shall be bound to make
any inquiry concerning the validity of any transaction made or to be made by the
Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
Duration and Termination of Trust
- ---------------------------------
Section 4. Unless terminated as provided herein, the Trust shall
continue without limitation of time. The Trust may be terminated at any time by
vote of Shareholders holding at least 66 2/3% of the Shares of each Series
entitled to vote and voting separately by Series or by the Trustees by written
notice to the Shareholders. Any series or class of Shares may be terminated at
any time by vote of at least 66 2/3% of the Shares of such series or class
entitled to vote or by the Trustees by written notice to the Shareholders of
such series or class. Upon termination of the Trust or of any one or more series
or classes of Shares, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated, of the
Trust or of the particular series or class as may be determined by the Trustees,
the Trust shall, in accordance with such procedures as the Trustees consider
appropriate, reduce the remaining assets to distributable form in cash or Shares
or other securities, or any combination thereof, and distribute the proceeds to
the Shareholders of the series or class involved, ratably according to the
number of Shares of such series or class held by the several Shareholders of
such series or class on the date of termination.
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Section 5. The original or a copy of this instrument and of each
amendment hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. A copy of this instrument and of each amendment
hereto shall be filed by the Trust with the Secretary of the Commonwealth of
Massachusetts and with the Boston City Clerk, as well as any other governmental
office where such filing may from time to time be required. Anyone dealing with
the Trust may rely on a certificate by an officer of the Trust as to whether or
not any such amendments have been made and as to any matters in connection with
the Trust hereunder; and, with the same effect as if it were the original, may
rely on a copy certified by an officer of the Trust to be a copy of this
instrument or of any such amendments. Headings are placed herein for convenience
of reference only and shall not be taken as part hereof or control or affect the
meaning, construction or effect of this instrument. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
Merger, Consolidation and Sale of Assets
- ----------------------------------------
Section 6. Any one or more series of the Trust may, either as the
successor, survivor or non-survivor, (1) consolidate or merge with one or more
other trusts, partnerships, associations or corporations, including any series
or class thereof, organized under the laws of the Commonwealth of Massachusetts
or any other state of the United States; or (2) transfer a substantial portion
of its assets to one or more other trusts, partnerships, associations or
corporations, including any series or class thereof, organized under the laws of
the Commonwealth of Massachusetts or any other state of the United States, any
such consolidation, merger or transfer to be upon such terms and conditions as
are specified in an agreement and plan of reorganization authorized and approved
by the Trustees and entered into by the relevant series in connection therewith.
Any such consolidation, merger or transfer may be authorized by vote of a
majority of the Trustees then in office without the approval of shareholders of
any series.
Incorporation, Reorganization
- -----------------------------
Section 7. The Trustees may cause to be organized or assist in
organizing a corporation or corporations under the laws of any jurisdiction, or
any other trust, unit investment trust, partnership, association or other
organization to take over the assets of any one or more series of the Trust or
to carry on any business in which such series of the Trust shall directly or
indirectly have any interest, and to sell, convey and transfer such assets to
any such corporation, trust, partnership, association or organization in
exchange for the shares or securities thereof or otherwise, and to lend money
to, subscribe for the shares or securities of, and enter into any contracts with
any such corporation, trust, partnership, association or organization in which
the Trust holds or is about to acquire shares or any other interest. Subject to
Section 6 of this Article IX, the Trustees may also cause a merger or
consolidation between such series of the Trust or any successor thereto and any
such corporation, trust, partnership, association or other organization if and
to the extent permitted by law.
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Applicable Law
- --------------
Section 8. The Trust shall be of the type commonly called a
Massachusetts business trust, and without limiting the provisions hereof, the
Trust may exercise all powers which are ordinarily exercised by such a trust.
This Declaration of Trust is to be governed by and construed and administered
according to the laws of said Commonwealth.
Amendments
- ----------
Section 9. This Declaration of Trust may be amended at any time by an
instrument in writing signed by a majority of the then Trustees when authorized
to do so by a vote or written consent of Shareholders, except that an amendment
which shall affect the holders of one or more series or classes of Shares but
not the holders of all outstanding series or classes shall be authorized by vote
or written consent of the Shareholders of each series or classes affected and no
vote of Shareholders of a series or classes not affected shall be required.
Amendments having the purpose of changing the name of the Trust or of supplying
any omission, curing any ambiguity or curing, correcting or supplementing any
defective or inconsistent provision contained herein shall not require
authorization by Shareholder vote.
IN WITNESS WHEREOF, the undersigned being the Trustees of the Trust,
have executed this document this 21st day of April, 1997.
/s/ Arthur Levy
------------------------
Arthur Levy
Sole Trustee
320 Park Avenue
New York, NY 10022
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BY-LAWS
OF
FLEMING CAPITAL MUTUAL FUND GROUP
Section 1. Agreement and Declaration of Trust and Principal Office
1.1 Agreement and Declaration of Trust. These By-Laws shall be subject to
the Agreement and Declaration of Trust, as from time to time in effect
(the "Declaration of Trust"), of Fleming Capital Mutual Fund Group, a
Massachusetts business trust established by the Declaration of Trust
(the "Trust").
1.2 Principal Office of the Trust. The principal office of the Trust shall
be located at 320 Park Avenue, New York, New York 10022.
Section 2. Shareholders
2.1 Annual Meeting. The Trust will not hold annual meetings of the
shareholders.
2.2 Special Meetings. A special meeting of the Shareholders of the Trust or
of any series or class may be called at any time by the Trustees, by
the President or such other person or persons as may be specified in
these By-Laws, and held from time to time for the purpose of taking
action upon any matter requiring the vote or the authority of the
Shareholders of the Trust or any series or class as herein provided or
upon any other matter deemed by the Trustees to be necessary or
desirable. Each call of a meeting shall state the place, date, hour and
purposes of the meeting. If the Trustees shall fail to call or give
notice of any meeting of Shareholders for a period of thirty days after
written application by Shareholders holding at least 10% of the Shares
then outstanding requesting a meeting to be called for a purpose
requiring action by the Shareholders as provided herein, then
Shareholders holding at least 10% of the Shares then outstanding may
call and give notice of such meeting, and thereupon the meeting shall
be held in the manner provided for herein in case of call thereof by
the Trustees. Notice of a meeting need not be given to any Shareholder
if a written waiver of notice, executed by him or her before or after
the meeting, is filed with the records of the meeting, or to any
Shareholder who attends the meeting without protesting prior thereto or
at its commencement the lack of notice to him or her.
2.3 Place of Meetings. All meetings of the shareholders shall be held at
such place within the United States as shall be designated by the
Trustees or the President of the Trust.
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2.4 Notice of Meetings. A written notice of each meeting of shareholders,
stating the place, date and hour and the purposes of the meeting, shall
be given to each shareholder entitled to vote thereat by leaving such
notice with him or at his residence or usual place of business or by
mailing it, postage prepaid, and addressed to such shareholder at his
address as it appears in the records of the Trust at least seven days
before the meeting. Such notice shall be given by the Secretary or an
Assistant Secretary or by an officer designated by the Trustees. No
notice of any meeting of shareholders need be given to a shareholder if
a written waiver of notice, executed before or after the meeting by
such shareholder or his attorney thereunto duly authorized, is filed
with the records of the meeting.
2.5 Voting Power. Each whole Share held entitles the holder of record to
one vote as to any matter on which the holder is entitled to vote and
each fractional Share shall be entitled to a proportionate fractional
vote. There shall be no cumulative voting in the election of Trustees.
Shares may be voted in person or by proxy.
2.6 Quorum and Required Vote. A majority in interest of the Shares entitled
to vote shall be a quorum for the transaction of business at a
Shareholders' meeting, except that where any provision of law or of the
Declaration of Trust permits or requires that holders of any series or
class shall vote as a series or class, then a majority in interest of
the Shares of that series or class entitled to vote shall be necessary
to constitute a quorum for the transaction of business by that series
or class. Any lesser number, however, shall be sufficient for
adjournments. Any adjourned session or sessions may be held within a
reasonable time after the date set for the original meeting without the
necessity of further notice.
Except when a larger vote is required by law, or by any provisions of
the Declaration of Trust or these By-Laws, a majority in interest of
the Shares voted on any matter shall decide such matter and a plurality
shall elect a Trustee, provided that where any provision of law or of
this Declaration of Trust permits or requires that the holders of any
series or class shall vote as a series or class, then a majority in
interest of the Shares of that series or class voted on the matter
shall decide that matter insofar as that series or class is concerned.
A majority in interest shall mean 50.1% or more of total votes
represented by all Shares entitled to vote and present at the meeting
either in person or by proxy.
2.7 Ballots. No ballot shall be required for any election unless requested
by a shareholder present or represented at the meeting and entitled to
vote in the election.
2.8 Proxies. Shareholders entitled to vote may vote either in person or by
proxy in writing dated not more than six months before the meeting
named therein, which proxies shall be filed with the Secretary or other
person responsible to record the proceedings of the
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meeting before being voted. Unless otherwise specifically limited by
their terms, such proxies shall entitle the holders thereof to vote at
any adjournment of such meeting but shall not be valid after the final
adjournment of such meeting.
A proxy with respect to Shares held in the name of two or more persons
shall be valid if executed by any one of them unless at or prior to the
exercise of the proxy the Trust receives a specific written notice to
the contrary from any one of them. A proxy purporting to be executed by
or on behalf of a Shareholder shall be deemed valid unless challenged
at or prior to its exercise and the burden of proving invalidity shall
rest on the challenger.
2.9 Action by Written Consent. Any action taken by Shareholders may be
taken without a meeting if a majority of Shareholders entitled to vote
on the matter (or such larger vote as shall be required by any
provision of the Declaration of Trust or these By-Laws) consent to the
action in writing and such written consents are filed with the records
of the meetings of Shareholders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
Section 3. Trustees
3.1 Regular Meetings. Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the Trustees may
from time to time determine, provided that notice of the first regular
meeting following any such determination shall be given to absent
Trustees. A regular meeting of the Trustees may be held without call or
notice immediately after and at the same place as the annual meeting of
the shareholders.
3.2 Special Meetings. Special meetings of the Trustees may be held at any
time and at any place designated in the call of the meeting, when
called by the Chairman of the Board, the President or the Treasurer or
by two or more Trustees, sufficient notice thereof being given to each
Trustee by the Secretary or an Assistant Secretary or by the officer or
one of the Trustees calling the meeting.
3.3 Notice. It shall be sufficient notice to a Trustee of a special meeting
to send notice by mail at least 48 hours before the meeting or by
telegram, facsimile, or overnight courier service at least 24 hours
before the meeting addressed to the Trustee at his or her usual or last
known business or residence address or to give notice to him or her in
person or by telephone or video at least 24 hours before the meeting.
Notice of a meeting need not be given to any Trustee if a written
waiver of notice, executed by him or her before or after the meeting,
is filed with the records of the meeting, or to any Trustee who attends
the meeting without protesting prior thereto or at its commencement the
lack of notice to him or her. Neither notice of a meeting nor a waiver
of a notice need specify the purposes of the meeting.
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3.4 Quorum. At any meeting of the Trustees one-third of the Trustees then
in office shall constitute a quorum; provided, however, a quorum shall
not be less than two. Any meeting may be adjourned from time to time by
a majority of the votes cast upon the question, whether or not a quorum
is present, and the meeting may be held as adjourned without further
notice.
3.5 Committees. The Trustees may appoint from their number an executive
committee and other committees, each of which shall consist of two or
more Trustees. Except as the Trustees may otherwise determine, any such
committee may make rules for conduct of its business. A committee shall
have and may exercise all the power and authority of the Board with
respect to all mattes other than as set forth in 3.6 of this Section 3.
3.6 Limitation of Committee Powers. No committee of the Board shall have
power or authority to:
(a) recommend to shareholders any action requiring authorization
of shareholders pursuant to statute or the Agreement and
Declaration of Trust;
(b) approve or terminate any contract with an investment adviser
or principal underwriter, as such terms are defined in the
Investment Company Act of 1940 ("1940 Act"), or take any other
action required to be taken by the Board of Trustees by the
1940 Act;
(c) amend or repeal these Bylaws or adopt new Bylaws;
(d) declare dividends or other distributions or issue capital
stock of the Trust; and
(e) approve any merger, division or share exchange which does not
require shareholder approval.
3.7 Committee Meetings and Appointments. One-third, but not less than two
members, of the members of any committee shall be present in person at
any meeting of such committee in order to constitute a quorum for the
transaction of business at such meeting, and the act of a majority
present shall be the act of such committee. The Board may designate a
chairman of any committee and such chairman or any two members of any
committee may fix the time and place of its meetings unless the Board
shall otherwise provide. In the absence or disqualification of any
member or any committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of the
Board of Trustees to act at the meeting in the place of any such absent
or disqualified member. The Board shall have the power at any time to
change the membership of any committee, to fill all vacancies, to
designate alternate members, to replace any absent or disqualified
member, or to dissolve any such committee.
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All committees shall keep written minutes of their proceedings and
shall report such minutes to the Board. All such proceedings shall be
subject to revision or alteration by the Board; if third parties shall
not be prejudiced by such revision or alteration.
3.8 Presence through Communications Equipment. Except as required by law,
the Board and any committee may, except as otherwise required by law,
the Agreement and Declaration of Trust, or these By-laws, hold any
meeting by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting
can hear each other at the same time. Participation by such means shall
constitute presence in person at such meeting.
Section 4. Officers and Agents
4.1 Enumeration; Qualification. The officers of the Trust shall be a
President, a Treasurer, a Secretary and such other officers, if any, as
the Trustees from time to time may in their discretion elect or
appoint. The Trust may also have such agents, if any, as the Trustees
from time to time may in their discretion appoint. Any officer may be,
but none need be, a Trustee or shareholder. Any two or more offices may
be held by the same person.
4.2 Powers. Subject to the other provisions of these By-Laws, each officer
shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as are commonly
incident to his or her office as if the Trust were organized as a
Massachusetts business corporation and such other duties and powers as
the Trustees may from time to time designate.
4.3 Election. The President, the Treasurer and the Secretary shall be
elected annually by the Trustees. Other officers, if any, may be
elected or appointed by the Trustees at any time.
4.4 Tenure. The President, the Treasurer, the Secretary, and any other
officers elected by the Trustees shall hold office until their
respective successors are chosen and qualified, or in each case until
he or she sooner dies, resigns, is removed or becomes disqualified.
Each officer shall hold office and each agent shall retain his or her
authority at the pleasure of the Trustees.
4.5 President and Vice Presidents. The President shall be the chief
executive officer of the Trust. The President shall, subject to the
control of the Trustees, have general charge and supervision of the
business of the Trust. Any Vice President shall have such duties and
powers as shall be designated from time to time by the Trustees.
4.6 Chairman of the Board. If a Chairman of the Board of Trustees is
elected, he or she shall have the duties and powers specified in these
By-Laws and have such other duties and powers as may be determined by
the Trustees.
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4.7 Treasurer and Assistant. The Treasurer shall be the chief financial
officer of the Trust and subject to any arrangement made by the
Trustees with a bank or trust company or other organization as
custodian or transfer or shareholder services agent, shall be in charge
of its valuable papers and shall have such other duties and powers as
may be designated from time to time by the Trustees or by the
President. If at any time there shall be no Assistant, the Treasurer
shall also be the chief accounting officer of the Trust and shall have
the duties and powers prescribed the Trust and shall have the duties
and powers prescribed herein for the Assistant. Any Assistant Treasurer
shall have such duties and powers as shall be designated from time to
time by the Trustees.
The Assistant, if any be elected, shall be the chief accounting officer
of the Trust and shall be in charge of its books of account and
accounting records. The Assistant shall be responsible for preparation
of financial statements of the Trust and shall have such other duties
and powers as may be designated from time to time by the Trustees or
the President.
4.8 Secretary and Assistant Secretaries. The Secretary shall record all
proceedings of the shareholders and the Trustees in books to be kept
therefor, which books shall be kept at the principal office of the
Trust. In the absence of the Secretary from any meeting of shareholders
or Trustees, an Assistant Secretary, or if there be none or he or she
is absent, a temporary clerk chosen at the meeting shall record the
proceedings thereof in the aforesaid books.
Section 5. Resignation and Removals
Any Trustee or officer may resign at any time by delivering his or her
resignation in writing to the Chairman of the Board, the President, the
Treasurer or the Secretary or to a meeting of the Trustees. The Trustees may
remove any officer elected by them with or without cause by the vote of a
majority of the Trustees then in office. Except to the extent expressly provided
in a written agreement with the Trust, no Trustee or officer resigning, and no
officer removed shall have any right to any compensation for any period
following his or her resignation or removal, or any right to damages on account
of such removal.
Section 6. Vacancies
A vacancy in any office may be filled at any time. Each successor shall hold
office for the unexpired term, and in the case of the President, the Treasurer
and the Secretary, until his or her successor is chosen and qualified, or in
each case until he or she sooner dies, resigns, is removed or becomes
disqualified.
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Section 7. Shares of Beneficial Interest
In lieu of issuing certificates for shares, the Trustees or the transfer or
shareholder services agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
Section 8. Record Date
The Trustees may fix in advance a time, which shall not be more than 90 days
before the date of any meeting of shareholders or the date for the payment of
any dividend or making of any other distribution to shareholders, as the record
date for determining the shareholders having the right to notice and to vote at
such meeting and any adjournment thereof or the right to receive such dividend
or distribution, and in such case only shareholders of record on such record
date shall have such right, notwithstanding any transfer of shares on the books
of the Trust after the record date.
Section 9. Seal
The seal of the Trust shall, subject to alteration by the Trustees, consist of a
flat-faced circular die with the word "Massachusetts", together with the name of
the Trust and the year of its organization, cut or engraved thereon; but, unless
otherwise required by the Trustees, the seal shall not be necessary to be placed
on, and its absence shall not impair the validity of, any document, instrument
or other paper executed and delivered by or on behalf of the Trust.
Section 10. Execution of Papers
Except as the Trustees may generally or in particular cases authorize the
execution thereof in some other manner, all deeds, leases, transfers, contracts,
bonds, notes, checks, drafts and other obligations made, accepted or endorsed by
the Trust shall be signed, and any transfers of securities standing in the name
of the Trust shall be executed, by the President or by one of the Vice
Presidents or by the Treasurer or by whomsoever else shall be designated for
that purpose by the vote of the Trustees and need not bear the seal of the
Trust.
Section 11. Fiscal Year
The fiscal year of the Trust shall end on such date in each year as the Trustees
shall from time to time determine.
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Section 12. Provisions Relating to the Conduct of the Trust's Business
12.1 Dealings with Affiliates. No officer, Trustee or agent of the Trust and
no officer, director or agent of any investment adviser shall deal for
or on behalf of the Trust with himself as principal or agent, or with
any partnership, association or corporation in which he has a material
financial interest; provided that the foregoing provisions shall not
prevent (a) officers and Trustees of the Trust from buying, holding or
selling shares in the Trust, or from being partners, officers or
directors of or financially interested in any investment adviser to the
Trust or in any corporation, firm or association which may at any time
have a distributor's or principal underwriter's contract with the
Trust; (b) purchases or sales of securities or other property, if such
transaction is permitted by or is exempt or exempted from the
provisions of the Investment Company Act of 1940 or any Rule or
Regulation thereunder, and if such transaction does not involve any
commission or profit to any securities dealer who is, or one or more of
whose partners, shareholders, officers or directors is, an officer or
Trustee of the Trust or an officer or director of the investment
adviser, administrator or principal underwriter of the Trust; (c)
employment of legal counsel, registrar, transfer agent, shareholder
services, dividend disbursing agent or custodian who is, or has a
partner, stockholder, officer or director who is, an officer or Trustee
of the Trust; or (d) sharing statistical, research and management
expenses, including rent, personnel and services, with any other
company in which an officer or Trustee of the Trust is an officer or
director or financially interested.
12.2 Dealing in Securities of the Trust. The Trust, the investment adviser,
any corporation, firm or association which may at any time have an
exclusive distributor's or principal underwriter's contract with the
Trust (the "distributor") and the officers and Trustees of the Trust
and officers and directors of every investment adviser and distributor,
shall not take long or short positions in the securities of the Trust,
except that:
(a) the distributor may place orders with the Trust for its shares
equivalent to orders received by the distributor;
(b) shares of the Trust may be purchased at not less than net
asset value for investment by the investment adviser and by
officers and directors of the distributor, investment adviser,
or the Trust and by any trust, pension, profit-sharing or
other benefit plan for such persons, no such purchase to be in
contravention of any applicable state or federal requirement.
12.3 Limitation on Certain Loans. The Trust shall not make loans to any
officer, Trustee or employee of the Trust or any investment adviser or
distributor or their respective officers, directors or partners or
employees.
12.4 Custodian. All securities and cash owned by the Trust shall be
maintained in the custody of one or more banks or trust companies
having (according to its last published report)
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not less than two million dollars ($2,000,000) aggregate capital,
surplus and undivided profits (any such bank or trust company is
hereinafter referred to as the "custodian"). The custodian may deliver
securities as collateral on borrowings effected by the Trust, provided
that such delivery shall be conditioned upon receipt of the borrowed
funds by the custodian except where additional collateral is being
pledged on an outstanding loan, and the custodian may deliver
securities lent by the Trust against receipt of initial collateral
specified by the Trust. Subject to such rules, regulations and orders,
if any, as the Securities and Exchange Commission may adopt, the Trust
may, or may permit any custodian to, deposit all or any part of the
securities owned by the Trust in a system for the central handling of
securities operated by the Federal Reserve Banks, or established by a
national securities exchange or national securities association
registered with said Commission under the Securities Exchange Act of
1934, or such other person as may be permitted by said Commission,
pursuant to which system all securities of any particular class or
series of any issue deposited with the system are treated as fungible
and may be transferred or pledged by bookkeeping entry, without
physical delivery of such securities.
The Trust shall upon the resignation or inability to serve of its
custodian or upon change of the custodian:
(a) in the case of such resignation or inability to serve, use its
best efforts to obtain a successor custodian;
(b) require that the cash and securities owned by this corporation
be delivered directly to the successor custodian; and
(c) in the event that no successor custodian can be found, submit
to the shareholders, before permitting delivery of the cash
and securities owned by the Trust otherwise than to a
successor custodian, the question whether or not the Trust
shall be liquidated or shall function without a custodian.
12.5 Limitations on Investment. Each series of Shares may not invest in
securities other than those described in the Trust's then current
prospectus as appropriate for the series of Shares for which such
securities are being purchased.
12.6 Determination of Net Asset Value. Determinations of net asset value
made in good faith shall be binding on all parties concerned.
The term "net asset value" with respect to shares of any series shall
mean that amount by which the assets of that series exceed its
liabilities, all as determined by or under the direction of the
Trustees. Such value shall be determined on such days and at such times
as the Trustees may determine. Such determination shall be made with
respect to securities for which market quotations are readily
available, at the market value of such securities; and with respect to
other securities and assets, at the fair value as determined
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in good faith by the Trustees, provided, however, that the Trustees,
without Shareholder approval, may alter the method of appraising
portfolio securities insofar as permitted under the 1940 Act and
interpretations thereof adopted or issued by the Commission or insofar
as permitted by any order of the Commission. The Trustees may delegate
any powers and duties under this Section 12.6 with respect to appraisal
of assets and liabilities. At any time the Trustees may cause the value
per Share last determined to be determined again in similar manner and
may fix the time when such redetermined value shall become effective.
12.7 Reports to Shareholders; Distributions from Realized Gains. The Trust
shall send to each shareholder of record at least annually a statement
of the condition of the Trust and of the results of its operation,
containing all information required by applicable laws or regulations.
Section 13. Amendments
These By-Laws may be amended or repealed, in whole or in part, by a majority of
the Trustees then in office at any meeting of the Trustees, or by one or more
writings signed by such majority.
Adopted this ____ day of ______________, 1997.
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