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As filed with the Securities and Exchange
Commission on November 21, 1997
Registration Nos. 33-
811-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. ________ |_|
Post-Effective Amendment No. _________ |_|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. _____ |_|
(Check appropriate box or boxes)
ICM Series Trust
(Exact Name of Registrant as Specified in Charter)
4400 Computer Drive, Westborough, Massachusetts 01581
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: (617) 345-9800
Joseph Mazzella, Esq.
Lane Altman & Owens LLP
101 Federal Street
Boston, Massachusetts 02110
(Name and Address of Agent for Service)
Copies to:
Warren J. Isabelle, CFA Teresa M.R. Hamlin, Esq.
IronWood Capital Management, LLC First Data Investor Services Group, Inc.
One Financial Center One Exchange Place, 8th Floor
Boston, MA 02111 Boston, Massachusetts 02109
Pursuant to Section 24(f) and Rule 24f-2 under the Investment Company Act
of 1940, the Registrant has registered an indefinite number of shares of
beneficial interest under the Securities Act of 1933. The Registrant will file
the notice required by Rule 24f-2 within 90 days after the close of the
Registrant's fiscal year.
The 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 this Registration Statement shall become
effective on such date as the commission, acting pursuant to Section 8(a), may
determine.
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ICM Series Trust
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus
(Investment Class Shares and Institutional Class Shares)
PART A
------------------------------------------
ITEM HEADING
1. Cover Page Cover Page
2. Synopsis Expense Information
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Cover Page; The Fund; Investment
Objective and Approach of the Fund;
Management of the Fund; The Trust
5. Management of Fund Investment Objective and Approach of
the Fund; Investment; Practices and
Risk Considerations; Management of
the Fund
6. Capital Stock and Other Securities Management of the Fund; How to
Purchase Fund Shares; How to Redeem
Fund Shares; Dividends,
Distributions and Taxation; The
Trust
7. Purchase of Securities Being Offered Management of the Fund; How to
Purchase Fund Shares; Distribution
Plan
8. Redemption of Repurchase How to Redeem Fund Shares
9. Pending Legal Proceedings Not Applicable
Statement of Additional Information
(Investment Class Shares and Institutional Class Shares)
PART B
------------------------------------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
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12. General Information and History The Fund; Description of Shares; See
Prospectus -- "Management of the
Fund"
13. Investment Objectives and Policies Investment Policies and Practices;
Investment Restrictions; Portfolio
Transactions
14. Management of the Fund Management of the Fund; Investment
Adviser; See Prospectus --
"Management of the Fund"
15. Control Persons and Principal Management of the Fund; Investment
Holders of Securities Adviser; See Prospectus --
"Management of the Fund"
16. Investment Advisory and Other Management of the Fund; Investment
Services Adviser; Distribution Plan;
Administrator; Transfer Agent;
Distributor; Custodian; Independent
Public Accountants; See Prospectus
-- "Management of the Fund"
17. Brokerage Allocation and Other Portfolio Transactions
Practices
18. Capital Stock and Other Securities Description of Shares; Shareholder
and Trustee Liability; See
Prospectus -- "Management of the
Fund"
19. Purchase, Redemption and Pricing of Purchase of Fund Shares; Redemption
Securities Being Offered of Fund Shares; Determination of Net
Asset Value; Description of Shares
20. Tax Status Taxes and Dividends; See Prospectus
-- "Dividends, Distributions and
Taxes"
21. Underwriters Distributor
22. Calculation of Performance Data Investment Results
23. Financial Statements Not Applicable
<PAGE> 4
PROSPECTUS _____________, 1997
ICM SERIES TRUST
ICM/ISABELLE SMALL-CAP VALUE FUND
Investment Class Shares
Institutional Class Shares
ICM Series Trust (the "Trust") is an open-end investment company known as a
mutual fund. This prospectus offers Investment Class Shares and Institutional
Class Shares of the ICM/ISABELLE SMALL-CAP VALUE FUND (the "Fund"). The Fund
seeks capital appreciation by investing in a diversified portfolio of securities
consisting primarily of common stocks. Any current income generated from these
securities is incidental to the investment objective of the Fund.
In order to achieve its investment objective, the Fund will invest at least
80% of its total assets in common stocks and common stock equivalents (such as
convertible bonds and preferred stock) of companies with a market capitalization
of less than $1 billion at time of purchase. Up to 20% of the Fund's total
assets may be invested in common stocks, common stock equivalents and debt
securities of companies not meeting the foregoing market capitalization
parameters. No more than 25% of the assets of the Fund will be invested in one
industry group. See "Investment Objective and Approach of the Fund" in this
Prospectus. There is no assurance that the Fund will achieve its investment
objective.
Fund returns and share prices fluctuate and the value of your account upon
redemption may be more or less than your purchase price. Shares in the Fund are
not deposits or obligations of, or guaranteed or endorsed by, any bank or other
depository institution, and the shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other government
agency. Investments in the securities of small capitalization companies may
offer greater capital appreciation potential than investments in mid to
large-cap company securities, but may be subject to greater short-term price
fluctuations. This Fund is intended for investors who can accept the risks
associated with its investments and may not be suitable for all investors. See
"Investment Objective and Policies" for a discussion of these risks.
Prospective investors should be aware that the Fund intends to close to new
investors once the Fund's total assets equal or exceed $500 million in total
assets. In such event, the Fund expects to continue to accept investments only
from existing shareholders. If the Fund closes, the right of existing
shareholders to redeem their shares will be not affected. See page ___ of this
Prospectus for more details.
IronWood Capital Management, LLC ("ICM" or the "Adviser") serves as the
Fund's investment adviser. First Data Investor Services Group, Inc. serves as
the Fund's administrator and transfer agent. First Data Distributors, Inc.
("FDDI") serves as the Fund's distributor.
This Prospectus provides information about the Fund which you should know
before investing. Please read and retain it for your future reference. More
information about the Fund is included in the Statement of Additional
Information, also dated ___________, 1997, which is incorporated into this
Prospectus by reference. A copy of the Statement of Additional Information may
be obtained free of charge by calling 1-800__________ or by written request to
the Trust at P.O. Box____, Westborough, Massachusetts 01581- ____. Additional
information about the Trust has been filed with the Securities and Exchange
Commission (the "SEC") and is available upon request and without charge. In
addition, the SEC maintains a web site (http://www.sec.gov) that contains the
Statement of Additional Information, information incorporated by reference in
this Prospectus and the Statement of Additional Information and other
information regarding registrants who file electronically with the SEC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 5
TABLE OF CONTENTS PAGE
EXPENSE INFORMATION .................................... 3
THE FUND ............................................... 4
INVESTMENT OBJECTIVE AND APPROACH OF THE FUND .......... 4
INVESTMENT PRACTICES AND RISK CONSIDERATIONS ........... 5
MANAGEMENT OF THE FUND ................................. 8
HOW TO PURCHASE FUND SHARES ............................ 9
HOW TO REDEEM FUND SHARES .............................. 11
DISTRIBUTION PLAN ...................................... 13
DIVIDENDS, DISTRIBUTIONS AND TAXATION .................. 13
THE TRUST .............................................. 14
PERFORMANCE RESULTS .................................... 15
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION, OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION AND IN THE FUND'S OFFICIAL SALES LITERATURE IN CONNECTION
WITH THE OFFER OF THE FUND'S SHARES, AND IF GIVEN OR MADE, SUCH INFORMATION AND
REPRESENTATION MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN
WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.
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EXPENSE INFORMATION
This table is designed to help you understand the charges and expenses that
you, as a shareholder, will bear directly or indirectly when you invest in the
Fund. The amount of "Other Expenses" in the table is based on estimated expenses
and projected assets for the current fiscal year.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES: INVESTMENT CLASS INSTITUTIONAL CLASS
- --------------------------------- ---------------- -------------------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases None None
Maximum Sales Load Imposed on Reinvested Dividends None None
Deferred Sales Load None None
Redemption Fees* None None
Exchange Fee None None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES: INVESTMENT CLASS INSTITUTIONAL CLASS
- -------------------------- ---------------- -------------------
(As a Percentage of Average Net Assets)
<S> <C> <C>
Management fee 1.00% 1.00%
12b-1 fees .25%
Other Expenses (including administration, None
accounting and transfer agent fees,
custodian fees and printing expenses)
(after expense reimbursement) .70%** .70%**
---- ----
TOTAL FUND OPERATING EXPENSES
(after expense reimbursement) 1.95%** 1.70%**
</TABLE>
* Broker-dealers holding your Shares may charge a fee for redemptions. In
addition, if you want to redeem Shares by wire transfer, the Fund's
Transfer Agent charges a fee, currently $____ for each wire redemption.
** The Adviser has voluntarily agreed to limit "Other Expenses" to .70% and
Total Fund Operating Expenses to 1.95% and 1.70% of average net assets
annually for Investment Class Shares and Institutional Class Shares,
respectively. In the absence of expense limitations, it is estimated that
Total Fund Operating Expenses would be approximately 3.05% annually for
Investment Class Shares and approximately 2.80% annually for Institutional
Class Shares. The Adviser may discontinue such expense limitations at any
time in its sole discretion.
EXAMPLE:
You would pay the following expenses on a $1,000 investment assuming a 5%
annual return, reinvestment of all dividends and distributions and that the
percentage amounts listed under "Total Operating Expenses" remain the same each
year. Amounts in the table could increase, if the Adviser's limitation of
expenses were to be terminated.
1 Year 3 Years
------ -------
Investment Class Shares $20 $61
Institutional Class Shares $17 $54
THE EXAMPLE IS DESIGNED FOR INFORMATION PURPOSES ONLY, AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR RETURN. ACTUAL FUND
EXPENSES AND RETURN WILL VARY FROM YEAR TO YEAR AND MAY BE HIGHER OR LOWER THAN
THOSE SHOWN.
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For further information regarding management fees, 12b-1 fees and other expenses
of the Fund, see "Management of the Fund," "Distribution Plan" and "How To
Purchase Fund Shares" in this Prospectus and "Management of the Fund" and
"Distribution Plan" in the Statement of Additional Information. The Fund's
payment of a Rule 12b-1 fee may result in long-term shareholders indirectly
paying more than the economic equivalent of the maximum sales charge permitted
under the Conduct Rules of the National Association of Securities Dealers, Inc.
("NASD").
THE FUND
The Fund is a diversified series of the Trust, an open-end management
investment company organized under the laws of the Commonwealth of Massachusetts
as a "Massachusetts Business Trust" on November 18, 1997.
INVESTMENT OBJECTIVE AND APPROACH OF THE FUND
The investment objective of the Fund is to seek capital appreciation by
investing in a diversified portfolio of securities consisting primarily of
common stocks. The Fund seeks to achieve its objective by investing primarily
in equity securities issued by companies whose equity market capitalization at
the time of purchase is $1 billion or less. Under normal circumstances, the
Fund will invest at least 80% of its total assets in common stocks and common
stock equivalents, issued by such small-cap companies. Up to 20% of the Fund's
total assets may be invested in common stocks, common stock equivalents and
debt securities not meeting the foregoing small company equity market
parameters. No more than 25% of the assets of the Fund will be invested in one
industry group. The Fund's objective is a fundamental policy of the Fund and
may not be changed without a vote of a majority of the outstanding voting
securities of the Fund. There is no assurance that the Fund's objective will be
achieved. The following policies may be changed by the Board of Trustees
without shareholder approval. See "Investment Practices and Risk
Considerations" for a description of investment practices of the Fund,
including limited investments in foreign securities, stock options, stock index
futures and options, illiquid and restricted securities, and Rule 144A private
placements.
ICM, the Fund's Adviser intends to pursue a value-oriented approach in
selecting securities for the Fund's portfolio. This approach seeks to identify
securities whose market value, in the Adviser's view, is less than their
economic value. As part of its value-oriented approach, ICM will seek to
identify companies with attributes which are not fairly valued in the market
place. These companies are often out of favor or not closely followed by
investors and, as a result, may offer the potential for substantial appreciation
over time. In selecting individual securities, ICM will perform in-depth
research and analysis of the issuer, including an analysis of cash flow
generating potential, and may conduct in-person visits or discussions with
management. ICM relies primarily on the knowledge, experience and judgment of
its own staff, but also receives and uses information from a variety of outside
sources, including brokerage firms, electronic databases, specialized research
firms and technical journals.
As part of its investment approach, ICM looks to select securities for
investment by the Fund on the basis of its belief that the potential exists for
some catalyst to cause a stock's price to rise. Such a catalyst might include,
among other things, one or more of the following: increased investor attention,
asset sales, corporate restructuring or reorganizations, a cyclical turnaround
of a depressed business or industry, a new product/innovation, or significant
changes in management and regulatory or environmental shifts.
The Fund's strategy of investing in small companies utilizing a
value-oriented approach will generally involve a long-term horizon of two to
three years. An investment in the Fund, therefore, should be considered a
long-term holding and not a complete investment program and may not be suitable
for all investors. For a discussion of the risks of investing in smaller
companies, see "Investment Practices and Risk Considerations" below.
There may be periods during which, in the opinion of ICM, market conditions
warrant a reduction of some or all of the Fund's securities holdings. During
such periods, the Fund may adopt a temporary "defensive" posture in which a
higher than usual portion of its total assets would be invested in short-term
liquid assets, cash or cash equivalents.
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INVESTMENT PRACTICES AND RISK CONSIDERATIONS
The following is a description of certain investment techniques and the
risks associated therewith that the Fund may utilize. See the "Investment
Policies and Practices" section of the Statement of Additional Information for a
description of the additional techniques which may be utilized and further
discussion of certain techniques discussed below.
The annual rate of portfolio turnover is anticipated to be approximately
50%. In general, the Adviser will not consider the rate of portfolio turnover to
be a limiting factor in determining when or whether to purchase or sell
securities in order to achieve the Fund's objective.
The net asset value of the Fund's shares will fluctuate with changes in the
market value of the Fund's portfolio securities. The market value of the Fund's
portfolio securities will increase or decrease due to a variety of economic,
market or political factors which cannot be predicted.
STOCKS OF SMALLER COMPANIES. The Fund's strategy of investing in small
companies carries more risk than investment in larger companies. In addition,
the Fund may invest in companies representing some of the smallest and least
liquid equity securities in the U.S. markets. The low market liquidity of the
Fund's holdings may have an adverse impact on the Fund's ability to sell certain
portfolio securities at favorable prices and may also make it difficult for the
Fund to obtain market quotations based on actual trades, for purposes of valuing
the Fund's portfolio securities.
Investing in lesser-known, smaller capitalization companies involves
greater risk of volatility of the Fund's net asset value than is customarily
associated with larger, more established companies. Often smaller capitalization
companies and the industries in which they are focused are still evolving and,
while this may offer better growth potential than larger, more established
companies, it also may make them more sensitive to changing market conditions.
ICM will seek to minimize the risks described above by diversification of
the Fund's portfolio. However, there can be no assurance that such
diversification will prevent loss in value of certain portfolio securities or in
the Fund's net asset value.
CONVERTIBLE SECURITIES AND DEBT SECURITIES. Convertible securities are bonds,
notes, debentures, preferred stocks and other securities which may be converted
or exchanged at a stated or determinable exchange ratio into shares of common
stock. Convertible securities rank senior to common stock in an issuer's
capital structure and are consequently of higher quality and entail less risk
than the issuer's common stock. The Fund may also invest in nonconvertible
preferred stock consistent with the Fund's objective. As with all debt
securities, the market value of convertible securities tend to increase when
interest rates decline, and conversely, tend to decline when interest rates
increase. In addition, the prices of convertible securities often reflect
changes in the value of the underlying common stock. Although convertible
securities purchased by the Fund are frequently investment grade, the Fund may
also purchase unrated securities or securities rated below investment grade
(those rated lower than BBB by Standard & Poor's Rating Service ("S&P"), a
division of the McGraw-Hill Companies, Inc., or lower than Baa by Moody's
Investors Services, Inc.). The Fund reserves the right to invest up to 20% of
its assets in convertible securities and non-convertible debt securities, on an
aggregated basis, which may be unrated or rated below investment grade. With
respect to non-convertible debt securities, the Fund does not intend to invest
more than 20% of its assets in non-convertible debt securities regardless of
their rating. Lower rated debt securities are commonly referred to as junk
bonds.
Lower-rated securities generally offer a higher current yield than that
available for higher grade issues. However, lower-rated securities involve
higher risks, in that they are especially subject to adverse changes in
general economic conditions and in the industries in which the issuers are
engaged, to changes in the financial condition of the issues and to price
fluctuations in response to changes in interest rates. During periods of
economic downturn or rising interest rates, highly leveraged issues may
experience financial stress which could adversely affect their ability to make
payments of interest and principal and increase the possibility of default. In
addition, the market for lower-rated debt securities has expanded rapidly in
recent years, and its growth paralleled a long economic expansion. At times in
recent years, the prices of many lower-rated debt securities declined
substantially, reflecting an expectation that many issues of such securities
might experience
5
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financial difficulties. As a result, the yields on lower-rated debt securities
rose dramatically, but such higher yields did not reflect the value of the
income stream that holders of such securities expected, but rather, the risk
that holders of such securities could lose a substantial portion of their value
as a result of issuers' financial restructuring or default. There can be no
assurance that such declines will not recur. The market for lower-rated debt
issues generally is smaller and less active than that for higher quality
securities, which may limit the Fund's ability to sell such securities at fair
value in response to changes in the economy or financial markets. Adverse
publicity and investor perceptions, whether or not based on fundamental
analysis, may also decrease the values and prevailing levels of interest rates
which generally increase the value of debt securities, while an increase in
rates usually reduces the value of those securities.
SHORT SALES AGAINST THE BOX. The Fund may from time to time make short sales of
securities it owns or has the right to acquire through conversion or exchange of
other securities it owns. A short sale is "against the box" to the extent that
the Fund contemporaneously owns or has the right to obtain, at no added cost,
securities identical to those sold short. In a short sale, the Fund does not
immediately deliver the securities sold or receive the proceeds from the sale.
The Fund may not make short sales or maintain a short position if it would cause
more than 25% of the Fund's total assets, taken at market value, to be held as
collateral for the sales.
The Fund may make a short sale in order to hedge against market risks when
it believes that the price of a security may decline, causing a decline in the
value of a security owned by the Fund or security convertible into, or
exchangeable for, the security, or when the Fund does not want to sell the
security it owns, because, among other reasons, it wishes to defer recognition
of gain or loss for U.S. federal income tax purposes.
FOREIGN SECURITIES. The Fund may invest up to 25% of its total assets in foreign
securities. Investments in foreign securities may involve potential benefits and
risks that are not typically associated with investments in securities of
domestic issuers. Foreign countries may have economic policies or business
cycles different from those of the U.S., and markets for foreign securities do
not necessarily move in a manner parallel to U.S. markets.
Foreign issuers are not generally subject to uniform accounting, auditing
and financial reporting standards comparable to those applicable to U.S.
issuers. There may be less publicly available information about a foreign issuer
than about a U.S. issuer. In addition, there is generally less government
regulation of foreign markets, companies and securities dealers than in the
United States. Foreign securities markets may have substantially less volume
than U.S. securities markets and securities of many foreign issuers are less
liquid and more volatile than securities of comparable domestic issuers.
Investing in the securities of foreign issuers may also be subject to a
decline in the exchange rate of the currency in which a portfolio security is
quoted or denominated relative to the U.S. dollar, thus reducing the value of
the portfolio security. In addition, if the currency in which a Fund receives
dividends, interest or other payments declines in value against the U.S. dollar
before such income is distributed as dividends to shareholders or converted to
U.S. dollars, the Fund may have to sell portfolio securities to obtain
sufficient cash to pay such dividends. Commissions on transactions in foreign
securities may be higher than those for similar transactions on domestic stock
markets. In addition, clearance and settlement procedures may be different in
foreign countries and, in certain markets, such procedures have on occasion been
unable to keep pace with the volume of securities transactions, thus making it
difficult to conduct such transactions.
The Fund may purchase American Depositary Receipts ("ADRs") or U.S. dollar
denominated securities of foreign issuers. ADRs are receipts issued by U.S.
Banks or trust companies with respect to securities of foreign issuers held on
deposit for use in the U.S. securities markets. While ADRs may not be
denominated in the same currency as the securities into which they may be
converted, many of the risks associated with foreign securities may also apply
to ADRs.
LENDING OF PORTFOLIO SECURITIES. The Fund may, in accordance with applicable
regulatory requirements, lend its portfolio securities to brokers, dealers, and
other financial institutions. Such loans must be secured by cash or cash
6
<PAGE> 10
equivalents in amounts at least equal to the market value of the securities
loaned. The advantage of such loans is that the Fund continues to receive the
income on the loaned securities while at the same time earning interest on the
cash amounts deposited as collateral. The Fund may experience a loss or delay in
the recovery of its securities if the institution with which it has entered into
a loan transaction breaches its agreement with the Fund.
RIGHTS AND WARRANTS. The Fund may invest up to 5% of its net assets at the time
of purchase in warrants or rights. In addition, the Fund may acquire rights
and/or warrants which are attached to other securities in its portfolio, or
which are issued as a distribution by the issuer of a security held in its
portfolios. Rights and/or warrants are, in effect, options to purchase equity
securities at a specific price, generally valid for a specific period of time,
and have no voting rights, pay no dividends and have no rights with respect to
the corporation issuing them. The prices of warrants do not necessarily
correlate with the prices of underlying securities.
BORROWING. The Fund is authorized to borrow money for temporary purposes in
amounts not exceeding 5% of its total assets. Additionally, the Fund is
authorized to borrow money up to 33 1/3% of its assets, as permitted by the
1940 Act, for the purpose of meeting redemption requests. The Fund will not
purchase securities when total borrowings by the Fund are greater than 5% of
its total assets.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements which
typically involve the acquisition by the Fund of debt securities from a selling
financial institution or broker-dealer. These agreements provide that the Fund
will sell back to the institution, and that the institution will repurchase, the
underlying security at a specified price and at a fixed time in the future,
usually not more than seven days from the date of purchase. While repurchase
agreements involve certain risks not associated with direct investments in debt
securities, including the risks of default or bankruptcy of the selling
financial institution, the Fund will review and monitor the creditworthiness of
any institution which enters into a repurchase agreement with the Fund, and
require the maintenance of adequate collateral.
ILLIQUID AND RESTRICTED SECURITIES. The Fund may invest in securities which are
subject to restrictions on resale because they have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), or which are
otherwise not readily marketable. Limitations on the resale of such securities
may have an adverse effect on their marketability, and may prevent the Fund from
disposing of them promptly at reasonable prices. The Fund may have to bear the
expense of registering such securities for resale and the risk of substantial
delays in effecting such registration. The Fund may not invest more than 15% of
its net assets in illiquid and restricted securities. Securities freely salable
among qualified institutional investors pursuant to Rule 144A under the
Securities Act, may be treated as liquid if they satisfy liquidity standards
established by the Board of Trustees. The continued liquidity of such securities
is not as well assured as that of publicly traded securities and accordingly,
the Board of Trustees will monitor their liquidity.
HEDGING TRANSACTIONS. The Fund may utilize techniques to manage risks associated
with exposure to the effects of possible changes in security prices, or other
factors that affect the value of its portfolio. These techniques such as buying
and selling derivative securities such as options, forward foreign currency
exchange contracts, futures contracts, or options on futures contracts, involve
significant risks and may increase the volatility of the Fund. Hedging
transactions may be utilized by the Fund solely for risk management purposes and
not for speculation. The Fund does not intend to invest more than 5% of its
total assets in hedging transactions.
Futures contracts and options can be highly volatile and are subject to
price movements in underlying securities. The Fund's attempt to use such
investments for hedging purposes may not be successful and could result in
reduction of the Fund's total return. In addition, the loss from investing in
futures transactions is potentially unlimited and the Fund may be unable to
control losses by closing its position if a liquid secondary market does not
exist.
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<PAGE> 11
For additional risk disclosure, please refer to the "Investment Practices
and Policies" section of the Statement of Additional Information.
MANAGEMENT OF THE FUND
The Board of Trustees of the Trust has overall responsibility for
management and supervision of the Fund. ICM, a Massachusetts limited liability
company with its principal office at One Financial Center, Boston, MA 02111,
acts as the Fund's Adviser pursuant to an Advisory Agreement between ICM and the
Trust. ICM was formed in August 1997, and therefore, ICM has no previous
experience in advising a mutual fund. Mr. Warren J. Isabelle, CFA and Mr.
Richard L. Droster are the controlling principals of ICM, and are officers and
trustees of the Trust. Mr. Isabelle is responsible for the day-to-day and
overall management of the Fund's portfolio. Until January, 1997, Mr. Isabelle
was Senior Vice President and Head of Domestic Equity Management for Pioneer
Mutual Funds, and portfolio manager of Pioneer Capital Growth Fund and Pioneer
Small Company Fund. He managed Pioneer Capital Growth Fund since its inception
in July 1990 and Pioneer Small Company Fund since its inception in November 1995
until January 1997. From February 1997 to May 1997, Mr. Isabelle was Senior Vice
President and Chief Investment Officer of Equities at Keystone Investment
Management Company.
Under the terms of its Advisory Agreement with the Trust, ICM is
responsible for supervising the investment activities of the Fund and is
authorized in its discretion to determine the securities to be purchased, sold
or otherwise disposed of by the Fund and the timing of such purchases, sales
and dispositions. ICM is responsible for all the expenses related to its
services for the Fund, with the exception of certain expenses which are to be
paid by the Fund, which include the charges and expenses of auditors; the
charges and expenses of any administrator, custodian, transfer agent, plan
agent, dividend disbursing agent and registrar appointed by the Trust with
respect to the Fund; fees and expenses involved in registering and maintaining
registrations of the Fund and/or its shares with regulatory agencies,
individual states or blue sky securities agencies, including the preparation of
Prospectuses and Statements of Additional Information for filing with
regulatory agencies; and distribution fees paid by the Fund in accordance with
Rule 12b-1 promulgated by the SEC pursuant to the 1940 Act. See the Statement
of Additional Information for a further description of the Advisory Agreement.
As compensation for its management services and certain expenses which ICM
incurs, ICM is entitled to a management fee equal to 1.00% per annum of the
Fund's average daily net assets. This fee is computed daily and paid monthly.
See "Expense Information" in this Prospectus and "Investment Adviser" in the
Statement of Additional Information.
ADMINISTRATOR AND TRANSFER AND DIVIDEND DISBURSING AGENT. Investor Services
Group, a subsidiary of First Data Corporation, located at 53 State Street,
Boston, Massachusetts 02109, serves as the Fund's administrator (the
"Administrator") pursuant to an Administration Agreement with the Fund. Under
the terms of the Administration Agreement, Investor Services Group generally
assists in all aspects of the Fund's administration and operations, including
the maintenance of financial records and fund accounting. Pursuant to the terms
of the Administration Agreement, the Fund has agreed to pay Investor Services
Group a fee, computed daily and payable monthly at an annual rate of ___% of the
value of the Fund's average daily net assets. Investor Services Group, 4400
Computer Drive, Westborough, Massachusetts 01581 is the Fund's Transfer and
Dividend Disbursing Agent (the "Transfer Agent").
CUSTODIAN. ______________________, located at ______________, is the Custodian
of the Fund's investments.
DISTRIBUTOR. FDDI, 4400 Computer Drive, Westborough, Massachusetts 01581, serves
as the distributor of the Shares. FDDI is a subsidiary of Investor Services
Group.
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<PAGE> 12
HOW TO PURCHASE FUND SHARES
The Fund continuously offers two Classes of Shares designated as Investment
Class Shares and Institutional Class Shares. Institutional Class Shares are
offered exclusively to institutional investors, such as employee benefit plans,
other tax-exempt institutions, corporations and other individual purchasers of
shares in amounts greater than or equal to $500,000 ("Institutional Buyers").
The Shares of the Fund are sold without a sales charge. You may be charged a
nominal fee, if you effect transactions in Shares through a securities dealer,
bank or other financial institution. No certificates are issued for shares. The
Fund reserves the right to reject any purchase order.
Minimum Investment and Minimum Balance Requirements
CLASS OF SHARES
- - INVESTMENT CLASS (individual investors)
TYPE OF ACCOUNT TO OPEN ACCOUNT MINIMUM ADDITION MINIMUM BALANCE*
- --------------- --------------- ---------------- ----------------
Individual or joint $1,000 $100 $1,000
IRA/403(b) $1,000 $100 $1,000
Automatic Investment $1,000 $100 $1,000
Plan (AIP)
- - INSTITUTIONAL CLASS (generally institutional investors)
TYPE OF ACCOUNT TO OPEN ACCOUNT MINIMUM ADDITION MINIMUM BALANCE**
- --------------- --------------- ---------------- -----------------
Qualified Account $500,000 $50,000 $250,000
*To minimize the expenses to all shareholders, the Trust reserves the right to
close any account which does not meet the minimum account size or is
uneconomical to maintain. If an account falls below the minimum balance, the
owner will be notified and given 45 days to meet the minimum or establish
automatic investments that total at least $1,200 per year. If the deadline is
not met, the Trust will redeem the shares in the account and send the proceeds
to the address of record. See "Involuntary Redemption" under "How to Redeem
Shares."
**The Trust may waive institutional account minimums if it is deemed
economically feasible and in the best interest of existing shareholders to do
so. This may include agreeing to a letter of intent to meet the stated minimums
in a specified time period. Employees and Trustees of the Trust may purchase
institutional shares for their personal accounts. See "Involuntary Redemptions"
under "How to Redeem Shares."
The initial investment must be accompanied or preceded by the Fund's Account
Application. The Fund reserves the right to vary the initial and subsequent
investment minimum requirements at any time.
You may purchase Shares by check or wire. Checks should be made payable to "ICM
Series Trust." For subsequent investments, your Fund account number should
appear on the check. Payments which are mailed should be sent to ICM Series
Trust, P.O. Box ___, Westborough, Massachusetts 01581-____, together with your
investment slip or, when opening a new account, your Account Application,
indicating the class of Shares being purchased. Neither initial nor subsequent
investments may be made by third party check.
Wire payments may be made if your bank account is in a commercial bank that is a
member of the Federal Reserve System. Immediately available funds may be
transmitted by wire to Boston Safe Deposit and Trust Company (ABA
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<PAGE> 13
#011001234), together with the name of the Fund and the Fund's DDA number,
_______, for purchase of Shares in your name. The wire must include your Fund
account number (for new accounts, your Taxpayer Identification Number ("TIN")
should be included instead), and account registration and dealer number, if
applicable. If your initial purchase of Fund Shares is by wire, please call
1-888-___-___ after completing your wire payment to obtain your Fund account
number. Please include your Fund account number on the Fund's Account
Application and promptly mail the Account Application to the Fund, as no
redemptions will be permitted until the Account Application is received. You may
obtain further information about remitting funds in this manner from your bank.
All payments should be made in U.S. dollars and, to avoid fees and delays,
should be drawn only on U.S. banks. A charge will be imposed if any check used
for investment in your account does not clear. The Fund makes available to
certain large institutions the ability to issue purchase instructions through
compatible computer facilities.
Subsequent investments also may be made by electronic transfer of funds from an
account maintained in a bank or other domestic financial institution that is an
Automated Clearing House member. You must direct the institution to transmit
immediately available funds through the Automated Clearing House to Boston Safe
and Trust Deposit Company with instructions to credit your Fund account. The
instructions must specify your Fund account registration and your Fund account
number preceded by the digits "____."
ICM SERIES TRUST AUTOMATIC INVESTMENT PLAN ("AIP") (INVESTMENT CLASS SHARES
ONLY). ICM Series Trust permits you to purchase Investment Class Shares (minimum
of $100 per transaction at regular intervals selected by you). Shares are
purchased by transferring funds from the bank account designated by you. At your
option, the bank account will be debited in the specified amount, and Shares
will be purchased, once a month on either the first or fifteenth day, or twice a
month, on both days. Only an account maintained at a domestic financial
institution which is an Automated Clearing House member may be so designated. To
establish an ICM Series Trust AIP account, you must file an authorization form
with the Transfer Agent. You may obtain the necessary authorization form by
calling 1-888-____- ____. You may cancel your participation in this privilege or
change the amount of purchase at any time by mailing written notification to ICM
Series Trust, P.O. Box ___, Westborough, Massachusetts 01581-____, and the
notification will be effective ten business days following receipt. The Trust
may modify or terminate this privilege at any time or charge a service fee. No
such fee currently is contemplated. As noted above, under the AIP, the Trust
requires that you establish automatic investments that total $1,200 per year.
DETERMINATION OF NET ASSET VALUE. Shares of the Fund are sold on a continuous
basis at the net asset value per share next determined after an order in proper
form is received by the Transfer Agent. Net asset value per share of each Class
of Shares of the Fund is determined by dividing the value of its assets, less
liabilities attributable to that Class, by the number of outstanding shares of
that Class. The net asset value is computed once daily, as of the close of
regular trading on the New York Stock Exchange (currently 4:00 p.m., New York
time) each day the New York Stock Exchange is open for business.
In the calculation of the Fund's net asset value: (1) an equity portfolio
security listed or traded on the New York or American Stock Exchange or other
stock exchange or quoted by NASDAQ is valued at its latest sale price on that
exchange or quotation service prior to the time assets are valued; if there were
no sales that day and for securities traded on the other over-the-counter
markets, the security is valued at the mean between the most recently quoted bid
and asked prices; (2) when market quotations are not readily available,
including circumstances under which it is determined by the Adviser that sale or
bid prices are not reflective of a security's market value, portfolio securities
are valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Fund's Trustees; (3) the
value of short-term debt securities which mature at a date less than sixty days
subsequent to valuation date will be determined on an amortized cost basis; and
(4) the value of other assets will be determined in good faith at fair value
under procedures established by and under the general supervision of the Fund's
Trustees. Dividends receivable are accrued as of the ex-dividend date. Interest
income is accrued daily.
The Fund does not accept purchase and redemption orders on days the New
York Stock Exchange is closed. The New York Stock Exchange is currently
scheduled to be closed on New Years Day, Martin Luther King Day, Presidents
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<PAGE> 14
Day, Good Friday, Memorial Day (observed), Independence Day, Labor Day,
Thanksgiving and Christmas, and on the preceding Friday or subsequent Monday
when one of these holidays fall on a Saturday or Sunday, respectively.
Federal regulations require that you provide a certified TIN upon opening
or reopening an account. See the Fund's Account Application for further
information concerning this requirement. Failure to furnish a certified TIN to
the Fund could subject you to a $50 penalty imposed by the Internal Revenue
Service (the "IRS").
RETIREMENT PLANS. Shares of the Fund may be purchased in connection with various
types of tax deferred retirement plans, including individual retirement accounts
("IRAs"), qualified plans, deferred compensation for public schools and
charitable organizations (403(b) plans) and simplified employee pension IRAs. An
individual or organization considering the establishment of a retirement plan,
should consult with an attorney and an accountant with regard to the terms and
tax aspects of the plan.
CLOSING THE FUND. The Fund intends to close to new investors when the Fund's
total assets equal or exceed $500 million. After the Fund closes to new
investors, the Fund expects to allow existing shareholders to make additional
investments in the Fund and at all times will permit shareholders to reinvest
dividends and capital gains distributions. The Trustees reserve the right to
close and re-open the Fund to new or existing shareholders at any time after it
is closed.
The Fund intends to close when it reaches approximately $500 million in
total assets, not on a specific date. SHAREHOLDERS WILL NOT BE INFORMED IN
ADVANCE OF THE DATE ON WHICH THE FUND WILL CLOSE.
HOW TO REDEEM FUND SHARES
GENERAL -- You may request redemption of your Shares at any time. Redemption
requests should be transmitted in accordance with the procedures described
below. When a request is received in proper form, the Fund will redeem the
Shares at the next determined net asset value.
Securities dealers, banks and other financial institutions may charge a
nominal fee for effecting redemptions of Fund Shares. The value of the Shares
redeemed may be more or less than their original cost, depending upon the Fund's
then current net asset value.
The Fund ordinarily will make payment for all Shares redeemed within seven
days after receipt by the Transfer Agent of a redemption request in proper form,
except as provided by the rules of the SEC.
HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK OR THROUGH THE ICM
SERIES TRUST AUTOMATIC INVESTMENT PLAN AND SUBSEQUENTLY SUBMIT A WRITTEN
REDEMPTION REQUEST TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE
TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK OR ICM
SERIES TRUST AUTOMATIC INVESTMENT PLAN ORDER, WHICH MAY TAKE EIGHT BUSINESS DAYS
OR MORE. IN ADDITION, THE FUND WILL REJECT REQUESTS TO REDEEM SHARES BY WIRE OR
TELEPHONE FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER
AGENT OF THE PURCHASE CHECK OR THE ICM SERIES TRUST AUTOMATIC INVESTMENT PLAN
ORDER AGAINST WHICH SUCH REDEMPTION IS REQUESTED. THESE PROCEDURES WILL NOT
APPLY IF YOUR SHARES WERE PURCHASED BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A
SUFFICIENT COLLECTED BALANCE IN YOUR ACCOUNT TO COVER THE REDEMPTION REQUEST.
PRIOR TO THE TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL
ACCRUE AND BE PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF
BENEFICIAL OWNERSHIP.
Shares will not be redeemed until the Transfer Agent has received your
Account Application.
PROCEDURES -- You may redeem Shares by using the regular redemption procedure
through the Transfer Agent, or, if you have checked the appropriate box and
supplied the necessary information on the Account Application or have filed a
Shareholder Services Form with the Transfer Agent, through the Wire Redemption
Privilege or the Telephone Redemption Privilege. The Trust reserves the right to
refuse any request made by wire or telephone, including requests made within
thirty days after a change of address, and may limit the amount involved or the
number of such requests.
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<PAGE> 15
The Trust may modify or terminate any redemption privilege at any time or charge
a service fee upon notice to shareholders. No such fee is currently
contemplated. However, the Fund's Transfer Agent charges a $____ fee for each
wire redemption.
You may redeem Shares by telephone if you have checked the appropriate box
on the Trust's Account Application or have filed a Shareholder Services Form
with the Transfer Agent. If you select a Telephone Redemption Privilege (which
is granted automatically unless you refuse it), you authorize the Transfer Agent
to act on telephone instructions from any person representing himself or herself
to be you and reasonably believed by the Transfer Agent to be genuine. The Trust
will require the Transfer Agent to employ reasonable procedures, such as
requiring a form of personal identification, to confirm that instructions are
genuine and, if it does not follow such procedures, the Trust or the Transfer
Agent may be liable for any losses due to unauthorized or fraudulent
instructions. Neither the Trust nor the Transfer Agent will be liable for
following telephone instructions reasonably believed to be genuine.
During times of drastic economic or market conditions, you may experience
difficulty in contacting the Transfer Agent by telephone to request a redemption
or exchange of Fund Shares. In such cases, you should consider using the other
redemption procedures described herein. Use of these other redemption procedures
may result in your redemption request being processed at a later time than it
would have been if telephone redemption had been used. During the delay, the
Fund's net asset value may fluctuate.
REGULAR REDEMPTION -- Under the regular redemption procedure, you may redeem
your Shares by written request mailed to ICM Series Trust., P.O. Box ____,
Westborough, Massachusetts 01581-____. Redemption requests must be signed by
each shareholder, including each owner of a joint account. You must provide a
signature guarantee if (1) you are redeeming shares worth more than $50,000; (2)
you are requesting that the proceeds check be made out to someone other than the
registered owners or be sent to an address other than the record address; (3)
the account registration has changed within the last 30 days; or (4) you are
instructing us to wire the proceeds to a bank account not designated on the
application. The Transfer Agent has adopted standards and procedures pursuant to
which signature-guarantees in proper form generally will be accepted from
domestic banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations,
as well as from participants in the New York Stock Exchange Medallion Signature
Program, the Securities Transfer Agents Medallion Program ("STAMP"), and the
Stock Exchanges Medallion Program. If you have any questions with respect to
signature-guarantees, please call 1-888___-___.
WIRE REDEMPTION PRIVILEGE -- You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank which is
a member of the Federal Reserve System, or a correspondent bank if your bank is
not a member. The Transfer Agent currently charges $ for each wire redemption.
You also may direct that redemption proceeds be paid by check (maximum $150,000
per day) made out to the owners of record and mailed to your address. Redemption
proceeds of less than $1,000 will be paid automatically by check. Holders of
jointly registered Fund or bank accounts may have redemption proceeds of only up
to $250,000 wired within any 30-day period. You may telephone redemption
requests by calling 1-888-____-____. The Statement of Additional Information
sets forth instructions for transmitting redemption requests by wire. Shares
held under retirement plans are not eligible for this privilege.
TELEPHONE REDEMPTION PRIVILEGE -- You may request by telephone that redemption
proceeds (maximum $50,000 per day) be paid by check and mailed to your address.
You may make telephone redemption instructions by calling 1-888- ___-_____.
Shares held under retirement plans are not eligible for this privilege.
Redemptions may be suspended or payment postponed during any period in
which any of the following conditions exist: the New York Exchange is closed or
trading on the New York Exchange is restricted; an emergency exists as a result
of which disposal by the Fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Fund to fairly determine
the value of the net assets of its portfolio; or the SEC, by order, so permits.
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<PAGE> 16
INVOLUNTARY REDEMPTION. As noted in the table above, the Trust reserves the
right to redeem your account at its option upon not less than 45 days' written
notice if your account's minimum balance is $1,000 or less for Investment
Class Shares and $250,000 or less for Institutional Class Shares and remains so
during the notice period. In addition, automatic investments in the AIP must
total at least $1,200 annually.
Redemptions are taxable transactions to shareholders. The net asset value
per share received upon redemption or repurchase may be more or less than the
cost of shares to an investor, depending on the market value of the portfolio at
the time of redemption or repurchase.
DISTRIBUTION PLAN (INVESTMENT CLASS SHARES ONLY)
The Trustees of the Fund have adopted a distribution plan (the "Plan") with
respect to the Investment Class Shares pursuant to Section 12(b) of the 1940
Act and Rule 12b-1 thereunder. Under the Plan, the Fund pays FDDI, distributor
of the Fund, a fee at an annual rate of up to .25 of 1% of the value of the
average daily net assets attributable to the Investment Class Shares for
certain service and distribution expenses borne, or paid to others, by FDDI.
Generally, the service fees covered under the Plan are fees paid to securities
dealers and other financial intermediaries for personal services to holders of
Investment Class Shares of the Fund and/or for the maintenance of the accounts
of the holders of the Shares. The services provided may include personal
services relating to shareholder accounts, such as answering shareholder
inquiries regarding the Fund and providing reports and other information, and
services related to the maintenance of shareholder accounts. The Plan also
permits for distribution expenses borne, or paid to others, by FDDI for the
purpose of financing or assisting in the financing of any activity which is
primarily intended to result in the sale of the Shares of the Fund. The types
of distribution expenses covered include, but are not limited to, the costs and
expenses of direct marketing activities, the design, preparation, printing and
distribution of promotional materials, advertising and offering materials, and
shareholder materials; the compensation of securities dealers and other
financial intermediaries for sales activities; and related capital, overhead
and interest expenses. Amounts payable under the Plan are charged to Investment
Class Shares of the Fund and therefore reduce income allocated to the
Investment Class Shares. Payments under the Plan are not tied exclusively to
the distributions and/or shareholder service expenses actually incurred by the
Distributor and the payments may exceed distribution and/or services expenses
actually incurred.
DIVIDENDS, DISTRIBUTIONS AND TAXATION
The Fund has elected to be treated and intends to qualify each year as a
"regulated investment company" under Subchapter M of the Code, so that it will
not pay federal income tax on income and capital gains distributed to
shareholders as required under the Code.
Under the Code, the Fund will be subject to a nondeductible 4% excise tax
on a portion of its undistributed ordinary income and capital gains if it fails
to meet certain distribution requirements with respect to each calendar year.
The Fund intends to make distributions in a timely manner and accordingly does
not expect to be subject to the excise tax.
The Fund makes distributions to shareholders from its net long-term capital
gains and income dividends, if any, at least annually. Dividends from income
and/or capital gains may also be paid at such other times as may be necessary
for the Fund to avoid federal income or excise tax. Generally, dividends from
the Fund's net investment income, market discount income, net short-term capital
gains, and certain net foreign exchange gains are taxable under the Code as
ordinary income, and dividends from the Fund's net long-term capital gains are
taxable as long-term capital gains.
Unless shareholders specify otherwise, all distributions will be
automatically reinvested in additional full and fractional shares of the Fund.
For federal income tax purposes, all dividends are taxable as described above
whether a shareholder takes them in cash or reinvests them in additional shares
of the Fund. Information as to the federal tax status of dividends and
distributions will be provided to shareholders annually.
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<PAGE> 17
Distributions by the Fund of the dividend income it receives from U.S.
domestic corporations, if any, may qualify for the dividends-received deduction
for corporate shareholders, subject to holding-period requirements and
debt-financing restrictions under the Code.
The Fund may be subject to foreign withholding taxes or other foreign taxes
on income (possibly including, in some cases, capital gains) on certain of its
foreign investments, which will reduce the yield on, or return from those
investments. If, as anticipated, the Fund does not qualify to pass such taxes
through to its shareholders, they will neither treat such taxes as additional
income nor be entitled to any associated foreign tax credits or deductions.
Dividends and other distributions and the proceeds of redemptions,
exchanges or repurchases of Fund shares paid to individuals and other non-exempt
payees will be subject to 31% backup withholding of federal income tax if the
Fund is not provided with the shareholder's correct taxpayer identification
number and certification that the number is correct and that the shareholder is
not subject to backup withholding or the Fund receives notice from the IRS or a
broker that such withholding applies. Please refer to the Account Application
for additional information.
The description above relates only to U.S. federal income tax consequences
for shareholders who are U.S. persons, i.e., U.S. citizens or residents or U.S.
corporations, partnerships, trusts or estates, and who are subject to U.S.
federal income tax. Non-U.S. shareholders and tax-exempt shareholders may be
subject to tax treatment that is different than described above. Shareholders
should consult their own tax advisors regarding state, local and other
applicable tax laws.
THE TRUST
The Fund is a diversified series of the Trust, an open-end management
investment company (commonly referred to as a mutual fund) organized as a
Massachusetts business trust on November 18, 1997. The Trust has authorized an
unlimited number of shares of beneficial interest. As an open-end management
investment company, the Trust continuously offers its shares to the public and
under normal conditions must redeem its shares upon the demand of any
shareholder at the then current net asset value per share. See "How to Sell Fund
Shares." The Trust is not required, and does not intend, to hold annual
shareholder meetings although special meetings may be called for the purpose of
electing or removing Trustees, changing fundamental investment restrictions or
approving an advisory contract. The Fund is currently the only series of the
Trust. The Trustees have the authority, without further shareholder approval, to
classify shares of beneficial interests in separate series. Additional series
may be added in the future. The Trustees also have authority to classify and
reclassify any series or portfolio into one or more classes. As of the date of
this Prospectus, the Trustees have authorized the issuance of two classes of
shares, designated as Investment Class Shares and Institutional Class Shares.
The shares of each class represent an interest in the same portfolio of
investments of the Fund. Each class has equal rights as to voting, redemption,
dividends and liquidation, except that each class bears different distribution
fees and may bear other expenses properly attributable to the particular class.
Investment Class shareholders have exclusive voting rights with respect to the
Rule 12b-1 distribution plan adopted by holders of those shares in connection
with the distribution of shares.
When issued and paid for in accordance with the terms of the Prospectus and
Statement of Additional Information, Shares of the Trust are fully-paid and
non-assessable. The Trust does not issue certificates representing Fund's
shares. Instead, the Transfer Agent maintains a record of your ownership and
sends confirmations and statements of account. In the event of liquidation,
shareholders are entitled to share pro rata in the net assets of the Fund
available for distribution to such shareholders. Shares have no preemptive,
subscription or conversion rights. Shareholders are entitled to one vote per
share, provided that, at the option of the Trustees, shareholders will be
entitled to a number of votes based upon the net asset values represented by
their shares.
Shareholder inquiries may be made by writing the Fund at P.O. Box ____,
Westborough, Massachusetts 01581-____, or by calling 1-888-____-______.
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<PAGE> 18
The Trust does not intend to hold annual meetings of shareholders.
However, pursuant to the Trust's By-Laws, the recordholders of at least a
majority of the shares outstanding and entitled to vote at a special meeting may
require the Trust to hold such special meeting for any purpose.
PERFORMANCE RESULTS
The average annual total return (for a designated period of time) on an
investment in the Fund may be included in advertisements, and furnished to
existing or prospective shareholders. The average annual total return for each
Class is computed in accordance with the SEC's standardized formula. The
calculation for each Class assumes the reinvestment of all dividends and
distributions at net asset value and does not reflect the impact of federal or
state income taxes. The periods illustrated would normally include one, three,
five and ten years (or since the commencement of the public offering of the
shares of a Class, if shorter) through the most recent calendar quarter.
One or more additional measures and assumptions, including but not limited
to historical total returns; distribution returns; results of actual or
hypothetical investments; changes in dividends, distributions or share values;
or any graphic illustration of such data may also be used. These data may cover
any period of the Fund's existence and may or may not include the impact of
taxes or other factors.
Other investments or savings vehicles and/or unmanaged market indices,
indicators of economic activity or averages of mutual funds results may be cited
or compared with the investment results of the Fund. Rankings or listings by
magazines, newspapers or independent statistical or rating services, such as
Lipper Analytical Services, Inc., may also be referenced.
The Fund's investment results will vary from time to time depending on
market conditions, the composition of the Fund's portfolio and operating
expenses of the Fund. All quoted investment results are historical and should
not be considered representative of what an investment in the Fund may earn in
any future period. For further information about the calculation methods and
uses of the Fund's investment results, see the Statement of Additional
Information.
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<PAGE> 19
ICM SERIES TRUST
ICM/ISABELLE SMALL-CAP VALUE FUND
4400 Compute Drive
Westborough, Massachusetts 01581
Investment Class Shares
Institutional Class Shares
STATEMENT OF ADDITIONAL INFORMATION
_____________________, 1997
ICM Series Trust (the "Trust") is an open-end management investment
company. Currently, the Trust offers one investment portfolio, ICM/Isabelle
Small-Cap Value Fund (the "Fund").
This Statement of Additional Information is not a prospectus, but should be
read in conjunction with the Prospectus for the Fund dated ___________, 1997, A
copy of the Prospectus can be obtained free of charge by calling 1-800-_________
or by written request to the Trust at P.O. Box ___, Westborough, Massachusetts
01581-____.
IronWood Capital Management, LLC ("ICM") serves as the Trust's investment
adviser. First Data Investor Services Group, Inc. ("Investor Services Group")
serves as the Trust's administrator and transfer agent. First Data Distributors,
Inc. ("FDDI") serves as the Fund's distributor.
<PAGE> 20
TABLE OF CONTENTS
Page
Investment Policies and Practices................................ 3
Investment Restrictions.......................................... 9
Management of the Fund........................................... 11
Investment Adviser............................................... 12
Distribution Plan................................................ 13
Administrator.................................................... 13
Transfer Agent................................................... 13
Custodian........................................................ 13
Distributor...................................................... 13
Independent Public Accountants................................... 13
Purchase of Fund Shares.......................................... 13
Redemption of Fund Shares........................................ 14
Portfolio Transactions........................................... 15
Taxes............................................................ 16
Description of Shares............................................ 19
Shareholder and Trustee Liability................................ 21
Determination of Net Asset Value................................. 21
Investment Results............................................... 22
Registration Statement........................................... 23
Appendix......................................................... 24
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS
AND IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
2
<PAGE> 21
THE FUND
The Fund is a series of the ICM Series Trust, an open-end management
investment company offering redeemable shares of beneficial interest. As of the
date of this Statement of Additional Information, the Fund is the only series of
the Trust.
INVESTMENT POLICIES AND PRACTICES
The Fund's current prospectus (the "Prospectus") presents the investment
objective and principal investment policies of the Fund. Additional investment
policies and a further description of some of the policies described in the
Prospectus appear below.
CONVERTIBLE SECURITIES AND DEBT SECURITIES
The Fund may invest in convertible securities as set forth in the
Prospectus. The common stock underlying convertible securities may be issued by
a different entity than the issuer of the convertible securities. Convertible
securities entitle the holder to receive interest payments paid on corporate
debt securities or the dividend preference on a preferred stock until such time
as the convertible security matures or is redeemed or until the holder elects to
exercise the conversion privilege.
The value of convertible securities is influenced by both the yield of
non-convertible securities of comparable issuers and by the value of a
convertible security viewed without regard to its conversion feature (i.e.,
strictly on the basis of its yield), sometimes referred to as its "investment
value." The investment value of the convertible security will typically
fluctuate inversely with changes in prevailing interest rates. However, at the
same time, the convertible security will be influenced by its "conversion
value," which is the market value of the underlying common stock that would be
obtained if the convertible security were converted. Conversion value fluctuates
directly with the price of the underlying common stock.
By investing in convertible securities, the Fund obtains the right to
benefit from the capital appreciation potential in the underlying stock upon
exercise of the conversion right, while earning higher current income than would
be available if the stock were purchased directly. In determining whether to
purchase a convertible security, ICM will consider the same criteria that would
be considered in purchasing the underlying stock.
The Fund reserves the right to invest up to 20% of its assets in
convertible and non-convertible debt securities, on an aggregated basis, which
may be unrated or rated below investment grade, ratings lower than BBB by
Standard & Poor's Rating Service ("S&P"), a division of McGraw-Hill Companies,
Inc. or
3
<PAGE> 22
lower than Baa by Moody's Investors Services, Inc. ("Moody's"). With
respect to non-convertible debt securities, the Fund may not invest more than
20% of its assets in non-convertible debt securities regardless of their rating.
Lower-rated securities generally offer a higher current yield than that
available for higher grade issues. However, lower-rated securities involve
higher risks, in that they are especially subject to adverse changes in general
economic conditions and in the industries in which the issuers are engaged, to
changes in the financial condition of the issues and to price fluctuations in
response to changes in interest rates. During periods of economic downturn or
rising interest rates, highly leveraged issues may experience financial stress
which could adversely affect their ability to make payments of interest and
principal and increase the possibility of default. In addition, the market for
lower-rated debt securities has expanded rapidly in recent years, and its growth
paralleled a long economic expansion. At times in recent years, the prices of
many lower-rated debt securities declined substantially, reflecting an
expectation that many issues of such securities might experience financial
difficulties. As a result, the yields on lower-rated debt securities rose
dramatically, but such higher yields did not reflect the value of the income
stream that holders of such securities expected, but rather, the risk that
holders of such securities could lose a substantial portion of their value as a
result of issuers' financial restructuring or default. There can be no assurance
that such declines will not recur. The market for lower-rated debt issues
generally is smaller and less active than that for higher quality securities,
which may limit the Fund's ability to sell such securities at fair value in
response to changes in the economy or financial markets. Adverse publicity and
investor perceptions, whether or not based on fundamental analysis, may also
decrease the values and prevailing levels of interest rates which generally
increase the value of debt securities, while an increase in rates usually
reduces the value of those securities.
RIGHTS AND WARRANTS
As stated in the Prospectus, the Fund may purchase rights or warrants,
which are privileges issued by corporations enabling owners to subscribe to and
purchase a specified number of shares of the corporation at a specified price
during a specified period of time. Subscription rights normally have a short
life span to expiration. The purchase of a warrant involves the risk that the
Fund could lose the purchase value of a warrant if the right to subscribe to
additional shares is not exercised prior to the warrants expiration. Also, the
purchase of warrants involves the risk that the effective price paid for the
warrant added to the subscription price of the related security may exceed the
value of the subscribed security's market price, such as when there is no
movement in the level of the underlying security.
LENDING OF PORTFOLIO SECURITIES
The Fund may lend its portfolio securities to registered brokers, dealers
and other financial institutions, provided that such loans are continuously
collateralized by cash or cash equivalents, which are maintained in an amount
that is at least the market value of the loaned securities. The advantage of
such loans is that the Fund continues to receive the income on the loaned
securities while at the same time earning interest on the cash amounts deposited
as collateral, which will be invested in short-term obligations. The Fund will
not lend more than 25% of the value of its total assets. As with any extensions
of credit, there are risks of delay in recovery and in some cases even loss of
rights in the collateral should the borrower of the securities fail financially.
However, these loans of portfolio securities will only be made to firms deemed
by the Fund's management to be creditworthy. The creditworthiness of firms to
which the Fund lends its portfolio securities will be monitored on an ongoing
basis by ICM pursuant to procedures adopted and reviewed, on an ongoing basis,
by the Board of Trustees of the Fund.
When voting or consent rights which accompany loaned securities pass to the
borrower, the Fund will follow the policy of calling the loaned securities, to
be delivered within one day after notice, to permit the exercise of such rights
if the matters involved would have a material effect on the Fund's investment in
such loaned securities.
FOREIGN SECURITIES
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The Fund may invest up to 25% of its assets in foreign securities. Foreign
investments can involve significant risks in addition to the risks inherent in
U.S. investments. The value of securities denominated in or indexed to foreign
currencies, and of dividends and interest from such securities, can change
significantly when foreign currencies strengthen or weaken relative to the U.S.
dollar. Foreign securities markets generally have less trading volume and less
liquidity than U.S. markets, and prices on some foreign markets can be highly
volatile. Many foreign countries lack uniform accounting and disclosure
standards comparable to those applicable to U.S. companies, and it may be more
difficult to obtain reliable information regarding an issuer's financial
condition and operations. In addition, the costs of foreign investing, including
withholding taxes, brokerage commissions, and custodial costs, generally are
higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers, and securities markets may be subject to less
government supervision.
Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments adverse to
the interests of U.S. investors, including the possibility of expropriation or
nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. There may be a greater possibility of
default by foreign governments or foreign government-sponsored enterprises.
Investments in foreign countries also involve a risk of local political,
economic or social instability, military action or unrest, or adverse diplomatic
developments. There can be no assurance that the Advisor will be able to
anticipate or counter these potential events and their impacts on the Fund's
share price.
Subject to the 25% limitation on investments in foreign securities, the
Fund may invest in securities of foreign issuers held by the Fund in the form of
American Depositary Receipts ("ADRs"). ADRs are certificates evidencing
ownership of shares of a foreign-based issuer held in trust by a bank or similar
financial institution.
BORROWING
The Fund is authorized to borrow money in amounts up to 5% of the value of
its total assets at the time of such borrowing for temporary purposes, and is
authorized to borrow money in excess of the 5% limit as permitted by the
Investment Company Act of 1940, as amended (the "1940 Act"), to meet redemption
requests. The Fund will not purchase securities while its borrowings exceed 5%
of its total assets. The Fund has no intention of increasing its net income
through borrowing. Any borrowing will be done from a bank with the required
asset coverage of at least 300%. If the 300% asset coverage should decline as a
result of market fluctuations or other reasons, the Fund may be required to sell
some of its holdings within three days to reduce the debt and restore the 300%
asset coverage, even though it may be disadvantageous from an investment
standpoint to sell securities at the time. The Fund may also be required to
maintain average balances in connection with such borrowing or to pay a
commitment or other fees to maintain a line of credit; either of these
requirements would increase the cost of borrowing over the stated interest rate.
ILLIQUID AND RESTRICTED SECURITIES
The Fund may not invest more than 15% of its net assets in illiquid
securities, including (i) securities for which there is no readily available
market; (ii) securities the disposition of which would be subject to legal
restrictions (so-called "restricted securities"); and (iii) repurchase
agreements having more than seven days to maturity. A considerable period of
time may elapse between the Fund's decision to dispose of such securities and
the time when the Fund is able to dispose of them, during which time the value
of the securities could decline. Restricted securities do not include those
which meet the requirements of Rule 144A of the Securities Act of 1933, as
amended (the "Securities Act") and which the Trustees have determined to be
liquid based on the applicable trading markets.
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<PAGE> 24
RULE 144A SECURITIES
The Fund may purchase securities that have been privately placed but
eligible for purchase and sale under Rule 144A under the Securities Act, which
permits the Fund to sell restricted securities to qualified institutional buyers
without limitation. ICM, pursuant to procedures adopted by the Trustees of
the Fund, will make a determination as to the liquidity of each restricted
security purchased by the Fund. In making this determination, ICM will consider
the trading markets for the specified security and the following factors:
(1) the frequency of trades and price quotes for the security; (2) the number
of dealers and other potential purchasers who have issued quotes on the
security; (3) any dealer undertakings to make a market in the security; and (4)
the nature of the security and the nature of the marketplace trades (the time
needed to dispose of the security, the method of soliciting offers, and the
mechanics of transfer). If a restricted security is determined to be "liquid,"
such security will not be included within the category "illiquid securities,"
which under current policy may not exceed 15% of the Fund's net assets.
SHORT SALES AGAINST THE BOX
The Fund may sell securities "short against the box." While a short sale is
the sale of a security that the Fund does not own, it is "against the box" if at
all times when the short position is open the Fund owns an equal amount of
securities or securities convertible into, or exchangeable without further
consideration for, securities of the same issue as the securities sold short.
To secure its obligations to deliver the securities sold short, the Fund
will deposit in escrow in a separate account with the Fund's custodian, an
amount at least equal to the securities sold short or securities convertible
into, or exchangeable for, the securities. The Fund may close out a short
position by purchasing and delivering an equal amount of securities sold short,
rather than by delivering securities already held by the Fund, because the Fund
may want to continue to receive interest and dividend payments on securities in
its portfolio that are convertible into the securities sold short.
HEDGING TRANSACTIONS
The Fund may utilize techniques to manage risks associated with exposure to
the effects of possible changes in security prices, or other factors that affect
the value of its portfolio. These techniques such as buying and selling
derivative securities such as options, futures contracts, or options on futures
contracts, involve significant risks and may increase the volatility of the
fund.
Hedging Transactions may be utilized by the Fund solely for risk management
purposes and not for speculation. The Fund does not intend to invest more than
5% of its total assets in hedging transactions.
OPTIONS ON SECURITIES AND INDICES
The Fund may purchase and sell put and call options on securities, indexes
or foreign currencies in standardized contracts traded on recognized securities
exchanges, boards of trade, or similar entities, or quoted on the Nasdaq
National Market. An option on a security (or index) is a contract that gives the
purchaser (holder) of the option, in return for a premium, the right to buy from
(call) or sell to (put) the seller (writer) of the option the security
underlying the option (or the cash value of the index) at a specified exercise
price at any time during the term of the option (normally not exceeding nine
months). The writer of an option on an individual security or on a foreign
currency has the obligation upon exercise of the option to deliver the
underlying security or foreign currency upon payment of the exercise price or to
pay the exercise price upon delivery of the underlying security or foreign
currency. Upon exercise, the writer of an option on an index is obligated to pay
the difference between the cash value of the index and the exercise price
multiplied by the specified multiplier for the index option. (An index is
designed to reflect specified facets of a
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<PAGE> 25
particular financial or securities market, a specific group of financial
instruments or securities, or certain economic indicators.)
The Fund may write covered call and put options on certain portfolio
securities, provided that (i) options may not be written on more than 25% of the
aggregate market value of any single portfolio security, and (ii) no more than
5% of the Fund's total assets may be utilized in any one or more of such
transactions. For example, in the case of a call option on a security, the
option is "covered" if the Fund owns the security underlying the call or has an
absolute and immediate right to acquire that security without additional cash
consideration (or, if additional cash consideration is required, cash or cash
equivalents in such amount are held in a segregated account by its custodian)
upon conversion or exchange of other securities held in its portfolio.
If an option written by the Fund expires, the Fund realizes a capital gain
equal to the premium received at the time the option was written. If an option
purchased by the Fund expires, the Fund realizes a capital loss equal to the
premium paid.
Prior to the earlier of exercise or expiration, an option may be closed out
by an offsetting purchase or sale of an option of the same series (type,
exchange, underlying security or index, exercise price, and expiration). There
can be no assurance, however, that a closing purchase or sale transaction can be
effected when the Fund desires.
The Fund will realize a capital gain from a closing purchase transaction if
the cost of the closing option is less than the premium received from writing
the option, or, if it is more, the Fund will realize a capital loss. If the
premium received from a closing sale transaction is more than the premium paid
to purchase the option, the Fund will realize a capital gain or, if it is less,
the Fund will realize a capital loss. The principal factors affecting the market
value of a put or a call option include supply and demand, interest rates, the
current market price of the underlying security or index in relation to the
exercise price of the option, the volatility of the underlying security or
index, and the time remaining until the expiration date.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
To hedge against changes in securities prices or currency exchange rates,
the Fund may purchase and sell various kinds of futures contracts, and purchase
and write (sell) call and put options on any of such futures contracts. Futures
options possess many of the same characteristics as options on securities and
indexes discussed above. A futures option gives the holder the right, in return
for the premium paid, to assume a long position (call) or short position (put)
in a futures contract at a specified exercise price at any time during the
period of the option. The Fund may enter into closing purchase and sale
transactions with respect to any of such contracts and options. The futures
contracts may be based on various securities (such as U.S. Government
securities), securities indices, foreign currencies and other financial
instruments and indices. The Fund will only engage in futures and related
options transactions that are standardized and traded on U.S. exchanges or
boards of trade that are licensed and regulated by the Commodity Futures Trading
Commission (the "CFTC") or on foreign exchanges.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Fund may enter into forward foreign currency exchange contracts in an
effort to reduce the level of volatility caused by changes in foreign currency
exchange rates. The Fund may not enter into these contracts for speculative
purposes. A forward currency exchange contract is an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set at the
time of contract. The Fund will segregate cash or liquid securities to cover its
obligation to purchase foreign currency under a forward foreign currency
contract. Although such contracts tend to minimize the risk of loss due to a
decline in the value of the hedged currency, at the same time they tend to limit
any potential gain that might be realized should
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<PAGE> 26
the value of such currency increase.
REPURCHASE AGREEMENTS
When cash may be available for only a few days, it may be invested by the
Fund in repurchase agreements until such time as it may otherwise be invested or
used for payments of obligations of the Fund. These agreements, which may be
viewed as a type of secured lending by the Fund, typically involve the
acquisition by the Fund of securities from a selling financial institution such
as a bank, savings and loan association or broker-dealer. The agreement provides
that the Fund will sell back to the institution, and that the institution will
repurchase, the underlying security ("collateral") at a specified price and at a
fixed time in the future, usually not more than seven days from the date of
purchase. The collateral will be maintained in a segregated account and will be
marked to market daily to determine that the value of the collateral, as
specified in the agreement, does not decrease below the purchase price plus
accrued interest. If such decrease occurs, additional collateral will be
requested and, when received, added to the account to maintain full
collateralization. The Fund will accrue interest from the institution until the
time when the repurchase is to occur. Although such date is deemed by the Fund
to be the maturity date of a repurchase agreement, the maturities of the
collateral are not subject to any limits.
While repurchase agreements involve certain risks not associated with
direct investments in debt securities, the Fund follows procedures designed to
minimize such risks. These procedures include effecting repurchase transactions
only with large, well-capitalized and well-established financial institutions
whose financial condition will be continually monitored by ICM subject to
procedures established by the Board of Trustees. In addition, as described
above, the value of the collateral underlying the repurchase agreement will be
at least equal to the repurchase price, including any accrued interest earned on
the repurchase agreement. In the event of a default or bankruptcy by a selling
financial institution, the Fund will seek to liquidate such collateral. However,
the exercising of the Fund's right to liquidate such collateral could involve
certain costs or delays and, to the extent that proceeds from any sale upon a
default of the obligation to repurchase were less than the repurchase price, the
Fund could suffer a loss. It is the current policy of the Fund not to invest in
repurchase agreements that do not mature within seven days of any such
investment, together with any other illiquid assets held by the Fund, which
amount to more than 15% of its net assets.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
From time to time the Fund may purchase securities on a when-issued or
delayed delivery basis or may purchase or sell securities on a forward
commitment basis. When such transactions are negotiated, the price is fixed at
the time of the commitment, but delivery and payment can take place a month or
more after the date of commitment. The Fund makes such commitments only with the
intention of actually acquiring the securities, but may sell the securities
before settlement if the Advisor deems it advisable. The securities so purchased
or sold are subject to market fluctuation and no interest or dividends accrue to
the purchaser prior to the settlement date. At the time the Fund makes the
commitment to purchase or sell securities on a when-issued or delayed delivery
basis, it will record the transaction and thereafter reflect the value, each
day, of such security purchased, or, if a sale, the proceeds to be received, in
determining its net asset value. At the time of delivery of the securities,
their value may be more or less than the purchase or sale price. The Fund will
establish a segregated account in which it will continually maintain cash or
cash equivalents or other high grade debt portfolio securities on a when-issued
or delayed delivery basis.
WHEN, AS AND IF ISSUED SECURITIES
The Fund may purchase securities on a "when, as and if issued" basis under
which the issuance of the security depends upon the occurrence of a subsequent
event, such as approval of a merger, corporate reorganization or debt
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<PAGE> 27
restructuring. The commitment for the purchase of any such security will not be
recognized in the portfolio of the Fund until the Adviser determines that
issuance of the security is probable. At such time, the Fund will record the
transaction and, in determining its net asset value, will reflect the value of
the security daily. At such time, the Fund will also establish a segregated
account in which it will maintain in cash or cash equivalents on other high
grade debt portfolio securities equal in value to recognized commitments for
such securities.
INVESTMENT RESTRICTIONS
FUNDAMENTAL RESTRICTIONS. The Fund has adopted the following fundamental
investment restrictions which may not be changed without the approval of the
Fund's shareholders.
The Fund may not:
(1) Invest more than 25% of its total assets in any one industry
(securities issued or guaranteed by the United States Government, its agencies
or instrumentalities are not considered to represent industries);
(2) With respect to 75% of the Fund's assets, invest more than 5% of the
Fund's assets (taken at market value at the time of purchase) in the outstanding
securities of any single issuer or own more than 10% of the outstanding voting
securities of any one issuer, in each case other than securities issued or
guaranteed by the United States Government, its agencies or instrumentalities;
(3) Borrow money except that the Fund may (i) borrow money for temporary
purposes in amounts not exceeding 5% of its total assets and (ii) borrow money
for the purpose of meeting redemption requests, in amounts (when aggregated with
amounts borrowed under clause (i)) not exceeding 33 1/3% of its total assets;
(4) Pledge, mortgage or hypothecate its assets other than to secure
borrowings permitted by restriction 3 above (collateral arrangements with
respect to margin requirements for options and futures transactions are not
deemed to be pledges or hypothecations for this purpose);
(5) Make loans of securities to other persons in excess of 25% of the
Fund's total assets, provided the Fund may invest without limitation in
short-term debt obligations (including repurchase agreements) and publicly
distributed debt obligations;
(6) Underwrite securities of other issuers, except insofar as the Fund may
be deemed an underwriter under the Securities Act of 1933, as amended, in
selling portfolio securities;
(7) Purchase or sell real estate or any interest therein, including
interests in real estate limited partnerships, except securities issued by
companies (including real estate investment trusts) that invest in real estate
or interests therein;
(8) Purchase securities on margin, except for the use of short-term credit
necessary for the clearance of purchases and sales of portfolio securities, but
the Fund may make the margin deposits in connection with transactions in
options, futures and options on futures;
(9) Invest in commodities or commodity futures contracts, provided that
this limitation shall not prohibit the purchase or sale by the Fund or forward
foreign currency exchange contracts, financial futures contracts and options
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<PAGE> 28
on financial futures contracts, and options on securities and on securities,
foreign currencies and on securities indices, as permitted by applicable law; or
(10) Issue any senior securities, except as permitted by the 1940 Act.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. The following restrictions have been
designated as non-fundamental and may be changed by a vote of the Trust's Board
of Trustees without the approval of shareholders.
The Fund may not:
(1) Sell securities short, except transactions involving selling
securities short "against the box";
(2) Make investments for the purpose of exercising control or management;
(3) Invest more than 15% of its net assets (taken at market value at the
time of purchase) in illiquid securities which cannot be readily
resold because of legal or contractual restrictions; or
(4) Invest in other investment companies except as permitted under the
1940 Act.
If a percentage limitation is satisfied at the time of investment, a later
increase or decrease in such percentage resulting from a change in the value of
the Fund's investments will not constitute a violation of such limitation,
except that any borrowing by the Fund that exceeds the fundamental investment
limitations stated above must be reduced to meet such limitations within the
period required by the 1940 Act (currently three days). Otherwise, the Fund may
continue to hold a security even though it causes the Fund to exceed a
percentage limitation because of fluctuation in the value of the Fund's assets.
MANAGEMENT OF THE FUND
The Fund is a series of the Trust, an open-end management investment
company offering redeemable shares of beneficial interest. The Trust's Board of
Trustees provides broad supervision over the affairs of the Fund and the Trust.
The officers of the Trust are responsible for the Fund's operations. The
Trustees and executive officers of the Trust are listed below, together with
their principal occupations during the past five years. An asterisk indicates
those Trustees who are interested persons of the Trust within the meaning of the
1940 Act.
NAME, POSITION WITH THE FUND
AND ADDRESS PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
Warren J. Isabelle, CFA* Senior Vice President and head of
Trustee and President Domestic Equity Management, Pioneer
One Financial Center Mutual Funds June 1984 to January
Boston, MA 02110 1997; Senior Vice President and Chief
Investment Officer of Equities at
Keystone Investment Management Company,
February 1997 through May 1997.
Richard L. Droster* Director of Institutional Marketing,
Trustee, Vice-President Heartland Advisors, Inc. (Investment
and Treasurer Advisor) since 1992.
One Financial Center
Boston, MA 02110
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Joseph F. Mazzella, Trustee* Partner, Lane Altman & Owens LLP (attorneys)
101 Federal Street since 1985; Director, Alliant Techsystems,
Boston, MA 02110 Inc. (defense contractor) since 1994;
Director, Paragon Acquisition Company
(investments) since 1996.
Gary S. Saks Client Service Representative and New
Secretary Accounts Assistant Manager, Furman Selz Prime
One Financial Center Brokerage Department (brokerage) December
Boston, MA 02110 1993 to July 1995; Consultant, Air Travelers
Service Corporation January 1997 to September
1997; Consultant, Dorchester Tire Service
January 1996 to December 1996.
COMPENSATION OF OFFICERS AND TRUSTEES
The Trust pays no salaries or compensation to any of its officers. The Fund
will pay an annual trustee's fee to each Trustee who is not affiliated with ICM
or FDDI consisting of a $[ ] retainer plus $[ ] per meeting attended.
INVESTMENT ADVISER
IronWood Capital Management, LLC ("ICM" or "Adviser") a Massachusetts
limited liability company, whose address is One Financial Center, Boston,
Massachusetts 02111, is the Fund's investment adviser. ICM was formed on August
15, 1997. Mr. Warren J. Isabelle, President of ICM and Mr. Richard L. Droster,
Vice-President and Director of ICM are the controlling principals of ICM and are
officers and trustees of the Trust.
The Trust, with respect to the Fund, has contracted with ICM, to act as its
investment adviser. A description of the services provided to the Fund under the
advisory contract (the "Advisory Agreement") and the expenses paid by the Fund
under such contract is set forth in the Prospectus under the caption "Management
of the Fund."
Under the terms of the Advisory Agreement, ICM is responsible for
supervising the investment activities of the Fund and is authorized in its
discretion to determine the securities to be purchased, sold or otherwise
disposed of by the Fund. ICM is responsible for all the expenses related to its
services for the Fund. Expenses not expressly assumed by ICM will be paid by the
Fund. The Adviser has undertaken to limit expenses to 1.95% of the average net
assets annually for Investment Class Shares and 1.70% of the average net assets
annually for Institutional Class Shares. The expenses borne by the Fund include,
but are not limited to: expenses of the Plan of Distribution pursuant to Rule
12b-1 (see "The Distributor"); charges and expenses of any administrator,
registrar, custodian, stock transfer and dividend disbursing agent; brokerage
commissions; taxes; registration costs of the Fund and its shares under federal
and state securities laws; the cost and expense of printing, including
typesetting, and distributing Prospectuses and Statements of Additional
Information of the Fund and supplements thereto to the Fund's shareholders; all
expenses of shareholders' and Trustees' meetings and of preparing, printing and
mailing of proxy statements and reports to shareholders; fees and travel
expenses of Trustees or members of any advisory board or committee who are not
employees of ICM or any corporate affiliate of ICM; all expenses incident to any
dividend, withdrawal or redemption options; charges and expenses of any outside
service used for pricing of the Fund's shares; fees and expenses of legal
counsel, including counsel to the Trustees who are not interested persons of the
Fund or of ICM (not including compensation or expenses of attorneys who are
employees of the Adviser) and independent accountants; membership dues of
industry associations; interest on Fund borrowings; postage; insurance premiums
on property or personnel (including officers and Trustees) of the Fund which
inure to its benefit; extraordinary expenses (including, but not limited to,
legal claims and liabilities and litigation costs and any indemnification
relating thereto); and all other costs of the Fund's operation.
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The Advisory Agreement will continue in effect for a period of two years from
the effective date and is renewable annually by the vote of a majority of the
Board of Trustees of the Trust (including a majority of the Board of Trustees
who are not parties to the contract or interested persons of any such parties).
The vote must be cast in person at a meeting called for the purpose of voting on
such renewal. This contract terminates if assigned and may be terminated without
penalty by either party upon sixty days' written notice, by vote of the Board of
Trustees or a majority of its outstanding voting securities. Pursuant to the
contract, ICM will not be liable for any error of judgment or mistake of law or
for any loss sustained by reason of the adoption of any investment policy or the
purchase, sale or retention of any securities on the recommendation of ICM. ICM,
however, is not protected against liability by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties or by reason of
its reckless disregard of its obligations and duties under the respective
management contract.
As compensation for its management services and expenses incurred, ICM is
entitled to a management fee from the Fund at the rate of 1.00% per annum of the
Fund's average daily net assets. The fee is computed and accounted for daily and
paid monthly.
DISTRIBUTION PLAN
The Trust, on behalf of the Fund, has adopted a plan of distribution
pursuant to Rule 12b-1 under the 1940 Act with respect to the Investment Class
Shares of the Fund (the "Plan"). Pursuant to the Plan, the Fund uses its assets
to finance activities relating to the distribution of Investment Class Shares to
investors and provision of certain shareholder services. Certain categories of
such expenditures have been approved by the Board of Trustees and are set forth
in the Prospectus. See "Distribution Plan" in the Prospectus. The expenses of
the Fund pursuant to the Plan are accrued on a fiscal year basis and may not
exceed the annual rate of .25% of the Fund's average annual net assets
attributable to Investment Class Shares.
GENERAL. In accordance with the terms of the Plan, FDDI provides to the
Trust for review by the Trustees a quarterly written report of the amounts
expended under the Plan and the purpose for which such expenditures were made.
No interested person of the Trust, nor any Trustee of the Trust who is not
an interested person of the Trust, has any direct or indirect financial interest
in the operation of the Plan.
The Plan was adopted by a majority vote of the Board of Trustees, including
all of the Trustees who are not, and were not at the time they voted, interested
persons of the Trust, as defined in the 1940 Act (none of whom had or have any
direct or indirect financial interest in the operation of the Plan), cast in
person at a meeting called for the purpose of voting on the Plan. In approving
the Plan, the Trustees identified and considered a number of potential benefits
which the Plan may provide. The Board of Trustees believes that there is a
reasonable likelihood that the Plan will benefit the Fund and its future
shareholders. Under its terms, the Plan remains in effect from year to year
provided such continuance is approved annually by vote of the Trustees in the
manner described above. The Plan may not be amended to increase materially the
annual percentage limitation of average net assets which may be spent for the
services described therein without approval of the shareholders of the Fund
affected thereby, and material amendments of the Plan must also be approved by
the Trustees in the manner described above. The Plan may be terminated at any
time, without payment of any penalty, by vote of the majority of the Trustees
who are not interested persons of the Trust and have no direct or indirect
financial interest in the operations of the Plan, or by a vote of a majority of
the outstanding voting securities of the Investment Class (as defined in the
1940 Act). The Plan will automatically terminate in the event of its assignment
(as defined in the 1940 Act).
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ADMINISTRATOR
The Trust has entered into an administration agreement ("Administration
Agreement") with Investor Services Group, a subsidiary of First Data
Corporation, 53 State Street, Boston, Massachusetts 02109. Investor Services
Group furnishes the Trust clerical help and accounting, data processing,
internal auditing and legal services and certain other services required by the
Trust, prepares reports to the Fund's shareholders, tax returns, reports to and
filings with SEC and state Blue Sky authorities, and generally assists in all
aspects of the Trust's operations, other than providing investment advice. As
compensation for its services under the Administration Agreement, Investor
Services is entitled to receive a fee at the annual rate of _____% of average
daily net assets.
TRANSFER AGENT
The Trust, on behalf of the Fund, has also contracted with Investor
Services Group, to act as transfer and dividend disbursing agent for the Trust.
Pursuant to the transfer agency agreement (the "Transfer Agency Agreement")
Investor Services Group: (i) issues and redeems Shares of the Fund; (ii)
addresses and mails all communications by the Fund to its record owners,
including reports to shareholders, dividend and distribution notices and proxy
materials for its meetings of shareholders; (iii) maintains shareholder
accounts; (iv) responds to correspondence by shareholders of the Fund; and (v)
makes periodic reports to the Board of Trustees concerning the operations of the
Trust.
CUSTODIAN
____________________ (the "Custodian") is the custodian of the Fund's
assets. The Custodian's responsibilities include safekeeping and controlling the
Fund's cash and securities, handling the receipt and delivery of securities, and
collecting interest and dividends on each Fund's investments. The Custodian does
not determine the investment policies of the Fund or decide which securities the
Fund will buy or sell. The Fund may, however, invest in securities, including
repurchase agreements, issued by the Custodian and may deal with the Custodian
as a principal in securities transactions. Portfolio securities may be deposited
into the Federal Reserve-Treasury Department Book Entry System or the Depository
Trust Company.
DISTRIBUTOR
FDDI, a subsidiary of Investor Services Group, serves as the distributor
for the Trust pursuant to a distribution agreement which is renewable annually.
Investment Class Shares and Institutional Class Shares are sold on a continuous
basis by FDDI as agent, although FDDI is not obligated to sell any particular
amount of shares. FDDI's principal offices are located at 4400 Computer Drive,
Westborough, Massachusetts.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, located at 225 Franklin Street, Boston, Massachusetts
02110-2812, is the Trust's independent public accountant, providing audit
services, tax return review, and assistance and consultation with respect to the
preparation of filings with the SEC.
PURCHASE OF FUND SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Purchase Fund
Shares."
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TRANSACTIONS THROUGH SECURITIES DEALERS. Fund shares may be purchased and
redeemed through securities dealers which may charge a nominal transaction fee
for such services. Some dealers will place the Fund's shares in an account with
their firm. Dealers also may require that the customer invest more than the
minimum investment, that the customer not request redemption checks to be issued
in the customer's name, fractional shares not be purchased, or other conditions.
There is no sales or service charge to individual investors by the Fund or
by FDDI, although investment dealers, banks and other institutions may make
reasonable charges to investors for their services. The services provided and
the applicable fees are established by each dealer or other institution acting
independently of the Fund. The Fund has been given to understand that these fees
may be charged for customer services including, but not limited to, same-day
investment of client funds; same-day access to client funds; advice to customers
about the status of their accounts, yield currently being paid or income earned
to date; provision of periodic account statements showing security and money
market positions; other services available from the dealer, bank or other
institution; and assistance with inquiries related to their investment. Any such
fees will be deducted from the investor's account monthly and on smaller
accounts could constitute a substantial portion of the distribution. Small,
inactive, long-term accounts involving monthly service charges may not be in the
best interest of investors. Investors should be aware that they may purchase
shares of the Fund directly from the Fund through FDDI without imposition of any
maintenance or service charges, other than those already described herein. In
some states, banks or other financial institutions effecting transactions in
Fund shares may be required to register as dealers pursuant to state law.
RETIREMENT PLANS. Shares of the Fund may be purchased in connection with
various types of tax deferred retirement plan, including individual retirement
accounts ("IRAs"), qualified plans, deferred compensation for public schools and
charitable organizations (403(b) plans) and simplified employee pension IRAs. An
individual or organization considering the establishment of a retirement plan
should consult with an attorney and/or accountant with respect to the terms and
tax aspects of the plan.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Redeem Fund Shares."
WIRE REDEMPTION PRIVILEGE. By using this Privilege, the investor authorizes
Investor Services Group (the "Transfer Agent") to act on wire or telephone
redemption instructions from any person representing himself or herself to be
the investor, and reasonably believed by the Transfer Agent to be genuine.
Ordinarily, the Fund will initiate payment for shares redeemed pursuant to this
Privilege on the next business day after receipt if the Transfer Agent receives
the redemption request in proper form. Redemption proceeds ($1,000 minimum) will
be transferred by Federal Reserve wire only to the commercial bank account
specified by the investor on the Account Application or Shareholder Services
Form, or to a correspondent bank if the investor's bank is not a member of the
Federal Reserve System. The Transfer Agent will deduct a wire redemption fee of
$____________ from the principal in the investor's account. Immediate
notification by the correspondent bank to the investor's bank is necessary to
avoid a delay in crediting the funds to the investor's bank account.
SIGNATURES. Written redemption requests must be signed by each shareholder,
including each holder of a joint account. You must provide a signature guarantee
if: (1) you are redeeming shares worth more than $50,000, (2) you are requesting
that the proceeds check be made out to someone other than the registered owners
or be sent to an address other than the record address, (3) the account
registration has changed within the last 30 days or (4) you are instructing us
to wire the proceeds to a bank account not designated on the application. The
Transfer Agent has adopted standards
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and procedures pursuant to which signature guarantees in proper form generally
will be accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies and
savings associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer Agents Medallion
Program and the Stock Exchanges Medallion Program. Guarantees must be signed by
an authorized signatory of the guarantor and "Signature Guaranteed" must appear
with the signature. The Transfer Agent may request additional documentation from
corporations, executors, administrators, trustees or guardians, and may accept
other suitable verification arrangements from foreign investors, such as
consular verification. For more information with respect to signature
guarantees, please call the telephone number listed on the cover.
REDEMPTION COMMITMENT. Under ordinary circumstances, the Fund intends to
pay all redemption requests in cash. However, the Fund has committed itself to
pay in cash all redemption requests by any shareholder of record, limited in
amount during any 90-day period to the lesser of $250,000 or 1% of the value of
the Fund's net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the SEC. In the case of requests for
redemption in excess of such amount, the Board of Trustees reserve the right to
make payments in whole or in part in securities or other assets in case of an
emergency or any time a cash distribution would impair the liquidity of the Fund
to the detriment of the existing shareholders. In such event, the securities
would be readily marketable, to the extent available, and would be valued in the
same manner as the Fund's investment securities are valued. If the recipient
sold such securities, brokerage charges would be incurred.
SUSPENSION OF REDEMPTIONS. The right of redemption may be suspended or the
date of payment postponed (a) during any period when the New York Stock Exchange
is closed (other than customary weekend and holiday closings), (b) when trading
in the markets the Fund ordinarily utilizes is restricted, or when an emergency
exists as determined by the SEC so that disposal of the Fund's investments or
determination of its net asset value is not reasonably practicable, or (c) for
such other periods as the SEC by order may permit to protect the Fund's
shareholders.
PORTFOLIO TRANSACTIONS
As of the date of this Statement of Additional Information, the Advisor
does not currently have any clients other than the Fund, but anticipates
privately managing investment portfolios for individuals, partnerships,
corporations, and other institutional investors.
All orders for the purchase or sale of portfolio securities are placed on
behalf of the Fund by ICM pursuant to authority contained in the Fund's Advisory
Agreement. In selecting brokers or dealers, ICM will consider various relevant
factors, including, but not limited to, the size and type of the transaction;
the nature and character of the markets for the security to be purchased or
sold; the execution efficiency, settlement capability, and financial condition
of the dealer; the dealer's execution services rendered on a continuing basis;
and the reasonableness of any dealer spreads.
In those instances where it is reasonably determined that more than one
broker-dealer can offer the most favorable price and execution available, ICM
may select broker-dealers which provide brokerage and/or research services to
the Fund. The research received from broker-dealers may be useful to ICM in
rendering investment management services to the Trust, although not all such
research may be useful to the Fund. The receipt of such research has not reduced
ICM's normal independent research activities; however, it enables ICM to avoid
the additional expenses which might otherwise be incurred if it were to attempt
to develop comparable information through its own staff. If ICM determines in
good faith that the amount of commissions charged by a broker-dealer is
reasonable in relation to the value of the brokerage and research services
provided by such broker, the Fund may pay a higher commission to such
broker-dealer than would be the case if no weight were given to the furnishing
of these supplemental services. Such supplemental services may include advice
concerning the value of securities; the
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advisability of investing in, purchasing or selling securities, the availability
of securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors and
trends, portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance and
settlement). ICM maintains a listing of broker-dealers who provide such services
on a regular basis. However, because it is anticipated that many transactions on
behalf of the Fund are placed with broker-dealers (including broker-dealers on
the listing) without regard to the furnishing of such services, it is not
possible to estimate the proportion of such transactions directed to such
dealers solely because such services were provided.
Portfolio transactions may be placed with broker-dealers who sell shares of
the Fund subject to rules adopted by the National Association of Securities
Dealers. This policy does not imply a commitment to execute all portfolio
transactions through all broker-dealers that sell shares of the Fund.
The Trustees periodically review ICM's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
Trust.
Investment decisions for the Fund are made independently from those of
other client accounts which may be managed by the Adviser. It is possible that
at times identical securities will be held by more than one fund and/or account.
However, positions in the same issue may vary and the length of time that any
fund or account may choose to hold its investment in the same issue may likewise
vary. To the extent that the Fund or a private account managed by ICM may not be
able to acquire as large a position in such security as it desires, it may have
to pay a higher price for the security. Similarly, a Fund may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if ICM decides to sell on behalf of another
account the same portfolio security at the same time. On the other hand, if the
same securities are bought or sold at the same time by more than one Fund or
account, the resulting participation in volume transactions could produce better
executions for the Fund or the account. In the event more than one account
purchases or sells the same security on a given date, each day's transactions in
such security will be allocated between the Fund and all such client accounts in
a manner deemed equitable by the Advisor, taking into account the respective
sizes of the accounts and the amount being purchased or sold.
TAXES
It is the Fund's policy to meet the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), for qualification as a
regulated investment company. These requirements relate to the sources of the
Fund's income, the diversification of its assets and the distribution of its
income to shareholders. If the Fund meets all such requirements and distributes
to its shareholders, in accordance with the Code's timing requirements, all
investment company taxable income and net capital gain, if any, which it earns,
the Fund will be relieved of the necessity of paying federal income tax.
In order to qualify as a regulated investment company under Subchapter M,
the Fund must, among other things, derive at least 90% of its annual gross
income from dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of stock, securities or foreign
currencies, or other income (including gains from options, futures and forward
contracts) derived with respect to its business of investing in such stock,
securities or currencies (the "90% income test"); and satisfy certain annual
distribution and quarterly diversification requirements. Tax diversification may
limit the Fund's investment composition so that at least 50% of the Fund's total
assets consist of cash and cash items, U.S. Government securities, securities of
other regulated investment companies, and other securities. Other securities are
limited with respect to any one issuer to an amount that does not exceed 5% of
the value of the Fund's total assets and 10% of the issuer's outstanding voting
securities; and, in addition, no more than 25% of the value on the Fund's total
assets can be invested in a single issuer (other than U.S. Government securities
or securities of other RICs). Changes to the Federal tax law repealed the 30%
limit on gains from securities held for less than 3
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months (the 30% test") for tax years beginning after August 5, 1997. The Fund
may however, continue to observe the restriction until such time as certain
state taxing authorities adopt the new federal provisions.
Dividends from investment company taxable income, which includes net
investment income, net short-term capital gain in excess of net long-term
capital loss, and certain net foreign exchange gains, are taxable as ordinary
income, whether received in cash or reinvested in additional shares. Dividends
from net long-term capital gain in excess of net short-term capital loss, if
any, whether received in cash or reinvested in additional shares, are taxable to
a Fund's shareholders as long-term capital gains for federal income tax purposes
without regard to the length of time shares of the Fund have been held. Recently
enacted federal legislation provides for additional categories of net capital
gain to be reported to shareholders each year beginning in 1997. Shareholders
who receive annual 1099-DIV information from the Fund will also be provided with
information with respect to the amount of 28% and 20% capital gain that is
included in the capital gain divided paid to shareholders during the year. The
federal income tax status of all distributions will be reported to shareholders
annually.
A 4% excise tax will be imposed on the excess, if any, of the Fund's
"required distribution" over the amount distributed within the calendar year.
The "required distribution" is defined generally as 98% of the Fund's ordinary
income earned during the calendar year; and 98% of capital gain net income for
the one year period ending October 31 (or December 31 if any election is made).
The required distribution also includes 100% of any undistributed amount from
prior years. The Fund generally expects to make distributions sufficient to
avoid the imposition of an excise tax. Any dividend declared by a Fund in
October, November or December as of a record date in such a month and paid
during the following January will be treated for federal income tax purposes as
received by shareholders on December 31 of the calendar year in which it is
declared.
Foreign exchange gains and losses realized by the Fund in connection with
certain transactions involving foreign currency-denominated debt securities,
certain options and futures contracts relating to foreign currency, foreign
currency forward contracts, foreign currencies, or payables or receivables
denominated in a foreign currency are subject to Section 988 of the Code, which
generally causes such gains and losses to be treated as ordinary income and
losses and may affect the amount, timing and character of distributions to
shareholders. Any such transactions that are not directly related to the Fund's
investments in stock or securities certain tax qualification requirements may
need to be limited in order to enable the Fund to satisfy. If the net foreign
exchange loss for a year were to exceed the Fund's investment company taxable
income (computed without regard to such loss), the resulting ordinary loss for
such year would not be deductible by the Fund or its shareholders in future
years.
If the Fund acquires any equity interest (under proposed regulations,
generally including not only stock but also an option to acquire stock) in
certain foreign corporations that receive at least 75% of their annual gross
income from passive sources (such as interest, dividends, rents, royalties or
capital gain) or hold at least 50% of their assets in investments producing such
passive income ("passive foreign investment companies"), the Fund could be
subject to federal income tax and additional interest charges on "excess
distributions" received from such companies or gain from the sale of stock in
such companies, even if all income or gain actually received by the Fund is
timely distributed to its shareholders. The Fund would not be able to pass
through to its shareholders any credit or deduction for such a tax. Certain
elections may, if available, ameliorate these adverse tax consequences, but any
such election would require the electing Fund to recognize taxable income or
gain without the concurrent receipt of cash. The Fund may limit and/or manage
its holdings in passive foreign investment companies to minimize its tax
liability or maximize its return from these investments.
If the Fund invests in certain pay-in-kind securities ("PIKs"), zero coupon
securities, deferred interest securities or, in general, any other securities
with original issue discount (or with market discount if the Fund elects to
include market discount in income currently), the Fund must accrue income on
such investments for each taxable year, which generally will be prior to the
receipt of the corresponding cash payments. However, the Fund must distribute,
at least
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annually, all or substantially all of its net income, including such accrued
income, to shareholders to qualify as a regulated investment company under the
Code and avoid to federal income and excise taxes. Therefore, the Fund may have
to dispose of its portfolio securities under disadvantageous circumstances to
generate cash, or may have to leverage itself by borrowing the cash, to satisfy
distribution requirements.
For federal income tax purposes, the Fund is permitted to carry forward a
net capital loss for any year to offset its own capital gains, if any, during
the eight years following the year of the loss. To the extent subsequent capital
gains are offset by such losses, they would not result in federal income tax
liability to the Fund and therefore are not expected to be distributed as such
to shareholders.
At the time of an investor's purchase of Fund shares, a portion of the
purchase price may be attributable to realized or unrealized appreciation in the
Fund's portfolio or undistributed taxable income of the Fund. Consequently,
subsequent distributions on these shares from such appreciation or income may be
taxable to such investor even if the net asset value of the investor's shares
is, as a result of the distributions, reduced below the investor's cost for such
shares and the distributions economically represent a return of a portion of the
investment.
Redemptions and exchanges are taxable events. Any loss realized by a
shareholder upon the redemption, exchange or other disposition of shares with a
tax holding period of six months or less will be treated as a long-term capital
loss to the extent of any amounts treated as distributions of long-term capital
gain with respect to such shares.
Options written or purchased and futures contracts entered into by the Fund
on certain securities, indices and foreign currencies, as well as certain
foreign currency forward contracts, may cause the Fund to recognize gains or
losses from marking-to-market at the end of its taxable year even though such
options may not have lapsed, been closed out, or exercised or such futures or
forward contracts may not have been performed or closed out. The tax rules
applicable to these contracts may affect the characterization as long-term or
short-term of some capital gains and losses realized by a Fund. Certain options,
futures and forward contracts relating to foreign currency may be subject to
Section 988, as described above, and may accordingly produce ordinary income or
loss. Losses on certain options, futures or forward contracts and/or offsetting
positions (portfolio securities or other positions with respect to which the
Fund's risk of loss is substantially diminished by one or more options, futures
or forward contracts) may also be deferred under the tax straddle rules of the
Code, which may also affect the characterization of capital gains or losses from
straddle positions and certain successor positions as long-term or short-term.
Certain tax elections may be available that would enable a Fund to ameliorate
some adverse effects of the tax rules described in this paragraph. The tax rules
applicable to options, futures or forward contracts and straddles may affect the
amount, timing and character of the Fund's income and losses and hence of its
distributions to shareholders.
For purposes of the 70% dividends-received deduction generally available to
corporations under the Code, dividends received by the Fund from U.S. domestic
corporations in respect of any share of stock with a tax holding period of at
least 46 days (91 days in the case of certain preferred stock) held in an
unleveraged position and distributed and designated by the Fund may be treated
as qualifying dividends. Any corporate shareholder should consult its tax
advisor regarding the possibility that its tax basis in its shares may be
reduced, for federal income tax purposes, by reason of "extraordinary dividends"
received with respect to the shares. In order to qualify for the deduction,
corporate shareholders must meet the minimum holding period requirement stated
above with respect to their Fund shares, taking into account any holding period
reductions from certain hedging or other transactions or positions that diminish
their risk of loss with respect to their Fund shares, and, if they borrow to
acquire Fund shares, they may be denied a portion of the dividends-received
deduction. The entire qualifying dividend, including the otherwise deductible
amount, will be included in determining the excess (if any) of a corporation's
adjusted current earnings over its alternative minimum taxable income, which may
increase a corporation's alternative minimum tax liability.
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The Fund may be subject to withholding and other taxes imposed by foreign
countries, including taxes on interest, dividends and capital gains, with
respect to its investments, if any, in those countries. Tax conventions between
certain countries and the U.S. may reduce or eliminate such taxes in some cases.
The Fund does not expect to satisfy the requirements for passing through to its
shareholders their pro rata shares of qualified foreign taxes paid by the Fund,
with the result that shareholders will not include such taxes in their gross
incomes and will not be entitled to a tax deduction or credit for such taxes on
their own tax returns.
Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions, and certain prohibited transactions, is accorded to accounts
maintained as qualified retirement plans. Shareholders should consult their tax
advisers for more information.
Federal law requires that each Fund withhold (as "backup withholding") 31%
of reportable payments, including dividends, capital gain dividends and the
proceeds of redemptions (including exchanges) and repurchases to shareholders
who have not complied with IRS regulations. In order to avoid this withholding
requirement, shareholders must certify on their Account Applications, or on
separate IRS Forms W-9, that the Social Security Number or other Taxpayer
Identification Number they provide is their correct number and that they are not
currently subject to backup withholding, or that they are exempt from backup
withholding. A Fund may nevertheless be required to withhold if it receives
notice from the IRS or a broker that the number provided is incorrect or backup
withholding is applicable as a result of previous under reporting of interest or
dividend income.
If, as anticipated, the Fund qualifies as a regulated investment company
under the Code, it will not be required to pay any Massachusetts income,
corporate excise or franchise taxes.
The description of certain federal tax provisions above relates only to
U.S. federal income tax consequences for shareholders who are U.S. persons, i.e.
U.S. citizens or residents or U.S. corporations, partnerships, trusts or
estates, and who are subject to U.S. federal income tax. This description does
not address the special tax rules that may be applicable to particular types of
investors, such as financial institutions, insurance companies, securities
dealers, or tax-exempt or tax-deferred plans, accounts or entities. Investors
other than U.S. persons may be subject to different U.S. tax treatment,
including a possible 30% non-resident alien U.S. withholding tax (or
non-resident alien withholding tax at a lower treaty rate) on amounts treated as
ordinary dividends from a Fund and, unless an effective IRS Form W-8 or
authorized substitute for Form W-8 is on file, to 31% backup withholding on
certain other payments from such Fund. Shareholders should consult their own tax
advisers on these matters and on state, local and other applicable tax laws.
DESCRIPTION OF SHARES
The Trust's Declaration of Trust permits the Board of Trustees to authorize
the issuance of an unlimited number of full and fractional shares of beneficial
interest which may be divided into such separate series as the Trustees may
establish. Currently, the Trust consists of only one series. The Trustees may,
however, establish additional series of shares, and may divide or combine the
shares into a greater or lesser number of shares without thereby changing the
proportionate beneficial interests in the Trust. The Declaration of Trust
further authorizes the Trustees to classify or reclassify any series of the
shares into one or more classes. Pursuant thereto, the Trustees have authorized
the issuance of two classes of shares of the Fund designated as, Investment
Class Shares and Institutional Class Shares. Each share of a class of the Fund
represents an equal proportionate interest in the assets of the Fund allocable
to that class. Upon liquidation of the Trust, shareholders of each class of a
Fund are entitled to share pro rata in the Fund's net assets allocable to such
class available for distribution to shareholders. The Trust reserves the right
to create and issue additional series or classes of shares, in which case the
shares of each class of a series would participate equally in the earnings,
dividends and assets allocable to that class of the particular series.
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Rule 18f-2 under the Act provides that any matter required to be submitted
by the provisions of the Act or applicable state law, or otherwise, to the
holders of the outstanding voting securities of an investment company such as
the Trust shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each class or
series affected by such matter. Rule 18f-2 further provides that a class or
series shall be deemed to be affected by a matter unless the interests of each
class or series in the matter are substantially identical or the matter does not
affect any interest of such class or series. However, Rule 18f-2 exempts the
selection of independent public accountants, the approval of principal
distribution contracts and the election of trustees from the separate voting
requirements of Rule 18f-2.
The Trust is not required to hold annual meetings of shareholders and does
not intend to hold such meetings. In the event that a meeting of shareholders is
held, each share of the Trust will be entitled, as determined by the Trustees,
either to one vote for each share or to one vote for each dollar of net asset
value represented by such shares on all matters presented to shareholders
including the elections of Trustees (this method of voting being referred to as
"dollar based voting"). However, to the extent required by the Act or otherwise
determined by the Trustees, series and classes of the Trust will vote separately
from each other. Shareholders of the Trust do not have cumulative voting rights
in the election of Trustees. Meetings of shareholders of the Trust, or any
series or class thereof, may be called by the Trustees, certain officers or upon
the written request of holders of 10% or more of the shares entitled to vote at
such meetings. The shareholders of the Trust will have voting rights only with
respect to the limited number of matters specified in the Declaration of Trust
and such other matters as the Trustees may determine or may be required by law.
The Declaration of Trust provides for indemnification of Trustees and
officers of the Trust unless the recipient is adjudicated (i) to be liable by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such person's office or (ii) not to
have acted in good faith in the reasonable belief that such person's actions
were in the best interest of the Trust. The Declaration of Trust provides that,
if any shareholder or former shareholder of any series is held personally liable
solely by reason of being or having been a shareholder and not because of the
shareholder's acts or omissions or for some other reason, the shareholder or
former shareholder (or heirs, executors, administrators, legal representatives
or general successors) shall be held harmless from and indemnified against all
loss and expense arising from such liability.
The Declaration of Trust permits the termination of the Trust or of any
series or class of the Trust (i) by a majority of the affected shareholders at a
meeting of shareholders of the Trust, series or class; or (ii) by a majority of
the Trustees without shareholder approval if the Trustees determine that such
action is in the best interest of the Trust or its shareholders.
The Declaration of Trust authorizes the Trustees, with shareholder
approval to cause the Trust, or any series thereof, to merge or consolidate with
any corporation, association, trust or other organization or sell or exchange
all or substantially all of the property belonging to the Trust or any series
thereof. In addition, the Trustees, without shareholder approval, may adopt a
master-feeder structure by investing all or a portion of the assets of a series
of the Trust in the securities of another open-end investment company.
The Declaration of Trust permits the Trustees to amend the Declaration of
Trust without a shareholder vote. However, shareholders of the Trust have the
right to vote on any amendment (i) that would affect the voting rights of
shareholders; (ii) that is required by law to be approved by shareholders; (iii)
that would amend the voting provisions of the Declaration of Trust; or (iv) that
the Trustees determine to submit to shareholders.
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SHAREHOLDER AND TRUSTEE LIABILITY
As a Massachusetts business trust, the Trust's operations are governed by
its Declaration of Trust dated November 18, 1997, a copy of which is on file
with the office of the Secretary of State of The Commonwealth of Massachusetts.
Theoretically, shareholders of a Massachusetts business trust may, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Declaration of Trust contains an express disclaimer of shareholder
liability for acts or obligations of the Trust or any series of the Trust and
provides that notice of such disclaimer may be given in each agreement,
obligation or instrument entered into or executed by the Trust or its Trustees.
Moreover, the Declaration of Trust provides for the indemnification out of Trust
property of any shareholders held personally liable for any obligations of the
Trust or any series of the Trust. The Declaration of Trust also provides that
the Trust shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Trust and satisfy any judgment
thereon. Thus, the risk of a shareholder incurring financial loss beyond his or
her investment because of shareholder liability would be limited to
circumstances in which the Trust itself will be unable to meet its obligations.
In light of the nature of the Trust's business and the nature and amount of its
assets, the possibility of the Trust's liabilities exceeding its assets, and
therefore a shareholder's risk of personal liability, is remote.
The Declaration of Trust further provides that the Trust shall indemnify
each of its Trustees and officers against liabilities and expenses reasonably
incurred by them, in connection with, or arising out of, any action, suit or
proceeding, threatened against or otherwise involving such Trustee or officer,
directly or indirectly, by reason of being or having been a Trustee or officer
of the Trust. The Declaration of Trust does not authorize the Trust to indemnify
any Trustee or officer against any liability to which he or she would otherwise
be subject by reason of or for willful misfeasance, bad faith, gross negligence
or reckless disregard of such person's duties.
DETERMINATION OF NET ASSET VALUE
Shares of the Fund are sold on a continuous basis at the net asset value
per share next determined after an order in proper form is received by the
Transfer Agent. Net asset value per share of each Class of Shares of the Fund is
determined by dividing the value of its assets, less liabilities attributable to
that Class, by the number of shares of that Class outstanding. The net asset
value is computed once daily, on each day the New York Exchange is open, as of
the close of regular trading on the New York Exchange.
In the calculation of the Fund's net asset value: (1) an equity portfolio
security listed or traded on the New York or American Stock Exchange or other
stock exchange or quoted by NASDAQ is valued at its latest sale price on that
exchange or quotation service prior to the time assets are valued; if there were
no sales that day and for securities traded on the other over-the-counter
markets, the security is valued at the mean between the most recently quoted bid
and asked prices; (2) when market quotations are not readily available,
including circumstances under which it is determined by the Advisor that sale or
bid prices are not reflective of a security's market value, portfolio securities
are valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Fund's Trustees; (3) the
value of short-term debt securities which mature at a date less than sixty days
subsequent to valuation date will be determined on an amortized cost basis; and
(4) the value of other assets will be determined in good faith at fair value
under procedures established by and under the general supervision of the Fund's
Trustees. Dividends receivable are accrued as of the ex-dividend date. Interest
income is accrued daily.
The Funds do not accept purchase and redemption orders on days the New York
Stock Exchange is closed. The New York Stock Exchange is currently scheduled to
be closed on New Year's Day, Martin Luther King Day, Presidents' Day, Good
Friday, Memorial Day (observed), Independence Day, Labor Day, Thanksgiving and
Christmas, and on the preceding Friday or subsequent Monday when one of these
holidays falls on a Saturday or Sunday, respectively.
21
<PAGE> 40
INVESTMENT RESULTS
QUOTATIONS, COMPARISONS, AND GENERAL INFORMATION From time to time, in
advertisements, in sales literature, or in reports to shareholders, the past
performance of the Fund may be illustrated and/or compared with that of other
mutual funds with similar investment objectives, and to stock or other relevant
indices. For example, total return of the Fund's classes may be compared to
rankings prepared by Lipper Analytical Services, Inc., a widely recognized
independent service which monitors mutual fund performance; the Standard &
Poor's 500 Stock Index ("S&P 500"), an index of unmanaged groups of common
stock; the Dow Jones Industrial Average, a recognized unmanaged index of common
stocks of 30 industrial companies listed on the New York Stock Exchange; or The
Frank Russell Indexes ("Russell 1000," "2000," "2500," "3000,") or the Wilshire
Total Market Value Index ("Wilshire 5000"), two recognized unmanaged indexes of
broad based common stocks.
Performance rankings and listings reported in newspapers or national
business and financial publications, such as Barron's, Business Week, Consumers
Digest, Consumer Reports, Financial World, Forbes, Fortune, Investors Business
Daily, Kiplinger's Personal Finance Magazine, Money Magazine, New York Times,
Smart Money, USA Today, U.S. News and World Report, The Wall Street Journal, and
Worth may also be cited (if a Fund is listed in any such publication) or used
for comparison, as well as performance listings and rankings from various other
sources including Bloomberg Financial Markets, CDA/Wiesenberger, Donoghue's
Mutual Fund Almanac, Investment Company Data, Inc., Johnson's Charts, Kanon
Bloch Carre and Co., Lipper Analytical Services, Inc., Micropal, Inc.,
Morningstar, Inc., Schabacker Investment Management and Towers Data Systems,
Inc.
In addition, from time to time quotations from articles from financial
publications such as those listed above may be used in advertisements in sales
literature, or in reports to shareholders of the Fund.
The Fund may also present, from time to time, historical information
depicting the value of a hypothetical account in one or more classes of a Fund
since the Fund's inception.
In presenting investment results, the Fund may also include references to
certain financial planning concepts, including (a) the need to evaluate
financial assets and obligations to determine how much to invest; (b) the need
to analyze the objectives of various investments to determine where to invest;
and (c) the need to analyze the time frame for future capital needs to determine
how long to invest. The investor controls these three factors, all of which
affect the use of investments in building assets.
One of the primary methods used to measure the performance of a class of
the Fund is "total return." "Total return" will normally represent the
percentage change in value of an account, or of a hypothetical investment in a
class of the Fund, over any period up to the lifetime of that class of the Fund.
Total return calculations will usually assume the reinvestment of all dividends
and capital gains distributions and will be expressed as a percentage increase
or decrease from an initial value, for the entire period or for one or more
specified periods within the entire period. Total return percentages for periods
of less than one year will usually be annualized; total return percentages for
periods longer than one year will usually be accompanied by total return
percentages for each year within the period and/or by the average annual
compounded total return for the period. The income and capital components of a
given return may be separated and portrayed in a variety of ways in order to
illustrate their relative significance. Performance may also be portrayed in
terms of cash or investment values, without percentages. Past performance cannot
guarantee any particular future result.
22
<PAGE> 41
The Fund's average annual total return quotations for each of its classes
as that information may appear in the Fund's Prospectus, this Statement of
Additional Information or in advertising are calculated by standard methods
prescribed by the Securities and Exchange Commission.
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN QUOTATIONS Average annual total
return quotations for a class of shares are computed by finding the average
annual compounded rates of return that would cause a hypothetical investment in
that class made on the first day of a designated period (assuming all dividends
and distributions are reinvested) to equal the ending redeemable value of such
hypothetical investment on the last day of the designated period in accordance
with the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000,
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1000 initial payment
made at the beginning of the designated period (or fractional portion
thereof)
For purposes of the above computation, it is assumed that all dividends and
distributions made by the Fund are reinvested at net asset value during the
designated period. The average annual total return quotation is determined to
the nearest 1/100 of 1%.
In determining the average annual total return (calculated as provided
above), recurring fees, if any, that are charged to all shareholder accounts of
a particular class are taken into consideration. For any account fees that vary
with the size of the account, the account fee used for purposes of the above
computation is assumed to be the fee that would be charged to a class's mean
account size.
REGISTRATION STATEMENT
This Statement of Additional Information and the Trust's Prospectus do not
contain all the information included in the Trust's registration statement filed
with the SEC under the 1933 Act with respect to the securities offered hereby,
certain portions of which have been omitted pursuant to the rules and
regulations of the SEC. The registration statement, including exhibits filed
therewith, may be examined at the offices of the SEC in Washington, D.C.
Statements contained herein and in the Prospectus as to the contents of any
contract or other documents referred to are not necessarily complete, and, in
such instance, reference is made to the copy of such contract or other documents
filed as an exhibit to the Trust's registration statement, each such statement
being qualified in all respects by such reference.
23
<PAGE> 42
APPENDIX A
MOODY'S INVESTORS SERVICE, INC.
Aaa: Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other market
shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Unrated: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
24
<PAGE> 43
2. The issue or issuer belongs to a group of securities that are not rated as
a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately based, in which case the rating is not published in
Moody's Investors Service, Inc.'s publications.
Suspension or withdrawal may occur if new and material circumstances arise,
the effects of which preclude satisfactory analysis; if there is no longer
available reasonable up-to-date data to permit a judgment to be formed; if a
bond is called for redemption; or for other reasons.
Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's believe
possess the strongest investment attributes are designated by the symbols Aa-1,
A-1, Baa-1, and B-1.
STANDARD & POOR'S RATINGS SERVICE
AAA: Bonds rated AAA have the highest rating assigned by Standard & Poor's
Ratings Service ("S&P"). Capacity to pay interest and repay principal is
extremely strong.
AA: Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.
A: Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in the highest rated
categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. While they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than in higher rated categories.
BB, B, CCC, CC, C: Bonds rated BB, B, CCC, CC and C are regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of this obligation. BB
indicates the lowest degree of speculation and C the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, they are outweighed by large uncertainties of major risk
exposures to adverse conditions.
C1: The rating C1 is reserved for income bonds on which no interest is
being paid.
D: Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a particular
type of obligation as a matter of policy.
25
<PAGE> 44
PART C. -- OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements
Report of Independent Certified Public Accountants*
Statement of Assets and Liabilities*
(b) Exhibits:
(1) Declaration of Trust is filed herein
(2) By-Laws are filed herein
(3) Not Applicable
(4) Not Applicable
(5) Form of Investment Advisory Agreement*
(6) Form of Distribution Agreement*
(7) Not Applicable
(8) (a) Form of Custody Agreement*
(b) Form of Subcustodian Agreement*
(9) (a) Form of Transfer Agency and Registrar Agreement*
(b) Form of Administration Agreement*
(10) Opinion and Consent of Counsel*
(11) Consent of Independent Public Accountants*
(12) Not Applicable
(13) Initial Capital Agreement*
(14) Not Applicable
(15) Distribution Plan for Investment Class Shares*
(16) Schedule for Computation of Performance Quotations*
(17) Not Applicable
(18) Multi-Class Plan*
- ------------------------------
* To be filed by amendment
<PAGE> 45
Item 25. Persons Controlled by or Under Common Control with Registrant.
None.
Item 26. Number of Holders of Securities.
As of ________________, 1997, the number of shareholders of record of each
Class of Shares of each Series of the Registrant was as follows:
Investment Class Institutional Class
---------------- -------------------
ICM/Isabelle Small-Cap Value Fund None None
Item 27. Indemnification
Reference is made to Article V of Registrant's Declaration of Trust filed
as an exhibit to this Registration Statement.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act"), may be permitted to Trustees, Officers and
controlling persons of the Registrant by the Registrant pursuant to the Trust's
Declaration of Trust, its By-Laws 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 indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by Trustees,
officers of controlling persons of the Registrant in connection with the
successful defense of any act, suit or proceeding) is asserted by such Trustees,
officers or controlling persons in connection with 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 Advisor.
IronWood Capital Management
---------------------------
Position
Name With Advisor
---- ------------
Warren J. Isabelle, CFA President, Chief Investment Officer and Manager
Richard L. Droster Vice President and Director of Marketing
Gary S. Saks Vice President of Compliance
For more information relating to the Investment Advisor's officers, reference is
made to Form ADV filed under the Investment Advisers Act of 1940 by IronWood
Capital Management, LLC SEC File No. _____________.
Item 29. Principal Underwriters.
(a) First Data Distributors, Inc. ("FDDI") serves as Distributor of
shares of the Registrant. FDDI also serves as principal underwriter to the
following investment companies other than the Registrant:
-- BT Insurance Funds Trust -- Galaxy Fund II
-- CT&T Funds -- First Choice Funds Trust
<PAGE> 46
-- Panorama Trust -- LKCM Funds
-- The Galaxy Fund -- Potomac Funds
-- The Galaxy VIP Fund
FDDI is registered with the Securities and Exchange Commission ("SEC") as a
broker-dealer and is a member of the National Association of Securities Dealers.
FDDI, a wholly owned subsidiary of First Data Investor Services Group, Inc. is
located at 4400 Computer Drive, Westborough, Massachusetts 01581.
(b) The information required by this Item 29(b) with respect to each
director, officer or partner of FDDI is incorporated by reference to Schedule A
of Form BD filed by FDDI with the SEC pursuant to the Securities Act of 1934
(File No. 8-45467). No director, officer or partner of FDDI holds a position or
office with the Registrant.
(c) Not Applicable
Item 30. Location of Accounts and Records.
The Account books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the Rules thereunder will be maintained at the offices of:
(1) IronWood Capital Management, LLC One Financial Center, Boston,
Massachusetts ( records relating to its function as investment
adviser)
(2) First Data Investor Services Group, Inc. 53 State Street,
Exchange Place, Boston, Massachusetts or 4400 Computer Drive,
Westborough, Massachusetts 01581 (records relating to its
functions as Administrator and Transfer Agent)
(3) First Data Distributors, Inc., 4400 Computer Drive, Westborough,
Massachusetts 01581 (records relating to its function as
distributor)
(4) _____________________________________________________ (records
relating to its function as custodian)
Item 31. Management Services.
Not Applicable
Item 32. Undertakings.
(a) Not Applicable
(b) Registrant undertakes to file a post-effective amendment to the
Registration Statement on Form N-1A, using reasonably current
financial statements which need not be certified, within four to
six months from the effective date of this Registration
Statement.
(c) Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest annual
report to shareholders upon request and without charge.
(d) Registrant undertakes to call a meeting of Shareholders for the
purpose of voting upon the question of removal of a Trustee or
Trustees when requested to do so by the holders of at least 10%
of the Registrant's outstanding Shares of beneficial interest and
in connection with such meeting to comply with the shareholders
communications provisions of Section 16(c) of the Investment
Company Act of 1940.
<PAGE> 47
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Boston and the Commonwealth of Massachusetts on
this 21st day of November, 1997.
ICM SERIES TRUST
By: /s/ Warren J. Isabelle
-----------------------------
Warren J. Isabelle, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form N-1A has been signed below by the following
persons in the capacities and on the date indicated:
Signatures Title Date
---------- ----- ----
/s/ Warren J. Isabelle President and Trustee November 21, 1997
- -------------------------
Warren J. Isabelle
/s/ Richard L. Droster Treasurer and Trustee November 21, 1997
- -------------------------
Richard L. Droster
/s/ Joseph F. Mazzella Trustee November 21, 1997
- -------------------------
Joseph F. Mazzella
<PAGE> 48
EXHIBIT INDEX
Exhibit Description
- ------- -----------
1. Declaration of Trust
2. By-Laws
<PAGE> 1
EXHIBIT 1
DECLARATION OF TRUST
<PAGE> 2
ICM SERIES TRUST
DECLARATION OF TRUST
Dated: November 18, 1997
<PAGE> 3
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
ARTICLE I Name and Definitions...............................................................1
Section 1.1 Name................................................................................1
Section 1.2 Definitions.........................................................................2
ARTICLE II Trustees...........................................................................3
Section 2.1 Number of Trustees..................................................................3
Section 2.2 Election and Term...................................................................3
Section 2.3 Resignation and Removal.............................................................3
Section 2.4 Vacancies...........................................................................4
Section 2.5 Delegation of Power to Other Trustees...............................................4
ARTICLE III Powers of Trustees.................................................................4
Section 3.1 General.............................................................................4
Section 3.2 Investments.........................................................................5
Section 3.3 Legal Title.........................................................................6
Section 3.4 Issuance and Repurchase of Securities...............................................6
Section 3.5 Borrowing Money; Lending Trust Assets...............................................6
Section 3.6 Delegation; Committees..............................................................6
Section 3.7 Collection and Payment..............................................................6
Section 3.8 Expenses............................................................................6
Section 3.9 Manner of Acting; By-Laws...........................................................7
Section 3.10 Miscellaneous Powers................................................................7
Section 3.11 Principal Transactions..............................................................7
Section 3.12 Litigation..........................................................................8
ARTICLE IV Investment Adviser, Distributor, Custodian and Transfer Agent.......................8
Section 4.1 Investment Adviser..................................................................8
Section 4.2 Administrative Services.............................................................8
Section 4.3 Distributor.........................................................................8
Section 4.4 Transfer Agent......................................................................9
Section 4.5 Custodian...........................................................................9
Section 4.6 Parties to Contract.................................................................9
ARTICLE V Limitations of Liability of Shareholders, Trustees and Others.......................9
Section 5.1 No Personal Liability of Shareholders, Trustees, etc................................9
Section 5.2 Non-Liability of Trustees, etc.....................................................10
</TABLE>
i
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 5.3 Indemnification....................................................................10
Section 5.4 No Bond Required of Trustees.......................................................10
Section 5.5 No Duty of Investigation; Notice in Trust Instruments, etc.........................10
Section 5.6 Reliance on Experts, etc...........................................................11
ARTICLE VI Shares of Beneficial Interest......................................................11
Section 6.1 Beneficial Interest................................................................11
Section 6.2 Rights of Shareholders.............................................................12
Section 6.3 Trust Only.........................................................................12
Section 6.4 Issuance of Shares.................................................................12
Section 6.5 Register of Shares.................................................................12
Section 6.6 Transfer of Shares.................................................................13
Section 6.7 Notices............................................................................13
Section 6.8 Voting Powers......................................................................13
Section 6.9 Series or Classes of Shares........................................................14
ARTICLE VII Redemptions........................................................................17
Section 7.1 Redemptions........................................................................17
Section 7.2 Redemption at the Option of the Trust..............................................17
Section 7.3 Effect of Suspension of Determination of Net Asset Value...........................18
Section 7.4 Suspension of Right of Redemption..................................................18
ARTICLE VIII Determination of Net Asset Value, Net Income and Distributions....................18
Section 8.1 Net Asset Value....................................................................18
Section 8.2 Distributions to Shareholders......................................................19
Section 8.3 Determination of Net Income........................................................19
Section 8.4 Power to Modify Foregoing Procedures...............................................19
ARTICLE IX Duration; Termination of Trust, Amendment, Mergers, etc............................20
Section 9.1 Duration...........................................................................20
Section 9.2 Termination of Trust...............................................................20
Section 9.3 Amendment Procedure................................................................21
Section 9.4 Merger, Consolidation and Sale of Assets...........................................21
Section 9.5 Reorganization and Master/Feeder...................................................21
ARTICLE X Reports to Shareholders............................................................22
ARTICLE XI Miscellaneous......................................................................22
</TABLE>
ii
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 11.1 Filing.............................................................................22
Section 11.2 Governing Law......................................................................22
Section 11.3 Counterparts.......................................................................22
Section 11.4 Reliance by Third Parties..........................................................22
Section 11.5 Provisions in Conflict with Law or Regulations.....................................22
Section 11.6 Principal Place of Business........................................................23
SIGNATURE PAGE..........................................................................................24
</TABLE>
iii
<PAGE> 6
DECLARATION OF TRUST
OF
ICM SERIES TRUST
DATED: NOVEMBER 18, 1997
DECLARATION OF TRUST of ICM Series Trust is made the 18th day of
November, 1997 by the parties signatory hereto, as trustees (such persons, so
long as they shall continue in office in accordance with the terms of this
Declaration of Trust, and all other persons who at the time in question have
been duly elected or appointed as trustees in accordance with the provisions of
this Declaration of Trust and are then in office, being hereinafter called the
"Trustees");
WITNESSETH:
WHEREAS, the Trustees desire to form a trust under the laws of
Massachusetts for the investment and reinvestment of funds contributed thereto;
and
WHEREAS, it is provided that the beneficial interest in the trust
assets be divided into transferable shares of beneficial interest as hereinafter
provided;
NOW, THEREFORE, the Trustees hereby declare that they will hold in
trust, all money and property contributed to the trust to manage and dispose of
the same for the benefit of the holders from time to time of the shares of
beneficial interest issued hereunder and subject to the provisions hereof and in
consideration of the foregoing premises and agreements herein contained declare
as follows:
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. Name. The name of the trust created hereby is the "ICM
Series Trust" and so far as may be practicable the Trustees shall conduct the
Trust's activities, execute all documents and sue or be sued under that name,
which name (and the word "Trust" wherever herein used) shall refer to the
Trustees as Trustees, and not as individuals, or personally, and shall not refer
to the officers, agents, employees or Shareholders of the Trust. Should the
Trustees determine that the use of such name is not advisable, they may use such
other name for the Trust as they deem proper and the Trust may hold its property
and conduct its activities under such other name.
Section 1.2. Definitions. Wherever they are used herein, the following
terms have the following respective meanings:
1
<PAGE> 7
(a) "By-Laws" means the By-Laws referred to in Section 3.9
hereof, as from time to time amended.
(b) the terms "Commission," "Affiliated Person" and
"Interested Person," have the meanings given them in the 1940 Act.
(c) "Class" means any division of Shares within a Series,
which Class is or has been established with such Series pursuant to
Section 6.1 hereof.
(d) "Declaration" means this Declaration of Trust as amended
from time to time. Reference in this Declaration of Trust to
"Declaration," "hereof," "herein" and "hereunder" shall be deemed to
refer to this Declaration rather than the article or section in which
such words appear.
(e) "Distributor" means the party, other than the Trust, to a
contract described in Section 4.3 hereof.
(f) "Fundamental Policies" shall mean the investment policies
and restrictions set forth in a Prospectus and Statement of Additional
Information and designated as fundamental policies therein.
(g) "Investment Adviser" means any party, other than the
Trust, to a contract described in Section 4.1 hereof.
(h) "1940 Act" means the Investment Company Act of 1940 and
the rules and regulations thereunder as amended from time to time.
(i) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities,
whether or not legal entities, and governments and agencies and
political subdivisions thereof.
(j) "Prospectus" means any effective Prospectus and Statement
of Additional Information constituting parts of any Registration
Statement of the Trust filed under the Securities Act of 1933 as such
Prospectus and Statement of Additional Information may be amended or
supplemented and filed with the Commission from time to time.
(k) "Series" means one of the separately managed components of
the Trust (or, if the Trust shall have only one such component, then
that one) as set forth in Section 6.1 hereof or as may be established
and designated from time to time by the Trustees pursuant to that
section.
(l) "Shareholder" means a record owner of outstanding Shares.
2
<PAGE> 8
(m) "Shares" means the equal proportionate units of interest
into which the beneficial interest in the Trust shall be divided from
time to time, including the Shares of any and all Series or of any
Class within any Series which may be established by the Trustees, and
includes fractions of Shares as well as whole Shares.
(n) "Transfer Agent" means the party, other than the Trust, to
the contract described in Section 4.4 hereof.
(o) "Trust" means the ICM Series Trust.
(p) "Trust Property" means any and all property, real or
personal, tangible or intangible, which is owned or held by or for the
account of the Trust or the Trustees.
(q) "Trustees" means the persons who have signed the
Declaration, so long as they shall continue in office in accordance
with the terms hereof, and all other persons who may from time to time
be duly elected or appointed, qualified and serving as Trustees in
accordance with the provisions hereof, and reference herein to a
Trustee or the Trustees shall refer to such person or persons in their
capacity as trustees hereunder.
ARTICLE II
TRUSTEES
Section 2.1. Number of Trustees. The number of Trustees shall initially
be three (3) and thereafter shall be such number as shall be fixed from time to
time by a written instrument signed by a majority of the Trustees, or by an
officer of the Trust pursuant to a vote of a majority of the Trustees; provided,
however, that the number of Trustees shall in no event be less than three (3)
nor more than fifteen (15).
Section 2.2. Election and Term. The Trustees shall be elected by a vote
of a majority of the outstanding voting securities, as defined by the 1940 Act,
held by the initial shareholder(s) (i.e., the person(s) that supplied the seed
capital required under Section 14(a) of the 1940 Act). The Trustees shall have
the power to set and alter the terms of office of the Trustees, and they may at
any time lengthen or lessen their own terms or make their terms of unlimited
duration, subject to the resignation and removal provisions of Section 2.3
hereof. Subject to Section 16(a) of the 1940 Act, the Trustees may elect their
own successors and may, pursuant to Section 2.4 hereof, appoint Trustees to fill
vacancies. The Trustees shall adopt By-Laws not inconsistent with this
Declaration or any provision of law to provide for election of Trustees by
Shareholders at such time or times as the Trustees shall determine to be
necessary or advisable.
Section 2.3. Resignation and Removal. Any Trustee may resign his trust
(without need for prior or subsequent accounting) by an instrument in writing
signed by him and delivered to the other Trustees and such resignation shall be
effective upon such delivery, or at a later date according to the terms of the
instrument. Any of the Trustees may be removed (provided the aggregate number
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of Trustees after such removal shall not be less than the number required by
Section 2.1 hereof) by the action of two-thirds of the remaining Trustees or by
the action of the Shareholders of record of not less than two-thirds of the
Shares outstanding (for purposes of determining the circumstances and procedures
under which such removal by the Shareholders may take place, the provisions of
Section 16(c) of the 1940 Act shall be applicable to the same extent as if the
Trust were subject to the provisions of that Section). Upon the resignation or
removal of a Trustee, or his otherwise ceasing to be a Trustee, he shall execute
and deliver such documents as the remaining Trustees shall require for the
purpose of conveying to the Trust or the remaining Trustees any Trust Property
held in the name of the resigning or removed Trustee. Upon the incapacity or
death of any Trustee, his legal representative shall execute and deliver on his
behalf such documents as the remaining Trustees shall require as provided in the
preceding sentence.
Section 2.4. Vacancies. The term of office of a Trustee shall terminate
and a vacancy shall occur in the event of the death, resignation, removal,
bankruptcy, adjudicated incompetence or other incapacity to perform the duties
of the office of a Trustee. No such vacancy shall operate to annul the
Declaration or to revoke any existing agency created pursuant to the terms of
the Declaration. In the case of a vacancy existing by reason of an increase in
the number of Trustees, subject to the provisions of Section 16(a) of the 1940
Act, the remaining Trustees shall fill such vacancy by the appointment of such
other person as they or he, in their or his discretion, shall see fit, made by a
written instrument signed by a majority of the remaining Trustees then in office
or by an officer of the Trust pursuant to the vote of a majority of the Trustees
then in office. Any such appointment shall not become effective, however, until
the person named in the written instrument of appointment shall have accepted in
writing such appointment and agreed in writing to be bound by the terms of the
Declaration. An appointment of a Trustee may be made in anticipation of a
vacancy to occur at a later date by reason of retirement, resignation or
increase in the number of Trustees, provided that such appointment shall not
become effective prior to such retirement, resignation or increase in the number
of Trustees. Whenever a vacancy in the number of Trustees shall occur, until
such vacancy is filled as provided in this Section 2.4, the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by the Declaration.
A written instrument certifying the existence of such vacancy signed by a
majority of the Trustees then in office or by an officer of the Trust pursuant
to the vote of a majority of the Trustees then in office shall be conclusive
evidence of the existence of such vacancy.
Section 2.5. Delegation of Power to Other Trustees. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six (6) months
at any one time to any other Trustee or Trustees; provided that in no case shall
less than two (2) Trustees personally exercise the powers granted to the
Trustees under the Declaration except as herein otherwise expressly provided.
ARTICLE III
POWERS OF TRUSTEES
Section 3.1. General. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the same
extent as if the Trustees were the sole owners
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of the Trust Property and business in their own right, but with such powers of
delegation as may be permitted by the Declaration. The Trustees shall have power
to conduct the business of the Trust and carry on its operations in any and all
of its branches and maintain offices both within and without the Commonwealth of
Massachusetts, in any and all states of the United States of America, in the
District of Columbia, and in any and all commonwealths, territories,
dependencies, colonies, possessions, agencies or instrumentalities wheresoever
in the world they may be located as they deem necessary, proper or desirable in
order to promote the interests of the Trust although such things are not herein
specifically mentioned. Any determination as to what is in the interests of the
Trust made by the Trustees in good faith shall be conclusive. In construing the
provisions of the Declaration, the presumption shall be in favor of a grant of
power to the Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
Section 3.2. Investments. The Trustees shall have the power to:
(a) conduct, operate and carry on the business of an
investment company, and exercise all the powers necessary and
appropriate to the conduct of such operations.
(b) subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer, exchange,
distribute, lend or otherwise deal in or dispose of negotiable or
nonnegotiable instruments, obligations, evidences of indebtedness,
certificates of deposit or indebtedness, commercial paper, repurchase
agreements, reverse repurchase agreements, options, commodities,
commodity futures contracts and related options, currencies, currency
futures and forward contracts, and other securities, investment
contracts and other instruments of any kind, including, without
limitation, those issued, guaranteed or sponsored by any and all
Persons including, without limitation, states, territories and
possessions of the United States, the District of Columbia and any of
the political subdivisions, agencies or instrumentalities thereof, and
by the United States Government or its agencies or instrumentalities,
foreign or international instrumentalities, or by any bank or savings
institution, or by any corporation or organization organized under the
laws of the United States or of any state, territory or possession
thereof, and of corporations or organizations organized under foreign
laws, or in "when issued" contracts for any such securities, or retain
Trust assets in cash and from time to time change the investments of
the assets of the Trust; and to exercise any and all rights, powers and
privileges of ownership or interest in respect of any and all such
investments of every kind and description, including, without
limitation, the right to consent and otherwise act with respect
thereto, with power to designate one or more persons, firms,
associations or corporations to exercise any of said rights, powers and
privileges in respect of any of said instruments; and the Trustees
shall be deemed to have the foregoing powers with respect to any
additional securities in which the Trust may invest should the
Fundamental Policies be amended.
(c) Notwithstanding any other provision of this Declaration to
the contrary, the Trustees shall have the power in their discretion
without any requirement of approval by Shareholders either to invest
all or part of the investable Trust Property, or to sell all or part
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of the Trust Property and invest all or part of the investable proceeds
of such sale or sales, in another investment company that is registered
under the 1940 Act.
The Trustees shall not be limited to investing in obligations maturing before
the possible termination of the Trust, nor shall the Trustees be limited by any
law limiting the investments which may be made by fiduciaries.
Section 3.3. Legal Title. Legal title to all the Trust Property shall
be vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust or any Series of the
Trust, or in the name of any other Person as nominee, on such terms as the
Trustees may determine, provided that the interest of the Trust therein is
appropriately protected. The right, title and interest of the Trustees in the
Trust Property shall vest automatically in each Person who may hereafter become
a Trustee. Upon the resignation, removal or death of a Trustee he shall
automatically cease to have any right, title or interest in any of the Trust
Property, and the right, title and interest of such Trustee in the Trust
Property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered.
Section 3.4. Issuance and Repurchase of Securities. The Trustees shall
have the power to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares and,
subject to the provisions set forth in Articles VII, VIII and IX and Section 6.9
hereof, to apply to any such repurchase, redemption, retirement, cancellation or
acquisition of Shares, any funds or property of the Trust, whether capital or
surplus or otherwise, to the full extent now or hereafter permitted by the laws
of the Commonwealth of Massachusetts governing business corporations.
Section 3.5. Borrowing Money; Lending Trust Assets. The Trustee shall
have power to borrow money or otherwise obtain credit and to secure the same by
mortgaging, pledging or otherwise subjecting as security the assets of the
Trust; to endorse, guarantee, or undertake the performance of any obligation,
contract or engagement of any other Person and to lend Trust assets.
Section 3.6. Delegation; Committees. The Trustees shall have power,
consistent with their continuing exclusive authority over the management of the
Trust and the Trust Property, to delegate from time to time to such of their
number or to officers, employees or agents of the Trust the doing of such things
and the execution of such instruments either in the name of the Trust or the
names of the Trustees or otherwise as the Trustees may deem expedient, to the
same extent as such is permitted by the 1940 Act.
Section 3.7. Collection and Payment. Subject to Section 6.9 hereof, the
Trustees shall have power to collect all property due to the Trust; to pay all
claims, including taxes, against the Trust Property; to prosecute, defend,
compromise or abandon any claims relating to the Trust Property; to foreclose
any security interest securing any obligations, by virtue of which any property
is owed to the Trust; and to enter into releases, agreements and other
instruments.
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Section 3.8. Expenses. Subject to Section 6.9 hereof, the Trustees
shall have the power to incur and pay any expenses which in the opinion of the
Trustees are necessary or incidental to carry out any of the purposes of the
Trust, and to pay reasonable compensation from the funds of the Trust to
themselves as Trustees. The Trustees shall fix the compensation of all officers,
employees and Trustees.
Section 3.9. Manner of Acting, By-Laws. Except as otherwise provided
herein or in the ByLaws or by any provision of law, any action to be taken by
the Trustees may be taken by a majority of the Trustees present at a meeting of
Trustees (a quorum being present), including any meeting held by means of a
conference telephone circuit or similar communications equipment by means of
which all persons participating in the meeting can hear each other, or by
written consents of all the Trustees. The Trustees may adopt By-Laws not
inconsistent with this Declaration to provide for the conduct of the business of
the Trust and may amend or repeal such By-Laws to the extent such power is not
reserved to the Shareholders.
Section 3.10. Miscellaneous Powers. The Trustees shall have the power
to: (a) employ or contract with such Persons as the Trustees may deem desirable
for the transaction of the business of the Trust or any Series thereof; (b)
enter into joint ventures, partnerships and any other combinations or
associations; (c) remove Trustees or fill vacancies in or add to their number,
elect and remove such officers and appoint and terminate such agents or
employees as they consider appropriate, and appoint from their own number, and
terminate, any one or more committees which may exercise some or all of the
power and authority of the Trustees as the Trustees may determine; (d) purchase,
and pay for out of Trust Property or the property of the appropriate Series of
the Trust, insurance policies insuring the Shareholders, Trustees, officers,
employees, agents, investment advisers, distributors, selected dealers or
independent contractors of the Trust against all claims arising by reason of
holding any such position or by reason of any action taken or omitted to be
taken by any such Person in such capacity, whether or not constituting
negligence, or whether or not the Trust would have the power to indemnify such
Person against such liability; (e) establish pension, profit-sharing, Share
purchase, and other retirement, incentive and benefit plans for any Trustees,
officers, employees and agents of the Trust; (f) to the extent permitted by law,
indemnify any person with whom the Trust or any Series thereof has dealings,
including any Investment Adviser, Distributor, Administrator, Transfer Agent and
selected dealers, to such extent as the Trustees shall determine; (g) guarantee
indebtedness or contractual obligations of others; (h) determine and change the
fiscal year of the Trust or any Series thereof and the method by which its
accounts shall be kept; and (i) adopt a seal for the Trust but the absence of
such seal shall not impair the validity of any instrument executed on behalf of
the Trust.
Section 3.11 Principal Transactions. Except in transactions not
permitted by the 1940 Act or any rule or regulation thereunder, adopted by the
Commission, the Trustees may, on behalf of the Trust, buy any securities (other
than Shares) from or sell any securities (other than Shares) to, or lend any
assets of the Trust or any Series thereof to, any Trustee or officer of the
Trust or any firm of which any such Trustee or officer is a member acting as
principal, or have any such dealings with any Investment Adviser, Distributor or
Transfer Agent or with any Affiliated Person of such Person; and the Trust or
any Series thereof may employ any such Person, or firm or company in which such
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Person is an Interested Person, as broker, legal counsel, registrar, transfer
agent, dividend disbursing agent or custodian upon customary terms.
Section 3.12. Litigation. The Trustees shall have the power to engage
in and to prosecute, defend, compromise, abandon, or adjust, by arbitration, or
otherwise, any actions, suits, proceedings, disputes, claims, and demands
relating to the Trust, and out of the assets of the Trust or any Series thereof
to pay or to satisfy any debts, claims or expenses incurred in connection
therewith, including those of litigation, and such power shall include without
limitation the power of the Trustees or any appropriate committee thereof, in
the exercise of their or its good faith business judgment, to dismiss any
action, suit, proceeding, dispute, claim, or demand, derivative or otherwise,
brought by any person, including a Shareholder in its own name or the name of
the Trust, whether or not the Trust or any of the Trustees may be named
individually therein or the subject matter arises by reason of business for or
on behalf of the Trust.
ARTICLE IV
INVESTMENT ADVISER, DISTRIBUTOR, CUSTODIAN AND TRANSFER AGENT
Section 4.1. Investment Adviser. Subject to and in accordance with the
1940 Act, the Trustees may in their discretion from time to time enter into one
or more investment advisory or management contracts or, if the Trustees
establish multiple Series, separate investment advisory or management contracts
with respect to one or more Series whereby the other party or parties to any
such contracts shall undertake to furnish the Trust or such Series such
management, investment advisory, administration, accounting, legal, statistical
and research facilities and services, promotional or marketing activities, and
such other facilities and services, if any, as the Trustees shall from time to
time consider desirable and all upon such terms and conditions as the Trustees
may in their discretion determine. Notwithstanding any provisions of the
Declaration, the Trustees may authorize the Investment Advisers, or any of them,
under any such contracts (subject to such general or specific instructions as
the Trustees may from time to time adopt) to effect purchases, sales, loans or
exchanges of portfolio securities and other investments of the Trust on behalf
of the Trustees or may authorize any officer, employee or Trustee to effect such
purchases, sales, loans or exchanges pursuant to recommendations of such
Investment Advisers, or any of them (and all without further action by the
Trustees). Any such purchases, sales, loans and exchanges shall be deemed to
have been authorized by all of the Trustees. In accordance with the 1940 Act,
the Trustees may, in their sole discretion, continue an investment advisory
agreement or management contract beyond its initial period upon annual approval
by a majority of the Trustees.
Section 4.2. Administrative Services. The Trustees may in their
discretion from time to time contract for administrative personnel and services
whereby the other party shall agree to provide the Trustees or the Trust
administrative personnel and services to operate the Trust on a daily or other
basis, on such terms and conditions as the Trustees may in their discretion
determine. Such services may be provided by one or more persons or entities.
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Section 4.3. Distributor. The Trustees may in their discretion from
time to time enter into one or more exclusive or non-exclusive contracts,
providing for the sale of Shares of the Trust or the applicable Series of the
Trust at not less than the net asset value per Share (as described in Article
VIII hereof) and pursuant to which the Trust may either agree to sell the Shares
to the other parties to the contracts, or any of them, or appoint any such other
party its sales agent for such Shares. In either case, any such contract shall
be on such terms and conditions as the Trustees may in their discretion
determine not inconsistent with the provisions of this Article IV, including,
without limitation, the provision for the repurchase or sale of shares of the
Trust by such other party as principal or as agent of the Trust.
Section 4.4. Transfer Agent. The Trustees may in their discretion from
time to time enter into a transfer agency and shareholder service contract
whereby the other party to such contract shall undertake to furnish transfer
agency and shareholder services to the Trust. The contract shall have such terms
and conditions as the Trustees may in their discretion determine not
inconsistent with the Declaration. Such services may be provided by one or more
Persons.
Section 4.5. Custodian. The Trustees may appoint or otherwise engage
one or more banks or trust companies, each having an aggregate capital, surplus
and undivided profits (as shown in its last published report) of at least five
million dollars ($5,000,000) to serve as Custodian with authority as its agent,
but subject to such restrictions, limitations and other requirements, if any, as
may be contained in the By-Laws of the Trust.
Section 4.6. Parties to Contract. Any contract of the character
described in Sections 4.1, 4.2, 4.3, 4.4 or 4.5 of this Article IV and any other
contract may be entered into with any Person, although one or more of the
Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, or member of such other party to the contract, and no such contract
shall be invalidated or rendered voidable by reason of the existence of any such
relationship; nor shall any Person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was not
inconsistent with the provisions of this Article IV. The same Person may be the
other party to any contracts entered into pursuant to Sections 4.1, 4.2, 4.3,
4.4 or 4.5 above or otherwise, and any individual may be financially interested
or otherwise affiliated with Persons who are parties to any or all of the
contracts mentioned in this Section 4.6.
ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
Section 5.1. No Personal Liability of Shareholders, Trustees, etc. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust Property or the acts, obligations or affairs of the
Trust. No Trustee, officer, employee or agent of the Trust shall be subject to
any personal liability whatsoever to any Person, other than the Trust or its
Shareholders,
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in connection with the Trust Property or the affairs of the Trust, save only
that arising from bad faith, willful misfeasance, gross negligence or reckless
disregard for his duty to such Person; and all such Persons shall look solely to
the Trust Property, or to the Property of one or more specific Series of the
Trust if the claim arises from the conduct of such Trustee, officer, employee or
agent with respect to only such Series, for satisfaction of claims of any nature
arising in connection with the affairs of the Trust. If any Shareholder,
Trustee, officer, employee or agent, as such, of the Trust is made a party to
any suit or proceeding to enforce any such liability, he shall not, on account
thereof, be held to any personal liability. The Trust shall indemnify out of the
property of the Trust and hold each Shareholder harmless from and against all
claims and liabilities, to which such Shareholder may become subject by reason
of his being or having been a Shareholder, and shall reimburse such Shareholder
for all legal and other expenses reasonably incurred by him in connection with
any such claim or liability; provided that, in the event the Trust shall consist
of more than one Series, Shareholders of a particular Series who are faced with
claims or liabilities solely by reason of their status as Shareholders of that
Series shall be limited to the assets of that Series for recovery of such loss
and related expenses. The rights accruing to a Shareholder under this Section
5.1 shall not exclude any other right to which such Shareholder may be lawfully
entitled, nor shall anything herein contained restrict the right of the Trust to
indemnity or reimburse a Shareholder in any appropriate situation even though
not specifically provided herein.
Section 5.2. Non-Liability of Trustees, etc. No Trustee, officer,
employee or agent of the Trust shall be liable to the Trust, its Shareholders,
or to any Shareholder, Trustee, officer, employee, or agent thereof for any
action or failure to act (including without limitation the failure to compel in
any way any former or acting Trustee to redress any breach of trust) except for
his own bad faith, willful misfeasance, gross negligence or reckless disregard
of his duties.
Section 5.3. lndemnification. (a) The Trustees shall provide for
indemnification by the Trust, or by one or more Series thereof, if the claim
arises from his or her conduct with respect to only such Series, of any person
who is, or has been, a Trustee, officer, employee or agent of the Trust against
all liability and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having been a
Trustee, officer, employee or agent and against amounts paid or incurred by him
in the settlement thereof, in such manner as the Trustees may provide from time
to time in the By-Laws.
(b) 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, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
Section 5.4. No Bond Required of Trustees. No Trustee shall be
obligated to give any bond or other security for the performance of any of his
duties hereunder.
Section 5.5. No Duty of Investigation; Notice in Trust Instruments,
etc. No purchaser, lender, transfer agent or other Person dealing with the
Trustees or any officer, employee or agent of the Trust or a Series thereof
shall be bound to make any inquiry concerning the validity of any
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transaction purporting to be made by the Trustees or by said officer, employee
or agent or be liable for the application of money or property paid, loaned or
delivered to or on the order of the Trustees or of said officer, employee or
agent. Every obligation, contract, instrument, certificate, Share, other
security of the Trust or a Series thereof or undertaking, and every other act or
thing whatsoever executed in connection with the Trust shall be conclusively
presumed to have been executed or done by the executors thereof only in their
capacity as officers, employees or agents of the Trust or a Series thereof.
Every written obligation, contract, instrument, certificate, Share, other
security of the Trust or undertaking made or issued by the Trustees shall recite
that the same is executed or made by them not individually, but as Trustees
under the Declaration, and that the obligations of the Trust or a Series thereof
under any such instrument are not binding upon any of the Trustees or
Shareholders, individually, but bind only the Trust Estate (or, in the event the
Trust shall consist of more than one Series, in the case of any such obligation
which relates to a specific Series, only the Series which is a party thereto),
and may contain any further recital which they or he may deem appropriate, but
the omission of such recital shall not affect the validity of such obligation,
contract instrument, certificate, Share, security or undertaking and shall not
operate to bind the Trustees or Shareholders individually. The Trustees shall at
all times maintain insurance for the protection of the Trust Property, its
Shareholders, Trustees, officers, employees and agents in such amount as the
Trustees shall deem adequate to cover possible tort liability, and such other
insurance as the Trustees in their sole judgment shall deem advisable.
Section 5.6. Reliance on Experts, etc. Each Trustee and officer or
employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
of the Trust, upon an opinion of counsel, or upon reports made to the Trust by
any of its officers or employees or by any Investment Adviser, Distributor,
Transfer Agent, selected dealers, accountants, appraisers or other experts or
consultants selected with reasonable care by the Trustees, officers or employees
of the Trust, regardless of whether such counsel or expert may also be a
Trustee.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 6.1. Beneficial Interest. The beneficial interest in the Trust
shall be evidenced by transferable Shares of one or more Series, each of which
may be divided into one or more separate and distinct Classes. The number of
Shares of the Trust and of each Series and Class is unlimited and each Share
shall have a par value of $0.001 per Share. All Shares issued hereunder shall be
fully paid and nonassessable. Shareholders shall have no preemptive or other
right to subscribe to any additional Shares of other securities issued by the
Trust. The Trustees shall have full power and authority, in their sole
discretion and without obtaining Shareholder approval: to issue original or
additional Shares and fractional Shares at such times and on such terms and
conditions as they deem appropriate; to establish and to change in any manner
Shares of any Series or Classes with such preferences, terms of conversion,
voting powers, rights and privileges as the Trustee may determine (but the
Trustees may not change outstanding Shares in a manner materially adverse to the
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Shareholders of such Shares); to divide or combine the Shares of any Series or
Classes into a greater or lesser number without thereby changing the
proportionate beneficial interest in that Series or Class; to classify or
reclassify any unissued Shares of any Series or Classes into one or more Series
or Classes of Shares; to abolish any one or more Series or Classes of Shares; to
issue Shares to acquire other assets (including assets subject to, and in
connection with, the assumption of liabilities) and businesses; and to take such
other action with respect to the Shares as the Trustees may deem desirable.
Section 6.2. Rights of Shareholders. The ownership of the Trust
Property of every description and the right to conduct any business hereinbefore
described are vested exclusively in the Trustees, and the Shareholders shall
have no interest therein other than the beneficial interest conferred by their
Shares, and they shall have no right to call for any partition or division of
any property, profits, rights or interests of the Trust nor can they be called
upon to assume any losses of the Trust or suffer an assessment of any kind by
virtue of their ownership of Shares. The Shares shall be personal property given
only the rights in the Declaration specifically set forth. The Shares shall not
entitle the holder top preference, preemptive, appraisal, conversion or exchange
rights, except as the Trustees may determine with respect to any Series of
Shares.
Section 6.3. Trust Only. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in the Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
Section 6.4. Issuance of Shares. The Trustees, in their discretion may,
from time to time without vote of the Shareholders, issue Shares of any Series
or Class, in addition to the then issued and outstanding Shares and Shares held
in the treasury, to such party or parties and for such amount and type of
consideration, including cash or property, at such time or times and on such
terms as the Trustees may deem best, and may in such manner acquire other assets
(including the acquisition of assets subject to, and in connection with the
assumption of liabilities) and businesses. In connection with any issuance of
Shares, the Trustees may issue fractional Shares. The Trustees may from time to
time divide or combine the Shares of the Trust or, if the Shares be divided into
Series, of any Series of the Trust, into a greater or lesser number without
thereby changing the proportionate beneficial interests in the Trust or in the
Trust Property allocated or belonging to such Series. Contributions to the Trust
may be accepted for, and Shares shall be redeemed as, whole Shares and/or
fractions of a Share as described in the applicable Prospectus.
Section 6.5. Register of Shares. A register shall be kept in respect of
each Series and Class at the principal office of the Trust or at an office of
the Transfer Agent which shall contain the names and addresses of the
Shareholders and the number of Shares of each Series and Class held by them
respectively and a record of all transfers thereof. Such register may be in
written form or any other form capable of being converted into written form
within a reasonable time for visual inspection. Such register shall be
conclusive as to who the holders of the Shares are and who shall be entitled to
receive dividends or distributions or otherwise to exercise or enjoy the rights
of Shareholders. No
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Shareholder shall be entitled to receive payment of any dividend or
distribution, nor to have notice given to him as herein or in the By-Laws
provided, until he has given his address to the Transfer Agent or such other
officer or agent of the Trustees as shall keep the said register for entry
thereon. It is not contemplated that certificates will be issued for the Shares;
however, the Trustees, in their discretion, may authorize the issuance of Share
certificates and promulgate appropriate rules and regulations as to their use.
Section 6.6. Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder or by his agent thereunto duly
authorized in writing, upon delivery to the Trustees or the Transfer Agent of a
duly executed instrument of transfer, together with such evidence of the
genuineness of each such execution and authorization and of other matters as may
reasonably be required. Upon such delivery the transfer shall be recorded on the
register of the Trust. Until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor any Transfer Agent or registrar nor any officer,
employee or agent of the Trust shall be affected by any notice of the proposed
transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
Agent, but until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer or agent of the
Trust shall be affected by any notice of such death, bankruptcy or incompetence,
or other operation of law, except as may otherwise be provided by the laws of
the Commonwealth of Massachusetts.
Section 6.7. Notices. Any and all notices to which any Shareholder may
be entitled and any and all communications shall be deemed duly served or given
if mailed, postage prepaid, addressed to any Shareholder of record at his last
known address as recorded on the register of the Trust. Annual reports and proxy
statements need not be sent to a Shareholder if: (i) an annual report and proxy
statement for two consecutive annual meetings, or (ii) all, and at least two,
checks (if sent by first class mail) in payment of dividends or interest and
shares during a twelve month period have been mailed to such Shareholder's
address and have been returned undelivered. However, delivery of such annual
reports and proxy statements shall resume once a Shareholder's current address
is determined.
Section 6.8. Voting Powers. The Shareholders shall have power to vote
only (i) for the election of Trustees as provided in Section 2.2 hereof, (ii)
for the removal of Trustees as provided in Section 2.3 hereof, (iii) with
respect to matters required to be approved by Shareholders of the Trust or an
Series or Class thereof under the 1940 Act; (iv) with respect to any termination
or amendment of any investment advisory or management contract as provided in
Section 4.1, (v) with respect to termination of the Trust as provided in Section
9.2, (vi) with respect to any amendment of the Declaration to the extent and as
provided in Section 9.3, (vii) with respect to any merger, consolidation or sale
of assets of the Trust as provided in Section 9.4, (viii) 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
derivately or as a class action on behalf of
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the Trust or the Shareholders (provided that the Shareholders of a Series or
Class are not entitled to vote in connection with the bringing of a derivative
or class action with respect to any matter which only affects another Series or
Class or its Shareholders), and (ix) with respect to such additional matters
relating to the Trust as may be required by law, the Declaration, the By-Laws or
any registration of the Trust with the Commission (or any successor agency) or
any state, or as and when the Trustees may consider necessary or desirable.
On any matter submitted to a vote of the Shareholders, unless the
Trustees determine otherwise, all Shares shall be voted in the aggregate not by
individual Series or Class, except (a) when required by the 1940 Act, other
applicable law or the attributes applicable to any Series or Class, Shares shall
be voted by individual Series or Cass, and (b) when the Trustees have determined
that the matter affects the interests of only one or more Series or Class, then
only the Shareholders of all such Series or Classes shall be entitled to vote
thereon. As determined by the Trustees without the vote or consent of
Shareholders, on any matter submitted to a vote of Shareholders, either (i) 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 proportionate
fractional vote or (ii) each dollar of Net Asset Value (number of Shares owned
times Net Asset Value per Share of such Series or Class, as applicable) shall be
entitled to one vote on any matter on which such Shares are entitled to vote and
each fractional dollar amount shall be entitled to a proportionate fractional
vote. Without limiting the power of the Trustees in any way to designate
otherwise in accordance with the preceding sentence, the Trustees hereby
establish that, until determined otherwise by them, 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 or in any manner provided for in the By-laws. The By-laws
may provide that proxies may be given by any electronic or telecommunication
device or in any other manner, but if a proposal by anyone other than the
officers or Trustees is submitted to a vote of the Shareholders of any Series or
Class, or if there is a proxy contest or proxy solicitation or proposal in
opposition to any proposal by the officers or Trustees, Shares may be voted only
in person or by written proxy. Until Shares of a Series are issued, as to that
Series, the Trustees may exercise all rights of Shareholders and may take any
action required or permitted to be taken by Shareholders by law, this
Declaration or the By-laws.
Section 6.9. Series or Classes of Shares. The following provisions are
applicable regarding the Shares of the Trust established in Section 6.1 hereof
and shall be applicable if the Trustees shall establish additional Series or
shall divide the shares of any Series into classes, also as provided in Section
6.1 hereof, and all provisions relating to the Trust shall apply equally to each
Series and Class thereof except as the context requires:
(a) The number of authorized Shares and the number of Shares
of each Series or of each Class that may be issued shall be unlimited.
The Trustees may classify or reclassify any unissued Shares or any
Shares previously issued and reacquired of any Series or Class into one
or more Series or one or more classes that may be established and
designated from time to time. The Trustees may hold as treasury Shares
(of the same or some other Series or Class), reissue for such
consideration and on such terms as they may determine, or cancel
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any Shares of any Series or any Class reacquired by the Trust at their
discretion from time to time.
(b) The power of the Trustees to invest and reinvest the Trust
Property shall be governed by Section 3.2 of this Declaration with
respect to any one or more Series which represents the interests in the
assets of the Trust immediately prior to the establishment of any
additional Series and the power of the Trustees to invest and reinvest
assets applicable to any other Series shall be as set forth in the
instrument of the Trustees establishing such Series which is
hereinafter described.
(c) All consideration received by the Trust for the issue or
sale of Shares of a particular Series or Class together with all assets
in which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in whatever
form the same may be, shall irrevocably belong to that Series or Class
for all purposes, subject only to the rights of creditors, and shall be
so recorded upon the books of account of the Trust. In the event that
there are any assets, income, earnings, profits, and proceeds thereof,
funds, or payments which are not readily identifiable as belonging to
any particular Series or Class, the Trustees shall allocate them among
any one or more of the Series or Classes established and designated
from time to time in such manner and on such basis as they, in their
sole discretion, deem fair and equitable. Each such allocation by the
Trustees shall be conclusive and binding upon the Shareholders of all
Series or Classes for all purposes. No holder of Shares of any Series
or Class shall have any claim on or right to any assets allocated or
belonging to any other Series or Class.
(d) The assets belonging to each particular Series shall be
charged with the liabilities of the Trust in respect of that Series and
all expenses, costs, charges and reserves attributable to that Series.
The liabilities, expenses, costs, charges and reserves so charged to a
Series are sometimes herein referred to as "liabilities belonging to"
that Series. Except as provided in the next sentence or otherwise
required or permitted by applicable law or any rule or order of the
Commission, each Class of a Series shall bear a pro rata portion of the
"liabilities belonging to" such Series. To the extent permitted by rule
or order of the Commission, the Trustees may allocate all or a portion
of any liabilities, expenses, costs, charges and reserves belonging to
a Series to a particular Class or Classes as the Trustees may from time
to time determine is appropriate. Without limitation of the foregoing
provisions, and subject to the right of the Trustees in their sole
discretion to allocate general liabilities, costs, expenses, charges or
reserves as hereinafter provided, all expenses and liabilities incurred
or arising in connection with a particular Series, or in connection
with the management thereof, shall be payable solely out of the assets
of that Series and creditors of a particular Series shall be entitled
to look solely to the property of such Series for satisfaction of their
claims. Any general liabilities, expenses, costs, charges or reserves
of the Trust which are not readily identifiable as belonging to any
particular Series shall be allocated and charged by the Trustees to and
among any one or more of the series established and designated from
time to time in such manner and on such basis as the Trustees in their
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sole discretion deem fair and equitable. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees
shall be conclusive and binding upon the holders of all Series and
Classes and no Shareholder or former Shareholder of any Series or Class
shall have a claim on or any right to any assets allocated or belonging
to any other Series or Class for all purposes. The Trustees shall have
full discretion, to the extent not inconsistent with the 1940 Act, to
determine which items shall be treated as income and which items as
capital; and each such determination and allocation shall be conclusive
and binding upon the Shareholders.
(e) The power of the Trustees to pay dividends and make
distributions shall be governed by Section 8.2 of this Declaration with
respect to any one or more Series or Classes which represents the
interests in the assets of the Trust immediately prior to the
establishment of any additional Series or Classes. With respect to any
other Series or Class, dividends and distributions on Shares of a
particular Series or Class may be paid with such frequency as the
Trustees may determine, which may be daily or otherwise, pursuant to a
standing resolution or resolutions adopted only once or with such
frequency as the Trustees may determine, to the holders of Shares of
that Series or Class, from such of the income and capital gains,
accrued or realized, from the assets belonging to that Series or Class,
as the Trustees may determine, after providing for actual and accrued
liabilities belonging to that Series or Class. All dividends and
distributions on Shares of a particular Series or Class shall be
distributed pro rata to the holders of that Series or Class in
proportion to the number of shares of that Series or Class held by such
holders at the date and time of record established for the payment of
such dividends or distributions.
(f) The Trustees shall have the power to determine the
designations, preferences, privileges, limitations and rights,
including voting and dividend rights, of each Class and Series of
Shares.
(g) Subject to compliance with the requirements of the 1940
Act, the Trustees shall have the authority to provide that the holders
of Shares of any Series or Class shall have the right to convert or
exchange said Shares into Shares of one or more Series or Classes of
Shares in accordance with such requirements and procedures as may be
established by the Trustees.
(h) The establishment and designation of any Series or Class
of Shares in addition to those established in Section 6.1 hereof shall
be effective upon the execution by a majority of the then Trustees of
an instrument setting forth such establishment and designation and the
relative rights, preferences, voting powers, restrictions, limitations
as to dividends, qualifications, and terms and conditions of redemption
of such Series or Class, or as otherwise provided in such instrument.
At any time that there are no Shares outstanding of any particular
Series or Class previously established and designated, the Trustees may
by an instrument executed by a majority of their number abolish that
Series or Class and the establishment and designation thereof. Each
instrument referred to in this paragraph shall have the status of an
amendment to this Declaration.
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(i) Shareholders of a Series or Class shall not be entitled to
participate in a derivative or class action with respect to any matter
which only affects another Series or Class or its Shareholders.
(j) Each Share of a Series of the Trust shall represent a
beneficial interest in the net assets of such Series. Each holder of
Shares of a Series shall be entitled to receive a pro-rata share of
distributions of income and capital gains made with respect to such
Series. In the event of the liquidation of a particular Series, the
Shareholders of that Series which has been established and designated
and which is being liquidated shall be entitled to receive, when and as
declared by the Trustees, the excess of the assets belonging to that
Series over the liabilities belonging to that Series. The holders of
Shares of any Series shall not be entitled hereby to any distribution
upon liquidation of any other Series. The assets so distributable to
the Shareholders of any Series shall be distributed among such
Shareholders in proportion to the number of Shares of that Series held
by them and recorded on the books of the Trust. The liquidation of any
particular Series in which there are Shares then outstanding may be
authorized by an instrument in writing, without a meeting, signed by a
majority of the Trustees then in office, subject to the approval of a
majority of the outstanding voting securities of that Series, as that
phrase is defined in the 1940 Act.
ARTICLE VII
REDEMPTIONS
Section 7.1. Redemptions. Each Shareholder of a particular Series or
Class shall have the right at such times as may be permitted by the Trust to
require the Trust to redeem all or any part of his Shares of that Series or
Class, upon and subject to the terms and conditions provided in this Article
VII. The Trust shall, upon application of any Shareholder or pursuant to
authorization from any Shareholder, redeem or repurchase from such Shareholder
outstanding Shares for an amount per Share determined by the Trustees in
accordance with any applicable laws and regulations; provided that (a) such
amount per Share shall not exceed the cash equivalent of the proportionate
interest of each Share or of any Class or Series of Shares in the assets of the
Trust at the time of the redemption or repurchase and (b) if so authorized by
the Trustees, the Trust may, at any time and from time to time charge fees for
effecting such redemption or repurchase, at such rates as the Trustees may
establish, as and to the extent permitted under the 1940 Act and the rules and
regulations promulgated thereunder, and may, at any time and from time to time,
pursuant to such Act and such rules and regulations, suspend such right of
redemption. The procedures for effecting and suspending redemption shall be as
set forth in the Prospectus from time to time. Payment will be made in such
manner as described in the Prospectus.
Section 7.2. Redemption at the Option of the Trust. Each Share of the
Trust or any Series or Class thereof of the Trust shall be subject to redemption
at the option of the Trust at the redemption price which would be applicable if
such Share were then being redeemed by the Shareholder pursuant to Section 7.l:
(i) at any time, if the Trustees determine in their sole discretion that failure
to so redeem may have materially adverse consequences to the holders of the
Shares of
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the Trust or of any Series or Class, or (ii) upon such other conditions with
respect to maintenance of Shareholder accounts of a minimum amount as may from
time to time be determined by the Trustees and set forth in the then current
Prospectus of the Trust. Upon such redemption the holders of the Shares so
redeemed shall have no further right with respect thereto other than to receive
payment of such redemption price.
Section 7.3. Effect of Suspension of Determination of Net Asset Value.
If, pursuant to Section 7.4 hereof, the Trustees shall declare a suspension of
the determination of net asset value with respect to Shares of the Trust or of
any Series thereof, the rights of Shareholders (including those who shall have
applied for redemption pursuant to Section 7.1 hereof but who shall not yet have
received payment) to have Shares redeemed and paid for by the Trust or a Series
thereof shall be suspended until the termination of such suspension is declared.
Any record holder who shall have his redemption right so suspended may, during
the period of such suspension, by appropriate written notice of revocation at
the office or agency where application was made, revoke any application for
redemption not honored and withdraw any certificates on deposit. The redemption
price of Shares for which redemption applications have not been revoked shall be
the net asset value of such Shares next determined as set forth in Section 8.1
after the termination of such suspension, and payment shall be made within seven
(7) days after the date upon which the application was made plus the period
after such application during which the determination of net asset value was
suspended.
Section 7.4. Suspension of Right of Redemption. The Trust may declare a
suspension of the right of redemption or postpone the date of payment or
redemption for the whole or any part of any period (i) during which the New York
Stock Exchange is closed other than for customary weekend and holiday closings,
(ii) during which trading on the New York Stock Exchange is restricted, (iii)
during which an emergency exists as a result of which disposal by the Trust or a
Series thereof of securities owned by it is not reasonably practicable or it is
not reasonably practicable for the Trust or a Series thereof fairly to determine
the value of its net assets, or (iv) during any other period when the Commission
may for the protection of security holders of the Trust by order permit
suspension of the rights of redemption or postponement of the date of payment or
redemption; provided that applicable rules and regulations of the Commission
shall govern as to whether the conditions prescribed in (ii), (iii) or (iv)
exist. Such suspension shall take effect at such time as the Trust shall specify
but not later than the close of business on the business day next following the
declaration of suspension, and thereafter there shall be no right of redemption
or payment on redemption until the Trust shall declare the suspension at an end,
except that the suspension shall terminate in any event on the first day on
which said stock exchange shall have reopened or the period specified in (ii) or
(iii) shall have expired (as to which in the absence of an official ruling by
the Commission, the determination of the Trust shall be conclusive). In the case
of a suspension of the right of redemption, a Shareholder may either withdraw
his request for redemption or receive payment based on the net asset value
existing after the termination of the suspension.
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ARTICLE VIII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
Section 8.1. Net Asset Value. The net asset value of each outstanding
Share of each Series of the Trust shall be determined on such days and at such
time or times as the Trustees may determine. The method of determination of net
asset value shall be determined by the Trustees and shall be as set forth in the
Prospectus. The power and duty to make the daily calculations may be delegated
by the Trustees to any Investment Adviser, the Custodian, the Transfer Agent or
such other person as the Trustees by resolution may determine. The Trustees may
suspend the daily determination of net asset value to the extent permitted by
the 1940 Act.
Section 8.2. Distributions to Shareholders. The Trustees shall from
time to time distribute ratably among the Shareholders of the Trust or of any
Series such proportion of the net income, earnings, profits, gains, surplus
(including paid-in surplus), capital, or assets of the Trust or of such Series
held by the Trustees as they may deem proper. Such distribution may be made in
cash or property (including without limitation any type of obligations of the
Trust or of such Series or any assets thereof), and the Trustees may distribute
ratably among the Shareholders of the Trust or of that Series additional Shares
issuable hereunder in such manner, at such times, and on such terms as the
Trustees may deem proper. Such distributions may be among the Shareholders of
record (determined in accordance with the Prospectus) of the Trust or of such
Series at the time of declaring a distribution or among the Shareholders of
record of the Trust or of such Series at such later date as the Trustees shall
determine. The Trustees may always retain from the net income, earnings, profits
or gains of the Trust or of such Series such amount as they may deem necessary
to pay the debts or expenses of the Trust or of such Series or to meet
obligations of the Trust or of such Series, or as they may deem desirable to use
in the conduct of its affairs or to retain for future requirements or extensions
of the business. The Trustees may adopt and offer to Shareholders of the Trust
or of any Series such dividend reinvestment plans, cash dividend payout plans or
related plans as the Trustees deem appropriate.
In as much as the computation of net income and gains for Federal
income tax purposes may vary from the computation thereof on the books, the
above provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust to avoid or reduce liability for taxes.
Section 8.3. Determination of Net Income. The Trustees shall have the
power to determine the net income of any Series of the Trust and from time to
time to distribute such net income ratably among the Shareholders as dividends
in cash or additional Shares of such Series issuable hereunder. The
determination of net income and the resultant declaration of dividends shall be
as set forth in the Prospectus. The Trustees shall have full discretion to
determine whether any cash or property received by any Series of the Trust shall
be treated as income or as principal and whether any item of expense shall be
charged to the income or the principal account, and their determination made in
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good faith shall be conclusive upon the Shareholders. In the case of stock
dividends received, the Trustees shall have full discretion to determine, in the
light of the particular circumstances, how much, if any, of the value thereof
shall be treated as income, the balance, if any, to be treated as principal.
Section 8.4. Power to Modify Foregoing Procedures. Notwithstanding any
of the foregoing provisions of this Article VIII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the per
Share net asset value of the Shares or net income, or the declaration and
payment of dividends and distributions, as they may deem necessary or desirable
to enable the Trust to comply with any provision of the 1940 Act, or any rule or
regulation thereunder, including any rule or regulation adopted pursuant to
Section 22 of the 1940 Act by the Commission or any securities association
registered under the Securities Exchange Act of 1934, or any order of exemption
issued by said Commission, all as in effect now or hereafter amended or
modified. Without limiting the generality of the foregoing, the Trustees may
establish classes or additional Series of Shares in accordance with Section 6.9.
ARTICLE IX
DURATION; TERMINATION OF TRUST, AMENDMENT, MERGERS, ETC.
Section 9.1. Duration. The Trust shall continue without limitation of
time but subject to the provisions of this Article IX.
Section 9.2. Termination of Trust. (a) The Trust or any Series may be
terminated (i) by any meeting of Shareholders of the Trust or the appropriate
Series thereof, (ii) by an instrument in writing, without a meeting, signed by a
majority of the Trustees, or (iii) by such other vote as may be established by
the Trustees with respect to any Class or Series of Shares. Upon termination of
the Trust or Series:
(i) The Trust or the Series shall carry on no business except
for the purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the
Trust or the Series and all of the powers of the Trustees under this
Declaration shall continue until the affairs of the Trust shall have
been wound up, including the power to fulfill or discharge the
contracts of the Trust or the Series, collect its assets, sell, convey,
assign, exchange, transfer or otherwise dispose of all or any part of
the remaining Trust Property or Trust Property allocated or belonging
to such Series to one or more persons at public or private sale for
consideration which may consist in whole or in part of cash, securities
or other property of any kind, discharge or pay its liabilities, and to
do all other acts appropriate to liquidate its business; provided that
any sale, conveyance, assignment, exchange, transfer or other
disposition of all or substantially all the Trust Property or Trust
Property allocated or belonging to such Series shall require
Shareholder approval in accordance with Section 9.4 hereof.
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(iii) After paying or adequately providing for the payment of
all liabilities, and upon receipt of such releases, indemnities and
refunding agreements, as they deem necessary for their protection, the
Trustees may distribute the remaining Trust Property or Trust Property
allocated or belonging to such Series, in cash or in kind or partly
each, among the Shareholders of the Trust according to their respective
rights. The Trust, any Series or Class thereof may be terminated by the
affirmative vote of the holders of not less than two-thirds of the
Shares outstanding and entitled to vote at any meeting of Shareholders
of the Trust or the appropriate Series or Class thereof.
Section 9.3. Amendment Procedure. The Trustees may, without any
Shareholder vote, amend or otherwise supplement this Declaration by making an
amendment, a Declaration of Trust supplemental hereto or an amended and restated
trust instrument; provided, that Shareholders shall have the right to vote on
any amendment (a) which would adversely affect the voting rights of Shareholders
granted in Article VI, Section 6.8, (b) to this Section 9.3, (c) required to be
approved by Shareholders by law or by the Trust's registration statement(s)
filed with the Commission, and (d) submitted to them by the Trustees in their
discretion. Any amendment submitted to Shareholders which the Trustees determine
would affect the Shareholders of one or more Series or Class shall be authorized
by vote of the Shareholders of each Series or Class affected and no vote shall
be required of Shareholders of a Series or Class not affected. Notwithstanding
anything else herein, any amendment to Article V which would have the effect of
reducing the indemnification and other rights provided thereby to Trustees or
officers of the Trust or to Shareholders or former Shareholders, and any repeal
or amendment of this sentence shall each require the affirmative vote of the
holders of two-thirds of the Outstanding Shares of the Trust entitled to vote
thereon.
Section 9.4. Merger, Consolidation and Sale of Assets. The Trust or any
Series thereof may merge or consolidate with any other corporation, association,
trust or other organization or may sell, lease or exchange all or substantially
all of the Trust Property or Trust Property allocated or belonging to such
Series, including its good will, upon such terms and conditions and for such
consideration when and as authorized, at any meeting of Shareholders called for
the purpose, by the affirmative vote of the holders of not less than two-thirds
of the Shares of the Trust or such Series outstanding and entitled to vote, or
by an instrument or instruments in writing without a meeting, consented to by
the holders of not less than two-thirds of such Shares, or by such other vote as
may be established by the Trustees with respect to any series or class of
Shares; provided, however, that, if such merger, consolidation, sale, lease or
exchange is recommended by the Trustees, an affirmative vote of a majority of
the Shares outstanding shall be sufficient authorization; and any such merger,
consolidation, sale, lease or exchange shall be deemed for all purposes to have
been accomplished under and pursuant to the laws of the Commonwealth of
Massachusetts. Nothing contained herein shall be construed as requiring approval
of Shareholders for (a) any sale of assets in the ordinary course of business
for the Trust or any Series or class of Shares or (b) any transaction described
in Section 3.2(c) hereof.
Section 9.5. Reorganization and Master/Feeder. 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, partnership, association or other
organization to take over all or portion of the Trust Property or the Trust
Property allocated or belonging to such Series or to carry on any business in
which the
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Trust shall directly or indirectly have any interest, or to sell, convey and
transfer all or a portion of the Trust Property or the Trust Property allocated
or belonging to such Series to any such corporation, trust, 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 or any corporation, partnership, trust, association or organization
in which the Trust or such Series holds or is about to acquire shares or any
other interest. The Trustees may also cause a merger or consolidation between
the Trust or any successor thereto and any such corporation, trust, partnership,
association or other organization if and to the extent permitted by law, as
provided under the law then in effect. Nothing contained herein shall be
construed as requiring approval of Shareholders for the Trustees to organize or
assist.
ARTICLE X
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit or cause the officers
of the Trust to submit to the Shareholders a written financial report of each
Series of the Trust, including financial statements which shall at least
annually be certified by independent public accountants.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Filing. This Declaration and any amendment hereto shall
be filed in the office of the Secretary of the Commonwealth of Massachusetts and
in such other places as may be required under the laws of Massachusetts and may
also be filed or recorded in such other places as the Trustees deem appropriate.
Each amendment so filed shall be accompanied by a certificate signed and
acknowledged by a Trustee or by the Secretary or any Assistant Secretary of the
Trust stating that such action was duly taken in a manner provided herein. A
restated Declaration, integrating into a single instrument all of the provisions
of the Declaration which are then in effect and operative, may be executed from
time to time by a majority of the Trustees and shall, upon filing with the
Secretary of the Commonwealth of Massachusetts, be conclusive evidence of all
amendments contained therein and may thereafter be referred to in lieu of the
original Declaration and the various amendments thereto.
Section 11.2. Governing Law. This Declaration is executed by the
Trustees and delivered in the Commonwealth of Massachusetts and with reference
to the laws thereof and the rights of all parties and the validity and
construction of every provision hereof shall be subject to and construed
according to the laws of said State.
Section 11.3. Counterparts. The Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall
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constitute one and the same instrument, which shall be sufficiently evidenced by
any such original counterpart.
Section 11.4. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust, appears to be a Trustee
hereunder, or Secretary or Assistant Secretary of the Trust, certifying to: (a)
the number or identity of Trustees or Shareholders, (b) the due authorization of
the execution of any instrument or writing, (c) the form of any vote passed at a
meeting of Trustees or Shareholders, (d) the fact that the number of Trustees or
Shareholders present at any meeting or executing any written instrument
satisfies the requirements of this Declaration, (e) the form of any By-Laws
adopted by or the identity of any officers elected by the Trustees, or (o the
existence of any fact or facts which in any manner relate to the affairs of the
Trust, shall be conclusive evidence as to the matters so certified in favor of
any Person dealing with the Trustees and their successors.
Section 11.5. Provisions in Conflict with Law or Regulations. (a) The
provisions of the Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code or with other applicable laws and regulations, the
conflicting provisions shall be deemed superseded by such law or regulation to
the extent necessary to eliminate such conflict; provided, however, that such
determination shall not affect any of the remaining provisions of the
Declaration or render invalid or improper any action taken or omitted prior to
such determination.
(b) If any provision of the Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
pertain only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of the
Declaration in any jurisdiction.
Section 11.6. Principal Place of Business. The principal place of
business of the Trust shall be 4400 Computer Drive, Westborough, Massachusetts
01581, or such other location as the Trustees may designate from time to time.
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IN WITNESS WHEREOF, the undersigned have executed this Declaration of
Trust this 18th day of November, 1997.
/s/ Richard L. Droster /s/ Warren J. Isabelle
- ------------------------------ -------------------------------
Richard L. Droster, as Warren J. Isabelle, as
Trustee and not individually Trustee and not individually
One Financial Center One Financial Center
Boston, MA 02111 Boston, MA 02111
STATE OF MASSACHUSETTS )
) ss.:
COUNTY OF SUFFOLK )
On this 18th day of November, 1997, Warren J. Isabelle and Richard L.
Droster, known to me and known to be the individuals described in and who
executed the foregoing instrument, personally appeared before me and they
severally acknowledged the foregoing instrument to be their free act and deed.
/s/ Katherine M. Kozub
---------------------------------
Notary Public
My commission expires: October 21, 1999
IN WITNESS WHEREOF, the undersigned has executed this Declaration of
Trust this 18th day of November, 1997.
/s/ Joseph F. Mazzella
------------------------------------------
Joseph F. Mazzella, as Trustee and not individually
101 Federal Street
Boston, MA 02110
STATE OF MASSACHUSETTS )
) ss.:
COUNTY OF SUFFOLK )
On this 18th day of November, 1997, Joseph F. Mazzella, known to me and
known to be the individual described in and who executed the foregoing
instrument, personally appeared before me and they severally acknowledged the
foregoing instrument to be their free act and deed.
/s/ Katherine M. Kozub
---------------------------------
Notary Public
My commission expires: October 21, 1999
24
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EXHIBIT 2
BY-LAWS
<PAGE> 2
BY-LAWS
OF
ICM SERIES TRUST
ARTICLE I
DEFINITIONS
The terms "Commission," "Declaration," "Distributor," "Investment
Adviser," "1940 Act," "Shareholder," "Shares," "Transfer Agent," "Trust," "Trust
Property" and "Trustees" have the respective meanings given them in the
Declaration of Trust of ICM Series Trust dated November 18, 1997.
ARTICLE II
OFFICES
SECTION 2.1. Principal Office. Until changed by the Trustees, the
principal office of the Trust in the Commonwealth of Massachusetts shall be in
Westborough, Massachusetts.
SECTION 2.2. Other Offices, In addition to its principal office in the
Commonwealth of Massachusetts, the Trust may have an office or offices at such
other places within and without the Commonwealth as the Trustees may from time
to time designate or the business of the Trust may require.
ARTICLE III
SHAREHOLDERS' MEETINGS
SECTION 3.1. Place of Meetings. Meetings of Shareholders shall be held
at such place, within or without the Commonwealth of Massachusetts, as may be
designated from time to time by the Trustees.
SECTION 3.2. Meetings. Meetings of Shareholders of the Trust shall be
held whenever called by the Trustees or the President of the Trust and whenever
election of a Trustee or Trustees by Shareholders is required by the provisions
of Section 16(a) of the 1940 Act, for that purpose. Meetings of Shareholders
shall also be called by the Secretary upon the written request of the holders of
Shares entitled to vote as otherwise required by Section 16(c) of the 1940 Act
and to the extent required by the corporate or business statute of any state in
which the Shares of the Trust are sold, as made applicable to the Trust by the
provisions of Section 2.3 of the Declaration. Such request shall state the
purpose or purposes of such meeting and the matters proposed to be acted on
thereat. Except to the extent otherwise required by Section 16(c) of the 1940
Act, as made applicable to the Trust by the provisions of Section 2.3 of the
Declaration, the Secretary shall inform such Shareholders of the reasonable
estimated cost of preparing and mailing such notice of the meeting, and upon
payment to the Trust of such costs, the Secretary shall give notice stating the
purpose or purposes of the meeting to all entitled to vote at such meeting. No
meeting need be called upon the request of the holders of Shares entitled to
cast less than a majority of all votes entitled to be cast
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at such meeting, to consider any matter which is substantially the same as a
matter voted upon at any meeting of Shareholders held during the preceding
twelve months.
SECTION 3.3. Notice of Meetings. Written or printed notice of every
Shareholders' meeting stating the place, date, and purpose or purposes thereof,
shall be given by the Secretary not less than ten (10) nor more than ninety (90)
days before such meeting to each Shareholder entitled to vote at such meeting.
Such notice shall be deemed to be given when deposited in the United States
mail, postage prepaid, directed to the Shareholder at his address as it appears
on the records of the Trust.
SECTION 3.4. Quorum and Adjournment of Meetings. Except as otherwise
provided by law, by the Declaration or by these By-Laws, at all meetings of
Shareholders the holders of a majority of the Shares issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall be
requisite and shall constitute a quorum for the transaction of business. In the
absence of a quorum, the Shareholders present or represented by proxy and
entitled to vote thereat shall have power to adjourn the meeting from time to
time. Any adjourned meeting may be held as adjourned without further notice. At
any adjourned meeting at which a quorum shall be present, any business may be
transacted as if the meeting had been held as originally called.
SECTION 3.5. Proxies. Subject to the provisions of the Declaration,
every Person entitled to vote for Trustees or on any other matter shall have the
right to do so either in person or by proxy, provided that either (i) an
instrument authorizing such a proxy to act is executed by the Shareholder in
writing and dated not more than eleven (11) months before the meeting, unless
the instrument specifically provides for a longer period or (ii) the Trustees
adopt an electronic, telephonic, computerized or other alternative to execution
of a written instrument authorizing the proxy to act which authorization is
received not more than eleven (11) months before the meeting. A proxy shall be
deemed executed by a Shareholder if the Shareholder's name is placed on the
proxy (whether by manual signature, typewriting, telegraphic transmission or
otherwise by the Shareholder or the Shareholder's attorney-in-fact or other
authorized agent. A valid proxy that does not state that it is irrevocable shall
continue in full force and effect unless (i) revoked by the person executing it
before the vote pursuant to that proxy by a writing delivered to the Trust
stating that the proxy is revoked by a subsequent proxy executed by, or
attendance at the meeting and voting in person by, the person executing that
proxy or revoked by such person using any electronic, telephonic, computerized
or other alternative means authorized by the Trustees for authorizing the proxy
to act; or (ii) written notice of the death or incapacity of the maker of that
proxy is received by the Trust before the vote pursuant to that proxy is
counted. 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
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. Proxies shall be
delivered to the Secretary of the Trust or other person responsible for
recording the proceedings before being voted. Unless otherwise specifically
limited by their terms, proxies shall entitle the holder thereof to vote at any
adjournment of a meeting. At all meetings of the Shareholders, unless the voting
is conducted by inspectors, all questions relating to the qualifications of
voters, the validity of proxies, and the acceptance or rejection of votes shall
be decided by the chairman of the meeting.
SECTION 3.6. Inspectors of Election. In advance of any meeting of
Shareholders, the Trustees may appoint Inspectors of Election to act at the
meeting or any adjournment thereof. If Inspectors of Election are not so
appointed, the chairman of any meeting of Shareholders may, and on the request
of any Shareholder or his proxy shall, appoint Inspectors of Election of the
meeting. In case any person appointed as Inspector fails to appear or fails or
refuses to act, the vacancy may be filled by appointment made by the
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Trustees in advance of the convening of the meeting or at the meeting by the
person acting as chairman. The Inspectors of Election shall determine the number
of Shares outstanding, the Shares represented at the meeting, the existence of a
quorum, the authenticity, validity and effect of proxies, shall receive votes,
ballots or consents, shall hear and determine all challenges and questions in
any way arising in connection with the right to vote, shall count and tabulate
all votes or consents, determine the results, and do such other acts as may be
proper to conduct the election or vote with fairness to all Shareholders. On
request of the chairman of the meeting, or of any Shareholder or his proxy, the
Inspectors of Election shall make a report in writing of any challenge or
question or matter determined by them and shall execute a certificate of any
facts found by them.
SECTION 3.7. Inspection of Books and Records. Shareholders shall have
such rights and procedures of inspection of the books and records of the Trust
as are granted to Shareholders under Section 32 of the Corporations Law of the
State of Massachusetts.
SECTION 3.8. Action by Shareholders Without Meeting. Except as
otherwise provided by law, the provisions of these By-Laws relating to notices
and meetings to the contrary notwithstanding, any action required or permitted
to be taken at any meeting of Shareholders may be taken without a meeting if a
majority of the Shareholders entitled to vote upon the action consent to the
action in writing and such consents are filed with the records of the Trust.
Such consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.
SECTION 3.9. Presence at Meetings. Presence at meetings of Shareholders
requires physical attendance by the Shareholder or his or her proxy at the
meeting site and does not encompass attendance by telephonic or other electronic
means.
ARTICLE IV
TRUSTEES
SECTION 4.1. Meetings of the Trustees. The Trustees may in their
discretion provide for regular or special meetings of the Trustees. Regular
meetings of the Trustees may be held at such time and place as shall be
determined from time to time by the Trustees without further notice. Special
meetings of the Trustees may be called at any time by the Chairman and shall be
called by the Chairman or the Secretary upon the written request of any two (2)
Trustees.
SECTION 4.2. Notice of Special Meetings. Written notice of special
meetings of the Trustees, stating the place, date and time thereof, shall be
given not less than two (2) days before such meeting to each Trustee,
personally, by telegram, by facsimile, by mail, or by leaving such notice at his
place of residence or usual place of business. If mailed, such notice shall be
deemed to be given when deposited in the United States mail, postage prepaid,
directed to the Trustee at his address as it appears on the records of the
Trust. Subject to the provisions of the 1940 Act, notice or waiver of notice
need not specify the purpose of any special meeting.
SECTION 4.3. Telephone Meetings. Subject to the provisions of the 1940
Act, any Trustee, or any member or members of any committee designated by the
Trustees, may participate in a meeting of the Trustees, or any such committee,
as the case may be, by means of a conference telephone or similar
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communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation in a meeting by these means
constitutes presence in person at the meeting.
SECTION 4.4. Quorum, Voting and Adjournment of Meetings. At all
meetings of the Trustees, a majority of the Trustees shall be requisite to and
shall constitute a quorum for the transaction of business. If a quorum is
present, the affirmative vote of a majority of the Trustees present shall be the
act of the Trustees, unless the concurrence of a greater proportion is expressly
required for such action by law, the Declaration or these By- Laws. If at any
meeting of the Trustees there be less than a quorum present, the Trustees
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall have been obtained.
SECTION 4.5. Action by Trustees Without Meeting. The provisions of
these By-Laws covering notices and meetings to the contrary notwithstanding, and
except as required by law, any action required or permitted to be taken at any
meeting of the Trustees may be taken without a meeting if a consent in writing
setting forth the action shall be signed by all of the Trustees entitled to vote
upon the action and such written consent is filed with the minutes of
proceedings of the Trustees.
SECTION 4.6. Expenses and Fees. Each Trustee may be allowed expenses,
if any, for attendance at each regular or special meeting of the Trustees, and
each Trustee who is not an officer or employee of the Trust or of its investment
manager or underwriter or of any corporate affiliate of any of said persons
shall receive for services rendered as a Trustee of the Trust such compensation
as may be fixed by the Trustees. Nothing herein contained shall be construed to
preclude any Trustee from serving the Trust in any other capacity and receiving
compensation therefor.
SECTION 4.7. Execution of Instruments and Documents and Signing of
Checks and Other Obligations and Transfers. All instruments, documents and other
papers shall be executed in the name and on behalf of the Trust and all checks,
notes, drafts and other obligations for the payment of money by the Trust shall
be signed, and all transfer of securities standing in the name of the Trust
shall be executed, by the Chairman, the President, any Vice President or the
Treasurer or by any one or more officers or agents of the Trust as shall be
designated for that purpose by vote of the Trustees; notwithstanding the above,
nothing in this Section 4.7 shall be deemed to preclude the electronic
authorization, by designated persons, of the Trust's Custodian (as described
herein in Section 9.1) to transfer assets of the Trust, as provided for herein
in Section 9.1.
SECTION 4.8. Indemnification of Trustees, Officers, Employees and
Agents. (a) The Trust shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Trust) by reason of the fact
that he is or was a Trustee, officer, employee, or agent of the Trust. The
indemnification shall be against expenses, including attorneys' fees, judgments,
fines, and amounts paid in settlement, actually and reasonably incurred by him
in connection with the action, suit, or proceeding, if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contenders or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
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(b) The Trust shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or on behalf of the Trust to obtain a judgment or decree in its favor by
reason of the fact that he is or was a Trustee, officer, employee, or agent of
the Trust. The indemnification shall be against expenses, including attorneys'
fees actually and reasonably incurred by him in connection with the defense or
settlement of the action or suit, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust;
except that no indemnification shall be made in respect of any claim, issue, or
matter as to which the person has been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Trust, except to the extent
that the court in which the action or suit was brought, or a court of equity in
the county in which the Trust has its principal office, determines upon
application that, despite the adjudication of liability but in view of all
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for those expenses which the court shall deem proper, provided such
Trustee, officer, employee or agent is not adjudged to be liable by reason of
his willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office.
(c) To the extent that a Trustee, officer, employee, or agent of the
Trust has been successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in subsection (a) or (b) or in defense of any
claim, issue or matter therein, he shall be indemnified against expenses,
including, attorneys' fees, actually and reasonably incurred by him in
connection therewith.
(d) (1) Unless a court orders otherwise, any indemnification under
subsections (a) or (b) of this section may be made by the Trust only as
authorized in the specific case after a determination that indemnification of
the Trustee, officer, employee, or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in subsections (a) or
(b).
(2) The determination shall be made:
(i) By the Trustees, by a majority vote of a quorum
which consists of Trustees who were not parties to the action,
suit or proceeding; or
(ii) If the required quorum is not obtainable, or if
a quorum of disinterested Trustees so directs, by independent
legal counsel in a written opinion; or
(iii) By the Shareholders.
(3) Notwithstanding any provision of this Section 4.8, no
person shall be entitled to indemnification for any liability, whether
or not there is an adjudication of liability, arising by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard
of duties as described in Section 17(h) and (i) of the Investment
Company Act of 1940 ("disabling conduct"). A person shall be deemed not
liable by reason of disabling conduct if, either:
(i) a final decision on the merits is made by a court
or other body before whom the proceeding was brought that the
person to be indemnified ("indemnitee") was not liable by
reason of disabling conduct; or
(ii) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the
indemnitee was not liable by reason of disabling conduct, is
made by either
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(A) a majority of a quorum of Trustees who
are neither "interested persons" of the Trust, as
defined in Section 2(a)(19) of the Investment Company
Act of 1940, nor parties to the action, suit or
proceeding, or
(B) an independent legal counsel in a
written opinion.
(e) Expenses, including attorneys' fees, incurred by a Trustee,
officer, employee or agent of the Trust in defending a civil or criminal action,
suit or proceeding may be paid by the Trust in advance of the final disposition
thereof if:
(1) authorized in the specific case by the Trustees; and
(2) the Trust receives an undertaking by or on behalf of the
Trustee, officer, employee or agent of the Trust to repay the advance
if it is not ultimately determined that such person is entitled to be
indemnified by the Trust; and
(3) either, (i) such person provides a security for his
undertaking, or
(ii) the Trust is insured against losses by reason of
any lawful advances, or
(iii) a determination, based on a review of readily
available facts, that there is reason to believe that such
person ultimately will be found entitled to indemnification,
is made by either--
(A) a majority of a quorum which consists of
Trustees who are neither "interested persons" of the
Trust, as defined in Section 2(a)(19) of the 1940
Act, nor parties to the action, suit or proceeding,
or
(B) an independent legal counsel in a
written opinion.
(f) The indemnification provided by this Section shall not be deemed
exclusive of any other rights to which a person may be entitled under any
by-law, agreement, vote of Shareholders or disinterested Trustees or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding the office, and shall continue as to a person who has ceased to be
a Trustee, employee, or agent and inure to the benefit of the heirs, executors
and administrators of such person; provided that no person may satisfy any right
of indemnity or reimbursement granted herein or to which he may be otherwise
entitled except out of the property of the Trust, and no Shareholder shall be
personally liable with respect to any claim for indemnity or reimbursement or
otherwise.
(g) The Trust may purchase and maintain insurance on behalf of any
person who is or was a Trustee, officer, employee, or agent of the Trust,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such. However, in no event will the
Trust purchase insurance to indemnify any officer or Trustee against liability
for any act for which the Trust itself is not permitted to indemnify him.
(h) Nothing contained in this Section shall be construed to protect any
Trustee or officer of the Trust against any liability to the Trust or to its
security holders to which he 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 office.
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ARTICLE V
COMMITTEES
SECTION 5.1. Executive and Other Committees. The Trustees, by
resolution adopted by a majority of the Trustees, may designate an Executive
Committee, Audit Committee, Nominating Committee, Pricing Committee, and/or
other committees, each committee to consist of two (2) or more of the Trustees
of the Trust and may delegate to such committees, in the intervals between
meetings of the Trustees, any or all of the powers of the Trustees in the
management of the business and affairs of the Trust. In the absence of any
member of any such committee, the members thereof present at any meeting,
whether or not they constitute a quorum, may appoint a Trustee to act in place
of such absent member.. Each such committee shall keep a record of its
proceedings.
The Executive Committee and any other committee shall fix its own rules
or procedure, but the presence of at least fifty percent (50%) of the members of
the whole committee shall in each case be necessary to constitute a quorum of
the committee and the affirmative vote of the majority of the members of the
committee present at the meeting shall be necessary to take action.
All actions of the Executive Committee shall be reported to the
Trustees at the meeting thereof next succeeding to the taking of such action.
SECTION 5.2. Advisory Committee. The Trustees may appoint an advisory
committee which shall be composed of persons who do not serve the Trust in any
other capacity and which shall have advisory functions with respect to the
investments of the Trust but which shall have no power to determine that any
security or other investment shall be purchased, sold or otherwise disposed of
by the Trust. The number of persons constituting any such advisory committee
shall be determined from time to time by the Trustees. The members of any such
advisory committee may receive compensation for their services and may be
allowed such fees and expenses for the attendance at meetings as the Trustees
may from time to time determine to be appropriate.
SECTION 5.3. Committee Action Without Meeting. The provisions of these
By-Laws covering notices and meetings to the contrary notwithstanding, and
except as required by law, any action required or permitted to be taken at any
meeting of any Committee of the Trustees appointed pursuant to Section 5.1 of
these By-Laws may be taken without a meeting if a consent in writing setting
forth the action shall be signed by all members of the Committee entitled to
vote upon the action and such written consent is filed with the records of the
proceedings of the Committee.
ARTICLE VI
OFFICERS
SECTION 6.1. Executive Officers. The executive officers of the Trust
shall be a Chairman, a President, one or more Vice Presidents, a Secretary and a
Treasurer. The Chairman shall be selected from among the Trustees but none of
the other executive officers need be a Trustee. Two or more offices, except
those of President and any Vice President, may be held by the same person, but
no officer shall execute, acknowledge or verify any instrument in more than one
capacity. The executive officers of the Trust shall
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be elected annually by the Trustees and each executive officer so elected shall
hold office until his successor is elected and has qualified.
SECTION 6.2. Other Officers and Agents. The Trustees may also elect one
or more Assistant Vice Presidents, Assistant Secretaries and Assistant
Treasurers and may elect, or may delegate to the Chairman the power to appoint,
such other officers and agents as the Trustees shall at any time or from time to
time deem advisable.
SECTION 6.3. Term and Removal and Vacancies. Each officer of the Trust
shall hold office until his successor is elected and has qualified. Any officer
or agent of the Trust may be removed by the Trustees whenever, in their
judgment, the best interests of the Trust will be served thereby, but such
removal shall be without prejudice to the contractual rights, if any, of the
person so removed.
SECTION 6.4. Compensation of Officers, The compensation of officers and
agents of the Trust shall be fixed by the Trustees, or by the Chairman to the
extent provided by the Trustees with respect to officers appointed by the
Chairman.
SECTION 6.5. Power and Duties. All officers and agents of the Trust, as
between themselves and the Trust, shall have such authority and perform such
duties in the management of the Trust as may be provided in or pursuant to these
By-Laws, or to the extent not so provided, as may be prescribed by the Trustees;
provided, that no rights of any third party shall be affected or impaired by any
such By-Law or resolution of the Trustees unless he has knowledge thereof.
SECTION 6.6. The Chairman. (a) The Chairman shall be the chief
executive officer of the Trust; he shall preside at all meetings of the
Shareholders and of the Trustees; he shall have general and active management of
the business of the Trust, shall see that all orders and resolutions of the
Trustees are carried into effect, and, in connection therewith, shall be
authorized to delegate to the President or to one or more Vice Presidents such
of his powers and duties at such times and in such manner as he may deem
advisable; he shall be a signatory on all Annual and Semi-Annual Reports as may
be sent to Shareholders, and he shall perform such other duties as the Trustees
may from time to time prescribe.
(b) In the absence of the Chairman, the Board shall determine who shall
preside at all meetings of the Shareholders and the Board of Trustees.
SECTION 6.7. The President. The President shall perform such duties as
the Board of Trustees and the Chairman may from time to time prescribe.
SECTION 6.8. The Vice Presidents. The Vice Presidents shall be of such
number and shall have such titles as may be determined from time to time by the
Trustees. The Vice President, or, if there be more than one, the Vice Presidents
in the order of their seniority as may be determined from time to time by the
Trustees or the Chairman, shall, in the absence or disability of the President,
exercise the powers and perform the duties of the President, and he or they
shall perform such other duties as the Trustees or the Chairman may from time to
time prescribe.
SECTION 6.9. The Assistant Vice Presidents. The Assistant Vice
President, or, if there be more than one, the Assistant Vice Presidents, shall
perform such duties and have such powers as may be assigned them from time to
time by the Trustees or the Chairman.
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SECTION 6.10. The Secretary. The Secretary shall attend all meetings of
the Trustees and all meetings of the Shareholders and record all the proceedings
of the meetings of the Shareholders and of the Trustees in a book to be kept for
that purpose, and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
Shareholders and special meetings of the Trustees, and shall perform such other
duties and have such powers as the Trustees, or the Chairman, may from time to
time prescribe. He shall keep in safe custody the seal of the Trust and affix or
cause the same to be affixed to any instrument requiring it, and, when so
affixed, it shall be attested by his signature or by the signature of an
Assistant Secretary.
SECTION 6.11. The Assistant Secretaries. The Assistant Secretary, or,
if there be more than one, the Assistant Secretaries in the order determined by
the Trustees or the Chairman, shall, in the absence or disability of the
Secretary, perform the duties and exercise the powers of the Secretary and shall
perform such duties and have such other powers as the Trustees or the Chairman
may from time to time prescribe.
SECTION 6.12. The Treasurer. The Treasurer shall be the chief financial
officer of the Trust. He shall keep or cause to be kept full and accurate
accounts of receipts and disbursements in books belonging to the Trust, and he
shall render to the Trustees and the Chairman, whenever any of them require it,
an account of his transactions as Treasurer and of the financial condition of
the Trust; and he shall perform such other duties as the Trustees, or the
Chairman, may from time to time prescribe.
SECTION 6.13. The Assistant Treasurers. The Assistant Treasurer, or, if
there shall be more than one, the Assistant Treasurers in the order determined
by the Trustees or the Chairman, shall, in the absence or disability of the
Treasurer, perform the duties and exercise the powers of the Treasurer and shall
perform such other duties and have such other powers as the Trustees, or the
Chairman, may from time to time prescribe.
SECTION 6.14. Delegation of Duties. Whenever an officer is absent or
disabled, or whenever for any reason the Trustees may deem it desirable, the
Trustees may delegate the powers and duties of an officer or officers to any
other officer or officers or to any Trustee or Trustees.
ARTICLE VII
DIVIDENDS AND DISTRIBUTIONS
Subject to any applicable provisions of law and the Declaration,
dividends and distributions upon the Shares may be declared at such intervals as
the Trustees may determine, in cash, in securities or other property, or in
Shares, from any sources permitted by law, all as the Trustees shall from time
to time determine.
Inasmuch as the computation of net income and net profits from the
sales of securities or other properties for federal income tax purposes may vary
from the computation thereof on the records of the Trust, the Trustees shall
have power, in their discretion, to distribute as income dividends and as
capital gain distributions, respectively, amounts sufficient to enable the Trust
to avoid or reduce liability for federal income taxes.
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ARTICLE VIII
CUSTODIAN
SECTION 8.1. Appointment and Duties. The Trust shall at all times
employ a bank or trust company having capital, surplus and undivided profits of
at least five million dollars ($5,000,000) as custodian with authority as its
agent, but subject to such restrictions, limitations and other requirements, if
any, as may be contained in these By-Laws and the 1940 Act:
(1) to receive and hold the securities owned by the Trust and
deliver the same upon written or electronically transmitted order;
(2) to receive and receipt for any moneys due to the Trust and
deposit the same in its own banking department or elsewhere as the
Trustees may direct;
(3) to disburse such funds upon orders or vouchers;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian. If so directed by a majority vote of shareholders, the
custodian shall deliver and pay over all property of the Trust held by it as
specified in such vote.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian and upon such terms and conditions as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees.
SECTION 8.2. Central Certificate System. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct the
custodian to deposit all or any part of the securities owned by the Trust in a
system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, or such other person as
may be permitted by the Commission, or otherwise in accordance with the 1940
Act, pursuant to which system all securities of any particular class or series
of any issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust.
ARTICLE IX
WAIVER OF NOTICE
Whenever any notice of the time, place or purpose of any meeting of
Shareholders, Trustees, or of any committee is required to be given in
accordance with law or under the provisions of the Declaration or these By-
Laws, a waiver thereof in writing, signed by the person or persons entitled to
such notice and filed with the records of the meeting, whether before or after
the holding thereof, or actual attendance at the meeting of shareholders,
Trustees or committee, as the case may be, in person, shall be deemed equivalent
to the giving of such notice to such person.
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ARTICLE X
MISCELLANEOUS
SECTION 10.1. Location of Books and Records. The books and records of
the Trust may be kept outside the Commonwealth of Massachusetts at such place or
places as the Trustees may from time to time determine, except as otherwise
required by law.
SECTION 10.2. Record Date. The Trustees may fix in advance a date as
the record date for the purpose of determining Shareholders entitled to notice
of, or to vote at, any meeting of Shareholders, or Shareholders entitled to
receive payment of any dividend or the allotment of any rights, or in order to
make a determination of Shareholders for any other proper purpose. Such date, in
any case, shall be not more than ninety (90) days, and in case of a meeting of
Shareholders not less than ten (10) days, prior to the date on which particular
action requiring such determination of Shareholders is to be taken. In lieu of
fixing a record date the Trustees may provide that the transfer books shall be
closed for a stated period but not to exceed, in any case, twenty (20) days. If
the transfer books are closed for the purpose of determining Shareholders
entitled to notice of a vote at a meeting of Shareholders, such books shall be
closed for at least ten (10) days immediately preceding such meeting.
SECTION 10.3. Seal. The Trustees shall adopt a seal, which shall be in
such form and shall have such inscription thereon as the Trustees may from time
to time provide. The seal of the Trust may be affixed to any document, and the
seal and its attestation may be lithographed, engraved or otherwise printed on
any document with the same force and effect as if it had been imprinted and
attested manually in the same manner and with the same effect as if done by a
Massachusetts business corporation under Massachusetts law.
SECTION 10.4. Fiscal Year. The fiscal year of the Trust shall end on
such date as the Trustees may by resolution specify, and the Trustees may by
resolution change such date for future fiscal years at any time and from time to
time.
SECTION 10.5. Orders for Payment of Money. All orders or instructions
for the payment of money of the Trust, and all notes or other evidences of
indebtedness issued in the name of the Trust, shall be signed by such officer or
officers or such other person or persons as the Trustees may from time to time
designate, or as may be specified in or pursuant to the agreement between the
Trust and the bank or trust company appointed as Custodian of the securities and
funds of the Trust.
ARTICLE XI
COMPLIANCE WITH FEDERAL REGULATIONS
The Trustees are hereby empowered to take such action as they may deem
to be necessary, desirable or appropriate so that the Trust is or shall be in
compliance with any federal or state statute, rule or regulation with which
compliance by the Trust is required.
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ARTICLE XII
AMENDMENTS
These By-Laws may be amended, altered, or repealed, or new By-Laws may
be adopted, (a) by a Majority Shareholder Vote, or (b) by the Trustees;
provided, however, that no By-Law may be amended, adopted or repealed by the
Trustees if such amendment, adoption or repeal requires, pursuant to law, the
Declaration, or these By-Laws, a vote of the Shareholders. The Trustees shall in
no event adopt ByLaws which are in conflict with the Declaration, and any
apparent inconsistency shall be construed in favor of the related provisions in
the Declaration.
ARTICLE XIII
DECLARATION OF TRUST
The Declaration of Trust establishing ICM Series Trust, a copy of which
is on file in the office of the Secretary of the Commonwealth of Massachusetts,
provides that the name ICM Series Trust refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or personally; and
no Trustee, Shareholder, officer, employee or agent of the Trust shall be held
to any personal liability, nor shall resort be had to their private property for
the satisfaction of any obligation or claim or otherwise, in connection with the
affairs of the Trust.
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