File No. 333- 45959
ICA No. 811-08649
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 6, 1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No.
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 1
E.I.I. REALTY SECURITIES TRUST
(Exact Name of Registrant as Specified in Charter)
667 Madison Avenue, 16th Floor
New York, New York 10021
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 575-5500
Richard J. Adler
European Investors Incorporated
667 Madison Avenue, 16th Floor
New York, New York 10021
(Name and Address of Agent for Service)
Copies to:
Susan J. Penry-Williams, Esq.
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Approximate date of proposed public offering: As soon as practicable
after this registration statement becomes effective.
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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 the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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E.I.I. REALTY SECURITIES TRUST
E.I.I. REALTY SECURITIES FUND
CROSS REFERENCE SHEET
Pursuant to Rule 495(a)
under the Securities Act of 1933
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Item Number
Form N-1A
Part A Prospectus Caption
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1. Cover Page Cover Page; Introduction
2. Synopsis Fund Expenses
3. Condensed Financial Information Inapplicable
4. General Description of Registrant Introduction; Investment Objectives and Policies;
Risk Factors; Investment Limitations; Additional
Information
5. Management of the Fund Fund Description; The Organization,
Management, and Service Providers of the Fund
5.A. Management's Discussion of Fund Investment Philosophy
Performance
6. Capital Stock and Other Securities How to Purchase Shares; How to Redeem Shares;
Dividends, Distributions and Taxes; Fund
Organization and Fees; Additional Information
7. Purchase of Securities Being Offered How to Purchase Shares
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings Inapplicable
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E.I.I. REALTY SECURITIES TRUST
E.I.I. REALTY SECURITIES FUND
CROSS REFERENCE SHEET
Item Number
Form N-1A Statement of Additional
Part B Information Caption
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10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Additional Information
13. Investment Objectives and Policies Investment Policies and Risks
14. Management of the Fund Management
15. Control Persons and Principal General Information
Holders of Securities
16. Investment Advisory and Other Investment Advisor and Investment Advisory
Services Agreements; Distribution Plans; Administrative
Services Agreement
17. Brokerage Allocation and Other Practices Portfolio Transactions and Brokerage;
Allocation of Investments
18. Capital Stock and Other Securities General Information
19. Purchase, Redemption and Pricing Purchase and Redemption of Shares
of Securities Being Offered
20. Tax Status Tax Matters
21. Underwriters Distribution Plans
21. Calculation of Performance Data Performance Calculation
22. Financial Statements Inapplicable
</TABLE>
Part C
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C of the Registration Statement.
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<PAGE>
E.I.I. REALTY SECURITIES FUND
Prospectus
June __, 1998
Institutional Shares
Adviser Shares
Investor Shares
(888) 323-8912
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY SUCH STATE AUTHORITY PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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FUND EXPENSES
The following information is provided to assist you in understanding the various
costs and expenses that an investor in the Fund will bear directly or
indirectly.
Shareholder Transaction Expenses
(as a percentage of the offering price)
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Sales Charge Imposed on Purchases None
Sales Charge Imposed on Reinvested Dividends None
Deferred Sales Charge None
Redemption Fees None
Exchange Fees None
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You may be charged additional fees if you purchase, exchange, or redeem shares
through a broker or agent.
The Annual Fund Operating Expenses table below illustrates the estimated
operating expenses that you will incur as a shareholder of the Fund. These
expenses are charged directly to the Fund. Expenses include management fees as
well as the costs of maintaining accounts, administering the Fund, providing
shareholder services, and other activities. The expenses shown are estimated
based on projected expenses of the Fund.
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Annual Fund Operating Expenses
(as a percentage of average daily net assets)
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Institutional Adviser Investor
Shares Shares Shares
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Management Fees 0.75% 0.75% 0.75%
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Administration Fees 0.15%* 0.25% 0.25%
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Shareholder Servicing Fees 0.00% 0.25% 0.25%
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Rule 12b-1 Distribution Fees 0.00% 0.00% 0.75%**
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Other Expenses 0.10% 0.10% 0.10%
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Total Fund Operating Expenses 1.10% 1.35% 2.10%
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*After fee waiver. Without the fee waiver, the Administration Fee for the
Institutional Shares would have been 0.25%.
**Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales loads permitted by the National Association of
Securities Dealers.
The following example, which is in the prospectus of every mutual fund, is
intended to provide investors with an opportunity to compare the expenses of the
Fund to the expenses of other mutual funds. The example is only an illustration
and does not depict the actual expenses or returns of the Fund. The expenses
used in the example are those listed in the Annual Fund Operating Expenses
Table. The example assumes a $1,000 investment, a 5% annual return, and
redemption at the end of each time period.
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Institutional Adviser Investor
Shares Shares Shares
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<S> <C> <C> <C>
1 Year $10 $14 $21
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3 Years $32 $43 $66
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</TABLE>
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INTRODUCTION
This prospectus describes the E.I.I. Realty Securities Fund (the "Fund"), as
eries of the E.I.I. Realty Securities Trust. The Fund is a non-diversified,
open-end investment management company. This prospectus explains the objectives,
policies, strategies, and risks of the Fund. You should read this prospectus
before investing in the Fund and keep it for future reference. A detailed
Statement of Additional Information (the "SAI") describing the Fund also is
available for your review. The SAI has been filed with the Securities and
Exchange Commission (the "SEC") and is incorporated by reference into, and is
legally a part of, this prospectus. If you would like a free copy of the SAI,
please request one by calling us at (888) 323-8912. Additional information,
including this Prospectus and the SAI, may be obtained by accessing the Internet
Web site maintained by the SEC (http://www.sec.gov).
Investment Objective and Policies
The investment objective of the Fund is to provide the diversification and total
return potential of investments in real estate. The Fund will seek to achieve
this objective by buying the shares of companies whose business it is to own,
operate, develop, and manage real estate. Typically, an investment in commercial
real estate provides a significant current return, with additional appreciation
potential. As such, a critical objective of the Fund is to achieve total returns
which include a significant component of current income, which may serve to
provide portfolio stability during periods of overall market fluctuations. (Over
the 10 year period ending 12/31/97, the National Association of Real Estate
Investment Trusts ("NAREIT") Equity Index achieved an annualized total return of
14.17%, which was comprised of 8.15% in current income and 5.57% of capital
appreciation.) Capital appreciation within the Fund also will be pursued by
targeting companies with the highest risk-adjusted total return potential. The
Fund intends to invest at least 80% of its assets in the securities of companies
in the real estate industry, with a primary emphasis on Real Estate Investment
Trusts ("REITs"). In addition, the Fund may invest in other securities as
described in "Other Investments."
The Fund may achieve its investment objective by investing all of its assets in
another investment company having substantially the same investment objective
and policies as the Fund instead of investing directly in the underlying
securities.
E.I.I. Realty Securities, Inc. ("E.I.I."), the Fund's investment adviser,
believes that investments in real estate offer a total return potential which
may serve as an effective portfolio diversifier for many investors. In addition,
E.I.I. believes that, for most investors, the most convenient and effective way
to invest in real estate is through the ownership of a diversified portfolio of
real estate securities. Real estate securities, and more specifically, REITs,
provide investors with many of the features particular to both real estate
investments and publicly-traded securities, providing investors with a practical
and efficient means to include professionally-managed real estate in an
investment portfolio.
WHY REAL ESTATE? Investments in real estate offer the following benefits over
investments in other asset classes:
o Relatively low historical correlation to the equity market
o Relatively high levels of potential current income from contractual
rental streams
o A potential hedge against inflation from rising asset values and the
possibility of passing through higher costs to tenants
WHY REAL ESTATE SECURITIES? An investment in a portfolio of real estate
securities offers the following benefits in addition to those provided by direct
real estate investments:
o Diversification of risk of real estate investments
o Market pricing of publicly-traded shares (instead of appraisal-based
valuations)
o Enhanced liquidity, which aids in investment speed as well as
portfolio rebalancing
WHY E.I.I.? E.I.I. and its parent company, European Investors Incorporated, have
been professionally managing real estate securities portfolios on behalf of
their clients for more than a decade and have consistently outperformed their
primary benchmark (the NAREIT Equity Index) by an average margin of
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more than 300 basis points on an annualized basis, before fees. The collective
client base of E.I.I. and European Investors Incorporated includes an array of
investors ranging from foreign and domestic high net worth individuals to U.S.
foundations, endowments, and corporate pension plans. In addition, European
Investors Incorporated serves as the adviser or sub-adviser for several offshore
funds investing with substantially the same investment objective as the Fund.
The chart below shows the historical performance of all of the real estate
accounts managed by E.I.I. and European Investors Incorporated, which have
substantially the same investment objective as the Fund. E.I.I. manages domestic
accounts and European Investors Incorporated manages offshore accounts using the
same personnel and philosophy. The data, calculated on an average annual total
return basis, is provided to illustrate E.I.I.'s past performance in managing
accounts in accordance with the same investment objective, policies, and
strategies as those of the Fund. These accounts consist of separate and distinct
portfolios and their performance is not indicative of past or future performance
of the Fund. As of June o, 1998, the Fund had not commenced investment
operations and therefore did not have a performance record of its own.
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PAST PERFORMANCE OF ALL REAL ESTATE SECURITIES ACCOUNTS OF
E.I.I. REALTY SECURITIES (E.I.I.) & EUROPEAN INVESTORS INCORPORATED
REAL ESTATE SECURITIES COMPOSITE AS OF DECEMBER 31, 1997
STANDARD
ANNUAL RETURNS THROUGH DECEMBER 31, 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 DEVIATION
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
E.I.I. Composite* 13.06% 12.09% -11.69% 34.39% 19.34% 19.60% 6.53% 17.06% 35.80% 22.15% 13.61%
Wilshire Real Estate Securities 24.18% 2.37% -33.46% 20.03% 7.40% 15.23% 1.64% 13.65% 36.87% 19.80% 18.79%
Index
NAREIT Equity Index 13.49% 8.84% -15.35% 35.70% 14.59% 19.65% 3.17% 15.27% 35.27% 20.26% 14.87%
CUMULATIVE RETURNS 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
- -----------------------------------------------------------------------------------------------------------------------
E.I.I. Composite* 13.06% 26.73% 11.92% 50.41% 79.50% 114.68% 128.70% 167.71% 263.53% 344.04%
Wilshire Real Estate Securities 24.18% 27.12% -15.41% 1.54% 9.05% 25.66% 27.73% 45.16% 98.68% 138.01%
Index
NAREIT Equity Index 13.49% 23.52% 4.56% 41.88% 62.58% 94.54% 100.70% 131.34% 212.93% 276.33%
CUMULATIVE SUMMARY
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1 YEAR 3 YEAR 5 YEAR 10 YEAR
E.I.I. Composite* 22.15% 94.20% 147.40% 344.00%
Wilshire Real Estate Securities 19.80% 86.35% 137.17% 138.01%
Index
NAREIT Equity Index 20.26% 87.51% 131.84% 276.33%
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*Net of investment management fees and all brokerage and trading expenses. These
accounts were not subject to the restrictions and diversification requirements
of the Investment Company Act of 1940, as amended, or the restrictions and
diversification requirements of Subchapter M of the Internal Revenue Code of
1986, as amended. However, these accounts historically have been run in a manner
that would have been in compliance with these restrictions and requirements but
for the fact that income was predominantly reinvested rather than distributed as
required by Subchapter M. If the accounts had been subject to these restrictions
and requirements, the returns might have been adversely affected.
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Performance Comparison
Chart comapring performance of E.I.I., Wilshire Real Estate
securities Index, and NAREIT Equity Index.
Performance is shown net of a 1% management fee, as well as all brokerage and
trading expenses. The Composite includes all of the real securities accounts of
E.I.I. and European Investors Incorporated except for: (i) foreign funds where
the performance is stated net of fees and withholding taxes and is therefore not
comparable and (ii) new accounts where the cash position is not yet comparable
to other portfolios and certain accounts with unique objectives and
restrictions. As these accounts become fully invested they are added to the
Composite.
FUND DESCRIPTION
Investment Philosophy
E.I.I.'s investment philosophy is to achieve attractive risk-adjusted total
returns by investing primarily in a diversified portfolio of real estate
securities of companies which it deems to be of the highest quality available in
the marketplace. In this regard, E.I.I. deems high-quality companies to be
candidates for the portfolio when a number of the following conditions are met:
o Experienced, dedicated management teams are in place which have
significant inside ownership of shares, have capital markets
expertise, and have a pro-shareholder orientation
o The companies have long-term strategies which position them for
sustainable cash flow growth The balance sheets of the individual
companies are positioned to enable significant growth
Investment Policies
The Fund will pursue its investment objective by investing at least 80% of its
total assets in the equity or convertible securities of U.S. companies (with a
primary emphasis on REITs) which are principally engaged in the ownership,
construction, management, financing, or sale of residential, commercial, or
industrial real estate. Principally engaged means at least 50% of a company's
revenues are derived from such real estate activities or at least 50% of the
fair market value of a company's assets are invested in real estate.
Under normal market conditions, the Fund will invest substantially all of its
assets in:
o Income producing real estate securities (including equity, mortgage,
and hybrid REITs)
o Real Estate Operating Companies ("REOCs")
o Securities convertible into common stocks (including convertible
preferred stocks, rights, warrants, etc.) of real estate companies
o Real estate related fixed-income securities (such as convertible
debentures, unsecured debentures, mortgage backed securities, etc.)
The Fund also may invest:
o up to 20% of its total assets in securities of foreign real estate
companies, many of which have substantial holdings of U.S. real estate
securities
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Investment Strategies
E.I.I.'s investment process employs a combination of a "top-down," macro level
analysis by its Investment Committee, together with rigorous "bottom-up,"
fundamental securities and real estate research and analysis on individual
companies by its analyst team.
Investment Committee Decision Process:
E.I.I.'s Investment Committee analyzes national and regional economic trends and
the market for different types of real estate including residential, retail,
hotel, industrial, and office properties. In addition, the Investment Committee
makes assessments of the economic environment, securitization trends, etc., and
then derives an investment strategy formulated to take advantage of perceived
opportunities.
Analyst Team Decision Process:
E.I.I.'s analyst team tracks a universe of more than 125 individual companies
which are analyzed for potential investment. Companies are evaluated on both a
quantitative and a qualitative basis in order to determine which companies may
provide attractive risk-adjusted returns.
E.I.I.'s analyst team evaluates and analyzes companies based upon the following
criteria:
Qualitative Analysis:
o Management strength
o Business strategy
o Financial strength
o Competitive advantages within the marketplace
Quantitative Analysis:
o Cash flow and dividend growth prospects
o Risk-adjusted total return expectations using numerous
o methodologies Real estate analysis using capitalization rates, values
on a square footage basis, etc.
o Balance sheet strength and relative cost of capital
Integral parts of E.I.I.'s investment process include
o performing individual property and market evaluations which are
important to understanding the company's portfolio
o verifying that the company's assets are consistent with management's
stated strategy
o finding and reviewing any problems relating to the company's
properties
o evaluating the company's properties and their position in the markets
o assessing the quality of property management.
About the Investment Adviser
The Fund has entered into an investment advisory agreement with E.I.I. E.I.I.
was formed in 1993 and is a registered investment adviser providing real estate
securities portfolio management services to U.S. tax-exempt institutions and
other investors. E.I.I. is a wholly-owned subsidiary of European Investors
Incorporated, which is a registered investment adviser providing both general
securities and real estate securities portfolio management services. E.I.I. and
European Investors Incorporated are owned by management.
European Investors Incorporated was founded in 1983 to provide investment
services primarily to foreign investors (with a focus in Europe) in the United
States by managing securities portfolios as well as providing direct real estate
advisory services and corporate advisory services. From these combined efforts,
European Investors Incorporated determined that securitized real estate could
serve as an alternative means of acquiring real estate assets and developed a
portfolio management service
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specifically in this area, which now caters to both foreign and domestic
investors. European Investors Incorporated commenced research into real estate
securities as a separate portfolio product in 1986, began managing real estate
securities portfolios in 1987, and is a recognized leader in real estate
securities investment management.
E.I.I. and European Investors Incorporated collectively have a diversified
client base that includes investors in twelve countries, encompassing taxable
and tax-exempt investors, individuals, and institutions, including over 60
domestic institutional investors. The combined companies currently have
approximately $1.6 billion invested in real estate securities on behalf of
clients. They also manage several offshore real estate investment funds with
assets of approximately $300 million.
Portfolio Management Personnel
RICHARD J. ADLER is a Managing Director of E.I.I. Mr. Adler serves as investment
strategist for E.I.I. and co-portfolio manager of the Fund, to which he provides
investment strategy as well as expertise in convertible and other securities.
Mr. Adler is a 1968 graduate of Yale University with a B.A. degree in Economics
and earned an M.B.A. from Harvard Business School with Honors in 1973. He has
served as an officer in the U.S. Navy and was a Vice President of Goldman, Sachs
& Co. in New York from 1973 to 1983, where he worked with foreign investors.
CYDNEY C. DONNELL is a Managing Director of E.I.I. Ms. Donnell serves as
co-portfolio manager of the Fund, jointly responsible for its day-to-day
operations. Ms. Donnell has served as a REIT analyst or portfolio manager for
E.I.I. since the inception of its real estate securities investment management
business in 1987. Prior to joining E.I.I., Ms. Donnell was a real estate lending
officer at Republic Bank Corporation from 1983 to 1986. Ms. Donnell graduated
magna cum laude from Texas A&M in 1981 with a degree in Finance and received an
M.B.A. from Southern Methodist University in 1982. She has served as a member of
the NAREIT Board of Governors.
DAVID P. O'CONNOR is a Managing Director of E.I.I. Mr. O'Connor serves as
co-portfolio manager of the Fund, jointly responsible for its day-to-day
operations. Mr. O'Connor has served as a REIT analyst or co-portfolio manager
for E.I.I. since February, 1994. Prior to joining E.I.I., Mr. O'Connor served as
an investment executive at Kidder, Peabody, and Co., Inc., where he specialized
in real estate securities. From 1987 to 1992, Mr. O'Connor was employed by a
management affiliate of Presidential Realty Corp. (an AMEX Listed REIT) and
subsequently served as a real estate analyst at Lane Webber Properties, a
private real estate development and investment firm. Mr. O'Connor is a 1986
graduate of the Boston College School of Management and received an M.S. in Real
Estate Development and Investment from New York University.
SECURITIES IN WHICH THE FUND INVESTS
A REIT is a corporation or a business trust that combines the capital of many
investors for investment primarily in income-producing real estate or real
estate-related loans or interests. The shares of a REIT are often freely traded
on a major stock exchange. A REIT must meet certain requirements contained in
the Internal Revenue Code of 1986, as amended (the "Code"), in which case it
generally does not pay federal corporate income tax. Generally, a REIT is
required to invest a substantial portion of its assets in interests in real
estate (including mortgages and other REITs) or cash and government securities,
derive most of its income from rents from real property or interest on loans
secured by mortgages on real property, and distribute to shareholders annually
substantially all of its otherwise taxable income. Most states honor this
federal income tax treatment and do not require REITs to pay state income tax.
As a result, nearly all of a REIT's income can be distributed to shareholders
without the imposition of a corporate level income tax. However, unlike a
partnership, a REIT cannot pass its tax losses through to its investors.
REITs are characterized as equity REITs, mortgage REITs, and hybrid REITs.
The Fund will invest predominantly in equity REITs. Equity REITs, which may
include operating or
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finance companies, own real estate directly and the value of, and income earned
by, these REITs depends upon the income of the underlying properties and the
rental income they earn. Equity REITs also can realize capital gains (or losses)
by selling properties that have appreciated (or depreciated) in value. Mortgage
REITs can make construction, development, or long-term mortgage loans and are
sensitive to the credit quality of the borrower. Mortgage REITs derive their
income from interest payments on such loans. Hybrid REITs combine the
characteristics of both equity and mortgage REITs, generally by holding both
ownership interests and mortgage interests in real estate. The value of
securities issued by REITs are affected by tax and regulatory requirements and
by perceptions of management skill. REITs also are subject to heavy cash flow
dependency, defaults by borrowers or tenants, self-liquidation, and the
possibility of failing to qualify for tax-free status under the Code or to
maintain exemption from the Investment Company Act of 1940, as amended (the
"Investment Company Act").
For more information about other securities in which the Fund can invest, see
"Other Securities in Which the Fund May Invest and Investment Techniques" and
the SAI.
PORTFOLIO TURNOVER
It is anticipated that the portfolio turnover rate for the Fund in any one year
will not exceed 60%, which is lower than the turnover rate for many comparable
real estate securities funds. A lower portfolio turnover rate will result in a
lower rate of net realized capital gains to the Fund and will decrease the
portion of the Fund's distributions constituting taxable capital gains.
RISK FACTORS
The Fund is designed for long-term investors. The Fund is subject to the risks
common to all mutual funds and the risks common to mutual funds that invest in
equity securities, real estate securities, foreign securities, and fixed-income
securities. In addition, the Fund is subject to the risks related to direct
investment in real estate. By itself, the Fund does not constitute a complete
investment plan and should be considered a long-term investment for investors
who can afford to weather changes in the value of their investment.
This prospectus describes some of the risks that you may assume as an investor
in the Fund. Some limitations on the Fund's investments are described in the
section that follows. "Other Securities in Which the Fund May Invest and
Investment Techniques" at the end of this prospectus provides additional
information on the securities in which the Fund can invest. As with any mutual
fund, there is no guarantee that the Fund will earn income or show a positive
total return over time. The Fund's price, yield, and total return will
fluctuate.
THE FOLLOWING RISKS ARE COMMON TO ALL MUTUAL FUNDS:
MARKET RISK is the risk that the market value of a security will
fluctuate, depending on the supply and demand for that type of
security. As a result of this fluctuation, a security may be
worth less than the price the Fund originally paid for it, or
less than the security was worth at an earlier time. Market
risk may affect a single security, an industry, a sector of
the economy, or the entire market, and is common to all
investments.
MANAGER RISK is the risk that the Fund's investment adviser may use a
strategy that does not produce the intended result. Manager
risk also refers to the possibility that the Fund's investment
adviser may fail to execute an investment strategy effectively
and thus fail to achieve its objective.
THE FOLLOWING RISK IS COMMON TO MUTUAL FUNDS THAT INVEST IN EQUITY SECURITIES:
EQUITY RISK is the risk that the value of the security will fluctuate
in response to changes in earnings or other conditions
affecting the issuer's profitability. Unlike debt securities,
which have preference to a company's earnings and cash flow,
equity securities are
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entitled to the residual value after the company meets its
other obligations. For example, holders of debt securities
have priority over holders of equity securities to a
company's assets in the event of bankruptcy.
THE FOLLOWING RISKS ARE COMMON TO MUTUAL FUNDS THAT INVEST IN REAL ESTATE
SECURITIES:
REAL ESTATE RISK is the risk that the value of a security will
fluctuate because of changes in property values, vacancies of
rental properties, overbuilding, changes in local laws,
increased property taxes and operating expenses, and other
risks associated with real estate. While the Fund will not
invest directly in real estate, it may be subject to the risks
associated with direct ownership. Equity REITs may be affected
by changes in property value, while mortgage REITs may be
affected by credit quality.
REGULATORY RISK is the risk that certain REITs may fail to qualify for
pass-through of income under federal tax law or to maintain
their exemption from the registration requirements under
federal securities laws.
THE FOLLOWING RISKS ARE COMMON TO MUTUAL FUNDS THAT INVEST IN FOREIGN
SECURITIES:
FOREIGN ISSUER RISK is the risk that foreign issuers may not be
subject to uniform accounting, auditing and financial
reporting standards and practices used by domestic issuers. In
addition, foreign securities markets may be less liquid, more
volatile, and less subject to governmental supervision than in
the U.S. Investments in foreign countries could be affected by
factors not present in the U.S., including expropriation,
confiscation of property, and difficulties in enforcing
contracts.
CURRENCY RISK is the risk that fluctuations in the exchange rates
between the U.S. dollar and foreign currencies may negatively
affect an investment. Adverse changes in rates may erode or
reverse gains produced by investments denominated in foreign
currencies.
THE FOLLOWING RISKS ARE COMMON TO MUTUAL FUNDS THAT INVEST IN FIXED INCOME
SECURITIES:
INTEREST RATE RISK. The value of a fixed income security typically
changes in the opposite direction from a change in interest
rates. When interest rates go up, the value of a fixed-rate
security typically goes down. When interest rates go down, the
value of these securities typically goes up. Generally, the
market values of securities with longer maturities are more
sensitive to changes in interest rates.
INFLATION RISK is the risk that inflation will erode the purchasing
power of the cash flows generated by fixed income securities
held by the Fund. Fixed-rate debt securities are more
susceptible to this risk than floating-rate debt securities.
REINVESTMENT RISK is the risk that when interest income is reinvested,
interest rates will have declined so that income must be
reinvested at a lower interest rate. Generally, interest rate
risk and reinvestment risk have offsetting effects.
CREDIT (OR DEFAULT) RISK is the risk that the issuer of a fixed
income security will be unable to make timely payments of
interest or principal.
OTHER INFORMATION ABOUT THE FUND
Diversification Requirements.
The SEC and IRS have certain requirements with which all mutual funds must
comply. The Fund monitors these limitations on an ongoing basis. These
diversification provisions and requirements are discussed further in the SAI.
o SEC Requirement: The Fund is not "diversified" according to certain federal
securities provisions regarding diversification of its assets. As a
non-diversified investment company, the Fund may devote a larger portion of
its assets to the securities of a single issuer than if it were
diversified.
o IRS Requirement: The Fund intends to comply with certain federal tax
requirements regarding the
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diversification of its assets. Generally, under those requirements, the
Fund must invest at least 50% of its total assets so that no more than 5%
of its total assets are invested in the securities of any one issuer
(excluding U.S. Government securities).
Investment Performance
The performance of the Fund may be advertised by comparing it to other mutual
funds with similar objectives and policies. Performance information also may
appear in various publications. Performance information is contained in the
annual and semi-annual reports. You may obtain a copy of the annual and
semi-annual reports free of charge by calling (888) 323-8912.
The "30-day yield" is an "annualized" figure-the amount you would earn if you
stayed in the Fund for a year and the Fund continued to earn the same net
interest income throughout that year. To calculate 30-day yield, the Fund's net
investment income per share for the most recent 30 days is divided by the
maximum offering price per share. To calculate "total return," the Fund starts
with the total number of shares that you can buy for $1,000 at the beginning of
the period. Then the Fund adds all dividends and distributions paid as if they
were reinvested in additional shares. This takes into account the Fund's
dividend distributions, if any. The total number of shares is multiplied by the
net asset value on the last day of the period and the result is divided by the
initial $1,000 investment to determine the percentage gain or loss. For periods
of more than one year, the cumulative total return is adjusted to get an average
annual total return. Yield is a measure of net dividend income. Average annual
total return is a hypothetical measure of past dividend income plus capital
appreciation. It is the sum of all parts of the Fund's investment return for
periods greater than one year. Total return is the sum of all parts of the
Fund's investment return. Whenever you see information on a Fund's performance,
do not consider the past performance to be an indication of the performance you
could expect by making an investment in the Fund today.
Past performance does not guarantee future results. You may obtain the current
30-day yield by calling (888) 323-8912. Shareholder Servicing representatives
are available from 8:00 a.m. to 6:00 p.m. Eastern time Monday through Friday.
Share Price
The Fund's daily share price, called its net asset value (the "NAV") is useful
to you as a shareholder because the NAV, multiplied by the number of Fund shares
you own, gives you the dollar amount and value of your investment. The Fund's
NAV is calculated each business day as of the close of the New York Stock
Exchange (normally at 4:00 p.m. Eastern time). Shares are purchased at the next
share price calculated after your investment instructions are received and
accepted. A business day is a day on which the New York Stock Exchange is open
for trading or any day in which enough trading has occurred in the securities
held by the Fund to affect the NAV materially.
The NAV is calculated by adding up the total value of the Fund's investments and
other assets, subtracting its liabilities, and then dividing that figure by the
number of outstanding shares of the Fund:
NAV = Total Assets - Liabilities
--------------------------
Number of Shares Outstanding
Dividends, Distributions, and Taxes
As a shareholder, you are entitled to your share of net income and capital gains
on the Fund's investments. The Fund passes its earnings along to investors in
the form of dividends. Dividend distributions are the net dividends or interest
earned on investments after expenses. As with any investment, you should
consider the tax consequences of an investment in the Fund.
Ordinarily, the Fund declares and pays dividends from its net investment income
quarterly. The Fund pays any net capital gains realized as dividends at least
annually. Distributions can be received in one of
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the following ways:
REINVESTMENT OPTION: You can have distributions automatically reinvested in
additional shares of the Fund. If you do not indicate another choice on your
Account Application, this option will be assigned to you automatically.
CASH OPTION: A check will be mailed to you no later than 7 days after the pay
date.
INCOME EARNED OPTION: Dividends can be reinvested automatically in the Fund and
your capital gains can be paid in cash, or capital gains can be reinvested and
dividends paid in cash.
DIRECTED BANK ACCOUNT OPTION: In most cases, you can have distributions
automatically transferred to your bank checking or savings account. Under normal
circumstances, a dividend will be transferred within 7 days of the dividend
payment date. The bank account must have a registration identical to that of
your Fund account.
Your choice of distribution should be set up on the original Account
Application. If you would like to change the option you selected, please call
the Transfer Agent at 800-323-8912.
You should check the Fund's distribution schedule before you invest. If you buy
shares of the Fund shortly before it makes a distribution, some of your
investment may come back to you as a taxable distribution.
Important Information about Taxes
o The Fund intends to qualify as a regulated investment company, in which
case it will pay no federal income tax on the earnings or capital gains it
distributes to its shareholders.
o Ordinary dividends from the Fund are taxable as ordinary income; dividends
from the Fund's long-term capital gains are taxable as capital gain.
o Dividends are treated in the same manner for federal income tax purposes
whether you receive them in cash or in additional shares. It is likely that
they will also be subject to state and local taxes.
o Dividends from interest on certain U.S. Government obligations held by the
Fund may be exempt from some state and local taxes. You will receive a
statement at the end of each year showing which dividends are exempt. The
Fund, however, expects dividends of this kind to be minimal.
o Certain dividends paid to you in January will be taxable as if they had
been paid to you the previous December.
o Generally, any gain or loss from a sale (redemption) of shares of the Fund
must be recognized for tax purposes. This gain or loss generally will be
long-term capital gain or loss if you held your shares of the Fund for more
than one year. If you are an individual, your long-term capital gain will
be taxed at the lowest rate applicable to capital gains if you held your
shares for more than 18 months at the time of the sale or redemption.
o Tax statements will be mailed from the Fund every January showing the
amounts and tax status of distributions made to you.
o Because your tax treatment depends on your purchase price and tax position,
you should keep your regular account statements for use in determining your
tax.
o You should review the more detailed discussion of federal income tax
considerations in the SAI.
THE TAX INFORMATION IN THIS PROSPECTUS IS PROVIDED AS GENERAL INFORMATION. YOU
SHOULD CONSULT YOUR OWN TAX ADVISER ABOUT THE TAX CONSEQUENCES OF AN INVESTMENT
IN THE FUND.
Statements and Reports
You will receive a periodic statement reflecting any transactions that affect
the balance or registration of your account. You will receive a confirmation
after any purchase, exchange, or redemption. If your
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account has been set up by an Investment Professional, account activity will be
detailed in their statements to you. Share certificates are not issued. Twice a
year, you will receive the financial reports of the Fund. By January 31 of each
year, you will be mailed an IRS form reporting distributions for the previous
year, which also will be filed with the IRS.
INVESTING WITH E.I.I.
The following sections describe how to open an account, how to access
information on your account, and how to purchase, exchange, and redeem shares of
the Fund.
The Fund offers three classes of shares: Institutional Shares, Adviser Shares,
and Investor Shares.
INSTITUTIONAL SHARES. The minimum investment for Institutional Shares is
$1,000,000. This minimum may be reduced to certain institutional clients of
E.I.I. in E.I.I.'s sole discretion.
ADVISER SHARES. The minimum investment for Adviser Shares is $100,000. Employees
and officers of E.I.I. and its affiliates and immediate family members can
purchase Adviser Shares without being subject to the minimum investment.
INVESTOR SHARES. The minimum investment for Investor Shares is $5,000.
How to Purchase Shares
Shares can be purchased in a number of different ways. You can send in your
investment by check or wire transfer. All you need to do to get started is to
fill out an application.
All purchases must be made in U.S. Dollars and drawn on U.S. banks. The Transfer
Agent may reject any purchase order in its sole discretion. If your check is
returned for any reason, you may be charged for any resulting fees and/or
losses. Third party checks will not be accepted. You may only invest or exchange
into fund shares legally available in your state. If your account falls below
the minimum initial investment as a result of redemptions by you, we may ask you
to re-establish the minimum investment. If you do not do so within 60 days, we
may close your account and send you the value of your account. If you would like
to make additional investments after your account is already established, use
the Investment Stub attached to your statement and send it with your check to
the address indicated.
SYSTEMATIC INVESTMENT PLAN
To enroll in the Systematic Investment Plan, you should check this box on the
Account Application. We will need your bank account information and the amount
and frequency of your investment. You can select monthly, quarterly,
semi-annual, or annual investments. You should attach a voided personal check so
the proper information can be obtained. You must first meet the minimum
investment requirement of $5,000, then we will make automatic withdrawals of the
amount you indicate ($25 or more) from your bank account and invest it into
shares of the Fund.
RETIREMENT PLANS
You can use the Fund as part of your retirement portfolio. Please contact the
Fund for details regarding an IRA or other retirement plan that works best for
your financial situation.
How to Redeem Shares
If we receive your request by 4:00 p.m. Eastern time, your redemption will be
processed the same day. Shares can be redeemed in one of the following ways:
BY TELEPHONE The easiest way to redeem shares is by calling (888)
323-8912. When you fill out your original application, be sure to check the
box marked "Telephone Authorization." Then when you are ready to redeem,
call us and tell us which one of the following options you would like to
use:
o Mail a check to the address of record;
o Wire funds to a domestic financial institution;
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o Mail to a previously designated alternate address; or
o Electronically transfer the funds via Automatic Clearing House
("ACH").
All telephone calls are recorded for your protection and measures are taken to
verify the identity of the caller. If we properly act on telephone instructions
and follow reasonable procedures to ensure against unauthorized transactions,
neither E.I.I., nor its servicing agents nor the Transfer Agent will be
responsible for any losses. If these procedures are not followed, the Transfer
Agent may be liable to you for losses resulting from unauthorized instructions.
If there is an unusual amount of market activity and you cannot reach the
Transfer Agent by telephone, consider placing your order by mail.
o BY MAIL Use the Regular U.S. Mail or Overnight Mail Address to redeem
shares. Send us a letter of instruction indicating your Fund account
number, amount of redemption, and where to send the proceeds. All account
owners must sign. A signature guarantee is required for the following
redemption requests:
o Redemptions over $10,000;
o Your account registration has changed within the last 15 days;
o The check is not being mailed to the address on your account; or
o The check is not being made payable to the owner of the account;
A signature guarantee can be obtained from a financial institution such as
a bank, broker-dealer, credit union, clearing agency, or savings
association. There are a number of convenient ways to redeem shares of the
Fund. You can use the same mailing addresses listed for purchases. You will
earn dividends up to the date your redemption request is processed.
o BY WIRE If you want to redeem funds by wire, you must establish a Fund
account which will accommodate wire transactions. If you call by 4:00 p.m.
Eastern time, your funds will be wired on the next business day.
BY ACH A redemption will be transferred by ACH as long as the transfer is to a
domestic bank.
Under certain emergency circumstances, the right of redemption may be suspended.
Redemption proceeds from the sale of shares purchased by a check may be held
until the purchase check has cleared. If you request a complete redemption, any
dividends declared will be included with the redemption proceeds.
Keep the following addresses handy for purchases, exchanges, or redemptions.
o Regular U.S. Mail Address
Send completed Account Application with your check, bank draft, or
money order to:
E.I.I. Realty Securities Fund
c/o PFPC
P.O. Box 8910
Wilmington, DE 19899-8910
o Overnight Mail Address
Use the following address ONLY for overnight packages:
E.I.I. Realty Securities Fund
c/o PFPC
400 Bellevue Parkway, Suite 108
Wilmington, DE 19809-3710
o Wiring Instructions
The Transfer Agent does not charge a wire fee, but your originating bank
may charge a fee. Always call the Transfer Agent at (888) 323-8912 BEFORE
wiring funds to obtain a control number.
PNC Bank, N.A.
Philadelphia, PA
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ABA # 0310-0005-3
Credit DDA # 86-0195-6004
For credit to E.I.I. Realty Securities Fund
Shareholder Name___________________________
Account No.________________________________
o ACH After your account is set up, your purchase amount can be transferred
by ACH. Only domestic members banks may be used. It takes about 15 days to
set up the ACH feature. Currently, there is no fee for ACH transfers.
THE ORGANIZATION, MANAGEMENT, AND SERVICE PROVIDERS OF THE FUND
Organization of the Fund
The Fund is a series of the E.I.I. Realty Securities Trust, a Delaware Business
Trust that was formed on December 22, 1997. The Fund's business affairs are
managed under the general supervision of the Board of Trustees. The Statement of
Additional Information contains the name and general business experience of each
Trustee. The Board of Trustees has the ability to establish new portfolios of
shares without shareholder approval.
Trustees
The Board of Trustees consists of Richard J. Adler, David P. O'Connor, Warren K.
Greene, Richard W. Hutson, and Samuel R. Karetsky. Mr. Adler is the Chairman of
the Board of Trustees. Mr. Adler and Mr. O'Connor are Managing Directors of
E.I.I. Mr. Greene is a Senior Vice President of TrendLogic Associates, a
registered investment adviser and commodity trading advisor, and was formerly
the president of the American Investors family of no-load mutual funds. Mr.
Hutson is retired from Hewitt Associates, an international human resources
consulting firm, where he was a senior principal. Mr. Karetsky is an asset
management consultant and was formerly a managing director of Morgan Stanley
Global Asset Management.
Investment Adviser and Administrator
E.I.I. is the Fund's investment adviser. The investment adviser manages the
Fund's business and investment activities. E.I.I. also serves as the Fund's
administrator, for which it is paid a fee at an annual rate of 0.25% (reduced to
0.15% for the Institutional Shares) of the Fund's average daily net assets.
E.I.I. may subcontract some of its administrative duties to other service
providers. E.I.I. has entered into a sub-administration contract with PFPC Inc.
under which E.I.I. pays PFPC Inc. to provide certain administrative services to
E.I.I.
The Sub-Administrator, Transfer Agent, and Custodian
PFPC Inc., a subsidiary of PNC Bank, N.A., is the Fund's sub-administrator and
transfer agent. PNC Bank, N.A. is the Fund's custodian.
Independent Auditors
Ernst & Young LLP serves as independent auditors to the Fund.
Legal Counsel
Kramer, Levin, Naftalis & Frankel serves as legal counsel to the Fund.
Shareholder Servicing
The Fund has adopted a Shareholder Servicing Plan for the Adviser Shares and the
Investor Shares. Under the Shareholder Servicing Plan, the Adviser will provide
shareholder services to its clients that invest in the Fund. The Fund also may
enter into shareholder service agreements pursuant to which a shareholder
servicing agent other than the Adviser performs shareholder services for its
customers who are shareholders of the Fund. In both instances, such services may
include establishing and maintaining accounts and records, processing dividend
and distribution payments, arranging for bank wires, assisting
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in transactions, and changing account information. In exchange for these
services, the Fund pays up to 0.25% of the average daily net assets of the
Adviser or Investor Shares serviced by the Adviser or the agent. The Fund may
enter into agreements with various shareholder servicing agents, other financial
institutions, and securities brokers. Shareholder servicing agents may waive all
or a portion of their fee periodically.
Distribution Plan
Under Rule 12b-1 of the Investment Company Act, the Fund has adopted a
Distribution and Service Plan for the Investor Shares, pursuant to which the
Fund may pay up to 0.75% of the average daily net assets of the Investor Shares
for distribution assistance.
ADDITIONAL INFORMATION
Some additional information you should know about the Fund appears in the SAI.
If you would like to receive additional copies of any materials, please call the
Fund at (888) 323-8912. The Fund offers only the classes of shares described in
this prospectus, but at some future date, the Fund may offer additional classes
of shares through a separate prospectus.
Code of Ethics
E.I.I. and the Fund have each adopted a Code of Ethics to which all investment
personnel and all other access persons to the Fund must conform. Investment
personnel must refrain from certain trading practices and are required to report
certain personal investment activities. Violations of the Code of Ethics can
result in penalties, suspension, or termination of employment.
Shareholder Communications
You will receive unaudited Semi-Annual Reports and audited Annual Reports on a
regular basis from the Fund. In addition, you also will receive updated
prospectuses or supplements to this prospectus. The securities described in this
prospectus and the SAI are not offered in any state in which they may not be
sold lawfully. No sales representative, dealer, or other person is authorized to
give any information or make any representation other than those contained in
this prospectus and the SAI.
OTHER SECURITIES IN WHICH THE FUND MAY INVEST AND INVESTMENT TECHNIQUES
The majority of the Fund's portfolio is made up of equity securities; however,
the Fund also is permitted to invest in the securities discussed below and in
the SAI.
The Fund may, for temporary defensive purposes, invest up to 100% of its assets
in cash, cash equivalents, and money market instruments.
OTHER SECURITIES IN WHICH THE FUND MAY INVEST
ASSET-BACKED SECURITIES--Asset-backed securities are a form of complex security.
The securitization techniques used for asset-backed securities are similar to
those used for mortgage-related securities. Asset-backed securities present
certain risks that are not presented by mortgage-backed securities. Primarily,
these securities may provide the Fund with a less effective security interest in
the related collateral than do mortgage-backed securities. Therefore, there is
the possibility that recoveries on the underlying collateral may not, in some
cases, be available to support payments on these securities.
CONVERTIBLE SECURITIES--Convertible securities have characteristics similar to
both fixed-income and equity securities. Convertible securities include bonds,
debentures, notes, preferred stocks, or other securities that may be converted
into or exchanged for a prescribed amount of common stock of the same or a
different issuer within a particular period of time at a specified price or
formula. A convertible security entitles the holder to receive interest
generally paid or accrued on debt or the dividend paid on preferred stock until
the convertible security matures or is redeemed, converted, or exchanged.
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<PAGE>
CORPORATE DEBT SECURITIES--Corporate debt securities include corporate bonds,
debentures, notes, and other similar instruments, including convertible
securities. Debt securities may be acquired with warrants attached. Corporate
income-producing securities also may include forms of preferred or preference
stock.
ILLIQUID SECURITIES--The Fund will not invest more than 10% of its net assets in
illiquid securities, not including restricted securities sold pursuant to Rule
144A, as described below.
INVESTMENT COMPANIES--The Fund may invest in securities issued by other
investment companies. Under the Investment Company Act, the Fund's investment in
such securities, subject to certain exceptions, currently is limited to (i) 3%
of the total voting stock of any one investment company, (ii) 5% of the Fund's
total assets with respect to any one investment company, (iii) 10% of the Fund's
total assets in the aggregate, and (iv) 100% of the Fund's total assets in
another investment company with a similar investment objective. Investments in
the securities of other investment companies may involve duplication of advisory
fees and certain other expenses.
MONEY MARKET INSTRUMENTS--The Fund may invest in the following types of money
market instruments:
U.S. Government Securities. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury
securities that differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government agencies
and instrumentalities are supported by the full faith and credit of the
U.S. Treasury; others by the right of the issuer to borrow from the
Treasury; others by discretionary authority of the U.S. Government to
purchase certain obligations of the agency or instrumentality; and others
only by the credit of the agency or instrumentality.
Bank Obligations. The Fund may purchase certificates of deposit, time
deposits, bankers' acceptances and other short-term obligations issued by
domestic banks, foreign subsidiaries or foreign branches of domestic banks,
domestic and foreign branches of foreign banks, domestic savings and loan
associations, and other banking institutions.
Commercial Paper. Commercial paper consists of short-term, unsecured
promissory notes issued to finance short-term credit needs.
MORTGAGE-RELATED SECURITIES--Mortgage-related securities are secured, directly
or indirectly, by pools of mortgage loans, including mortgage loans made by
savings and loan institutions, mortgage bankers, commercial banks and others,
assembled as securities for sale to investors by various governmental,
government-related and private organizations. The mortgage-related securities in
which the Fund may invest include the following:
o Commercial Mortgage-Related Securities. The Fund may invest in commercial
mortgage-related securities, which generally are multi-class debt or
pass-through certificates secured by mortgage loans on commercial
properties.
o Residential Mortgage-Related Securities. The Fund may invest in
mortgage-related securities representing participation interests in pools
of one- to four-family residential mortgage loans issued or guaranteed by
governmental agencies or instrumentalities, such as the Government National
Mortgage Association ("GNMA"), the Federal National Mortgage Association
("FNMA"), and the Federal Home Loan Mortgage Corporation ("FHLMC"), or
issued by private entities.
o Collateral Mortgage Obligations and Multi-Class Pass-Through Securities.
Collateralized mortgage obligations or "CMOs" are multiclass bonds backed
by pools of mortgage pass-through certificates or mortgage loans.
RESTRICTED SECURITIES--The Fund may invest in securities that are subject to
restrictions on resale because they have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"). These securities are
sometimes referred to as private placements. Although securities which may be
resold only to "qualified institutional buyers" in accordance with the
provisions of Rule 144A under the 1933 Act are technically considered
"restricted securities," the Fund may purchase Rule 144A securities without
regard to the limitation on investments in illiquid securities described above,
provided that a determination is made that such securities have a readily
available trading market. E.I.I. will determine the liquidity of Rule 144A
securities under the supervision of the Fund's Board of Trustees. The liquidity
of Rule 144A securities will be monitored by E.I.I., and if as a result of
changed
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conditions, it is determined that a Rule 144A security is no longer liquid, the
Fund's holdings of illiquid securities will be reviewed to determine what, if
any, action is required to assure that the Fund does not exceed the applicable
percentage limitation for investments in illiquid securities.
ZERO COUPON SECURITIES--The market prices of zero coupon securities generally
are more volatile than the market prices of securities that pay interest
periodically and are likely to respond to a greater degree to changes in
interest rates than non-zero coupon securities having similar maturities and
credit qualities.
INVESTMENT TECHNIQUES
FORWARD COMMITMENTS--The Fund may purchase or sell securities on a forward
commitment, when-issued, or delayed delivery basis, which means delivery and
payment take place a number of days after the date of the commitment to purchase
or sell the securities at a predetermined price and/or yield. The Fund intends
to engage in forward commitments to increase its portfolio's financial exposure
to the types of securities in which it invests. Leveraging the portfolio in this
manner will increase the Fund's exposure to changes in interest rates and will
increase the volatility of its returns. At no time will the Fund have more than
15% of its assets committed to purchase securities on a forward commitment
basis.
LENDING PORTFOLIO SECURITIES--The Fund may lend securities from its portfolio to
brokers, dealers, and other financial institutions needing to borrow securities
to complete certain transactions. Loans of portfolio securities may not exceed
33-1/3% of the value of the Fund's total assets.
LEVERAGE--Leveraging
exaggerates the effect on net asset value of any increase or decrease in the
market value of the Fund's portfolio. The Fund may borrow on a short term basis
in order to meet redemptions. Money borrowed for such purposes is limited to
33-1/3% of the value of the Fund's total assets. Typically, the Fund borrows by
entering into reverse repurchase agreements with banks, brokers, or dealers.
USE OF COMPLEX SECURITIES--The Fund may invest for hedging purposes in
derivative securities, such as futures and options. These instruments and
certain related risks are described more specifically under "Investment
Objective and Management Policies--Management Policies--Complex Securities" in
the Statement of Additional Information. Complex Securities can be volatile and
involve various types and degrees of risk, depending upon the characteristics of
the particular security and the portfolio as a whole. Such investments permit
the Fund to increase or decrease the level of risk, or change the character of
the risk, to which its portfolio is exposed in much the same way as the Fund can
increase or decrease the level of risk, or change the character of the risk, of
its portfolio by making investments in specific securities.
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Table of Contents
FUND EXPENSES:.................................................................2
INTRODUCTION...................................................................3
FUND DESCRIPTION...............................................................5
SECURITIES IN WHICH THE FUND INVESTS...........................................7
RISK FACTORS...................................................................8
OTHER INFORMATION ABOUT THE FUND...............................................9
INVESTING WITH E.I.I..........................................................12
THE ORGANIZATION, MANAGEMENT, AND SERVICE PROVIDERS OF THE FUND...............14
ADDITIONAL INFORMATION........................................................15
OTHER SECURITIES IN WHICH THE FUND MAY INVEST AND INVESTMENT TECHNIQUES.......15
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
June __, 1998
E.I.I. REALTY SECURITIES FUND
This Statement of Additional Information is not a prospectus.
This Statement of Additional Information is incorporated by reference in its
entirety into the Prospectus and should be read in conjunction with the Trust's
current Prospectus, copies of which may be obtained by writing E.I.I. Realty
Securities Fund c/o PFPC Inc., P.O. Box 8910, Wilmington, DE 19899-8910 or
calling (888) 323-8912.
This Statement of Additional Information relates to the E.I.I.
Realty Securities Fund Prospectus which is dated June __, 1998.
TABLE OF CONTENTS
PAGE
INVESTMENT POLICIES AND RISKS................................ 2
INVESTMENT RESTRICTIONS...................................... 3
MANAGEMENT................................................... 4
INVESTMENT ADVISER AND INVESTMENT ADVISORY AGREEMENTS........ 5
DISTRIBUTION PLANS........................................... 6
ADMINISTRATIVE SERVICES AGREEMENT............................ 6
PORTFOLIO TRANSACTIONS AND BROKERAGE......................... 7
ALLOCATION OF INVESTMENTS.................................... 7
COMPUTATION OF NET ASSET VALUE............................... 8
PURCHASE AND REDEMPTION OF SHARES............................ 8
TAX MATTERS.................................................. 8
PERFORMANCE CALCULATION...................................... 13
GENERAL INFORMATION.......................................... 15
REPORTS...................................................... 15
<PAGE>
E.I.I. Realty Securities Trust (the "Trust") is a Delaware business
trust currently consisting of one series, E.I.I. Realty Securities Fund (the
"Fund"). The Fund is an open-end, non-diversified management investment company.
The Fund's investment objective is to provide the diversification and total
return potential of investments in real estate. The Fund will seek to achieve
this objective by buying the shares of companies whose business it is to own,
operate, develop, and manage real estate. Much of the information contained in
this Statement of Additional Information expands on subjects discussed in the
Prospectus. Capitalized terms not defined herein are used as defined in the
Prospectus. No investment in shares of the Fund should be made without first
reading the Fund's Prospectus.
INVESTMENT POLICIES AND RISKS
The following descriptions supplement the investment policies of the Fund set
forth in the Prospectus. The Fund's investments in the following securities and
other financial instruments are subject to the investment policies and
limitations described in the Prospectus and this Statement of Additional
Information.
1. BORROWING
The Fund may, from time to time, borrow money to the maximum extent
permitted by the Investment Company Act of 1940, as amended (the "Investment
Company Act"), from banks at prevailing interest rates for temporary or
emergency purposes and investing in additional securities. The Fund's borrowings
are limited so that immediately after such borrowings the value of assets
(including borrowings) less liabilities (not including borrowings) is at least
three times the amount of the borrowings. Should the Fund, for any reason, have
borrowings that do not meet the above test , within three business days, then
the Fund must reduce such borrowings so as to meet the necessary test. Under
such a circumstance, the Fund may have to liquidate portfolio securities at a
time when it is disadvantageous to do so. Gains made with additional funds
borrowed generally will cause the net asset value of the Fund's shares to rise
faster than could be the case without borrowings. Conversely, if investment
results fail to cover the cost of borrowings, the net asset value of the Fund
could decrease faster than if there had been no borrowings.
2. REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements subject to resale to a
bank or dealer at an agreed upon price which reflects a net interest gain for
the Fund. The Fund will receive interest from the institution until the time
when the repurchase is to occur.
The Fund will always receive as collateral U.S. Government or
short-term money market securities whose market value is equal to at least 100%
of the amount invested by the Fund, and the Fund will make payment for such
securities only upon the physical delivery or evidence by book entry transfer to
the account of its custodian. If the seller institution defaults, the Fund might
incur a loss or delay in the realization of proceeds if the value of the
collateral securing the repurchase agreement declines and it might incur
disposition costs in liquidating the collateral. The Fund will attempt to
minimize such risks by entering into such transactions only with
well-capitalized financial institutions and specifying the required value of the
underlying collateral.
- 2 -
<PAGE>
Unlike the fundamental investment objective of the Fund set forth above
and the investment restrictions set forth below which may not be changed without
shareholder approval, the Fund has the right to modify the investment policies
described above without shareholder approval.
INVESTMENT RESTRICTIONS
The following fundamental policies and investment restrictions have
been adopted by the Fund and, except as noted, such policies and restrictions
cannot be changed without approval by the vote of a majority of the outstanding
voting shares of the Fund which, as defined by the Investment Company Act, means
the affirmative vote of the lesser of (a) 67% or more of the shares of the Fund
present at a meeting at which the holders of more than 50% of the outstanding
shares of the Fund are represented in person or by proxy or (b) more than 50% of
the outstanding shares of the Fund.
The Fund may not:
(1) issue senior securities;
(2) concentrate its investments in particular industries other
than the real estate industry. No more than 25% of the value of a
Fund's assets will be invested in any one industry other than the real
estate industry. The Fund will concentrate its investments in the real
estate industry;
(3) make loans of money or securities other than (a) through the
purchase of publicly distributed bonds, debentures, or other corporate
or governmental obligations, (b) by investing in repurchase
agreements, and (c) by lending its portfolio securities, provided the
value of such loaned securities does not exceed 33-1/3% of its total
assets;
(4) borrow money in excess of 33-1/3% of the value of a Fund's
total assets from banks;
(5) buy or sell commodities or commodity contracts, except the
Fund may purchase or sell futures or options on futures; and
(6) underwrite securities.
The following restrictions are non-fundamental and may be changed by
the Fund's Board of Trustees. Pursuant to such restrictions, the Fund will not:
(1) make short sales of securities, other than short sales
"against the box," or purchase securities on margin except for
short-term credits necessary for clearance of portfolio transactions,
provided that this restriction will not be applied to limit the use of
options, futures contracts, and related options, in the manner
otherwise permitted by the investment restrictions, policies, and
investment program of the Fund;
(2) purchase the securities of any other investment company, if
the Fund, immediately after such purchase or acquisition, owns in the
aggregate, (i) more than 3% of the total outstanding voting stock of
such investment company, (ii) securities issued by such investment
company having an aggregate value in excess of 5% of the value of the
total assets of the Fund, (iii) securities issued by such investment
company and all
- 3 -
<PAGE>
other investment companies having an aggregate value in excess of 10%
of the value of the total assets of the Fund, or (iv) unless the 100%
of the due of the total assets of the fund are invested in the
securities of another investment company with the same investment
objective;
(3) invest more than 10% of its net assets in illiquid
securities. Illiquid securities are securities that are not readily
marketable or cannot be disposed of promptly within seven days and in
the usual course of business without taking a materially reduced
price. Such securities include, but are not limited to, time deposits
and repurchase agreements with maturities longer than seven days.
Securities that may be resold under Rule 144A or securities offered
pursuant to Section 4(2) of the Securities Act of 1933, as amended,
shall not be deemed illiquid solely by reason of being unregistered.
The Investment Adviser shall determine whether a particular security
is deemed to be liquid based on the trading markets for the specific
security and other factors;
(4) invest more than 20% of its total assets in securities of
foreign issuers and ADRs are not considered to be foreign securities
for this purpose.
MANAGEMENT
The overall management of the business and affairs of the Fund is
vested with the Board of Trustees. The Board of Trustees approves all
significant agreements between the Trust or the Fund and persons or companies
furnishing services to the Fund, including the Fund's agreement with an
investment adviser, custodian, and transfer agent. The day-to-day operations of
the Fund are delegated to the Fund's officers subject always to the investment
objectives and policies of each Fund and to general supervision by the Trust's
Board of Trustees.
The Trustees and officers and their principal occupations are noted
below. Unless otherwise indicated the address of each Trustee and executive
officer is 667 Madison Avenue, New York, New York 10021.
<TABLE>
<CAPTION>
Position(s) held Principal Occupation
Name, Address, and Age with the Fund During Past 5 Years
- ----------------------- -------------- -------------------
<S> <C> <C>
Richard J. Adler, Chairman of the Managing Director, E.I.I. Realty
661 Madison Avenue, Board of Trustees, Securities, Inc. June 1993 to present;
New York, NY 10021 Chief Executive Managing Director, European Investors
51 Officer Incorporated and Vice President,
European Investors Corporate Finance,
Inc., April, 1983 to present.
David P. O'Connor Trustee, President, Managing Director, E.I.I. Realty
661 Madison Avenue, Treasurer Securities, Inc. and Vice President,
New York, NY 10021 European Investors Incorporated,
34 February, 1994 to present; Investment
Executive, Kidder, Peabody, and Co.,
Inc., 1992 to January, 1994.
Warren K. Greene, Trustee Senior Vice President,
51-12 Old Kings Highway, TrendLogic Associates, Inc.
Old Greenwich, CT 06870, 62 January, 1995 to present; President,
Baker Weeks & Co., October, 1993 to
June, 1994.
- 4 -
<PAGE>
Richard W. Hutson Trustee Retired/Part-time consultant to Hewitt
615 Innsbruck Court, Associates; November, 1996 to present;
Libertyville, IL 60048, 59 Senior Principal, Hewitt Associates,
December, 1964 to October, 1996.
Samuel R. Karetsky, Trustee Managing Member, Samuel R. Karetsky
180 East 79th Street, LLC, March, 1997 to present;
New York, NY 10021, 53 Managing Director, Morgan Stanley &
Co., June, 1995 to March, 1997;
Managing Director, OFFITBANK, January, 1993
to June, 1995.
Cydney C. Donnell Vice President Managing Director, E.I.I. Realty
667 Madison Avenue, Securities, Inc., June, 1993 to present;
New York, NY 10021 Vice President, European Investors
39 Incorporated, and Vice President, E.I.I.
Realty Corp., September, 1986 to present.
Peter J. Gavey Secretary Director of Business Development,
677 Madison Avenue, E.I.I. Realty Securities, Inc. February,
New York, NY 10021, 1998 to present; Director Rogers, Casey
31 Alternative Investments, May, 1993 to
February, 1998
</TABLE>
The Fund may indemnify any person who was or is a Trustee, officer, or
employee of the Fund to the maximum extent permitted by the Delaware business
trust law; provided, however, that any such indemnification (unless ordered by a
court) shall be made by the Fund only as authorized in the specific case upon a
determination that indemnification of such persons is proper in the
circumstances. Such determination shall be made (i) by the Board of Trustees, by
a majority vote of a quorum which consists of Trustees who are neither
"interested persons" of the Trust, as defined in Section 2(a)(19) of the
Investment Company Act, nor parties to the proceeding, or (ii) if the required
quorum is not obtained or if a quorum of such Trustees so directs, by
independent legal counsel in a written opinion. No indemnification will be
provided by the Fund to any Trustee or officer of the Fund for any liability to
the Fund or it shareholders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of duty.
As of June __, 1998 the Trustees and officers as a group did not own
beneficially any of the Fund's outstanding shares. Each disinterested Trustee
will receive $4,000 per annum and $1,500 per meeting, plus expenses of
attendance at Trustees meetings. "Interested" Trustees do not receive Trustees'
fees.
INVESTMENT ADVISER AND INVESTMENT ADVISORY AGREEMENTS
E.I.I. Realty Securities, Inc. (the "Investment Adviser" or "E.I.I."),
667 Madison Avenue, New York, New York 10021, acts as the Investment Adviser to
the Fund under an investment advisory agreement (the "Agreement"). The Agreement
provides that the Investment Adviser identify and analyze possible investments
for the Fund, determine the amount and timing of such investments, and the form
of investment. The Investment Adviser has the responsibility of monitoring and
reviewing the Fund's portfolio, and, on a regular basis, to recommend the
ultimate disposition of such investments. It is the Investment Adviser's
responsibility to cause the purchase and sale of securities in the Fund's
portfolio, subject at all times to the policies set forth by the Trust's Board
of Trustees. In addition, the Investment Adviser provides certain administrative
and managerial services to the Fund.
The Investment Adviser receives a fee from the Fund calculated daily
and payable monthly, for the performance of its services at an annual rate of
.75% of the average daily net assets of
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<PAGE>
the Fund. The fee is accrued daily for the purposes of determining the offering
and redemption price of the Fund's shares.
Under the terms of the Agreement, the Fund pays all of its expenses
(other than those expenses specifically assumed by the Investment Adviser and
the Fund's distributor) including the costs incurred in connection with the
maintenance of its registration under the Securities Act of 1933, as amended,
and the Investment Company Act, printing of prospectuses distributed to
shareholders, taxes or governmental fees, brokerage commissions, custodial,
transfer and shareholder servicing agents, expenses of outside counsel and
independent accountants, preparation of shareholder reports, and expenses of
Trustee and shareholder meetings.
The Agreement may be terminated without penalty on 60 days' written
notice by a vote of the majority of the Trust's Board of Trustees or by the
Investment Adviser, or by holders of a majority of the Fund's outstanding
shares. The Fund's Agreement will continue for two years from its effective date
and from year-to-year thereafter provided it is approved, at least annually, in
the manner described in the Investment Company Act. This requires that the
Agreement and any renewal thereof be approved by a vote of the majority of the
Fund's Trustees who are not parties thereto or interested persons of any such
party, cast in person at a meeting specifically called for the purpose of voting
on such approval.
DISTRIBUTION PLANS
The Fund has adopted a distribution plan pursuant to Rule 12b-1 of the
Investment Company Act (the "Plan") with respect to the Investor shares of the
Fund. The Plan provides that the Fund's Investor shares may incur distribution
expenses related to the sale of shares of up to .75% per annum of the average
daily net assets of the Fund's Investor shares.
The Plan provides that the Fund's Investor shares may finance
activities which are primarily intended to result in the sale of the Fund's
Investor shares, including, but not limited to, advertising, printing of
prospectuses and reports for other than existing shareholders, preparation and
distribution of advertising material and sales literature, and payments to
dealers and shareholder servicing agents including any affiliates who enter into
agreements with the Fund or its distributor.
In approving the Plan in accordance with the requirements of Rule 12b-1
under the Investment Company Act, the Trustees (including the "disinterested"
Trustees, as defined in the Investment Company Act) considered various factors
and determined that there is a reasonable likelihood that the Plan will benefit
the Fund and its shareholders. The Plan will continue in effect from year to
year if specifically approved annually (a) by the majority of the Fund's
outstanding Investor shares or by the Board of Trustees and (b) by the vote of a
majority of the disinterested Trustees. While the Plan remains in effect, the
Fund's Principal Financial Officer shall prepare and furnish to the Board of
Trustees a written report setting forth the amounts spent by the Fund under the
Plan and the purposes for which such expenditures were made. The Plan may not be
amended to increase materially the amount to be spent for distribution without
shareholder approval and all material amendments to the Plan must be approved by
the Board of Trustees and by the disinterested Trustees cast in person at a
meeting called specifically for that purpose. While the Plan is in effect, the
selection and nomination of the disinterested Trustees shall be made by those
disinterested Trustees then in office.
- 6 -
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
E.I.I. will serve as the Fund's Administrator and has retained PFPC,
Inc. as the Sub- Administrator.
Administrator supervises administration of the Fund pursuant to an
Administrative Services Agreement with the Fund. Under the Administrative
Services Agreement, the Administrator supervises the administration of all
aspects of the Fund's operations, including the Fund's receipt of services for
which the Fund is obligated to pay, provides the Fund with general office
facilities, and provides, at the Fund's expense, the services of persons
necessary to perform such supervisory, administrative, and clerical functions as
are needed to operate the Fund effectively. Those persons, as well as certain
employees and Trustees of the Fund, may be directors, officers, or employees of
(and persons providing services to the Fund may include) E.I.I. and its
affiliates. For these services and facilities, E.I.I. receives with respect to
the Fund a fee computed and paid monthly at an annual rate of 0.25% of the
average daily net assets of the Fund, out of which E.I.I., and not the Fund,
pays the Sub-Administrator.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the supervision of the Board of Trustees, decisions to buy
and sell securities for the Fund are made by the Investment Adviser. The
Investment Adviser is authorized to allocate the orders placed by it on behalf
of the Fund to such unaffiliated brokers who also provide research or
statistical material or other services to the Fund or the Investment Adviser for
the Fund's use. Such allocation shall be in such amounts and proportions as the
Investment Adviser shall determine and the Investment Adviser will report on
said allocations regularly to the Board of Trustees indicating the unaffiliated
brokers to whom such allocations have been made and the basis therefor. In
addition, the Investment Adviser may consider sales of shares of the Fund and of
any other funds advised or managed by the Investment Adviser as a factor in the
selection of unaffiliated brokers to execute portfolio transactions for the
Fund, subject to the requirements of best execution. At times, the Fund also may
purchase portfolio securities directly from dealers acting as principals,
underwriters, or market makers. As these transactions are usually conducted on a
net basis, no brokerage commissions are paid by the Fund.
In selecting a broker to execute each particular transaction, the
Investment Adviser will take the following into consideration: the best net
price available; the reliability, integrity, and financial condition of the
broker; the size and difficulty in executing the order; and the value of the
expected contribution of the broker to the investment performance of the Fund on
a continuing basis. Accordingly, the cost of the brokerage commissions to the
Fund in any transaction may be greater than that available from other brokers if
the difference is reasonably justified by other aspects of the portfolio
execution services offered. Subject to such policies and procedures as the Board
of Trustees may determine, the Investment Adviser shall not be deemed to have
acted unlawfully or to have breached any duty solely by reason of its having
caused the Fund to pay an unaffiliated broker that provides research services to
the Investment Adviser for the Fund's use an amount of commission for effecting
a portfolio investment transaction in excess of the amount of commission another
broker would have charged for effecting the transaction, if the Investment
Adviser determines in good faith that such amount of commission was reasonable
in relation to the value of the research service provided by such broker viewed
in terms of either that particular transaction of the Investment Adviser's
ongoing responsibilities with respect to the Fund.
- 7 -
<PAGE>
ALLOCATION OF INVESTMENTS
The Investment Adviser has other advisory clients, some of which have
similar investment objectives to the Fund. As such, there will be times when the
Investment Adviser may recommend purchases and/or sales of the same portfolio
securities for the Fund and its other clients. In such circumstances, it will be
the policy of the Investment Adviser to allocate purchases and sales among the
Fund and its other clients in a manner which the Investment Adviser deems
equitable, taking into consideration such factors as size of account,
concentration of holdings, investment objectives, tax status, cash availability,
purchase cost, holding period, and other pertinent factors relative to each
account. Simultaneous transactions may have an adverse effect upon the price or
volume of a security purchased by the Fund.
COMPUTATION OF NET ASSET VALUE
The Fund will determine the net asset value of its shares once daily as
of the close of trading on the New York Stock Exchange (the "Exchange") on each
day that the Exchange is open. It is expected that the Exchange will be closed
on Saturdays and Sundays and on New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
The Fund may make or cause to be made a more frequent determination of the net
asset value and offering price, which determination shall reasonably reflect any
material changes in the value of securities and other assets held by the Fund
from the immediately preceding determination of net asset value. The net asset
value is determined by dividing the market value of the Fund's investments as of
the close of trading plus any cash or other assets (including dividends
receivable and accrued interest) less all liabilities (including accrued
expenses) by the number of the Fund's shares outstanding. Securities traded on
the New York Stock Exchange or the American Stock Exchange will be valued at the
last sale price, or if no sale, at the mean between the latest bid and asked
price. Securities traded in any other U.S. or foreign market shall be valued in
a manner as similar as possible to the above, or if not so traded, on the basis
of the latest available price. Securities sold short "against the box" will be
valued at market as determined above; however, in instances where the Fund has
sold securities short against a long position in the issuer's convertible
securities, for the purpose of valuation, the securities in the short position
will be valued at the "asked" price rather than the mean of the last "bid" and
"asked" prices. Where there are no readily available quotations for securities
they will be valued at a fair value as determined by the Board of Trustees
acting in good faith.
PURCHASE AND REDEMPTION OF SHARES
A complete description of the manner by a which the Fund's shares may
be purchased and redeemed appears in the Prospectus under the headings "Purchase
of Shares" and "Redemption of Shares" respectively.
TAX MATTERS
The following is only a summary of certain additional federal income
tax considerations generally affecting the Fund and its shareholders that are
not described in the Prospectus. No attempt
- 8 -
<PAGE>
is made to present a detailed explanation of the tax treatment of the Fund or
its shareholders, and the discussions here and in the Prospectus are not
intended as substitutes for careful tax planning.
Qualification as a Regulated Investment Company
The Fund will elect to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a
regulated investment company, the Fund will not be subject to federal income tax
on the portion of its net investment income (i.e., taxable interest, dividends,
and other taxable ordinary income, net of expenses) and capital gain net income
(i.e., the excess of capital gains over capital losses) for a taxable year that
it distributes to shareholders, provided that it distributes at least 90% of its
investment company taxable income (i.e., net investment income and the excess of
net short-term capital gain over net long-term capital loss) for the taxable
year (the "Distribution Requirement") and satisfies certain other requirements
of the Code that are described below. Distributions by the Fund made during the
taxable year or, under specified circumstances, within twelve months after the
close of the taxable year, will be considered distributions of income and gains
of the taxable year and will, therefore , count towards satisfaction of the
Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must derive at least 90% of its gross income from dividends,
interest, certain payments with respect to securities loans, gains from the sale
or other disposition of stock or securities or foreign currencies (to the extent
such currency gains are directly related to the regulated investment company's
principal business of investing in stock or securities) , and other income
(including but not limited to gains from options, futures, or forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies.
The Fund also must satisfy an asset diversification test in order to
qualify as a regulated investment company. Under this test, at the close of each
quarter of the Fund's taxable year, at least 50% of the value of the Fund's
assets must consist of cash and cash items, U.S. Government securities,
securities of other regulated investment companies, and securities of other
issuers (limited, for this purpose, in respect of any one issuer to no more than
5% of the value of the Fund's total assets and to no more than 10% of the
outstanding voting securities of such issuer) and no more than 25% of the value
of its total assets may be invested in the securities (other than U.S.
Government securities and securities of other regulated investment companies) of
any one issuer or of two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses. Generally, an option with
respect to a security is treated as issued by the issuer of the security rather
than the issuer of the option.
If for any taxable year the Fund does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.
Excise Tax on Regulated Investment Companies
A 4% non-deductible excise tax is imposed on a regulated investment
company to the extent that it fails to distribute in each calendar year an
amount equal to 98% of its ordinary income for such calendar year and 98% of its
capital gain net income for the one-year period ended on October
- 9 -
<PAGE>
31 of such calendar year (or, at the election of a regulated investment company
having a taxable year ending November 30 or December 31, for its taxable year (a
"taxable year election")). The balance of such income must be distributed during
the next calendar year. For the foregoing purposes, a regulated investment
company is treated as having distributed any amount on which it is subject to
income tax for any taxable year ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall:
(1) reduce its capital gain net income (but not below its net capital gain) by
the amount of any net ordinary loss for the calendar year and (2) exclude
foreign currency gains and losses incurred after October 31 of any year (or
after the end of its taxable year if it has made a taxable year election) in
determining the amount of ordinary taxable income for the current calendar year
(and, instead, include such gains and losses in determining ordinary taxable
income for the succeeding calendar year).
The Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax. However,
investors should note that the Fund may in certain circumstances be required to
liquidate portfolio investments to make sufficient distributions to avoid excise
tax liability.
Fund Distributions
Distributions by the Fund from net investment income and net short-term
capital gains are taxable to shareholders as ordinary income. To the extent
attributable to qualifying dividends received by the Fund, ordinary income
dividends may qualify for the 70% dividends-received deduction generally
available to corporations (other than corporations, such as S corporations,
which are not eligible for the deduction because of their special
characteristics and other than for purposes of special taxes such as the
accumulated earnings tax and the personal holding company tax) . However,
because distributions received by the Fund from real estate investment trusts
("REITs") are not qualifying dividends, distributions by the Fund generally will
not be eligible for the dividends-received deduction. In addition, a dividend
received by the Fund will not be treated as a qualifying dividend (1) if it has
been received with respect to any share of stock that the Fund has held for less
than 46 days (91 days in the case of certain preferred stock), excluding for
this purpose under the rules of Code section 246(c)(3) and (4) any period during
which the Fund has an option to sell, is under a contractual obligation to sell,
has made and not closed a short sale of, is the grantor of a deep-in-the-money
or otherwise nonqualified option to buy, or has otherwise diminished its risk of
loss by holding other positions with respect to such (or substantially
identical) stock; (2) to the extent that the Fund is under an obligation
(pursuant to a short sale or otherwise) to make related payments with respect to
positions in substantially similar or related property; or (3) to the extent
that the stock on which the dividend is paid is treated as debt-financed under
the rules of Code section 246A. The 46-day holding period must be satisfied
during the 90-day period beginning 45 days prior to each applicable ex-dividend
date; the 91-day holding period must be satisfied during the 180-day period
beginning 90 days before each applicable ex-dividend date. Moreover, the
dividends-received deduction for a corporate shareholder may be disallowed or
reduced (1) if the corporate shareholder fails to satisfy the foregoing
requirements with respect to its shares of the Fund or (2) by application of
Code section 246(b) which in general limits the dividends-received deduction to
70% of the shareholder's taxable income (determined without regard to the
dividends-received deduction and certain other items).
Alternative minimum tax ("AMT") is imposed in addition to, but only to
the extent that it exceeds, the regular tax and is computed at a maximum
marginal rate of 28% for noncorporate taxpayers and 20% for corporate taxpayers
on the excess of the taxpayer's alternative minimum taxable income ("AMTI") over
an exemption amount. For purposes of the corporate AMT, the corporate
- 10 -
<PAGE>
dividends-received deduction is not itself an item of tax preference that must
be added back to taxable income or is otherwise disallowed in determining a
corporation's AMTI. However, a corporate shareholder generally will be required
to take the full amount of any dividend received from the Fund into account
(without a dividends-received deduction) in determining its adjusted current
earnings, which are used in computing an additional corporate preference item
(i.e., 75% of the excess of a corporate taxpayer's adjusted current earnings
over its AMTI (determined without regard to this item and the AMT net operating
loss deduction)) includable in AMTI.
Distributions by the Fund from net long-term capital gains are taxable
to a shareholder as long-term capital gains regardless of the length of time the
shares on which such distributions are paid have been held by the shareholder.
However, shareholders should note that any loss realized upon the sale or
redemption of shares held for six months or less will be treated as a long-term
capital loss to the extent of any distribution of long-term capital gain to the
shareholder with respect to such shares.
If the Fund elects to retain its net capital gain, the Fund will be
taxed thereon (except to the extent of any available capital loss carryovers) at
the 35% corporate tax rate. If a Fund elects to retain its net capital gain, it
is expected that the Fund also will elect to have shareholders of record on the
last day of its taxable year treated as if each received a distribution of his
pro rata share of such gain, with the result that each shareholder will be
required to report his pro rata share of such gain on his tax return as
long-term capital gain, will receive a refundable tax credit for his pro rata
share of tax paid by the Fund on the gain, and will increase the tax basis for
his shares by an amount equal to the deemed distribution less the tax credit.
Distributions by the Fund that do not constitute ordinary income
dividends or capital gain dividends will be treated as a return of capital to
the extent of (and in reduction of) the shareholder's tax basis in his shares;
any excess will be treated as gain from the sale of his shares, as discussed
below.
Distributions by the Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund. Shareholders receiving a distribution in the form
of additional shares will be treated as receiving a distribution in an amount
equal to the fair market value of the shares received, determined as of the
reinvestment date. In addition, if the net asset value at the time a shareholder
purchases shares of the Fund reflects undistributed net investment income or
recognized capital gain net income or unrealized appreciation in the value of
the assets of the Fund, distributions of such amounts will be taxable to the
shareholder in the manner described above, although such distributions
economically constitute a return of capital to the shareholder.
Ordinarily, shareholders are required to take distributions by the Fund
into account in the year in which the distributions are made. However, dividends
declared in October, November, or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.
Backup Withholding
The Fund will be required in certain cases to withhold and remit to the
Internal Revenue Service 31% of ordinary income dividends and capital gain
dividends and the proceeds of redemption of shares paid to any shareholder (1)
who failed to provide to the Fund a correct taxpayer
- 11 -
<PAGE>
identification number , (2) who is subject to backup withholding for failure to
report properly the receipt of interest or dividend income , or (3) who has
failed to certify to the Fund that it is not subject to backup withholding or
that it is a corporation or other "exempt recipient."
Redemption of Shares
A shareholder will recognize gain or loss on the redemption of shares
of the Fund in an amount equal to the difference between the proceeds of the
redemption and the shareholder's adjusted tax basis in the shares redeemed. All
or a portion of any loss so recognized may be disallowed if the shareholder
purchases other shares of the Fund within 30 days before or after the
redemption. In general, any gain or loss arising from (or treated as arising
from) the redemption of shares of the Fund will be considered capital gain or
loss and will be long-term capital gain or loss if the shares were held for
longer than one year. Long-term capital gain recognized by an individual
shareholder will be taxed at the lowest rates applicable to capital gains if the
holder has held such shares for more than 18 months at the time of the
redemption. Any capital loss arising from the redemption of shares held for six
months or less will be treated as a long-term capital loss to the extent of the
amount of capital gain dividends received on such shares. For this purpose, the
special holding period rules of Code section 246(c)(3) and (4) (discussed above
in connection with the dividends-received deduction for corporations) generally
will apply in determining the holding period of shares. Capital losses in any
year are deductible only to the extent of capital gains plus, in the case of a
noncorporate taxpayer, $3,000 of ordinary income.
Taxation of Certain Mortgage REITs
The Fund may invest in REITs that hold residual interests in real
estate mortgage investment conduits ("REMICs"). Under Treasury Regulations that
have not yet been issued, but may apply retroactively, the portion of the Fund's
income from a REIT that is attributable to the REIT's residual interest in a
REMIC (referred to in the Code as an "excess inclusion") will be allocated to
shareholders of the Fund in proportion to the dividends received by them with
the same consequences as if the shareholders held their proportionate share of
the REMIC residual interest directly. In general, excess inclusion income
allocated to shareholders (1) cannot be offset by net operating losses (subject
to a limited exception for certain thrift institutions) and (2) will constitute
unrelated business taxable income to entities that are subject to tax on
unrelated business income (including a qualified pension plan, an individual
retirement account, a 401(k) plan, a Keogh plan, or other tax-exempt entity),
thereby potentially requiring such entity to file a federal income tax return
and remit tax on its excess inclusion income. In addition, if at any time during
any taxable year a "disqualified organization" (as defined in the Code) is a
record holder of a share in the Fund, then the Fund will be subject to tax, at
the highest federal income tax rate imposed on corporations, on that portion of
its excess inclusion income for the taxable year that is allocable to the
disqualified organization.
Foreign Shareholders
Taxation of a shareholder who, as to the United States, is a
nonresident alien individual, foreign trust or estate, foreign corporation, or
foreign partnership ("foreign shareholder"), depends on whether the income from
the Fund is "effectively connected" with a U.S. trade or business carried on by
such shareholder.
If the income from the Fund is not effectively connected with a U.S.
trade or business carried on by a foreign shareholder, ordinary income dividends
paid to such foreign shareholder will be subject to U.S. withholding tax at the
rate of 30% (or lower applicable treaty rate) upon the gross
- 12 -
<PAGE>
amount of the dividend. Such foreign shareholder generally would be exempt from
U.S. federal income tax on gains realized on the sale of shares of the Fund,
capital gain dividends, and amounts retained by the Fund that are designated as
undistributed capital gains.
If the income from the Fund is (or is treated as) effectively connected
with a U.S. trade or business carried on by a foreign shareholder, then ordinary
income dividends, capital gain dividends, and any gains realized upon the sale
of shares of the Fund will be subject to U.S. federal income tax at the rates
applicable to U.S. citizens or domestic corporations. If at least 50% of the
value of the Fund is represented by shares of REITs that are "domestically
controlled" within the meaning of section 897(h) of the Code or is represented
by shares of classes of REIT stock that (1) constitute not more than 5% of such
classes and (2) are "regularly traded on an established securities market"
within the meaning of section 897(c)(3) of the Code, a foreign shareholder
should not be subject to withholding tax under the Foreign Investment in Real
Property Tax Act ("FIRPTA") with respect to gain arising from the sale or
redemption of shares. In addition, foreign shareholders should not be subject to
withholding under FIRPTA on distributions of the Fund's net capital gain
(designated as capital gain by the Fund).
In the case of foreign shareholders other than corporations, the Fund
may be required to withhold U.S. federal income tax at a rate of 31% on
distributions and the proceeds of redemptions that are otherwise exempt from
withholding tax (or taxable at a reduced treaty rate) unless such shareholders
furnish the Fund with proper notification of their foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the Fund,
including the applicability of foreign taxes.
Effect of Future Legislation; Local Tax Considerations
The foregoing general discussion of U.S. federal income tax
consequences is based on the Code and the Treasury Regulations issued thereunder
as in effect on the date of this Statement of Additional Information. Future
legislative or administrative changes or court decisions may significantly
change the conclusions expressed herein, and any such changes or decisions may
have a retroactive effect .
Rules of state and local taxation of ordinary income dividends
and capital gain dividends from regulated investment companies may differ from
the rules for U.S. federal income taxation described above. Shareholders are
urged to consult their tax advisers as to the consequences of these and other
state and local tax rules affecting investment in a Fund.
PERFORMANCE CALCULATION
For purposes of quoting and comparing the performance of the Fund to
that of other mutual funds and to other relevant market indices in
advertisements or in reports to shareholders, performance may be stated in terms
of total return. Under rules promulgated by the Securities and Exchange
Commission ("SEC"), a fund's advertising performance must include total return
quotations calculated according to the following formula:
P(1 + T)^n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
- 13 -
<PAGE>
n = number of years (1, 5, or 10)
ERV = ending redeemable value of a
hypothetical $1,000 payment, made at
the beginning of the 1, 5, or 10
year period, at the end of such
period (or fractional portion
thereof.)
Under the foregoing formula, the time periods used in advertising will
be based on rolling calendar quarters, updated to the last day of the most
recent quarter prior to submission of the advertising for publication, and will
cover 1, 5, and 10 year periods of the Fund's existence or such shorter period
dating from the effectiveness of the Fund's Registration Statement. In
calculating the ending redeemable value, all dividends and distributions by the
Fund are assumed to have been reinvested at net asset value as described in the
Prospectus on the reinvestment dates during the period. Total return, or "T" in
the formula above, is computed by finding the average annual compounded rates of
return over the 1, 5, and 10 year periods (or fractional portion thereof) that
would equate the initial amount invested to the ending redeemable value. Any
recurring account charges that might in the future be imposed by the Fund would
be included at that time.
In addition to the total return quotations discussed above, the Fund
may advertise its yield based on a 30-day (or one month) period ended on the
date of the most recent balance sheet included in the Fund's Post-Effective
Amendment to its Registration Statement, computed by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period, according to the following formula:
a-b
YIELD = 2[( ----- +1)^6-1]
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
Under this formula, interest earned on debt obligations for purposes of
"a" above, is calculated by (1) computing the yield to maturity of each
obligation held by the Fund based on the market value of the obligation
(including actual accrued interest) at the close of business on the last day of
each month, or, with respect to obligations purchased during the month, the
purchase price (plus actual accrued interest), (2) dividing that figure by 360
and multiplying the quotient by the market value of the obligation (including
actual accrued interest as referred to above) to determine the interest income
on the obligation for each day of the subsequent month that the obligation is in
the Fund's portfolio (assuming a month of 30 days), and (3) computing the total
of the interest earned on all debt obligations and all dividends accrued on all
equity securities during the 30-day or one month period. In computing dividends
accrued, dividend income is recognized by accruing 1/360 of the stated dividend
rate of a security each day that the security is in the Fund's portfolio. For
purposes of "b" above, Rule 12b-1 expenses are included among the expenses
accrued for the period. Undeclared earned income, computed in accordance with
generally accepted accounting principles, may be subtracted from the maximum
offering price calculation required pursuant to "d" above.
Any quotation of performance stated in terms of yield will be given no
greater prominence than the information prescribed under the SEC's rules. In
addition, all advertisements containing performance data of any kind will
include a legend disclosing that such performance data
- 14 -
<PAGE>
represents past performance and that the investment return and principal value
of an investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
GENERAL INFORMATION
ORGANIZATION AND DESCRIPTION OF SHARES OF THE FUND
The Trust was organized as a Delaware business trust under the laws of
the state of Delaware. The Trust's Certificate of Trust was filed December 22,
1997. The Trust's Declaration of Trust, dated as of December 22, 1997, permits
the Trustees to issue an unlimited number of shares of beneficial interest with
a par value of $0.01 per share in the Trust in an unlimited number of series of
shares. The Trust consists of one series, E.I.I. Realty Securities Fund. Each
share of beneficial interest has one vote and shares equally in dividends and
distributions when and if declared by the Fund and in the Fund's net assets upon
liquidation. All shares, when issued, are fully paid and nonassessable. There
are no preemptive, conversion, or exchange rights. Fund shares do not have
cumulative voting rights and, as such, holders of at least 50% of the shares
voting for Trustees can elect all Trustees and the remaining shareholders would
not be able to elect any Trustees. The Board of Trustees may classify or
reclassify any unissued shares of the Trust into shares of any series by setting
or changing in any one or more respects, from time to time, prior to the
issuance of such shares, the preference, conversion, or other rights, voting
powers, restrictions, limitations as to dividends, or qualifications of such
shares. Any such classification or reclassification will comply with the
provisions of the Investment Company Act. Shareholders of each series as created
will vote as a series to change, among other things, a fundamental policy of the
Fund and to approve the Investment Advisory Agreement and Distribution Plan.
The Trust is not required to hold annual meetings of shareholders but
will hold special meetings of shareholders when, in the judgment of the
Trustees, it is necessary or desirable to submit matters for a shareholder vote.
Shareholders have, under certain circumstances, the right to communicate with
other shareholders in connection with requesting a meeting of shareholders for
the purpose of removing one or more Trustees. Shareholders also have, in certain
circumstances, the right to remove one or more Trustees without a meeting.
REPORTS
Shareholders receive reports at least semi-annually showing the Fund's
holdings and other information. In addition, shareholders receive annual
financial statements that have been audited examined by the Fund's independent
auditors.
- 15 -
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
List all financial statements and exhibits filed as part of the
Registration Statement.
(a) Financial statements:
In Part A: None.
In Part B: To be filed by amendment.
In Part C: None.
(b) Exhibits
EX-99.B1(a) Corrected Certificate of Trust as of December 22, 1997. (2)
EX-99.B1(b) Trust Instrument.(2)
EX-99.B2 By-Laws.(2)
EX-99.B3 None.
EX-99.B4 None.
EX-99.B5 Form of Investment Advisory Agreement between Registrant and
E.I.I. Realty Securities, Inc.(2)
EX-99.B6 None.
EX-99.B7 None.
EX-99.B8 Form of Custodian Services Agreement between PNC Bank,
National Association and Registrant.(2)
EX-99.B9(a) Form of Administration Agreement between Registrant and
E.I.I. Realty Securities, Inc.(2)
EX-99.B9(b) Form of Sub-Administration Agreement and Accounting Services
Agreement between European Investors Incorporated, the
Registrant and PFPC INC.(2)
- -------------------
(1) Filed as an Exhibit to Registrant's Registration Statement on Form N-1A
on February 10, 1998, accession number 0000922423-98-000122
(2) Filed herewith.
(3) To be filed by amendment.
<PAGE>
EX-99.B9(c) Form of Transfer Agency Services Agreement between PFPC INC.
and Registrant.(2)
EX-99.B9(d) Form of Shareholder Servicing Agreement.(2)
EX-99.B10 Opinion of Kramer, Levin, Naftalis & Frankel.(3)
EX-99.B11(a) Consent of Kramer, Levin, Naftalis & Frankel, Counsel for
the Registrant.(2)
EX-99.B11(b) Consent of Ernst & Young LLP, independent auditors for the
Registrant.(2)
EX-99.B12 None.
EX-99.B13 Form of Investment letter re: initial $100,000 capital.(2)
EX-99.B14 None.
EX-99.B15 Form of Distribution Plan pursuant to Rule 12b-1 for the
Investor Shares of Registrant.(2)
EX-99.B16 Schedule for computation of performance quotation.(3)
EX-99.B17 Not applicable.
EX-99.B18 Form of Rule 18f-3 Multiple Class Plan.(2)
EX-99.B19 Powers of Attorney of Warren K. Greene, Richard W. Hutson,
and Samuel R. Karetsky.(2)
- --------------------
(1) Filed as an Exhibit to Registrant's Registration Statement on Form N-1A
on February 10, 1998, accession number 0000922423-98-000122.
(2) Filed herewith.
(3) To be filed by amendment.
ITEM 25. Persons Controlled By or Under Common Control with Registrant
None.
- 5 -
<PAGE>
ITEM 26. Number of Holders of Securities
Number of Record Holders
Title of Class as of May 6, 1998
- -------------- ------------------
Shares of beneficial interest
E.I.I. Realty Securities Fund
($.001 par value)
Institutional Shares 0
Adviser Shares 0
Investor Shares 0
ITEM 27. Indemnification
Section 10.02 of the Registrant's Trust Instrument provides as follows:
"(a) Subject to the exceptions and limitations contained in Subsection 10.02(b):
(i) every person who is, or has been, a Trustee or officer of
the Trust (hereinafter referred to as a "Covered Person") shall be
indemnified by the Trust to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him
in connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of his being or
having been a Trustee or officer and against amounts paid or incurred
by him in the settlement thereof;
(ii) 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 while in office or
thereafter, and the words "liability" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office or (B) not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, (A) by the court or other
body approving the settlement; (B) by at least a majority of those
Trustees who are neither Interested Persons of the Trust nor are
parties to the matter based upon a review of readily available facts
(as opposed to a full trial-type inquiry); or (C) by written opinion of
independent legal counsel based upon a review of readily available
facts (as opposed to a full trial-type inquiry).
- 6 -
<PAGE>
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now
or hereafter be entitled, shall continue as to a person who has ceased to
be a Covered Person and shall inure to the benefit of the heirs, executors
and administrators of such a person. Nothing contained herein shall affect
any rights to indemnification to which Trust personnel, other than Covered
Persons, and other persons may be entitled by contract or otherwise under
law.
(d) Expenses in connection with the preparation and presentation of a defense
to any claim, action, suit or proceeding of the character described in
Subsection (a) of this Section 10.02 may be paid by the Trust or Series
from time to time prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount will be
paid over by him to the Trust or Series if it is ultimately determined that
he is not entitled to indemnification under this Section 10.02; provided,
however, that either (i) such Covered Person shall have provided
appropriate security for such undertaking, (ii) the Trust is insured
against losses arising out of any such advance payments or (iii) either a
majority of the Trustees who are neither Interested Persons of the Trust
nor parties to the matter, or independent legal counsel in a written
opinion, shall have determined, based upon a review of readily available
facts (as opposed to a trial-type inquiry or full investigation), that
there is reason to believe that such Covered Person will be found entitled
to indemnification under this Section 10.02."
ITEM 28. Business and Other Connections of Investment Adviser
[To be filed by amendment]
ITEM 29. Principal Underwriters
(a) None.
(b) The following information is furnished with respect to the officers
and partners of E.I.I. Realty Securities, Inc., the Registrant's principal
underwriter. The business address for all persons listed below is 667 Madison
Avenue, 16th Floor, New York, NY 10110.
Name and Principal Positions and Offices with Positions and Offices
Business Address Principal Underwriter with Registrant
Richard J. Adler Managing Director Chairman of the Board
David P. O'Connor Managing Director Trustee, President and
Treasurer
Cydney C. Donnell Managing Director Vice President
(c) Not Applicable. The Registrant's principal underwriter is an
affiliated person of the Registrant.
- 7 -
<PAGE>
ITEM 30. Location of Accounts and Records
As required by Section 31(a) of the Investment Company Act of 1940, the
accounts, books or other documents relating to the E.I.I. Realty Securities
Fund's budget and accruals will be kept by E.I.I. Realty Securities, Inc., 667
Madison Avenue, 16th Floor, New York, NY 10110. The accounts, books or other
documents of the Fund relating to shareholder accounts and records and dividend
disbursements will also be kept by E.I.I. Realty Securities, Inc. at the above
address.
ITEM 31. Management Services
There are no management-related service contracts not discussed in
Parts A and B.
ITEM 32. Undertakings
(1) Registrant undertakes to call a meeting of shareholders for the
purpose of voting upon the question of removal of a director or directors if
requested to do so by the holders of at least 10% of the Registrant's
outstanding voting securities, and to assist in communications with other
shareholders as required by Section 16(c) of the 1940 Act.
- 8 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Pre-Effective Amendment No. 1 to the Registration Statement on Form N-1A to be
signed on its behalf by the undersigned, thereto duly authorized in the city of
New York, and the state of New York on this 6th day of May, 1998.
E.I.I. REALTY SECURITIES FUND
(Registrant)
By:/s/ Richard J. Adler
--------------------
Richard J. Adler, Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 6th day of May, 1998.
SIGNATURE TITLE
/s/Richard J. Adler Chairman of the Board and
- ------------------- Chief Executive Officer
Richard J. Adler
/s/David P. O'Connor President and Treasurer
- --------------------
David P. O'Connor
/s/Warren K. Greene Trustee
- -------------------
Warren K. Greene
/s/Richard W. Hutson Trustee
- --------------------
Richard W. Hutson
/s/Samuel R. Karetsky Trustee
- ---------------------
Samuel R. Karetsky
<PAGE>
INDEX TO EXHIBITS
Exhibit Caption
- ------- -------
EX-99.B1(a) Corrected Certificate of Trust as of December 22, 1997
EX-99.B1(b) Trust Instrument
EX-99.B2 By-Laws
EX-99.B5 Form of Investment Advisory Agreement between Registrant and
E.I.I. Realty Securities, Inc.
EX-99.B8 Form of Custodian Services Agreement between PNC Bank,
National Association and Registrant
EX-99.B9(a) Form of Administration Agreement between Registrant and
E.I.I. Realty Securities, Inc.
EX-99.B9(b) Form of Sub-Administration Agreement and Accounting Services
Agreement between European Investors Incorporated, the
Registrant and PFPC INC.
EX-99.B9(c) Form of Transfer Agency Services Agreement between PFPC INC.
and Registrant
EX-99.B9(d) Form of Shareholder Servicing Agreement
EX-99.B11(a) Consent of Kramer, Levin, Naftalis & Frankel, Counsel for
the Registrant
EX-99.B11(b) Consent of Ernst & Young LLP, independent auditors for the
Registrant
EX-99.B13 Form of Investment letter re: initial $100,000 capital.
EX-99.B15 Form of Distribution Plan pursuant to Rule 12b-1 for the
Investor Shares of Registrant.(2)
EX-99.B18 Form of Rule 18f-3 Multiple Class Plan
EX-99.B19 Powers of Attorney of Warren K. Greene, Richard W. Hutson,
and Samuel R. Karetsky
CORRECTED CERTIFICATE OF TRUST FILED TO
CHANGE THE NAME OF
THE EII REALTY SECURITIES FUND
TO
E.I.I. REALTY SECURITIES TRUST
The Certificate of Trust of The EII Realty Securities Fund inaccurately
states the name of the Trust. This corrected Certificate of Trust is being
executed as of April 27, 1998 for the purpose of correcting the Certificate of
Trust. The corrected Certificate of Trust is set forth below.
This Certificate of Trust is being executed as of December 22, 1997 for
the purpose of organizing a business trust pursuant to the Delaware Business
Trust Act, 12 Del. C. ss.ss. 3801 et seq.
The undersigned hereby certifies as follows:
1. Name. The name of the business trust is E.I.I. Realty Securities
Trust ("Trust").
2. Registered Investment Company. The Trust is or will become a
registered investment company under the Investment Company Act of 1940, as
amended.
3. Registered Office and Registered Agent. The registered office of the
Trust in the State of Delaware is located at 1201 North Market Street, P.O. Box
1347, Wilmington, Delaware 19899-1347. The name of the registered agent of the
Trust for service of process at such location is Delaware Corporation
Organizers, Inc.
4. Notice of Limitation of Liabilities of Series. Notice is hereby
given that the Trust is or may hereafter be constituted a series fund. The
debts, liabilities, obligations, and
<PAGE>
expenses incurred, contracted for, or otherwise existing with respect to any
particular series shall be enforceable against the assets of such series only,
and not against the assets of the Trust generally.
IN WITNESS WHEREOF, the undersigned, being all the trustees of the
Trust, have duly executed this Certificate of Trust as of the day and year first
above written.
/s/ Susan J. Penry-Williams
-----------------------
Susan J. Penry-Williams
/s/ Peter J. O'Rourke
-----------------------
Peter J. O'Rourke
- 2 -
E.I.I. REALTY SECURITIES TRUST
TRUST INSTRUMENT
<PAGE>
E.I.I. REALTY SECURITIES TRUST
TABLE OF CONTENTS
Page
ARTICLE I - NAME AND DEFINITION........................................... 1
Section 1.01 Name............................................... 1
Section 1.02 Definitions........................................ 1
ARTICLE II - BENEFICIAL INTEREST.......................................... 2
Section 2.01 Shares of Beneficial Interest...................... 2
Section 2.02 Issuance of Shares................................. 2
Section 2.03 Register of Shares and Share Certificates.......... 3
Section 2.04 Transfer of Shares................................. 3
Section 2.05 Treasury Shares.................................... 3
Section 2.06 Establishment of Series............................ 3
Section 2.07 Investment in the Trust............................. 4
Section 2.08 Assets and Liabilities of Series................... 4
Section 2.09 No Preemptive Rights............................... 5
Section 2.10 No Personal Liability of Shareholder............... 5
Section 2.11 Assent to Trust Instrument......................... 5
ARTICLE III - THE TRUSTEES................................................ 6
Section 3.01 Management of the Trust............................. 6
Section 3.02 Initial Trustees................................... 6
Section 3.03 Term of Office..................................... 6
Section 3.04 Vacancies and Appointments......................... 7
Section 3.05 Temporary Absence.................................. 7
Section 3.06 Number of Trustees................................. 7
Section 3.07 Effect of Ending of a Trustee's Service............ 7
Section 3.08 Ownership of Assets of the Trust.................... 7
ARTICLE IV - POWERS OF THE TRUSTEES....................................... 8
Section 4.01 Powers............................................. 8
Section 4.02 Issuance and Repurchase of Shares.................. 10
Section 4.03 Trustees and Officers as Shareholders.............. 11
Section 4.04 Action by the Trustees............................. 11
Section 4.05 Chairman of the Trustees........................... 11
Section 4.06 Principal Transactions............................. 11
ARTICLE V - EXPENSES OF THE FUND.......................................... 12
ARTICLE VI - INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT................................. 12
Section 6.01 Investment Adviser................................. 12
Section 6.02 Principal Underwriter.............................. 13
Section 6.03 Administration..................................... 13
i
<PAGE>
Section 6.04 Transfer Agent..................................... 13
Section 6.05 Parties to Contract................................ 13
Section 6.06 Provisions and Amendments.......................... 14
ARTICLE VII - SHAREHOLDERS' VOTING POWERS AND MEETINGS.................... 14
Section 7.01 Voting Powers...................................... 14
Section 7.02 Meetings........................................... 15
Section 7.03 Quorum and Required Vote........................... 15
ARTICLE VIII - CUSTODIAN.................................................. 16
Section 8.01 Appointment and Duties............................. 16
Section 8.02 Central Certificate System......................... 16
ARTICLE IX - DISTRIBUTIONS AND REDEMPTIONS................................ 17
Section 9.01 Distributions...................................... 17
Section 9.02 Redemptions........................................ 17
Section 9.03 Determination of Net Asset Value and
Valuation of Portfolio Assets.................................... 17
Section 9.04 Suspension of the Right of Redemption.............. 18
Section 9.05 Redemption of Shares in Order to
Qualify as Regulated Investment Company.......................... 18
Section 9.06 Redemption of Small Accounts....................... 19
ARTICLE X - LIMITATION OF LIABILITY AND INDEMNIFICATION................... 19
Section 10.01 Limitation of Liability........................... 19
Section 10.02 Indemnification................................... 19
Section 10.03 Shareholders...................................... 20
ARTICLE XI - MISCELLANEOUS................................................ 21
Section 11.01 Trust Not A Partnership........................... 21
Section 11.02 Trustee's Good Faith Action, Expert Advice,
No Bond or Surety...................................... 21
Section 11.03 Establishment of Record Dates..................... 21
Section 11.04 Termination of Trust.............................. 22
Section 11.05 Reorganization.................................... 22
Section 11.06 Filing of Copies, References, Headings............ 23
Section 11.07 Applicable Law.................................... 23
Section 11.08 Amendments........................................ 24
Section 11.09 Fiscal Year....................................... 24
Section 11.10 Name Reservation.................................. 24
Section 11.11 Provisions in Conflict With Law................... 25
ii
<PAGE>
E.I.I. REALTY SECURITIES FUND
Trust Instrument, made by Susan J. Penry-Williams and Peter J. O'Rourke
(the "Trustees").
WHEREAS, the Trustees desire to establish a business trust for the
investment and reinvestment of funds contributed thereto;
NOW THEREFORE, the Trustees declare that all money and property
contributed to the trust hereunder shall be held and managed in trust under this
Trust Instrument as herein set forth below.
ARTICLE I
NAME AND DEFINITION
SECTION 1.01 NAME. The name of the trust created hereby is "E.I.I.
Realty Securities Trust."
SECTION 1.02 DEFINITIONS. Wherever used herein, unless otherwise
required by the context or specifically provided:
(a) The "Investment Company Act" means the Investment Company Act of
1940, as amended from time to time. Whenever reference is made hereunder to the
Investment Company Act, such references shall be interpreted as including any
applicable order or orders of the Commission or any rules or regulations adopted
by the Commission thereunder or interpretive releases of the Commission staff;
(b) "Bylaws" means the Bylaws of the Trust as adopted by the Trustee,
as amended from time to time;
(c) "Commission" has the meaning given it in the Investment Company
Act. In addition, "Affiliated Person," "Interested Person" and "Principal
Underwriter" shall have the respective meanings given them in the Investment
Company Act;
(d) "Delaware Act" means the Delaware Business Trust Act, to Chapter 38
of Title 12 of the Delaware Code, as amended from time to time;
(e) "Net Asset Value" means the net asset value of each Series of the
Trust determined in the manner provided in Article IX, Section 9.03 hereof;
(f) "Outstanding Shares" means those Shares shown from time to time in
the books of the Trust or its transfer agent as then issued and outstanding, but
shall not include Shares which have been redeemed or repurchased by the Trust
and which are at the time held in the treasury of the Trust;
1
<PAGE>
(g) "Series" means a series of Shares of the Trust established in
accordance with the provisions of Article II, Section 2.06 hereof;
(h) "Shareholder" means a record owner of Outstanding Shares of the
Trust;
(i) "Shares" means the equal proportionate transferable units of
beneficial interest into which the beneficial interest of each Series of the
Trust or class thereof shall be divided and may include fractions of Shares as
well as whole Shares;
(j) The "Trust" means The EII Realty Securities Trust, a Delaware
business trust, and reference to the Trust when applicable to one or more Series
of the Trust, shall refer to any such Series;
(k) The "Trustees" means the person or persons who has or have signed
this Trust Instrument so long as he or they shall continue in office in
accordance with the terms hereof and all other persons who may from time to time
be duly qualified and serving as Trustees in accordance with the provisions of
Article III hereof, and reference herein to a Trustee or to the Trustees shall
refer to the individual Trustees in their respective capacity as Trustees
hereunder;
(l) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of one or
more of the Trust or any Series, or the Trustees on behalf of the Trust or any
Series.
ARTICLE II
BENEFICIAL INTEREST
SECTION 2.01 SHARES OF BENEFICIAL INTEREST. The beneficial interest in
the Trust shall be divided into such Shares of one or more separate and distinct
Series or classes of a Series as set forth in Section 2.06 or as the Trustees
shall otherwise from time to time create and establish as provided in Section
2.06. The number of Shares of each Series and class thereof authorized hereunder
is unlimited. Except as otherwise determined by the Trustees, each Share shall
have a par value of $.001. All Shares issued hereunder, including without
limitation Shares issued in connection with a dividend paid in Shares or a split
or reverse split of Shares, shall be fully paid and nonassessable.
SECTION 2.02 ISSUANCE OF SHARES. The Trustees in their discretion may,
from time to time, without a vote of the Shareholders, issue Shares, in addition
to the then issued and outstanding Shares and Shares held in the treasury, to
such party or parties and for such amount and type of consideration, subject to
applicable law, including cash or securities, at such time or times and on such
terms as the Trustees may deem appropriate, 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 and Shares held in the
treasury. The Trustees may from time to time divide or combine the Shares into a
greater or lesser number without thereby changing the proportionate beneficial
interests in the Trust. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/1000th of a Share or
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integral multiples thereof. The Trustees or any person the Trustees may
authorize for the purpose may, in their discretion, reject any application for
the issuance of shares.
SECTION 2.03 REGISTER OF SHARES AND SHARE CERTIFICATES. A register
shall be kept at the principal office of the Trust or an office of the Trust's
transfer agent which shall contain the names and addresses of the Shareholders
of each Series, the number of Shares of that Series (or any class or classes
thereof) held by them respectively and a record of all transfers thereof. No
share certificates shall be issued by the Trust except as the Trustees may
otherwise authorize, and the persons indicated as shareholders in such register
shall be entitled to receive dividends or other distributions or otherwise to
exercise or enjoy the rights of Shareholders. No Shareholder shall be entitled
to receive payment of any dividend or other distribution, nor to have notice
given to him as herein or in the Bylaws provided, until he has given his address
to the transfer agent or such officer or other agent of the Trustees as shall
keep the said register for entry thereon.
SECTION 2.04 TRANSFER OF SHARES. Except as otherwise provided by the
Trustees, Shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Trust's transfer agent of a duly executed
instrument of transfer and such evidence of the genuineness of such execution
and authorization and of such other matters as may be required by the Trustees.
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
the Trust, 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.
SECTION 2.05 TREASURY SHARES. Shares held in the treasury shall, until
reissued pursuant to Section 2.02 hereof, not confer any voting rights on the
Trustees, nor shall such Shares be entitled to any dividends or other
distributions declared with respect to the Shares.
SECTION 2.06 ESTABLISHMENT OF SERIES AND CLASSES. The Trust created
hereby shall consist initially of one Series which is specified by name on
Schedule A attached hereto, and such Series shall initially consist of such
classes of Shares as are designated on Schedule A. Such initial Series (or class
thereof, as applicable) shall have the investment objectives, purposes and
policies, and such relative rights, powers, duties and other attributes, as are
specified in the Registration Statement and related prospectus and statement of
additional information approved by the Trustees in connection with the
registration and offer of Shares of such Series (or class thereof). Distinct
records shall be maintained by the Trust for each Series and the assets and
liabilities associated with the Series shall be held and accounted for
separately from the assets and liabilities of the Trust or any other Series. The
Trustees shall have full power and authority, in their sole discretion and
without obtaining any prior authorization or vote of the Shareholders of any
Series, to establish and designate and to change in any manner any Series or any
classes of initial or additional Series and to fix such preferences, voting
powers, rights and privileges of such Series or classes thereof as the Trustees
may from time to time determine, to divide or combine the Shares or any Series
or classes thereof into a greater or lesser number, to classify or reclassify
any issued Shares or any Series or classes thereof into one or more Series or
classes of Shares, and to take such other action with respect to the Shares as
the Trustees may deem desirable. The establishment and designation of any Series
(other than those established pursuant
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to the first sentence of this Section 2.06) shall be effective upon the adoption
of a resolution by a majority of the Trustees setting forth such establishment
and designation and the relative rights and preferences of the Shares of such
Series. A Series may issue any number of Shares, but need not issue Shares. At
any time that there are no Shares outstanding of any particular Series
previously established and designated, the Trustees may by a majority vote
abolish that Series and the establishment and designation thereof.
All references to Shares in this Trust Instrument shall be deemed to be
Shares of any or all Series, or classes thereof as the context may require. All
provisions herein relating to the Trust shall apply equally to each Series of
the Trust, and each class thereof, except as the context otherwise requires.
Each Share of a Series of the Trust shall represent an equal beneficial
interest in the net assets of such Series. Each holder of Shares of a Series
shall be entitled to receive his proportionate share of all distributions made
with respect to such Series, based upon the number of full and fractional Shares
of the Series held. Upon redemption of his Shares, such Shareholder shall be
paid solely out of the funds and property of such Series of the Trust.
SECTION 2.07 INVESTMENT IN THE FUND. The Trustees shall accept
investments in any Series from such persons and on such terms as they may from
time to time authorize. At the Trustees' discretion, such investments, subject
to applicable law, may be in the form of cash or securities in which the
affected Series is authorized to invest, valued as provided in Article IX
Section 9.03 hereof. Investments in a Series shall be credited to each
Shareholder's account in the form of full and fractional Shares at the net asset
value per Share next determined after the investment is received or accepted as
may be determined by the Trustees; provided, however, that the Trustees may, in
their sole discretion, (a) fix minimum amounts for initial and subsequent
investments or (b) impose a sales charge upon investments in such manner and at
such time determined by the Trustees.
SECTION 2.08 ASSETS AND LIABILITIES OF SERIES. All consideration
received by the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or reinvested,
all income, earnings, profits, and proceeds thereof including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in whatever form the
same may be, shall be held and accounted for separately from the other assets of
the Trust and of every other Series and may be referred to herein as "assets
belonging to" that Series. The assets belonging to a particular Series shall
belong to that Series for all purposes, and to no other Series, and shall be
subject only to the rights of creditors of that Series. In addition, any assets,
income, earnings, profits or funds, or payments and proceeds with respect
thereto, which are not readily identifiable as belonging to any particular
Series shall be allocated by the Trustees between and among one or more of the
Series in such manner as the Trustees, in their sole discretion, deem fair and
equitable. Each such allocation shall be conclusive and binding upon the
Shareholders of all Series for all purposes, and such assets, income, earnings,
profits or funds, or payments and proceeds with respect thereto shall be assets
belonging to that Series. The assets belonging to a particular Series shall be
so recorded upon the books of the Trust, and shall be held by the Trustees in
fund for the benefit of the holders of Shares of that Series. The assets
belonging to each particular Series shall be charged with the liabilities of
that Series and
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all expenses, costs, charges and reserves attributable to that Series. Any
general liabilities, expenses, costs, charges or reserves of the Trust which are
not readily identifiable as belonging to any particular Series shall be
allocated and charged by the Trustees between or among any one or more of the
Series in such manner as the Trustees in their sole discretion deem fair and
equitable. Each such allocation shall be conclusive and binding upon the
Shareholders of all Series for all purposes. Without limitation of the foregoing
provisions of this Section 2.08, but subject to the right of the Trustees in
their discretion to allocate general liabilities, expenses, costs, changes or
reserves as herein provided, the debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to a particular
Series shall be enforceable against the assets of such Series only, and not
against the assets of the Trust generally. Notice of this contractual limitation
on inter-Series liabilities may, in the Trustee's sole discretion, be set forth
in the certificate of fund of the Trust (whether originally or by amendment) as
filed or to be filed in the Office of the Secretary of State of the State of
Delaware pursuant to the Delaware Act, and upon the giving of such notice in the
certificate of fund, the statutory provisions of Section 3804 of the Delaware
Act relating to limitations on inter-Series liabilities (and the statutory
effect under Section 3804 of setting forth such notice in the certificate of
fund) shall become applicable to the Trust and each Series. Any person extending
credit to, contracting with or having any claim against any Series may look only
to the assets of that Series to satisfy or enforce any debt, with respect to
that Series. No Shareholder or former Shareholder of any Series shall have a
claim on or any right to any assets allocated or belonging to any other Series.
SECTION 2.09 NO PREEMPTIVE RIGHTS. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares or other
securities issued by the Trust or the Trustees, whether of the same or other
Series.
SECTION 2.10 NO PERSONAL LIABILITY OF SHAREHOLDER. No Shareholder shall
be personally liable for the debts, liabilities, obligation and expenses
incurred by, contracted for, or otherwise existing with respect to, the Trust or
by or on behalf of any Series. The Trustees shall have no power to bind any
Shareholder personally or to call upon any Shareholder for the payment of any
sum of money or assessment whatsoever other than such as the Shareholder may at
any time personally agree to pay by way of subscription for any Shares or
otherwise.
SECTION 2.11 ASSENT TO TRUST INSTRUMENT. Every Shareholder, by virtue
of having purchased a Share shall become a Shareholder and shall be held to have
expressly assented and agreed to be bound by the terms hereof.
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ARTICLE III
THE TRUSTEES
SECTION 3.01 MANAGEMENT OF THE FUND. The Trustees shall have exclusive
and absolute control over the Trust Property and over the business of the Trust
to the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Trust Instrument. 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 State of Delaware, in any and
all states of the United States of America, in the District of Columbia, in any
and all commonwealths, territories, dependencies, colonies, or possessions of
the United States of America, and in any foreign jurisdiction and to do all such
other things and execute all such instruments 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 this Trust Instrument, the presumption shall be
in favor of a grant of power to the Trustees.
The enumeration of any specific power in this Trust Instrument shall
not be construed as limiting the aforesaid power. The powers of the Trustees may
be exercised without order of or resort to any court.
Except for the Trustees named herein or appointed to fill vacancies
pursuant to Section 3.04 of this Article III and except as otherwise provided in
Section 3.02 of this Article III, the Trustees shall be elected by the
Shareholders owning of record a plurality of the Shares voting at a meeting of
Shareholders. Any Shareholder meeting held for such purpose shall be held on a
date fixed by the Trustees. In the event that less than a majority of the
Trustees holding office have been elected by Shareholders, the Trustees then in
office will call a Shareholders' meeting for the election of Trustees in
accordance with the provisions of the Investment Company Act.
SECTION 3.02 INITIAL TRUSTEES. The initial Trustees shall be the person
named herein. The initial Trustees shall appoint additional or substitute
Trustees at an organizational meeting of Trustees. Thereafter, Trustees shall be
appointed or elected as provided in Sections 3.01 and 3.04 of this Article III.
SECTION 3.03 TERM OF OFFICE. The Trustees shall hold office during the
lifetime of this Trust, and until its termination as herein provided; except (a)
that any Trustee may resign his fund by written instrument signed by him and
delivered to the other Trustees, which shall take effect upon such delivery or
upon such later date as is specified therein; (b) that any Trustee may be
removed at any time by written instrument, signed by at least two-thirds of the
number of Trustees prior to such removal specifying the date when such removal
shall become effective; (c) that any Trustee who requests in writing to be
retired or who has died, become physically or mentally incapacitated by reason
of illness or otherwise, or is otherwise unable to serve, may be retired by
written instrument signed by a majority of the other Trustees, specifying the
date of his retirement; and (d) that a Trustee may be removed at any meeting of
the Shareholders of the Trust by a vote of Shareholders owning at least
two-thirds of the Outstanding Shares of the Trust.
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SECTION 3.04 VACANCIES AND APPOINTMENTS. In case of a Trustee's
declination to serve, death, resignation, retirement, removal, physical or
mental incapacity by reason of illness, disease or otherwise, or if a Trustee is
otherwise unable to serve, or if there is an increase in the number of Trustees,
a vacancy shall occur. Whenever a vacancy in the Board of Trustees shall occur,
until such vacancy is filled, the other Trustees shall have all the powers
hereunder and the certificate of the other Trustees of such vacancy shall be
conclusive. In the case of a vacancy, the remaining Trustees shall fill such
vacancy by appointing such other person as they in their discretion see fit, to
the extent consistent with the limitations provided under the Investment Company
Act. Such appointment shall be evidenced by a written instrument signed by a
majority of the Trustees in office or by resolution of the Trustees, duly
adopted, which shall be recorded in the minutes of a meeting of the Trustees,
whereupon the appointment shall take effect.
An appointment of a Trustee may be made by the Trustees then in office
in anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As soon as any person
appointed as a Trustee pursuant to this Section 3.04 shall have accepted this
Trust, the fund estate shall vest in the new Trustee or Trustees, together with
the continuing Trustees, without any further act or conveyance, and such person
shall be deemed a Trustee.
SECTION 3.05 TEMPORARY ABSENCE. Any Trustee may, by power of attorney,
delegate his power for a period not exceeding six months at any time to any
other Trustee or Trustees, provided that in no case shall fewer than two
Trustees personally exercise the other powers hereunder except as herein
otherwise expressly provided.
SECTION 3.06 NUMBER OF TRUSTEES. From and after the date of appointment
of Trustees by the initial Trustees named herein, the number of Trustees shall
be at least three (3), and thereafter shall be such number as shall be fixed
from time to time by a majority of the Trustees, provided, however, that the
number of Trustees shall in no event be more than twelve (12).
SECTION 3.07 EFFECT OF ENDING OF A TRUSTEE'S SERVICE. The declination
to serve, death, resignation, retirement, removal, incapacity, or inability of
the Trustees, or any one of them, shall not operate to terminate the Trust or to
revoke any existing agency created pursuant to the terms of this Trust
Instrument.
SECTION 3.08 OWNERSHIP OF ASSETS OF THE FUND. The assets of the Trust
and of each Series shall be held separate and apart from any assets now or
hereafter held in any capacity other than as Trustee hereunder by the Trustees
or any successor Trustees. Legal title in all of the assets of the Trust and the
right to conduct any business shall at all times be considered as vested in the
Trustees on behalf of the Trust, except that the Trustees may cause legal title
to any Trust Property to be held by, or in the name of, the Trust or in the name
of any person as nominee. No Shareholder shall be deemed to have a severable
ownership in any individual asset of the Trust or of any Series or any right of
partition or possession thereof but each Shareholder shall have, except as
otherwise provided for herein, a proportionate undivided beneficial interest in
the Trust or Series based upon the number of Shares owned. The Shares shall be
personal property giving only the rights specifically set forth in this Trust
Instrument.
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ARTICLE IV
POWERS OF THE TRUSTEES
SECTION 4.01 POWERS. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts and to make
and execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust. The
Trustees shall not in any way be bound or limited by present or future laws or
customs in regard to fund investments, but shall have full authority and power
to make any and all investments which they, in their sole discretion, shall deem
proper to accomplish the purpose of this Trust without recourse to any court or
other authority. Subject to any applicable limitation in this Trust Instrument
or the Bylaws of the Trust, the Trustees shall have the power and authority:
(a) To invest and reinvest cash and other property (including
investment, notwithstanding any other provision hereof, of all of the assets of
any Series in a single open-end investment company, including investment by
means of transfer of such assets in exchange for an interest or interests in
such investment company), and to hold cash or other property of the Trust
uninvested, without in any event being bound or limited by any present or future
law or custom in regard to investments by trustees, and to sell, exchange, lend,
pledge, mortgage, hypothecate, write options on and lease any or all of the
assets of the Trust:
(b) To operate as and carry on the business of an investment company,
and exercise all the powers necessary and appropriate to the conduct of such
operations;
(c) To borrow money and in this connection issue notes or other
evidence of indebtedness; to secure borrowings by mortgaging, pledging or
otherwise subjecting as security the Trust Property; to endorse, guarantee, or
undertake the performance of an obligation or engagement of any other Person and
to lend Trust Property;
(d) To provide for the distribution of interests of the Trust either
through a principal underwriter in the manner hereinafter provided for or by the
Trust itself, or both, or otherwise pursuant to a plan of distribution of any
kind;
(e) To adopt Bylaws not inconsistent with this Trust Instrument
providing for the conduct of the business of the Trust and to amend and repeal
them to the extent that they do not reserve that right to the Shareholders; such
Bylaws shall be deemed incorporated and included in this Trust Instrument;
(f) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate;
(g) To employ one or more banks, fund companies or companies that are
members of a national securities exchange or such other entities as the
Commission may permit as custodians of any assets of the Trust subject to any
conditions set forth in this Trust Instrument or in the Bylaws;
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(h) To retain one or more transfer agents and shareholder servicing
agents, or both;
(i) To set record dates in the manner provided herein or in the Bylaws;
(j) To delegate such authority as they consider desirable (with power
of subdelegation) to any officers or employees of the Trust and to any
investment adviser, manager, custodian, underwriter or other agent or
independent contractor;
(k) To sell or exchange any or all of the assets of the Trust, subject
to the provisions of Article XI, subsection 11.04(b) hereof;
(l) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property, and to execute and deliver
powers of attorney to such person or persons as the Trustees shall deem proper,
granting to such person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
(m) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;
(n) To hold any security or property in a form not indicating any fund,
whether in bearer, book entry, unregistered or other negotiable form; or either
in the name of the Trust or in the name of a custodian or a nominee or nominees,
subject in either case to proper safeguards according to the usual practice of
Delaware business funds or investment companies;
(o) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article II hereof and to establish classes of
such Series having relative rights, powers and duties as they may provide
consistent with applicable law;
(p) Subject to the provisions of Section 3804 of the Delaware Act, to
allocate assets, liabilities and expenses of the Trust to a particular Series or
to apportion the same between or among two or more Series, provided that any
liabilities or expenses incurred by a particular Series shall be payable solely
out of the assets belonging to that Series as provided for in Article II hereof;
(q) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase, or
sale of property by such corporation or concern, and to pay calls or
subscriptions with respect to any security held in the Trust;
(r) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited to,
claims for taxes;
(s) To make distributions of income and of capital gains to
Shareholders in the manner provided herein;
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(t) To establish, from time to time, a minimum investment for
Shareholders in the Trust or in one or more Series or class, and to require the
redemption of the Shares of any Shareholders whose investment is less than such
minimum upon giving notice to such Shareholder;
(u) To establish one or more committees, to delegate any of the powers
of the Trustees to said committees and to adopt a committee charter providing
for such responsibilities, membership (including Trustees, officers or other
agents of the Trust therein) and any other characteristics of said committees as
the Trustees may deem proper. Notwithstanding the provisions of this Article IV,
and in addition to such provisions or any other provision of this Trust
Instrument or of the Bylaws, the Trustees may by resolution appoint a committee
consisting of less than the whole number of Trustees then in office, which
committee may be empowered to act for and bind the Trustees and the Trust, as if
the acts of such committee were the acts of all the Trustees then in office,
with respect to the institution, prosecution, dismissal, settlement, review or
investigation of any action, suit or proceeding which shall be pending or
threatened to be brought before any court, administrative agency or other
adjudicatory body;
(v) To interpret the investment policies, practices or limitations of
any Series;
(w) To establish a registered office and have a registered agent in the
state of Delaware; and
(x) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed as objects and powers, and the
foregoing enumeration of specific powers shall not be held to limit or restrict
in any manner the general powers of the Trustees. Any action by one or more of
the Trustees in their capacity as such hereunder shall be deemed an action on
behalf of the Trust or the applicable Series, and not an action in an individual
capacity.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust.
No one dealing with the Trustees shall be under any obligation to make
any inquiry concerning the authority of the Trustees, or to see the application
of any payments made or property transferred to the Trustees or upon their
order.
SECTION 4.02 ISSUANCE AND REPURCHASE OF SHARES. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of and otherwise deal in Shares and, subject to the
provisions set forth in Article II and Article IX, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
funds or property of the Trust, or the particular Series of the Trust, with
respect to which such Shares are issued.
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SECTION 4.03 TRUSTEES AND OFFICERS AS SHAREHOLDERS. Any Trustee,
officer or other agent of the Trust may acquire, own and dispose of Shares to
the same extent as if he were not a Trustee, officer or agent; and the Trustees
may issue and sell or cause to be issued and sold Shares to and buy such Shares
from any such person or any firm or company in which he is interested, subject
only to the general limitations herein contained as to the sale and purchase of
such Shares; and all subject to any restrictions which may be contained in the
Bylaws.
SECTION 4.04 ACTION BY THE TRUSTEES. In any action taken by the
Trustees hereunder, unless otherwise specified, the Trustees shall act by
majority vote at a meeting duly called or by unanimous written consent without a
meeting or by telephone meeting provided a quorum of Trustees participate in any
such telephone meeting, unless the Investment Company Act requires that a
particular action be taken only at a meeting at which the Trustees are present
in person. At any meeting of the Trustees, a majority of the Trustees shall
constitute a quorum. Meetings of the Trustees may be called orally or in writing
by the Chairman of the Board of Trustees or by any two other Trustees. Notice of
the time, date and place of all meetings of the Trustees shall be given by the
person calling the meeting to each Trustee by telephone, facsimile or other
electronic mechanism sent to his home or business address at least twenty-four
hours in advance of the meeting or by written notice mailed to his home or
business address at least seventy-two hours in advance of the meeting. Notice
need not be given to any Trustee who attends the meeting without objecting to
the lack of notice or who executes a written waiver of notice with respect to
the meeting. Any meeting conducted by telephone shall be deemed to take place at
the principal office of the Trust, as determined by the Bylaws or by the
Trustees. Subject to the requirements of the Investment Company Act, the
Trustees by majority vote may delegate to any one or more of their number their
authority to approve particular matters or take particular actions on behalf of
the Trust. Written consents or waivers of the Trustees may be executed in one or
more counterparts. Execution of a written consent or waiver and delivery thereof
to the Trust may be accomplished by facsimile or other similar electronic
mechanism.
SECTION 4.05 CHAIRMAN OF THE TRUSTEES. The Trustees shall appoint one
of their number to be Chairman of the Board of Trustees. The Chairman shall
preside at all meetings of the Trustees, shall be responsible for the execution
of policies established by the Trustees and the administration of the Trust, and
may be (but is not required to be) the chief executive, financial and/or
accounting officer of the Trust.
SECTION 4.06 PRINCIPAL TRANSACTIONS. Except to the extent prohibited by
applicable law, the Trustees may, on behalf of the Trust, buy any securities
from or sell any securities to, or lend any assets of the Trust to, any Trustee
or officer of the Trust or any firm of which any such Trustee or officer is a
member acting as principal, or have any such dealings with any investment
adviser, administrator, distributor or transfer agent for the Trust or with any
Interested Person of such person; and the Trust may employ any such person, or
firm or company in which such person is an Interested Person, as broker, legal
counsel, registrar, investment adviser, administrator, distributor, transfer
agent, dividend disbursing agent, custodian or in any other capacity upon
customary terms.
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ARTICLE V
EXPENSES OF THE FUND
Subject to the provisions of Article II, Section 2.08 hereof, the
Trustees are authorized to pay or cause to be paid from the Trust estate or the
assets belonging to the appropriate Series, expenses and disbursements,
including, without limitation, interest charges, taxes, brokerage fees and
commissions; expenses of issue, repurchase and redemption of Shares; certain
insurance premiums; applicable fees, interest charges and expenses of third
parties, including the Trust's investment advisers, managers, administrators,
distributors, custodian, transfer agent and fund accountant; fees of pricing,
interest, dividend, credit and other reporting services; costs of membership in
trade associations; telecommunications expenses; funds transmission expenses;
auditing, legal and compliance expenses; costs of forming the Trust and
maintaining its existence; costs of preparing and printing the Trust's
prospectuses, statements of additional information and shareholder reports and
delivering them to existing Shareholders; expenses of meetings of Shareholders
and proxy solicitations therefor; costs of maintaining books and accounts; costs
of reproduction, stationery and supplies; fees and expenses of the Trust's
trustees; compensation of the Trust's officers and employees and costs of other
personnel performing services for the Trust; costs of Trustee meetings;
Commission registration fees and related expenses; state or foreign securities
laws registration fees and related expenses and for such non-recurring items as
may arise, including litigation to which the Trust (or a Trustee acting as such)
is a party, and for all losses and liabilities by them incurred in administering
the Trust, and for the payment of such expenses, disbursements, losses and
liabilities the Trustees shall have a lien on the assets belonging to the
appropriate Series, or in the case of an expense allocable to more than one
Series, on the assets of each such Series, prior to any rights or interests of
the Shareholders thereto. This section shall not preclude the Trust from
directly paying any of the aforementioned fees and expenses.
ARTICLE VI
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT
SECTION 6.01 INVESTMENT ADVISER. (a) The Trustees may in their
discretion, from time to time, enter into an investment advisory contract or
contracts with respect to the Trust or any Series whereby the other party or
parties to such contract or contracts shall undertake to furnish the Trustees
with such investment advisory, statistical and research facilities and services
and such other facilities and services, if any, all upon such terms and
conditions (including any Shareholder vote) that may be required under the
Investment Company Act, as may be prescribed in the Bylaws, or as the Trustees
may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws).
Notwithstanding any other provision of this Trust Instrument, the Trustees may
authorize any investment adviser (subject to such general or specific
instructions as the Trustees may from time to time adopt) to effect purchases,
sales or exchanges of portfolio securities, other investment instruments of the
Trust, or other Trust Property on behalf of the Trustees, or may authorize any
officer, agent, or Trustee to effect such purchases, sales or exchanges pursuant
to recommendations of the investment adviser (and all without further action by
the Trustees). Any such purchases, sales and exchanges shall be deemed to have
been authorized by all of the Trustees.
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(b) The Trustees may authorize the investment adviser to employ, from
time to time, one or more sub-advisers to perform such of the acts and services
of the investment adviser, and upon such terms and conditions, as may be agreed
upon between the investment adviser and sub- adviser (such terms and conditions
not to be inconsistent with the provisions of this Trust Instrument or of the
Bylaws). Any reference in this Trust Instrument to the investment adviser shall
be deemed to include such sub-advisers, unless the context otherwise requires;
provided that no Shareholder approval shall be required with respect to any
sub-adviser unless required under the Investment Company Act or other law,
contract or order applicable to the Trust.
SECTION 6.02 PRINCIPAL UNDERWRITER. The Trustees may in their
discretion from time to time enter into an exclusive or non-exclusive
underwriting contract or contracts providing for the sale of Shares, whereby the
Trust may either agree to sell Shares to the other party to the contract or
appoint such other party its sales agent for such Shares. In either case, the
contract shall be on such terms and conditions as may be prescribed in the
Bylaws and as the Trustees may in their discretion determine (such terms and
conditions not to be inconsistent with the provisions of this Trust Instrument
or of the Bylaws); and such contract may also provide for the repurchase or sale
of Shares by such other party as principal or as agent of the Trust.
SECTION 6.03 ADMINISTRATION. The Trustees may in their discretion from
time to time enter into one or more management or administrative contracts
whereby the other party or parties shall undertake to furnish the Trustees with
management or administrative services. The contract or contracts shall be on
such terms and conditions as may be prescribed in the Bylaws and as the Trustees
may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws).
SECTION 6.04 TRANSFER AGENT. The Trustees may in their discretion from
time to time enter into one or more transfer agency and shareholder service
contracts whereby the other party or parties shall undertake to furnish the
Trustees with transfer agency and shareholder services. The contract or
contracts shall be on such terms and conditions as may be prescribed in the
Bylaws and as the Trustees may in their discretion determine (such terms and
conditions not to be inconsistent with the provisions of this Trust Instrument
or of the Bylaws).
SECTION 6.05 PARTIES TO CONTRACT. Any contract of the character
described in Sections 6.01, 6.02, 6.03 and 6.04 of this Article VI or any
contract of the character described in Article VIII hereof may be entered into
with any corporation, firm, partnership, fund or association, 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 void or voidable by reason of the
existence of any relationship, nor shall any person holding such relationship be
disqualified from voting on or executing the same in his capacity as Shareholder
and/or Trustee, 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 VI or Article VIII hereof or of
the Bylaws. The same person (including a corporation, firm, partnership, fund,
or association) may be the other party to contracts entered into pursuant to
Sections 6.01, 6.02, 6.03 and 6.04 of this Article VI or pursuant to Article
VIII hereof and any
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individual may be financially interested or otherwise affiliated with persons
who are parties to any or all of the contracts mentioned in this Section 6.05.
SECTION 6.06 PROVISIONS AND AMENDMENTS. Any contract entered into
pursuant to Section 6.01 or 6.02 of this Article VI shall be consistent with and
subject to the requirements of Section 15 of the Investment Company Act, if
applicable, or other applicable Act of Congress hereafter enacted with respect
to its continuance in effect, its termination, and the method of authorization
and approval of such contract or renewal thereof, and no amendment to any
contract entered into pursuant to Section 6.01 of this Article VI shall be
effective unless assented to in a manner consistent with the requirements of
said Section 15, as modified by any applicable rule, regulation or order of the
Commission.
ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
SECTION 7.01 VOTING POWERS. (a) The Shareholders shall have power to
vote only (a) for the election of Trustees to the extent provided in Article
III, Section 3.01 hereof, (b) for the removal of Trustees to the extent provided
in Article III, Section 3.03(d) hereof, (c) with respect to any investment
advisory contract to the extent provided in Article VI, Section 6.01 hereof, (d)
with respect to an amendment of this Trust Instrument, to the extent provided in
Article XI, Section 11.08, and (e) with respect to such additional matters
relating to the Trust as may be required by law, by this Trust Instrument, or
any registration of the Trust with the Commission or any State, or as the
Trustees may consider desirable.
(b) Notwithstanding paragraph (a) of this Section 7.01 or any other
provision of this Trust Instrument (including the Bylaws) which would by its
terms provide for or require a vote of Shareholders, the Trustees may take
action without a Shareholder vote if (i) the Trustees shall have obtained an
opinion of counsel that a vote or approval of such action by Shareholders is not
required under (A) the Investment Company Act or any other applicable laws, or
(B) any registrations, undertakings or agreements of the Trust known to such
counsel, and the Trustees determine in good faith that the taking of such action
without a Shareholder vote would be consistent with the best interests of the
Shareholders.
(c) On any matter submitted to a vote of the Shareholders, all Shares
shall be voted separately by individual Series, and whenever the Trustees
determine that the matter affects only certain Series, may be submitted for a
vote by only such Series, except (i) when required by the Investment Company
Act, Shares shall be voted in the aggregate and not by individual Series; and
(ii) when the Trustees have determined that the matter affects the interests of
more than one Series and that voting by shareholders of all Series would be
consistent with the Investment Company Act, then the Shareholders of all such
Series shall be entitled to vote thereon (either by individual Series or by
Shares voted in the aggregate, as the Trustees in their discretion may
determine). The Trustees may also determine that a matter affects only the
interests of one or more classes of a Series, in which case (or if required
under the Investment Company Act) such matter shall be voted on by such class or
classes. 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
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voted in person or by proxy or in any manner provided for in the Bylaws. A proxy
may be given in writing. The Bylaws may provide that proxies may also, or may
instead, be given by any electronic or telecommunications device or in any other
manner. Notwithstanding anything else herein or in the Bylaws, in the event a
proposal by anyone other than the officers or Trustees of the Trust is submitted
to a vote of the Shareholders, or in the event of any proxy contest or proxy
solicitation or proposal in opposition to any proposal by the officers or
Trustees of the Trust, Shares may be voted only in person or by written proxy.
Until Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required or permitted by law, this Trust Instrument or
any of the Bylaws of the Trust to be taken by Shareholders.
SECTION 7.02 MEETINGS. Meetings of Shareholders may be held within or
without the State of Delaware. Special meetings of the Shareholders of any
Series for the purpose of voting upon the removal of a Trustee or Trustees may
be called by the Trustees and shall be called by the Trustees upon the written
request of Shareholders owning at least one tenth of the Outstanding Shares of
the Trust entitled to vote. Whenever ten or more Shareholders meeting the
qualifications set forth in Section 16(c) of the Investment Company Act, as the
same may be amended from time to time, seek the opportunity of furnishing
materials to the other Shareholders with a view to obtaining signatures on such
a request for a meeting, the Trustees shall comply with the provisions of said
Section 16(c) with respect to providing such Shareholders access to the list of
the Shareholders of record of the Trust or the mailing of such materials to such
Shareholders of record, subject to any rights provided to the Trust or any
Trustees provided by said Section 16(c). Notice shall be sent, by First Class
Mail or such other means determined by the Trustees, at least 10 days prior to
any such meeting. Notwithstanding anything to the contrary in this Section 7.02,
the Trustees shall not be required to call a special meeting of the Shareholders
of any Series or to provide Shareholders seeking the opportunity of furnishing
the materials to other Shareholders with a view to obtaining signatures on a
request for a meeting except to the extent required under the Investment Company
Act.
SECTION 7.03 QUORUM AND REQUIRED VOTE. One-third of Shares outstanding
and entitled to vote in person or by proxy as of the record date for a
Shareholders' meeting shall be a quorum for the transaction of business at such
Shareholders' meeting, except that where any provision of law or of this Trust
Instrument permits or requires that holders of any Series shall vote as a Series
(or that holders of a class shall vote as a class), then one-third of the
aggregate number of Shares of that Series (or that class) entitled to vote shall
be necessary to constitute a quorum for the transaction of business by that
Series (or that class). Any meeting of Shareholders may be adjourned from time
to time by a majority of the votes properly cast upon the question of adjourning
a meeting to another date and time, whether or not a quorum is present. Any
adjourned session or sessions may be held, within a reasonable time after the
date set for the original meeting, without the necessity of further notice.
Except when a larger vote is required by law or by any provision of this Trust
Instrument or the Bylaws, a majority of the Shares voted in person or by proxy
at a meeting at which a quorum is present shall decide any questions and a
plurality shall elect a Trustee, provided that where any provision of law or of
this Trust Instrument permits or requires that the holders of any Series shall
vote as a Series (or that the holders of any class shall vote as a class), then
a majority of the Shares voted in person or by proxy at a meeting of that Series
(or class), at which a quorum is present shall decide that matter insofar as
that Series (or class) is concerned. Shareholders may act by unanimous written
consent, to the extent not inconsistent with the Investment Company Act, and any
such actions taken by
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a Series (or class) may be consented to unanimously in writing by Shareholders
of that Series (or class).
ARTICLE VIII
CUSTODIAN
SECTION 8.01 APPOINTMENT AND DUTIES. The Trustees shall employ a bank,
a company that is a member of a national securities exchange, or a fund company,
that in each case shall have capital, surplus and undivided profits of at least
twenty million dollars ($20,000,000) and that is a member of the Depository
Trust Company (or such other person or entity as may be permitted to act as
custodian of the Trust's assets under the Investment Company Act) as custodian
with authority as its agent, but subject to such restrictions, limitations and
other requirements, if any, as may be contained in the Bylaws of the Trust: (a)
to hold the securities owned by the Trust and deliver the same upon written
order or oral order confirmed in writing; (b) 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; and (c) to disburse such funds upon orders
or vouchers.
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, provided that in
every case such sub-custodian shall be a bank, a company that is a member of a
national securities exchange, or a fund company organized under the laws of the
United States or one of the states thereof and having capital, surplus and
undivided profits of at least twenty million dollars ($20,000,000) and that is a
member of the Depository Trust Company or such other person or entity as may be
permitted by the Commission or is otherwise able to act as custodian of the
Trust's assets in accordance with the Investment Company Act.
SECTION 8.02 CENTRAL CERTIFICATE SYSTEM. Subject to the Investment
Company Act and such other 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, as amended, or such other person as may be permitted by the Commission, or
otherwise in accordance with the Investment Company Act, pursuant to which
system all securities of any particular class or series of any issuer deposited
within the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of such securities, provided that
all such deposits shall be subject to withdrawal only upon the order of the
Trust or its custodians, sub-custodians or other agents.
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ARTICLE IX
DISTRIBUTIONS AND REDEMPTIONS
SECTION 9.01 DISTRIBUTIONS.
(a) The Trustees may from time to time declare and pay dividends or
other distributions with respect to any Series and/or class of a Series. The
amount of such dividends or distributions and the payment of them and whether
they are in cash or any other Trust Property shall be wholly in the discretion
of the Trustees.
(b) Dividends and other distributions may be paid or made to the
Shareholders of record at the time of declaring a dividend or other distribution
or among the Shareholders of record at such other date or time or dates or times
as the Trustees shall determine, which dividends or distributions, at the
election of the Trustees, may be paid pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine. The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans or related plans as the Trustees
shall deem appropriate.
(c) Anything in this Trust Instrument to the contrary notwithstanding,
the Trustees may at any time declare and distribute a share dividend to the
Shareholders of a particular Series, or class thereof, as of the record date of
that Series fixed as provided in Subsection 9.01(b) hereof.
SECTION 9.02 REDEMPTIONS. In case any holder of record of Shares of a
particular Series desires to dispose of his Shares or any portion thereof he may
deposit at the office of the transfer agent or other authorized agent of that
Series a written request or such other form of request as the Trustees may from
time to time authorize, requesting that the Series purchase the Shares in
accordance with this Section 9.02; and, subject to Section 9.04 hereof, the
Shareholder so requesting shall be entitled to require the Series to purchase,
and the Series or the principal underwriter of the Series shall purchase his
said Shares, but only at the Net Asset Value thereof (as described in Section
9.03 of this Article IX). The Series shall make payment for any such Shares to
be redeemed, as aforesaid, in cash or property from the assets of that Series
and, subject to Section 9.04 hereof, payment for such Shares shall be made by
the Series or the principal underwriter of the Series to the Shareholder of
record within seven (7) days after the date upon which the request is effective.
Upon redemption and unless otherwise determined by the Trustees shares shall
become Treasury shares and may be re-issued from time to time.
SECTION 9.03 DETERMINATION OF NET ASSET VALUE AND VALUATION OF
PORTFOLIO ASSETS. The term "Net Asset Value" of any Series shall mean that
amount by which the assets of that Series exceed its liabilities, all as
determined by or under the direction of the Trustees. The Trustees may delegate
any of their powers and duties under this Section 9.03 with respect to valuation
of assets and liabilities. Such value shall be determined separately for each
Series and shall be determined on such days and at such times as the Trustees
may determine. Such determination shall be made with respect to securities for
which market quotations are readily available, at the market value of such
securities; and with respect to other securities and assets, at the fair value
as determined in good faith by the Trustees; provided, however, that the
Trustees, without Shareholder approval, may alter the method of valuing
portfolio securities insofar as permitted under the Investment Company Act. The
resulting amount, which shall represent the total Net
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Asset Value of the particular Series, shall be divided by the total number of
shares of that Series outstanding at the time and the quotient so obtained shall
be the Net Asset Value per Share of that Series. At any time the Trustees may
cause the Net Asset Value per Share last determined to be determined again in
similar manner and may fix the time when such redetermined value shall become
effective.
The Trustees shall not be required to adopt, but may at any time adopt,
discontinue or amend a practice of seeking to maintain the Net Asset Value per
Share of the Series at a constant amount. If, for any reason, the net income of
any Series, determined at any time, is a negative amount, the Trustees shall
have the power with respect to that Series (a) to offset each Shareholder's pro
rata share of such negative amount from the accrued dividend account of such
Shareholder, (b) to reduce the number of Outstanding Shares of such Series by
reducing the number of Shares in the account of each Shareholder by a pro rata
portion of that number of full and fractional Shares which represents the amount
of such excess negative net income, (c) to cause to be recorded on the books of
such Series an asset account in the amount of such negative net income (provided
that the same shall thereupon become the property of such Series with respect to
such Series and shall not be paid to any Shareholder), which account may be
reduced by the amount of dividends declared thereafter upon the Outstanding
Shares of such Series on the day such negative net income is experienced, until
such asset account is reduced to zero; (d) to combine the methods described in
clauses (a) and (b) and (c) of this sentence; or (e) to take any other action
they deem appropriate, in order to cause (or in order to assist in causing) the
Net Asset Value per Share of such Series to remain at a constant amount per
Outstanding Share immediately after each such determination and declaration. The
Trustees shall also have the power not to declare a dividend out of net income
for the purpose of causing the Net Asset Value per Share to be increased.
In the event that any Series is divided into classes, the provisions of
this Section 9.03, to the extent applicable as determined in the discretion of
the Trustees and consistent with the Investment Company Act and other applicable
law, may be equally applied to each such class.
SECTION 9.04 SUSPENSION OF THE RIGHT OF REDEMPTION. The Trustees may
declare a suspension of the right of redemption or postpone the date of payment
if permitted under the Investment Company Act. Such suspension shall take effect
at such time as the Trustees 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 until the Trustees
shall declare the suspension at an end. 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 per Share next determined after the
termination of the suspension.
SECTION 9.05 REDEMPTION OF SHARES IN ORDER TO QUALIFY AS REGULATED
INVESTMENT COMPANY. If the Trustees shall, at any time and in good faith, be of
the opinion that direct or indirect ownership of Shares of any Series has or may
become concentrated in any Person to an extent which would disqualify any Series
as a regulated investment company under the Internal Revenue Code, then the
Trustees shall have the power (but not the obligation) by lot or other means
deemed equitable by them (a) to call for redemption by any such person of a
number, or principal amount, of Shares sufficient to maintain or bring the
direct or indirect ownership of Shares into conformity with the requirements for
such qualification and (b) to refuse to transfer or issue Shares to any person
whose acquisition of Shares in question would result in such disqualification.
The redemption shall be effected at the redemption price and in the manner
provided in this Article IX.
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The holders of Shares shall upon demand disclose to the Trustees in
writing such information with respect to direct and indirect ownership of Shares
as the Trustees deem necessary to comply with the requirements of any taxing
authority or this Section 9.05.
SECTION 9.06 REDEMPTION OF SMALL ACCOUNTS. Subject to the requirements
of the Investment Company Act, the Trustees may cause the Trust to redeem, at
the price and in the manner provided in this Article IX, Shares of any Series or
class of a Series held by any Shareholder (i) if such Shareholder is no longer
qualified to hold such Shares in accordance with such qualifications as may be
established by the Trustees, (ii) if the net asset value of such Shares is below
$500 or such other amount as determined by the Trustees or (iii) if otherwise
deemed by the Trustees to be in the best interest of the Trust or that
particular Series (or class) as a whole.
ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION
SECTION 10.01 LIMITATION OF LIABILITY. Neither a Trustee nor an officer
of the Trust, when acting in such capacity, shall be personally liable to any
person other than the Trust or the Shareholders for any act, omission or
obligation of the Trust, any Trustee or any officer of the Trust. Neither a
Trustee nor an officer of the Trust shall be liable for any act or omission or
any conduct whatsoever in his capacity as Trustee or as an officer of the Trust,
provided that nothing contained herein or in the Delaware Act shall protect any
Trustee or any officer of the Trust against any liability to the Trust or to
Shareholders 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 the office of Trustee or officer of the Trust
hereunder.
SECTION 10.02 INDEMNIFICATION.
(a) Subject to the exceptions and limitations contained in Subsection
10.02(b):
(i) every person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as a "Covered Person") shall be
indemnified by the Trust to the fullest extent permitted by law
against liability and against all expenses reasonably incurred or paid
by him in connection with any claim, action, suit or proceeding in
which he becomes involved as a party or otherwise by virtue of his
being or having been a Trustee or officer and against amounts paid or
incurred by him in the settlement thereof;
(ii) 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 while in office or
thereafter, and the words "liability" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
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(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office or (B) not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, (A) by the court or
other body approving the settlement; (B) by at least a majority of
those Trustees who are neither Interested Persons of the Trust nor are
parties to the matter based upon a review of readily available facts
(as opposed to a full trial-type inquiry); or (C) by written opinion
of independent legal counsel based upon a review of readily available
facts (as opposed to a full trial-type inquiry).
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, shall continue as to a person who has ceased to be a
Covered Person and shall inure to the benefit of the heirs, executors and
administrators of such a person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than Covered Persons,
and other persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
Subsection (a) of this Section 10.02 may be paid by the Trust or Series from
time to time prior to final disposition thereof upon receipt of an undertaking
by or on behalf of such Covered Person that such amount will be paid over by him
to the Trust or Series if it is ultimately determined that he is not entitled to
indemnification under this Section 10.02; provided, however, that either (i)
such Covered Person shall have provided appropriate security for such
undertaking, (ii) the Trust is insured against losses arising out of any such
advance payments or (iii) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the matter, or independent legal
counsel in a written opinion, shall have determined, based upon a review of
readily available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such Covered Person will be
found entitled to indemnification under this Section 10.02.
SECTION 10.03 SHAREHOLDERS. In case any Shareholder of any Series shall
be held to be personally liable solely by reason of his being or having been a
Shareholder of such Series and not because of his acts or omissions or for some
other reason, the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives, or, in the case of a corporation
or other entity, its corporate or other general successor) shall be entitled out
of the assets belonging to the applicable Series to be held harmless from and
indemnified against all loss and expense arising from such liability. The Trust,
on behalf of the affected Series, shall, upon request by the Shareholder, assume
the defense of any claim made against the Shareholder
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for any act or obligation of the Series and satisfy any judgment thereon from
the assets of the Series.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 FUND NOT A PARTNERSHIP. It is hereby expressly declared
that a fund and not a partnership is created hereby. No Trustee hereunder shall
have any power to bind personally either the Trust officers or any Shareholder.
All persons extending credit to, contracting with or having any claim against
the Trust or the Trustees shall look only to the assets of the appropriate
Series or (if the Trustees shall have yet to have established Series) of the
Trust for payment under such credit, contract or claim; and neither the
Shareholders nor the Trustees, nor any of their agents, whether past, present or
future, shall be personally liable therefor. Nothing in this Trust Instrument
shall protect a Trustee against any liability to the Trust or a Shareholder to
which the Trustee would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee hereunder.
SECTION 11.02 TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR
SURETY. The exercise by the Trustees or the officers of the Trust of their
powers and discretion hereunder in good faith and with reasonable care under the
circumstances then prevailing shall be binding upon everyone interested. Subject
to the provisions of Article X hereof and to Section 11.01 of this Article XI,
the Trustees and the officers of the Trust shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees and the officers of the Trust
may take advice of counsel or other experts with respect to the meaning and
operation of this Trust Instrument, and subject to the provisions of Article X
hereof and Section 11.01 of this Article XI, shall be under no liability for any
act or omission in accordance with such advice or for failing to follow such
advice. The Trustees and the officers of the Trust shall not be required to give
any bond as such, nor any surety if a bond is obtained.
SECTION 11.03 ESTABLISHMENT OF RECORD DATES. The Trustees may close the
Share transfer books of the Trust for a period not exceeding sixty (60) days
preceding the date of any meeting of Shareholders, or the date for the payment
of any dividends or other distributions, or the date for the allotment of
rights, or the date when any change or conversion or exchange of Shares shall go
into effect; or in lieu of closing the stock transfer books as aforesaid, the
Trustees may fix in advance a date, not exceeding sixty (60) days preceding the
date of any meeting of Shareholders, or the date for payment of any dividend or
other distribution, or the date for the allotment of rights, or the date when
any change or conversion or exchange of Shares shall go into effect, as a record
date for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting, or entitled to receive payment of any such dividend
or other distribution, or to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of Shares, and in
such case such Shareholders and only such Shareholders as shall be Shareholders
of record on the date so fixed shall be entitled to such notice of, and to vote
at, such meeting, or to receive payment of such dividend or other distribution,
or to receive such allotment or rights, or to exercise such rights, as the case
may be, notwithstanding any transfer of any Shares on the books of the Trust
after any such record date fixed as aforesaid.
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SECTION 11.04 TERMINATION OF FUND.
(a) This Trust shall continue without limitation of time but subject to
the provisions of Subsection 11.04(b).
(b) The Trustees may, subject to any necessary Shareholder, Trustee,
and regulatory approvals:
(i) sell and convey all or substantially all of the assets of the
Trust or any affected Series to another fund, partnership, association
or corporation, or to a separate series of shares thereof, organized
under the laws of any state which fund, partnership, association or
corporation is an open-end management investment company as defined in
the Investment Company Act, or is a series thereof, for adequate
consideration which may include the assumption of all outstanding
obligations, taxes and other liabilities, accrued or contingent, of
the Trust or any affected Series, and which may include shares of
beneficial interest, stock or other ownership interests of such fund,
partnership, association or corporation or of a series thereof;
(ii) enter into a plan of liquidation in order to terminate and
liquidate any Series (or class) of the Trust, or the Trust; or
(iii) at any time sell and convert into money all of the assets
of the Trust or any affected Series.
Upon making reasonable provision, in the determination of the Trustees, for the
payment of all liabilities by assumption or otherwise, the Trustees shall
distribute the remaining proceeds or assets (as the case may be) of each Series
(or class) ratably among the holders of Shares of the affected Series, based
upon the ratio that each Shareholder's Shares bears to the number of Shares of
such Series (or class) then outstanding.
(c) Upon completion of the distribution of the remaining proceeds or
the remaining assets as provided in Subsection 11.04(b), the Trust or any
affected Series shall terminate and the Trustees and the Trust shall be
discharged of any and all further liabilities and duties hereunder and the
right, title and interest of all parties with respect to the Trust or Series
shall be cancelled and discharged.
Upon termination of the Trust, following completion of winding up of
its business, the Trustees shall cause a certificate of cancellation of the
Trust's certificate of fund to be filed in accordance with the Delaware Act,
which certificate of cancellation may be signed by any one Trustee.
SECTION 11.05 REORGANIZATION.
(a) Notwithstanding anything else herein, the Trustees, in order to
change the form or jurisdiction of organization of the Trust, may (i) cause the
Trust to merge or consolidate with or into one or more funds, partnerships
(general or limited), associations or corporations so long as the surviving or
resulting entity is an open-end management investment company under the
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Investment Company Act, or is a series thereof, that will succeed to or assume
the Trust's registration under that Act and which is formed, organized or
existing under the laws of a state, commonwealth, possession or colony of the
United States or (ii) cause the Trust to incorporate under the laws of Delaware.
(b) The Trustees may, subject to a vote of a majority of the Trustees
and any shareholder vote required under the Investment Company Act, if any,
cause the Trust to merge or consolidate with or into one or more Trusts,
partnerships (general or limited), associations, limited liability companies or
corporations formed, organized or existing under the laws of a state,
commonwealth, possession or colony of the United States.
(c) Any agreement of merger or consolidation or certificate of merger
or consolidation may be signed by a majority of Trustees and facsimile
signatures conveyed by electronic or telecommunication means shall be valid.
(d) Pursuant to and in accordance with the provisions of Section
3815(f) of the Delaware Act, and notwithstanding anything to the contrary
contained in this Trust Instrument, an agreement of merger or consolidation
approved by the Trustees in accordance with paragraph (a) or (b) this Section
11.05 may effect any amendment to the Trust Instrument or effect the adoption of
a new fund instrument of the Trust if it is the surviving or resulting fund in
the merger or consolidation.
SECTION 11.06 FILING OF COPIES, REFERENCES, HEADINGS. The original or a
copy of this Trust Instrument and of each amendment hereof or Trust Instrument
supplemental hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. Anyone dealing with the Trust may rely on a
certificate by an officer or Trustee of the Trust as to whether or not any such
amendments or supplements have been made and as to any matters in connection
with the Trust hereunder, and with the same effect as if it were the original,
may rely on a copy certified by an officer or Trustee of the Trust to be a copy
of this Trust Instrument or of any such amendment or supplemental Trust
Instrument. In this Trust Instrument or in any such amendment or supplemental
Trust Instrument, references to this Trust Instrument, and all expressions such
as "herein," "hereof" and "hereunder," shall be deemed to refer to this Trust
Instrument as amended or affected by any such supplemental Trust Instrument. All
expressions such as "his," "he" and "him," shall be deemed to include the
feminine and neuter, as well as masculine, genders. Headings are placed herein
for convenience of reference only and in case of any conflict, the text of this
Trust Instrument, rather than the headings, shall control. This Trust Instrument
may be executed in any number of counterparts each of which shall be deemed an
original.
SECTION 11.07 APPLICABLE LAW. The fund set forth in this instrument is
made in the State of Delaware, and the Trust and this Trust Instrument, and the
rights and obligations of the Trustees and Shareholders hereunder, are to be
governed by and construed and administered according to the Delaware Act and the
laws of said State; provided, however, that there shall not be applicable to the
Trust, the Trustees or this Trust Instrument (a) the provisions of Section 3540
of Title 12 of the Delaware Code or (b) any provisions of the laws (statutory or
common) of the State of Delaware (other than the Delaware Act) pertaining to
funds which relate to or regulate (i) the filing with any court or governmental
body or agency of trustee accounts or schedules of
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trustee fees and charges, (ii) affirmative requirements to post bonds for
trustees, officers, agents or employees of a fund, (iii) the necessity for
obtaining court or other governmental approval concerning the acquisition,
holding or disposition of real or personal property, (iv) fees or other sums
payable to trustees, officers, agents or employees of a fund, (v) the allocation
of receipts and expenditures to income or principal, (vi) restrictions or
limitations on the permissible nature, amount or concentration of fund
investments or requirements relating to the titling, storage or other manner of
holding of fund assets, or (vii) the establishment of fiduciary or other
standards of responsibilities or limitations on the acts or powers of trustees,
which are inconsistent with the limitations or liabilities or authorities and
powers of the Trustees set forth or referenced in this Trust Instrument. The
Trust shall be of the type commonly called a "business fund," and without
limiting the provisions hereof, the Trust may exercise all powers which are
ordinarily exercised by such a fund under Delaware law. The Trust specifically
reserves the right to exercise any of the powers or privileges afforded to funds
or actions that may be engaged in by funds under the Delaware Act, and the
absence of a specific reference herein to any such power, privilege or action
shall not imply that the Trust may not exercise such power or privilege or take
such actions.
SECTION 11.08 AMENDMENTS. Except as specifically provided herein, the
Trustees may, without shareholder vote, amend or otherwise supplement this Trust
Instrument by making an amendment, a Trust Instrument supplemental hereto or an
amended and restated fund instrument. Shareholders shall have the right to vote
(a) on any amendment as may be required by law or by the Trust's registration
statement filed with the Commission and (b) on any amendment submitted to them
by the Trustees. Any amendment required or permitted to be submitted to
Shareholders which, as the Trustees determine, shall affect the Shareholders of
one or more Series shall be authorized by vote of the Shareholders of each
Series affected and no vote of shareholders of a Series not affected shall be
required. Notwithstanding any other provision of this Trust Instrument, any
amendment to Article X hereof shall not limit the rights to indemnification or
insurance provided therein with respect to action or omission of Covered Persons
prior to such amendment.
SECTION 11.09 FISCAL YEAR. The fiscal year of the Trust shall end on a
specified date as set forth in the Bylaws, provided, however, that the Trustees
may change the fiscal year of the Trust.
SECTION 11.10 NAME RESERVATION. The Trustees on behalf of the Trust
acknowledge that E.I.I. Realty Securities, Inc. has licensed to the Trust the
non-exclusive right to use the words "E.I.I." as part of the name of the Trust
and has reserved the right to grant the non-exclusive use of the words "E.I.I."
or any derivative thereof to any other party. In addition, E.I.I. Realty
Securities, Inc. reserves the right to grant the non-exclusive use of the words
"E.I.I." to, and to withdraw such right from, any other business or other
enterprise. E.I.I. Realty Securities, Inc. reserves the right to withdraw from
the Trust the right to use the words "E.I.I." and will withdraw such right if
the Trust ceases to employ, for any reason, E.I.I. Realty Securities, Inc., an
affiliate, or any successor as adviser of the Trust.
24
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SECTION 11.11 PROVISIONS IN CONFLICT WITH LAW. The provisions of this
Trust Instrument are severable, and if the Trustees shall determine, with the
advice of counsel, that any of such provisions is in conflict with the
Investment Company Act, the regulated investment company provisions of the
Internal Revenue Code or with other applicable laws and regulations, the
conflicting provision shall be deemed never to have constituted a part of this
Trust Instrument; provided, however, that such determination shall not affect
any of the remaining provisions of this Trust Instrument or render invalid or
improper any action taken or omitted prior to such determination. If any
provision of this Trust Instrument shall be held invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall attach only to such
provision in such jurisdiction and shall not in any matter affect such provision
in any other jurisdiction or any other provision of this Trust Instrument in any
jurisdiction.
IN WITNESS WHEREOF, the undersigned, being the initial Trustees of the
Trust, have executed this instrument as of date first written above.
/s/Susan J. Penry-Williams
--------------------------
Susan J. Penry-Williams, as Trustee
and not individually
/s/Peter J. O'Rourke
--------------------------
Peter J. O'Rourke, as Trustee
and not individually
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SCHEDULE A
E.I.I. Realty Securities Fund
Institutional Shares
Adviser Shares
Investor Shares
26
E.I.I. REALTY SECURITIES TRUST
BYLAWS
<PAGE>
TABLE OF CONTENTS
ARTICLE I
PRINCIPAL OFFICE........................................................... 1
ARTICLE II
OFFICERS AND THEIR ELECTION................................................ 1
Section 2.01 Officers............................................. 1
Section 2.02 Election of Officers................................. 1
Section 2.03 Resignations......................................... 1
ARTICLE III
POWERS AND DUTIES OF OFFICERS AND TRUSTEES................................. 1
Section 3.01 Management of the Fund............................... 1
Section 3.02 Executive And Other Committees....................... 2
Section 3.03 Compensation......................................... 2
Section 3.04 Chairman Of The Trustees............................. 2
Section 3.05 President............................................ 2
Section 3.06 Treasurer............................................ 2
Section 3.07 Secretary............................................ 2
Section 3.08 Vice President....................................... 3
Section 3.09 Assistant Treasurer.................................. 3
Section 3.10 Assistant Secretary.................................. 3
Section 3.11 Subordinate Officers................................. 3
Section 3.12 Surety Bonds......................................... 3
Section 3.13 Removal.............................................. 3
Section 3.14 Remuneration......................................... 3
ARTICLE IV
SHAREHOLDERS' MEETINGS..................................................... 4
Section 4.01 Special Meetings..................................... 4
Section 4.02 Notices.............................................. 4
Section 4.03 Voting-Proxies....................................... 4
Section 4.04 Place of Meeting..................................... 5
Section 4.05 Action Without a Meeting............................. 5
ARTICLE V
TRUSTEES' MEETINGS......................................................... 5
Section 5.01 Special Meetings..................................... 5
Section 5.02 Regular Meetings..................................... 5
Section 5.03 Quorum............................................... 5
Section 5.04 Notice............................................... 5
Section 5.05 Place of Meeting..................................... 5
Section 5.06 Special Action....................................... 5
Section 5.07 Action by Consent.................................... 5
Section 5.08 Participation in Meetings By Conference Telephone.... 6
i
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ARTICLE VI
FISCAL YEAR; REGISTERED OFFICE AND REGISTERED AGENT........................ 6
Section 6.01 Fiscal Year.......................................... 6
Section 6.02 Registered Office and Registered Agent............... 6
ARTICLE VII
INSPECTION OF BOOKS........................................................ 6
ARTICLE VIII
INSURANCE OF OFFICERS, TRUSTEES, AND EMPLOYEES............................. 6
ARTICLE IX
SEAL....................................................................... 7
ARTICLE X
AMENDMENTS................................................................. 7
ii
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E.I.I. REALTY SECURITIES TRUST
BYLAWS
These Bylaws of E.I.I. Realty Securities Fund (the "Trust"), a Delaware
business trust, are subject to the Trust Instrument of the Trust, dated as of
December 22, 1997, as from time to time amended, supplemented, or restated (the
"Trust Instrument"). Capitalized terms used herein which are defined in the
Trust Instrument are used as therein defined.
ARTICLE I
PRINCIPAL OFFICE
The principal office of the Trust shall be located in New York, New
York or such other location as the Trustees may, from time to time, determine.
The Trust may establish and maintain such other offices and places of business
as the Trustees may, from time to time, determine.
ARTICLE II
OFFICERS AND THEIR ELECTION
SECTION 2.01 OFFICERS. The officers of the Trust shall be a President,
a Treasurer, a Secretary, and such other officers as the Trustees may from time
to time elect. The Trustees may delegate to any officer or committee the power
to appoint any subordinate officers or agents. It shall not be necessary for any
Trustee or other officer to be a holder of Shares in the Trust.
SECTION 2.02 ELECTION OF OFFICERS. The Treasurer and Secretary shall be
chosen by the Trustees. The President shall be chosen by and from the Trustees.
Two or more offices may be held by a single person except the offices of
President and Secretary. Subject to the provisions of Section 3.13 hereof the
President, the Treasurer, and the Secretary shall each hold office until their
successors are chosen and qualified and all other officers shall hold office at
the pleasure of the Trustees.
SECTION 2.03 RESIGNATIONS. Any officer of the Trust may resign,
notwithstanding Section 2.02 hereof, by filing a written resignation with the
President, the Trustees, or the Secretary, which resignation shall take effect
on being so filed or at such time as may be therein specified.
ARTICLE III
POWERS AND DUTIES OF OFFICERS AND TRUSTEES
SECTION 3.01 MANAGEMENT OF THE FUND. The business and affairs of the
Trust shall be managed by, or under the direction of the Trustees, and they
shall have all powers
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necessary and desirable to carry out their responsibilities, so far as such
powers are not inconsistent with the laws of the State of Delaware, the Trust
Instrument, or these Bylaws.
SECTION 3.02 EXECUTIVE AND OTHER COMMITTEES. The Trustees may elect
from their own number an executive committee, which shall have any or all of the
powers of the Board of Trustees while the Board of Trustees is not in session.
The Trustees may also elect from their own number other committees from time to
time. The number composing such committees and the powers conferred upon the
same are to be determined by vote of a majority of the Trustees. All members of
such committees shall hold such offices at the pleasure of the Trustees. The
Trustees may abolish any such committee at any time. Any committee to which the
Trustees delegate any of their powers or duties shall keep records of its
meetings and shall report its actions to the Trustees. The Trustees shall have
power to rescind any action of any committee, but no such rescission shall have
retroactive effect.
SECTION 3.03 COMPENSATION. Each Trustee and each committee member may
receive such compensation for his services and reimbursement for his expenses as
may be fixed from time to time by resolution of the Trustees.
SECTION 3.04 CHAIRMAN OF THE TRUSTEES. The Trustees may appoint from
among their number a Chairman who shall serve as such at the pleasure of the
Trustees. When present, he shall preside at all meetings of the Shareholders and
the Trustees, and he may, subject to the approval of the Trustees, appoint a
Trustee to preside at such meetings in his absence. He shall perform such other
duties as the Trustees may from time to time designate.
SECTION 3.05 PRESIDENT. The President shall be the chief executive
officer of the Trust and, subject to the direction of the Trustees, shall have
general administration of the business and policies of the Trust. Except as the
Trustees may otherwise order, the President shall have the power to grant,
issue, execute, or sign such powers of attorney, process, agreements, or other
documents as may be deemed advisable or necessary in the furtherance of the
interests of the Trust or any Series thereof. He shall also have the power to
employ attorneys, accountants, and other advisors and agents and counsel for the
Trust. The President shall perform such duties additional to all of the
foregoing as the Trustees may from time to time designate.
SECTION 3.06 TREASURER. The Treasurer shall be the principal financial
and accounting officer of the Trust. He shall deliver all funds and securities
of the Trust which may come into his hands to such company as the Trustees shall
employ as Custodian in accordance with the Trust Instrument and applicable
provisions of law. He shall make annual reports regarding the business and
condition of the Trust, which reports shall be preserved in Trust records, and
he shall furnish such other reports regarding the business and condition of the
Trust as the Trustees may from time to time require. The Treasurer shall perform
such additional duties as the Trustees may from time to time designate.
SECTION 3.07 SECRETARY. The Secretary shall record in books kept for
the purpose all votes and proceedings of the Trustees and the Shareholders at
their respective
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meetings. He shall have the custody of the seal of the Trust. The Secretary
shall perform such additional duties as the Trustees may from time to time
designate.
SECTION 3.08 VICE PRESIDENT. Any Vice President of the Trust shall
perform such duties as the Trustees or the President may from time to time
designate. At the request or in the absence or disability of the President, the
Vice President (or, if there are two or more Vice Presidents, then the senior of
the Vice Presidents) present and able to act may perform all the duties of the
President and, when so acting, shall have all the powers of and be subject to
all the restrictions upon the President.
SECTION 3.09 ASSISTANT TREASURER. Any Assistant Treasurer of the Trust
shall perform such duties as the Trustees or the Treasurer may from time to time
designate, and, in the absence of the Treasurer, the senior Assistant Treasurer,
present and able to act, may perform all the duties of the Treasurer and, when
so acting, shall have all the powers of and be subject to all the restrictions
upon the Treasurer.
SECTION 3.10 ASSISTANT SECRETARY. Any Assistant Secretary of the Trust
shall perform such duties as the Trustees or the Secretary may from time to time
designate, and, in the absence of the Secretary, the senior Assistant Secretary,
present and able to act, may perform all the duties of the Secretary and, when
so acting, shall have all the powers of and be subject to all the restrictions
upon the Secretary.
SECTION 3.11 SUBORDINATE OFFICERS. The Trustees from time to time may
appoint such officers or agents as they may deem advisable, each of whom shall
have such title, hold office for such period, have such authority, and perform
such duties as the Trustees may determine. The Trustees from time to time may
delegate to one or more officers or committees of Trustees the power to appoint
any such subordinate officers or agents and to prescribe their respective terms
of office, authorities, and duties.
SECTION 3.12 SURETY BONDS. The Trustees may require any officer or
agent of the Trust to execute a bond (including without limitation, any bond
required by the Investment Company Act and the rules and regulations of the
Commission) to the Trust in such sum and with such surety or sureties as the
Trustees may determine, conditioned upon the faithful performance of his duties
to the Fund including responsibility for negligence and for the accounting of
any of the Trust's property, funds, or securities that may come into his hands.
SECTION 3.13 REMOVAL. Any officer may be removed from office, with or
without cause, whenever in the judgment of the Trustees the best interest of the
Trust will be served thereby, by the vote of a majority of the Trustees given at
any regular meeting or any special meeting of the Trustees. In addition, any
officer or agent appointed in accordance with the provisions of Section 3.10
hereof may be removed, either with or without cause, by any officer upon whom
such power of removal shall have been conferred by the Trustees.
SECTION 3.14 REMUNERATION. The salaries or other compensation, if any,
of the officers of the Fund shall be fixed from time to time by resolution of
the Trustees.
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ARTICLE IV
SHAREHOLDERS' MEETINGS
SECTION 4.01 SPECIAL MEETINGS. A special meeting of the shareholders
shall be called by the Secretary whenever (a) ordered by the Trustees or (b)
requested in writing by the holder or holders of at least 10% of the Outstanding
Shares entitled to vote for the purpose of voting upon the question of removal
of Trustees. If the meeting is a meeting of the Shareholders of one or more
Series or classes of Shares, but not a meeting of all Shareholders of the Trust,
then only special meetings of the Shareholders of such one or more Series or
classes shall be called and only the shareholders of such one or more Series or
classes shall be entitled to notice of and to vote at such meeting.
SECTION 4.02 NOTICES. Except as provided in Section 4.01, notices of
any meeting of the Shareholders shall be given by the Secretary by delivering or
mailing, postage prepaid, to each Shareholder entitled to vote at said meeting,
written or printed notification of such meeting at least ten (10) days before
the meeting, to such address as may be registered with the Trust by the
Shareholder. Notice of any Shareholder meeting need not be given to any
Shareholder if a written waiver of notice, executed before or after such
meeting, is filed with the records of such meeting, or to any Shareholder who
shall attend such meeting in person or by proxy. Notice of adjournment of a
Shareholder's meeting to another time or place need not be given, if such time
and place are announced at the meeting or reasonable notice is given to persons
present at the meeting and the adjourned meeting is held within a reasonable
time after the date set for the original meeting.
SECTION 4.03 VOTING-PROXIES. Subject to the provisions of the Trust
Instrument, shareholders entitled to vote may vote either in person or by proxy,
provided that either (a) an instrument authorizing such 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
(b) the Trustees adopt by resolution 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. Proxies shall be delivered to the Secretary of the Trust or other
person responsible for recording the proceedings before being voted. A proxy
with respect to shares held in the name of two or more persons shall be valid if
executed by one of them unless at or prior to exercise of such proxy the Trust
receives a specific written notice from any one of them. Unless otherwise
specifically limited by their terms, proxies shall entitle the holder thereof to
vote at any adjournment of a meeting. A proxy purporting to be exercised by or
on behalf of a Shareholder shall be deemed valid unless challenged at or prior
to its exercise and the burden of proving invalidity shall rest on the
challenger. At 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. Except as otherwise provided herein or in the
Trust Instrument, as these Bylaws or such Trust Instrument may be amended or
supplemented from time to time, all matters relating to the giving, voting or
validity of proxies shall be governed by the General Corporation Law of the
State of Delaware relating to proxies, and judicial interpretations thereunder,
as if the Fund were a Delaware corporation and the Shareholders were
shareholders of a Delaware corporation.
4
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SECTION 4.04 PLACE OF MEETING. All special meetings of the Shareholders
shall be held at the principal place of business of the Trust or at such other
place in the United States as the Trustees may designate.
SECTION 4.05 ACTION WITHOUT A MEETING. Any action to be taken by
Shareholders may be taken without a meeting if all Shareholders entitled to vote
on the matter consent to the action in writing and the written consents are
filed with the records of meetings of Shareholders of the Trust. Such consent
shall be treated for all purposes as a vote at a meeting of the Shareholders
held at the principal place of business of the Trust.
ARTICLE V
TRUSTEES' MEETINGS
SECTION 5.01 SPECIAL MEETINGS. Special meetings of the Trustees may be
called orally or in writing by the Chairman of the Board of Trustees or any two
other Trustees.
SECTION 5.02 REGULAR MEETINGS. Regular meetings of the Trustees may be
held at such places and at such times as the Trustees may from time to time
determine; each Trustee present at such determination shall be deemed a party
calling the meeting and no call or notice will be required to such Trustee
provided that any Trustee who is absent when such determination is made shall be
given notice of the determination by the Chairman or any two other Trustees, as
provided for in Section 4.04 of the Trust Instrument.
SECTION 5.03 QUORUM. A majority of the Trustees shall constitute a
quorum for the transaction of business at any meeting and an action of a
majority of the Trustees in attendance constituting a quorum shall constitute
action of the Trustees.
SECTION 5.04 NOTICE. Except as otherwise provided, notice of any
special meeting of the Trustees shall be given by the party calling the meeting
to each of the Trustees, as provided for in Section 4.04 of the Trust
Instrument. A written notice may be mailed, postage prepaid, addressed to him at
his address as registered on the books of the Fund or, if not so registered, at
his last known address.
SECTION 5.05 PLACE OF MEETING. All special meetings of the Trustees
shall be held at the principal place of business of the Fund or such other place
as the Trustees may designate. Any meeting may adjourn to any place.
SECTION 5.06 SPECIAL ACTION. When all the Trustees shall be present at
any meeting however called or wherever held, or shall assent to the holding of
the meeting without notice, or shall sign a written assent thereto filed with
the records of such meeting, the acts of such meeting shall be valid as if such
meeting had been regularly held.
SECTION 5.07 ACTION BY CONSENT. Any action by the Trustees may be taken
without a meeting if a written consent thereto is signed by all the Trustees and
filed with the
5
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records of the Trustees' meeting. Such consent shall be treated, for all
purposes, as a vote at a meeting of the Trustees held at the principal place of
business of the Trustees.
SECTION 5.08 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Except
when presence in person is required at a meeting under the Investment Company
Act or other applicable laws, Trustees may participate in a meeting of Trustees
by conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting. Any meeting
conducted by telephone shall be deemed to take place at and from the principal
office of the Fund.
ARTICLE VI
FISCAL YEAR; REGISTERED OFFICE AND REGISTERED AGENT
SECTION 6.01 FISCAL YEAR. The fiscal year of the Trust and of each
Series of the Trust shall end on June 30 of each year; provided that the last
fiscal year of the Trust and each Series shall end on the date on which the
Trust or each such Series is terminated, as applicable; and further provided
that the Trustees by resolution and without a Shareholder vote may at any time
change the fiscal year of the Trust and of any or all Series (and the Trust and
each Series may have different fiscal years as determined by the Trustees).
SECTION 6.02 REGISTERED OFFICE AND REGISTERED AGENT. The initial
registered office of the Fund in the State of Delaware shall be located at 1201
North Market Street, P.O. Box 1347, Wilmington, Delaware 19899-1347. The
registered agent of the Trust at such location shall be Delaware Corporation
Organizers, Inc.; provided that the Trustees by resolution and without a
Shareholder vote may at any time change the Trust's registered office or its
registered agent, or both.
ARTICLE VII
INSPECTION OF BOOKS
The Trustees shall from time to time determine whether and to what
extent, and at what times and places, and under what conditions and regulations
the accounts and books of the Trust or any of them shall be open to the
inspection of the Shareholders; and no Shareholder shall have any right to
inspect any account or book or document of the Trust except as conferred by law
or otherwise by the Trustees or by resolution of the Shareholders.
ARTICLE VIII
INSURANCE OF OFFICERS, TRUSTEES, AND EMPLOYEES
The Trust may purchase and maintain insurance on behalf of any Covered
Person (as defined in Section 10.02 of the Trust Instrument) or employee of the
Trust, including any Covered Person or employee of the Trust who is or was
serving at the request of the Trust as
6
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a Trustee, officer, or employee of a corporation, partnership, joint venture,
trust, or other enterprise against any liability asserted against him and
claimed by him in any such capacity or arising out of his status as such,
whether or not the Trustees would have the power to indemnify him against such
liability.
The Trust may not acquire or obtain a contract for insurance that
protects or purports to protect any Trustee or officer of the Trust against any
liability to the Trust or its Shareholders 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.
ARTICLE IX
SEAL
The seal of the Trust shall be circular in form bearing the
inscription:
"E.I.I. REALTY SECURITIES TRUST, DECEMBER 22, 1997
THE STATE OF DELAWARE"
ARTICLE X
AMENDMENTS
These Bylaws may be amended from time to time by action of the
Trustees, without requirement for the vote or approval of shareholders.
7
FORM OF
INVESTMENT ADVISORY AGREEMENT
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FORM OF
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this __th day of ____, 1998 by and between the
E.I.I. REALTY SECURITIES TRUST, a Delaware business trust (the "Trust"), on
behalf of the E.I.I. REALTY SECURITIES FUND (the "Fund"), and E.I.I. REALTY
SECURITIES, INC., a Delaware corporation (the "Investment Adviser");
W I T N E S S E T H
WHEREAS, the Trust is registered as an open-end, non-diversified
management investment company under the Investment Company Act of 1940, as
amended (the "Investment Company Act"), and the rules and regulations
promulgated thereunder; and
WHEREAS, the Investment Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended (the "Investment Advisers
Act"), and engages in the business of acting as an investment adviser; and
WHEREAS, the Trust and the Investment Adviser desire to enter into an
agreement to provide for the management of the assets of the Fund on the terms
and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Management. The Investment Adviser shall act as investment adviser
for the Fund and shall, in such capacity, supervise the investment and
reinvestment of the cash, securities or other properties comprising the Fund's
assets, subject at all times to the policies and control of the Trust's Board of
Trustees. The Investment Adviser shall give the Fund the benefit of its best
judgment, efforts and facilities in rendering its services as investment
adviser.
2. Duties of Investment Advisor. In carrying out its obligation under
paragraph 1 hereof, the Investment Adviser shall:
(a) provide the Board of Trustees of the Trust on a regular basis
with financial reports and analyses on the Fund's operations and the operations
of comparable investment companies;
(b) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or the Fund, and whether
concerning the individual issuers whose securities are included in the Fund or
the activities in which they engage, or with respect to securities which the
Investment Adviser considers desirable for inclusion in the Fund;
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(c) determine what issuers and securities shall be represented in
the Fund's portfolio and regularly report them to the Board of Trustees of the
Trust;
(d) formulate and implement continuing programs for the purchases
and sales of the securities of such issuers and regularly report thereon to the
Board of Trustees of the Trust; and
(e) take, on behalf of the Fund, all actions which appear to the
Fund necessary to carry into effect such purchase and sale programs as
aforesaid, including the placing of orders for the purchase and sale of
portfolio securities.
3. Broker-Dealer Relationships. The Investment Adviser is responsible
for decisions to buy and sell securities for the Fund, broker-dealer selection,
and negotiation of brokerage commission rates. The Investment Adviser's primary
consideration in effecting a security transaction will be execution at a price
that is reasonable and fair compared to the commission, fee or other
remuneration received or to be received by other brokers in connection with
comparable transactions, including similar securities being purchased or sold on
a securities exchange during a comparable period of time.
In selecting abroker-dealer to execute each particular transaction, the
Investment Adviser will take the following into consideration: the best net
price available; the reliability, integrity and financial condition of the
broker-dealer; the size of and difficulty in executing the order; and the value
of the expected contribution of the broker-dealer to the investment performance
of the Fund on a continuing basis. Accordingly, the price to the Fund in any
transaction may be less favorable than that available from another broker-dealer
if the difference is reasonably justified by other aspects of the portfolio
execution services offered. Subject to such policies and procedures as the Board
of Trustees may determine, the Investment Adviser shall not be deemed to have
acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Fund to pay a broker or
dealer that provides brokerage and research services to the Investment Adviser
for the Fund's use an amount of commission for effecting a portfolio investment
transaction in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction, if the Investment Adviser
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Investment Adviser's overall responsibilities with respect to the Fund. The
Investment Adviser is further authorized to allocate the orders placed by it on
behalf of the Fund to such brokers and dealers who also provide research or
statistical material, or other services to the Fund or the Investment Adviser
for the Fund's use. Such allocation shall be in such amounts and proportions as
the Investment Adviser shall determine and the Investment Adviser will report on
said allocations regularly to the Board of Trustees of the Trust indicating the
brokers to whom such allocations have been made and the basis therefor.
4. Control by Board of Trustees. Any investment program undertaken by
the Investment Adviser pursuant to this Agreement, as well as any other
activities undertaken by the Investment Adviser on behalf of the Fund pursuant
thereto, shall at all times be subject to any directives of the Board of
Trustees of the Trust.
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5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Investment Adviser shall at all times
conform to:
(a) all applicable provisions of the Investment Company Act and
the Investment Advisers Act and any rules and regulations adopted thereunder as
amended; and
(b) the provisions of the Registration Statements of the Fund
under the Securities Act of 1933, as amended, and the Investment Company Act;
and
(c)the provisions of the Agreement and Declaration of Trust of the
Trust, as amended; and
(d) the provisions of the By-laws of the Trust, as amended; and
(e)any other applicable provisions of state and federal law.
6. Expenses. The expenses connected with the Fund shall be allocable
between the Fund and the Investment Adviser as follows:
(a)The Investment Adviser shall bear the expenses connected with
carrying out its obligations under this Agreement.
(b) The Investment Adviser shall further maintain, at its expense
and without cost to the Fund, a trading function in order to carry out its
obligations under subparagraph (e) of paragraph 2 hereof to place orders for the
purchase and sale of portfolio securities for the Fund.
(c) Nothing in subparagraph (a) hereof shall be construed to
require the Investment Adviser to bear:
(i) any of the costs (including applicable office space,
facilities and equipment) of the services of a principal financial
officer of the Fund whose normal duties consist of maintaining the
financial accounts and books and records of the Fund; including the
reviewing of calculations of net asset value and preparing tax
returns; or
(ii) any of the costs (including applicable office space,
facilities and equipment) of the services of any of the personnel
operating under the direction of such principal financial officer.
Notwithstanding the obligation of the Fund to bear the expense of the
functions referred to in clauses (i) and (ii) of this subparagraph
(c), the Investment Adviser may pay the salaries, including any
applicable employment or payroll taxes and other salary costs, of the
principal financial officer and other personnel carrying out such
functions and the Fund shall reimburse the Investment Adviser therefor
upon proper accounting.
(d) All of the ordinary business expenses incurred in the
operations of the Fund and the offering of its shares shall be borne by the Fund
unless specifically provided otherwise in this paragraph 6. These expenses
include but are not limited to brokerage commissions, legal, auditing, taxes or
governmental fees, the cost of preparing share certificates, custodian,
depository, transfer and shareholder service agent costs, expenses of issue,
sale, redemption and repurchase of shares, expenses of registering and
qualifying shares for sale, insurance premiums on property or personnel
(including officers and trustees if available) of the Fund which inure to its
benefit, expenses relating to trustee and shareholder meetings, the cost of
preparing and distributing reports and notices to
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shareholders, the fees and other expenses incurred by the Fund in connection
with membership in investment company organizations and the cost of printing
copies of prospectuses and statements of additional information distributed to
shareholders.
7. Delegation of Responsibilities. The Investment Adviser, with the
consent of the Board of Trustees, may delegate the performance of certain
investment advisory services to a subadviser as permitted under the Investment
Company Act.
8. Compensation. The Fund shall pay the Investment Adviser in full
compensation for services rendered hereunder an annual investment advisory fee,
payable monthly, of 0.75% of the Fund's average daily net assets. The average
daily net asset value of the Fund shall be determined in the manner set forth in
the Registration Statement of the Fund.
9. Name. The Fund hereby acknowledges that any and all rights in or to
the name "E.I.I." which exist on the date of this Agreement or which may arise
hereafter are, and under any and all circumstances shall continue to be, the
sole property of the Investment Adviser; that the Investment Adviser may assign
any or all of such rights to another party or to parties without the consent of
the Fund; and that the Investment Adviser may permit other parties, including
other investment companies, to use the term "E.I.I." in their names. If the
Investment Adviser, or its assignee as the case may be, ceases to serve as an
adviser to the Fund, the Fund hereby agrees to take promptly any and all actions
which are necessary or desirable to change its name and the name of the Fund so
as to delete the term "E.I.I.".
10. Non-Exclusivity. The services of the Investment Adviser to the Fund
are not to be deemed to be exclusive, and the Investment Adviser shall be free
to render investment advisory or other services to others (including other
investment companies) and to engage in other activities. It is understood and
agreed that officers of the Investment Adviser may serve as officers or trustees
of the Trust, and that officers or trustees of the Trust may serve as officers
of the Investment Adviser to the extent permitted by law; and that the officers
of the Investment Adviser are not prohibited from engaging in any other business
activity or from rendering services to any other person, or from serving as
partners or officers of any other firm or corporation, including other
investment companies.
11. Term and Approval. This Agreement shall become effective at the
close of business on the date hereof and shall remain in force and effect for
two years and thereafter from year to year, provided that such continuance is
specifically approved at least annually:
(a) (i) by the Trust's Board of Trustees or (ii) by the vote
of a majority of the Fund's outstanding voting securities (as defined in Section
2(a)(42) of the Investment Company Act); and
(b) (i) by the affirmative vote of a majority of the Trustees
who are not parties to this Agreement or interested persons of a party to this
Agreement (other than as Trust trustees), by votes cast in person at a meeting
specifically called for such purpose.
12. Termination. This Agreement may be terminated at any time, without
the payment of any penalty, by vote of the Trust's Board of Trustees or by vote
of a majority of
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the Fund's outstanding voting securities, or by the Investment Adviser, on sixty
(60) days' written notice to the other party. The notice provided for herein may
be waived by either party. This Agreement shall automatically terminate in the
event of its assignment, the term "assignment" for the purpose having the
meaning defined in Section 2(a)(4) of the Investment Company Act.
13. Liability of Investment Adviser and Indemnification. In the absence
of willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Investment Adviser or any of
its officers, directors or employees, it shall not be subject to liability to
the Fund or to any shareholder of the Fund for any omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
14. Liability of Trustees and Shareholders. A copy of the Agreement and
Declaration of Trust of the Trust is on file with the Secretary of The State of
Delaware, and notice is hereby given that this instrument is executed on behalf
of the trustees of the Trust as trustees and not individually and that the
obligations of this instrument are not binding upon any of the trustees or
shareholders individually but are binding only upon the assets and property of
the Trust.
15. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust
and that of the Investment Adviser shall be 667 Madison Avenue, New York, New
York 10021.
16. Questions of Interpretation. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the Investment Company Act shall be resolved by
reference to such term or provision of the Act and to interpretations thereof,
if any, by the United States Courts or in the absence of any controlling
decision of any such court, by rules, regulations or orders of the Securities
and Exchange Commission issued pursuant to said Act. In addition, where the
effect of a requirement of the Investment Company Act reflected in any provision
of this Agreement is released by rules, regulation or order of the Securities
and Exchange Commission, such provision shall be deemed to incorporate the
effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
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E.I.I. REALTY SECURITIES TRUST, on
behalf of the E.I.I. Realty Securities Fund
Attest: By:________________________________________
_____________________
E.I.I. REALTY SECURITIES, INC.
Attest:
By:________________________________________
_____________________
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FORM OF AGREEMENT
CUSTODIAN SERVICES AGREEMENT
THIS AGREEMENT is made as of _________________, 1998 by and between PNC
BANK, NATIONAL ASSOCIATION, a national banking association ("PNC Bank"), and
E.I.I. Realty Securities Fund, a Delaware business trust (the "Fund").
W I T N E S S E T H:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to retain PNC Bank to provide custodian
services, and PNC Bank wishes to furnish custodian services, either directly or
through an affiliate or affiliates, as more fully described herein.
NOW, THEREFORE, In consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. DEFINITIONS. AS USED IN THIS AGREEMENT:
(a) "1933 Act" means the Securities Act of 1933, as amended.
(b) "1934 Act" means the Securities Exchange Act of 1934, as
amended.
(c) "Authorized Person" means any officer of the Fund and any
other person duly authorized by the Fund's Board of Trustees to give Oral
Instructions and Written Instructions on behalf of the Fund and listed on the
Authorized Persons Appendix attached hereto and made a part hereof or any
amendment thereto as may be received by PNC Bank. An Authorized Person's scope
of authority may be limited by the Fund by setting forth such limitation in the
Authorized
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Persons Appendix.
(d) "Book-Entry System" means Federal Reserve Treasury book-entry
system for United States and federal agency securities, its successor or
successors, and its nominee or nominees and any book-entry system maintained by
an exchange registered with the SEC under the 1934 Act.
(e) "CEA" means the Commodities Exchange Act, as amended.
(f) "Oral Instructions" mean oral instructions received by PNC
Bank from an Authorized Person or from a person reasonably believed by PNC Bank
to be an Authorized Person.
(g) "PNC Bank" means PNC Bank, National Association or a
subsidiary or affiliate of PNC Bank, National Association.
(h) "SEC" means the Securities and Exchange Commission.
(i) "Securities Laws" mean the 1933 Act, the 1934 Act, the 1940
Act and the CEA.
(j) "Shares" mean the shares of beneficial interest of any series
or class of the Fund.
(k) "Property" means:
(i) any and all securities and other investment items which the
Fund may from time to time deposit, or cause to be
deposited, with PNC Bank or which PNC Bank may from time to
time hold for the Fund;
(ii) all income in respect of any of such securities or other
investment items;
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(iii) all proceeds of the sale of any of such securities
or investment items; and
(iv) all proceeds of the sale of securities issued by the
Fund, which are received by PNC Bank from time to
time, from or on behalf of the Fund.
(l) "Written Instructions" mean written instructions signed by
two Authorized Persons and received by PNC Bank. The instructions may be
delivered by hand, mail, tested telegram, cable, telex or facsimile sending
device.
2. APPOINTMENT. The Fund hereby appoints PNC Bank to provide custodian
services to the Fund, on behalf of each of its investment portfolios (each, a
"Portfolio"), and PNC Bank accepts such appointment and agrees to furnish such
services.
3. DELIVERY OF DOCUMENTS. The Fund has provided or, where applicable,
will provide PNC Bank with the following:
(a) certified or authenticated copies of the resolutions of the
Fund's Board of Trustees, approving the appointment of PNC
Bank or its affiliates to provide services;
(b) a copy of the Fund's most recent effective registration
statement;
(c) a copy of each Portfolio's advisory agreements;
(d) a copy of the distribution agreement with respect to each
class of Shares;
(e) a copy of each Portfolio's administration agreement if PNC
Bank is not providing the Portfolio with such services;
(f) copies of any shareholder servicing agreements made in
respect of the Fund or a Portfolio; and
(g) certified or authenticated copies of any and all amendments
or supplements to the foregoing.
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4. COMPLIANCE WITH LAWS.
PNC Bank undertakes to comply with all applicable requirements of the
Securities Laws and any laws, rules and regulations of governmental authorities
having jurisdiction with respect to the duties to be performed by PNC Bank
hereunder. Except as specifically set forth herein, PNC Bank assumes no
responsibility for such compliance by the Fund or any Portfolio.
5. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PNC Bank
shall act only upon Oral Instructions and Written Instructions.
(b) PNC Bank shall be entitled to rely upon any Oral
Instructions and Written Instructions it receives from an Authorized Person (or
from a person reasonably believed by PNC Bank to be an Authorized Person)
pursuant to this Agreement. PNC Bank may assume that any Oral Instructions or
Written Instructions received hereunder are not in any way inconsistent with the
provisions of organizational documents of the Fund or of any vote, resolution or
proceeding of the Fund's Board of Trustees or of the Fund's shareholders, unless
and until PNC Bank receives Written Instructions to the contrary.
(c) The Fund agrees to forward to PNC Bank Written
Instructions confirming Oral Instructions (except where such Oral Instructions
are given by PNC Bank or its affiliates) so that PNC Bank receives the Written
Instructions by the close of business on the same day that such Oral
Instructions are received. The fact that such confirming Written Instructions
are not received by PNC Bank shall in no way invalidate the transactions or
enforceability of the transactions authorized by the Oral Instructions. Where
Oral Instructions or Written Instructions reasonably appear to have been
received from an Authorized Person, PNC Bank shall incur no liability to the
Fund in acting upon such Oral Instructions or Written Instructions provided that
PNC Bank's actions comply with the other provisions of this Agreement.
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6. RIGHT TO RECEIVE ADVICE.
(a) Advice of the Fund. If PNC Bank is in doubt as to any
action it should or should not take, PNC Bank may request directions or advice,
including Oral Instructions or Written Instructions, from the Fund.
(b) Advice of Counsel. If PNC Bank shall be in doubt as to any
question of law pertaining to any action it should or should not take, PNC Bank
may request advice at its own cost from such counsel of its own choosing (who
may be counsel for the Fund, the Fund's investment adviser or PNC Bank, at the
option of PNC Bank).
(c) Conflicting Advice. In the event of a conflict between
directions, advice or Oral Instructions or Written Instructions PNC Bank
receives from the Fund, and the advice it receives from counsel, PNC Bank shall
be entitled to rely upon and follow the advice of counsel. In the event PNC Bank
so relies on the advice of counsel, PNC Bank remains liable for any action or
omission on the part of PNC Bank which constitutes willful misfeasance, bad
faith, gross negligence or reckless disregard by PNC Bank of any duties,
obligations or responsibilities set forth in this Agreement.
(d) Protection of PNC Bank. PNC Bank shall be protected in any
action it takes or does not take in reliance upon directions, advice or Oral
Instructions or Written Instructions it receives from the Fund or from counsel
and which PNC Bank believes, in good faith, to be consistent with those
directions, advice or Oral Instructions or Written Instructions. Nothing in this
section shall be construed so as to impose an obligation upon PNC Bank (i) to
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seek such directions, advice or Oral Instructions or Written Instructions, or
(ii) to act in accordance with such directions, advice or Oral Instructions or
Written Instructions unless, under the terms of other provisions of this
Agreement, the same is a condition of PNC Bank's properly taking or not taking
such action. Nothing in this subsection shall excuse PNC Bank when an action or
omission on the part of PNC Bank constitutes willful misfeasance, bad faith,
gross negligence or reckless disregard by PNC Bank of any duties, obligations or
responsibilities set forth in this Agreement.
7. RECORDS; VISITS. The books and records pertaining to the Fund and
any Portfolio, which are in the possession or under the control of PNC Bank,
shall be the property of the Fund. Such books and records shall be prepared and
maintained as required by the 1940 Act and other applicable securities laws,
rules and regulations. The Fund and Authorized Persons shall have access to such
books and records at all times during PNC Bank's normal business hours. Upon the
reasonable request of the Fund, copies of any such books and records shall be
provided by PNC Bank to the Fund or to an authorized representative of the Fund,
at the Fund's expense.
8. CONFIDENTIALITY. PNC Bank agrees to keep confidential all records of
the Fund and information relating to the Fund and its shareholders, unless the
release of such records or information is otherwise consented to, in writing, by
the Fund. The Fund agrees that such consent shall not be unreasonably withheld
and may not be withheld where PNC Bank may be exposed to civil or criminal
contempt proceedings or when required to divulge such information or records to
duly constituted authorities.
9. COOPERATION WITH ACCOUNTANTS. PNC Bank shall cooperate with the
Fund's independent public accountants and shall take all reasonable action in
the performance of its
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obligations under this Agreement to ensure that the necessary information is
made available to such accountants for the expression of their opinion, as
required by the Fund.
10. DISASTER RECOVERY. PNC Bank shall enter into and shall maintain in
effect with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment to the
extent appropriate equipment is available. In the event of equipment failures,
PNC Bank shall, at no additional expense to the Fund, take reasonable steps to
minimize service interruptions. PNC Bank shall have no liability with respect to
the loss of data or service interruptions caused by equipment failure provided
such loss or interruption is not covered by PNC Bank's own willful misfeasance,
bad faith, gross negligence or reckless disregard of its duties or obligations
under this Agreement.
11. COMPENSATION. As compensation for custody services rendered by PNC
Bank during the term of this Agreement, the Fund, on behalf of each of the
Portfolios, will pay to PNC Bank a fee or fees as may be agreed to in writing
from time to time by the Fund and PNC Bank.
12. INDEMNIFICATION. The Fund, on behalf of each Portfolio, agrees to
indemnify and hold harmless PNC Bank and its affiliates from all taxes, charges,
expenses, assessments, claims and liabilities (including, without limitation,
liabilities arising under the Securities Laws and any state and foreign
securities and blue sky laws, and amendments thereto, and expenses, including
(without limitation) attorneys' fees and disbursements, arising directly or
indirectly from any action or omission to act which PNC Bank takes (i) at the
request or on the direction of or in reliance on the advice of the Fund or (ii)
upon Oral Instructions or Written Instructions. Neither PNC Bank, nor any of its
affiliates, shall be indemnified against any liability (or any expenses incident
to such liability) arising out of PNC Bank's or its affiliates' own willful
misfeasance,
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bad faith, gross negligence or reckless disregard of its duties under this
Agreement.
13. RESPONSIBILITY OF PNC BANK.
(a) PNC Bank shall be under no duty to take any action on
behalf of the Fundor any Portfolio except as specifically set forth herein or as
may be specifically agreed to by PNC Bank in writing. PNC Bank shall be
obligated to exercise care and diligence in the performance of its duties
hereunder, to act in good faith and to use its best efforts, within reasonable
limits, in performing services provided for under this Agreement. PNC Bank shall
be liable for any damages arising out of PNC Bank's failure to perform its
duties under this agreement to the extent such damages arise out of PNC Bank's
willful misfeasance, bad faith, gross negligence or reckless disregard of its
duties under this Agreement.
(b) Without limiting the generality of the foregoing or of any
other provision of this Agreement, (i) PNC Bank shall not be under any duty or
obligation to inquire into and shall not be liable for (A) the validity or
invalidity or authority or lack thereof of any Oral Instruction or Written
Instruction, notice or other instrument which conforms to the applicable
requirements of this Agreement, and which PNC Bank reasonably believes to be
genuine; or (B) subject to section 10, delays or errors or loss of data
occurring by reason of circumstances beyond PNC Bank's control, including acts
of civil or military authority, national emergencies, fire, flood, catastrophe,
acts of God, insurrection, war, riots or failure of the mails, transportation,
communication or power supply.
(c) Notwithstanding anything in this Agreement to the
contrary, neither PNC Bank nor its affiliates shall be liable to the Fund or to
any Portfolio for any consequential, special or indirect losses or damages which
the Fund may incur or suffer by or as a consequence of PNC
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Bank's or its affiliates' performance of the services provided hereunder,
whether or not the likelihood of such losses or damages was known by PNC Bank or
its affiliates.
14. DESCRIPTION OF SERVICES.
(a) Delivery of the Property. The Fund will deliver or arrange
for delivery to PNC Bank, all the Property owned by the Portfolios, including
cash received as a result of the distribution of Shares, during the period that
is set forth in this Agreement. PNC Bank will not be responsible for such
property until actual receipt.
(b) Receipt and Disbursement of Money. PNC Bank, acting upon
Written Instructions, shall open and maintain separate accounts in the Fund's
name using all cash received from or for the account of the Fund, subject to the
terms of this Agreement. In addition, upon Written Instructions, PNC Bank shall
open separate custodial accounts for each separate series or Portfolio of the
Fund (collectively, the "Accounts") and shall hold in the Accounts all cash
received from or for the Accounts of the Fund specifically designated to each
separate series or Portfolio.
PNC Bank shall make cash payments from or for the Accounts of a
Portfolio only for:
(i) purchases of securities in the name of a Portfolio
or PNC Bank or PNC Bank's nominee as provided in
sub-section (j) and for which PNC Bank has received
a copy of the broker's or dealer's confirmation or
payee's invoice, as appropriate;
(ii) purchase or redemption of Shares of the Fund
delivered to PNC Bank;
(iii) payment of, subject to Written Instructions,
interest, taxes, administration, accounting,
distribution, advisory, management fees or similar
expenses which are to be borne by a Portfolio;
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(iv) payment to, subject to receipt of Written
Instructions, the Fund's transfer agent, as agent
for the shareholders, an amount equal to the amount
of dividends and distributions stated in the Written
Instructions to be distributed in cash by the
transfer agent to shareholders, or, in lieu of
paying the Fund's transfer agent, PNC Bank may
arrange for the direct payment of cash dividends and
distributions to shareholders in accordance with
procedures mutually agreed upon from time to time by
and among the Fund, PNC Bank and the Fund's transfer
agent.
(v) payments, upon receipt Written Instructions, in
connection with the conversion, exchange or
surrender of securities owned or subscribed to by
the Fund and held by or delivered to PNC Bank;
(vi) payments of the amounts of dividends received with
respect to securities sold short;
(vii) payments made to a sub-custodian pursuant to
provisions in sub-section (c) of this Section; and
(viii) payments, upon Written Instructions, made for other
proper Fund purposes.
PNC Bank is hereby authorized to endorse and collect all checks, drafts
or other orders for the payment of money received as custodian for the Accounts.
(c) Receipt of Securities; Subcustodians.
(i) PNC Bank shall hold all securities
received by it for the Accounts in a
separate account that physically
segregates such securities from those of
any other persons, firms or
corporations, except for securities held
in a Book-Entry System. All such
securities shall be held or disposed of
only upon Written Instructions of the
Fund pursuant to the terms of this
Agreement. PNC Bank shall have no power
or authority to assign, hypothecate,
pledge or otherwise dispose of any such
securities or investment, except upon
the express terms of this Agreement and
upon Written Instructions, accompanied
by a certified resolution of the Fund's
Board of Trustees, authorizing the
transaction. In no case may any member
of the Fund's Board of Trustees, or any
officer, employee or agent of the Fund
withdraw any securities.
At PNC Bank's own expense and for its
own convenience, PNC Bank may enter into
sub-custodian agreements with other
United
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States banks or trust companies to
perform duties described in this
sub-section (c). Such bank or trust
company shall have an aggregate capital,
surplus and undivided profits, according
to its last published report, of at
least one million dollars ($1,000,000),
if it is a subsidiary or affiliate of
PNC Bank, or at least twenty million
dollars ($20,000,000) if such bank or
trust company is not a subsidiary or
affiliate of PNC Bank. In addition, such
bank or trust company must be qualified
to act as custodian and agree to comply
with the relevant provisions of the 1940
Act and other applicable rules and
regulations. Any such arrangement will
not be entered into without prior
written notice to the Fund.
PNC Bank shall remain responsible for
the performance of all of its duties as
described in this Agreement and shall
hold the Fund and each Portfolio
harmless from its own acts or omissions,
under the standards of care provided for
herein, or the acts and omissions of any
sub-custodian chosen by PNC Bank under
the terms of this sub-section (c).
(d) Transactions Requiring Instructions. Upon receipt of
Oral Instructions or Written Instructions and not
otherwise, PNC Bank, directly or through the use of
the Book-Entry System, shall:
(i) deliver any securities held for a
Portfolio against the receipt of payment
for the sale of such securities;
(ii) execute and deliver to such persons as
may be designated in such Oral
Instructions or Written Instructions,
proxies, consents, authorizations, and
any other instruments whereby the
authority of a Portfolio as owner of any
securities may be exercised;
(iii) deliver any securities to the issuer
thereof, or its agent, when such
securities are called, redeemed, retired
or otherwise become payable; provided
that, in any such case, the cash or
other consideration is to be delivered
to PNC Bank;
(iv) deliver any securities held for a
Portfolio against receipt of other
securities or cash issued or paid in
connection with the liquidation,
reorganization, refinancing, tender
offer, merger, consolidation or
recapitalization of any corporation, or
the exercise of any conversion
privilege;
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<PAGE>
(v) deliver any securities held for a
Portfolio to any protective committee,
reorganization committee or other person
in connection with the reorganization,
refinancing, merger, consolidation,
recapitalization or sale of assets of
any corporation, and receive and hold
under the terms of this Agreement such
certificates of deposit, interim
receipts or other instruments or
documents as may be issued to it to
evidence such delivery;
(vi) make such transfer or exchanges of the
assets of the Portfolios and take such
other steps as shall be stated in said
Oral Instructions or Written
Instructions to be for the purpose of
effectuating a duly authorized plan of
liquidation, reorganization, merger,
consolidation or recapitalization of the
Fund;
(vii) release securities belonging to a
Portfolio to any bank or trust company
for the purpose of a pledge or
hypothecation to secure any loan
incurred by the Fund on behalf of that
Portfolio; provided, however, that
securities shall be released only upon
payment to PNC Bank of the monies
borrowed, except that in cases where
additional collateral is required to
secure a borrowing already made subject
to proper prior authorization, further
securities may be released for that
purpose; and repay such loan upon
redelivery to it of the securities
pledged or hypothecated therefor and
upon surrender of the note or notes
evidencing the loan;
(viii) release and deliver securities owned by
a Portfolio in connection with any
repurchase agreement entered into on
behalf of the Fund, but only on receipt
of payment therefor; and pay out moneys
of the Fund in connection with such
repurchase agreements, but only upon the
delivery of the securities;
(ix) release and deliver or exchange
securities owned by the Fund in
connection with any conversion of such
securities, pursuant to their terms,
into other securities;
(x) release and deliver securities owned by
the fund for the purpose of redeeming in
kind shares of the Fund upon delivery
thereof to PNC Bank; and
(xi) release and deliver or exchange
securities owned by the Fund for other
corporate purposes.
PNC Bank must also receive a certified
resolution describing the nature of the
corporate purpose and the name and
address of the person(s) to whom
delivery shall be made when such action
is pursuant to sub-paragraph d.
(e) Use of Book-Entry System. The Fund shall deliver to PNC
Bank certified
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<PAGE>
resolutions of the Fund's Board of Trustees approving, authorizing and
instructing PNC Bank on a continuous basis, to deposit in the Book-Entry System
all securities belonging to the Portfolios eligible for deposit therein and to
utilize the Book-Entry System to the extent possible in connection with
settlements of purchases and sales of securities by the Portfolios, and
deliveries and returns of securities loaned, subject to repurchase agreements or
used as collateral in connection with borrowings. PNC Bank shall continue to
perform such duties until it receives Written Instructions or Oral Instructions
authorizing contrary actions.
PNC Bank shall administer the Book-Entry System as follows:
(i) With respect to securities of each Portfolio which are
maintained in the Book-Entry System, the records of PNC
Bank shall identify by Book-Entry or otherwise those
securities belonging to each Portfolio. PNC Bank shall
furnish to the Fund a detailed statement of the Property
held for each Portfolio under this Agreement at least
monthly and from time to time and upon written request.
(ii) Securities and any cash of each Portfolio deposited in the
Book-Entry System will at all times be segregated from any
assets and cash controlled by PNC Bank in other than a
fiduciary or custodian capacity but may be commingled with
other assets held in such capacities. PNC Bank and its
sub-custodian, if any, will pay out money only upon receipt
of securities and will deliver securities only upon the
receipt of money.
(iii) All books and records maintained by PNC Bank which relate
to the Fund's participation in the Book-Entry System will
at all times during PNC Bank's regular business hours be
open to the inspection of Authorized Persons, and PNC Bank
will furnish to the Fund all information in respect of the
services rendered as it may require.
PNC Bank will also provide the Fund with such reports on its own system
of internal control as the Fund may reasonably request from time to time.
(f) Registration of Securities. All Securities held for a
Portfolio which are issued or issuable only in bearer form, except such
securities held in the Book-Entry System, shall be
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<PAGE>
held by PNC Bank in bearer form; all other securities held for a Portfolio may
be registered in the name of the Fund on behalf of that Portfolio, PNC Bank, the
Book-Entry System, a sub-custodian, or any duly appointed nominees of the Fund,
PNC Bank, Book-Entry System or sub-custodian. The Fund reserves the right to
instruct PNC Bank as to the method of registration and safekeeping of the
securities of the Fund. The Fund agrees to furnish to PNC Bank appropriate
instruments to enable PNC Bank to hold or deliver in proper form for transfer,
or to register in the name of its nominee or in the name of the Book-Entry
System, any securities which it may hold for the Accounts and which may from
time to time be registered in the name of the Fund on behalf of a Portfolio.
(g) Voting and Other Action. Neither PNC Bank nor its nominee
shall vote any of the securities held pursuant to this Agreement by or for the
account of a Portfolio, except in accordance with Written Instructions. PNC
Bank, directly or through the use of the Book-Entry System, shall execute in
blank and promptly deliver all notices, proxies and proxy soliciting materials
to the registered holder of such securities. If the registered holder is not the
Fund on behalf of a Portfolio, then Written Instructions or Oral Instructions
must designate the person who owns such securities.
(h) Transactions Not Requiring Instructions. In the absence of
contrary Written Instructions, PNC Bank is authorized to take the following
actions:
(i) Collection of Income and Other Payments.
(A) collect and receive for the account of each
Portfolio, all income, dividends,
distributions, coupons, option premiums,
other payments and similar items, included or
to be included in the Property, and, in
addition, promptly advise each Portfolio of
such receipt and credit such income, as
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<PAGE>
collected, to each Portfolio's custodian
account;
(B) endorse and deposit for collection, in the
name of the Fund, checks, drafts, or other
orders for the payment of money;
(C) receive and hold for the account of each
Portfolio all securities received as a
distribution on the Portfolio's securities as
a result of a stock dividend, share split-up
or reorganization, recapitalization,
readjustment or other rearrangement or
distribution of rights or similar securities
issued with respect to any securities
belonging to a Portfolio and held by PNC Bank
hereunder;
(D) present for payment and collect the amount
payable upon all securities which may mature
or be called, redeemed, or retired, or
otherwise become payable on the date such
securities become payable; and
(E) take any action which may be necessary and
proper in connection with the collection and
receipt of such income and other payments and
the endorsement for collection of checks,
drafts, and other negotiable instruments.
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<PAGE>
(ii) Miscellaneous Transactions.
(A) deliver or cause to be delivered Property
against payment or other consideration or
written receipt therefor in the following
cases:
(1) for examination by a broker or
dealer selling for the account
of a Portfolio in accordance
with street delivery custom;
(2) for the exchange of interim
receipts or temporary
securities for definitive
securities; and
(3) for transfer of securities
into the name of the Fund on
behalf of a Portfolio or PNC
Bank or nominee of either, or
for exchange of securities for
a different number of bonds,
certificates, or other
evidence, representing the
same aggregate face amount or
number of units bearing the
same interest rate, maturity
date and call provisions, if
any; provided that, in any
such case, the new securities
are to be delivered to PNC
Bank.
(B) Unless and until PNC Bank receives Oral
Instructions or Written Instructions to the
contrary, PNC Bank shall:
(1) pay all income items held by
it which call for payment upon
presentation and hold the cash
received by it upon such
payment for the account of
each Portfolio;
(2) collect interest and cash
dividends received, with
notice to the Fund, to the
account of each Portfolio;
(3) hold for the account of each
Portfolio all stock dividends,
rights and similar securities
issued with respect to any
securities held by PNC Bank;
and
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<PAGE>
(4) execute as agent on behalf of
the Fund all necessary
ownership certificates
required by the Internal
Revenue Code or the Income Tax
Regulations of the United
States Treasury Department or
under the laws of any state
now or hereafter in effect,
inserting the Fund's name, on
behalf of a Portfolio, on such
certificate as the owner of
the securities covered
thereby, to the extent it may
lawfully do so.
(i) Segregated Accounts.
(i) PNC Bank shall upon receipt of Written Instructions
or Oral Instructions establish and maintain a
segregated accounts on its records for and on behalf
of each Portfolio. Such accounts may be used to
transfer cash and securities, including securities
in the Book-Entry System:
(A) for the purposes of compliance by the Fund
with the procedures required by a securities
or option exchange, providing such procedures
comply with the 1940 Act and any releases of
the SEC relating to the maintenance of
segregated accounts by registered investment
companies; and
(B) Upon receipt of Written Instructions, for
other proper corporate purposes.
(ii) PNC Bank shall arrange for the establishment of IRA
custodian accounts for such shareholders holding
Shares through IRA accounts, in accordance with the
Fund's prospectuses, the Internal Revenue Code of
1986, as amended (including regulations promulgated
thereunder), and with such other procedures as are
mutually agreed upon from time to time by and among
the Fund, PNC Bank and the Fund's transfer agent.
(j) Purchases of Securities. PNC Bank shall settle purchased
securities upon receipt of Oral Instructions or Written Instructions from the
Fund or its investment advisers that specify:
(i) the name of the issuer and the title of the
securities, including CUSIP number if applicable;
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<PAGE>
(ii) the number of shares or the principal amount
purchased and accrued interest, if any;
(iii) the date of purchase and settlement;
(iv) the purchase price per unit;
(v) the total amount payable upon such purchase;
(vi) the Portfolio involved; and
(vii) the name of the person from whom or the broker
through whom the purchase was made. PNC Bank shall
upon receipt of securities purchased by or for a
Portfolio pay out of the moneys held for the account
of the Portfolio the total amount payable to the
person from whom or the broker through whom the
purchase was made, provided that the same conforms
to the total amount payable as set forth in such
Oral Instructions or Written Instructions.
(k) Sales of Securities. PNC Bank shall settle sold securities
upon receipt of Oral Instructions or Written Instructions from the Fund that
specify:
(i) the name of the issuer and the title of the
security, including CUSIP number if applicable;
(ii) the number of shares or principal amount sold, and
accrued interest, if any;
(iii) the date of trade and settlement;
(iv) the sale price per unit;
(v) the total amount payable to the Fund upon such sale;
(vi) the name of the broker through whom or the person to
whom the sale was made; and
(vii) the location to which the security must be delivered
and delivery deadline, if any; and (viii) the
Portfolio involved.
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<PAGE>
PNC Bank shall deliver the securities upon receipt of the total amount
payable to the Portfolio upon such sale, provided that the total amount payable
is the same as was set forth in the Oral Instructions or Written Instructions.
Subject to the foregoing, PNC Bank may accept payment in such form as shall be
satisfactory to it, and may deliver securities and arrange for payment in
accordance with the customs prevailing among dealers in securities.
(l) Reports; Proxy Materials.
(i) PNC Bank shall furnish to the Fund the following
reports:
(A) such periodic and special reports as the Fund
may reasonably request;
(B) a monthly statement summarizing all
transactions and entries for the account of
each Portfolio, listing each Portfolio
securities belonging to each Portfolio with
the adjusted average cost of each issue and
the market value at the end of such month and
stating the cash account of each Portfolio
including disbursements;
(C) the reports required to be furnished to the
Fund pursuant to Rule 17f-4; and
(D) such other information as may be agreed upon
from time to time between the Fund and PNC
Bank.
(ii) PNC Bank shall transmit promptly to the Fund any proxy
statement, proxy material, notice of a call or conversion
or similar communication received by it as custodian of the
Property. PNC Bank shall be under no other obligation to
inform the Fund as to such actions or events.
(m) Collections. All collections of monies or other property in
respect, or which are to become part, of the Property (but not the safekeeping
thereof upon receipt by PNC Bank) shall be at the sole risk of the Fund. If
payment is not received by PNC Bank within a reasonable time after proper
demands have been made, PNC Bank shall notify the Fund in
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<PAGE>
writing, including copies of all demand letters, any written responses,
memoranda of all oral responses and shall await instructions from the Fund. PNC
Bank shall not be obliged to take legal action for collection unless and until
reasonably indemnified to its satisfaction. PNC Bank shall also notify the Fund
as soon as reasonably practicable whenever income due on securities is not
collected in due course and shall provide the Fund with periodic status reports
of such income collected after a reasonable time.
15. DURATION AND TERMINATION. This Agreement shall be effective on the
date first above written and shall continue in effect for an initial period of
one (1) year. Thereafter, this Agreement shall continue automatically for
successive terms of one (1) year; provided, however, that this Agreement may be
terminated by either party upon 120 days' prior written notice to the other
party. In the event this Agreement is terminated (pending appointment of a
successor to PNC Bank or vote of the shareholders of the Fund to dissolve or to
function without a custodian of its cash, securities or other property), PNC
Bank shall not deliver cash, securities or other property of the Portfolios to
the Fund. It may deliver them to a bank or trust company of PNC Bank's choice,
having an aggregate capital, surplus and undivided profits, as shown by its last
published report, of not less than twenty million dollars ($20,000,000), as a
custodian for the Fund to be held under terms similar to those of this
Agreement. PNC Bank shall not be required to make any such delivery or payment
until full payment shall have been made to PNC Bank of all of its fees,
compensation, costs and expenses. PNC Bank shall have a security interest in and
shall have a right of setoff against the Property as security for the payment of
such fees, compensation, costs and expenses.
16. NOTICES. All notices and other communications, including Written
Instructions,
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<PAGE>
shall be in writing or by confirming telegram, cable, telex or facsimile sending
device. Notice shall be addressed (a) if to PNC Bank at Airport Business Center,
International Court 2, 200 Stevens Drive, Lester, Pennsylvania 19113, marked for
the attention of the Custodian Services Department (or its successor) (b) if to
the Fund, at 667 Madison Avenue, 16th Floor, New York, NY 10021, Attn: or (c) if
to neither of the foregoing, at such other address as shall have been given by
like notice to the sender of any such notice or other communication by the other
party. If notice is sent by confirming telegram, cable, telex or facsimile
sending device, it shall be deemed to have been given immediately. If notice is
sent by first-class mail, it shall be deemed to have been given five days after
it has been mailed. If notice is sent by messenger, it shall be deemed to have
been given on the day it is delivered.
17. AMENDMENTS. This Agreement, or any term hereof, may be changed or
waived only by a written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
18. DELEGATION; ASSIGNMENT. PNC Bank may assign its rights and delegate
its duties hereunder to any wholly-owned direct or indirect subsidiary of PNC
Bank, National Association or PNC Bank Corp., provided that (i) PNC Bank gives
the Fund thirty (30) days' prior written notice; (ii) the delegate (or assignee)
agrees with PNC Bank and the Fund to comply with all relevant provisions of the
1940 Act; and (iii) PNC Bank and such delegate (or assignee) promptly provide
such information as the Fund may request, and respond to such questions as the
Fund may ask, relative to the delegation (or assignment), including (without
limitation) the capabilities of the delegate (or assignee).
19. COUNTERPARTS. This Agreement may be executed in two or more
counterparts,
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<PAGE>
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
20. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
21. MISCELLANEOUS.
(a) Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties and supersedes all prior
agreements and understandings relating to the subject matter hereof, provided
that the parties may embody in one or more separate documents their agreement,
if any, with respect to delegated duties and Oral Instructions.
(b) Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(c) Governing Law. This Agreement shall be deemed to be a
contract made in Pennsylvania and governed by Pennsylvania law, without regard
to principles of conflicts of law.
(d) Partial Invalidity. If any provision of this Agreement
shall be held or made invalid by a court decision, statute, rule or otherwise,
the remainder of this Agreement shall not be affected thereby.
(e) Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(f) Facsimile Signatures. The facsimile signature of any party
to this Agreement shall constitute the valid and binding execution hereof by
such party.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PNC BANK, NATIONAL ASSOCIATION
By:
---------------------------
Title:
------------------------
E.I.I. REALTY SECURITIES FUND
By:
---------------------------
Title:
------------------------
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<PAGE>
AUTHORIZED PERSONS APPENDIX
NAME (TYPE) SIGNATURE
- -------------------------- --------------------------
- -------------------------- --------------------------
- -------------------------- --------------------------
- -------------------------- --------------------------
- -------------------------- --------------------------
- -------------------------- --------------------------
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FORM OF
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made this __th day of ____, 1998 by and between the
E.I.I. REALTY SECURITIES TRUST, a Delaware business trust (the "Trust"), on
behalf of the E.I.I. REALTY SECURITIES FUND (the "Fund"), and E.I.I. REALTY
SECURITIES, INC. (the "Administrator");
W I T N E S S E T H
WHEREAS, the Trust is registered as an open-end, non-diversified
management investment company under the Investment Company Act of 1940, as
amended (the "Investment Company Act"), and the rules and regulations
promulgated thereunder; and
WHEREAS, the Administrator is an investment adviser and wishes to act
as an administrator of the Fund; and
WHEREAS, the Trust and the Administrator desire to enter into an
agreement to provide for the administration of the assets of the Fund on the
terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Administration. The Administrator shall act as administrator to the
Fund and shall, in such capacity, provide administrative and other services to
the Fund, subject at all time to the policies and control of the Trust's Board
of Trustees. In rendering its services as Administrator, the Administrator shall
give the Fund the benefit of its best judgment, efforts and facilities. The
Administrator shall, for all purposes herein, be deemed an independent
contractor and shall have, unless otherwise expressly provided or authorized, no
authority to act for or represent the Fund in any way or otherwise be deemed an
agent of the Fund.
2. Duties of Administrator. In carrying out its obligation under this
Agreement the Administrator shall:
(a) supervise and manage all aspects of the Fund's operations;
(b) provide the Fund or obtain for it, and thereafter supervise,
such executive, administrative, clerical and shareholder servicing services as
are deemed advisable by the Trust's Board of Trustees;
(c) arrange, but not pay for, the periodic updating of
prospectuses and supplements thereto, proxy material, tax returns, reports to
the Fund's shareholders and
<PAGE>
reports to and filings with the Securities and Exchange Commission and state
Blue Sky authorities;
(d) provide the Fund with, or obtain for it, adequate office space
and all necessary office equipment and services, including telephone service,
heat, utilities, stationery supplies and similar items for the Fund's principal
office; and
(e) take, on behalf of the Fund, all actions which appear to the
Fund necessary to carry into effect such administrative and supervisory
functions as aforesaid.
3. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Administrator shall at all times conform
to:
(a) all applicable provisions of the Investment Company Act and
any rules and regulations adopted thereunder as amended; and
(b) the provisions of the Registration Statements of the Fund
under the Securities Act of 1933, as amended, and the Investment Company Act;
and
(c) the provisions of the Declaration of Trust of the Trust, as
amended; and
(d) the provisions of the By-laws of the Trust, as amended; and
(e) any other applicable provisions of state and federal law.
4. Expenses. The expenses connected with the Fund shall be allocable
between the Fund and the Administrator as follows:
(a) The Administrator shall furnish, at its expense and without
cost to the Trust, the services of a President, Secretary and one or more Vice
Presidents of the Fund, to the extent that such additional officers may be
required by the Fund for the proper conduct of its affairs.
(b) Nothing in subparagraph (a) hereof shall be construed to
require the Administrator to bear:
(i) any of the costs (including applicable office space,
facilities and equipment) of the services of a principal financial
officer of the Fund whose normal duties consist of maintaining the
financial accounts and books and records of the Fund; including the
reviewing of calculations of net asset value and preparing tax
returns; or
(ii) any of the costs (including applicable office space,
facilities and equipment) of the services of any of the personnel
operating under the direction of such principal financial officer.
Notwithstanding the obligation of the Fund to bear the expense of the
functions referred to in clauses (i) and (ii) of this subparagraph
(b), the Administrator may pay the salaries, including any applicable
employment or payroll taxes and other salary costs, of the principal
financial officer and other personnel carrying out such functions and
the Fund shall reimburse the Administrator therefor upon proper
accounting.
(c) All of the ordinary business expenses incurred in the
operations of the Fund and the offering of its shares shall be borne by the Fund
unless specifically provided otherwise in this paragraph 4. These expenses
include but are not limited to
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<PAGE>
brokerage commissions, legal, auditing, taxes or governmental fees, the cost of
preparing share certificates, custodian, depository, transfer and shareholder
service agent costs, expenses of issue, sale, redemption and repurchase of
shares, expenses of registering and qualifying shares for sale, insurance
premiums on property or personnel (including officers and trustees if available)
of the Fund which inure to its benefit, expenses relating to trustee and
shareholder meetings, the cost of preparing and distributing reports and notices
to shareholders, the fees and other expenses incurred by the Fund in connection
with membership in investment company organizations and the cost of printing
copies of prospectuses and statements of additional information distributed to
shareholders.
5. Delegation of Responsibilities. The Administrator may in its
discretion delegate the performance of certain administrative services to a
subadministrator.
6. Compensation. The Fund shall pay the Administrator in full
compensation for services rendered hereunder an annual administration fee,
payable monthly, of 0.15%, 0.25% and 0.25% of the average daily net assets of
the Fund's Institutional Shares, Adviser Shares and Investor Shares,
respectively. The average daily net asset value of the Fund shall be determined
in the manner set forth in the Registration Statement of the Fund.
7. Non-Exclusivity. The services of the Administrator to the Fund are
not to be deemed to be exclusive, and the Administrator shall be free to render
administrative or other services to others (including other investment
companies) and to engage in other activities. It is understood and agreed that
officers of the Administrator may serve as officers or trustees of the Trust,
and that officers or trustees of the Trust may serve as officers of the
Administrator to the extent permitted by law; and that the officers of the
Administrator are not prohibited from engaging in any other business activity or
from rendering services to any other person, or from serving as partners or
officers of any other firm or corporation, including other investment companies.
8. Term and Approval. This Agreement shall become effective at the
close of business on the date hereof and shall remain in force and effect for
two years and thereafter from year to year, provided that such continuance is
specifically approved at least annually by the Board of Trustees.
9. Termination. This Agreement may be terminated at any time, without
the payment of any penalty, by vote of the Trust's Board of Trustees or by vote
of a majority of the Fund's outstanding voting securities, or by the
Administrator, on sixty (60) days' written notice to the other party. The notice
provided for herein may be waived by either party.
10. Liability of Administrator and Indemnification. In the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Administrator or any of its
officers, trustees or employees, it
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<PAGE>
shall not be subject to liability to the Fund or to any shareholder of the Fund
for any omission in the course of, or connected with, rendering services
hereunder.
11. Liability of Trustees and Shareholders. A copy of the Agreement and
Declaration of Trust of the Trust is on file with the Secretary of The State of
Delaware, and notice is hereby given that this instrument is executed on behalf
of the trustees of the Trust as trustees and not individually and that the
obligations of this instrument are not binding upon any of the trustees or
shareholders individually but are binding only upon the assets and property of
the Trust.
12. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust
and that of the Administrator shall be 667 Madison Avenue, New York, New York
10021.
13. Questions of Interpretation. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the Investment Company Act shall be resolved by
reference to such term or provision of the Act and to interpretations thereof,
if any, by the United States Courts or in the absence of any controlling
decision of any such court, by rules, regulations or orders of the Securities
and Exchange Commission issued pursuant to said Act. In addition, where the
effect of a requirement of the Investment Company Act reflected in any provision
of this Agreement is released by rules, regulation or order of the Securities
and Exchange Commission, such provision shall be deemed to incorporate the
effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
E.I.I. REALTY SECURITIES TRUST, on
behalf of the E.I.I. Realty Securities Fund
Attest: By:_________________________
______________________
E.I.I. REALTY SECURITIES, INC.
Attest:
By:_________________________
______________________
-4-
FORM OF AGREEMENT
SUB-ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made as of __________, 1998 by and between European
Investors Incorporated, a __________________________ corporation ("EII"), E.I.I.
Realty Securities Fund, a Delaware business trust (the "Fund"), and PFPC INC., a
Delaware corporation ("PFPC"), which is an indirect wholly owned subsidiary of
PNC Bank Corp.
W I T N E S S E T H :
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, EII wishes to retain PFPC to provide sub-administration and
accounting services to the Fund's investment portfolios listed on Exhibit A
attached hereto and made a part hereof, as such Exhibit A may be amended from
time to time (each a "Portfolio"), and PFPC wishes to furnish such services.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and intending to be legally bound hereby the parties
hereto agree as follows:
1. DEFINITIONS. AS USED IN THIS AGREEMENT:
(a) "1933 Act" means the Securities Act of 1933, as amended.
(b) "1934 Act" means the Securities Exchange Act of 1934, as
amended.
(c) "Authorized Person" means any officer of the Fund and any
other person duly authorized by the Fund's Board of Trustees to give Oral
Instructions and Written Instructions on behalf of the Fund and listed on the
Authorized Persons Appendix attached hereto and made a part hereof or any
amendment thereto as may be received by PFPC. An Authorized
<PAGE>
Person's scope of authority may be limited by the Fund by setting forth such
limitation in the Authorized Persons Appendix.
(d) "CEA" means the Commodities Exchange Act, as amended.
(e) "Oral Instructions" mean oral instructions received by PFPC
from an Authorized Person or from a person reasonably believed by PFPC to be an
Authorized Person.
(f) "SEC" means the Securities and Exchange Commission.
(g) "Securities Laws" means the 1933 Act, the 1934 Act, the 1940
Act and the CEA.
(h) "Shares" mean the shares of beneficial interest of any series
or class of the Fund.
(i) "Written Instructions" mean written instructions signed by an
Authorized Person and received by PFPC. The instructions may be delivered by
hand, mail, tested telegram, cable, telex or facsimile sending device.
2. APPOINTMENT. EII hereby appoints PFPC to provide sub-administration
and accounting services to the each of the Portfolios, in accordance with the
terms set forth in this Agreement. PFPC accepts such appointment and agrees to
furnish such services.
3. DELIVERY OF DOCUMENTS. The Fund has provided or, where applicable,
will provide PFPC with the following:
(a) certified or authenticated copies of the resolutions of the
Fund's Board of Trustees, approving the appointment of PFPC
or its affiliates to provide services to each Portfolio and
approving this Agreement;
(b) a copy of the Fund's most recent effective registration
statement;
(c) a copy of each Portfolio's advisory agreement or agreements;
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(d) a copy of the distribution agreement with respect to each
class of Shares representing an interest in a Portfolio;
(e) a copy of any additional administration agreement with
respect to a Portfolio;
(f) a copy of any shareholder servicing agreement made in
respect of the Fund or a Portfolio; and
(g) copies (certified or authenticated, where applicable) of any
and all amendments or supplements to the foregoing.
4. COMPLIANCE WITH RULES AND REGULATIONS.
PFPC undertakes to comply with all applicable requirements of the
Securities Laws, and any laws, rules and regulations of governmental authorities
having jurisdiction with respect to the duties to be performed by PFPC
hereunder. Except as specifically set forth herein, PFPC assumes no
responsibility for such compliance by the Fund or any Portfolio.
5. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PFPC shall act
only upon Oral Instructions and Written Instructions.
(b) PFPC shall be entitled to rely upon any Oral Instructions and
Written Instructions it receives from an Authorized Person (or from a person
reasonably believed by PFPC to be an Authorized Person) pursuant to this
Agreement. PFPC may assume that any Oral Instruction or Written Instruction
received hereunder is not in any way inconsistent with the provisions of
organizational documents or this Agreement or of any vote, resolution or
proceeding of the Fund's Board of Trustees or of the Fund's shareholders, unless
and until PFPC receives Written Instructions to the contrary.
(c) The Fund agrees to forward to PFPC Written Instructions
confirming Oral
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<PAGE>
Instructions (except where such Oral Instructions are given by PFPC or its
affiliates) so that PFPC receives the Written Instructions by the close of
business on the same day that such Oral Instructions are received. The fact that
such confirming Written Instructions are not received by PFPC shall in no way
invalidate the transactions or enforceability of the transactions authorized by
the Oral Instructions. Where Oral Instructions or Written Instructions
reasonably appear to have been received from an Authorized Person, PFPC shall
incur no liability to the Fund in acting upon such Oral Instructions or Written
Instructions provided that PFPC's actions comply with the other provisions of
this Agreement.
6. RIGHT TO RECEIVE ADVICE.
(a) Advice of the Fund. If PFPC is in doubt as to any action it
should or should not take, PFPC may request directions or advice, including Oral
Instructions or Written Instructions, from the Fund or EII.
(b) Advice of Counsel. If PFPC shall be in doubt as to any
question of law pertaining to any action it should or should not take, PFPC may
request advice at its own cost from such counsel of its own choosing (who may be
counsel for the Fund, the Fund's investment adviser or PFPC, at the option of
PFPC).
(c) Conflicting Advice. In the event of a conflict between
directions, advice or Oral Instructions or Written Instructions PFPC receives
from EII or the Fund and the advice PFPC receives from counsel, PFPC may rely
upon and follow the advice of counsel. In the event PFPC so relies on the advice
of counsel, PFPC remains liable for any action or omission on the part of PFPC
which constitutes willful misfeasance, bad faith, gross negligence or reckless
disregard by PFPC of any duties, obligations or responsibilities set forth in
this Agreement.
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<PAGE>
(d) Protection of PFPC. PFPC shall be protected in any action it
takes or does not take in reliance upon directions, advice or Oral Instructions
or Written Instructions it receives from EII, the Fund or from counsel and which
PFPC believes, in good faith, to be consistent with those directions, advice and
Oral Instructions or Written Instructions. Nothing in this section shall be
construed so as to impose an obligation upon PFPC (i) to seek such directions,
advice or Oral Instructions or Written Instructions, or (ii) to act in
accordance with such directions, advice or Oral Instructions or Written
Instructions unless, under the terms of other provisions of this Agreement, the
same is a condition of PFPC's properly taking or not taking such action. Nothing
in this subsection shall excuse PFPC when an action or omission on the part of
PFPC constitutes willful misfeasance, bad faith, gross negligence or reckless
disregard by PFPC of any duties, obligations or responsibilities set forth in
this Agreement.
7. RECORDS; VISITS.
(a) The books and records pertaining to the Fund and the
Portfolios which are in the possession or under the control of PFPC shall be the
property of the Fund. Such books and records shall be prepared and maintained as
required by the 1940 Act and other applicable securities laws, rules and
regulations. The Fund, EII and Authorized Persons shall have access to such
books and records at all times during PFPC's normal business hours. Upon the
reasonable request of the Fund or EII, copies of any such books and records
shall be provided by PFPC to the Fund, EII or to an Authorized Person, at the
Fund's expense.
(b) PFPC shall keep the following records:
(i) all books and records with respect to each Portfolio's books
of account;
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(ii) records of each Portfolio's securities transactions; and
(iii) all other books and records as PFPC is required to maintain
pursuant to Rule 31a-1 of the 1940 Act in connection with
the services provided hereunder.
8. CONFIDENTIALITY. PFPC agrees to keep confidential all records of the
Fund and information relating to the Fund and its shareholders, unless the
release of such records or information is otherwise consented to, in writing, by
the Fund or EII. The Fund and EII agree that such consent shall not be
unreasonably withheld and may not be withheld where PFPC may be exposed to civil
or criminal contempt proceedings or when required to divulge such information or
records to duly constituted authorities.
9. LIAISON WITH ACCOUNTANTS. PFPC shall act as liaison with the Fund's
independent public accountants and shall provide account analyses, fiscal year
summaries, and other audit-related schedules with respect to each Portfolio.
PFPC shall take all reasonable action in the performance of its duties under
this Agreement to assure that the necessary information is made available to
such accountants for the expression of their opinion, as required by the Fund.
10. DISASTER RECOVERY. PFPC shall enter into and shall maintain in
effect with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment to the
extent appropriate equipment is available. In the event of equipment failures,
PFPC shall, at no additional expense to the Fund, take reasonable steps to
minimize service interruptions. PFPC shall have no liability with respect to the
loss of data or service interruptions caused by equipment failure, provided such
loss or interruption is not caused by PFPC's own willful misfeasance, bad faith,
gross negligence or reckless disregard of its duties or obligations under this
Agreement.
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<PAGE>
11. COMPENSATION. As compensation for services rendered by PFPC during
the term of this Agreement, EII and the Fund, on behalf of each Portfolio, will
pay to PFPC a fee or fees as may be agreed to in writing by EII, the Fund and
PFPC.
12. INDEMNIFICATION. EII and the Fund, on behalf of each Portfolio,
agree to indemnify and hold harmless PFPC and its affiliates from all taxes,
charges, expenses, assessments, claims and liabilities (including, without
limitation, liabilities arising under the Securities Laws and any state or
foreign securities and blue sky laws, and amendments thereto), and expenses,
including (without limitation) attorneys' fees and disbursements arising
directly or indirectly from any action or omission to act which PFPC takes (i)
at the request or on the direction of or in reliance on the advice of the Fund
or (ii) upon Oral Instructions or Written Instructions. Neither PFPC, nor any of
its affiliates', shall be indemnified against any liability (or any expenses
incident to such liability) arising out of PFPC's or its affiliates' own willful
misfeasance, bad faith, gross negligence or reckless disregard of its duties and
obligations under this Agreement. Any amounts payable by the Fund hereunder
shall be satisfied only against the relevant Portfolio's assets and not against
the assets of any other investment portfolio of the Fund.
13. RESPONSIBILITY OF PFPC.
(a) PFPC shall be under no duty to take any action on behalf of
EII, the Fund or any Portfolio except as specifically set forth herein or as may
be specifically agreed to by PFPC in writing. PFPC shall be obligated to
exercise care and diligence in the performance of its duties hereunder, to act
in good faith and to use its best efforts, within reasonable limits, in
performing services provided for under this Agreement. PFPC shall be liable for
any damages
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<PAGE>
arising out of PFPC's failure to perform its duties under this Agreement to the
extent such damages arise out of PFPC's willful misfeasance, bad faith, gross
negligence or reckless disregard of such duties.
(b) Without limiting the generality of the foregoing or of any
other provision of this Agreement, (i) PFPC shall not be liable for losses
beyond its control, provided that PFPC has acted in accordance with the standard
of care set forth above; and (ii) PFPC shall not be liable for (A) the validity
or invalidity or authority or lack thereof of any Oral Instruction or Written
Instruction, notice or other instrument which conforms to the applicable
requirements of this Agreement, and which PFPC reasonably believes to be
genuine; or (B) subject to Section 10, delays or errors or loss of data
occurring by reason of circumstances beyond PFPC's control, including acts of
civil or military authority, national emergencies, labor difficulties, fire,
flood, catastrophe, acts of God, insurrection, war, riots or failure of the
mails, transportation, communication or power supply.
(c) Notwithstanding anything in this Agreement to the contrary,
neither PFPC nor its affiliates shall be liable to the Fund or to any Portfolio
for any consequential, special or indirect losses or damages which the Fund or
any Portfolio may incur or suffer by or as a consequence of PFPC's or any
affiliates' performance of the services provided hereunder, whether or not the
likelihood of such losses or damages was known by PFPC or its affiliates.
14. DESCRIPTION OF ACCOUNTING SERVICES ON A CONTINUOUS BASIS.
PFPC will perform the following accounting services with respect
to each Portfolio:
(i) Journalize investment, capital share and income and
expense activities;
(ii) Verify investment buy/sell trade tickets when
received from the investment
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<PAGE>
adviser for a Portfolio (the "Adviser") and transmit
trades to the Fund's custodian (the "Custodian") for
proper settlement;
(iii) Maintain individual ledgers for investment
securities;
(iv) Maintain historical tax lots for each security;
(v) Reconcile cash and investment balances of the Fund
with the Custodian, and provide the Adviser with the
beginning cash balance available for investment
purposes;
(vi) Update the cash availability throughout the day as
required by the Adviser;
(vii) Post to and prepare the Statement of Assets and
Liabilities and the Statement of Operations;
(viii) Calculate various contractual expenses (e.g.,
advisory and custody fees);
(ix) Monitor the expense accruals and notify an officer
of the Fund of any proposed adjustments;
(x) Control all disbursements and authorize such
disbursements upon Written Instructions;
(xi) Calculate capital gains and losses;
(xii) Determine net income;
(xiii) Obtain security market quotes from independent
pricing services approved by the Adviser, or if such
quotes are unavailable, then obtain such prices from
the Adviser, and in either case calculate the market
value of each Portfolio's Investments;
(xiv) Transmit or mail a copy of the daily portfolio
valuation to the Adviser;
(xv) Compute net asset value;
(xvi) Asappropriate, compute yields, total return, expense
ratios, portfolio turnover rate, and, if required,
portfolio average dollar-weighted maturity; and
(xvii) Prepare a monthly financial statement, which will
include the following items:
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<PAGE>
Schedule of Investments Statement of Assets and
Liabilities Statement of Operations Statement of
Changes in Net Assets Cash Statement Schedule of
Capital Gains and Losses.
15. DESCRIPTION OF SUB-ADMINISTRATION SERVICES ON A CONTINUOUS BASIS.
PFPC will perform the following sub-administration services with
respect to each Portfolio:
(i) Prepare quarterly broker security transactions summaries;
(ii) Prepare monthly security transaction listings;
(iii)Supply various normal and customary Portfolio and Fund
statistical data as requested on an ongoing basis;
(iv) Prepare for execution and file the Fund's Federal and state
tax returns;
(v) Prepare and file the Fund's Semi-Annual Reports with the SEC
on Form N-SAR;
(vi) Prepare and file with the SEC the Fund's annual,
semi-annual, and quarterly shareholder reports;
(vii)Assist in the preparation of registration statements and
other filings relating to the registration of Shares;
(viii) Monitor each Portfolio's status as a regulated investment
company under Sub-chapter M of the Internal Revenue Code of
1986, as amended;
(ix) Coordinate contractual relationships and communications
between the Fund and its contractual service providers; and
(x) Monitor the Fund's compliance with the amounts and
conditions of each state qualification;
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<PAGE>
(xi) Maintain the qualification of Fund shares in the
jurisdictions it is authorized to sell and prepare and file,
if necessary, reports with the Blue Sky authorities;
(xii)Prepare and file, if necessary, sales reports with each
state in which the Fund has qualified.
16. DURATION AND TERMINATION. This Agreement shall be effective on the date
first above written and shall continue in effect for an initial period of one
(1) years. Thereafter, this Agreement shall continue automatically for
successive terms of one (1) year; provided, however, that this Agreement may be
terminated by either party upon 120 days' prior written notice to the other
party.
17. NOTICES. All notices and other communications, including Written
Instructions, shall be in writing or by confirming telegram, cable, telex or
facsimile sending device. If notice is sent by confirming telegram, cable, telex
or facsimile sending device, it shall be deemed to have been given immediately.
If notice is sent by first-class mail, it shall be deemed to have been given
three days after it has been mailed. If notice is sent by messenger, it shall be
deemed to have been given on the day it is delivered. Notices shall be addressed
(a) if to PFPC, at 400 Bellevue Parkway, Wilmington, Delaware 19809; (b) if to
the Fund, at 667 Madison Avenue, 16th Floor, New York, NY 10021, Attn:
____________; or (c) if to neither of the foregoing, at such other address as
shall have been provided by like notice to the sender of any such notice or
other communication by the other party.
18. AMENDMENTS. This Agreement, or any term thereof, may be changed or
waived only by written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
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<PAGE>
19. DELEGATION; ASSIGNMENT. PFPC may assign its rights and delegate its
duties hereunder to any wholly-owned direct or indirect subsidiary of PNC Bank,
National Association or PNC Bank Corp., provided that (I) PFPC gives the Fund
thirty (30) days' prior written notice; (ii) the delegate (or assignee) agrees
with PFPC and the Fund to comply with all relevant provisions of the 1940 Act;
and (iii) PFPC and such delegate (or assignee) promptly provide such information
as the Fund may request, and respond to such questions as the Fund may ask,
relative to the delegation (or assignment), including (without limitation) the
capabilities of the delegate (or assignee).
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
21.FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
22. MISCELLANEOUS.
(a) Entire Agreement. This Agreement embodies the entire agreement
and understanding between the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof, provided that the parties
may embody in one or more separate documents their agreement, if any, with
respect to delegated duties and Oral Instructions.
(b) Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
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<PAGE>
(c) Governing Law. This Agreement shall be deemed to be a contract
made in Delaware and governed by Delaware law, without regard to principles of
conflicts of law.
(d) Partial Invalidity. If any provision of this Agreement shall
be held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
(e) Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(f) Facsimile Signatures. The facsimile signature of any party to
this Agreement shall constitute the valid and binding execution hereof by such
party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC INC.
By:
Name:_______________________________
Title:
E.I.I. REALTY SECURITIES FUND
By:
Name:_______________________________
Title:
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<PAGE>
EUROPEAN INVESTORS INCORPORATED
By:_________________________________
Name:_______________________________
Title:______________________________
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<PAGE>
EXHIBIT A
THIS EXHIBIT A, dated as of ____________, 1998, is Exhibit A to that
certain Sub-Administration and Accounting Services Agreement dated as of
____________, 1998 between PFPC Inc., European Investors Incorporated and E.I.I.
Realty Securities Fund.
PORTFOLIOS
[List all Portfolios here]
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<PAGE>
AUTHORIZED PERSONS APPENDIX
NAME (TYPE) SIGNATURE
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FORM OF AGREEMENT
TRANSFER AGENCY SERVICES AGREEMENT
THIS AGREEMENT is made as of___________________, 1998 by and between
PFPC INC., a Delaware corporation ("PFPC"), and E.I.I. Realty Securities Fund, a
Delaware business trust (the "Fund").
W I T N E S S E T H:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to retain PFPC to serve as transfer agent,
registrar, dividend disbursing agent and shareholder servicing agent to its
investment portfolios listed on Exhibit A attached hereto and made a part
hereof, as such Exhibit A may be amended from time to time (each a "Portfolio"),
and PFPC wishes to furnish such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. DEFINITIONS. AS USED IN THIS AGREEMENT:
(a) "1933 Act" means the Securities Act of 1933, as amended.
(b) "1934 Act" means the Securities Exchange Act of 1934, as
amended.
(c) "Authorized Person" means any officer of the Fund and any
other person duly authorized by the Fund's Board of Trustees to give Oral
Instructions and Written Instructions on behalf of the Fund and listed on the
Authorized Persons Appendix attached hereto and made a part hereof or any
amendment thereto as may be received by PFPC. An Authorized Person's
<PAGE>
scope of authority may be limited by the Fund by setting forth such limitation
in the Authorized Persons Appendix.
(d) "CEA" means the Commodities Exchange Act, as amended.
(e) "Oral Instructions" mean oral instructions received by
PFPC from an Authorized Person or from a person reasonably believed by PFPC to
be an Authorized Person.
(f) "SEC" means the Securities and Exchange Commission.
(g) "Securities Laws" mean the 1933 Act, the 1934 Act, the
1940 Act and the CEA.
(h) "Shares" mean the shares of beneficial interest of any
series or class of the Fund.
(i) "Written Instructions" mean written instructions signed by
an Authorized Person and received by PFPC. The instructions may be delivered by
hand, mail, tested telegram, cable, telex or facsimile sending device.
2. APPOINTMENT. The Fund hereby appoints PFPC to serve as transfer
agent, registrar, dividend disbursing agent and shareholder servicing agent to
the Fund in accordance with the terms set forth in this Agreement. PFPC accepts
such appointment and agrees to furnish such services.
3. DELIVERY OF DOCUMENTS. The Fund has provided or, where applicable,
will provide PFPC with the following:
(a) Certified or authenticated copies of the resolutions of
the Fund's Board of Trustees, approving the appointment of PFPC or its
affiliates to provide services to the Fund and approving this Agreement;
(b) A copy of the Fund's most recent effective registration
statement;
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<PAGE>
(c) A copy of the advisory agreement with respect to each
investment Portfolio of the Fund (each, a Portfolio);
(d) A copy of the distribution agreement with respect to each
class of Shares of the Fund;
(e) A copy of each Portfolio's administration agreements if
PFPC is not providing the Portfolio with such services;
(f) Copies of any shareholder servicing agreements made in
respect of the Fund or a Portfolio; and
(g) Copies (certified or authenticated where applicable) of
any and all amendments or supplements to the foregoing.
4. COMPLIANCE WITH RULES AND REGULATIONS. PFPC undertakes to comply
with all applicable requirements of the Securities Laws and any laws, rules and
regulations of governmental authorities having jurisdiction with respect to the
duties to be performed by PFPC hereunder. Except as specifically set forth
herein, PFPC assumes no responsibility for such compliance by the Fund or any of
its investment portfolios.
5. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PFPC shall
act only upon Oral Instructions and Written Instructions.
(b) PFPC shall be entitled to rely upon any Oral Instructions
and Written Instructions it receives from an Authorized Person (or from a person
reasonably believed by PFPC to be an Authorized Person) pursuant to this
Agreement. PFPC may assume that any Oral Instruction or Written Instruction
received hereunder is not in any way inconsistent with the provisions of
organizational documents or this Agreement or of any vote, resolution or
proceeding of the Fund's Board of Trustees or of the Fund's shareholders, unless
and until
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<PAGE>
PFPC receives Written Instructions to the contrary.
(c) The Fund agrees to forward to PFPC Written Instructions
confirming Oral Instructions so that PFPC receives the Written Instructions by
the close of business on the same day that such Oral Instructions are received.
The fact that such confirming Written Instructions are not received by PFPC
shall in no way invalidate the transactions or enforceability of the
transactions authorized by the Oral Instructions. Where Oral Instructions or
Written Instructions reasonably appear to have been received from an Authorized
Person, PFPC shall incur no liability to the Fund in acting upon such Oral
Instructions or Written Instructions provided that PFPC's actions comply with
the other provisions of this Agreement.
6. RIGHT TO RECEIVE ADVICE.
(a) Advice of the Fund. If PFPC is in doubt as to any action
it should or should not take, PFPC may request directions or advice, including
Oral Instructions or Written Instructions, from the Fund.
(b) Advice of Counsel. If PFPC shall be in doubt as to any
question of law pertaining to any action it should or should not take, PFPC may
request advice at its own cost from such counsel of its own choosing (who may be
counsel for the Fund, the Fund's investment adviser or PFPC, at the option of
PFPC).
(c) Conflicting Advice. In the event of a conflict between
directions, advice or Oral Instructions or Written Instructions PFPC receives
from the Fund, and the advice it receives from counsel, PFPC may rely upon and
follow the advice of counsel. In the event PFPC so relies on the advice of
counsel, PFPC remains liable for any action or omission on the part of PFPC
which constitutes willful misfeasance, bad faith, gross negligence or reckless
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<PAGE>
disregard by PFPC of any duties, obligations or responsibilities set forth in
this Agreement.
(d) Protection of PFPC. PFPC shall be protected in any action
it takes or does not take in reliance upon directions, advice or Oral
Instructions or Written Instructions it receives from the Fund or from counsel
and which PFPC believes, in good faith, to be consistent with those directions,
advice or Oral Instructions or Written Instructions. Nothing in this section
shall be construed so as to impose an obligation upon PFPC (i) to seek such
directions, advice or Oral Instructions or Written Instructions, or (ii) to act
in accordance with such directions, advice or Oral Instructions or Written
Instructions unless, under the terms of other provisions of this Agreement, the
same is a condition of PFPC's properly taking or not taking such action. Nothing
in this subsection shall excuse PFPC when an action or omission on the part of
PFPC constitutes willful misfeasance, bad faith, gross negligence or reckless
disregard by PFPC of any duties, obligations or responsibilities set forth in
this Agreement.
7. RECORDS; VISITS. The books and records pertaining to the Fund, which
are in the possession or under the control of PFPC, shall be the property of the
Fund. Such books and records shall be prepared and maintained as required by the
1940 Act and other applicable securities laws, rules and regulations. The Fund
and Authorized Persons shall have access to such books and records at all times
during PFPC's normal business hours. Upon the reasonable request of the Fund,
copies of any such books and records shall be provided by PFPC to the Fund or to
an Authorized Person, at the Fund's expense.
8. CONFIDENTIALITY. PFPC agrees to keep confidential all records of the
Fund and information relating to the Fund and its shareholders, unless the
release of such records or
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<PAGE>
information is otherwise consented to, in writing, by the Fund. The Fund agrees
that such consent shall not be unreasonably withheld and may not be withheld
where PFPC may be exposed to civil or criminal contempt proceedings or when
required to divulge such information or records to duly constituted authorities.
9. COOPERATION WITH ACCOUNTANTS. PFPC shall cooperate with the Fund's
independent public accountants and shall take all reasonable actions in the
performance of its obligations under this Agreement to ensure that the necessary
information is made available to such accountants for the expression of their
opinion, as required by the Fund.
10. DISASTER RECOVERY. PFPC shall enter into and shall maintain in
effect with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment to the
extent appropriate equipment is available. In the event of equipment failures,
PFPC shall, at no additional expense to the Fund, take reasonable steps to
minimize service interruptions. PFPC shall have no liability with respect to the
loss of data or service interruptions caused by equipment failure, provided such
loss or interruption is not caused by PFPC's own willful misfeasance, bad faith,
gross negligence or reckless disregard of its duties or obligations under this
Agreement.
11. COMPENSATION. As compensation for services rendered by PFPC during
the term of this Agreement, the Fund will pay to PFPC a fee or fees as may be
agreed to from time to time in writing by the Fund and PFPC.
12. INDEMNIFICATION. The Fund agrees to indemnify and hold harmless
PFPC and its affiliates from all taxes, charges, expenses, assessments, claims
and liabilities (including, without limitation, liabilities arising under the
Securities Laws and any state and foreign securities and
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<PAGE>
blue sky laws, and amendments thereto), and expenses, including (without
limitation) attorneys' fees and disbursements, arising directly or indirectly
from (i) any action or omission to act which PFPC takes (a) at the request or on
the direction of or in reliance on the advice of the Fund or (b) upon Oral
Instructions or Written Instructions or (ii) the acceptance, processing and/or
negotiation of checks or other methods utilized for the purchase of Shares.
Neither PFPC, nor any of its affiliates, shall be indemnified against any
liability (or any expenses incident to such liability) arising out of PFPC's or
its affiliates' own willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties and obligations under this Agreement, provided that in
the absence of a finding to the contrary the acceptance, processing and/or
negotiation of a fraudulent payment for the purchase of Shares shall be presumed
not to have been the result of PFPC's or its affiliates own willful misfeasance,
bad faith, gross negligence or reckless disregard of such duties and
obligations.
13. RESPONSIBILITY OF PFPC.
(a) PFPC shall be under no duty to take any action on behalf
of the Fund except as specifically set forth herein or as may be specifically
agreed to by PFPC in writing. PFPC shall be obligated to exercise care and
diligence in the performance of its duties hereunder, to act in good faith and
to use its best efforts, within reasonable limits, in performing services
provided for under this Agreement. PFPC shall be liable for any damages arising
out of PFPC's failure to perform its duties under this Agreement to the extent
such damages arise out of PFPC's willful misfeasance, bad faith, gross
negligence or reckless disregard of such duties.
(b) Without limiting the generality of the foregoing or of any
other provision of this Agreement, (i) PFPC, shall not be liable for losses
beyond its control, provided that PFPC
- 7 -
<PAGE>
has acted in accordance with the standard of care set forth above; and (ii) PFPC
shall not be under any duty or obligation to inquire into and shall not be
liable for (A) the validity or invalidity or authority or lack thereof of any
Oral Instruction or Written Instruction, notice or other instrument which
conforms to the applicable requirements of this Agreement, and which PFPC
reasonably believes to be genuine; or (B) subject to Section 10, delays or
errors or loss of data occurring by reason of circumstances beyond PFPC's
control, including acts of civil or military authority, national emergencies,
labor difficulties, fire, flood, catastrophe, acts of God, insurrection, war,
riots or failure of the mails, transportation, communication or power supply.
(c) Notwithstanding anything in this Agreement to the
contrary, neither PFPC nor its affiliates shall be liable to the Fund for any
consequential, special or indirect losses or damages which the Fund may incur or
suffer by or as a consequence of PFPC's or its affiliates' performance of the
services provided hereunder, whether or not the likelihood of such losses or
damages was known by PFPC or its affiliates.
14. DESCRIPTION OF SERVICES.
(a) Services Provided on an Ongoing Basis, If Applicable.
(i) Calculate 12b-1 payments;
(ii) Maintain proper shareholder registrations;
(iii) Review new applications and correspond with
shareholders to complete or correct information;
(iv) Direct payment processing of checks or wires;
(v) Prepare and certify stockholder lists in con-
junction with proxy solicitations;
- 8 -
<PAGE>
(vi) Countersign share certificates;
(vii) Prepare and mail to shareholders confirmation of
activity;
(viii) Provide toll-free lines for direct shareholder use,
plus customer liaison staff for on-line inquiry
response;
(ix) Mail duplicate confirmations to broker-dealers of
their clients' activity, whether executed through
the broker-dealer or directly with PFPC;
(x) Provide periodic shareholder lists and statistics to
the clients;
(xi) Provide detailed data for underwriter/broker
confirmations;
(xii) Prepare periodic mailing of year-end tax and
statement information;
(xiii) Notify on a timely basis the investment adviser,
accounting agent, and custodian of fund activity;
and
(xiv) Perform other participating broker-dealer
shareholder services as may be agreed upon from time
to time.
(b) Services Provided by PFPC Under Oral Instructions or
Written Instructions.
(i) Accept and post daily Fund purchases and
redemptions;
(ii) Accept, post and perform shareholder transfers and
exchanges;
(iii) Pay dividends and other distributions;
(iv) Solicit and tabulate proxies; and
(v) Issue and cancel certificates (when requested in
writing by the shareholder).
(c) Purchase of Shares. PFPC shall issue and credit an account
of an investor, in the manner described in the Fund's prospectus, once it
receives:
(i) A purchase order;
(ii) Proper information to establish a shareholder
account; and
- 9 -
<PAGE>
(iii) Confirmation of receipt or crediting of funds for
such order to the Fund's custodian.
(d) Redemption of Shares. PFPC shall redeem Shares only if
that function is properly authorized by the certificate of incorporation or
resolution of the Fund's Board of Trustees. Shares shall be redeemed and payment
therefor shall be made in accordance with the Fund's prospectus, when the
recordholder tenders Shares in proper form and directs the method of redemption.
If Shares are received in proper form, Shares shall be redeemed before the funds
are provided to PFPC from the Fund's custodian (the "Custodian"). If the
recordholder has not directed that redemption proceeds be wired, when the
Custodian provides PFPC with funds, the redemption check shall be sent to and
made payable to the recordholder, unless:
(i) the surrendered certificate is drawn to the order of
an assignee or holder and transfer authorization is
signed by the recordholder; or
(ii) Transfer authorizations are signed by the
recordholder when Shares are held in book-entry
form.
When a broker-dealer notifies PFPC of a redemption desired by
a customer, and the Custodian provides PFPC with funds, PFPC shall prepare and
send the redemption check to the broker-dealer and made payable to the
broker-dealer on behalf of its customer.
(e) Dividends and Distributions. Upon receipt of a resolution
of the Fund's Board of Trustees authorizing the declaration and payment of
dividends and distributions, PFPC shall issue dividends and distributions
declared by the Fund in Shares, or, upon shareholder election, pay such
dividends and distributions in cash, if provided for in the Fund's prospectus.
Such issuance or payment, as well as payments upon redemption as described
above, shall be made after deduction and payment of the required amount of funds
to be withheld in accordance
- 10 -
<PAGE>
with any applicable tax laws or other laws, rules or regulations. PFPC shall
mail to the Fund's shareholders such tax forms and other information, or
permissible substitute notice, relating to dividends and distributions paid by
the Fund as are required to be filed and mailed by applicable law, rule or
regulation. PFPC shall prepare, maintain and file with the IRS and other
appropriate taxing authorities reports relating to all dividends above a
stipulated amount paid by the Fund to its shareholders as required by tax or
other law, rule or regulation.
(f) Shareholder Account Services.
(i) PFPC may arrange, in accordance with the prospectus,
for issuance of Shares obtained through:
- Any pre-authorized check plan; and
- Direct purchases through broker wire orders, checks
and applications.
(ii) PFPC may arrange, in accordance with the prospectus,
for a shareholder's:
- Exchange of Shares for shares of another fund with
which the Fund has exchange privileges;
- Automatic redemption from an account where that
shareholder participates in a automatic redemption
plan; and/or
- Redemption of Shares from an account with a
checkwriting privilege.
(g) Communications to Shareholders. Upon timely Written
Instructions, PFPC shall mail all communications by the Fund to its
shareholders, including:
(i) Reports to shareholders;
(ii) Confirmations of purchases and sales of Fund shares;
(iii) Monthly or quarterly statements;
(iv) Dividend and distribution notices;
(v) Proxy material; and
- 11 -
<PAGE>
(vi) Tax form information.
In addition, PFPC will receive and tabulate the proxy cards
for the meetings of the Fund's shareholders.
(h) Records. PFPC shall maintain records of the accounts for
each shareholder showing the following information:
(i) Name, address and United States Tax Identification
or Social Security number;
(ii) Number and class of Shares held and number and class
of Shares for which certificates, if any, have been
issued, including certificate numbers and
denominations;
(iii) Historical information regarding the account of each
shareholder, including dividends and distributions
paid and the date and price for all transactions on
a shareholder's account;
(iv) Any stop or restraining order placed against a
shareholder's account;
(v) Any correspondence relating to the current
maintenance of a shareholder's account;
(vi) Information with respect to withholdings; and
(vii) Any information required in order for the transfer
agent to perform any calculations contemplated or
required by this Agreement.
(i) Lost or Stolen Certificates. PFPC shall place a stop
notice against any certificate reported to be lost or stolen and comply with all
applicable federal regulatory requirements for reporting such loss or alleged
misappropriation. A new certificate shall be registered and issued only upon:
(i) The shareholder's pledge of a lost instrument bond
or such other appropriate indemnity bond issued by a
surety company approved by PFPC; and
- 12 -
<PAGE>
(ii) Completion of a release and indemnification
agreement signed by the shareholder to protect PFPC
and its affiliates.
(j) Shareholder Inspection of Stock Records. Upon a request
from any Fund shareholder to inspect stock records, PFPC will notify the Fund
and the Fund will issue instructions granting or denying each such request.
Unless PFPC has acted contrary to the Fund's instructions, the Fund agrees and
does hereby, release PFPC from any liability for refusal of permission for a
particular shareholder to inspect the Fund's stock records.
(k) Withdrawal of Shares and Cancellation of Certificates.
Upon receipt of Written Instructions, PFPC shall cancel outstanding certificates
surrendered by the Fund to reduce the total amount of outstanding shares by the
number of shares surrendered by the Fund.
15. DURATION AND TERMINATION. This Agreement shall be effective on the
date first above written and shall continue in effect for an initial period of
one (1) year. Thereafter, this Agreement shall continue automatically for
successive terms of one (1) year; provided, however, that this Agreement may be
terminated by either party upon 120 days' prior written notice to the other
party.
16. NOTICES. All notices and other communications, including Written
Instructions, shall be in writing or by confirming telegram, cable, telex or
facsimile sending device. Notices shall be addressed (a) if to PFPC, at 400
Bellevue Parkway, Wilmington, Delaware 19809; (b) if to the Fund, at 667 Madison
Avenue, 16th Floor, New York, NY 10021, Attn:__________or (c) if to neither of
the foregoing, at such other address as shall have been given by like notice to
the sender of any such notice or other communication by the other party. If
notice is
- 13 -
<PAGE>
sent by confirming telegram, cable, telex or facsimile sending device, it shall
be deemed to have been given immediately. If notice is sent by first-class mail,
it shall be deemed to have been given three days after it has been mailed. If
notice is sent by messenger, it shall be deemed to have been given on the day it
is delivered.
17. AMENDMENTS. This Agreement, or any term thereof, may be changed or
waived only by a written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
18. DELEGATION; ASSIGNMENT. PFPC may assign its rights and delegate its
duties hereunder to any wholly-owned direct or indirect subsidiary of PNC Bank,
National Association or PNC Bank Corp., provided that (i) PFPC gives the Fund
thirty (30) days' prior written notice; (ii) the delegate (or assignee) agrees
with PFPC and the Fund to comply with all relevant provisions of the 1940 Act;
and (iii) PFPC and such delegate (or assignee) promptly provide such information
as the Fund may request, and respond to such questions as the Fund may ask,
relative to the delegation (or assignment), including (without limitation) the
capabilities of the delegate (or assignee).
19. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
- 14 -
<PAGE>
21. MISCELLANEOUS.
(a) Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties and supersedes all prior
agreements and understandings relating to the subject matter hereof, provided
that the parties may embody in one or more separate documents their agreement,
if any, with respect to delegated duties and Oral Instructions.
(b) Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(c) Governing Law. This Agreement shall be deemed to be a
contract made in Delaware and governed by Delaware law, without regard to
principles of conflicts of law.
(d) Partial Invalidity. If any provision of this Agreement
shall be held or made invalid by a court decision, statute, rule or otherwise,
the remainder of this Agreement shall not be affected thereby.
(e) Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(f) Facsimile Signatures. The facsimile signature of any party
to this Agreement shall constitute the valid and binding execution hereof by
such party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
- 15 -
<PAGE>
PFPC INC.
By:
--------------------------
Title:
----------------------
E.I.I. REALTY SECURITIES FUND
By:
--------------------------
Title:
----------------------
- 16 -
<PAGE>
EXHIBIT A
THIS EXHIBIT A, dated as of________, 1998, is Exhibit A to that certain
Transfer Agency Services Agreement dated as of________, 1998 between PFPC Inc.
and E.I.I. Realty Securities Fund.
PORTFOLIOS
[List all Portfolios here]
- 17 -
<PAGE>
AUTHORIZED PERSONS APPENDIX
NAME (TYPE) SIGNATURE
- ----------------------- -----------------------
- ----------------------- -----------------------
- ----------------------- -----------------------
- ----------------------- -----------------------
- ----------------------- -----------------------
- ----------------------- -----------------------
- 18-
FORM OF
SHAREHOLDER SERVICING AGREEMENT
E.I.I. REALTY SECURITIES TRUST
------------------
------------------------
To: _______________
We, the E.I.I. Realty Securities Trust (the "Trust"), on behalf of the
Adviser Shares and Investor Shares (the "Shares") of the E.I.I. Realty
Securities Fund (the "Fund"), wish to enter into this Shareholder Servicing
Agreement (the "Agreement") with you concerning the provision of support
services to your clients ("Clients") who may from time to time beneficially own
Shares of the Fund.
The terms and conditions of this Agreement are as follows:
SECTION 1. You agree to provide the following support services to
Clients who may from time to time beneficially own Shares: (i) answering
customer inquiries regarding account matters; (ii) assisting shareholders in
designating and changing various account options; (iii) aggregating and
processing purchase and redemption orders and transmitting and receiving funds
for shareholder orders; (iv) transmitting, on behalf of the Fund, proxy
statements, prospectuses and shareholder reports to shareholders and tabulating
proxies; (v) processing dividend payments and providing subaccounting services
for Fund shares held beneficially; and (vi) providing such other services as the
Fund or a shareholder may request to the extent you are permitted to do so under
applicable statutes, rules and regulations.
SECTION 2. You will provide such office space and equipment, telephone
facilities and personnel (which may be any part of the space, equipment and
facilities currently used in your business, or any personnel employed by you) as
may be reasonably necessary or beneficial in order to provide the aforementioned
services and assistance to Clients.
SECTION 3. Neither you nor any of your officers, employees or agents
are authorized to make any representations concerning us or the Shares except
those contained in our then current prospectus and statement of additional
information, copies of which will be supplied by us to you, or in such
supplemental literature or advertising as may be authorized by us in writing.
SECTION 4. For all purposes of this Agreement you will be deemed to be
an independent contractor, and will have no authority to act as agent for us in
any matter or in any respect. By your written acceptance of this Agreement, you
agree to and do release, indemnify and hold us harmless from and against any and
all direct or indirect liabilities or losses resulting from requests,
directions, actions, or inactions of or by you or your officers, employees or
agents regarding your responsibilities hereunder or the purchase, redemption,
transfer or registration of Shares (or orders relating to the same) by or on
behalf of Clients. You and your employees will, upon request, be available
during normal business hours to consult with us or our designees concerning the
performance of your responsibilities under this Agreement.
<PAGE>
SECTION 5. In consideration of the services and facilities provided by
you hereunder, we will pay to you, and you will accept as full payment therefor,
a fee at the annual rate of 0.25% of the average daily net asset value of the
Adviser Shares or Investors Shares, respectively, beneficially owned by your
Clients for whom you are the dealer of record or holder of record or with whom
you have a servicing relationship (the "Clients' Shares"), which fee will be
computed daily (on the basis of 360-day year) and payable monthly. For purposes
of determining the fees payable under this Section 5, the average daily net
asset value of the Clients' Shares will be computed in the manner specified in
our Registration Statement (as the same is in effect from time to time) in
connection with the computation of the net asset value of Shares for purposes of
purchases and redemptions. By your written acceptance of this Agreement, you
agree to and do waive such portion of any fee payable to you hereunder to the
extent necessary to assure that such fee and other expenses required to be
accrued by us on any day with respect to the Clients' Shares in the Fund that
declares its net investment income as a dividend to shareholders on a daily
basis does not exceed the income to be accrued by us to such Shares on that day.
The fee rate stated above may be prospectively increased or decreased by us, in
our sole discretion, at any time upon notice to you. Further, we may, in our
discretion and without notice, suspend or withdraw the sale of Shares, including
the sale of Shares to you for the account of any Client or Clients.
SECTION 6. Any person authorized to direct the disposition of monies
paid or payable by us pursuant to this Agreement will provide to our Board of
Trustees, and our Trustees will review, at least quarterly, a written report of
the amounts so expended and the purposes for which such expenditures were made.
In addition, you will furnish us or our designees with such information as we or
they may reasonably request (including, without limitation, periodic
certifications confirming the provision to Clients of the services described
herein), and will otherwise cooperate with us and our designees (including,
without limitation, any auditors designated by us), in connection with the
preparation of reports to our Board of Trustees concerning this Agreement and
the monies paid or payable by us pursuant hereto, as well as any other reports
or filings that may be required by law.
SECTION 7. We may enter into other similar Shareholder Servicing
Agreements with any other person or persons without your consent.
SECTION 8. By your written acceptance of this Agreement, you represent,
warrant and agree that: (i) the compensation payable to you in connection with
the investment of your Clients' assets in Shares will be disclosed by you to
your Clients, will be authorized by your Clients and will not be excessive; and
(ii) the services provided by you under this Agreement will in no event be
primarily intended to result in the sale of Shares.
SECTION 9. This Agreement will become effective on the date a fully
executed copy of this Agreement is received by us or our designee. Unless sooner
terminated, this Agreement will continue automatically for successive annual
periods provided such continuance is specifically approved at least annually by
us in the manner described in Section 12. This Agreement is terminable without
penalty at any time by us (which termination may be by a vote of a majority of
the Disinterested Trustees as defined in Section 12) or by you upon written
notice to the other party hereto.
<PAGE>
SECTION 10. All notices and other communications to either you or us
will be duly given if mailed, telegraphed, telexed or transmitted by similar
telecommunication device to the appropriate address stated herein, or to such
other address as either party shall so provide the other.
SECTION 11. This Agreement will be construed in accordance with the
laws of the State of Delaware and is non-assignable by the parties hereto.
SECTION 12. This Agreement has been approved by vote of a majority of
(i) our Board of Trustees and (ii) those Trustees who are not "interested
persons" (as defined in the Investment Company Act of 1940) of us and have no
direct or indirect financial interest in this Agreement ("Disinterested
Trustees"), cast in person at a meeting called for the purpose of voting on such
approval.
SECTION 13. The names "E.I.I. Realty Securities Trust" and the "Board
of Trustees" refer respectively to the Trust created and the Trustees, as
trustees but not individually or personally, acting from time to time under a
Certificate of Trust filed at the office of the State Secretary of the State of
Delaware on December 22, 1997. The obligations of "E.I.I. Realty Securities
Trust" entered into in the name or on behalf thereof by any of the Trustees,
representatives or agents are made not individually but in such capacities, and
are not binding upon any of the Trustees, Shareholders or representatives of the
Trust personally, but bind only the Trust Property (as defined in the
Certificate of Trust), and all persons dealing with any class of Shares of ours
must look solely to the Trust Property belonging to such class for the
enforcement of any claims against us.
If you agree to be legally bound by the provisions of this Agreement,
please sign a copy of this letter where indicated below and promptly return it
to us, _____________________.
Very truly yours,
E.I.I. REALTY SECURITIES TRUST
on behalf of E.I.I. Realty Securities Fund
Date: ____________________ By: ______________________
(Authorized Officer)
Title:
Accepted and Agreed to:
Date: ____________________ By: ______________________
(Authorized Officer)
Title:
[LETTERHEAD OF KRAMER, LEVIN, NAFTALIS & FRANKEL]
May 6, 1998
E.I.I. Realty Securities Trust
667 Madison Avenue, 16th Floor
New York, New York 10021
Re: E.I.I. Realty Securities Trust
File No. 333-45959
------------------
Gentlemen:
We hereby consent to the reference to our firm as counsel in this
Pre-Effective Amendment No. 1 to the Registration Statement on Form N-1A.
Very truly yours,
/s/Kramer, Levin, Naftalis & Frankel
------------------------------------
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent Auditors"
in the Prospectus in this Registration Statement (Form N-1A No. 333-45959) of
E.I.I. Realty Securities Trust.
/s/ERNST & YOUNG LLP
--------------------
ERNST & YOUNG LLP
New York, New York
May 6, 1998
[FORM OF INVESTMENT LETTER]
E.I.I. REALTY SECURITIES, INC.
667 Madison Avenue
New York, NY 10021
May __, 1998
E.I.I. Realty Securities Fund
667 Madison Avenue
New York, NY 10021
Ladies/Gentlemen:
E.I.I. Realty Securities, Inc. ("E.I.I.") hereby offers to purchase __
shares of E.I.I. Realty Securities Fund (the "Seed Capital Shares"). This letter
will confirm that E.I.I. is purchasing the Seed Capital Shares for its own
account for investment purposes only and not with a view to reselling or
otherwise distributing such shares.
E.I.I. agrees and hereby undertakes that, in the event any of the Seed
Capital Shares are redeemed during the period of amortization of the Fund's
organizational expenses, the redemption proceeds will be reduced by any
unamortized organizational expenses in the same proportion as the number of Seed
Capital Shares being redeemed bears to the number of Seed Capital Shares
outstanding at the time of redemption.
Sincerely,
__________________________
Richard J. Adler
Managing Director
E.I.I. Realty Securities, Inc.
FORM OF
RULE 12b-1 DISTRIBUTION PLAN
<PAGE>
PLAN FOR PAYMENT OF CERTAIN EXPENSES
FOR DISTRIBUTION OF SHARES
A Plan (the "Plan") pertaining to Investor Shares of the E.I.I. Realty
Securities Fund (the "Fund"), a series of the E.I.I. Realty Securities Trust
(the "Trust"), a Delaware business trust and an open-end, diversified management
investment company registered under the Investment Company Act of 1940, as
amended (the "Act"), adopted pursuant to Section 12(b) of the Act and Rule 12b-1
promulgated thereunder ("Rule 12b-1").
1. Distribution Payments. (a) The Fund, either directly or through
E.I.I. Realty Securities, Inc. (the "Investment Adviser"), may make payments
periodically (i) to a distributor of Investor Shares of the Fund (the
"Distributor") or to any broker-dealer (a "Broker") who is registered under the
Securities Exchange Act of 1934 and a member in good standing of the National
Association of Securities Dealers, Inc. and who has entered into a selected
dealer agreement with the Distributor, (ii) to other persons or organizations
("Distribution Agents") who have entered into shareholder servicing agreements
with the Trust on behalf of the Fund for the distribution of the Fund's Investor
Shares, or (iii) to the Distributor, a Broker, the Investment Advisor, a
Distribution Agent, or any other person for expenses associated with
distribution of the Fund's Investor Shares, including the compensation of the
sales personnel of the Distributor.
(b) The schedule of such fees and the basis upon which such fees will
be paid shall be determined from time to time by the Distributor and the
Investment Adviser subject to approval by the Board of Trustees of the Trust.
<PAGE>
(c) Payments may also be made for any advertising and promotional
expenses relating to selling efforts, including but not limited to the
incremental costs of printing prospectuses, statements of additional
information, annual reports and other periodic reports for distribution to
persons who are not shareholders of the Fund; costs of preparing and
distributing any other supplemental sales literature; costs of radio,
television, newspaper and other advertising; telecommunications expenses,
including the cost of telephones, telephone lines and other communications
equipment, incurred by or for the Distributor or other person in carrying out
its obligations under an agreement with the Trust.
(d) The aggregate amount of all payments by the Fund in any fiscal
year, to the Distributor, Brokers, the Investment Advisor, Distribution Agents
and for advertising and promotional expenses pursuant to paragraphs (a), (b),
(c) of this Section 2 shall not exceed 0.75% of the average daily net asset
value attributable to Investor Shares of the Fund on an annual basis for such
fiscal year, or such lesser amounts as determined appropriate. The Plan will
only make payments for expenses actually incurred on a first-in, first-out
basis. The amount of expenses incurred in any year may not exceed the rate of
reimbursement set forth in the Plan. The unreimbursed amounts may be recovered
through future payments under the Plan. Carry-over amounts are not limited in
the number of years they may be carried forward. If the Plan is terminated in
accordance with its terms, the obligations of the Fund to make payments pursuant
to the Plan will cease and the Fund will not be required to make any payments
past the date the Plan terminates.
2. Reports. Quarterly, in each year that this Plan remains in effect,
the Trust's Principal Financial Officer shall prepare and furnish to the Board
of Trustees of the
-2-
<PAGE>
Trust a written report, complying with the requirements of Rule 12b-l, setting
forth the amounts expended by the Fund under the Plan and purposes for which
such expenditures were made.
3. Approval of Plan. This Plan shall become effective upon approval of
the Plan as it pertains to the Fund and the form of Selected Dealer Agreement,
by a majority vote of the Board of Trustees, including a majority of those
Trustees who are not interested persons of the Trust (as defined in Section
2(a)(19) of the Act) and who have no direct or indirect financial interest in
the operation of the Plan or in any agreements related to it (the "Qualified
Trustees"), cast in person at a meeting called for the purpose of voting on the
Plan.
4. Term. This Plan as it pertains to the Fund shall remain in effect
for one year from its adoption date and may be continued thereafter if this Plan
and all related agreements are approved at least annually by a majority vote of
the Trustees, including the Qualified Trustees, cast in person at a meeting
called for the purpose of voting on such Plan and agreements. This Plan may not
be amended as it pertains to the Fund in order to increase materially the amount
to be spent for distribution assistance without shareholder approval. All
material amendments to this Plan must be approved by a vote of the Board of
Trustees, and of the Qualified Trustees, cast in person at a meeting called for
the purpose of voting thereon.
5. Termination. This Plan may be terminated as it pertains to the Fund
at any time by a majority vote of the Qualified Trustees or by vote of a
majority of the outstanding voting securities of the Fund, as defined in section
2(a)(42) of the Act.
-3-
<PAGE>
6. Nomination of "Disinterested" Trustees. While this Plan shall be in
effect, the selection and nomination of the "disinterested" Trustees of the
Trust shall be committed to the discretion of the Qualified Trustees then in
office.
7. Miscellaneous. (a) Any termination or noncontinuance of (i) a
Selected Dealer Agreement between the Distributor and a particular Broker, or
(ii) any other Agreement between the Investment Advisor or the Trust on behalf
of the Fund and a particular person or organization, shall have no effect on any
similar agreements between Brokers or other persons and the Fund, the Investment
Advisor or the Distributor pursuant to this Plan.
(b) Neither the Distributor, the Investment Advisor nor the Fund shall
be under any obligation because of this Plan to execute any Selected Dealer
Agreement with any Broker or any other Agreement with any person or
organization.
(c) All agreements with any person or organization relating to the
implementation of this Plan shall be in writing and any agreement related to
this Plan shall be subject to termination, without penalty, pursuant to the
provisions of Section 5 hereof.
dated: __________________, 1998
-4-
<PAGE>
[Name and Address of Distributor]
Re: Selected Dealer Agreement for
the E.I.I. Realty Securities Trust
----------------------------------
Gentlemen:
We understand that the E.I.I. Realty Securities Trust (the "Trust"), on
behalf of the E.I.I. Realty Securities Fund (the "Fund"), has adopted a plan
(the "Plan") pertaining to its Investor Shares pursuant to Rule 12b-l of the
Investment Company Act of 1940, as amended (the "Act"), for making payments to
selected brokers for distribution assistance of the Fund's Investor Shares.
We desire to enter into an agreement with you (the "Agreement") for the
sale and distribution of the Investor Shares of the Fund for which you are
Distributor and whose Investor Shares are offered to the public at net asset
value plus any initial sales charge as set forth in the current prospectus. Upon
acceptance of this Agreement by you, we understand that we may offer and sell
Investor Shares of the Fund, subject, however, to all of the terms and
conditions hereof and to your right to suspend or terminate the sale of such
securities.
1. We understand that the Investor Shares of the Fund covered by this
Agreement will be offered and sold at the public offering price. The public
offering price is the net asset value described in the Fund's current Prospectus
in effect at the time the order for such Investor Shares is confirmed and
accepted on your behalf by the Fund plus any initial sales charge. We further
understand that all purchase requests and applications submitted by us are
subject to acceptance or rejection in the Fund's or your sole discretion.
2. We certify that we are members of the National Association of
Securities Dealers, Inc. ("NASD") and agree to maintain membership in said
association, or in the alternative, that we are foreign brokers not eligible for
membership in said association. In either case, we agree to abide by all the
rules and regulations of the NASD which are binding upon underwriters and
brokers in the distribution of the shares of open-end investment companies,
including without limitation, Section 26 of Article III of the Rules of Fair
Practice, all of which are incorporated herein as if set forth in full. We
further agree to comply with all applicable state and Federal laws and the rules
and regulations of authorized regulatory agencies. We agree that we will not
sell or offer for sale, shares of the Fund in any state or jurisdiction where
they are not exempt from registration or have not been qualified for sale.
3. We will offer and sell the Investor Shares of the Fund covered by
this Agreement only in accordance with the terms and conditions of its then
current Prospectus,
<PAGE>
and we will make no representations not included in said Prospectus or in any
authorized supplemental material supplied by you. We will use our best efforts
in the development and promotion of sales of the Investor Shares covered by this
Agreement and agree to be responsible for the proper instruction and training of
all sales personnel employed by us, in order that the Investor Shares will be
offered in accordance with the terms and conditions of this Agreement and all
applicable laws, rules and regulations. We agree to hold you harmless and
indemnify you in the event that we, or any of our sales representatives, should
violate any law, rule or regulation, or any provisions of this Agreement, which
may result in liability to you; and in the event you determine to refund any
amount paid by any investor by reason of any such violation on our part, we
shall return to you any distribution assistance payments previously paid or
allowed by you to us with respect to the transaction for which the refund is
made. All expenses which we incur in connection with our activities under this
Agreement shall be borne by us.
4. For purposes of this Agreement "Qualified Accounts" shall mean:
accounts of customers of ours who have purchased Investor Shares of the Fund and
who use our facilities to communicate with the Fund or to effect redemptions or
additional purchases of Investor Shares and with respect to which we provide
shareholder and administration services, which services may include, without
limitation: answering inquiries regarding the Fund; assistance to customers in
changing dividend options, account designations and addresses; performance of
sub-accounting; establishment and maintenance of shareholder accounts and
records; processing purchase and redemption transactions; automatic investment
in Investor Shares of customer account cash balances; providing periodic
statements showing a customer's account balance and the integration of such
statements with those of other transactions and balances in the customer's other
accounts serviced by us; arranging for bank wires; and such other information
and services as you reasonably may request, to the extent we are permitted by
applicable statute, rule or regulation.
5. In consideration of the services and facilities described herein, we
shall be entitled to receive from you such fees as are set forth in the Plan for
Payment of Certain Expenses for Distribution Shares (the "Plan"). We understand
that the payment of such fees has been authorized pursuant to a Plan approved by
the Board of Trustees and shareholders of the Fund and shall be paid only so
long as this Agreement is in effect.
6. The frequency of payment, the terms of any right to sell in a
territory, and any other supplemental terms, conditions or qualifications for us
to receive such payments are subject to change by you from time to time, upon 30
days' written notice. Any orders placed after the effective date of such change
shall be subject to the fee rates in effect at the time of receipt of the
payment by the Fund or you. Such 30-day period may be waived at your sole option
in the event such change increases the distribution assistance payments due us.
7. Payment for Investor Shares shall be made to the Fund and shall be
received by the Fund promptly after the acceptance of our order. If such payment
is not
-2-
<PAGE>
received by the Fund, we understand that the Fund reserves the right without
notice, forthwith to cancel the sale, or, at the Fund's option, to sell the
Investor Shares ordered by us back to the Fund in which latter case we may be
held responsible for any loss, including loss of profit, suffered by the Fund
resulting from our failure to make payments aforesaid.
8. Your obligations to us under this Agreement are subject to all the
provisions of any underwriting agreements you have or may enter into with the
Fund. We understand and agree that in performing our services covered by this
Agreement we are acting as principal, and you are in no way responsible for the
manner of our performance or for any of our acts or omissions in connection
therewith. Nothing in this Agreement or in the Plan shall be construed to
constitute us or any of our agents, employees or representatives as your agent,
partner or employee, or the agent, partner or employee of the Fund.
9. This Agreement shall terminate automatically (i) in the event of its
assignment, the term "assignment" for this purpose having the meaning defined in
Section 2(a)(4) of the Act or (ii) in the event the Plan is terminated.
10. This Agreement may be terminated at any time (without payment of
any penalty) by a majority of the "Qualified Trustees" as defined in the Plan or
by a vote of a majority of the outstanding voting securities of the Fund as
defined in the Plan (on not more than 60 days' written notice to us at our
principal place of business). We, on 60 days' written notice addressed to you at
your principal place of business, may terminate this Agreement. You may also
terminate this Agreement for cause on violation by us of any of the provisions
of this Agreement, said termination to become effective on the date of mailing
notice to us of such termination. Without limiting the generality of the
foregoing and any provision hereof to the contrary notwithstanding, our
expulsion from the NASD will automatically terminate this Agreement without
notice; our suspension from the NASD or violation of applicable state or Federal
laws or rules and regulations of authorized regulatory agencies will terminate
this Agreement effective upon date of mailing notice to us of such termination.
Your failure to terminate for any cause shall not constitute a waiver of your
right to terminate at a later date for any such cause.
11. A copy of the Certificate of Formation is on file with the
Secretary of State of Delaware, and notice is hereby given that this instrument
is executed on behalf of the Trustees as Trustees and not individually and that
the obligations of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding only upon the assets and property of
the Fund.
12. All communications to you shall be sent to you at your offices at
__________________________. Any notice to us shall be duly given if mailed or
telegraphed to us at the address shown on this Agreement.
-3-
<PAGE>
13. This Agreement shall become effective as of the date when it is
executed and dated by you below. This Agreement and all the rights and
obligations of the parties hereunder shall be governed by and construed under
the laws of the State of [New York].
____________________________________
(Broker/Dealer)
By:_________________________________
Name:
Title:
____________________________________
(Address)
____________________________________
(City) (State) (Zip Code)
ACCEPTED:
[Distributor]
By:_____________________________
Name:
Title:
Dated:
-4-
E.I.I. REALTY SECURITIES TRUST
FORM OF
RULE 18f-3 MULTI-CLASS PLAN
I. INTRODUCTION.
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as
amended (the "1940 Act"), the following sets forth the method for allocating
fees and expenses among each class of shares of the various series (each series
a "Fund") of E.I.I. Realty Securities Trust (the "Trust") that issue multiple
classes of shares, whether now existing or subsequently established (the
"Multi-Class Funds"). In addition, this Rule 18f-3 Multi-Class Plan (the "Plan")
sets forth the shareholder servicing arrangements, distribution arrangements,
conversion features, exchange privileges, and other shareholder services of each
class of shares in the Multi-Class Funds.
The Trust is an open-end series investment company registered under the
1940 Act, the shares of which are registered on Form N-1A under the Securities
Act of 1933 (Registration Nos. 333-45959 and 811-08649). Upon the effective date
of this Plan, the Trust hereby elects to offer multiple classes of shares in the
Multi-Class Funds pursuant to the provisions of Rule 18f-3 and this Plan. This
Plan does not make any material changes to the general class arrangements and
expense allocations previously approved by the Board of Trustees of the Trust
(the "Board of Trustees").
The Trust currently consists of one Fund: E.I.I. Realty Securities
Fund.
<PAGE>
The Funds are authorized to issue the following classes of shares
representing interests in the same underlying portfolio of assets of the
respective Fund:
THE MULTI-CLASS FUNDS
- -----------------------------------------------------------
INSTITUTIONAL SHARES, ADVISERS SHARES, AND INVESTOR SHARES
E.I.I. Realty Securities Fund
I. CLASS ARRANGEMENTS.
The following summarizes the front-end sales charges, contingent
deferred sales charges, Rule 12b-1 distribution fees, shareholder servicing
fees, conversion features, exchange privileges, and other shareholder services
applicable to each particular class of shares of the Funds. Additional details
regarding such fees and services are set forth in each Fund's current Prospectus
and Statement of Additional Information.
A. INSTITUTIONAL SHARES:
1. Rule 12b-1 Distribution Fees: None.
2. Administration Fees: Up to 0.25% per annum of average daily net
assets.
3. Shareholder Servicing Fees: None.
4. Other Expenses: Up to 0.10% per annum of average daily net
assets.
B. ADVISER SHARES:
1. Rule 12b-1 Distribution Fees: None.
2. Administration Fees: Up to 0.25% per annum of average daily net
assets.
3. Shareholder Servicing Fees: Up to 0.25% per annum of average
daily net assets.
4. Other Expenses: Up to 0.10% per annum of average daily net
assets.
C. INVESTOR SHARES:
1. Rule 12b-1 Distribution Fees: Up to 0.75% per annum of average
daily net assets.
2. Administration Fees: Up to 0.25% per annum of average daily net
assets.
<PAGE>
3. Shareholder Servicing Fees: Up to 0.25% per annum of average
daily net assets.
4. Other Expenses: Up to 0.10% per annum of average daily net
assets.
II. ALLOCATION OF EXPENSES.
Pursuant to Rule 18f-3 under the 1940 Act, the Trust shall allocate to
each class of shares in a Multi-Class Fund (i) any fees and expenses incurred by
the Trust in connection with the distribution of such class of shares (other
than with respect to any money market Funds) under a distribution plan adopted
for such class of shares pursuant to Rule 12b-1 ("Rule 12b-1 Fees") and (ii) any
fees and expenses incurred by the Trust under a shareholder servicing plan in
connection with the provision of shareholder services to the holders of such
class of shares ("Service Plan Fees"). In addition, pursuant to Rule 18f-3, the
Trust may allocate the following fees and expenses (the "Class Expenses") to a
particular class of shares in a single Multi-Class Fund:
1. transfer agent fees identified by the transfer agent as being
attributable to such class of shares;
2. printing and postage expenses related to preparing and
distributing materials such as shareholder reports, prospectuses,
reports, and proxies to current shareholders of such class of
shares or to regulatory agencies with respect to such class of
shares;
3. blue sky registration or qualification fees incurred by such
class of shares;
4. Securities and Exchange Commission registration fees incurred by
such class of shares;
5. the expense of administrative personnel and services (including,
but not limited to, those of a fund accountant or dividend paying
agent charged with calculating net asset values or determining or
paying dividends) as required to support the shareholders of such
class of shares;
6. litigation or other legal expenses relating solely to such class
of shares;
7. fees of the Board of Trustees incurred as result of issues
relating to such class of shares;
8. independent accountants' fees relating solely to such class of
shares; and shareholder meeting expenses for meetings of a
particular class.
Class Expenses, Rule 12b-1 Fees, and Service Plan Fees are the only
expenses allocated to the classes disproportionately. The Class Expenses
allocated to each share of a class
<PAGE>
during a year will differ from the Class Expenses allocated to each share of any
other class by less than 50 basis points of the average daily net asset value of
the class of shares with the smallest average daily net asset value.
The initial determination of fees and expenses that will be allocated
by the Trust to a particular class of shares and any subsequent changes thereto
will be reviewed by the Board of Trustees and approved by a vote of the Board of
Trustees including a majority of the Trustees who are not interested persons of
the Trust. The Board of Trustees will monitor conflicts of interest among the
classes and agree to take any action necessary to eliminate conflicts.
Income, realized and unrealized capital gains and losses, and any
expenses of any money market Fund not allocated to a particular class of such
Fund by this Plan shall be allocated to each class of such Fund on the basis of
the relative net assets (settled shares), as defined in Rule 18f-3, of that
class in relation to the net assets of such Fund.
Income, realized and unrealized capital gains and losses, and any
expenses of a non-money market Fund not allocated to a particular class of any
such Fund pursuant to this Plan shall be allocated to each class of the Fund on
the basis of the net asset value of that class in relation to the net asset
value of the Fund.
Any dividends and other distributions on shares of a class will differ
from dividends and other distributions on shares of other classes only as a
result of the allocation of Class Expenses, Rule 12b-1 Fees, Service Plan Fees,
and the effects of such allocations.
The Investment Adviser will waive or reimburse its management fee in
whole or in part only if the fee is waived or reimbursed to all shares of a Fund
in proportion to their relative average daily net asset values. The Investment
Adviser, and any entity related to the Investment Adviser, who charges a fee for
a Class Expense will waive or reimburse that fee in whole or in part only if the
revised fee more accurately reflects the relative costs of providing to each
class the service for which the Class Expense is charged.
III. BOARD REVIEW.
The Board of Trustees shall review this Plan as frequently as it deems
necessary. Prior to any material amendment(s) to this Plan, the Board of
Trustees, including a majority of the Trustees that are not interested persons
of the Trust, shall find that the Plan, as proposed to be amended (including any
proposed amendments to the method of allocating Class Expenses and/or Fund
expenses), is in the best interest of each class of shares of a Multi-Class Fund
individually and the Fund as a whole. In considering whether to approve any
proposed amendment(s) to the Plan, the Board of Trustees shall request and
evaluate such information as it considers reasonably necessary to evaluate the
proposed amendment(s) to the Plan. Such information shall address the issue of
whether any waivers or reimbursements of advisory or administrative fees could
be considered a cross-subsidization of one class by another and other potential
conflicts of interest between classes.
<PAGE>
In making its initial determination to approve this Plan, the Board of
Trustees has focused on, among other things, the relationship between or among
the classes and has examined potential conflicts of interest among classes
(including those potentially involving a cross-subsidization between classes)
regarding the allocation of fees, services, waivers and reimbursements of
expenses, and voting rights. The Board of Trustees has evaluated the level of
services provided to each class and the cost of those services to ensure that
the services are appropriate and the allocation of expenses is reasonable. In
approving any subsequent amendments to this Plan, the Board of Trustees shall
focus on and evaluate such factors as well as any others it deems necessary.
Adopted April 28, 1998.
Amended and Restated:
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints
Susan J. Penry-Williams and Laura E. Fahey, and each of them, with full power to
act without the other, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities (until revoked in writing) to sign any and all
Registration Statements (including any pre-effective and post-effective
amendments to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto, and
other documents in connection thereunder, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, and each of them, may lawfully do or cause to be done by virtue hereof.
DATED this 28th day of April, 1998.
/s/ Warren K. Greene
--------------------
Warren K. Greene
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints
Susan J. Penry-Williams and Laura E. Fahey, and each of them, with full power to
act without the other, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities (until revoked in writing) to sign any and all
Registration Statements (including any pre-effective and post-effective
amendments to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto, and
other documents in connection thereunder, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, and each of them, may lawfully do or cause to be done by virtue hereof.
DATED this 28th day of April, 1998.
/s/ Richard W. Hutson
--------------------
Richard W. Hutson
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints
Susan J. Penry-Williams and Laura E. Fahey, and each of them, with full power to
act without the other, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities (until revoked in writing) to sign any and all
Registration Statements (including any pre-effective and post-effective
amendments to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto, and
other documents in connection thereunder, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, and each of them, may lawfully do or cause to be done by virtue hereof.
DATED this 28th day of April, 1998.
/s/ Samuel R. Karetsky
----------------------
Samuel R. Karetsky
