<PAGE> 1
As filed with the Securities and Exchange Commission on April 16, 1998
Registration Nos. [ ] and [ ]
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. __ [ ]
Post-Effective Amendment No. __ [ ]
and
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. __ [ ]
(Check appropriate box or boxes)
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PUGET SOUND ALTERNATIVE INVESTMENT SERIES TRUST
(Exact name of registrant as specified in charter)
One Yesler Building, Suite 200
Seattle, Washington 98104
Registrant's telephone number, including area code: (206) 405-4100
Name and address
of agent for service with a copy to:
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Margaret M. Towle John M. Loder, Esq.
Puget Sound Asset Management Co., LLC Ropes & Gray
One Yesler Building, Suite 200 One International Place
Seattle, Washington 98104 Boston, MA 02110
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
Title of Securities Being Registered: Shares of Beneficial Interest of the
Puget Sound Alternative Investment Series Trust.
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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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PUGET SOUND ALTERNATIVE INVESTMENT SERIES TRUST
Cross Reference Sheet
Items required by Form N-1A
<TABLE>
<CAPTION>
PART A
ITEM NO. REGISTRATION STATEMENT CAPTION CAPTION IN PROSPECTUS
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Fund Synopsis; Summary of Expenses
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Cover Page; Fund Synopsis; The Fund's Objective;
Who Should Consider Investing; Investment Strategy
and Risks; General Information
5. Management of the Fund Fund Synopsis; Portfolio Transactions; Management of
the Fund; Back Cover
5A. Management's Discussion of Fund Not Applicable
Performance
6. Capital Stock and Other Securities Cover Page; Fund Synopsis; Institutional and Investor
Shares; Distributions and Taxes; General Information
7. Purchase of Securities Being Offered Fund Synopsis; Management of the Fund; How to
Purchase Shares; Share Price; Back Cover
8. Redemption or Repurchase How to Redeem Shares; How to Purchase Shares
9. Pending Legal Proceedings Not Applicable
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
PART B
ITEM NO. REGISTRATION STATEMENT CAPTION CAPTION IN PROSPECTUS OR STATEMENT OF ADDITIONAL INFORMATION
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
13. Investment Objectives and Policies Investment Objective, Policies and Restrictions
14. Management of the Fund Management of the Trust
15. Control Persons and Principal Holders of Ownership of Shares of the Fund
Securities
16. Investment Advisory and Other Services Investment Advisory and Other Services; Management
of the Fund (Prospectus)
17. Brokerage Allocation and Other Practices Portfolio Transactions (Prospectus); Portfolio
Transactions and Brokerage
18. Capital Stock and Other Securities Description of the Trust; How to Redeem Shares
(Prospectus); Redemptions; Distributions and Taxes
(Prospectus); Income Dividends, Capital Gain
Distributions and Tax Status
19. Purchase, Redemption and Pricing of How to Purchase Shares (Prospectus); How to Buy
Securities Being Offered Shares; Share Price (Prospectus); Net Asset Value and
Public Offering Price; Shareholder Services; How to
Redeem Shares (Prospectus); Redemptions
20. Tax Status Distributions and Taxes (Prospectus); Income
Dividends, Capital Gain Distributions and Tax Status
21. Underwriters Investment Advisory and Other Services
22. Calculations of Performance Data Performance Information
23. Financial Statements Not Applicable
</TABLE>
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<PAGE> 4
PART C
The 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> 5
Prospectus June __, 1998
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of such state.
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PUGET SOUND MARKET NEUTRAL PORTFOLIO
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Puget Sound Market Neutral Portfolio (the "Fund") is a newly organized mutual
fund and the first series of Puget Sound Alternative Investment Series Trust
(the "Trust"), a registered open-end management investment company.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's objective is to seek long-term capital appreciation while maintaining
minimal exposure to general equity market risk. The Fund seeks to achieve its
objective through a diversified portfolio using a non-traditional, "market
neutral" investment strategy. For a description of the risks of an investment in
the Fund, see "The Fund's Objective" and "Investment Strategy and Risks."
FEES AND EXPENSES
The Fund offers two classes of shares: Institutional Shares and Investor Shares.
Investor Shares, unlike Institutional Shares, bear a 12b-1 marketing fee,
shareholder servicing fee and a sales commission (unless waived).
WHY READING THIS PROSPECTUS IS IMPORTANT
This Prospectus explains the objective, risks and strategy of the Fund that a
prospective investor ought to know before investing. To highlight terms and
concepts important to mutual fund investors, we have provided "Plain English"
explanations along the way. Reading this Prospectus will help you to decide
whether the Fund is the right investment for you. We suggest that you keep it
for future reference.
ADDITIONAL INFORMATION ABOUT THE FUND
A Statement of Additional Information ("SAI") (dated June __, 1998), which has
been filed with the Securities and Exchange Commission (the "SEC"), contains
more information about the Fund and is, by reference, part of this Prospectus.
The SAI may be obtained, upon request and without charge, along with other
information about the Fund, by writing to Puget Sound Alternative Investment
Series Trust, 3435 Stelzer Road, Columbus, Ohio 43219 or by calling our Investor
Information Department at 1-800-[ ]. The SAI, material incorporated by
reference into this Prospectus and the SAI, and other information regarding
registrants that file electronically with the SEC may also be obtained at the
SEC's Website (http://www.sec.gov).
For more information about establishing an account, or any other information
about the Fund, call 1-800-[ ].
IT IS IMPORTANT TO NOTE THAT SHARES OF THE FUND ARE NOT GUARANTEED OR INSURED BY
THE FDIC OR ANY AGENCY OF THE U.S. GOVERNMENT. AS WITH ANY INVESTMENT IN COMMON
STOCKS, WHICH ARE SUBJECT TO WIDE FLUCTUATIONS IN MARKET VALUE, YOU COULD LOSE
MONEY BY INVESTING IN THE FUND.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 6
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TABLE OF CONTENTS
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FUND SYNOPSIS..................................................................1
SUMMARY OF EXPENSES............................................................3
THE FUND'S OBJECTIVE...........................................................5
WHO SHOULD CONSIDER INVESTING..................................................5
INVESTMENT STRATEGY AND RISKS..................................................6
PORTFOLIO TRANSACTIONS........................................................10
PERFORMANCE INFORMATION.......................................................11
MANAGEMENT OF THE FUND........................................................12
INSTITUTIONAL AND INVESTOR SHARES.............................................14
HOW TO PURCHASE SHARES........................................................15
SHAREHOLDER SERVICES..........................................................18
HOW TO REDEEM SHARES..........................................................19
SHARE PRICE...................................................................20
DISTRIBUTIONS AND TAXES.......................................................20
GENERAL INFORMATION...........................................................21
<PAGE> 7
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FUND SYNOPSIS
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WHO SHOULD CONSIDER INVESTING (PAGE 5)
o Investors looking for a simple, efficient way to diversify
their stock, bond and cash investments with direct exposure to
a long/short, equity strategy.
o Investors seeking a portfolio that offers the potential for
capital appreciation with minimal exposure to general equity
market risk.
o Investors wanting growth of capital over the long term--at
least five years.
WHO SHOULD NOT INVEST
o Investors unwilling to accept fluctuations in share price.
o Investors seeking a mutual fund that exposes them to equity
market risk.
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PLAIN ENGLISH ABOUT
INVESTING FOR THE LONG TERM
The Fund is intended to be a long-term investment vehicle and is not designed to
provide investors with a means of speculating on short-term fluctuations in the
stock market.
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RISKS OF THE FUND (PAGE 7)
The Fund's total return and share value will fluctuate, so an investor could
lose money over short or even extended periods. The Fund is subject to, among
other risks:
o Investment risk (The chance that Fund shares may lose value,
depending on market, economic, political and other conditions
affecting the Fund's portfolio).
o Short Sale Risk (The risk that Fund shares may lose value as a
result of selling borrowed shares).
o Portfolio Turnover Risk (The risk that the Fund's portfolio
turnover may vary significantly from time to time.)
INVESTMENT ADVISER AND SUB-ADVISER (PAGE 12)
Puget Sound Asset Management Co., LLC ("PSAM"), Seattle, Washington, is the
Fund's investment adviser and Fiduciary Asset Management Co. ("FAMCO" or the
"Sub-Adviser"), Clayton, Missouri, is the Fund's sub-adviser.
<PAGE> 8
DISTRIBUTIONS
Distributions to Fund shareholders out of any dividends or interest that the
Fund has received as well as distributions of any net long-term capital gains
are paid at least annually. All distributions may include dividends and capital
gains that are taxable.
INCEPTION DATE: June ___, 1998
ESTIMATED EXPENSE RATIO
(giving effect to fee waivers): Institutional Shares 2.17%
Investor Shares 2.67%
SUITABLE FOR IRAs: YES
MINIMUM INITIAL INVESTMENT: $1,000,000 for Institutional Shares, $2,500 for
Investor Shares, $1,000 for IRAs and Custodial Accounts for Minors.
HOW TO PURCHASE SHARES (PAGE 15)
SHAREHOLDER SERVICES (PAGE 18)
o Systematic Withdrawal Plan.
o Automatic Investment Plan.
o Retirement Plans.
HOW TO REDEEM SHARES (PAGE 19)
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SUMMARY OF EXPENSES
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The following information is designed to help you understand the various costs
and expenses you would bear, directly or indirectly, as an investor in the Fund.
This table illustrates the transaction expenses you will incur as a shareholder
in the Fund. For more information about shareholder transaction expenses, see
"Institutional and Investor Shares" and "How to Purchase Shares."
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
INVESTOR SHARES INSTITUTIONAL SHARES
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<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a % of offering price)(1) 3.00% None
Sales Load Imposed on Reinvested Distributions
(and other Distributions) None None
Deferred Sales Load None None
Redemption Fees(2) None None
Exchange Fees Not Applicable Not Applicable
</TABLE>
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(1) A reduced sales charge on Investor Shares applies in some cases. See
"How to Purchase Shares -- Reduced Sales Charges (Investor Shares Only)."
(2) Redemptions by wire transfer are subject to a wire fee (currently $5) that
is deducted from the redemption proceeds.
The next table illustrates the operating expenses that you would incur as a
shareholder of the Fund. These expenses are deducted from the Fund's income
before it is paid to you, and include investment advisory expenses as well as
the cost of maintaining accounts, administering the Fund, providing shareholder
services, distribution and other activities. Since the Fund had not commenced
operations as of the date of this Prospectus, the expenses shown are estimates
for the Fund's first full fiscal year. For more information about the Fund's
operating expenses, see "Management of the Fund" and "Institutional and Investor
Shares."
<TABLE>
<CAPTION>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
INVESTOR SHARES INSTITUTIONAL SHARES
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<S> <C> <C>
Management Fees (after fee waiver)(1) 1.75% 1.75%
12b-1 Fees (after fee waiver)(2) 0.25% None
Other Operating Expenses 0.67% 0.42%
Total Operating Expenses (after fee waivers)(3) 2.67% 2.17%
</TABLE>
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(1) The Trust's investment adviser has voluntarily agreed to reduce its fees to
the amount shown in the table above. Without such voluntary reduction, the
adviser would be entitled to receive investment advisory fees of 2.00% of
the average daily net assets of the Fund.
(2) The Trust's distributor has voluntarily agreed to reduce its fees to the
amount shown in the table above. Without such voluntary reduction, the
distributor would be entitled to receive 12b-1 fees of 0.50% of the average
daily net assets of the Investor Shares.
(3) Without the voluntary fee reduction disclosed in footnotes (1) and (2)
above, Total Operating Expenses of the Fund would be 2.42% and 3.17% for
the Institutional and Investor shares, respectively.
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PLAIN ENGLISH ABOUT
FUND EXPENSES
All mutual funds have operating expenses. These expenses, which are deducted
from a fund's gross income, are expressed as a percentage of the net assets of
the fund. The Fund pays higher investment advisory fees than some other mutual
funds. Some types of non-traditional investments, such as market neutral
strategies, are often more complex and require greater time and resources to
manage than other more traditional equity mutual funds. This additional effort
is reflected in higher investment advisory fees.
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The following example illustrates the hypothetical expenses that you would incur
on a $1000 investment over various periods. The example assumes (1) that the
Fund provides a return of 5% a year and (2) that you redeem your investment at
the end of each period.
<TABLE>
<CAPTION>
EXAMPLE*
INVESTOR SHARES INSTITUTIONAL SHARES
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<S> <C> <C>
One Year ............................... $ 56 $22
Three Years............................. $110 $68
</TABLE>
* Under SEC rules, newly-organized funds, such as the Fund, are required to
show expenses in an example for one- and three-year periods only.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FUTURE, WHICH MAY BE HIGHER OR LOWER THAN
THOSE SHOWN.
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A WORD ABOUT RISK
This Prospectus describes the risks you will face as an investor in the Fund. It
is important to keep in mind one of the main axioms of investing: the higher the
risk of losing money, the higher the potential reward. As you consider an
investment in the Fund, you should also take into account your personal
tolerance for share price volatility.
Look for this "caution" symbol !! throughout this Prospectus. It is used
to mark detailed information about each type of risk that you, as a shareholder
of the Fund, will confront.
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THE FUND'S OBJECTIVE
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The Fund's objective is to seek long-term capital appreciation while maintaining
minimal exposure to general equity market risk. The Fund seeks to achieve its
objective by taking both long and short positions in equity securities. Although
the Fund's investment strategy seeks to minimize the risk associated with
investing in the equity market, an investment in the Fund will be subject to the
risk of poor stock selection by the Fund. In other words, the Fund may not be
successful in executing its strategy of taking long positions in stocks that
outperform the market and short positions in stocks that underperform the
market. See "Investment Strategy and Risks."
Except as explicitly set forth in this Prospectus or in the SAI, the investment
objective and policies of the Fund may be changed by the Board of Trustees of
the Trust without shareholder approval.
!! BECAUSE OF THE SEVERAL TYPES OF RISKS DESCRIBED ON THE FOLLOWING
PAGES, YOUR INVESTMENT IN THE FUND, AS IS THE CASE WITH MANY INVESTMENTS IN
STOCKS AND BONDS, COULD LOSE MONEY.
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WHO SHOULD CONSIDER INVESTING
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The Fund may be a suitable investment for you if:
o You want to add a non-traditional investment strategy to your
existing mix of stock, bond and money market funds.
o You want an investment fund that seeks to provide long-term
growth of capital by taking advantage of stock market
inefficiencies while maintaining minimal exposure to general
equity market risk.
o You are looking for an investment that performs differently
than a diversified stock or bond fund.
o You characterize your investment temperament as "safety
oriented."
This Fund is not appropriate if you are a "market-timer." Investors who engage
in excessive in-and-out trading activity generate additional costs that are
borne by all the Fund's shareholders. To minimize such costs, which reduce the
ultimate returns achieved by you and other shareholders, the Fund has adopted
the following policies:
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<PAGE> 12
o The Fund reserves the right to reject any purchase request,
including requests that it regards as disruptive to the
efficient management of the portfolio. This could be because
of timing of the investment or because of a history of
excessive trading by that investor.
o The Fund reserves the right to stop offering shares at any
time.
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INVESTMENT STRATEGY AND RISKS
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This section explains how the Fund tries to achieve long-term capital
appreciation while maintaining minimal exposure to general equity market risk.
It also explains three important risks--investment risk, short sale risk, and
portfolio turnover risk--faced by investors in the Fund. The investment strategy
can be changed by the Trust's Board of Trustees without shareholder approval.
Market neutral strategies are designed to produce returns that do not depend on
the stock market's direction; hence the term "market neutral." Using this type
of strategy, the Fund could hypothetically increase shareholder value in a down
market or conversely decrease shareholder value in up markets.
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PLAIN ENGLISH ABOUT
MARKET NEUTRAL INVESTING
There are many different styles of market neutral investing, such as long/short
equity portfolios, convertible bond hedging, fixed income hedging and risk
arbitrage.
In this Prospectus, market neutral investing refers to an equity fund that holds
two diversified portfolios: a long portfolio of stocks identified as
undervalued, held simultaneously with a short portfolio of stocks identified as
overvalued.
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Part of the Fund's objective is to maintain minimal exposure to general equity
market risk, or volatility of total returns. This maintenance of minimal
exposure to volatility of total returns is important, since volatility is
extremely high for a diversified common stock portfolio when measured over short
periods. To illustrate the volatility of stock prices, the following table shows
the best, worst and average total returns (dividend income plus changes in
market value) for the U.S. stock market over various periods as measured by the
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500"), a widely used
barometer of stock market activity. Note that the returns shown do not include
the cost of buying and selling stocks or other expenses that a real-world
investment portfolio would incur.
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S&P 500 Returns (1927-1997)
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1 Year 5 Years 10 Years 20 Years
------ ------- -------- --------
Best
Worst
Average
The table covers all the 1-, 5-, 10-, and 20-year periods from 1927 through
1997. For example, while the average annual return on stocks for all the 5-year
periods was ____, average annual returns for the 5-year periods ranged from a
_____ (from ___ through ___), to ____ (from ___ through ____). These average
returns reflect past performance of the stocks that were then included in the
S&P 500 and should not be regarded as an indication of future returns from
either the stock market as a whole or the Fund in particular.
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PLAIN ENGLISH ABOUT
VOLATILITY
The most commonly accepted measure of risk in any financial asset class is the
volatility of its total returns. Volatility risk, quite simply, refers to the
fact that a diversified portfolio may fluctuate in value and show a loss during
any interim period.
Increasing the length of period during which stocks are held tends to reduce the
volatility risk. Another method is to create a long portfolio of attractive
stocks and a short portfolio of unattractive stocks in which the overall
volatility of returns is low.
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The Fund's Sub-Adviser screens a large universe of stocks to find the 1400 most
liquid common stocks that are publicly traded in the United States. Securities
held in the Fund consist of all size companies, or market capitalization.
!! THE FUND IS SUBJECT TO INVESTMENT RISK, WHICH IS THE POSSIBILITY THAT
CHANGES IN MARKET, ECONOMIC, POLITICAL AND OTHER CONDITIONS COULD HURT
STOCK PERFORMANCE.
In general, during periods of high political or economic instability, equity
investments may lose some of their appeal for investors. This could result in
loss of value for the Fund, even though the Fund seeks to be less volatile than
many other equity funds. However, if the Fund holds long positions in stocks
that underperform the market and short positions in stocks that outperform the
market, then the losses of the Fund may exceed those of other stock mutual
funds.
!! THE FUND IS SUBJECT TO SHORT SALE RISK, WHICH IS THE POSSIBILITY THAT
FUND SHARES MAY DECREASE AS A RESULT OF SELLING BORROWED SHARES.
The Fund's short portfolio poses additional risks for the Fund investor. The
short portfolio represents stocks that the Fund has borrowed from their owners,
and then sold to other investors. The Fund remains obligated to return the
borrowed stocks to their owners. To do this, the Fund will have to purchase the
borrowed stocks back, at some time in the future, and pay whatever the market
price for those stocks may then be. If the price of those stocks has gone up
since the Fund borrowed the stocks and sold them, the Fund will lose money on
the investment. A fund that engages in short selling is more risky than other
equity mutual funds. Although the Fund's
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<PAGE> 14
gain is limited to the amount for which it sold the borrowed security, its
potential loss is unlimited.
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PLAIN ENGLISH ABOUT
SELLING SHORT
Selling short is selling a security that you do not own. You borrow the security
from your broker, then immediately sell it. Later, you repurchase and deliver
the security to pay back your borrowed shares to the broker. Short sales are
made because the seller anticipates a decline in the price of the security.
If the price of the stock goes down between the time that you borrowed the stock
and when you repurchase it, you make money. If the price of the stock goes up
between the time that you borrowed the stock and when you repurchase it, you
lose money.
Your potential loss in short selling is unlimited. Thus, successful short
selling requires a great deal of experience, diligence and attention.
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!! THE FUND IS SUBJECT TO PORTFOLIO TURNOVER RISK, WHICH IS THE POSSIBILITY
THAT THE FUND'S PORTFOLIO TURNOVER MAY VARY SIGNIFICANTLY FROM TIME TO
TIME.
In general, the Fund's Sub-Adviser does not consider the level of portfolio
turnover when deciding which securities to buy, sell and sell short. The rate of
the Fund's portfolio turnover may vary significantly from time to time depending
on the volatility of economic and market conditions. Although the rate of
portfolio turnover is difficult to predict, under normal circumstances the
Sub-Adviser expects an annual portfolio turnover rate of each of the long and
short portfolios not to exceed 150%. This expected portfolio turnover rate of
300% for the Fund is higher than many other mutual funds. The Fund's Sub-Adviser
views the rate of portfolio turnover as indicative of many market
inefficiencies, or opportunities.
High portfolio turnover can involve correspondingly greater brokerage
commissions and other transaction costs. These costs are borne directly by the
Fund. Turnover could involve the realization of capital gains that would be
taxable when distributed to shareholders of the Fund. The extent that the Fund's
portfolio turnover results in the realization of net short-term capital gains,
such gains are usually taxed to shareholders at ordinary income tax rates. See
"Portfolio Transactions" and "Distributions and Taxes."
SECURITIES SELECTION AND PORTFOLIO DIVERSIFICATION
The Fund employs an active investment approach. The Fund attempts to achieve its
objective by taking long positions in stocks traded in the markets of the United
States that the Sub-Adviser has identified as undervalued and short positions in
stocks traded in the markets of the United States that the Sub-Adviser has
identified as overvalued. By taking long and short positions in stocks with
similar characteristics, the Fund attempts to cancel out the effect of general
stock market movements on the Fund's performance.
The Sub-Adviser will determine the size of each long or short position by
analyzing the tradeoff between the attractiveness of each position and its
impact on the risk of the overall portfolio.
-8-
<PAGE> 15
The Sub-Adviser seeks to construct a diversified portfolio containing both long
and short positions that have minimal net exposure to the U.S. equity market.
The Sub-Adviser selects long and short positions with matching risk
characteristics, within specific capitalization ranges (e.g., large cap, mid cap
and small cap) and certain other risk factors. In general, the Fund's
Sub-Adviser attempts to buy highly liquid stocks for the Fund; in other words,
stocks that trade with great frequency.
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PLAIN ENGLISH ABOUT
PORTFOLIO DIVERSIFICATION
In general, the more diversified a fund's portfolio of stocks, the less likely
that a specific stock's poor performance will hurt the fund. One measure of
diversification is the percentage of assets represented by its ten largest
holdings. The average mutual fund has about 25% of its assets invested in its
ten largest holdings, while some less-diversified mutual funds have more than
50% of their assets in the stocks of just ten companies.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLAIN ENGLISH ABOUT
LARGE CAP, MID CAP AND SMALL CAP STOCKS
Stocks of publicly traded companies--and mutual funds that hold these
stocks--can be classified by the companies' market value, or capitalization. The
Fund defines large cap as companies with a market value exceeding $5 billion.
Mid cap companies are those with a market value between $1 billion and $5
billion. Small cap companies are those with a market value less than $1 billion.
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The Fund borrows securities that are then sold short. Until the Fund replaces
the borrowed security, it will maintain daily a segregated account with the
Fund's custodian. This account will contain cash, U.S. Government securities or
other liquid securities. The amount deposited in the Fund's account, plus any
amount deposited with a broker or other custodian as collateral, will at least
equal the current market value of the securities sold short. Depending on the
arrangements made with such brokers or custodians, the Fund may not receive any
payments (including interest) on collateral deposited with such brokers or
custodians. The Fund will not use leverage as part of its investment strategy.
In other words, the Fund will not make a short sale if, after completing the
transaction, the market value of all the securities sold short exceeds 100% of
the Fund's net assets.
OTHER RISK CONSIDERATIONS
COMMON STOCKS AND OTHER EQUITY SECURITIES. Common stocks and similar equity
securities are securities that represent an ownership interest (or the right to
acquire such an interest) in a company and include securities exercisable for or
convertible into common stocks (e.g., warrants). While offering greater
potential for long-term growth, common stocks and similar equity securities are
more volatile and more risky than some other forms of investment. Therefore, the
value of your investment in the Fund may sometimes decrease instead of increase.
The Fund may invest in equity securities of companies with relatively small
market capitalization. Securities of such companies may be more volatile than
the securities of larger, more established companies and the broad equity market
indices. See "Small Companies"
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<PAGE> 16
below. The Fund's investments may include securities traded "over-the-counter"
as well as those traded on a securities exchange. Some over-the-counter
securities may be more difficult to sell under some market conditions.
SMALL COMPANIES. The Fund may invest in companies with relatively small market
capitalization. Investments in companies with relatively small capitalization
may involve greater risk than is usually associated with stocks of larger
companies. These companies often have sales and earnings growth rates which
exceed those of companies with larger capitalization. Such growth rates may in
turn be reflected in more rapid share price appreciation. However, companies
with smaller capitalization often have limited product lines, markets or
financial resources and may be dependent upon a relatively small management
group. The securities may have limited marketability and may be subject to more
abrupt or erratic movements in price than securities of companies with larger
capitalization or market averages in general. The net asset value per share of
the Fund therefore may fluctuate more widely than market averages.
REPURCHASE AGREEMENTS. Any Fund assets not invested in common stocks or other
equity securities will generally be held in the form of cash or in repurchase
agreements. Under a repurchase agreement, the Fund will buy securities from a
seller, usually a bank or brokerage firm, with the understanding that the seller
will repurchase the securities at a higher price at a later date (usually seven
days or less from the date of original purchase). If the seller fails to
repurchase the securities, the Fund has rights to sell the securities to third
parties. Repurchase agreements can be regarded as loans by the Fund to the
seller, collateralized by the securities that are the subject of the agreement.
Repurchase agreements afford an opportunity for the Fund to earn a return on
available cash at relatively low credit risk, although the Fund may be subject
to various delays and risks of loss if the seller fails to meet its obligation
to repurchase, including (a) possible declines in the value of the underlying
security during the period while the Fund seeks to enforce its rights thereto,
(b) possible reduced levels of income and lack of access to income during this
period and (c) possible inability to enforce rights and the expenses involved in
enforcement or attempted enforcement. The Fund treats repurchase agreements
maturing in more than seven days as illiquid securities. The Fund has a policy
of not investing more than 15% of the Fund's net assets (taken at current value)
in illiquid securities.
- --------------------------------------------------------------------------------
PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
Portfolio turnover considerations will not limit the Sub-Adviser's investment
discretion in managing the Fund's assets. The Sub-Adviser anticipates that the
Fund's portfolio turnover rates will vary significantly from time to time
depending on the volatility of economic and market conditions, but will not
ordinarily exceed 150% annually for each of the long and the short portfolios.
The Sub-Adviser views the rate of portfolio turnover as indicative of many
market inefficiencies, or opportunities. High portfolio turnover may involve
higher costs and higher levels of taxable gains.
The Sub-Adviser selects brokers and dealers to execute portfolio transactions
for the Fund. In selecting brokers the Sub-Adviser may consider research and
brokerage services furnished to it, and may cause the Fund to pay higher
commissions in recognition of the provision of these services. Subject to
seeking best price and execution, the Sub-Adviser may allocate Fund portfolio
transactions to brokers or dealers whose customers have invested in the Trust.
-10-
<PAGE> 17
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The table below presents information about the investment performance of all the
discretionary, fee-paying accounts managed by FAMCO with investment objectives,
policies and strategies substantially similar to that of the Fund (the
"Accounts"). The investment performance is shown for the period from July 1,
1995, the date FAMCO began managing the Accounts, to March 31, 1998, on an
annual return basis, with returns for periods of less than one year not
annualized, and on an average annual return and cumulative return basis. During
the entire period FAMCO has managed the Accounts, John L. Dorian, the individual
responsible for the day-to-day portfolio management of the Fund, has been the
portfolio manager of the Accounts.
The gross investment performance for the Accounts has been attested to by
____________ for use in connection with the registration statement of the Trust
under the Securities Act of 1933, as amended (the "Securities Act"), in
accordance with standards established by the Association for Investment
Management and Research. The gross investment performance represents total
return, assuming reinvestment of all dividends and proceeds from capital
transactions. The method for calculating performance produces a different result
than if the performance information were calculated using the SEC's method for
calculating the total return of a mutual fund. In the table, the investment
performance has been adjusted for estimated net fees and expenses of the Fund.
THE INFORMATION PROVIDED BELOW DOES NOT REPRESENT THE PERFORMANCE OF THE FUND,
WHICH IS NEWLY-ORGANIZED AND HAS NO PERFORMANCE RECORD OF ITS OWN. THE FOLLOWING
PERFORMANCE INFORMATION SHOULD NOT BE CONSIDERED A PREDICTION OF FUTURE
PERFORMANCE OF THE FUND. THE FUND'S PERFORMANCE MAY BE HIGHER OR LOWER THAN THAT
SHOWN BELOW.
- --------------------------------------------------------------------------------
Annual Returns Accounts(%)
- --------------------------------------------------------------------------------
1/1/98 - 3/31/98
1997
1996
7/1/95-12/31/95
- --------------------------------------------------------------------------------
Average Annual Returns through 3/31/98
- --------------------------------------------------------------------------------
1 Year
Since 7/1/95
- --------------------------------------------------------------------------------
Cumulative Returns through 3/31/98
- --------------------------------------------------------------------------------
1 Year
Since 7/1/95
- --------------------------------------------------------------------------------
* 7/1/95 is the date FAMCO began managing the Accounts.
The Fund's expenses, timing of purchases and sales of portfolio securities,
availability of cash flows, and brokerage commissions are all reasons that might
cause performance results of the Fund to vary from the Accounts. In addition,
the Accounts are not subject to the diversification requirements, specific tax
restrictions and investment limitations imposed on the Fund by the Investment
Company Act of 1940, as amended (the "1940 Act") or the Internal Revenue Code of
1986, as amended (the "Code"). Consequently, the performance results of the
Accounts could have been less favorable had the Accounts been subject to these
requirements, restrictions and limitations.
-11-
<PAGE> 18
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
PSAM is the investment adviser of the Fund and has responsibility for the
management of the Fund's affairs, under the supervision of the Trust's Board of
Trustees. The Fund's investment portfolio is managed on a day-to-day basis by
the Sub-Adviser, under the general oversight of PSAM and the Trust's Board of
Trustees. PSAM monitors and evaluates the Sub-Adviser to help assure it is
managing the Fund consistently with the Fund's investment objective and
restrictions and applicable laws and guidelines. PSAM does not, however,
determine what investments will be purchased or sold for the Fund.
PSAM, One Yesler Building, Suite 200, Seattle, Washington, was organized in 1998
as a Washington limited liability company. PSAM offers innovative investment
products to financial intermediaries. PSAM's principal has been in the
investment management business since 1983, however, PSAM has no prior experience
managing mutual funds. Zwick Financial Corp. Profit Sharing Trust, a profit
sharing plan, owns more than 25% of the voting interests of PSAM and therefore
is regarded to control PSAM for purposes of the 1940 Act.
FAMCO, 8112 Maryland Avenue, Suite 310, Clayton, Missouri, was organized in 1994
as a Missouri corporation and serves as an investment adviser to taxable and
tax-exempt accounts. Charles Walbrant, FAMCO's President, owns 100% of the
voting interests of FAMCO and therefore is regarded to control FAMCO for
purposes of the 1940 Act. John L. Dorian has day- to-day responsibility for
managing the Fund's portfolio. Mr. Dorian has served as Chief Investment
Officer-Equities of FAMCO since May, 1995. From May, 1990 to May, 1995, Mr.
Dorian was a Managing Director-Equity Portfolio Manager at First Quadrant Corp.
- --------------------------------------------------------------------------------
PLAIN ENGLISH ABOUT
THE FUND'S SUB-ADVISER
FAMCO provides investment advisory services to many institutional clients. As of
March 31, 1998, FAMCO managed over $3 billion in assets. The individual who
manages the Fund is John L. Dorian, Chief Investment Officer-Equities of FAMCO.
Mr. Dorian has 17 years experience managing investment portfolios and 10 years
experience managing assets using a market neutral strategy. Mr. Dorian has a
B.S., M.S. and M.B.A. from Florida State University, Tallahassee, Florida.
- --------------------------------------------------------------------------------
The Trust intends to apply for an exemptive order from the SEC to permit PSAM,
subject to the approval of the Trust's Board of Trustees and certain other
conditions, to enter into sub-advisory agreements with sub-advisers other than
the current sub-adviser of the Fund without obtaining shareholder approval. The
exemptive request will also seek to permit, without obtaining shareholder
approval, the terms of an existing sub-advisory agreement to be changed or the
employment of an existing sub-adviser to be continued after events that would
otherwise cause an automatic termination of a sub-advisory agreement, if such
changes or continuation are approved by the Trust's Board of Trustees. This
Prospectus would be revised and the shareholders notified if the sub-adviser of
the Fund is changed or a new sub-adviser is added.
-12-
<PAGE> 19
ADVISORY AND SUB-ADVISORY FEES AND OTHER EXPENSES
The Fund has agreed to pay PSAM a management fee at the annual percentage rate
of 2.00% of the Fund's average daily net assets. PSAM has voluntarily agreed,
however, to reduce the annual rate of its fee with respect to the Fund to 1.75%
of the Fund's average daily net assets. PSAM may terminate this voluntary
agreement at any time. PSAM pays FAMCO a sub-advisory fee at the annual
percentage rate of 1.50% of the Fund's average daily net assets.
In addition to the investment advisory fee, the Fund pays all expenses not
expressly assumed by PSAM, including taxes, brokerage commissions, fees and
expenses of registering and qualifying the Fund's shares under federal and state
securities laws, fees of the Fund's custodian, transfer agent, independent
accountants and legal counsel, expenses of shareholders' and trustees' meetings,
expenses of preparing, printing and mailing prospectuses to existing
shareholders and fees of trustees who are not directors, officers or employees
of PSAM.
ADMINISTRATOR, TRANSFER AGENT AND CUSTODIAN
BISYS Fund Services Ohio, Inc. (the "Administrator"), a wholly-owned subsidiary
of The BISYS Group, Inc., serves as the Trust's administrator and generally
assists the Trust in all aspects of its administration and operation. As
compensation for its administrative services, the Administrator receives a
monthly fee based upon an annual percentage rate of 0.15% of the average daily
net assets of the Trust.
BISYS Fund Services, Inc. (the "Transfer Agent") has entered into an agreement
with the Trust for the provision of transfer agency services and dividend
disbursing services for the Trust. As compensation for its transfer agency
services and dividend disbursing services, the Transfer Agent receives $20,000
per fund plus $25 per shareholder per year. The principal business address of
the Transfer Agent, Inc. is 3435 Stelzer Road, Columbus, Ohio 43219.
[ ] (the "Custodian") serves as the custodian
of the assets of the Fund. The principal address of the Custodian is
[ ].
DISTRIBUTOR
Institutional and Investor Shares of the Fund are sold on a continuous basis by
BISYS Fund Services, L.P., the Trust's distributor (the "Distributor").
Solely for the purpose of compensating the Distributor for services and expenses
primarily intended to result in the sale of Investor Shares, such shares are
subject to an annual Distribution Fee of up to 0.50% of the average daily net
assets attributable to such shares in accordance with a Distribution Plan (the
"Distribution Plan") adopted by the Trust pursuant to Rule 12b-1 under the 1940
Act. Currently, the Fund pays the Distributor an annual Distribution Fee of
0.25% of the Fund's average daily net assets attributable to Investor Shares.
Activities which the Distributor may pay for using is revenues under the
Distribution Plan include (but are not limited to) the development and
implementation of direct mail promotions and advertising for sales of Investor
Shares, the preparation, printing and distribution of prospectuses for the Fund
to recipients other than existing shareholders, and payments to wholesalers of
Investor Shares. The Distribution Plan is of the type known as a "compensation"
plan. This means that, although the Trustees of the Trust are expected to take
into account the expenses of the Distributor in their
-13-
<PAGE> 20
periodic review of the Distribution Plan, the fees are payable to compensate the
Distributor for services rendered even if the amount paid exceeds the
Distributor's expenses.
SHAREHOLDER SERVICING AGENTS
The Distributor may also provide (or arrange for another intermediary or agent
to provide) personal and/or account maintenance services to Investor
shareholders of the Fund (the Distributor or such entity is referred to as a
"Servicing Agent" in such capacity). A Servicing Agent will be paid some or all
of the Shareholder Servicing Fees charged with respect to Investor Shares
pursuant to a Servicing Plan for such shares. For the services provided, the
Trust's Servicing Plan permits the Fund to pay fees of up to 0.25% of the
average daily net asset value of Investor Shares for which such Servicing Agents
provide services for the benefit of customers.
- --------------------------------------------------------------------------------
INSTITUTIONAL AND INVESTOR SHARES
- --------------------------------------------------------------------------------
The Fund offers two classes of shares to investors. The two classes of shares
are Institutional Shares and Investor Shares. The following table sets forth
basic investment and fee information for each class.
<TABLE>
<CAPTION>
Minimum Annual Annual
Fund Subsequent Shareholder Servicing Distribution
Name of Class Investment* Investments* Fee Fee
- ------------- ----------- ------------ --- ---
<S> <C> <C> <C> <C>
Institutional $ 1 million $ 10,000 None None
Investor $ 2,500 $ 250 0.25% 0.25%**
</TABLE>
- -------------------------
* Certain exceptions apply. See "Institutional Shares" and "Investor Shares"
below.
** With fee waiver.
The offering price of Fund shares is based on the net asset value per share next
determined after an order is received. See "Share Price," "How to Purchase
Shares" and "How to Redeem Shares."
INSTITUTIONAL SHARES
Institutional Shares may be purchased by individuals, endowments, foundations,
Taft-Hartley plans and plan sponsors of 401(a), 401(k), 457 and 403(b) plans and
by certain other entities that PSAM permits to purchase Institutional Shares,
which decision shall be at the sole discretion of PSAM. In order to be eligible
to purchase Institutional Shares, an institution, plan or individual must make
an initial investment of at least $1,000,000 in the Fund. In its sole
discretion, PSAM may waive this minimum investment requirement and PSAM intends
to do so for officers and affiliates of PSAM, for the spouse, parents, children,
siblings, grandparents or grandchildren of such officers and affiliates, for
employees of the Sub-Adviser, the Administrator and the Distributor and for
Trustees of the Trust and their spouses. Institutional Shares are sold without
any initial or deferred sales charges and are not subject to any ongoing
distribution expenses or shareholder servicing fees.
-14-
<PAGE> 21
INVESTOR SHARES
Investor Shares may be purchased by individuals, intermediary financial
institutions and certain individual retirement accounts. In order to be eligible
to purchase Investor Shares, an eligible investor must make an initial
investment of at least $2,500 in the Fund. Certain exceptions apply to this
minimum investment requirement, such as for IRAs and custodial accounts for
minors. In addition, PSAM may, in its sole discretion, waive the minimum
investment requirement for any potential investors. Investor Shares are subject
to an annual Shareholder Service Fee equal to an amount of up to 0.25% of the
average daily net assets attributable to Investor Shares, an annual Distribution
Fee equal to an amount of up to 0.50% (currently this fee has been voluntarily
reduced by the Distributor to 0.25%) of the average daily net assets
attributable to Investor Shares and a sales charge to the net asset value of the
shares being purchased, unless such sales charge is waived by PSAM. As described
above, the Distribution Plan for Investor Shares permits payments up to 0.50% of
the Fund's average daily net assets attributable to Investor Shares.
GENERAL
The Shareholder Service Fee charged with respect to Investor Shares is intended
to be compensation for services rendered for account maintenance, record keeping
and other services performed by financial intermediaries with respect to such
shares. The Distribution Fee charged with respect to Investor Shares is intended
to compensate the Distributor for services and expenses primarily intended to
result in the sale of Investor Shares. See "Management of the Fund --
Distributor".
As described above, shares of the Fund may be sold to corporations or other
institutions such as trusts, foundations or broker-dealers purchasing for the
accounts of others ("Shareholder Organizations"). Investors purchasing and
redeeming shares of the Fund through a Shareholder Organization may be charged a
transaction-based fee or other fee for the services provided by the Shareholder
Organization. Each such Shareholder Organization is responsible for transmitting
to its customers a schedule of any such fees and information regarding any
additional or different conditions regarding purchases and redemptions of Fund
shares. Customers of Shareholder Organizations should read this Prospectus in
light of the terms governing accounts with their particular organization.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
- --------------------------------------------------------------------------------
You may make an initial purchase of shares of the Fund by sending a completed
application form and payment to:
Puget Sound Alternative Investment Series Trust
P.O. Box [ ]
Columbus, OH 43218
The minimum initial investment to purchase the Fund's Institutional Shares is
$1,000,000, and subsequent investments must be $10,000. The minimum initial
investment to purchase the Fund's Investor Shares is $2,500 for regular accounts
and $1,000 for IRAs and custodial accounts for minors. Subsequent investments
must be at least $250. The minimum investment amount
-15-
<PAGE> 22
for both Institutional and Investor Shares may be waived by PSAM, in its sole
discretion. See "Shareholder Services" below for further information about
minimum investments in certain other circumstances.
Upon acceptance of your order, the Fund's shareholder servicing agent will open
an account for you, apply the payment to the purchase of full and fractional
Fund shares and mail a statement of account confirming the transaction.
After an account has been established, you may send subsequent investments at
any time directly to the Fund at the above address. The remittance must be
accompanied by either the account identification slip detached from a statement
of account or a note containing sufficient information to identify the account,
i.e., the Fund name, your account name or your name and social security number.
Subsequent investments can also be made by federal funds wire. To purchase
shares by wire, call 1-800-[ ] to obtain instructions regarding the bank
account number into which the funds should be wired and other pertinent
information.
Certificates will not be issued for shares. The Fund reserves the right to
reject any purchase order for any reason which the Fund in its sole discretion
deems appropriate. Although the Fund does not anticipate that it will do so, it
reserves the right to suspend or change the terms of the offering of its shares.
For Institutional Shares, the price you pay will be the per share net asset
value next calculated after a proper investment order is received by the Fund.
The net asset value of the Fund's shares is calculated once daily as of the
close of regular trading on the New York Stock Exchange on each day the Exchange
is open for trading. See "Share Price." Portfolio securities are valued at their
market value as more fully described in the SAI. For Investor Shares, the price
you pay will be the per share net asset value next calculated after a proper
investment order is received by the Fund, plus any applicable sales charge.
The Fund may accept telephone orders from broker-dealers who have been
previously approved by the Distributor. It is the responsibility of such
broker-dealers to forward purchase or redemption orders promptly to the Fund. In
addition to any sales charge, broker-dealers may charge the investor a
transaction-based fee or other fee for their services at either the time of
purchase or the time of redemption. Such fees may vary among broker-dealers but
in all cases will be retained by the broker-dealer and not remitted to the Fund,
PSAM or the Sub-Adviser.
SALES CHARGES
Institutional Shares are offered to the public at net asset value. Investor
Shares are offered at public offering prices determined by adding the following
sales charges to the net asset value of the shares being purchased. On each
purchase, the net asset value is invested in the Fund and the sales charge is
paid to the Distributor. The Distributor reallows a portion of the sales charge
to the dealer responsible for your order, as shown in the following table.
-16-
<PAGE> 23
<TABLE>
<CAPTION>
Sales Charge Sales Charge Dealer Reallowance
as a % of Public as a % of Net as a % of Public
Amount of Purchase ($) Offering Price Amount Invested Offering Price
- ---------------------- -------------- --------------- --------------
<S> <C> <C> <C>
Up to 100,000 3.00 3.09 2.70
Over 100,000 and up to 250,000 2.50 2.56 2.25
Over 250,000 and up to 500,000 2.00 2.04 1.80
Over 500,000 and up to 1,000,000 1.00 1.01 0.90
Over 1,000,000 0.00 0.00 0.00
</TABLE>
REDUCED SALES CHARGES (INVESTOR SHARES ONLY)
Amounts Redeemed From Other Mutual Funds
No sales charge applies on amounts invested in the Fund that represent the
proceeds of an investor's redemption, within the 30 days immediately preceding
investment in the Fund, of shares of another mutual fund on which the investor
paid a front-end sales charge equal to or greater than the amount required. To
qualify for this arrangement, the investor must furnish a broker's confirmation
statement (or other documentation satisfactory to the Fund) showing the payment
of the sales charge. This arrangement is not available if the investor paid a
contingent deferred sales charge on the redemption.
Letter Of Intent
An investor may obtain a reduced sales charge by means of a written Letter of
Intent that expresses the intention of such investor to invest a certain amount
in shares of the Fund within a period of 13 months. Each purchase of shares
under a Letter of Intent will be made at the public offering price plus the
sales charge applicable at the time of such purchase to a single transaction of
the total dollar amount indicated in the Letter of Intent. The 13-month period
during which the Letter of Intent is in effect will begin on the date of the
earliest purchase to be included. Five percent of all investments made by a
shareholder under a Letter of Intent will be held in escrow for the period of
the Letter. If the investor does not fulfill the Letter of Intent, the amount of
the sales charge that would apply in the absence of the Letter will be paid to
the Distributor out of the escrowed portion of the shareholder's account. The
Letter of Intent program may be modified or eliminated at any time or from time
to time by the Fund without notice.
Rights Of Accumulation
Pursuant to rights of accumulation, a shareholder may combine a current purchase
of shares of the Fund with prior purchases of shares of the Fund. The public
offering price applicable to a purchase of shares is based on the sum of (i) the
shareholder's current purchase of shares of the Fund and (ii) the then current
net asset value of the shareholder's holdings of shares of the Fund.
Purchase By Certain Investors
No sales charge applies in certain instances.
o Shares of the Fund may be purchased at net asset value by
investment advisers, financial planners or other
intermediaries who place trades for their own accounts or the
accounts of their clients and who charge a management,
consulting or other fee
-17-
<PAGE> 24
for their services; clients of such investment advisers,
financial planners or other intermediaries who place trades
for their own accounts if the accounts are linked to the
master account of such investment adviser, financial planner
or other intermediary on the books and records of the broker
or agent; and retirement and deferred compensation plans and
trusts used to fund those plans, including, but not limited
to, those defined in Section 401(a), 401(k), 403(b) or 457 of
the Code and rabbi trusts. Investors may be charged a fee if
they effect transactions through a broker or agent.
o There is no sales charge or initial investment minimum related
to investments by certain current and retired employees of
PSAM, the Sub-Adviser, the Distributor or the Administrator;
current and former Trustees of the Trust; registered
representatives of broker-dealers that have selling
arrangements with the Distributor or the Administrator; the
spouse, parents, children, siblings, grandparents or
grandchildren of the persons listed above; and any trust,
pension, profit sharing or other benefit plan for any of the
foregoing persons.
o Shares of the Fund are available at net asset value for
investments by accounts of bank trust departments or trust
companies.
o Shares of the Fund are available at net asset value for
investments in participant-directed 401(a) and 401(k) plans
that have 50 or more eligible employees.
o Shares of the Fund also may be purchased at net asset value
through certain broker-dealers and/or financial services
organizations without any transaction fee. Such organizations
may receive compensation, in an amount of up to 0.35% annually
of the average value of the Fund shares held by their
customers. This compensation may be paid by PSAM and/or the
Sub-Adviser out of their own assets, or may be paid indirectly
by the Fund in the form of servicing, distribution or transfer
agent fees.
The reduction or elimination of the sales charge in connection with sales
described above reflects the absence or reduction of sales expenses associated
with such sales. For more information on these reductions or waivers, please
call 1-800-[ ].
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
The Fund offers the following shareholder services which are more fully
described in the SAI. Explanations and forms are available from the Fund.
SYSTEMATIC WITHDRAWAL PLAN. If the value of your account is at least $5,000, you
may have periodic cash withdrawals automatically paid to you or any person you
designate.
AUTOMATIC INVESTMENT PLAN. Voluntary monthly investments of at least $250 may be
made automatically by pre-authorized withdrawals from your checking account.
RETIREMENT PLANS. The Fund's shares may be purchased by all types of
tax-deferred retirement plans. The Fund makes available retirement plan forms
for IRAs.
-18-
<PAGE> 25
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
You can redeem your shares by sending a written request to Puget Sound
Alternative Investment Series Trust, P.O. Box [ ], Columbus, Ohio 43218.
The request must include the name of the Fund, your account number, the exact
name(s) in which your shares are registered, and the number of shares or the
dollar amount to be redeemed. All owners of the shares must sign the request in
the exact names in which the shares are registered (this appears on your
confirmation statement) and should indicate any special capacity in which they
are signing (such as trustee or custodian or on behalf of a partnership,
corporation or other entity).
If you are redeeming shares worth more than $10,000, or requesting that the
proceeds check be made out to someone other than the registered owner(s), or be
sent to an address other than your record address, you must have your signature
guaranteed by an eligible guarantor. Eligible guarantors include commercial
banks, trust companies, savings associations, credit unions and brokerage firms
that are members of domestic securities exchanges. Before submitting your
redemption request, you should verify with the guarantor institution that it is
an eligible guarantor. Signature guarantees by notaries public are not
acceptable.
If you have received certificates for your investment, you must enclose the
certificates and a properly completed redemption form or stock power. The Fund
recommends that certificates be sent by registered mail.
You may also redeem your shares by calling 1-800- [ ]. When you telephone a
redemption request, the proceeds are wired to the bank account previously chosen
by you. A telephone redemption request must be received by the Fund prior to the
close of regular trading on the New York Stock Exchange. If you telephone your
request to the Fund after the New York Stock Exchange closes or on a day when
the New York Stock Exchange is not open for business, the Fund cannot accept
your request and a new request will be necessary. The Trust, the Transfer Agent
and ___________________, the Trust's custodian, are not responsible for the
authenticity of withdrawal instructions received by telephone. Reasonable
procedures will be adopted to verify that telephone instructions are genuine.
You may select the telephone redemption service when you fill out your initial
application or you may select it later by completing the Service Option Form
(with a signature guarantee), available from the Fund. If you decide to change
the bank account to which proceeds are to be wired, you must send in this change
on the Service Option Form with a signature guarantee. Telephonic redemptions
may be made only if your bank is a member of the Federal Reserve System or has a
correspondent bank that is a member of the System. If your account is with a
savings bank, it must have only one correspondent bank that is a member of the
System. In times of heavy market activity, a shareholder who encounters
difficulty in placing a redemption or exchange order by telephone may wish to
place the order by mail as described above.
The redemption price will be the net asset value per share next determined after
the redemption request and any necessary special documentation are received by
the Fund in proper form. See "Share Price."
Proceeds resulting from a written redemption request will normally be mailed to
you within seven days after receipt of your request, if it is in good order.
Telephonic redemption proceeds will
-19-
<PAGE> 26
normally be wired to your bank on the first business day following receipt of a
proper redemption request. If you purchased your shares by check and your check
was deposited less than 10 days prior to the redemption request, the Fund may
withhold redemption proceeds until your check has cleared, which may take up to
10 days from the purchase date.
The Fund may suspend the right of redemption and may postpone redemptions for
more than seven days when the New York Stock Exchange is closed for other than
weekends or holidays, or if permitted by the rules of the SEC when trading on
the New York Stock Exchange is restricted or during an emergency which makes it
impracticable for the Fund to dispose of its securities or to determine fairly
the value of its net assets, or during any other period permitted by the SEC for
the protection of investors.
If the value of your account with the Fund falls below a minimum amount set by
the Board of Trustees of the Trust (currently $2,500), the Fund may close your
account and send you the balance. The Fund will notify you at least 60 days
before closing your account, to give you time to purchase additional shares to
bring your account value above the minimum. Accounts will not be closed solely
because the value of shares has fallen through market price movements.
- --------------------------------------------------------------------------------
SHARE PRICE
- --------------------------------------------------------------------------------
The Fund's share price, called its net asset value, is calculated each business
day as of the close of regular trading (generally 4:00 p.m. Eastern time) on the
New York Stock Exchange. Net asset value per share is computed by adding up the
total value of the Fund's investments and other assets, subtracting any
liabilities, or debts, and then dividing by the total number of Fund shares
outstanding:
Net Asset Value = Total Assets - Liabilities (attributable to each class)
-------------------------------------------------------
Number of Shares Outstanding (attributable to each class)
Daily net asset value, or 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 you would have received had you sold all of your shares that day.
- --------------------------------------------------------------------------------
DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
DISTRIBUTIONS
The Fund intends to declare distributions to shareholders out of any dividends
or interest that the Fund has received at least annually, although it may do so
more frequently as determined by the Board of Trustees of the Trust. The Fund
intends to pay out as dividends substantially all of its net investment income
(which comes from dividends and interest it receives from its investments and
net short-term capital gains). The Fund also intends to distribute any net
long-term capital gains at least annually. If you request redemption of all your
shares at any time during a month, you will receive all declared dividends
through the date of redemption together with the proceeds of the redemption.
-20-
<PAGE> 27
Each shareholder's dividends and other distributions are reinvested in
additional shares of the Fund at net asset value per share generally determined
at the close of business on the ex-distribution date, unless the shareholder
elects in writing to receive dividends and other distributions in cash.
If you own your Fund shares in a non-retirement account, the Fund will notify
you each year of the amount and taxability of the Fund's dividends and
distributions paid during the previous year (that is, the amount of dividends,
capital gains, and any return of capital that you receive). You will also be
notified of the amount, if any, of federal income taxes withheld from the
distribution.
INCOME TAX CONSIDERATIONS
The Fund intends to qualify as a "regulated investment company" for federal
income tax purposes and to meet all other requirements necessary for it to be
relieved of federal taxes on income and gains it distributes to shareholders.
The Fund will distribute substantially all of its ordinary income and capital
gain net income on a current basis.
Generally, Fund distributions will be taxable to you as ordinary income to the
extent derived from the Fund's investment income and net short-term capital
gains (i.e., net gains from securities held for 12 months or less).
Distributions designated by the Fund as deriving from net gains on securities
held for more than 12 months but not more than 18 months and from net gains on
securities held for more than 18 months will be taxable to you as such,
regardless of how long you have held the shares. Distributions will be taxable
as described above whether received in cash or in shares through the
reinvestment of distributions.
Dividends and distributions on Fund shares are generally subject to federal
income tax as described above to the extent they do not exceed the Fund's
realized income and gains, even though such dividends and distributions may
economically represent a return of a particular shareholder's investment. Such
distributions are likely to occur in respect of shares purchased at a time when
the Fund's net asset value reflects gains that are either unrealized, or
realized but not distributed.
Early in each calendar year, the Fund will notify you of the amount and tax
status of distributions paid to you for the preceding year.
Keep in mind that the tax information in this Prospectus is a summary of certain
U.S. federal income tax consequences of investing in the Fund. You should
consult your own tax adviser about the federal, foreign, state and local tax
consequences of investing in, redeeming or exchanging shares of the Fund.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- --------------------------------------------------------------------------------
Puget Sound Market Neutral Portfolio is the first series of Puget Sound
Alternative Investment Series Trust. The Trust is a diversified, open-end
management investment company organized as a Massachusetts business trust on
April 14, 1998. The Trust is authorized to issue an unlimited number of full and
fractional shares of beneficial interest in multiple series. Currently, the Fund
has two classes of shares, Institutional Shares and Investor Shares. Each share
in the Fund has one vote, with fractional shares voting proportionally. All
Trust shares entitled to vote will vote together irrespective of series or class
unless the rights of a particular series or class would be adversely
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<PAGE> 28
affected by the vote, in which case a separate vote of that series or class will
be required to decide the question. Shares are freely transferable, are entitled
to dividends as declared by the Trustees of the Trust, and, if the Fund were
liquidated, would receive the net assets of the Fund. The Fund may suspend the
sale of shares at any time and may refuse any order to purchase shares. The
Trust does not generally hold regular shareholder meetings and will do so only
when required by law. Shareholders may remove the Trustees of the Trust from
office by votes cast at a shareholder meeting or by written consent.
On _____, 1998, BISYS Fund Services, L.P. held more than 25% of the outstanding
shares of the Trust, and as a result, may be deemed to "control" the Trust as
that term is defined in the 1940 Act.
Shareholders could , under certain circumstances, be held personally liable for
the obligations of the Trust. However, the risk of a shareholder incurring
financial loss on account of such liability is considered remote since it may
arise only in very limited circumstances.
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<PAGE> 29
INVESTMENT ADVISER
Puget Sound Asset Management Co., LLC
One Yesler Building, Suite 200
Seattle, Washington 98104
Toll free: 800-[ ]
Phone: 206-405-4100
Fax: 206-654-4121
DISTRIBUTOR
BISYS Fund Services, L.P.
3435 Stelzer Road
Columbus, Ohio 43219
TRANSFER AGENT
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
INDEPENDENT ACCOUNTANTS
[ ]
CUSTODIAN
[ ]
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, Massachusetts 02110
<PAGE> 30
PUGET SOUND ALTERNATIVE INVESTMENT SERIES TRUST
SUBJECT TO COMPLETION
STATEMENT OF ADDITIONAL INFORMATION
JUNE __, 1998
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Statement of Additional Information shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be any sale
of these securities in any state in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws of
such state.
This Statement of Additional Information is not a prospectus. This Statement of
Additional Information relates to the Puget Sound Market Neutral Portfolio
Prospectus dated June __, 1998, and should be read in conjunction therewith. A
copy of the Prospectus may be obtained by writing to Puget Sound Alternative
Investment Series Trust, P.O. Box [ ], Columbus, OH 43218, or calling
1-800- [ ].
<PAGE> 31
TABLE OF CONTENTS
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS...............................1
MANAGEMENT OF THE TRUST.......................................................4
OWNERSHIP OF SHARES OF THE FUND...............................................5
INVESTMENT ADVISORY AND OTHER SERVICES........................................6
PORTFOLIO TRANSACTIONS AND BROKERAGE.........................................10
DESCRIPTION OF THE TRUST.....................................................12
HOW TO BUY SHARES............................................................14
NET ASSET VALUE AND PUBLIC OFFERING PRICE....................................15
SHAREHOLDER SERVICES.........................................................15
OPEN ACCOUNTS.......................................................15
SYSTEMATIC WITHDRAWAL PLAN..........................................16
IRAs................................................................16
REDEMPTIONS..................................................................17
INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX STATUS.................18
PERFORMANCE INFORMATION......................................................21
EXPERTS......................................................................21
INDEPENDENT AUDITOR'S REPORT.................................................22
SPECIMEN PRICE MAKE-UP.......................................................24
APPENDIX A -- Publications That May Contain Fund Information................A-1
APPENDIX B -- Advertising and Promotional Literature........................B-1
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<PAGE> 32
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
The investment objective and policies of Puget Sound Market Neutral Portfolio
(the "Fund"), a series of Puget Sound Alternative Investment Series Trust (the
"Trust"), are summarized in the Prospectus under "The Fund's Objective" and
"Investment Strategy and Risks."
In addition, the following is an additional description of certain investments
of the Fund.
SHORT SALES. The Fund will seek to realize additional gains through short sales.
Short sales are transactions in which the Fund sells a security that it does not
own, in anticipation of a decline in the value of that security relative to the
long positions held by the Fund. To complete such a transaction, the Fund must
borrow the security to make delivery to the buyer. The Fund is then obligated to
replace the security borrowed by purchasing it in the market at or prior to the
time of replacement. The price at such time may be more or less than the price
at which the security was sold by the Fund. Until the security is replaced, the
Fund is required to repay the lender any dividends or interest that accrue
during the period of the loan. To borrow the security, the Fund may also be
required to pay a premium, which would increase the cost of the security sold.
The net proceeds of the short sale will be retained by the broker (or by the
Trust's custodian in a special custody account),to the extent necessary to meet
margin requirements, until the short position is closed out. The Fund will also
incur transaction costs in effecting short sales.
The Fund will incur a loss as a result of the short sale if the price of the
security increases between the date of the short sale and the date which the
Fund replaces the borrowed security. The Fund will realize a gain if the
security declines price between those dates. The amount of any gain will be
decreased, and the amount of loss increased, by the amount of the premium,
dividends, interest, or expense the Fund may be required to pay in connection
with a short sale. An increase in the value of a security sold short by the Fund
over the price at which it was sold short will result in a loss to the Fund.
There can be no assurance that the Fund will be able to close out the position
at any particular time or at any acceptable price.
The staff of the Securities and Exchange Commission is of the opinion that a
short sale involves the creation of a senior security and is, therefore, subject
to the limitations of Section 18 of the Investment Company Act of 1940, as
amended (the "1940 Act"). The staff has taken the position that in order to
comply with the provisions of Section 18, the Fund must put in a segregated
account (not with the broker) an amount of cash or securities equal to the
difference between: (a) the market value of the securities sold short at the
time they were sold short, and (b) any cash or securities required to be
deposited as collateral with the broker in connection with the short sale (not
including the proceeds from the short sale). In addition, until the Fund
replaces the borrowed security, it must daily maintain the segregated account at
such a level that the amount deposited in it plus the amount deposited with the
broker as collateral will equal the current market value of the securities sold
short.
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<PAGE> 33
MISCELLANEOUS INVESTMENT PRACTICES
PORTFOLIO TURNOVER. A change in securities held by the Fund is known as
"portfolio turnover" and almost always involves the payment by the Fund of
brokerage commissions or dealer markup and other transaction costs on the sale
of the securities as well as the reinvestment of the proceeds in other
securities. Portfolio turnover is not a limiting factor with respect to
investment decisions. As disclosed in the Prospectus, high portfolio turnover
involves correspondingly greater brokerage commissions and other transaction
costs, which will be borne directly by the Fund, and could involve realization
of capital gains that would be taxable when distributed to shareholders of the
Fund. To the extent that portfolio turnover results in the realization of net
short-term capital gains, such gains are ordinarily taxed to shareholders at
ordinary income tax rates. See "Portfolio Transactions and Brokerage" and
"Income Dividends, Capital Gains Distributions and Tax Status."
INVESTMENT RESTRICTIONS
In addition to its investment objective and policies set forth in the
Prospectus, the following investment restrictions are fundamental policies of
the Fund:
The Fund will not:
(1) Borrow money in excess of 33 1/3% of the value (taken at
the lower of cost or current value) of the Fund's total assets (not
including the amount borrowed) at the time the borrowing is made, and
then only from banks as a temporary measure to facilitate the meeting
of redemption requests (not for leverage) which might otherwise require
the untimely disposition of portfolio investments or for extraordinary
or emergency purposes. Such borrowings will be repaid before any
additional investments are purchased. Short sales and related
borrowings of securities are not subject to this restriction.
(2) Pledge, hypothecate, mortgage or otherwise encumber any of
its assets, except that the Fund may pledge assets having a value not
exceeding 10% of its total assets (taken at cost) to secure borrowings
permitted by restriction (1) above. (For the purposes of this
restriction, collateral arrangements with respect to options, short
sales, stock index, interest rate, currency or other futures, options
on futures contracts and collateral arrangements with respect to
initial and variation margin are not deemed to be a pledge or other
encumbrance of assets. Collateral arrangements with respect to swaps
and other derivatives are also not deemed to be a pledge or other
encumbrance of assets.)
(3) Purchase securities on margin, except such short-term
credits as may be necessary for the clearance of purchases and sales of
securities. (For this purpose, the deposit or payment of initial or
variation margin in connection with futures contracts or related
options transactions is not considered the purchase of a security on
margin.)
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<PAGE> 34
(4) Make short sales of securities or maintain a short
position, if, when added together, more than 100% of the value of the
Fund's net assets would be (i) deposited as collateral for the
obligation to replace securities borrowed to effect short sales, and
(ii) allocated to segregated accounts in connection with short sales.
Short sales "against the box" are not subject to this limitation.
(5) Underwrite securities issued by other persons except to
the extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under certain
federal securities laws.
(6) Purchase or sell real estate, although it may purchase
securities of issuers which deal in real estate, securities which are
secured by interests in real estate, and securities which represent
interests in real estate, and it may acquire and dispose of real estate
or interests in real estate acquired through the exercise of its rights
as a holder of debt obligations secured by real estate or interests
therein.
(7) Purchase securities (other than securities of the U.S.
government, its agencies or instrumentalities) if, as a result of such
purchase, more than 25% of the Fund's total assets would be invested in
any one industry.
(8) Invest in securities of other investment companies, except
to the extent permitted by the 1940 Act, or by exemptive order issued
by the Securities and Exchange Commission.
(9) Purchase or sell commodities or commodity contracts,
except that the Fund may purchase and sell stock index and other
financial futures contracts and options, and may enter into swap
agreements, foreign exchange contracts and other financial transactions
not involving physical commodities.
(10) Make loans, except by purchase of debt obligations, by
entering into repurchase agreements, or by lending its portfolio
securities.
(11) Issue any class of securities which is senior to the
Fund's shares of beneficial interest. (For the purpose of this
restriction none of the following is deemed to be a senior security:
any pledge or other encumbrance of assets permitted by restriction (2)
above; any borrowing permitted by restriction (1) above; short sales
permitted by restriction (4) above; any collateral arrangements with
respect to short sales, swaps, options, future contracts and options on
future contracts and with respect to initial and variation margin; and
the purchase or sale of options, future contracts or options on future
contracts.)
Notwithstanding the latitude permitted by Restrictions 1, 2, 3 and 9 above, the
Fund has no current intention of (a) borrowing money or (b) purchasing interest
rate futures.
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<PAGE> 35
In addition to the foregoing fundamental investment restrictions, it is contrary
to the Fund's present policy, which may be changed without shareholder approval,
to:
(a) Invest in warrants or rights (other than warrants or rights
acquired by the Fund as a part of a unit or attached to securities at the time
of purchase).
(b) Write, purchase or sell options on particular securities (as
opposed to market indices).
(c) Buy or sell oil, gas or other mineral leases, rights or royalty
contracts.
(d) Make investments for the purpose of exercising control of a
company's management.
(e) Purchase or sell futures contracts or options thereon.
(f) Invest in (i) securities which at the time of investment are not
readily marketable, (ii) securities restricted as to resale (excluding
securities determined by the trustees of the Trust (the "Trustees") (or the
person designated by the Trustees to make such determinations) to be readily
marketable) and (iii) repurchase agreements maturing in more than seven days,
if, as a result, more than 15% of the Fund's net assets (taken at current value)
would then be invested in (i), (ii) and (iii) above.
The investment policies of the Fund set forth in the Prospectus and in this
Statement of Additional Information may be changed by PSAM subject to review and
approval by the Board of Trustees of the Trust (the "Board of Trustees"),
without shareholder approval, except that any Fund policy explicitly identified
as "fundamental" may not be changed without the approval of the holders of a
majority of the outstanding shares of the Fund (which in the Prospectus and this
Statement of Additional Information means the lesser of (i) 67% of the shares of
the Fund represented at a meeting at which 50% or more of the outstanding shares
are represented or (ii) more than 50% of the outstanding shares).
MANAGEMENT OF THE TRUST
The Board of Trustees is responsible for the overall supervision of the
operations of the Fund. The Trustees can perform the duties imposed on them by
the 1940 Act and the Massachusetts General laws. In addition to their other
duties, the Trustees appoint the officers of the Fund annually and approve the
selection and termination of the Fund's sub-advisers.
The Trustees and officers of the Trust, their ages, addresses and principal
occupations during the past five years are as follows (an asterisk indicates a
Trustee who is an "interested person" of the Trust as defined in the 1940 Act):
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<PAGE> 36
*MARGARET M. TOWLE (49) --- TRUSTEE, PRESIDENT, TREASURER AND SECRETARY. Chief
Executive Officer, Chief Investment Officer and Portfolio Manager of PSAM since
February, 1998; self-employed investment advisory consultant since October,
1997; formerly Chairman, Chief Executive Officer, Director and Secretary of
Towle Associates, Inc., an investment advisory firm, from October, 1991 to
September, 1997.
The address of each Trustee and officer of the Trust affiliated with PSAM is One
Yesler Building, Suite 200, Seattle, Washington 98104.
The Trust pays no compensation to its officers or to the Trustees
listed above who are officers or employees of PSAM. Each Trustee who is not an
officer or employee of PSAM is compensated at the rate of $5,000 per annum. The
Trust provides no pension or retirement benefits to its Trustees, but has
adopted a deferred payment arrangement under which each Trustee who is to
receive fees form the Trust may elect not to receive such fees from the Trust on
a current basis but to receive in a subsequent period an amount equal to the
value that such fees would have if they had been invested in the Fund on the
normal payment date for such fees. As a result of this method of calculating the
deferred payments, the Fund, upon making the deferred payments, will be in the
same financial position as if the fees had been paid on the normal payment
dates.
The following table estimates the amount of compensation to be paid (or
deferred in lieu of current payment) by the Trust during its fiscal year ending
May 30th to the persons who are to serve as Trustees during such period:
AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM TRUST AND
PERSON FROM TRUST FUND COMPLEX*
- ------ ---------- -------------
Margaret M. Towle $ 0 $ 0
* No Trustee receives any compensation from any mutual fund affiliated with PSAM
other than the Trust.
OWNERSHIP OF SHARES OF THE FUND
As of June __, 1998, BISYS Fund Services, L.P., a limited partnership
and a 100% indirect subsidiary of The BISYS Group, Inc., owned of record and
beneficially 100% of the shares of the Fund as a result of its investment of
$100,000 "seed capital" in the Fund, and therefore, may be deemed to "control"
the Fund as that term is defined in the 1940 Act. The address of BISYS Fund
Services, L.P., is 3435 Stelzer Road, Columbus, Ohio 43219.
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<PAGE> 37
As of_________, the Trustees and officers of the Trust beneficially
owned as a group no outstanding shares of the Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
BACKGROUND
As described in the Prospectus, the Fund is governed by the Board of
Trustees, who are generally responsible for the broad supervision and overall
direction of the Fund. The Fund has engaged PSAM, as the investment adviser of
the Fund. The assets of the Fund are managed on a day-to-day basis by Fiduciary
Asset Management Co. ("FAMCO" or the "Sub-Adviser"), the Fund's sub-adviser,
under the general oversight of PSAM and the Board of Trustees.
If the Fund in the future has multiple sub-advisers, then PSAM will
allocate assets of the Fund between the then current sub-advisers based on
continuing qualitative and quantitative assessment of the sub-advisers' skills
in managing assets.
The Sub-Adviser has discretion, subject to oversight by the Board of
Trustees and PSAM, to purchase and sell portfolio assets consistent with the
objective and policies set forth in its sub-advisory agreement with PSAM and
established for it by PSAM. PSAM is paid a management fee by the Fund for its
services, and a certain portion of that management fee (as set forth below) is
forwarded to the Sub-Adviser as compensation for its services.
INVESTMENT ADVISER AND SUB-ADVISER
Under a separate investment advisory agreement with the Fund, PSAM
provides investment advice for, and supervises the investment programs of, the
Fund. In this capacity, PSAM, subject to the authority of the Board of Trustees,
is responsible for the overall management of the Fund's business affairs.
PSAM, located at One Yesler Building, Suite 200, Seattle, Washington
98104, is an independently-owned investment adviser. The principal of PSAM,
Margaret M. Towle, has over 16 years experience in the investment management,
brokerage and consulting business. PSAM is presently owned by Margaret M. Towle
and Zwick Financial Corp. Profit Sharing Trust. Zwick Financial Corp. Profit
Sharing Trust owns more than 25% of the voting interests of PSAM and therefore
is regarded to control PSAM for purposes of the 1940 Act.
FAMCO, located at 8112 Maryland Ave., Suite 310, Clayton, Missouri, was
formed in June, 1994, and is currently 100% owned, by Charles D. Walbrandt, the
President of FAMCO. As of June 1, 1998, FAMCO had managed over $3 billion of
assets.
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<PAGE> 38
As disclosed in this Statement of Additional Information under the
heading "Management of the Trust", Margaret M. Towle is a Trustee and the
President, Treasurer and Secretary of the Trust as well as the Chief Executive
Officer, Chief Investment Officer, Portfolio Manager and a member of PSAM.
ADVISORY AND SUB-ADVISORY AGREEMENTS
The Fund has entered into an advisory agreement (the "Advisory
Agreement") with PSAM, and PSAM has entered into a sub-advisory agreement with
the Sub-Adviser (the "Sub-Advisory Agreement"). As compensation for its
services, PSAM is entitled to a fee, payable quarterly, at the annual rate of
2.00% of the average daily net asset value of the Fund. This fee is higher than
the management fee paid by most investment companies. As compensation for the
services provided by the Sub-Adviser, PSAM has agreed to pay the Sub-Adviser a
fee at the annual rate of 1.50% of the average daily net asset value of the
Fund, which payment will be paid out of the fee received by PSAM from the Fund.
As described in the Prospectus, PSAM has agreed to certain voluntary
arrangements to reduce its fees in order to limit the Fund's expenses. These
arrangements may be modified or terminated by PSAM at any time.
The Advisory Agreement provides that it will continue in effect for two
years from its date of execution and thereafter from year to year if its
continuance is approved at least annually (i) by the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund and (ii) by
vote of a majority of the Trustees who are not "interested persons" of the Trust
or PSAM, as that term is defined in the 1940 Act, cast in person at a meeting
called for the purpose of voting on such approval. Any amendment to the Advisory
Agreement must be approved (i) by vote of a majority of the outstanding voting
securities of the Fund and (ii) by vote of a majority of the Trustees who are
not such interested persons, cast in person at a meeting called for the purpose
of voting on such approval. The Advisory Agreement may be terminated without
penalty by vote of the Board of Trustees or by vote of a majority of the
outstanding voting securities of the Fund, upon sixty days' written notice to
PSAM, or by PSAM upon ninety days' written notice to the Trust, and terminates
automatically in the event of its assignment. In addition, the Advisory
Agreement will automatically terminate if the Trust or the Fund shall at any
time be required by PSAM to eliminate all reference to the word "Puget Sound" in
the name of the Trust or the Fund, unless the continuance of the agreement after
such change of name is approved by vote of a majority of the outstanding voting
securities of the Fund and by vote of a majority of the Trustees who are not
interested persons of the Trust or PSAM, cast in person at a meeting called for
the purpose of voting on such approval. The Advisory Agreement also provides
that PSAM shall not be subject to any liability in connection with the
performance of its services thereunder in the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations and duties.
The Sub-Advisory Agreement provides that it will continue in effect for
two years from its date of execution and thereafter from year to year if its
continuance is approved at least annually (i) by the Board of Trustees or by
vote of a majority of the outstanding voting securities
-7-
<PAGE> 39
of the Fund and (ii) by vote of a majority of the Trustees who are not
"interested persons" of the Trust, PSAM or the Sub-Adviser, as that term is
defined in the 1940 Act, cast in person at a meeting called for the purpose of
voting on such approval. Any amendment to the Sub-Advisory Agreement must be
approved (i) by vote of a majority of the outstanding voting securities of the
Fund and (ii) by vote of a majority of the Trustees who are not such interested
persons, cast in person at a meeting called for the purpose of voting on such
approval. The Sub-Advisory Agreement may be terminated without penalty by vote
of the Board of Trustees or by vote of a majority of the outstanding voting
securities of the Fund, upon sixty days' written notice to the Sub-Adviser, and
terminates automatically in the event of its assignment. The Sub-Advisory
Agreement also provides that the Sub-Adviser shall not be subject to any
liability in connection with the performance of its services thereunder in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties.
As described in the Prospectus, the Trust intends to apply for an
exemptive order from the Securities and Exchange Commission to permit PSAM,
subject to the approval of the Board of Trustees and certain other conditions,
to enter into sub-advisory agreements with sub-advisers other than the current
sub-adviser for the Fund and amend sub-advisory agreements with sub-advisers
without obtaining shareholder approval. See "Management of the Fund" in the
Prospectus.
The Sub-Adviser also provides investment advice to numerous other
corporate and fiduciary clients. These other clients sometimes invest in
securities in which the Fund also invests. If the Fund and such other clients
desire to buy or sell the same portfolio securities at the same time, purchases
and sales may be allocated, to the extent practicable, on a pro rata basis in
proportion to the amounts desired to be purchased or sold for each. It is
recognized that in some cases the practices described in this paragraph could
have a detrimental effect on the price or amount of the securities which the
Fund purchases or sells. In other cases, however, it is believed that these
practices may benefit the Fund. It is the opinion of the Board of Trustees that
the desirability of retaining the Sub-Adviser as the sub-adviser for the Fund
outweighs the disadvantages, if any, which might result from these practices.
ADMINISTRATOR
BISYS Fund Services Ohio, Inc. (the "Administrator"), under an
agreement with the Trust, provides management and administrative services to the
Fund, and, in general, supervises the operations of the Trust. The Administrator
does not provide investment advisory services. As part of its duties, the
Administrator provides office space, equipment and clerical personnel for
managing and administering the affairs of the Trust. The Administrator
supervises the provision of custodial, auditing, valuation, bookkeeping, legal,
and dividend disbursing services and provides other management and
administrative services. The Trust pays the Administrator a fee for its services
to the Fund at the annual rate of 0.15% of the Trust's average daily net assets.
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<PAGE> 40
TRUST EXPENSES
The Trust pays the compensation of its Trustees; registration, filing
and other fees in connection with requirements of regulatory authorities; all
charges and expenses of its custodian and transfer agent; the charges and
expenses of its independent accountants; all brokerage commissions and transfer
taxes in connection with portfolio transactions; all taxes and fees payable to
governmental agencies; the cost of any certificates representing shares of the
Fund; the expenses of meetings of the shareholders and Trustees; the charges and
expenses of the Trust's legal counsel; interest on any borrowings by the Fund;
the cost of services, including services of counsel, required in connection with
the preparation of, and the cost of printing, the Trust's registration
statements and prospectuses, including amendments and revisions thereto, annual,
semiannual and other periodic reports of the Trust, and notices and proxy
solicitation material furnished to shareholders or regulatory authorities, to
the extent that any such materials relate to the Trust or its shareholders; and
the Trust's expenses of bookkeeping, accounting, auditing and financial
reporting, including related clerical expenses.
DISTRIBUTOR
As stated in the text of the Prospectus under the heading "Management
of the Fund," Institutional and Investor Shares are sold on a continuous basis
by the Trust's distributor, BISYS Fund Services, L.P. (the "Distributor"). Under
the Distributor's Contract between the Trust and the Distributor (the
"Distributor's Contract"), the Distributor is not obligated to sell any specific
amount of shares of the Trust and will purchase shares for resale only against
orders for shares.
Pursuant to the Distribution Plan (the "Plan") described in the
Prospectus, in connection with the distribution of Investor Shares, the
Distributor receives certain distribution fees from the Trust. The Distributor
may pay all or a portion of the distribution fees it receives from the Trust to
participating and introducing brokers.
The Plan may be terminated with respect to Investor Shares by vote of a
majority of the Trustees who are not interested persons of the Trust (as defined
in the 1940 Act) and who have no direct or indirect financial interest in the
operation of the Plan or the Distributor's Contract, or by a vote of majority of
the outstanding voting securities of that class. Any change in the Plan that
would materially increase the cost to the Investors Shares to which the Plan
relates requires approval by the Investor shareholders. The Trustees review
quarterly a written report of such costs and the purposes for which such costs
have been incurred. Except as described above, the Plan may be amended by vote
of the Trustees, including a majority of the Trustees who are not interested
persons of the Trust (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of the Plan or the Distributor's
Contract, cast in person at a meeting called for the purpose. For so long as the
Plan is in effect, selection and nomination of those Trustees who are not
interested persons of the Trust shall be committed to the discretion of such
disinterested persons.
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<PAGE> 41
The Distributor's Contract may be terminated at any time by not more
than 60 days' nor less than 30 days' written notice without payment of any
penalty either by the Distributor or by the Fund or class and will terminate
automatically, without the payment of any penalty, in the event of its
assignment.
The Distributor's Contract and the Plan will continue in effect with
respect to each class of shares to which they relate for successive one-year
periods, provided that each such continuance is specifically approved (i) by the
vote of a majority of the Trustees who are not interested persons of the Trust
(as defined in the 1940 Act) and who have no direct or indirect financial
interest in the operation of the Plan or the Distributor's Contract and (ii) by
the vote of a majority of the entire Board of Trustees (or by vote of a majority
of the outstanding shares of class, in the case of the Distributor's Contract)
cast in person at a meeting called for that purpose.
The Trustees believe that the Plan will provide benefits to the Trust.
The Trustees believe that the Plan will result in greater sales and/or fewer
redemptions of Investor Shares, although it is impossible to know for certain
the level of sales and redemptions of Investor Shares that would occur in the
absence of the Plan or under alternative distribution schemes. The Trustees
believe that the effect on sales and/or redemptions benefit the Trust by
reducing Fund expense ratio and/or by affording greater flexibility to the
Sub-Adviser.
ADDITIONAL ARRANGEMENTS
Custodial Arrangements. _______________, is the Trust's custodian.
_____________ holds in safekeeping securities and cash belonging to the Fund
and, in such capacity, is the registered owner of securities held in book entry
form belonging to the Fund. Upon instruction, ___________________ receives and
delivers cash and securities of the Fund in connection with Fund transactions
and collects all dividends and other distributions made with respect to Fund
portfolio securities. Pursuant to an agreement with the Trust, ___________
receives compensation from the Fund for such services based upon a percentage of
the Fund's average daily net assets.
Independent Accountants. The Fund's independent accountants are
________________, [address]. __________________conducts an annual audit of the
Trust's financial statements, assists in the preparation of the Fund's federal
and state income tax returns and consults with the Fund as to matters of
accounting and federal and state income taxation.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Transactions on U.S. stock exchanges and other agency transactions for
the account of the Fund involve the payment by the Fund of negotiated brokerage
commissions. Such commissions vary among different brokers. A particular broker
may charge different commissions according to such factors as the difficulty and
size of the transaction. There is generally no stated
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<PAGE> 42
commission in the case of securities traded in the over-the-counter markets, but
the price paid by the Fund usually includes an undisclosed dealer commission or
markup. In underwritten offerings, the price paid by the Fund includes a
disclosed, fixed commission or discount retained by the underwriter or dealer.
In addition to selecting portfolio investments for the Fund, the
Sub-Adviser selects brokers or dealers to execute securities purchases and sales
for the Fund's account. The Sub-Adviser selects only brokers or dealers which it
believes are financially responsible, will provide efficient and effective
services in executing, clearing and settling an order and will charge commission
rates which, when combined with the quality of the foregoing services, will
produce best price and execution for the transaction. This does not necessarily
mean that the lowest available brokerage commission will be paid. However, the
commissions are believed to be competitive with generally prevailing rates. The
Sub-Adviser will use its best efforts to obtain information as to the general
level of commission rates begin charged by the brokerage community from time to
time and will evaluate the overall reasonableness of brokerage commissions paid
on transactions by reference to such data. In making such evaluation, all
factors affecting liquidity and execution of the order, as well as the amount of
the capital commitment by the broker in connection with the order, are taken
into account. The Fund will not pay a broker a commission at a higher rate than
otherwise available for the same transaction in recognition of the value of
research services provided by the broker or in recognition of the value of any
other services provided by the broker which do not contribute to the best price
and execution of the transaction.
The Sub-Adviser's receipt of research services from brokers may
sometimes be a factor in its selection of a broker that it believes will provide
best price and execution for a transaction. These research services include not
only a wide variety of reports on such matters as economic and political
developments, industries, companies, securities, portfolio strategy, account
performance, daily prices of securities, stock and bond market conditions and
projections, asset allocation and portfolio structure, but also meetings with
management representatives of issuers and with other analysts and specialists.
Although it is in many cases not possible to assign an exact dollar value to
these services, they may, to the extent used, tend to reduce the Sub-Adviser's
expenses. Such services may be used by the Sub-Adviser in managing other client
accounts and in some cases may not be used with respect to the Fund. Receipt of
services or products other than research from brokers is not a factor in the
selection of brokers. Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking best price and
execution, purchases of shares of the Fund by customers of broker-dealers may be
considered as a factor in the selection of broker-dealers to execute the Fund's
securities transactions.
The Sub-Adviser may cause the Fund to pay a broker-dealer that provides
brokerage and research services to the Sub-Adviser an amount of commission for
effecting a securities transaction for the Fund in excess of the amount another
broker-dealer would have charged for effecting that transaction. The Sub-Adviser
must determine in good faith that such greater commission is reasonable in
relation to the value of the brokerage and research services provided by the
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<PAGE> 43
executing broker-dealer viewed in terms of that particular transaction or the
Sub-Adviser's overall responsibilities to the Fund and its other clients. The
Sub-Adviser's authority to cause the Fund to pay greater commissions is also
subject to such policies as the Trustees of the Trust may adopt from time to
time.
DESCRIPTION OF THE TRUST
The Trust, registered as a diversified open-end management investment
company, is organized as a Massachusetts business trust under the laws of
Massachusetts by an Agreement and Declaration of Trust (the "Declaration of
Trust") dated April 14, 1998.
The Declaration of Trust currently permits the Trustees to issue an
unlimited number of full and fractional shares of each series. Each share of the
Fund represents an equal proportionate interest in the Fund with each other
share of the Fund and is entitled to a proportionate interest in the dividends
and distributions from the Fund. The shares of the Fund do not have any
preemptive rights. Upon termination of the Fund, whether pursuant to liquidation
of the Trust or otherwise, shareholders of the Fund are entitled to share pro
rata in the net assets of the Fund available for distribution to shareholders.
The Declaration of Trust also permits the Trustees to charge shareholders
directly for custodial, transfer agency and servicing expenses.
The assets received by the Fund for the issue or sale of its shares and
all income, earnings, profits, losses and proceeds therefrom, subject only to
the rights of creditors, are allocated to, and constitute the underlying assets
of, the Fund. The underlying assets are segregated and are charged with the
expenses with respect to the Fund and with a share of the general expenses of
the Trust. If at any future time the Trust issues more than one series of
shares, any general expenses of the Trust that are not readily identifiable as
belonging to the Fund are allocated by or under the direction of the Trustees in
such manner as the Trustees determine to be fair and equitable. While the
expenses of the Trust will be allocated to the separate books of account of each
fund of the Trust, certain expenses may be legally chargeable against the assets
of all funds of the Trust.
The Declaration of Trust also permits the Trustees, without shareholder
approval, to subdivide any series of shares or the Fund into various sub-series
of shares with such dividend preferences and other rights as the Trustees may
designate. While the Trustees have no current intention to exercise this power,
it is intended to allow them to provide for an equitable allocation of the
impact of any future regulatory requirements which might affect various classes
of shareholders differently, or to permit shares of a series to be distributed
through more than one distribution channel, with the costs of the particular
means of distribution (or costs of related services) to be borne by the
shareholders who purchase through that means of distribution. The Trustees may
also, without shareholder approval, establish one or more additional separate
portfolios for investments in the Trust. Shareholders' investments in such an
additional portfolio would be evidenced by a separate series of shares (i.e., a
new "Fund").
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<PAGE> 44
The Declaration of Trust provides for the perpetual existence of the
Trust. The Trust or the Fund, however, may be terminated at any time by vote of
at least two-thirds of the outstanding shares of the Fund. The Declaration of
Trust further provides that the Trustees may also terminate the Trust or the
Fund upon written notice to the shareholders.
VOTING RIGHTS
As summarized in the Prospectus, shareholders are entitled to one vote
for each full share held (with fractional votes for each fractional share held)
and may vote (to the extent provided in the Declaration of Trust) on the
election of Trustees and the termination of the Trust and on other matters
submitted to the vote of shareholders.
The Declaration of Trust provides that on any matter submitted to a
vote of all Trust shareholders, all Trust shares entitled to vote shall be voted
together irrespective of series or sub-series unless the rights of a particular
series or sub-series would be adversely affected by the vote, in which case a
separate vote of that series or sub-series shall also be required to decide the
question. Also, a separate vote shall be held whenever required by the 1940 Act
or any rule thereunder. Rule 18f-2 under the 1940 Act provides in effect that a
class shall be deemed to be affected by a matter unless it is clear that the
interests of each class in the matter are substantially identical or that the
matter does not affect any interest of such class. On matters affecting an
individual series, only shareholders of that series are entitled to vote.
Consistent with the current position of the Securities and Exchange Commission,
shareholders of all series vote together, irrespective of series, on the
election of Trustees and the selection of the Trust's independent accountants,
but shareholders of each series vote separately on other matters requiring
shareholder approval, such as certain changes in investment policies of that
series or the approval of the investment advisory agreement relating to that
series.
There will normally be no meetings of shareholders for the purpose of
electing Trustees except that, in accordance with the 1940 Act, (i) the Trust
will hold a shareholders' meeting for the election of Trustees at such time as
less than a majority of the Trustees holding office have been elected by
shareholders, and (ii) if, as a result of a vacancy on the Board of Trustees,
less than two-thirds of the Trustees holding office have been elected by the
shareholders, that vacancy may be filled only by a vote of the shareholders. In
addition, Trustees may be removed from office by a written consent signed by the
holders of two-thirds of the outstanding shares and filed with the Trust's
custodian or by a vote of the holders of two-thirds of the outstanding shares at
a meeting duly called for that purpose, which meeting shall be held upon the
written request of the holders of not less than 10% of the outstanding shares.
Upon written request by ten holders of shares having an aggregate net
asset value constituting 1% of the outstanding shares stating that such
shareholders wish to communicate with the other shareholders for the purpose of
obtaining the signatures necessary to demand a meeting to consider removal of a
Trustee, the Trust has undertaken to provide a list of shareholders or to
disseminate appropriate materials (at the expense of the requesting
shareholders).
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<PAGE> 45
Except as set forth above, the Trustees shall continue to hold office
and may appoint successor Trustees. Voting rights are not cumulative.
No amendment may be made to the Declaration of Trust without the
affirmative vote of a majority of the outstanding shares of the Trust, except
(i) to change the Trust's name or to cure technical problems in the Declaration
of Trust and (ii) to establish, change or eliminate the par value of any shares
(currently all shares have no par value).
SHAREHOLDER AND TRUSTEE LIABILITY
Under Massachusetts law shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Declaration of Trust disclaims shareholder liability for acts or
obligations of the Fund and requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed by the Trust
or the Trustees. The Declaration of Trust provides for indemnification out of
Fund property for all loss and expense of any shareholder held personally liable
for the obligations of the Fund. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is considered remote since it
is limited to circumstances in which the disclaimer is inoperative and the Fund
itself would be unable to meet its obligations.
The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, nothing in
the Declaration of Trust protects a Trustee against any liability 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
his office. The By-Laws of the Trust provide for indemnification by the Trust of
the Trustees and officers of the Trust except with respect to any matter as to
which any such person did not act in good faith in the reasonable belief that
such action was in the best interests of the Trust. No officer or Trustee may be
indemnified against any liability to the Trust or the Trust's shareholders to
which such person would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office.
HOW TO BUY SHARES
Subject to minimum initial investment requirements and certain other conditions,
an investor may make an initial purchase of shares of the Fund by submitting a
completed application form and payment to:
Puget Sound Alternative Investment Series Trust
P.O. Box [ ]
Columbus, OH 43218
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<PAGE> 46
The procedures for purchasing shares of the Fund are summarized in "How to
Purchase Shares" in the Prospectus.
NET ASSET VALUE AND PUBLIC OFFERING PRICE
The net asset value of the shares of the Fund is determined by dividing
the Fund's total net assets (the excess of its assets over its liabilities) by
the total number of shares of the Fund outstanding and rounding to the nearest
cent. Such determination is made as of the close of regular trading on the New
York Stock Exchange on each day on which that Exchange is open for unrestricted
trading, and no less frequently than once daily on each day during which there
is sufficient trading in the Fund's portfolio securities that the value of the
Fund's shares might be materially affected. The New York Stock Exchange is
expected to be closed on the following weekdays: New Year's Day, President's
Day, Good Friday, Martin Luther King Day, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. Equity securities listed on an
established securities exchange or on the NASDAQ National Market System are
normally valued at their last sale price on the exchange where primarily traded
or, if there is no reported sale during the day, and in the case of
over-the-counter securities not so listed, at the last bid price. Long-term debt
securities are valued by a pricing service, which determines valuations of
normal institutional-size trading units of long-term debt securities. Such
valuations are determined using methods based on market transactions from
comparable securities and on various relationships between securities which are
generally by institutional traders. Other securities for which current market
quotations are not readily available (including restricted securities, if any)
and all other assets are taken at fair value as determined in good faith by the
Trustees, although the actual calculations may be made by persons acting
pursuant to the direction of the Trustees.
SHAREHOLDER SERVICES
OPEN ACCOUNTS
A shareholder's investment in the Fund is automatically credited to an
open account maintained for the shareholder by BISYS Fund Services, Inc., the
shareholder servicing agent for Trust (the "Shareholder Serving Agent").
Following each transaction in the account, a shareholder will receive an account
statement disclosing the current balance of shares owned and the details of
recent transactions in the account. After the close of each fiscal year, the
Shareholder Servicing Agent will send each shareholder a statement providing
federal tax information on dividends and distributions paid to the shareholder
during the year. This should be retained as a permanent record. Shareholders
will be charged a fee for duplicate information.
The open account system permits the purchase of full and fractional
shares and, by making the issuance and delivery of certificates representing
shares unnecessary, eliminates the problems
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<PAGE> 47
of handling and safekeeping certificates, and the cost and inconvenience of
replacing lost, stolen, mutilated or destroyed certificates.
The costs of maintaining the open account system are borne by the
Trust, and no direct charges are made to shareholders. Although the Trust has no
present intention of making such direct charges to shareholders, it reserves the
right to do so. Shareholders will receive prior notice before any such charges
are made.
SYSTEMATIC WITHDRAWAL PLAN
A Systematic Withdrawal Plan, referred to in the Prospectus under
"Shareholder Services--Systematic Withdrawal Plan," provides for monthly,
quarterly, semiannual or annual withdrawal payments of $100 or more from the
account of a shareholder provided that the account has a value of at least
$5,000 at the time the plan is established.
Payments will be made either to the shareholder or to any other person
designated by the shareholder. If payments are issued to an individual other
than the registered owner(s), a signature guarantee will be required on the Plan
application. All shares in an account that is subject to a Systematic Withdrawal
Plan must be held in an open account rather than in certificated form. Income
dividends and capital gain distributions will be reinvested at the net asset
value determined as of the close of regular trading on the New York Stock
Exchange on the record date for the dividend or distribution.
Since withdrawal payments represent proceeds from the liquidation of
shares, the shareholder should recognize that withdrawals may reduce and
possibly exhaust the value of the account, particularly in the event of a
decline in net asset value. Accordingly, the shareholder should consider whether
a Systematic Withdrawal Plan and the specified amounts to be withdrawn are
appropriate in the circumstances. The Fund makes no recommendations or
representations in this regard. It may be appropriate for the shareholder to
consult a tax adviser before establishing such a plan. See "Redemptions" and
"Income Dividends, Capital Gain Distributions and Tax Status" below for certain
information as to federal income taxes.
IRAS
Under "Shareholder Services--Retirement Plans," the Prospectus refers
to IRAs established under a prototype plan made available by the Fund. These
plans may be funded with shares of the Fund.
All income dividends and capital gain distributions of plan
participants must be reinvested. Plan documents and further information can be
obtained from the Fund.
Check with your financial or tax adviser as to the suitability of Fund
shares for your retirement plan.
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<PAGE> 48
REDEMPTIONS
The procedures for redemption of Fund shares are summarized in the
Prospectus under "How to Redeem Shares."
Except as noted below, signatures on redemption requests must be
guaranteed by commercial banks, trust companies, savings associations, credit
unions or brokerage firms that are members of domestic securities exchanges.
Signature guarantees by notaries public are not acceptable. However, as noted in
the Prospectus, a signature guarantee will not be required if the proceeds of
the redemption do not exceed $10,000 and the proceeds check is made payable to
the registered owner(s) and mailed to the record address.
If a shareholder selects the telephone redemption service in the manner
described in the next paragraph, Fund shares may be redeemed by calling
1-800-[ ]. When a telephonic redemption request is received, the proceeds
are wired to the bank account previously chosen by the shareholder and a nominal
wire fee (currently $5.00) is deducted. Telephonic redemption requests must be
received by the Fund prior to the close of regular trading on the New York Stock
Exchange on a day when the Exchange is open for business. Requests made after
that time or on a day when the New York Stock Exchange is not open for business
cannot be accepted by the Fund and a new request will be necessary.
In order to redeem shares by telephone, a shareholder must either
select this service when completing the Fund application or must do so
subsequently on the Service Options Form available from the Fund. When selecting
the service, a shareholder must designate a bank account to which the redemption
proceeds should be wired. Any change in the bank account so designated must be
made by furnishing to the Fund a completed Service Options Form with a signature
guarantee. Whenever the Service Options Form is used, the shareholder's
signature must be guaranteed as described above. Telephone redemptions may only
be made if an investor's bank is a member of the Federal Reserve System or has a
correspondent bank that is a member of the System. If the account is with a
savings bank, it must have only one correspondent bank that is a member of the
System. The Trust, and its transfer agent and custodian are not responsible for
the authenticity of withdrawal instructions received by telephone.
The redemption price will be the net asset value per share next
determined after the redemption request and any necessary special documentation
are received by the Fund in proper form. Proceeds resulting from a written
redemption request will normally be mailed to you within seven days after
receipt of your request in good order. Telephonic redemption proceeds will
normally be wired on the first business day following receipt of a proper
redemption request. In those cases where you have recently purchased your shares
by check and your check was received less than 10 days prior to the redemption
request, the Fund may withhold redemption proceeds until your check has cleared,
which may take up to 10 days from the purchase date.
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<PAGE> 49
The Fund will normally redeem shares for cash; however, the Fund
reserves the right to pay the redemption price wholly or partly in kind if the
Board of Trustees determines it to be advisable in the interest of the remaining
shareholders. If portfolio securities are distributed in lieu of cash, the
shareholder will normally incur brokerage commissions upon subsequent
disposition of any such securities. However, the Trust has elected to be
governed by Rule l8f-l under the 1940 Act pursuant to which the Trust is
obligated to redeem shares solely in cash for any shareholder during any 90-day
period up to the lesser of $250,000 or 1% of the total net asset value of the
Trust at the beginning of such period.
A redemption constitutes a sale of the shares for federal income tax
purposes on which the investor may realize a long- or short-term capital gain or
loss depending on the investor's holding period and adjusted basis in the
shares. See "Income Dividends, Capital Gains Distributions and Tax Status."
INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX STATUS
It is the policy of the Fund to pay its shareholders, as dividends,
substantially all net investment income and to distribute annually all net
realized capital gains, if any, after offsetting any capital loss carryovers.
Income dividends and capital gains distributions are payable in full
and fractional shares of the Fund based upon the net asset value determined as
of the close of regular trading on the New York Stock Exchange on the record
date for each dividend or distribution. Shareholders, however, may elect to
receive their income dividends or capital gains distributions, or both, in cash.
The election may be made at any time by submitting a written request to the
Fund. In order for a change to be in effect for any dividend or distribution, it
must be received by the Fund on or before the record date for such dividend or
distribution.
As required by federal law, detailed federal tax information will be
furnished to each shareholder for each calendar year on or before January 31 of
the succeeding year.
The Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Internal Revenue Code 1986, as amended (the "Code").
In order so to qualify and to qualify for the favorable tax treatment accorded
regulated investment companies and their shareholders, the Fund must, among
other things, (i) derive at least 90% of its gross income from dividends,
interest, payments with respect to certain securities loans, gains from the sale
or other disposition of stock or securities, or 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 or securities; (ii)
distribute with respect to each taxable year at least 90% of the sum of its
taxable net investment income, its net tax-exempt income, and the excess, if
any, of net short-term capital gains over net long-term capital losses for such
year; and (iii) at the end of each fiscal quarter maintain at least 50% of the
value of its total assets in cash, U.S. government securities, securities
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<PAGE> 50
of other regulated investment companies, and other securities of issuers which
represent, with respect to each issuer, no more than 5% of the value of the
Fund's total assets and 10% of the outstanding voting securities of such issuer,
with no more than 25% of its assets invested in the securities (other than those
of the U.S. government or 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, similar or related trades and businesses. To satisfy these
conditions, the Fund may be limited in its ability to use certain investment
techniques and may be required to liquidate assets to distribute income.
Moreover, some investment techniques used by the Fund may change the character
and amount of income recognized by the Fund. As a regulated investment company,
the Fund will not be subject to federal income tax on income paid on a timely
basis to its shareholders in the form of dividends or capital gain
distributions.
An excise tax at the rate of 4% will be imposed on the excess, if any,
of the Fund's "required distribution" (as defined in the Code) over its actual
distributions in any calendar year. Generally, the "required distribution" is
98% of the Fund's ordinary income for the calendar year plus 98% of its capital
gain net income recognized during the one-year period ending on October 31 plus
undistributed amounts from prior years. The Fund intends to make distributions
sufficient to avoid imposition of the excise tax. Distributions declared by the
Fund during October, November or December to shareholders of record on a date in
any such month and paid by the Fund during the following January will be treated
for federal tax purposes as paid by the Fund and received by shareholders on
December 31 of the year in which declared.
Shareholders of the Fund will be subject to federal income taxes on
distributions made by the Fund, whether received in cash or additional shares of
the Fund. Distributions by the Fund of net income and short-term capital gains,
if any, will be taxable to shareholders as ordinary income. Pursuant to the
Taxpayer Relief Act of 1997, two different tax rates apply to net capital gains
(that is, the excess of net gains from capital assets held for more than one
year over net losses from capital assets held for not more than one year). One
rate (generally 28%) applies to net gains on capital assets held for more than
one year but not more than 18 months ("28% rate gains") and a second, preferred
rate (generally 20%) applies to the balance of such net capital gains ("adjusted
net capital gains"). Distributions of net capital gains will be treated in the
hands of shareholders as 28% rate gains to the extent designated by the Fund as
deriving from net gains from assets held for more than one year but not more
than 18 months, and the balance will be treated as adjusted net capital gains.
Distributions of 28% rate gains and adjusted net capital gains will be taxable
to shareholders as such, regardless of how long a shareholder has held shares in
the Fund. A loss on the sale of shares held for six months or less will be
treated as a long-term capital loss to the extent of any long-term capital gain
dividend paid to the shareholder with respect to such shares.
Dividends and distributions on Fund shares are subject to federal
income taxes even if in effect they are a return of capital.
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<PAGE> 51
Redemptions, sales and exchanges of the Fund's shares are taxable
events and, accordingly, shareholders may realize gains and losses on these
transactions. Provided the shareholder holds the shares as a capital asset, any
gain realized upon a taxable disposition of shares will be treated as 28% rate
gain if the shares have been held for more than 12 months but not more than 18
months, and as adjusted net capital gains if the shares have been held for more
than 18 months. Otherwise, the gain on the redemption, sale or exchange of Fund
shares will be treated as short-term capital gain. In general, any loss realized
upon a taxable disposition of shares will be treated as a long-term capital loss
if the shares have been held for more than 12 months, and otherwise as
short-term capital loss. No loss will be allowed on the sale of Fund shares to
the extent the shareholder acquired other shares of the same Fund within 30 days
prior to the sale of the loss shares or 30 days after such sale.
If the Fund engages in hedging transactions, including hedging
transactions in options, futures contracts, and straddles, or other similar
transactions, it will be subject to special tax rules (including constructive
sale, mark-to-market, straddle, wash sale, and short sale rules), the effect of
which may be to accelerate income to the Fund, defer losses to the Fund, cause
adjustments in the holding periods of the Fund's securities, or convert
short-term capital losses into long-term capital losses. These rules could
therefore affect the amount, timing and character of distributions to
shareholders. The Fund will endeavor to make any available elections pertaining
to such transactions in a manner believed to be in the best interests of the
Fund.
The Fund is required to withhold 31% of any redemption proceeds, income
dividends and capital gain distributions it pays to you (1) if you do not
provide a correct, certified taxpayer identification number, (2) if the Fund is
notified that you have underreported income in the past, or (3) if you fail to
certify to the Fund that you are not subject to such withholding.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and regulations currently in effect. For the complete
provisions, reference should be made to the pertinent Code sections and
regulations. The Code and regulations are subject to change by legislative or
administrative action.
Dividends and distributions also may be subject to state and local
taxes. Shareholders are urged to consult their tax advisers regarding specific
questions as to federal, foreign, state or local taxes.
The foregoing discussion relates solely to U.S. investors. Non-U.S.
investors should consult their tax advisers concerning the tax consequences of
ownership of shares of the Fund, including the possibility that distributions
may be subject to a 30% United States withholding tax (or a reduced rate of
withholding provided by treaty).
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<PAGE> 52
PERFORMANCE INFORMATION
The Fund may from time to time include its total return in
advertisements or in information furnished to present or prospective
shareholders. The Fund may from time to time include in advertisements its total
return and the ranking of those performance figures relative to such figures for
groups of mutual funds categorized by Lipper Analytical Services as having the
same investment objectives.
Quotations of average annual total return for the Fund will be
expressed in terms of the average annual compounded rate of return of a
hypothetical investment in the Fund or class over periods of one, five, and ten
years (or for such shorter periods as shares of the Fund have been offered),
calculated pursuant to the following formula: P (1 + T) [n exponent]= ERV (where
P = a hypothetical initial payment of $1,000, T = the average annual total
return, n = the number of years, and ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the period). Except as
noted below, all total return figures reflect the deduction of a proportional
share of Fund expenses on an annual basis, and assume that (i) the maximum sales
load (or other charges deducted from payments) is deducted from the initial
$1,000 payment and (ii) all dividends and distributions are reinvested when
paid. Quotations of total return may also be shown for other periods. The Fund
may also, with respect to certain periods of less than one year, provide total
return information for that period that is unannualized. Any such information
would be accompanied by standardized total return information.
EXPERTS
The statement of assets and liabilities of the Trust as of
____________, 1998 appearing in this Statement of Additional Information have
been audited by _______________, independent auditors, as set forth in their
report thereon appearing elsewhere herein, and are included in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
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<PAGE> 53
INDEPENDENT AUDITOR'S REPORT
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<PAGE> 54
PUGET SOUND MARKET NEUTRAL PORTFOLIO
Statement of Assets and Liabilities
____________, 1998
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<PAGE> 55
SPECIMEN PRICE MAKE-UP
Total Offering Price Per Unit (as of ______, 1998):
Puget Sound Market
Neutral Portfolio
-------------------
Shares of beneficial interest outstanding [ ]
Net asset value and redemption price per share [$ ]
Maximum offering price per share ($______) [$ ]
-24-
<PAGE> 56
APPENDIX A
PUBLICATIONS THAT MAY CONTAIN FUND INFORMATION
A-1
<PAGE> 57
APPENDIX B
ADVERTISING AND PROMOTIONAL LITERATURE
B-1
<PAGE> 58
PUGET SOUND ALTERNATIVE INVESTMENT SERIES TRUST
PART C. OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits
(A) (1) Financial Statements: To be filed by amendment.
(B) Exhibits
1. Agreement and Declaration of Trust of Puget Sound
Alternative Investment Series Trust (the "Trust").
2. By-Laws of the Trust.
3. None.
4. None.
5. (a) Form of Management Agreement between
the Trust and Puget Sound Asset Management
Co., LLC ("PSAM") relating to Puget Sound
Market Neutral Portfolio, a series of the
Trust (the "Fund").
(b) Form of Sub-Advisory Agreement between PSAM
and Fiduciary Asset Management Co.
("FAMCO") relating to the Fund.
6. Form of Distribution Agreement between the Trust
and BISYS Fund Services, L.P.
7. None.
8. Form of Custodian Agreement (to be filed by
amendment).
9. (a) Form of Transfer Agency Agreement between
the Trust and BISYS Fund Services, Inc.
(b) Form of Administration Agreement between
the Trust and BISYS Fund Services Ohio,
Inc.
(c) Form of Fund Accounting Agreement between
the Trust and BISYS Fund Services, Inc.
(d) Form of Organizational Expense
Reimbursement Agreement between the Trust
and PSAM (to be filed by amendment).
<PAGE> 59
10. Opinion and Consent of Counsel (to be filed by
amendment).
11. Consent of Independent Accountants (to be filed by
amendment).
12. None.
13. Investment Representation Letter (to be filed by
amendment).
14. None.
15. Form of Distribution Plan for Investor Shares (to
be filed by amendment).
16. None.
17. None.
18. Form of Multi-Class Plan (to be filed by
amendment).
19. None.
-2-
<PAGE> 60
Item 25. Persons Controlled by or Under Common Control with the Trust
------------------------------------------------------------
None.
Item 26. Number of Holders of Securities
-------------------------------
The following table sets forth the number of record holders of each
series of the Trust as of _______________, 1998.
Title of Series Number of Record Holders
--------------- ------------------------
Puget Sound Market Neutral Portfolio [ ]
Item 27. Indemnification
---------------
Article VIII of the Trust's Agreement and Declaration of
Trust (Exhibit 1 hereto) and Article 4 of the Trust's
By-Laws (Exhibit 2 hereto) provides for indemnification of
its Trustees and officers. The effect of these provisions
is to provide indemnification for each of the Trust's
Trustees and officers against liabilities and counsel fees
reasonably incurred in connection with the defense of any
legal proceeding in which such Trustee or officer may be
involved by reason of being or having been a Trustee or
officer, except with respect to any matter as to which
such Trustee of officer shall have been adjudicated not to
have acted in good faith in the reasonable belief that
such Trustee's or officer's action was in the best
interest of the Trust, and except that no Trustee or
officer shall be indemnified against any liability to the
Trust or its shareholders to which such Trustee or officer
otherwise would be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such
Trustee's or officer's office.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 (the "Act") may be permitted to
Trustees, officers and controlling persons of the Trust
pursuant to the foregoing provisions, or otherwise, the
Trust has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Act, and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Trust of expenses incurred or paid by a
Trustee, officer or controlling person of the Trust in the
successful defense of any action, suit or proceeding) is
asserted by such Trustee, officer or controlling person in
connection with the securities being registered, the Trust
will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such
indemnification by it is
-3-
<PAGE> 61
against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
(a) PSAM is the investment adviser to the Fund, and its business is
summarized in "Management of the Fund" in the Prospectus. PSAM's
members, directors and officers have been engaged during the past two
fiscal years in the following businesses, professions, vocations or
employments of a substantial nature (former affiliations are marked
with an asterisk):
<TABLE>
<CAPTION>
Name and Office Name and Address of Nature of
with PSAM Other Affiliations Connection
--------- ------------------ ----------
<S> <C> <C>
Margaret M. Towle Margaret M. Towle, Self-Employed Consultant
Chief Executive Officer, sole proprietor
Chief Investment Officer, P.O. Box 11371
Portfolio Manager and Bainbridge Island, Washington 98110
member
*Towle Associates, Inc. Chairman, Chief
One Yesler Building, Suite 200 Executive Officer,
Seattle, Washington 98104 Director and Secretary
Barry M. Zwick Six Sigma Investment Corp. #102 General Partner
Trustee of member 925 De La Vina Street
Santa Barbara, California 93101
</TABLE>
(b) FAMCO is the sub-adviser to the Fund, and its business is summarized in
"Management of the Fund" in the Prospectus. FAMCO's directors and
officers have been engaged during the past two fiscal years in the
following businesses, professions, vocations or employments of a
substantial nature (former affiliations are marked with an asterisk):
<TABLE>
<CAPTION>
Name and Office Name and Address of Nature of
with PSAM Other Affiliations Connection
--------- ------------------ ----------
<S> <C> <C>
Charles D. Walbrandt None None
President
John L. Dorian None None
Chief Investment Officer -
Equity
</TABLE>
-4-
<PAGE> 62
<TABLE>
<CAPTION>
<S> <C> <C>
Wiley D. Angell None None
Chief Investment Officer -
Fixed Income
John P. Maguire None None
Executive Vice President
Joseph E. Gallagher None None
Vice President
</TABLE>
Item 29. Principal Underwriters
----------------------
(a) BISYS Fund Services, L.P., acts as distributor for the Trust. BISYS
Fund Services, L.P., also distributes the securities of the following
investment companies: American Performance Funds, AmSouth Mutual
Funds, The ARCH Fund, Inc., The BB&T Mutual Funds Group, The Coventry
Group, The Empire Builder Tax Free Bond Fund, ESC Strategic Funds,
Inc., The Eureka Funds, Fountain Square Funds, Hirtle Callaghan
Trust, HSBC Family of Funds, The Infinity Mutual Funds, Inc., INTRUST
Funds Trust, The Kent Funds, Magna Funds, Meyers Investment Trust,
MMA Praxis Mutual Funds, M.S.D.&T. Funds, Pacific Capital Funds,
Parkstone Group of Funds, The Parkstone Advantage Fund, Pegasus
Funds, The Republic Funds Trust, The Republic Advisors Funds Trust,
The Riverfront Funds, Inc., SBSF Funds, Inc. dba Key Mutual Funds,
Sefton Funds, The Sessions Group, Summit Investment Trust, Variable
Insurance Funds, The Victory Portfolios, The Victory Variable Funds, and
Vintage Mutual Funds, Inc.
(b)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
- ---------------- ---------------- ---------------
<S> <C> <C>
BISYS Fund Services, Inc. Sole General Partner None
Overlook at Great Notch
150 Clove Road
Little Falls, NJ 07424
WC Subsidiary Corporation Sole Limited Partner None
3435 Stelzer Road
Columbus, Ohio 43219
Robert John McMullan Executive Officer None
Overlook at Great Notch
150 Clove Road
Little Falls, NJ 07424
</TABLE>
-5-
<PAGE> 63
<TABLE>
<CAPTION>
<S> <C> <C>
William J. Tomko Supervising Principal None
3435 Stelzer Road
Columbus, Ohio 43219
David P. Blackmore Fin. Op. None
3435 Stelzer Road
Columbus, Ohio 43219
</TABLE>
(c) Not applicable.
Item 30. Location of Accounts and Records
--------------------------------
Persons maintaining physical possession of accounts, books and other
documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the Rules promulgated thereunder
are the Trust's Secretary, Margaret M. Towle, the Trust's investment
adviser, PSAM; the Trust's principal underwriter, BISYS Fund
Services, L.P.; the Trust's custodian, [ ]; and the Trust's transfer
agent, BISYS Fund Services, Inc. The address of the Secretary and the
investment adviser is One Yesler Building, Suite 200, Seattle,
Washington 98104; the address of the custodian is [ ]; and the
address of the transfer agent and principal underwriter is 3435
Stelzer Road, Columbus, Ohio 43219.
Item 31. Management Services
-------------------
None.
Item 32. Undertakings
------------
(a) The undersigned Trust hereby undertakes to call a meeting of
shareholders for the purpose of voting on the removal of a
trustee or trustees when requested in writing to do so by
the holders of at least 10% of the Trust's outstanding
voting securities and in connection with such meeting to
comply with the provisions of Section 16(c) of the
Investment Company Act of 1940 relating to shareholder
communications.
(b) The Trust hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Trust's latest
Annual Report to shareholders upon request and without
charge.
(c) The Trust hereby undertakes to file a post-effective
amendment to this Registration Statement on Form N-1A, using
financial statements which need not be certified, within
four to six months from the effective date of this
Registration Statement.
-6-
<PAGE> 64
NOTICE
A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts and notice
is hereby given that this instrument is executed on behalf of the Trust by an
officer of the Trust as an officer and not individually and the obligations of
or arising out 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.
-7-
<PAGE> 65
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Trust has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Seattle and state of Washington on the 16th day of
April, 1998.
PUGET SOUND ALTERNATIVE
INVESTMENT SERIES TRUST
By: /s/ Margaret M. Towle
-------------------------
Margaret M. Towle
Title: President
Pursuant to the Securities Act of 1933, this registration statement has
been signed below by the following persons in the capacities and on the dates
indicated.
Signatures Title Date
- ---------- ----- ----
/s/ Margaret M. Towle
- ---------------------- President, Treasurer, April 16, 1998
Margaret M. Towle Secretary and Trustee
<PAGE> 66
PUGET SOUND ALTERNATIVE INVESTMENT SERIES TRUST
Index to Exhibits
Exhibit No.
- -----------
Description
-----------
99.1 Agreement and Declaration of Trust of the Trust.
99.2 By-Laws of the Trust.
99.5(a) Form of Management Agreement between the Trust and PSAM relating
to the Fund.
99.5(b) Form of Sub-Advisory Agreement between PSAM and FAMCO relating to
the Fund.
99.6 Form of Distribution Agreement between the Trust and BISYS Fund
Services, L.P.
99.9(a) Form of Transfer Agency Agreement between the Trust and BISYS
Fund Services, Inc.
99.9(b) Form of Administration Agreement between the Trust and BISYS Fund
Services Ohio, Inc.
99.9(c) Form of Fund Accounting Agreement between the Trust and BISYS
Fund Services, Inc.
<PAGE> 1
EXHIBIT
-------
EX-99.1:
--------
AGREEMENT AND DECLARATION OF TRUST OF THE TRUST.
<PAGE> 2
PUGET SOUND ALTERNATIVE INVESTMENT SERIES TRUST
AGREEMENT AND DECLARATION OF TRUST
THIS AGREEMENT AND DECLARATION OF TRUST made at Boston,
Massachusetts, this 14th day of April, 1998 by the Trustees hereunder and by the
holders of shares of beneficial interest to be issued hereunder as hereinafter
provided:
WITNESSETH that
WHEREAS, this Trust has been formed to carry on the business of an
investment company; and
WHEREAS, the Trustees have agreed to manage all property coming into
their hands as trustees of a Massachusetts voluntary association with
transferable shares in accordance with the provisions hereinafter set forth;
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets, which they may from time to time acquire in
any manner as Trustees hereunder, IN TRUST to manage and dispose of the same
upon the following terms and conditions for the benefit of the holders from time
to time of Shares in this Trust as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
NAME
Section 1. This Trust shall be known as "Puget Sound Alternative
Investment Series Trust", and the Trustees shall conduct the business of the
Trust under that name or any other name as they may from time to time determine.
DEFINITIONS
Section 2. Whenever used herein, unless otherwise required by the
context or specifically provided:
(a) "Trust" refers to the Massachusetts business trust established by
this Agreement and Declaration of Trust, as amended from time to time;
(b) "Trustees" refers to the Trustees of the Trust named herein or
elected in accordance with Article IV hereof;
<PAGE> 3
(c) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest in the Trust shall be
divided from time to time or, if more than one series or class of
Shares is authorized by the Trustees, the equal proportionate
transferable units into which each series or class of Shares shall be
divided from time to time;
(d) "Shareholder" means a record owner of Shares;
(e) "1940 Act" refers to the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all as amended from time to time;
(f) The terms "Affiliated Person", "Assignment", "Commission",
"Interested Person", "Principal Underwriter" and "Majority Shareholder
Vote" (the sixty-seven percent (67%) or fifty percent (50%) requirement
of the third sentence of Section 2(a)(42) of the 1940 Act, whichever
may be applicable) shall have the meanings given them in the 1940 Act;
(g) "Declaration of Trust" shall mean this Agreement and Declaration of
Trust, as amended or restated from time to time;
(h) "By-Laws" shall mean the By-Laws of the Trust, as amended from time
to time;
(i) "Series" or "Series of Shares" refers to the one or more separate
investment portfolios of the Trust into which the assets and
liabilities of the Trust may be divided and the Shares of the Trust
representing the beneficial interest of Shareholders in such respective
portfolios; and
(j) "Class" or "Class of Shares" refers to the division of Shares
representing any Series into two or more Classes as provided in Article
III, Section 1 hereof.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to provide investors a managed investment
primarily in securities, debt instruments and other instruments and rights of a
financial character and to carry on such other business as the Trustees may from
time to time determine pursuant to their authority under this Declaration of
Trust.
-2-
<PAGE> 4
ARTICLE III
SHARES
DIVISION OF BENEFICIAL INTEREST
Section 1. The Shares of the Trust shall be issued in one or more
Series as the Trustees may, without shareholder approval, authorize. Each Series
shall be preferred over all other Series in respect of the assets specifically
allocated to that Series within the meaning of the 1940 Act and shall represent
a separate investment portfolio of the Trust. The beneficial interest in each
Series shall at all times be divided into Shares, without par value, each of
which shall, except as provided in the following sentence, represent an equal
proportionate interest in the Series with each other Share of the same Series,
none having priority or preference over another. The Trustees may, without
Shareholder approval, divide the Shares of any Series into two or more Classes,
Shares of each such Class having such preferences and special or relative rights
and privileges (including conversion rights, if any) as the Trustees may
determine or as shall be set forth in the By-Laws. The number of Shares
authorized shall be unlimited. The Trustees may from time to time divide or
combine the Shares of any Series or Class into a greater or lesser number
without thereby changing the proportionate beneficial interest in the Series or
Class.
OWNERSHIP OF SHARES
Section 2. The ownership of Shares shall be recorded on the books of
the Trust or a transfer or similar agent. No certificates certifying the
ownership of Shares shall be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the transfer of Shares and
similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent, as the case may be, shall be conclusive as to who are
the Shareholders of each Series and Class and as to the number of Shares of each
Series and Class held from time to time by each Shareholder.
INVESTMENT IN THE TRUST
Section 3. The Trustees shall accept investments in the Trust from such
persons and on such terms and for such consideration, which may consist of cash
or tangible or intangible property or a combination thereof, as they or the
By-Laws from time to time authorize.
All consideration received by the Trust for the issue or sale of Shares
of each Series, together with all income, earnings, profits and proceeds
thereof, including any proceeds derived from the sale, exchange or liquidation
thereof, and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same
-3-
<PAGE> 5
may be, shall irrevocably belong to the Series of Shares with respect to which
the same were received by the Trust for all purposes, subject only to the rights
of creditors, and shall be so handled upon the books of account of the Trust and
are herein referred to as "assets of" such Series.
NO PREEMPTIVE RIGHTS
Section 4. Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the Trust.
DERIVATIVE CLAIMS
Section 5. No Shareholder shall have the right to bring or maintain any
court action, proceeding or claim on behalf of the Trust or any Series without
first making demand on the Trustees requesting the Trustees to bring or maintain
such action, proceeding or claim. Such demand shall be excused only when the
plaintiff makes a specific showing that irreparable injury to the Trust or
Series would otherwise result. Such demand shall be mailed to the Secretary of
the Trust at the Trust's principal office and shall set forth in reasonable
detail the nature of the proposed court action, proceeding or claim and the
essential facts relied upon by the Shareholder to support the allegations made
in the demand. The Trustees shall consider such demand within 45 days of its
receipt by the Trust. In their sole discretion, the Trustees may submit the
matter to a vote of Shareholders of the Trust or Series, as appropriate. Any
decision by the Trustees to bring, maintain or settle (or not to bring, maintain
or settle) such court action, proceeding or claim, or to submit the matter to a
vote of Shareholders, shall be made by the Trustees in their business judgment
and shall be binding upon the Shareholders. Any decision by the Trustees to
bring or maintain a court action, proceeding or suit on behalf of the Trust or a
Series shall be subject to the right of the Shareholders under Article V,
Section 1 hereof to vote on whether or not such court action, proceeding or suit
should or should not be brought or maintained.
STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
Section 6. Shares shall be deemed to be personal property giving only
the rights provided in this Declaration of Trust or the By-Laws. Every
Shareholder by virtue of having become a Shareholder shall be held to have
expressly assented and agreed to the terms of this Declaration of Trust and the
By-Laws and to have become a party hereto. The death of a Shareholder during the
continuance of the Trust shall not operate to terminate the same nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but such
representative shall be entitled only to the rights of said decedent under this
Declaration of Trust. Ownership of Shares shall not entitle the Shareholder to
any title in or to the whole or any part of the Trust property or right to call
for a partition or
-4-
<PAGE> 6
division of the same or for an accounting, nor shall the ownership of Shares
constitute the Shareholders partners. Neither the Trust nor the Trustees, nor
any officer, employee or agent of the Trust, shall have any power to bind
personally any Shareholder, nor except as specifically provided in this
Declaration of Trust 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.
ARTICLE IV
THE TRUSTEES
ELECTION, TENURE AND REMOVAL
Section 1. The initial Trustee shall be Gregory Clark Davis. The
Trustees may fix the number of Trustees, fill vacancies in the Trustees,
including vacancies arising from an increase in the number of Trustees, or
remove Trustees with or without cause. Each Trustee shall serve during the
continued lifetime of the Trust until he or she dies, resigns or is removed, or,
if sooner, until the next meeting of Shareholders called for the purpose of
electing Trustees and until the election and qualification of his or her
successor. Any Trustee may resign at any time by written instrument signed by
him or her and delivered to any officer of the Trust or to a meeting of the
Trustees. Such resignation shall be effective upon receipt unless specified to
be effective at some other time. Except to the extent expressly provided in a
written agreement with the Trust, no Trustee resigning and no Trustee removed
shall have any right to any compensation for any period following his or her
resignation or removal, or any right to damages on account of such removal. The
Shareholders may fix the number of Trustees and elect Trustees at any meeting of
Shareholders called by the Trustees for that purpose and to the extent required
by applicable law, including paragraphs (a) and (b) of Section 16 of the 1940
Act.
No natural person shall serve as Trustee after the holders of record of
not less than two-thirds of the outstanding Shares have declared that such
Trustee be removed from that office either by declaration in writing filed with
the Trust's custodian or by votes cast in person or by proxy at a meeting called
for the purpose. The Trustees shall promptly call a meeting of Shareholders for
the purpose of voting upon the question of removal of any Trustee when requested
to do so in writing by the record holders of not less than ten percent (10%) of
the outstanding Shares.
Whenever ten or more Shareholders of record, who have been such for at
least six months preceding the date of application and who hold Shares in the
aggregate having a net asset value of at least one percent (1%) of the
outstanding Shares, shall apply to the Trustees in writing, stating that they
wish to communicate with other Shareholders with a view to obtaining signatures
to request a meeting pursuant to this Section and accompanied by a form of
communication and request which they wish to transmit, the
-5-
<PAGE> 7
Trustees shall within five business days after receipt of such application
either (a) afford to such applicants access to a list of the names and addresses
of all Shareholders as recorded on the books of the Trust; or (b) inform such
applicants as to the approximate cost of mailing to all Shareholders the
proposed communication and form of request. If the Trustees elect to follow the
course specified in clause (b), the Trustees, upon the written request of such
applicants, accompanied by a tender of the material to be mailed and of the
reasonable expenses of mailing, shall, with reasonable promptness, mail such
material to all Shareholders of record at their addresses as recorded on the
books of the Trust, unless within five business days after such tender the
Trustees shall mail to such applicants and file with the Commission, together
with a copy of the material proposed to be mailed, a written statement signed by
at least a majority of the Trustees to the effect that in their opinion either
such material contains untrue statements of fact or omits to state facts
necessary to make the statements contained therein not misleading, or would be
in violation of applicable law, and specifying the basis of such opinion. If the
Commission shall enter an order refusing to sustain any of the objections
specified in the written statement so filed, or if, after the entry of an order
sustaining one or more of such objections, the Commission shall find, after
notice and opportunity for hearing, that all objections so sustained have been
met, and shall enter an order so declaring, the Trustees shall mail copies of
such material to all Shareholders with reasonable promptness after the entry of
such order and the renewal of such tender.
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
Section 2. The death, declination, resignation, retirement, removal or
incapacity of the Trustees, or any one of them, shall not operate to annul the
Trust or to revoke any existing agency created pursuant to the terms of this
Declaration of Trust.
POWERS
Section 3. Subject to the provisions of this Declaration of Trust, the
business of the Trust shall be managed by the Trustees, and they shall have all
powers necessary or convenient to carry out that responsibility. Without
limiting the foregoing, the Trustees may adopt By-Laws not inconsistent with
this Declaration of Trust providing for the regulation and management of the
affairs of the Trust and may amend and repeal them to the extent that such
By-Laws do not reserve that right to the Shareholders; they may fill vacancies,
including vacancies caused by enlargement of their number, and may remove
Trustees with or without cause; they may elect and remove, with or without
cause, such officers and appoint and terminate such agents as they consider
appropriate; they may appoint from their own number, and terminate, any one or
more committees consisting of two or more Trustees, including an executive
committee which may, when the Trustees are not in session, exercise some or all
of the power and authority of the Trustees as the Trustees may determine; they
may employ one or more custodians of the assets of the Trust and may authorize
such custodians to employ subcustodians and to
-6-
<PAGE> 8
deposit all or any part of such assets in a system or systems for the central
handling of securities or with a Federal Reserve Bank, retain a transfer agent
or a Shareholder servicing agent, or both, provide for the distribution of
Shares by the Trust, through one or more principal underwriters or otherwise,
set record dates for the determination of Shareholders with respect to various
matters, and in general delegate such authority as they consider desirable to
any officer of the Trust, to any committee of the Trustees and to any agent or
employee of the Trust or to any such custodian or underwriter.
Without limiting the foregoing, the Trustees shall have power and
authority:
(a) To invest and reinvest cash, and to hold cash uninvested;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, lease,
write options with respect to or otherwise deal in any property rights
relating to any or all of the assets of the Trust;
(c) To act as a distributor of shares and as underwriter of, or broker
or dealer in, securities and other property;
(d) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such
power and discretion with relation to securities or property as the
Trustees shall deem proper;
(e) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;
(f) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, or in
the name of the Trustees or of the Trust or in the name of a custodian,
subcustodian or other depositary or a nominee or nominees or otherwise;
(g) To allocate assets, liabilities, income and expenses of the Trust
to a particular Series of Shares or to apportion the same among two or
more Series, provided that any liabilities or expenses incurred by a
particular Series of Shares shall be payable solely out of the assets
of that Series; and, to the extent necessary or appropriate to give
effect to the preferences and special or relative rights and privileges
of any Classes of Shares, to allocate assets, liabilities, income and
expenses of a Series to a particular Class of Shares of that Series or
to apportion the same among two or more Classes of Shares of that
Series;
-7-
<PAGE> 9
(h) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security of
which is or was held in the Trust; to consent to any contract, lease,
mortgage, purchase or sale of property by such corporation or issuer;
and to pay calls or subscriptions with respect to any security held in
the Trust;
(i) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to
deposit any security with, or transfer any security to, any such
committee, depositary or trustee, and to delegate to them such power
and authority with relation to any security (whether or not so
deposited or transferred) as the Trustees shall deem proper, and to
agree to pay, and to pay, such portion of the expenses and compensation
of such committee, depositary or trustee as the Trustees shall deem
proper;
(j) 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;
(k) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;
(l) To borrow funds or other property;
(m) To endorse or guarantee the payment of any notes or other
obligations of any person; to make contracts of guaranty or suretyship,
or otherwise assume liability for payment thereof; and to mortgage and
pledge the Trust property or any part thereof to secure any of or all
such obligations;
(n) To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of
the Trust's business, including, without limitation, insurance policies
insuring the assets of the Trust and payment of distributions and
principal on its portfolio investments, and insurance policies insuring
the Shareholders, Trustees, officers, employees, agents, investment
advisers or managers, principal underwriters or independent contractors
of the Trust individually against all claims and liabilities of every
nature arising by reason of holding or having held any such office or
position, or by reason of any action alleged to have been taken or
omitted by any such person as Shareholder, Trustee, officer, employee,
agent, investment adviser or manager, principal underwriter or
independent contractor, including any action taken or omitted that may
be determined to constitute negligence,
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<PAGE> 10
whether or not the Trust would have the power to indemnify such person
against such liability;
(o) To pay pensions as deemed appropriate by the Trustees, and to
adopt, establish and carry out pension, profit-sharing, share bonus,
share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life
insurance and annuity contracts as a means of providing such retirement
and other benefits, for any or all of the Trustees, officers, employees
and agents of the Trust; and
(p) To engage in any other lawful act or activity in which corporations
organized under the Massachusetts Business Corporation Act may engage.
The Trustees shall not in any way be bound or limited by any present or
future law or custom in regard to investments by trustees. The Trustees shall
not be required to obtain any court order to deal with any assets of the Trust
or take any other action hereunder.
Except as otherwise provided herein or from time to time in the
By-Laws, any action to be taken by the Trustees may be taken (A) by a majority
of the Trustees present at a meeting of the Trustees (a quorum being present),
within or without Massachusetts, including any meeting held by means of a
conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other at the same time
(participation by which means shall for all purposes constitute presence in
person at a meeting), or (B) by written consents of a majority of the Trustees
then in office (which written consents shall be filed with the records of the
meetings of the Trustees and shall be treated for all purposes as a vote taken
at a meeting of Trustees).
PAYMENT OF EXPENSES BY TRUST AND BY SHAREHOLDERS
Section 4. The Trustees are authorized to pay or to cause to be paid
out of the principal or income of the Trust, or partly out of principal and
partly out of income, as they deem fair, all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust, in connection with
the management thereof, or in connection with the financing of the sale of
Shares, including, but not limited to, the Trustees' compensation and such
expenses and charges for the services of the Trust's officers, employees, any
investment adviser, manager or sub-adviser, principal underwriter, auditor,
counsel, custodian, transfer agent, shareholder servicing agent, and such other
agents or independent contractors and such other expenses and charges as the
Trustees may deem necessary or proper to incur, provided, however, that all
expenses, fees, charges, taxes and liabilities incurred by or arising in
connection with a particular Series of Shares, as determined by the Trustees,
shall be payable solely out of the assets of that
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<PAGE> 11
Series and may, as the Trustees from time to time may determine, be allocated to
a particular Class of Shares of a Series or apportioned among two or more
Classes of Shares of a Series.
The Trustees shall have the power, as frequently as they may determine,
to cause each Shareholder, or each Shareholder of any particular Series or
Class, to pay directly, in advance or arrears, for charges of the Trust's
custodian or transfer, shareholder servicing or similar agent, an amount fixed
from time to time by the Trustees, by setting off such charges due from such
Shareholder from declared but unpaid dividends owed such Shareholder and/or by
reducing the number of Shares in the account of such Shareholder by that number
of full and/or fractional Shares which represents the outstanding amount of such
charges due from such Shareholder.
OWNERSHIP OF ASSETS OF THE TRUST
Section 5. Title to all of the assets of each Series of Shares and of
the Trust shall at all times be considered as vested in the Trustees.
ADVISORY, MANAGEMENT AND DISTRIBUTION
Section 6. The Trustees may, at any time and from time to time,
contract for exclusive or nonexclusive advisory and/or management services with
any corporation, trust, association or other organization (the "Manager"), every
such contract to comply with such requirements and restrictions as may be set
forth in the By-Laws; and any such contract may provide for one or more
sub-advisers who shall perform all or part of the obligations of the Manager
under such contract and may contain such other terms interpretive of or in
addition to said requirements and restrictions as the Trustees may determine,
including, without limitation, authority to determine from time to time what
investments shall be purchased, held, sold or exchanged and what portion, if
any, of the assets of the Trust shall be held uninvested and to make changes in
the Trust's investments. The Trustees may also, at any time and from time to
time, contract with the Manager or any other corporation, trust, association or
other organization, appointing it exclusive or nonexclusive distributor or
principal underwriter for the Shares, every such contract to comply with such
requirements and restrictions as may be set forth in the By-Laws; and any such
contract may contain such other terms interpretive of or in addition to said
requirements and restrictions as the Trustees may determine.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter, distributor or affiliate or agent of or
for any corporation, trust, association or other organization, or of or
for any
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<PAGE> 12
parent or affiliate of any organization, with which an advisory or
management contract, or principal underwriter's or distributor's
contract, or transfer, shareholder servicing or other agency contract
may have been or may hereafter be made, or that any such organization,
or any parent or affiliate thereof, is a Shareholder or has an interest
in the Trust, or that
(ii) any corporation, trust, association or other organization with
which an advisory or management contract, principal underwriter's or
distributor's contract, or transfer, shareholder servicing or other
agency contract may have been or may hereafter be made also has an
advisory or management contract, principal underwriter's or
distributor's contract, or transfer, shareholder servicing or other
agency contract with one or more other corporations, trusts,
associations or other organizations, or has other business or interests
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
Section 1. The Shareholders shall have power to vote only (i) for the
election of Trustees as provided in Article IV, Section 1 of this Declaration of
Trust, PROVIDED, HOWEVER, that no meeting of Shareholders is required to be
called for the purpose of electing Trustees unless and until such time as less
than a majority of the Trustees have been elected by the Shareholders, (ii) with
respect to any Manager or Sub-Adviser as provided in Article IV, Section 6 of
this Declaration of Trust to the extent required by the 1940 Act, (iii) with
respect to any termination of this Trust to the extent and as provided in
Article IX, Section 5 of this Declaration of Trust, (iv) with respect to any
amendment of this Declaration of Trust to the extent and as provided in Article
IX, Section 8 of this Declaration of Trust, (v) to the same extent as the
stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the Shareholders,
and (vi) with respect to such additional matters relating to the Trust as may be
required by law, this Declaration of Trust, the By-Laws or any registration of
the Trust with the Commission (or any successor agency) or any state, or as the
Trustees may consider necessary or desirable. Each whole Share shall be entitled
to one vote as to any matter on which it is entitled to vote and each fractional
Share shall be entitled to a proportionate fractional vote. On any matter
submitted to a vote of Shareholders, all Shares of the Trust then entitled to
vote shall, except as
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otherwise provided in the By-Laws, be voted in the aggregate as a single class
without regard to Series or Classes of Shares, except that (1) when required by
the 1940 Act or when the Trustees shall have determined that the matter affects
one or more Series or Classes of Shares materially differently, Shares shall be
voted by individual Series or Class and (2) when the matter affects only the
interests of one or more Series or Classes, only Shareholders of such Series or
Classes shall be entitled to vote thereon. There shall be no cumulative voting
in the election of Trustees. Shares may be voted in person or by proxy. A proxy
with respect to Shares held in the name of two or more persons shall be valid if
executed by any one of them unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any one of them. A
proxy purporting to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. Until Shares are issued, the Trustees
may exercise all rights of Shareholders and may take any action permitted or
required of the Shareholders by law, this Declaration of Trust or the By-Laws.
MEETINGS
Section 2. Meetings of the Shareholders may be called by the Trustees
for the purpose of electing Trustees as provided in Article IV, Section 1 of
this Declaration of Trust and for such other purposes as may be prescribed by
law, by this Declaration of Trust or by the By-Laws. Meetings of the
Shareholders may also be called by the Trustees from time to time for the
purpose of taking action upon any other matter deemed by the Trustees to be
necessary or desirable. A meeting of Shareholders may be held at any place
designated by the Trustees. Written notice of any meeting of Shareholders shall
be given or caused to be given by the Trustees by mailing such notice at least
seven days before such meeting, postage prepaid, stating the time and place of
the meeting, to each Shareholder entitled to vote at such meeting at the
Shareholder's address as it appears on the records of the Trust. Whenever notice
of a meeting is required to be given to a Shareholder under this Declaration of
Trust or the By-Laws, a written waiver thereof, executed before or after the
meeting by such Shareholder or his or her attorney thereunto authorized and
filed with the records of the meeting, shall be deemed equivalent to such
notice.
QUORUM AND REQUIRED VOTE
Section 3. Forty percent (40%) of the Shares entitled to vote shall
constitute a quorum for the transaction of business at a Shareholders' meeting,
except that where any provision of law or of this Declaration of Trust or the
By-Laws requires that holders of any Series or Class shall vote as a Series or
Class, then forty percent (40%) of the aggregate number of Shares of that Series
or Class entitled to vote shall be necessary to constitute a quorum for the
transaction of business by that Series or Class. Any lesser number shall be
sufficient for adjournments. Any adjourned session or sessions may be
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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 any provision of law or this Declaration of Trust or the By-Laws, a majority
of the Shares voted shall decide any questions and a plurality shall elect a
Trustee, provided that where any provision of law or of this Declaration of
Trust or the By-Laws requires that the holders of any Series or Class shall vote
as a Series or Class, then a majority of the Shares of that Series or Class
voted on the matter (or a plurality with respect to the election of a Trustee)
shall decide that matter insofar as that Series or Class is concerned.
ACTION BY WRITTEN CONSENT
Section 4. Any action taken by Shareholders may be taken without a
meeting if Shareholders holding a majority of the Shares entitled to vote on the
matter (or such larger proportion thereof as shall be required by any express
provision of law or this Declaration of Trust or the By-Laws) or, as applicable,
holding a majority (or such larger proportion as aforesaid) of the Shares of any
Series or Class entitled to vote separately on the matter consent to the action
in writing and such written consents are filed with the records of the meetings
of Shareholders. Such consent shall be treated for all purposes as a vote taken
at a meeting of Shareholders.
ADDITIONAL PROVISIONS
Section 5. The By-Laws may include further provisions for Shareholders'
votes and meetings and related matters.
ARTICLE VI
DISTRIBUTIONS, REDEMPTIONS AND REPURCHASES
DISTRIBUTIONS
Section 1. The Trustees may each year, or more frequently if they so
determine in their sole discretion, distribute to the Shareholders of each
Series out of the assets of such Series such amounts as the Trustees may
determine. Any such distribution to the Shareholders of a particular Series
shall be made to said Shareholders pro rata in proportion to the number of
Shares of such Series held by each of them, except to the extent otherwise
required or permitted by the preferences and special or relative rights and
privileges of any Classes of Shares of that Series, and any distribution to the
Shareholders of a particular Class of Shares shall be made to such Shareholders
pro rata in proportion to the number of Shares of such Class held by each of
them. Such distributions shall be made in cash, Shares or other property, or a
combination thereof, as determined by the Trustees. Any such distribution paid
in Shares will be paid at the net asset value thereof as determined in
accordance with the By-Laws.
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<PAGE> 15
REDEMPTIONS AND REPURCHASES
Section 2. The Trust shall purchase such Shares as are offered by any
Shareholder for redemption, upon the presentation of any certificate for the
Shares to be purchased, a proper instrument of transfer and a request directed
to the Trust or a person designated by the Trust that the Trust purchase such
Shares, or in accordance with such other procedures for redemption as the
Trustees may from time to time authorize; and the Trust will pay therefor the
net asset value thereof, as next determined in accordance with the By-Laws, less
any redemption charge or fee as the Trustees may from time to time authorize.
Except as otherwise provided from time to time in the prospectus of the Trust
relating to the particular Class or Series of Shares, or as the Trustees may
otherwise determine, payment for said Shares shall be made by the Trust to the
Shareholder within seven days after the date on which the request is made. The
Trust may also purchase or repurchase Shares at a price not exceeding the net
asset value of such Shares in effect when the purchase or repurchase or any
contract to purchase or repurchase is made.
REDEMPTIONS AT THE OPTION OF THE TRUST
Section 3. The Trust shall have the right at its option and at any time
to redeem Shares of any Shareholder at the net asset value thereof as determined
in accordance with the By-Laws: (i) if at such time such Shareholder owns fewer
Shares than, or Shares having an aggregate net asset value of less than, an
amount determined from time to time by the Trustees; or (ii) to the extent that
such Shareholder owns Shares of a particular Series or Class of Shares equal to
or in excess of a percentage of the outstanding Shares of that Series or Class
determined from time to time by the Trustees; or (iii) to the extent that such
Shareholder owns Shares of the Trust representing a percentage equal to or in
excess of such percentage of the aggregate number of outstanding Shares of the
Trust or the aggregate net asset value of the Trust determined from time to time
by the Trustees.
ARTICLE VII
COMPENSATION AND LIMITATION OF LIABILITY OF TRUSTEES
COMPENSATION
Section 1. The Trustees as such shall be entitled to reasonable
compensation from the Trust; they may fix the amount of their compensation.
Nothing herein shall in any way prevent the employment of any Trustee for
advisory, management, legal, accounting, investment banking, underwriting,
brokerage or other services and payment for the same by the Trust.
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<PAGE> 16
LIMITATION OF LIABILITY
Section 2. The Trustees shall not be responsible or liable in any event
for any neglect or wrongdoing of any officer, agent, employee, Manager or
principal underwriter of the Trust, nor shall any Trustee be responsible for the
act or omission of any other Trustee, but nothing herein contained shall protect
any Trustee against any liability to which he or she would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office.
Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever issued, executed or done by or on behalf of
the Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been issued, executed or done only in or with
respect to their or his or her capacity as Trustees or Trustee, and such
Trustees or Trustee shall not be personally liable thereon.
ARTICLE VIII
INDEMNIFICATION
TRUSTEES, OFFICERS, ETC.
Section 1. The By-Laws may include provisions whereby the Trust may
provide indemnity to its Trustees and officers, including persons who serve at
the Trust's request as directors, officers or trustees of another organization
in which the Trust has any interest as a shareholder, creditor or otherwise
(each such Trustee, officer or person hereinafter referred to as a "Covered
Person"), against all liabilities and expenses, including but not limited to
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and counsel fees reasonably incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such Covered Person may be or may have
been threatened, while in office or thereafter, by reason of being or having
been such a Covered Person. Any indemnity provided to Covered Persons by the
By-Laws may, if the By-Laws so provide, be in addition to any other indemnity to
which such persons may be entitled by law, contract or otherwise.
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ARTICLE IX
MISCELLANEOUS
TRUSTEES, SHAREHOLDERS ETC. NOT PERSONALLY LIABLE; NOTICE
Section 1. All persons extending credit to, contracting with or having
any claim against the Trust or any Series or Class shall look only to the assets
of the Trust, or, to the extent that the liability relates to assets of a
particular Series or Class, only to the assets belonging to the relevant Series
or attributable to the relevant Class, for payment under such credit, contract
or claim, and neither the Shareholders nor the Trustees, nor any of the Trust's
officers, employees or agents, whether past, present or future, shall be
personally liable therefor. Nothing in this Declaration of Trust shall protect
any Trustee against any liability to which such Trustee would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the office of
Trustee.
Every note, bond, contract, instrument, certificate or undertaking made
or issued on behalf of the Trust by the Trustees, by any officer or officers or
otherwise shall give notice that this Declaration of Trust is on file with the
Secretary of The Commonwealth of Massachusetts and shall recite that the same
was executed or made by or on behalf of the Trust or by them as Trustee or
Trustees or as officer or officers or otherwise and not individually and that
the obligations of such instrument are not binding upon any of them or the
Shareholders individually but are binding only upon the assets and property of
the Trust or upon the assets belonging to the Series or attributable to the
Class for the benefit of which the Trustees have caused the note, bond,
contract, instrument, certificate or undertaking to be made or issued, and may
contain such further recital as he or she or they may deem appropriate, but the
omission of any such recital shall not operate to bind any Trustee or Trustees
or officer or officers or Shareholders or any other person individually.
SHAREHOLDERS
Section 2. In case any Shareholder or former Shareholder shall be held
to be personally liable solely by reason of his or her being or having been a
Shareholder of the Trust or of a particular Series or Class and not because of
his or her acts or omissions or for some other reason, the Shareholder or former
Shareholder (or his or her heirs, executors, administrators or other legal
representatives or, in the case of a corporation or other entity, its corporate
or other general successor) shall be entitled out of the assets of the Series
(or attributable to the Class) of which he or she is a Shareholder or former
Shareholder to be held harmless from and indemnified against all loss and
expense arising from such liability.
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TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
Section 3. The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. A Trustee shall be liable
for his or her own willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustee, and
for nothing else, and shall not be liable for the errors of judgment or mistakes
of fact or law. The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust, and shall be
under no liability for any act or omission in accordance with such advice or for
failing to follow such advice. The Trustees as such shall not be required to
give any bond as such nor any surety if a bond is required.
LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES
Section 4. No person dealing with the Trustees shall be bound to make
any inquiry concerning the validity of any transaction made or to be made by the
Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
DURATION AND TERMINATION OF TRUST
Section 5. Unless terminated as provided herein, the Trust shall
continue without limitation of time. The Trust may be terminated at any time by
vote of Shareholders holding at least sixty-six and two-thirds percent (66 2/3%)
of the Shares entitled to vote, or by the Trustees by written notice to the
Shareholders. Any Series or Class of Shares may be terminated at any time by
vote of Shareholders holding at least sixty-six and two-thirds percent (66 2/3%)
of the Shares of such Series or Class entitled to vote, or by the Trustees by
written notice to the Shareholders of such Series or Class. Upon termination of
the Trust or of any one or more Series or Classes of Shares, after paying or
otherwise providing for all charges, taxes, expenses and liabilities, whether
due or accrued or anticipated, of the Trust or of the particular Series or Class
as may be determined by the Trustees, the Trust shall in accordance with such
procedures as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash or shares or other property, or any combination
thereof, and distribute the proceeds to the Shareholders of the Series involved,
ratably according to the number of Shares of such Series held by the several
Shareholders of such Series on the date of termination, except to the extent
otherwise required or permitted by the preferences and special or relative
rights and privileges of any Classes of Shares of that Series, provided that any
distribution to the Shareholders of a particular Class of Shares shall be made
to such Shareholders pro rata in proportion to the number of Shares of such
Class held by each of them.
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FILING AND COPIES, REFERENCES, HEADINGS
Section 6. The original or a copy of this instrument and of each
amendment hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. A copy of this instrument and of each amendment
hereto shall be filed by the Trust with the Secretary of The Commonwealth of
Massachusetts and with the Boston City Clerk, as well as any other governmental
office where such filing may from time to time be required. Anyone dealing with
the Trust may rely on a certificate by an officer of the Trust as to whether or
not any such amendments have been made and as to any matters in connection with
the Trust hereunder, and, with the same effect as if it were the original, may
rely on a copy certified by an officer of the Trust to be a copy of this
instrument or of any such amendments. In this instrument and in any such
amendment, references to this instrument and all expressions like "herein",
"hereof" and "hereunder" shall be deemed to refer to this instrument as amended
or affected by any such amendments. Headings are placed herein for convenience
of reference only and shall not be taken as a part hereof or control or affect
the meaning, construction or effect of this instrument. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
APPLICABLE LAW
Section 7. This Declaration of Trust is made in The Commonwealth of
Massachusetts, and it is created under and is to be governed by and construed
and administered according to the laws of said Commonwealth. The Trust shall be
of the type commonly called a Massachusetts business trust and, without limiting
the provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
AMENDMENTS
Section 8. This Declaration of Trust may be amended at any time by an
instrument in writing signed by a majority of the then Trustees when authorized
to do so by vote of Shareholders holding a majority of the Shares entitled to
vote, except that an amendment which in the determination of the Trustees shall
affect the holders of one or more Series or Classes of Shares but not the
holders of all outstanding Series and Classes shall be authorized by vote of the
Shareholders holding a majority of the Shares entitled to vote of each Series
and Class affected and no vote of Shareholders of a Series or Class not affected
shall be required. Amendments having the purpose of changing the name of the
Trust, of establishing, changing or eliminating the par value of any Shares or
of supplying any omission, curing any ambiguity or curing, correcting or
supplementing any defective or inconsistent provision contained herein shall not
require authorization by vote of any Shareholders.
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IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
in the City of Boston, Massachusetts for himself and his assigns, as of the day
and year first above written.
/s/ Gregory Clark Davis
------------------------
Gregory Clark Davis
THE COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. Boston, April 14, 1998
Then personally appeared the above named Gregory Clark Davis and
acknowledged the foregoing instrument to be his free act and deed, before me,
/s/ Richard E. Gordet
-------------------------
Notary Public
My Commission Expires: February 26, 2004
Trustee: Gregory Clark Davis
172 Beech Street
Belmont, Massachusetts 02178
Trust Address: One Yesler Building, Suite 200
Seattle, Washington 98104
<PAGE> 1
EXHIBIT
-------
EX-99.2:
--------
BY-LAWS OF THE TRUST.
<PAGE> 2
BY-LAWS
OF
PUGET SOUND ALTERNATIVE INVESTMENT SERIES TRUST
ARTICLE 1
AGREEMENT AND DECLARATION
OF TRUST AND PRINCIPAL OFFICE
1.1 AGREEMENT AND DECLARATION OF TRUST. These By-Laws shall be subject to the
Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of Puget Sound Alternative Investment Series Trust (the
"Trust"), the Massachusetts business trust established by the Declaration of
Trust.
1.2 PRINCIPAL OFFICE OF THE TRUST. The principal office of the Trust shall be
located in Seattle, Washington.
ARTICLE 2
MEETINGS OF TRUSTEES
2.1 REGULAR MEETINGS. Regular meetings of the Trustees may be held without call
or notice at such places and at such times as the Trustees may from time to time
determine, provided that notice of the first regular meeting following any such
determination shall be given to absent Trustees.
2.2 SPECIAL MEETINGS. Special meetings of the Trustees may be held, at any time
and at any place designated in the call of the meeting, when called by the
Chairman of the Board, if any, the President or the Treasurer or by two or more
Trustees, sufficient notice thereof being given to each Trustee by the Secretary
or an Assistant Secretary or by the officer or the Trustees calling the meeting.
2.3 NOTICE. It shall be sufficient notice to a Trustee of a special meeting to
send notice by mail at least forty-eight hours or by telegram at least
twenty-four hours before the meeting addressed to the Trustee at his or her
usual or last known business or residence address or to give notice to him or
her in person or by telephone at least twenty-four hours before the meeting.
Notice of a meeting need not be given (a) to any Trustee if a written waiver of
notice, executed by him before or after the meeting, is filed with the records
of the meeting; or (b) to any Trustee who attends the meeting without protesting
prior thereto or at its commencement the lack of notice to him or her. Neither
notice of a meeting nor a waiver of a notice need specify the purposes of the
meeting.
2.4 QUORUM. At any meeting of the Trustees a majority of the Trustees then in
office shall constitute a quorum. Any meeting may be adjourned from time to time
by a majority of the
<PAGE> 3
votes cast upon the question, whether or not a quorum is present, and the
meeting may be held as adjourned without further notice.
ARTICLE 3
OFFICERS
3.1 ENUMERATION; QUALIFICATION. The officers of the Trust shall be a President,
a Treasurer, a Secretary, and such other officers, if any, as the Trustees from
time to time may in their discretion elect. The Trust may also have such agents
as the Trustees may appoint from time to time in their discretion. If a Chairman
of the Board is elected, he or she shall be a Trustee and may but need not be a
shareholder; and any other officer may be but none need be a Trustee or
shareholder. Any two or more offices may be held by the same person.
3.2 ELECTION AND TENURE. The President, the Treasurer, the Secretary and such
other officers as the Trustees may in their discretion from time to time elect
shall each be elected by the Trustees to serve until his or her successor is
elected or qualified, or until he or she sooner dies, resigns, is removed or
becomes disqualified. Each officer shall hold office and each agent shall retain
authority at the pleasure of the Trustees.
3.3 POWERS. Subject to the other provisions of these By-Laws, each officer shall
have, in addition to the duties and powers herein and in the Declaration of
Trust set forth, such duties and powers as are commonly incident to the office
occupied by him or her as if the Trust were organized as a Massachusetts
business corporation and such other duties and powers as the Trustees may from
time to time designate.
3.4 PRESIDENT AND VICE PRESIDENTS. The President shall have the duties and
powers specified in these By-Laws and shall have such other duties and powers as
may be determined by the Trustees. Any Vice Presidents shall have such duties
and powers as shall be designated from time to time by the Trustees.
3.5 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the Trust shall be
the Chairman of the Board, the President or such other officer as is designated
by the Trustees and shall, subject to the control of the Trustees, have general
charge and supervision of the business of the Trust and, except as the Trustees
shall otherwise determine, preside at all meetings of the shareholders and of
the Trustees. If no such designation is made, the President shall be the Chief
Executive Officer.
3.6 CHAIRMAN OF THE BOARD. If a Chairman of the Board of Trustees is elected, he
or she shall have the duties and powers specified in these By-Laws and shall
have such other duties and powers as may be determined by the Trustees.
3.7 TREASURER. The Treasurer shall be the chief financial and accounting officer
of the Trust, and shall, subject to the provisions of the Declaration of Trust
and to any arrangement made by
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<PAGE> 4
the Trustees with a custodian, investment adviser or manager or transfer,
shareholder servicing or similar agent, be in charge of the valuable papers,
books of account and accounting records of the Trust, and shall have such other
duties and powers as may be designated from time to time by the Trustees or by
the President.
3.8 SECRETARY. The Secretary shall record all proceedings of the Shareholders
and the Trustees in books to be kept therefor, which books or a copy thereof
shall be kept at the principal office of the Trust. In the absence of the
Secretary from any meeting of the Shareholders or Trustees, an assistant
Secretary or, if there be none or if he or she is absent, a temporary clerk
chosen at such meeting shall record the proceedings thereof in the aforesaid
books.
3.9 RESIGNATIONS AND REMOVALS. Any officer may resign at any time by written
instrument signed by him or her and delivered to the President or the Secretary
or to a meeting of the Trustees. Such resignation shall be effective upon
receipt unless specified to be effective at some other time. The Trustees may
remove any officer with or without cause. Except to the extent expressly
provided in a written agreement with the Trust, no officer resigning and no
officer removed shall have any right to any compensation for any period
following his or her resignation or removal, or any right to damages on account
of such removal.
ARTICLE 4
INDEMNIFICATION
4.1 TRUSTEES, OFFICERS, ETC. The Trust shall indemnify each of its Trustees and
officers (including persons who serve at the Trust's request as directors,
officers or trustees of another organization in which the Trust has any interest
as a shareholder, creditor or otherwise) (each such Trustee, officer or person
hereinafter referred to as a "Covered Person") against all liabilities and
expenses, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and counsel fees reasonably
incurred by any Covered Person in connection with the defense or disposition of
any action, suit or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, in which such Covered Person may be
or may have been involved as a party or otherwise or with which such person may
be or may have been threatened, while in office or thereafter, by reason of any
alleged act or omission as a Trustee or officer or by reason of his or her being
or having been such a Trustee or officer, except with respect to any matter as
to which such Covered Person shall have been finally adjudicated in any such
action, suit or other proceeding not to have acted in good faith in the
reasonable belief that such Covered Person's action was in the best interest of
the Trust, and except that no Covered Person shall be indemnified against any
liability to the Trust or its Shareholders to which such Covered Person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
Covered Person's office. Expenses, including counsel fees so incurred by any
such Covered Person, may be paid from time to time by the Trust in advance of
the final disposition of any such action, suit or proceeding on the condition
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that the amounts so paid shall be repaid to the Trust if it is ultimately
determined that indemnification of such expenses is not authorized under this
Article.
4.2 COMPROMISE PAYMENT. As to any matter disposed of by a compromise payment by
any such Covered Person referred to in Section 4.1 above, pursuant to a consent
decree or otherwise, no such indemnification either for said payment or for any
other expenses shall be provided unless such compromise shall be approved as in
the best interests of the Trust, after notice that it involved such
indemnification, (a) by a disinterested majority of the Trustees then in office;
or (b) by a majority of the disinterested Trustees then in office; or (c) by any
disinterested person or persons to whom the question may be referred by the
Trustees; or (d) by vote of Shareholders holding a majority of the Shares
entitled to vote thereon, exclusive of any Shares beneficially owned by any
interested Covered Person; provided, however, that such indemnification would
not protect such person against any liability to the Trust or its Shareholders
to which such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of office. Approval by the Trustees pursuant to clause
(a) or (b) or by any disinterested person or persons pursuant to clause (c) of
this Section shall not prevent the recovery from any Covered Person of any
amount paid as indemnification to such Covered Person in accordance with any of
such clauses if such Covered Person is subsequently adjudicated by a court of
competent jurisdiction not to have acted in good faith in the reasonable belief
that such Covered Person's action was in the best interests of the Trust or to
have been 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 such Covered Person's office.
4.3 INDEMNIFICATION NOT EXCLUSIVE. The right of indemnification hereby provided
shall not be exclusive of or affect any other rights to which any such Covered
Person may be entitled. As used in this Article 4, the term "Covered Person"
shall include such person's heirs, executors and administrators; an "interested
Covered Person" is one against whom the action, suit or other proceeding in
question or another action, suit or other proceeding on the same or similar
grounds is then or has been pending; and a "disinterested Trustee" or
"disinterested person" is a Trustee or a person against whom none of such
actions, suits or other proceedings or another action, suit or other proceeding
on the same or similar grounds is then or has been pending. Nothing contained in
this Article shall affect any rights to indemnification to which personnel of
the Trust, other than Trustees and officers, and other persons may be entitled
by contract or otherwise under law, or the power of the Trust to purchase and
maintain liability insurance on behalf of any such person.
ARTICLE 5
REPORTS
5.1 GENERAL. The Trustees and officers shall render reports at the time and in
the manner required by the Declaration of Trust or any applicable law. Officers
shall render such
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<PAGE> 6
additional reports as they may deem desirable or from time to time as may be
required by the Trustees.
ARTICLE 6
FISCAL YEAR
6.1 GENERAL. Except as otherwise provided from time to time by the Trustees, the
fiscal year of the Trust shall end on May 31 in each year.
ARTICLE 7
SEAL
7.1 GENERAL. The seal of the Trust shall consist of a flat-faced die with the
word "Massachusetts", together with the name of the Trust and the year of its
organization cut or engraved thereon. Unless otherwise required by the Trustees,
it shall not be necessary to place the seal on, and its absence shall not impair
the validity of, any document, instrument or other paper executed and delivered
by or on behalf of the Trust.
ARTICLE 8
EXECUTION OF PAPERS
8.1 GENERAL. Except as the Trustees, generally or in particular cases, may have
authorized the execution thereof in some other manner, all checks, notes, drafts
and other obligations and all registration statements and amendments thereto and
all applications and amendments thereto to the Securities and Exchange
Commission shall be signed by any of the President, any Vice- President, the
Treasurer or any of such other officers or agents as shall be designated for
that purpose by a vote of the Trustees.
ARTICLE 9
ISSUANCE OF SHARE CERTIFICATES
9.1 SHARE CERTIFICATES. In lieu of issuing certificates for shares, the Trustees
or the transfer agent may either issue receipts therefor or may keep accounts
upon the books of the Trust for the record holders of such shares, who shall in
either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms of this Article 9.
The Trustees may at any time authorize the issuance of share certificates. In
that event, each shareholder shall be entitled to a certificate stating the
number of shares owned by him or her, in such form as shall be prescribed from
time to time by the Trustees. Such certificates shall be signed by the President
or any Vice-President and by the Treasurer or any Assistant Treasurer. Such
signatures may be facsimile if the certificate is signed by a transfer agent, or
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<PAGE> 7
by a registrar, other than a Trustee, officer or employee of the Trust. In case
any officer who has signed or whose facsimile signature has been placed on such
certificate shall cease to be such officer before such certificate is issued, it
may be issued by the Trust with the same effect as if he or she were such
officer at the time of its issue.
9.2 LOSS OF CERTIFICATES. In case of the alleged loss or destruction or the
mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe.
9.3 ISSUANCE OF NEW CERTIFICATES TO PLEDGEE. A pledgee of shares transferred as
collateral security shall be entitled to a new certificate if the instrument of
transfer substantially describes the debt or duty that is intended to be secured
thereby. Such new certificate shall express on its face that it is held as
collateral security, and the name of the pledgor shall be stated thereon, who
alone shall be liable as a shareholder and entitled to vote thereon.
9.4 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees may at any time
discontinue the issuance of share certificates and may, by written notice to
each shareholder, require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not effect the ownership of
shares in the Trust.
ARTICLE 10
PROVISIONS RELATING TO THE CONDUCT OF THE TRUST'S BUSINESS
10.1 DETERMINATION OF NET ASSET VALUE PER SHARE. Net asset value per share of
each series or class of shares of the Trust shall be determined at the times and
in the manner specified from time to time by the Trustees.
ARTICLE 11
SHAREHOLDERS' VOTING POWERS AND MEETINGS
11.1 RECORD DATES. For the purpose of determining the shareholders who are
entitled to vote or act at any meeting or any adjournment thereof, or who are
entitled to receive payment of any dividend or of any other distribution, the
Trustees may from time to time fix a time, which shall be not more than 90 days
before the date of any meeting of shareholders or the date for the payment of
any dividend or of any other distribution, as the record date for determining
the shareholders having the right to notice of and to vote at such meeting and
any adjournment thereof or the right to receive such dividend or distribution,
and in such case only shareholders of record on such record date shall have such
right notwithstanding any transfer of shares on the books of the Trust after the
record date; or without fixing such record date the Trustees may for any of such
purposes close the register or transfer books for all or any part of such
period.
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ARTICLE 12
AMENDMENTS TO THE BY-LAWS
12.1 GENERAL. These By-Laws may be amended or repealed, in whole or in part, by
a majority of the Trustees then in office at any meeting of the Trustees.
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<PAGE> 1
EXHIBIT
-------
EX-99.5(a):
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FORM OF MANAGEMENT AGREEMENT BETWEEN THE TRUST AND PSAM RELATING TO THE FUND.
<PAGE> 2
PUGET SOUND ALTERNATIVE INVESTMENT SERIES TRUST
MANAGEMENT AGREEMENT
(MARKET NEUTRAL PORTFOLIO)
This MANAGEMENT AGREEMENT (this "Agreement") is entered into as of
________, 1998 by and between PUGET SOUND ALTERNATIVE INVESTMENT SERIES TRUST, a
Massachusetts business trust (the "Trust"), with respect to its Market Neutral
Portfolio series (the "Series"), and PUGET SOUND ASSET MANAGEMENT CO., LLC, a
Washington limited liability company (the "Manager").
WITNESSETH:
WHEREAS, the Trust and the Manager wish to enter into an agreement
setting forth the terms upon which the Manager (or certain other parties acting
pursuant to delegation from the Manager) will perform certain services for the
Series;
NOW, THEREFORE, in consideration of the premises and covenants
hereinafter contained, the parties agree as follows:
1. (a) The Trust hereby employs the Manager to furnish the Trust
with Portfolio Management Services (as defined in Section 2 hereof),
subject to the authority of the Manager to delegate certain of its
responsibilities hereunder to other parties as provided in Section 1(b)
hereof. The Manager hereby accepts such employment and agrees, at its
own expense, to furnish such services (either directly or pursuant to
delegation to other parties as and to the extent permitted by Section
1(b) hereof) and to assume the obligations herein set forth, for the
compensation herein provided. The Manager shall, unless otherwise
expressly provided or authorized, have no authority to act for or
represent the Trust in any way or otherwise be deemed an agent of the
Trust.
(b) The Manager may delegate any or all of its
responsibilities hereunder with respect to the provision of Portfolio
Management Services (and assumption of related expenses) to one or more
other parties (each such party, a "Sub-Adviser"), pursuant in each case
to a written agreement with such Sub-Adviser that meets the
requirements of Section 15 of the Investment Company Act of 1940 and
the rules thereunder (the "1940 Act") applicable to contracts for
service as investment adviser of a registered investment company
(including without limitation the requirements for approval by the
trustees of the Trust and the shareholders of the Series), subject,
however, to such exemptions as may be granted by the Securities and
Exchange Commission. Any Sub-Adviser may (but need not) be affiliated
with the Manager.
<PAGE> 3
(c) In the event that the Manager delegates to one or more
Sub-Advisers all or part of its responsibilities hereunder with respect
to the provision of Portfolio Management Services, the Manager hereby
agrees to furnish to the Trust the following services ("Oversight
Services"):
(i) supervision and oversight of each Sub-Adviser's
provision of Portfolio Management Services with
respect to the Series;
(ii) periodic evaluation of the Portfolio Management
Services provided by each Sub-Adviser, and of the
investment performance of the Series;
(iii) advice to and consultation with the Board of
Trustees of the Trust with respect to matters
relating to the investment operations of the Series,
including matters relating to the selection,
evaluation, retention and possible termination of
each Sub-Adviser; and
(iv) regular reporting to the Board of Trustees of
the Trust with respect to the foregoing matters.
2. As used in this Agreement, "Portfolio Management Services" means
management of the investment and reinvestment of the assets belonging to the
Series, consisting specifically of the following:
(a) obtaining and evaluating such economic, statistical and
financial data and information and undertaking such additional
investment research as shall be necessary or advisable for the
management of the investment and reinvestment of the assets belonging
to the Series in accordance with the Series' investment objectives and
policies;
(b) taking such steps as are necessary to implement the
investment policies of the Series by purchasing and selling of
securities, including the placing of orders for such purchase and sale;
and
(c) regularly reporting to the Board of Trustees of the Trust
with respect to the implementation of the investment policies of the
Series.
3. Nothing in this Agreement shall require the Manager to bear, or to
reimburse the Trust for:
(a) office space, office supplies, facilities and equipment
for the Trust;
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<PAGE> 4
(b) executive and other personnel for managing the affairs of
the Trust, other than for the provision of (1) Portfolio Management
Services and (2) Oversight Services (if the Manager shall have
delegated to one or more Sub-Advisers any or all of its
responsibilities hereunder with respect to the provision of Portfolio
Management Services);
(c) any of the costs of printing and mailing the items
referred to in SubSection (p) of this Section 3;
(d) any of the costs of preparing, printing and distributing
sales literature;
(e) compensation of trustees of the Trust who are not
directors, officers or employees of the Manager or of any affiliated
person (other than a registered investment company) of the Manager;
(f) registration, filing and other fees in connection with
requirements of regulatory authorities;
(g) the charges and expenses of any entity appointed by the
Trust for custodial, paying agent, shareholder servicing and plan agent
services;
(h) charges and expenses of independent accountants retained
by the Trust;
(i) charges and expenses of any transfer agents and registrars
appointed by the Trust;
(j) brokers' commissions and issue and transfer taxes
chargeable to the Trust in connection with securities transactions to
which the Trust is a party;
(k) taxes and fees payable by the Trust to federal, state or
other governmental agencies;
(l) any cost of certificates representing shares of the Trust;
(m) legal fees and expenses in connection with the affairs of
the Trust, including registering and qualifying its shares with federal
and state regulatory authorities;
(n) expenses of meetings of shareholders and trustees of the
Trust;
(o) interest, including interest on borrowings by the Trust;
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<PAGE> 5
(p) the costs of services, including services of counsel,
required in connection with the preparation of the Trust's registration
statements and prospectuses, including amendments and revisions
thereto, annual, semiannual and other periodic reports of the Trust,
and notices and proxy solicitation material furnished to shareholders
of the Trust or regulatory authorities; and
(q) the Trust's expenses of bookkeeping, accounting, auditing
and financial reporting, including related clerical expenses.
4. All activities undertaken by the Manager or any Sub-Adviser pursuant
to this Agreement shall at all times be subject to the supervision and control
of the Board of Trustees of the Trust, any duly constituted committee thereof or
any officer of the Trust acting pursuant to like authority.
5. The services to be provided by the Manager and any Sub-Adviser
hereunder are not to be deemed exclusive and the Manager and any Sub-Adviser
shall be free to render similar services to others, so long as its services
hereunder are not impaired thereby.
6. As full compensation for all services rendered, facilities furnished
and expenses borne by the Manager hereunder, the Trust shall pay the Manager
compensation at the annual rate of 2.00% of the average daily net assets of the
Series (or such lesser amount as the Manager may from time to time agree to
receive). Such compensation shall be payable monthly in arrears or at such other
intervals, not less frequently than quarterly, as the Board of Trustees of the
Trust may from time to time determine and specify in writing to the Manager. The
Manager hereby acknowledges that the Trust's obligation to pay such compensation
is binding only on the assets and property belonging to the Series.
7. It is understood that any of the shareholders, trustees, officers,
employees and agents of the Trust may be a member, director, officer, employee
or agent of, or be otherwise interested in, the Manager, any affiliated person
of the Manager, any organization in which the Manager may have an interest or
any organization which may have an interest in the Manager; that the Manager,
any such affiliated person or any such organization may have an interest in the
Trust; and that the existence of any such dual interest shall not affect the
validity hereof or of any transactions hereunder except as otherwise provided in
the Agreement and Declaration of Trust of the Trust, the partnership agreement
of the Manager or specific provisions of applicable law.
8. The Trust acknowledges that, as between the Trust and the Manager,
the Manager owns and controls the name "Puget Sound." The Manager consents to
the use by the Trust of the name "Puget Sound Alternative Investment Series
Trust" and by the Series of the name "Puget Sound Market Neutral Portfolio" or
any other name embodying the words "Puget Sound," in such forms as the Manager
shall in writing approve, but only on condition and so long as (i) this
Agreement shall remain in full force and (ii) the Trust shall fully perform,
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<PAGE> 6
fulfill and comply with all provisions of this Agreement expressed herein to be
performed, fulfilled or complied with by it. No such name shall be used by the
Trust or the Series at any time or in any place or for any purposes or under any
conditions except as in this section provided. The foregoing authorization by
the Manager to the Trust and the Series to use said words as part of a business
or name is not exclusive of the right of the Manager itself to use, or to
authorize others to use, the same; the Trust acknowledges and agrees that as
between the Manager and the Trust, the Manager has the exclusive right so to
use, or authorize others to use, said words, and the Trust agrees to take such
action as may reasonably be requested by the Manager to give full effect to the
provisions of this section (including, without limitation, consenting to such
use of said words). Without limiting the generality of the foregoing, the Trust
agrees that, upon any termination of this Agreement by either party or upon the
violation of any of its provisions by the Trust, the Trust will, at the request
of the Manager made at any time after the Manager has knowledge of such
termination or violation, use its best efforts to change the name of the Trust
and the Series so as to eliminate all reference, if any, to the words "Puget"
and "Sound" and will not thereafter transact any business in a name containing
the words "Puget" or "Sound" in any form or combination whatsoever, or (except
as may otherwise be required by law) designate itself as the same entity as or
successor to any entity of such name, or otherwise use the words "Puget" or
"Sound" or any other reference to the Manager. Such covenants on the part of the
Trust and the Series shall be binding upon it, its trustees, officers,
shareholders, creditors and all other persons claiming under or through it.
9. This Agreement shall become effective as of the date of its
execution, and
(a) unless otherwise terminated, this Agreement shall continue
in effect for two years from the date of execution, and from year to
year thereafter so long as such continuance is specifically approved at
least annually (i) by the Board of Trustees of the Trust or by vote of
a majority of the outstanding voting securities of the Series, and (ii)
by vote of a majority of the trustees of the Trust who are not
interested persons of the Trust or the Manager, cast in person at a
meeting called for the purpose of voting on, such approval;
(b) this Agreement may at any time be terminated on sixty
days' written notice to the Manager either by vote of the Board of
Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Series;
(c) this Agreement shall automatically terminate in the event
of its assignment;
(d) this Agreement may be terminated by the Manager on ninety
days' written notice to the Trust; and
(e) if the Manager requires the Trust or the Series to change
its name so as to eliminate all references to the words "Puget Sound,"
this Agreement shall
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<PAGE> 7
automatically terminate at the time of such change unless the
continuance of this Agreement after such change shall have been
specifically approved by vote of a majority of the outstanding voting
securities of the Series and by vote of a majority of the trustees of
the Trust who are not interested persons of the Trust or the Manager,
cast in person at a meeting called for the purpose of voting on such
approval.
Termination of this Agreement pursuant to this Section 9 shall be
without the payment of any penalty.
10. This Agreement may be amended at any time by mutual consent of the
parties, provided that such consent on the part of the Trust shall have been
approved by vote of a majority of the outstanding voting securities of the
Series and by vote of a majority of the trustees of the Trust who are not
interested persons of the Trust or the Manager, cast in person at a meeting
called for the purpose of voting on such approval.
11. For the purpose of this Agreement, the terms "vote of a majority of
the outstanding voting securities," "interested person," "affiliated person" and
"assignment" shall have their respective meanings defined in the 1940 Act,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission under the 1940 Act. References in this Agreement to any
assets, property or liabilities "belonging to" the Series shall have the meaning
defined in the Trust's Agreement and Declaration of Trust as amended from time
to time.
12. In the absence of willful misfeasance, bad faith or gross
negligence on the part of the Manager, or reckless disregard of its obligations
and duties hereunder, the Manager shall not be subject to any liability to the
Trust, to any shareholder of the Trust or to any other person, firm or
organization, for any act or omission in the course of, or connected with,
rendering services hereunder.
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<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
PUGET SOUND ALTERNATIVE INVESTMENT
SERIES TRUST, on behalf of its Market Neutral
Portfolio series
By:
----------------------------------
Margaret M. Towle
President
PUGET SOUND ASSET MANAGEMENT CO., LLC
By:
----------------------------------
Margaret M. Towle
Chief Executive Officer
NOTICE
A copy of the Agreement and Declaration of Trust establishing Puget
Sound Alternative Investment Series Trust (the "Trust") is on file with the
Secretary of The Commonwealth of Massachusetts, and notice is hereby given that
this Agreement is executed with respect to the Trust's Market Neutral Portfolio
series (the "Series") on behalf of the Trust by officers of the Trust as
officers and not individually and that the obligations of or arising out of this
Agreement are not binding upon any of the trustees, officers or shareholders
individually but are binding only upon the assets and property belonging to the
Series.
<PAGE> 1
EXHIBIT
-------
EX-99.5(b):
-----------
FORM OF SUB-ADVISORY AGREEMENT BETWEEN PSAM AND FAMCO RELATING TO THE FUND.
<PAGE> 2
PUGET SOUND ALTERNATIVE INVESTMENT SERIES TRUST
SUB-ADVISORY AGREEMENT
(MARKET NEUTRAL PORTFOLIO)
This SUB-ADVISORY AGREEMENT (this "Agreement") is entered into as of
__________, 1998 by and between PUGET SOUND ASSET MANAGEMENT CO., LLC, a
Washington limited liability company (the "Manager"), and FIDUCIARY ASSET
MANAGEMENT CO., a Missouri corporation (the "Sub-Adviser").
WHEREAS, the Manager has entered into a Management Agreement dated
_________, 1998 (the "Management Agreement") with Puget Sound Alternative
Investment Series Trust (the "Trust"), pursuant to which the Manager provides
portfolio management and administrative services to the Market Neutral Portfolio
of the Trust (the "Series");
WHEREAS, the Management Agreement provides that the Manager may
delegate any or all of its portfolio management responsibilities under the
Management Agreement to one or more sub-advisers; and
WHEREAS, the Manager desires to retain the Sub-Adviser to render
portfolio management services in the manner and on the terms set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, the Manager and the Sub-Adviser agree as follows:
1. SUB-ADVISORY SERVICES.
a. The Sub-Adviser shall, subject to the supervision of the
Manager and in cooperation with any administrator appointed by the Manager (the
"Administrator"), manage the investment and reinvestment of the assets of the
Series. The Sub-Adviser shall manage the Series in conformity with (1) the
investment objective, policies and restrictions of the Series set forth in the
Trust's prospectus and statement of additional information relating to the
Series, (2) any additional policies or guidelines established by the Manager or
by the Trust's trustees that have been furnished in writing to the Sub-Adviser
and (3) the provisions of the Internal Revenue Code (the "Code") applicable to
"regulated investment companies" (as defined in Section 851 of the Code), all as
from time to time in effect (collectively, the "Policies"), and with all
applicable provisions of law, including without limitation all applicable
provisions of the Investment Company Act of 1940 (the "1940 Act") and the rules
and regulations thereunder. Subject to the foregoing, the Sub-Adviser is
authorized, in its discretion and without prior consultation with the Manager,
to buy, sell, lend and otherwise trade in any stocks, bonds and other securities
and investment instruments on behalf of the Series, without
<PAGE> 3
regard to the length of time the securities have been held and the resulting
rate of portfolio turnover or any tax considerations; and the majority or the
whole of the Series may be invested in such proportions of stocks, bonds, other
securities or investment instruments, or cash, as the Sub-Adviser shall
determine. Notwithstanding the foregoing provisions of this Section 1.a,
however, the Sub-Adviser shall, upon written instructions from the Manager,
effect such portfolio transactions for the Series as the Manager shall determine
are necessary in order for the Series to comply with the Policies.
b. The Sub-Adviser shall furnish the Manager and the
Administrator monthly, quarterly and annual reports concerning portfolio
transactions and performance of the Series in such form as may be mutually
agreed upon, and agrees to review the Series and discuss the management of the
Series with representatives or agents of the Manager, the Administrator or the
Trust at their reasonable request. The Sub-Adviser shall permit all books and
records with respect to the Series to be inspected and audited by the Manager
and the Administrator at all reasonable times during normal business hours, upon
reasonable notice. The Sub-Adviser shall also provide the Manager, the
Administrator and the Trust with such other information and reports as may
reasonably be requested by the Manager, the Administrator or the Trust from time
to time, including without limitation all material as reasonably may be
requested by the trustees of the Trust pursuant to Section 15(c) of the 1940
Act.
c. The Sub-Adviser shall provide to the Manager a copy of the
Sub- Adviser's Form ADV as filed with the Securities and Exchange Commission and
as amended from time to time and a list of the persons whom the Sub-Adviser
wishes to have authorized to give written and/or oral instructions to custodians
of assets of the Series.
d. The Sub-Adviser shall be bound by the Code of Ethics of
Puget Sound Alternative Investment Series Trust as such Code of Ethics is
amended or superseded from time to time.
e. The Sub-Adviser represents that it is registered as an
investment adviser under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and will, so long as this Agreement is in effect, (i) continue
to be registered as a registered investment adviser under the Advisers Act, (ii)
comply with the provisions of the Advisers Act and the rules and regulations
thereunder and (iii) conduct its operations, including without limitation the
performance of its obligations under this Agreement, in full conformity with all
applicable federal and state laws, rules and regulations.
2. OBLIGATIONS OF THE MANAGER.
a. The Manager shall provide (or cause the Trust's custodian
to provide) timely information to the Sub-Adviser regarding such matters as the
composition of assets in the Series, cash requirements and cash available for
investment in the Series, and all other
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<PAGE> 4
information as may be reasonably necessary for the Sub-Adviser to perform its
responsibilities hereunder.
b. The Manager has furnished the Sub-Adviser a copy of the
prospectus and statement of additional information of the Series and agrees
during the continuance of this Agreement to furnish the Sub-Adviser copies of
any revisions or supplements thereto at, or, if practicable, before the time the
revisions or supplements become effective. The Manager agrees to furnish the
Sub-Adviser with minutes of meetings of the trustees of the Trust applicable to
the Series to the extent they may affect the duties of the Sub-Adviser, and with
copies of any financial statements or reports made by the Series to its
shareholders, and any further materials or information which the Sub-Adviser may
reasonably request to enable it to perform its functions under this Agreement.
3. CUSTODIAN. The Manager shall provide the Sub-Adviser with a copy of
the Series' agreement with the custodian designated to hold the assets of the
Series (the "Custodian") and any modifications thereto (the "Custody
Agreement"), copies of such modifications to be provided to the Sub-Adviser a
reasonable time in advance of the effectiveness of such modifications. The
assets of the Series shall be maintained in the custody of the Custodian
identified in, and in accordance with the terms and conditions of, the Custody
Agreement (or any sub-custodian properly appointed as provided in the Custody
Agreement). The Sub-Adviser shall have no liability for the acts or omissions of
the Custodian, unless such act or omission is required by and taken in reliance
upon instructions given to the Custodian by a representative of the Sub-Adviser
properly authorized to give such instructions under the Custody Agreement. Any
assets added to the Series shall be delivered directly to the Custodian.
4. EXPENSES. Except for expenses specifically assumed or agreed to be
paid by the Sub-Adviser pursuant hereto, the Sub-Adviser shall not be liable for
any expenses of the Manager or the Trust including, without limitation, (a)
interest and taxes, (b) brokerage commissions and other costs in connection with
the purchase or sale of securities or other investment instruments with respect
to the Series, and (c) custodian fees and expenses. The Sub-Adviser will pay its
own expenses incurred in furnishing the services to be provided by it pursuant
to this Agreement.
5. PURCHASE AND SALE OF ASSETS. Absent instructions from the Manager to
the contrary, the Sub-Adviser shall place all orders for the purchase and sale
of securities for the Series with brokers or dealers selected by the
Sub-Adviser, which may include brokers or dealers affiliated with the
Sub-Adviser, provided such orders comply with Rule 17e-1 under the 1940 Act in
all respects. To the extent consistent with applicable law, purchase or sell
orders for the Series may be aggregated with contemporaneous purchase or sell
orders of other clients of the Sub-Adviser. The Sub-Adviser shall use its best
efforts to obtain execution of transactions for the Series at prices which are
advantageous to the Series and at commission rates that are reasonable in
relation to the benefits received. However, the Sub-Adviser may
- 3 -
<PAGE> 5
select brokers or dealers on the basis that they provide brokerage, research or
other services or products to the Series and/or other accounts serviced by the
Sub-Adviser. To the extent consistent with applicable law, the Sub-Adviser may
pay a broker or dealer an amount of commission for effecting a securities
transaction in excess of the amount of commission or dealer spread another
broker or dealer would have charged for effecting that transaction if the
Sub-Adviser determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research products
and/or services provided by such broker or dealer. This determination with
respect to brokerage and research services or products may be viewed in terms of
either that particular transaction or the overall responsibilities that the
Sub-Adviser and its affiliates have with respect to the Series or to accounts
over which they exercise investment discretion. Not all such services or
products need be used by the Sub-Adviser in managing the Series.
6. COMPENSATION OF THE SUB-ADVISER. As full compensation for all
services rendered, facilities furnished and expenses borne by the Sub-Adviser
hereunder, the Manager shall pay the Sub-Adviser compensation at the annual rate
of 1.50% of the average daily net assets of the Series. Such compensation shall
be payable monthly in arrears or at such other intervals, not less frequently
than quarterly, as the Manager is paid by the Series pursuant to the Management
Agreement. The Manager may from time to time waive the compensation it is
entitled to receive from the Trust; however, any such waiver will have no effect
on the Manager's obligation to pay the Sub-Adviser the compensation provided for
herein.
7. NON-EXCLUSIVITY. The Manager and the Series agree that the services
of the Sub-Adviser are not to be deemed exclusive and that the Sub-Adviser and
its affiliates are free to act as investment manager and provide other services
to various investment companies and other managed accounts, except as the
Sub-Adviser and the Manager may otherwise agree from time to time in writing
before or after the date hereof. This Agreement shall not in any way limit or
restrict the Sub-Adviser or any of its directors, officers, employees or agents
from buying, selling or trading any securities or other investment instruments
for its or their own account or for the account of others for whom it or they
may be acting, provided that such activities do not adversely affect or
otherwise impair the performance by the Sub-Adviser of its duties and
obligations under this Agreement. The Manager and the Series recognize and agree
that the Sub-Adviser may provide advice to or take action with respect to other
clients, which advice or action, including the timing and nature of such action,
may differ from or be identical to advice given or action taken with respect to
the Series. The Sub-Adviser shall for all purposes hereof be deemed to be an
independent contractor and shall, unless otherwise provided or authorized, have
no authority to act for or represent the Trust or the Manager in any way or
otherwise be deemed an agent of the Trust or the Manager.
8. LIABILITY. Except as may otherwise be provided by the 1940 Act or
other federal securities laws, neither the Sub-Adviser nor any of its officers,
directors, members, employees or agents (the "Indemnified Parties") shall be
subject to any liability to the Manager, the Trust, the Series or any
shareholder of the Series for any error of judgment, any
- 4 -
<PAGE> 6
mistake of law or any loss arising out of any investment or other act or
omission in the course of, connected with, or arising out of any service to be
rendered under this Agreement, except by reason of willful misfeasance, bad
faith or gross negligence in the performance of the Sub- Adviser's duties or by
reason of reckless disregard by the Sub-Adviser of its obligations and duties.
9. EFFECTIVE DATE AND TERMINATION. This Agreement shall become
effective as of the date of its execution, and
a. unless otherwise terminated, this Agreement shall continue
in effect for two years from the date of execution, and from year to year
thereafter so long as such continuance is specifically approved at least
annually (i) by the Board of Trustees of the Trust or by vote of a majority of
the outstanding voting securities of the Series, and (ii) by vote of a majority
of the trustees of the Trust who are not interested persons of the Trust, the
Manager or the Sub-Adviser, cast in person at a meeting called for the purpose
of voting on such approval;
b. this Agreement may at any time be terminated on sixty days'
written notice to the Sub-Adviser by the Manager, by vote of the Board of
Trustees of the Trust or by vote of a majority of the outstanding voting
securities of the Series; and
c. this Agreement shall automatically terminate in the event
of its assignment.
Termination of this Agreement pursuant to this Section 9 shall be
without the payment of any penalty.
10. AMENDMENT. This Agreement may be amended at any time by mutual
consent of the Manager and the Sub-Adviser, provided that, if required by law,
such amendment shall also have been approved by vote of a majority of the
outstanding voting securities of the Series and by vote of a majority of the
trustees of the Trust who are not interested persons of the Trust, the Manager
or the Sub-Adviser, cast in person at a meeting called for the purpose of voting
on such approval.
11. CERTAIN DEFINITIONS. For the purpose of this Agreement, the terms
"vote of a majority of the outstanding voting securities," "interested person,"
"affiliated person" and "assignment" shall have their respective meanings
defined in the 1940 Act, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under the 1940 Act.
12. GENERAL.
a. If any term or provision of this Agreement or the
application thereof to any person or circumstances is held to be invalid or
unenforceable to any extent, the remainder
- 5 -
<PAGE> 7
of this Agreement or the application of such provision to other persons or
circumstances shall not be affected thereby and shall be enforced to the fullest
extent permitted by law.
b. This Agreement shall be governed by and interpreted in
accordance with the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
PUGET SOUND ASSET MANAGEMENT CO., LLC
By:
-------------------------------------
Margaret M. Towle
Chief Executive Officer
FIDUCIARY ASSET MANAGEMENT CO.
By:
-------------------------------------
Charles D. Walbrant
President
<PAGE> 1
EXHIBIT
-------
EX-99.6:
--------
FORM OF DISTRIBUTION AGREEMENT BETWEEN THE TRUST AND BISYS FUND SERVICES, L.P.
<PAGE> 2
DISTRIBUTION AGREEMENT
----------------------
AGREEMENT made this ________ day of June, 1998, between PUGET SOUND
ALTERNATIVE INVESTMENT SERIES TRUST (the "Trust"), a Massachusetts business
trust, and BISYS FUND SERVICES LIMITED PARTNERSHIP d/b/a BISYS FUND SERVICES
("Distributor"), an Ohio limited partnership.
WHEREAS, the Trust is an open-end management investment company,
organized as a Massachusetts business trust and registered with the Securities
and Exchange Commission (the "Commission") under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, it is intended that Distributor act as the distributor of the
units of beneficial interest ("Shares") of each of the investment portfolios of
the Trust (such portfolios being referred to individually as a "Fund" and
collectively as the "Funds").
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as Distributor.
------------------------
1.1 Distributor will act as agent for the distribution of the
Shares covered by the registration statement and prospectus of the Trust then in
effect under the Securities Act of 1933, as amended (the "Securities Act"). As
used in this Agreement, the term "registration statement" shall mean Parts A
(the prospectus), B (the Statement of Additional Information) and C of each
registration statement that is filed on Form N-1A, or any successor thereto,
with the Commission, together with any amendments thereto. The term "prospectus"
shall mean each form of prospectus and Statement of Additional Information used
by the Funds for delivery to shareholders and prospective shareholders after the
effective dates of the above referenced registration statements, together with
any amendments and supplements thereto.
1.2 Distributor agrees to use appropriate efforts to solicit
orders for the sale of the Shares and will undertake such advertising and
promotion as it believes reasonable in connection with such solicitation. The
Trust understands that Distributor is now and may in the future be the
distributor of the shares of several investment companies or series (together,
"Companies") including Companies having investment objectives similar to those
of the Trust. The Trust further understands that investors and potential
investors in the Trust may invest in shares of such other Companies. The Trust
agrees that Distributor's duties to such Companies shall not be deemed in
conflict with its duties to the Trust under this paragraph 1.2.
Distributor shall, at its own expense, finance
appropriate activities which it deems reasonable, which are primarily intended
to result in the sale of the Shares, including, but not limited to, advertising,
compensation of underwriters, dealers and sales personnel, the printing and
<PAGE> 3
mailing of prospectuses to other than current Shareholders, and the printing and
mailing of sales literature.
1.3 In its capacity as distributor of the Shares, all
activities of Distributor and its partners, agents, and employees shall comply
with all applicable laws, rules and regulations, including, without limitation,
the 1940 Act, all rules and regulations promulgated by the Commission thereunder
and all rules and regulations adopted by any securities association registered
under the Securities Exchange Act of 1934.
1.4 Distributor will provide one or more persons, during
normal business hours, to respond to telephone questions with respect to the
Trust.
1.5 Distributor will transmit any orders received by it for
purchase or redemption of the Shares to the transfer agent and custodian for the
Funds.
1.6 Whenever in their judgment such action is warranted by
unusual market, economic or political conditions, or by abnormal circumstances
of any kind, the Trust's officers may decline to accept any orders for, or make
any sales of, the Shares until such time as those officers deem it advisable to
accept such orders and to make such sales.
1.7 Distributor will act only on its own behalf as principal
if it chooses to enter into selling agreements with selected dealers or others.
1.8 The Trust agrees at its own expense to execute any and all
documents and to furnish any and all information and otherwise to take all
actions that may be reasonably necessary in connection with the qualification of
the Shares for sale in such states as Distributor may designate.
1.9 The Trust shall furnish from time to time, for use in
connection with the sale of the Shares, such information with respect to the
Funds and the Shares as Distributor may reasonably request; and the Trust
warrants that the statements contained in any such information shall fairly show
or represent what they purport to show or represent. The Trust shall also
furnish Distributor upon request with: (a) unaudited semi-annual statements of
the Funds' books and accounts prepared by the Trust, (b) a monthly itemized list
of the securities in the Funds, (c) monthly balance sheets as soon as
practicable after the end of each month, and (d) from time to time such
additional information regarding the financial condition of the Funds as
Distributor may reasonably request.
1.10 The Trust represents to Distributor that, with respect to
the Shares, all registration statements and prospectuses filed by the Trust with
the Commission under the Securities Act have been carefully prepared in
conformity with requirements of said Act and rules and regulations of the
Commission thereunder. The registration statement and prospectus contain all
statements required to be stated therein in conformity with said Act and the
rules and regulations
2
<PAGE> 4
of said Commission and all statements of fact contained in any such registration
statement and prospectus are true and correct. Furthermore, neither any
registration statement nor any prospectus includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser of the
Shares. The Trust may, but shall not be obligated to, propose from time to time
such amendment or amendments to any registration statement and such supplement
or supplements to any prospectus as, in the light of future developments, may,
in the opinion of the Trust's counsel, be necessary or advisable. If the Trust
shall not propose such amendment or amendments and/or supplement or supplements
within fifteen days after receipt by the Trust of a written request from
Distributor to do so, Distributor may, at its option, terminate this Agreement.
The Trust shall not file any amendment to any registration statement or
supplement to any prospectus without giving Distributor reasonable notice
thereof in advance; provided, however, that nothing contained in this Agreement
shall in any way limit the Trust's right to file at any time such amendments to
any registration statement and/or supplements to any prospectus, of whatever
character, as the Trust may deem advisable, such right being in all respects
absolute and unconditional.
1.11 The Trust authorizes Distributor and dealers to use any
prospectus in the form furnished from time to time in connection with the sale
of the Shares. The Trust agrees to indemnify, defend and hold Distributor, its
several partners and employees, and any person who controls Distributor within
the meaning of Section 15 of the Securities Act free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which Distributor, its partners
and employees, or any such controlling person, may incur under the Securities
Act or under common law or otherwise, arising out of or based upon any untrue
statement, or alleged untrue statement, of a material fact contained in any
registration statement or any prospectus or arising out of or based upon any
omission, or alleged omission, to state a material fact required to be stated in
either any registration statement or any prospectus or necessary to make the
statements in either thereof not misleading; provided, however, that the Trust's
agreement to indemnify Distributor, its partners or employees, and any such
controlling person shall not be deemed to cover any claims, demands, liabilities
or expenses arising out of any statements or representations as are contained in
any prospectus and in such financial and other statements as are furnished in
writing to the Trust by Distributor and used in the answers to the registration
statement or in the corresponding statements made in the prospectus, or arising
out of or based upon any omission or alleged omission to state a material fact
in connection with the giving of such information required to be stated in such
answers or necessary to make the answers not misleading; and further provided
that the Trust's agreement to indemnify Distributor and the Trust's
representations and warranties hereinbefore set forth in paragraph 1.10 shall
not be deemed to cover any liability to the Trust or its Shareholders to which
Distributor would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reason of
Distributor's reckless disregard of its obligations and duties under this
Agreement. The Trust's agreement to indemnify Distributor, its partners and
employees and any such controlling person, as aforesaid, is expressly
conditioned upon the Trust being notified of any action brought against
Distributor, its partners or employees, or any such controlling person, such
notification to
3
<PAGE> 5
be given by letter or by telegram addressed to the Trust at its principal office
in Columbus, Ohio and sent to the Trust by the person against whom such action
is brought, within 10 days after the summons or other first legal process shall
have been served. The failure to so notify the Trust of any such action shall
not relieve the Trust from any liability which the Trust may have to the person
against whom such action is brought by reason of any such untrue, or allegedly
untrue, statement or omission, or alleged omission, otherwise than on account of
the Trust's indemnity agreement contained in this paragraph 1.11. The Trust will
be entitled to assume the defense of any suit brought to enforce any such claim,
demand or liability, but, in such case, such defense shall be conducted by
counsel of good standing chosen by the Trust and approved by Distributor, which
approval shall not be unreasonably withheld. In the event the Trust elects to
assume the defense of any such suit and retain counsel of good standing approved
by Distributor, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case the
Trust does not elect to assume the defense of any such suit, or in case
Distributor reasonably does not approve of counsel chosen by the Trust, the
Trust will reimburse Distributor, its partners and employees, or the controlling
person or persons named as defendant or defendants in such suit, for the fees
and expenses of any counsel retained by Distributor or them. The Trust's
indemnification agreement contained in this paragraph 1.11 and the Trust's
representations and warranties in this Agreement shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
Distributor, its partners and employees, or any controlling person, and shall
survive the delivery of any Shares.
This Agreement of indemnity will inure exclusively to
Distributor's benefit, to the benefit of its several partners and employees, and
their respective estates, and to the benefit of the controlling persons and
their successors. The Trust agrees promptly to notify Distributor of the
commencement of any litigation or proceedings against the Trust or any of its
officers or Trustees in connection with the issue and sale of any Shares.
1.12 Distributor agrees to indemnify, defend and hold the
Trust, its several officers and Trustees and any person who controls the Trust
within the meaning of Section 15 of the Securities Act free and harmless from
and against any and all claims, demands, liabilities and expenses (including the
costs of investigating or defending such claims, demands, or liabilities and any
counsel fees incurred in connection therewith) which the Trust, its officers or
Trustees or any such controlling person, may incur under the Securities Act or
under common law or otherwise, but only to the extent that such liability or
expense incurred by the Trust, its officers or Trustees or such controlling
person resulting from such claims or demands, shall arise out of or be based
upon any untrue, or alleged untrue, statement of a material fact contained in
information furnished in writing by Distributor to the Trust and used in the
answers to any of the items of the registration statement or in the
corresponding statements made in the prospectus, or shall arise out of or be
based upon any omission, or alleged omission, to state a material fact in
connection with such information furnished in writing by Distributor to the
Trust required to be stated in such answers or necessary to make such
information not misleading. Distributor's agreement to indemnify the Trust, its
officers and Trustees, and any such controlling person, as aforesaid, is
expressly conditioned upon Distributor being notified of any action brought
against the Trust, its officers or Trustees, or any such
4
<PAGE> 6
controlling person, such notification to be given by letter or telegram
addressed to Distributor at its principal office in Columbus, Ohio, and sent to
Distributor by the person against whom such action is brought, within 10 days
after the summons or other first legal process shall have been served.
Distributor shall have the right of first control of the defense of such action,
with counsel of its own choosing, satisfactory to the Trust, if such action is
based solely upon such alleged misstatement or omission on Distributor's part,
and in any other event the Trust, its officers or Trustees or such controlling
person shall each have the right to participate in the defense or preparation of
the defense of any such action. The failure to so notify Distributor of any such
action shall not relieve Distributor from any liability which Distributor may
have to the Trust, its officers or Trustees, or to such controlling person by
reason of any such untrue or alleged untrue statement, or omission or alleged
omission, otherwise than on account of Distributor's indemnity agreement
contained in this paragraph 1.12.
1.13 No Shares shall be offered by either Distributor or the
Trust under any of the provisions of this Agreement and no orders for the
purchase or sale of Shares hereunder shall be accepted by the Trust if and so
long as the effectiveness of the registration statement then in effect or any
necessary amendments thereto shall be suspended under any of the provisions of
the Securities Act or if and so long as a current prospectus as required by
Section 10(b)(2) of said Act is not on file with the Commission; provided,
however, that nothing contained in this paragraph 1.13 shall in any way restrict
or have an application to or bearing upon the Trust's obligation to repurchase
Shares from any Shareholder in accordance with the provisions of the Trust's
prospectus, Agreement and Declaration of Trust, or Bylaws.
1.14 The Trust agrees to advise Distributor as soon as
reasonably practical by a notice in writing delivered to Distributor or its
counsel:
(a) of any request by the Commission for
amendments to the registration statement or
prospectus then in effect or for additional
information;
(b) in the event of the issuance by the
Commission of any stop order suspending the
effectiveness of the registration statement
or prospectus then in effect or the
initiation by service of process on the
Trust of any proceeding for that purpose;
(c) of the happening of any event that makes
untrue any statement of a material fact made
in the registration statement or prospectus
then in effect or which requires the making
of a change in such registration statement
or prospectus in order to make the
statements therein not misleading; and
(d) of all action of the Commission with respect
to any amendment to any registration
statement or prospectus which may from time
to time be filed with the Commission.
5
<PAGE> 7
For purposes of this section, informal requests by or
acts of the Staff of the Commission shall not be deemed actions of or requests
by the Commission.
1.15 Distributor agrees on behalf of itself and its partners
and employees to treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and its prior,
present or potential Shareholders, and not to use such records and information
for any purpose other than performance of its responsibilities and duties
hereunder, except, after prior notification to and approval in writing by the
Trust, which approval shall not be unreasonably withheld and may not be withheld
where Distributor may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
1.16 This Agreement shall be governed by the laws of the State
of Ohio.
2. Fee.
----
Distributor shall receive from the Funds identified in the
Distribution and Shareholder Service Plan attached as Schedule A hereto (the
"Distribution Plan Funds") a distribution fee at the rate and upon the terms and
conditions set forth in such Plan. The distribution fee shall be accrued daily
and shall be paid on the first business day of each month, or at such time(s) as
the Distributor shall reasonably request.
3. Sale and Payment.
-----------------
Shares of a Fund may be subject to a sales load and may be
subject to the imposition of a distribution fee pursuant to the Distribution and
Shareholder Service Plan referred to above. To the extent that Shares of a Fund
are sold at an offering price which includes a sales load or at net asset value
subject to a contingent deferred sales load with respect to certain redemptions
(either within a single class of Shares or pursuant to two or more classes of
Shares), such Shares shall hereinafter be referred to collectively as "Load
Shares" (in the case of Shares that are sold with a front-end sales load or
Shares that are sold subject to a contingent deferred sales load), "Front-End
Load Shares" or "CDSL Shares" and individually as a "Load Share," a "Front-End
Load Share" or a "CDSL Share." A Fund that contains Front-End Load Shares shall
hereinafter be referred to collectively as "Load Funds" or "Front-End Load
Funds" and individually as a "Load Fund" or a "Front-end Load Fund." A Fund that
contains CDSL Shares shall hereinafter be referred to collectively as "Load
Funds" or "CDSL Funds" and individually as a "Load Fund" or a "CDSL Fund." Under
this Agreement, the following provisions shall apply with respect to the sale
of, and payment for, Load Shares.
3.1 Distributor shall have the right to purchase Load Shares
at their net asset value and to sell such Load Shares to the public against
orders therefor at the applicable public offering price, as defined in Section 4
hereof. Distributor shall also have the right to sell Load Shares to dealers
against orders therefor at the public offering price less a concession
determined
6
<PAGE> 8
by Distributor, which concession shall not exceed the amount of the sales charge
or underwriting discount, if any, referred to in Section 4 below.
3.2 Prior to the time of delivery of any Load Shares by a Load
Fund to, or on the order of, Distributor, Distributor shall pay or cause to be
paid to the Load Fund or to its order an amount in Boston or New York clearing
house funds equal to the applicable net asset value of such Shares. Distributor
may retain so much of any sales charge or underwriting discount as is not
allowed by Distributor as a concession to dealers.
4. Public Offering Price.
----------------------
The public offering price of a Load Share shall be the net
asset value of such Load Share, plus any applicable sales charge, all as set
forth in the current prospectus of the Load Fund. The net asset value of Shares
shall be determined in accordance with the provisions of the Agreement and
Declaration of Trust and Bylaws of the Trust and the then-current prospectus of
the Load Fund.
5. Issuance of Shares.
-------------------
The Trust reserves the right to issue, transfer or sell Load
Shares at net asset value (a) in connection with the merger or consolidation of
the Trust or the Load Fund(s) with any other investment company or the
acquisition by the Trust or the Load Fund(s) of all or substantially all of the
assets or of the outstanding Shares of any other investment company; (b) in
connection with a pro rata distribution directly to the holders of Shares in the
nature of a stock dividend or split; (c) upon the exercise of subscription
rights granted to the holders of Shares on a pro rata basis; (d) in connection
with the issuance of Load Shares pursuant to any exchange and reinvestment
privileges described in any then-current prospectus of the Load Fund; and (e)
otherwise in accordance with any then-current prospectus of the Load Fund.
6. Term, Duration and Termination.
-------------------------------
This Agreement shall become effective with respect to each
Fund listed on Schedule A hereof as of the date first written above (or, if a
particular Fund is not in existence on such date, on the date an amendment to
Schedule A to this Agreement relating to that Fund is executed) and, unless
sooner terminated as provided herein, shall continue until June _____, 2000.
Thereafter, if not terminated, this Agreement shall continue with respect to a
particular Fund automatically for successive one-year terms, provided that such
continuance is specifically approved at least annually by (a) by the vote of a
majority of those members of the Trust's Board of Trustees who are not parties
to this Agreement or interested persons of any such party, cast in person at a
meeting for the purpose of voting on such approval and (b) by the vote of the
Trust's Board of Trustees or the vote of a majority of the outstanding voting
securities of such Fund. This Agreement is terminable without penalty, on not
less than sixty days' prior written notice, by the Trust's Board of Trustees, by
vote of a majority of the outstanding voting securities of the Trust or by the
Distributor. This
7
<PAGE> 9
Agreement will also terminate automatically in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested persons" and "assignment" shall have the same meanings
as ascribed to such terms in the 1940 Act.)
7. Limitation of Liability of the Trustees and Shareholders.
---------------------------------------------------------
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust personally, but shall bind only the
trust property of the Trust. The execution and delivery of this Agreement have
been authorized by the Trustees, and this Agreement has been signed and
delivered by an authorized officer of the Trust, acting as such, and neither
such authorization by the Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the trust
property of the Trust as provided in the Trust's Agreement and Declaration of
Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
written above.
PUGET SOUND ALTERNATIVE BISYS FUND SERVICES
INVESTMENT SERIES TRUST LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc.,
General Partner
By: By:
----------------------------- ---------------------------------
Title: Title:
--------------------------- -----------------------------
8
<PAGE> 10
Dated: June _____, 1998
SCHEDULE A
TO THE DISTRIBUTION AGREEMENT
BETWEEN
PUGET SOUND ALTERNATIVE INVESTMENT SERIES TRUST
AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
DISTRIBUTION AND SHAREHOLDER SERVICE PLAN
A-1
<PAGE> 1
EXHIBIT
-------
EX-99.9(a):
-----------
FORM OF TRANSFER AGENCY AGREEMENT BETWEEN THE TRUST AND BISYS FUND SERVICES,
INC.
<PAGE> 2
TRANSFER AGENCY AGREEMENT
-------------------------
AGREEMENT made this _________ day of June, 1998, between PUGET SOUND
ALTERNATIVE INVESTMENT SERIES TRUST (the "Trust"), a Massachusetts business
trust, and BISYS FUND SERVICES, INC. ("BISYS"), a Delaware corporation.
WHEREAS, the Trust desires that BISYS perform certain services for each
series of the Trust (individually referred to herein as a "Fund" and
collectively as the "Funds"); and
WHEREAS, BISYS is willing to perform such services on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Retention of BISYS.
-------------------
BISYS shall perform for the Trust the transfer agent services
set forth in Schedule A hereto. BISYS also agrees to perform for the Trust such
special services incidental to the performance of the services enumerated herein
as agreed to by the parties from time to time. BISYS shall perform such
additional services as are provided on an amendment to Schedule A hereof, in
consideration of such fees as the parties hereto may agree.
BISYS may, in its discretion, appoint in writing other parties
qualified to perform transfer agency services reasonably acceptable to the Trust
(individually, a "Sub-transfer Agent") to carry out some or all of its
responsibilities under this Agreement with respect to a Fund; provided, however,
that the Sub-transfer Agent shall be the agent of BISYS and not the agent of the
Trust or such Fund, and that BISYS shall be fully responsible for the acts of
such Sub-transfer Agent and shall not be relieved of any of its responsibilities
hereunder by the appointment of such Sub-transfer Agent.
2. Fees.
-----
The Trust shall pay BISYS for the services to be provided by
BISYS under this Agreement in accordance with, and in the manner set forth in,
Schedule B hereto. Fees for any additional services to be provided by BISYS
pursuant to an amendment to Schedule A hereto shall be subject to mutual
agreement at the time such amendment to Schedule A is proposed.
<PAGE> 3
3. Reimbursement of Expenses.
--------------------------
In addition to paying BISYS the fees described in Section 2
hereof, the Trust agrees to reimburse BISYS for BISYS' out-of-pocket expenses in
providing services hereunder, including without limitation, the following:
(a) All freight and other delivery and bonding charges
incurred by BISYS in delivering materials to and from the
Trust and in delivering all materials to shareholders;
(b) All direct telephone, telephone transmission and telecopy
or other electronic transmission expenses incurred by
BISYS in communication with the Trust, the Trust's
investment adviser or custodian, dealers, shareholders or
others as required for BISYS to perform the services to be
provided hereunder;
(c) Costs of postage, couriers, stock computer paper,
statements, labels, envelopes, checks, reports, letters,
tax forms, proxies, notices or other form of printed
material which shall be required by BISYS for the
performance of the services to be provided hereunder;
(d) The cost of microfilm or microfiche of records or other
materials; and
(e) Any expenses BISYS shall incur at the written direction of
an officer of the Trust thereunto duly authorized.
4. Effective Date.
---------------
This Agreement shall become effective as of the date first
written above (the "Effective Date").
5. Term.
-----
The initial term of this Agreement (the "Initial Term") shall be
for a period commencing on the Effective Date and ending on June _____, 1999.
Thereafter, it shall be renewed automatically for successive one-year terms
unless written notice not to renew is given by the non- renewing party to the
other party at least 90 days prior to the expiration of the then-current term.
Notwithstanding the foregoing, either party may terminate this Agreement,
without penalty, during the Initial Term or any subsequent one-year term, upon
the provision of 90 days written notice to the other party. After such
termination, for so long as BISYS, with the written consent of the Trust, in
fact continues to perform any one or more of the services contemplated by this
Agreement or any Schedule or exhibit hereto, the provisions of this Agreement,
including without limitation the provisions dealing with indemnification, shall
continue in full force and effect. Fees and out-of-pocket expenses incurred by
BISYS but unpaid by the Trust upon such termination shall be
2
<PAGE> 4
immediately due and payable upon and notwithstanding such termination. BISYS
shall be entitled to collect from the Trust, in addition to the fees and
disbursements provided by Sections 2 and 3 hereof, the amount of all of BISYS'
reasonable cash disbursements and a reasonable fee (which fee shall not be less
than one hundred and two percent (102%) of the sum of the actual costs, not
including such cash disbursements, incurred by BISYS in performing such service)
for services in connection with BISYS' activities in effecting such termination,
including without limitation, the delivery to the Trust and/or its distributor
or investment adviser and/or other parties, of the Trust's property, records,
instruments and documents, or any copies thereof. To the extent that BISYS may
retain in its possession copies of any Trust documents or records subsequent to
such termination which copies had not been requested by or on behalf of the
Trust in connection with the termination process described above, BISYS, for a
reasonable fee, will provide the Trust with reasonable access to such copies.
In the event of a material breach of this Agreement by either
party, the non-breaching party shall notify the breaching party in writing of
such breach and, upon receipt of such notice, the breaching party shall have 45
days to remedy the breach. In the event the breach is not remedied within such
time period, the nonbreaching party may immediately terminate this Agreement.
6. Uncontrollable Events.
----------------------
BISYS assumes no responsibility hereunder, and shall not be
liable for any damage, loss of data, delay or any other loss whatsoever caused
by events beyond its reasonable control.
7. Legal Advice.
-------------
BISYS shall notify the Trust at any time BISYS believes that it
is in need of the advice of counsel (other than counsel in the regular employ of
BISYS or any affiliated companies) with regard to BISYS' responsibilities and
duties pursuant to this Agreement; and after so notifying the Trust, BISYS, at
its discretion, shall be entitled to seek, receive and act upon advice of legal
counsel of its choosing, such advice to be at the expense of the Trust or Funds
unless relating to a matter involving BISYS' willful misfeasance, bad faith,
gross negligence or reckless disregard with respect to BISYS' responsibilities
and duties hereunder and BISYS shall in no event be liable to the Trust or any
Fund or any shareholder or beneficial owner of the Trust for any action
reasonably taken pursuant to such advice.
8. Instructions.
-------------
Whenever BISYS is requested or authorized to take action
hereunder pursuant to instructions from a shareholder, or a properly authorized
agent of a shareholder ("shareholder's agent"), concerning an account in a Fund,
BISYS shall be entitled to rely upon any certificate, letter or other instrument
or communication, believed by BISYS to be genuine and to have been properly
made, signed or authorized by an officer or other authorized agent of the Trust
or by the shareholder or shareholder's agent, as the case may be, and shall be
entitled to receive as conclusive proof of any
3
<PAGE> 5
fact or matter required to be ascertained by it hereunder a certificate signed
by an officer of the Trust or any other person authorized by the Trust's Board
of Trustees or by the shareholder or shareholder's agent, as the case may be.
As to the services to be provided hereunder, BISYS may rely
conclusively upon the terms of the Prospectuses and Statement of Additional
Information of the Trust relating to the Funds to the extent that such services
are described therein unless BISYS receives written instructions to the contrary
in a timely manner from the Trust.
9. Standard of Care; Reliance on Records and Instructions;
-------------------------------------------------------
Indemnification.
----------------
BISYS shall use its best efforts to ensure the accuracy of all
services performed under this Agreement, but shall not be liable to the Trust
for any action taken or omitted by BISYS in the absence of bad faith, willful
misfeasance, negligence or reckless disregard by it of its obligations and
duties. The Trust agrees to indemnify and hold harmless BISYS, its employees,
agents, directors, officers and nominees from and against any and all claims,
demands, actions and suits, whether groundless or otherwise, and from and
against any and all judgments, liabilities, losses, damages, costs, charges,
reasonable counsel fees and other expenses of every nature and character arising
out of or in any way relating to BISYS' actions taken or nonactions with respect
to the performance of services under this Agreement or based, if applicable,
upon reasonable reliance on information, records, instructions or requests given
or made to BISYS by the Trust, the investment adviser and on any records
provided by any fund accountant or custodian thereof; provided that this
indemnification shall not apply to actions or omissions of BISYS (including
actions or omissions by its employees, agents, directors, officers or nominees)
in cases of its own bad faith, willful misfeasance, negligence or reckless
disregard by it of its obligations and duties; and further provided that prior
to confessing any claim against it which may be the subject of this
indemnification, BISYS shall give the Trust written notice of and reasonable
opportunity to defend against said claim in its own name or in the name of
BISYS.
10. Record Retention and Confidentiality.
-------------------------------------
BISYS shall keep and maintain on behalf of the Trust all books
and records which the Trust or BISYS is, or may be, required to keep and
maintain pursuant to any applicable statutes, rules and regulations, including
without limitation Rules 31a-1 and 31a-2 under the Investment Company Act of
1940, as amended (the "1940 Act"), relating to the maintenance of books and
records in connection with the services to be provided hereunder. BISYS further
agrees that all such books and records shall be the property of the Trust and to
make such books and records available for inspection by the Trust or by the
Securities and Exchange Commission (the "Commission") at reasonable times and
otherwise to keep confidential all books and records and other information
relative to the Trust and its shareholders, except when requested to divulge
such information by duly-constituted authorities or court process, or requested
by a shareholder or shareholder's agent with respect to information concerning
an account as to which such shareholder has either a legal
4
<PAGE> 6
or beneficial interest or when requested by the Trust, the shareholder, or
shareholder's agent, or the dealer of record as to such account.
11. Reports.
--------
BISYS will furnish to the Trust and to its properly-authorized
auditors, investment advisers, examiners, distributors, dealers, underwriters,
salesmen, insurance companies and others designated by the Trust in writing,
such reports at such times as are prescribed in Schedule C attached hereto, or
as subsequently agreed upon by the parties pursuant to an amendment to Schedule
C. The Trust agrees to examine each such report or copy promptly and will report
or cause to be reported any errors or discrepancies therein.
12. Rights of Ownership.
--------------------
All computer programs and procedures developed to perform
services required to be provided by BISYS under this Agreement are the property
of BISYS. All records and other data except such computer programs and
procedures are the exclusive property of the Trust and all such other records
and data will be furnished to the Trust in appropriate form as soon as
practicable after termination of this Agreement for any reason.
13. Return of Records.
------------------
BISYS may at its option at any time, and shall promptly upon the
Trust's demand, turn over to the Trust and cease to retain BISYS' files, records
and documents created and maintained by BISYS pursuant to this Agreement which
are no longer needed by BISYS in the performance of its services or for its
legal protection. If not so turned over to the Trust, such documents and records
will be retained by BISYS for six years from the year of creation. At the end of
such six-year period, such records and documents will be turned over to the
Trust unless the Trust authorizes in writing the destruction of such records and
documents.
14. Bank Accounts.
--------------
The Trust and the Funds shall establish and maintain such bank
accounts with such bank or banks as are selected by the Trust, as are necessary
in order that BISYS may perform the services required to be performed hereunder.
To the extent that the performance of such services shall require BISYS directly
to disburse amounts for payment of dividends, redemption proceeds or other
purposes, the Trust and Funds shall provide such bank or banks with all
instructions and authorizations necessary for BISYS to effect such
disbursements.
15. Representations of the Trust.
-----------------------------
The Trust certifies to BISYS that: (a) as of the close of
business on the Effective Date, each Fund which is in existence as of the
Effective Date has authorized unlimited shares, and (b)
5
<PAGE> 7
by virtue of its Declaration of Trust, shares of each Fund which are redeemed by
the Trust may be sold by the Trust from its treasury, and (c) this Agreement has
been duly authorized by the Trust and, when executed and delivered by the Trust,
will constitute a legal, valid and binding obligation of the Trust, enforceable
against the Trust in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
16. Representations of BISYS.
-------------------------
BISYS represents and warrants that: (a) BISYS has been in, and
shall continue to be in, substantial compliance with all provisions of law,
including Section 17A(c) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), required in connection with the performance of its duties under
this Agreement; and (b) the various procedures and systems which BISYS has
implemented with regard to safekeeping from loss or damage attributable to fire,
theft or any other cause of the blank checks, records, and other data of the
Trust and BISYS' records, data, equipment, facilities and other property used in
the performance of its obligations hereunder are adequate and that it will make
such changes therein from time to time as are required for the secure
performance of its obligations hereunder.
17. Insurance.
----------
BISYS shall notify the Trust should its insurance coverage with
respect to professional liability or errors and omissions coverage be canceled
or reduced. Such notification shall include the date of change and the reasons
therefor. BISYS shall notify the Trust of any material claims against it with
respect to services performed under this Agreement, whether or not they may be
covered by insurance, and shall notify the Trust from time to time as may be
appropriate of the total outstanding claims made by BISYS under its insurance
coverage.
18. Information to be Furnished by the Trust and Funds.
---------------------------------------------------
The Trust has furnished to BISYS the following:
(a) Copies of the Declaration of Trust of the Trust and of any
amendments thereto, certified by the proper official of
the state in which such Declaration has been filed.
(b) Copies of the following documents:
1. The Trust's By-Laws and any amendments thereto.
2. Certified copies of resolutions of the Board of
Trustees covering the following matters:
6
<PAGE> 8
A. Approval of this Agreement and authorization
of a specified officer of the Trust to
execute and deliver this Agreement and
authorization for specified officers of the
Trust to instruct BISYS hereunder; and
B. Authorization of BISYS to act as Transfer
Agent for the Trust on behalf of the Funds.
(c) A list of all officers of the Trust, together with
specimen signatures of those officers, who are authorized
to instruct BISYS in all matters.
(d) Two copies of the following (if such documents are
employed by the Trust):
1. Prospectuses and Statement of Additional
Information;
2. Distribution Agreement; and
3. All other forms commonly used by the Trust or its
Distributor with regard to their relationships and
transactions with shareholders of the Funds.
(e) A certificate as to shares of beneficial interest of the
Trust authorized, issued, and outstanding as of the
Effective Date of BISYS' appointment as Transfer Agent (or
as of the date on which BISYS' services are commenced,
whichever is the later date) and as to receipt of full
consideration by the Trust for all shares outstanding,
such statement to be certified by the Treasurer of the
Trust.
19. Information Furnished by BISYS.
-------------------------------
BISYS has furnished to the Trust the following:
(a) BISYS' Articles of Incorporation.
(b) BISYS' By-Laws and any amendments thereto.
(c) Certified copies of actions of BISYS covering the
following matters:
1. Approval of this Agreement, and authorization of a
specified officer of BISYS to execute and deliver
this Agreement;
2. Authorization of BISYS to act as Transfer Agent for
the Trust.
(d) A copy of the most recent independent accountants' report
relating to internal accounting control systems as filed
with the Commission pursuant to Rule 17Ad-13 under the
Exchange Act.
7
<PAGE> 9
20. Amendments to Documents.
------------------------
The Trust shall furnish BISYS written copies of any amendments
to, or changes in, any of the items referred to in Section 18 hereof forthwith
upon such amendments or changes becoming effective. In addition, the Trust
agrees that no amendments will be made to the Prospectuses or Statement of
Additional Information of the Trust which might have the effect of changing the
procedures employed by BISYS in providing the services agreed to hereunder or
which amendment might affect the duties of BISYS hereunder unless the Trust
first obtains BISYS' approval of such amendments or changes.
21. Reliance on Amendments.
-----------------------
BISYS may rely on any amendments to or changes in any of the
documents and other items to be provided by the Trust pursuant to Sections 18
and 20 of this Agreement and the Trust hereby indemnifies and holds harmless
BISYS from and against any and all claims, demands, actions, suits, judgments,
liabilities, losses, damages, costs, charges, counsel fees and other expenses of
every nature and character which may result from actions or omissions on the
part of BISYS in reasonable reliance upon such amendments and/or changes.
Although BISYS is authorized to rely on the above-mentioned amendments to and
changes in the documents and other items to be provided pursuant to Sections 18
and 20 hereof, BISYS shall be under no duty to comply with or take any action as
a result of any of such amendments or changes unless the Trust first obtains
BISYS' written consent to and approval of such amendments or changes.
22. Compliance with Law.
--------------------
Except for the obligations of BISYS set forth in Section 10
hereof, the Trust assumes full responsibility for the preparation, contents, and
distribution of each prospectus of the Trust as to compliance with all
applicable requirements of the Securities Act of 1933, as amended (the "1933
Act"), the 1940 Act, and any other laws, rules and regulations of governmental
authorities having jurisdiction. BISYS shall have no obligation to take
cognizance of any laws relating to the sale of the Trust's shares. The Trust
represents and warrants that no shares of the Trust will be offered to the
public until the Trust's registration statement under the 1933 Act and the 1940
Act has been declared or becomes effective.
23. Notices.
--------
Any notice provided hereunder shall be sufficiently given when
sent by registered or certified mail to the party required to be served with
such notice at the following address: 3435 Stelzer Road, Columbus, Ohio 43219,
or at such other address as such party may from time to time specify in writing
to the other party pursuant to this Section.
8
<PAGE> 10
24. Headings.
---------
Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
25. Assignment.
-----------
This Agreement and the rights and duties hereunder shall not be
assignable by either of the parties hereto except by the specific written
consent of the other party. This Section 25 shall not limit or in any way affect
BISYS' right to appoint a Sub-transfer Agent pursuant to Section 1 hereof. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns.
26. Governing Law and Matters Relating to the Trust as a Massachusetts
------------------------------------------------------------------
Business Trust.
--------------
This Agreement shall be governed by and provisions shall be
construed in accordance with the laws of the State of Ohio. It is expressly
agreed that the obligations of the Trust hereunder shall not be binding upon any
of the Trustees, shareholders, nominees, officers, agents or employees of the
Trust personally, but shall bind only the trust property of the Trust. The
execution and delivery of this Agreement have been authorized by the Trustees,
and this Agreement has been signed and delivered by an authorized officer of the
Trust, acting as such, and neither such authorization by the Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust as provided in the Trust's
Agreement and Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
PUGET SOUND ALTERNATIVE INVESTMENT
SERIES TRUST
By:
--------------------------------------
Title:
-----------------------------------
BISYS FUND SERVICES, INC.
By:
--------------------------------------
Title:
-----------------------------------
9
<PAGE> 11
Dated: June _____, 1998
SCHEDULE A
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
PUGET SOUND ALTERNATIVE INVESTMENT SERIES TRUST
AND
BISYS FUND SERVICES, INC.
TRANSFER AGENCY SERVICES
------------------------
1. Shareholder Transactions
------------------------
a. Process shareholder purchase and redemption orders.
b. Set up account information, including address, dividend option,
taxpayer identification numbers and wire instructions.
c. Issue confirmations in compliance with Rule 10b-10 under the
Securities Exchange Act of 1934, as amended.
d. Issue periodic statements for shareholders.
e. Process transfers and exchanges.
f. Process dividend payments, including the purchase of new shares,
through dividend reimbursement.
2. Shareholder Information Services
--------------------------------
a. Provide toll-free lines for direct shareholder use and customer
liaison staff with on-line inquiry capacity.
b. Make information available to appropriate shareholder servicing
personnel and other remote access units regarding trade date,
share price, current holdings, yields, and dividend information.
c. Produce detailed history of transactions through duplicate or
special order statements upon request.
A-1
<PAGE> 12
d. Provide mailing labels for distribution of financial reports,
prospectuses, proxy statements or marketing material to current
shareholders.
3. Compliance Reporting
--------------------
a. Provide reports to the Securities and Exchange Commission, the
National Association of Securities Dealers and the States in
which the Fund is registered.
b. Prepare and distribute appropriate Internal Revenue Service
forms for corresponding Fund and shareholder income and capital
gains.
c. Issue tax withholding reports to the Internal Revenue Service.
4. Dealer/Load Processing (if applicable)
--------------------------------------
a. Provide reports for tracking rights of accumulation and
purchases made under a Letter of Intent.
b. Account for separation of shareholder investments from
transaction sale charges for purchase of Fund shares.
c. Calculate fees due under 12b-1 plans for distribution and
marketing expenses.
d. Track sales and commission statistics by dealer and provide for
payment of commissions on direct shareholder purchases in a load
Fund.
5. Shareholder Account Maintenance
-------------------------------
a. Maintain all shareholder records for each account in the Trust.
b. Issue customer statements on scheduled cycle, providing
duplicate second and third party copies if required.
c. Record shareholder account information changes.
d. Maintain account documentation files for each shareholder.
A-2
<PAGE> 13
SCHEDULE B
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
PUGET SOUND ALTERNATIVE INVESTMENT SERIES TRUST
AND
BISYS FUND SERVICES, INC.
TRANSFER AGENT FEES
-------------------
The following fees shall be paid to BISYS; provided, however, that the
total fees payable hereunder for the first year of operations shall not exceed
$35,000:
Annual Per Fund Fee: $20,000
- --------------------
Annual Per Account Fee: $25
- -----------------------
Additional Services:
- --------------------
Additional services such as IRA processing, development of interface
capabilities, servicing of 403(b) and 408(c) accounts, management of cash sweeps
between DDAs and mutual fund accounts and coordination of the printing and
distribution of prospectuses, annual reports and semi-annual reports are subject
to additional fees which will be quoted upon request. Programming costs or
database management fees for special reports or specialized processing will be
quoted upon request.
Multiple Classes of Shares:
- ---------------------------
An additional annual charge of $10,000 per class per Fund shall be
imposed in the event new classes of shares are created after the Effective Date
of this Agreement.
Out-of-pocket Expenses:
- -----------------------
BISYS shall be entitled to be reimbursed for all reasonable
out-of-pocket expenses including, but not limited to, the expenses set forth in
Section 3 of the Transfer Agency Agreement to which this Schedule B is attached.
B-1
<PAGE> 14
SCHEDULE C
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
PUGET SOUND ALTERNATIVE INVESTMENT SERIES TRUST
AND
BISYS FUND SERVICES, INC.
REPORTS
-------
1. Daily Shareholder Activity Journal
2. Daily Fund Activity Summary Report
a. Beginning Balance
b. Dealer Transactions
c. Shareholder Transactions
d. Reinvested Dividends
e. Exchanges
f. Adjustments
g. Ending Balance
3. Daily Wire and Check Registers
4. Monthly Dealer Processing Reports
5. Monthly Dividend Reports
6. Sales Data Reports for Blue Sky Registration
7. Annual report by independent public accountants concerning BISYS'
shareholder system and internal accounting control systems to be filed
with the Securities and Exchange Commission pursuant to Rule 17Ad-13 of
the Securities Exchange Act of 1934, as amended.
C-1
<PAGE> 1
EXHIBIT
-------
EX-99.9(b):
-----------
FORM OF ADMINISTRATION AGREEMENT BETWEEN THE TRUST AND BISYS FUND SERVICES OHIO,
INC.
<PAGE> 2
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this ___ day of June, 1998, by and between
PUGET SOUND ALTERNATIVE INVESTMENT SERIES TRUST, a Massachusetts business trust
(the "Trust"), and BISYS FUND SERVICES OHIO, INC. (the "Administrator"), an Ohio
corporation.
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Trust Act of 1940, as amended (the "1940 Act"),
which is authorized to issue multiple series of shares of beneficial interest
("Shares"); and
WHEREAS, the Trust desires the Administrator to provide, and the
Administrator is willing to provide, management and administrative services to
such series of the Trust as the Trust and the Administrator may agree on
("Portfolios") and as listed on Schedule A attached hereto and made a part of
this Agreement, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Administrator hereby agree as follows:
ARTICLE 1. RETENTION OF THE ADMINISTRATOR. The Trust hereby engages the
Administrator to act as the administrator of the Portfolios and to furnish the
Portfolios with the management and administrative services as set forth in
Article 2 below. The Administrator hereby accepts such engagement and agrees to
perform the duties set forth below.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trust in any way and shall
not be deemed an agent of the Trust.
ARTICLE 2. ADMINISTRATIVE SERVICES. The Administrator shall perform or
supervise the performance by others of other administrative services in
connection with the operations of the Portfolios, and, on behalf of the Trust,
will investigate, assist in the selection of and conduct relations with
custodians, depositories, accountants, legal counsel, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Portfolios' operations. The
Administrator shall provide the Trustees of the Trust with such reports
regarding investment performance as they may reasonably request but shall have
no responsibility for supervising the performance by any investment adviser or
sub-adviser of its responsibilities.
The Administrator shall provide the Trust with regulatory reporting,
all necessary office space, equipment, personnel, compensation and facilities
(including facilities for meetings of shareholders ("Shareholders") and Trustees
of the Trust) for handling the affairs of the Portfolios and such other services
as the Administrator shall, from time to time, determine to be necessary to
perform its obligations under this Agreement. In addition, at the request of the
Board of Trustees,
<PAGE> 3
the Administrator shall make reports to the Trust's Trustees concerning the
performance of its obligations hereunder.
Without limiting the generality of the foregoing, the Administrator
shall:
(a) calculate contractual Trust expenses and control all
disbursements for the Trust, and as appropriate compute the
Trust's yields, including tax-equivalent yields, total return,
expense ratios, portfolio turnover rate and, if required,
portfolio average dollar-weighted maturity;
(b) assist Trust counsel with the preparation of prospectuses,
statements of additional information, registration statements
and proxy materials;
(c) prepare such reports, applications and documents (including
reports regarding the sale and redemption of Shares as may be
required in order to comply with Federal and state securities
law) as may be necessary or desirable to register the Trust's
Shares with state securities authorities, monitor the sale of
Trust Shares for compliance with state securities laws, and
file with the appropriate state securities authorities the
registration statements and reports for the Trust and the
Trust's Shares and all amendments thereto, as may be necessary
or convenient to register and keep effective the Trust and the
Trust's Shares with state securities authorities to enable the
Trust to make a continuous offering of its Shares;
(d) develop and prepare, with the assistance of the Trust's
investment adviser, communications to Shareholders, including
the annual report to Shareholders, coordinate the mailing of
prospectuses, notices, proxy statements, proxies and other
reports to Trust Shareholders, and supervise and facilitate
the proxy solicitation process for all shareholder meetings,
including the tabulation of shareholder votes;
(e) administer contracts on behalf of the Trust with, among
others, the Trust's investment adviser, distributor,
custodian, transfer agent and fund accountant;
(f) supervise the Trust's transfer agent with respect to the
payment of dividends and other distributions to Shareholders;
(g) calculate performance data of the Trust and its Portfolios for
dissemination to information services covering the investment
company industry;
(h) coordinate and supervise the preparation and filing of the
Trust's tax returns;
2
<PAGE> 4
(i) examine and review the operations and performance of the
various organizations providing services to the Trust or any
Portfolio of the Trust, including, without limitation, the
Trust's investment adviser, distributor, custodian, fund
accountant, transfer agent, outside legal counsel and
independent public accountants, and at the request of the
Board of Trustees, report to the Board on the performance of
organizations;
(j) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and
printing of the Trust's semi-annual and annual reports to
Shareholders;
(k) assist with the design, development, and operation of the
Trust Portfolios, including new classes, investment
objectives, policies and structure;
(l) provide individuals reasonably acceptable to the Trust's Board
of Trustees to serve as officers of the Trust, who will be
responsible for the management of certain of the Trust's
affairs as determined by the Trust's Board of Trustees;
(m) advise the Trust and its Board of Trustees on matters
concerning the Trust and its affairs;
(n) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Trust
in accordance with the requirements of Rules 17g-1 and
17d-1(d)(7) under the 1940 Act as such bonds and policies are
approved by the Trust's Board of Trustees;
(o) monitor and advise the Trust and its Portfolios on their
registered investment company status under the Internal
Revenue Code of 1986, as amended;
(p) perform all administrative services and functions of the Trust
and each Portfolio to the extent administrative services and
functions are not provided to the Trust or such Portfolio
pursuant to the Trust's or such Portfolio's investment
advisory agreement, distribution agreement, custodian
agreement, transfer agent agreement and fund accounting
agreement;
(q) furnish advice and recommendations with respect to other
aspects of the business and affairs of the Portfolios as the
Trust and the Administrator shall determine desirable; and
(r) prepare and file with the SEC the semi-annual report for the
Trust on Form N-SAR and all required notices pursuant to Rule
24f-2.
3
<PAGE> 5
The Administrator shall perform such other services for the Trust that
are mutually agreed upon by the parties from time to time. Such services may
include performing internal audit examinations; mailing the annual reports of
the Portfolios; preparing an annual list of Shareholders; and mailing notices of
Shareholders' meetings, proxies and proxy statements, for all of which the Trust
will pay the Administrator's out-of-pocket expenses.
ARTICLE 3. ALLOCATION OF CHARGES AND EXPENSES.
(A) THE ADMINISTRATOR. The Administrator shall furnish at its own
expense the executive, supervisory and clerical personnel necessary to perform
its obligations under this Agreement. The Administrator shall also provide the
items which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Trust as well as all Trustees of the
Trust who are affiliated persons of the Administrator or any affiliated
corporation of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Trust retained by the Trustees of the Trust
to perform services on behalf of the Trust.
(B) THE TRUST. The Trust assumes and shall pay or cause to be paid all
other expenses of the Trust not otherwise allocated herein, including, without
limitation, organization costs, taxes, expenses for legal and auditing services,
the expenses of preparing (including typesetting), printing and mailing reports,
prospectuses, statements of additional information, proxy solicitation material
and notices to existing Shareholders, all expenses incurred in connection with
issuing and redeeming Shares, the costs of custodial services, the cost of
initial and ongoing registration of the Shares under Federal and state
securities laws, fees and out-of-pocket expenses of Directors who are not
affiliated persons of the Administrator or the Investment Adviser to the Trust
or any affiliated corporation of the Administrator or the Investment Adviser,
insurance, interest, brokerage costs, litigation and other extraordinary or
nonrecurring expenses, and all fees and charges of investment advisers to the
Trust.
ARTICLE 4. COMPENSATION OF THE ADMINISTRATOR.
(A) ADMINISTRATION FEE. For the services to be rendered, the facilities
furnished and the expenses assumed by the Administrator pursuant to this
Agreement, the Trust shall pay to the Administrator compensation at an annual
rate specified in Schedule A attached hereto. Such compensation shall be
calculated and accrued daily, and paid to the Administrator monthly. The Trust
shall also reimburse the Administrator for its reasonable out-of-pocket
expenses, including the travel and lodging expenses incurred by officers and
employees of the Administrator in connection with attendance at Board meetings.
If this Agreement becomes effective subsequent to the first
day of a month or terminates before the last day of a month, the Administrator's
compensation for that part of the month in which this Agreement is in effect
shall be prorated in a manner consistent with the calculation of the fees as set
forth above. Payment of the Administrator's compensation for the preceding month
shall be made promptly.
4
<PAGE> 6
(B) SURVIVAL OF COMPENSATION RIGHTS. All rights of compensation under
this Agreement for services performed as of the termination date shall survive
the termination of this Agreement.
ARTICLE 5. LIMITATION OF LIABILITY OF THE ADMINISTRATOR. The duties of
the Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting from
willful misfeasance, bad faith or negligence in the performance of its duties,
or by reason of reckless disregard of its obligations and duties hereunder,
except as may otherwise be provided under provisions of applicable law which
cannot be waived or modified hereby. (As used in this Article 5, the term
"Administrator" shall include officers, directors, employees and other agents of
the Administrator as well as the Administrator itself.)
So long as the Administrator acts in good faith and with due diligence
and without negligence, the Trust assumes full responsibility and shall
indemnify the Administrator and hold it harmless from and against any and all
actions, suits and claims, whether groundless or otherwise, and from and against
any and all losses, damages, costs, charges, reasonable counsel fees and
disbursements, payments, expenses and liabilities (including reasonable
investigation expenses) arising directly or indirectly out of the
Administrator's actions taken or inactions with respect to the performance of
services hereunder. The indemnity and defense provisions set forth herein shall
indefinitely survive the termination of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Trust may be asked to indemnify or hold the
Administrator harmless, the Trust shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care to identify and
notify the Trust promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Trust, but failure to do so in good faith shall not affect the rights
hereunder.
The Trust shall be entitled to participate at its own expense or, if it
so elects, to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If the Trust elects to assume the defense
of any such claim, the defense shall be conducted by counsel chosen by the Trust
and satisfactory to the Administrator, whose approval shall not be unreasonably
withheld. In the event that the Trust elects to assume the defense of any suit
and retain counsel, the Administrator shall bear the fees and expenses of any
additional counsel retained by it. If the Trust does not elect to assume the
defense of a suit, it will reimburse the Administrator for the reasonable fees
and expenses of any counsel retained by the Administrator.
5
<PAGE> 7
The Administrator may apply to the Trust at any time for instructions
and may consult counsel for the Trust or its own counsel and with accountants
and other experts with respect to any matter arising in connection with the
Administrator's duties, and the Administrator shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. The Administrator will not be held to have
notice of any change of authority of any officers, employees or agents of the
Trust until receipt of written notice thereof from the Trust.
ARTICLE 6. ACTIVITIES OF THE ADMINISTRATOR. The services of the
Administrator rendered to the Trust are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that trustees, officers, employees
and Shareholders of the Trust are or may be or become interested in the
Administrator, as partners, officers, employees and shareholders or otherwise
and that partners, officers and employees of the Administrator and its counsel
are or may be or become similarly interested in the Trust, and that the
Administrator may be or become interested in the Trust as a Shareholder or
otherwise.
ARTICLE 7. DURATION OF THIS AGREEMENT. The Term of this Agreement shall
be as specified in Schedule A hereto.
ARTICLE 8. ASSIGNMENT. This Agreement shall not be assignable by either
party without the written consent of the other party; provided, however, that,
upon the provision of advance written notice to the Trust, the Administrator
may, at its expense, subcontract with any entity or person concerning the
provision of the services contemplated hereunder. The Administrator shall not,
however, be relieved of any of its obligations under this Agreement by the
appointment of such subcontractor and provided further, that the Administrator
shall be responsible, to the extent provided in Article 5 hereof, for all acts
of such subcontractor as if such acts were its own. This Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns.
ARTICLE 9. AMENDMENTS. This Agreement may be amended by the parties
hereto only if such amendment is specifically approved (i) by the vote of a
majority of the Trustees of the Trust, and (ii) by the vote of a majority of the
Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party.
ARTICLE 10. CERTAIN RECORDS. The Administrator shall maintain customary
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Trust shall be prepared and maintained at the
6
<PAGE> 8
expense of the Administrator, but shall be the property of the Trust and will be
made available to or surrendered promptly to the Trust on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Trust and follow the Trust's
instructions as to permitting or refusing such inspection; provided that the
Administrator may exhibit such records to any person in any case where it is
advised by its counsel that it may be held liable for failure to do so, unless
(in cases involving potential exposure only to civil liability) the Trust has
agreed to indemnify the Administrator against such liability.
ARTICLE 11. DEFINITIONS OF CERTAIN TERMS. The terms "interested person"
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 12. NOTICE. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the following address: 3435 Stelzer Road, Columbus, Ohio 43219,
or at such other address as such party may from time to time specify in writing
to the other party pursuant to this Section.
ARTICLE 13. GOVERNING LAW AND MATTERS RELATING TO THE TRUST AS A
MASSACHUSETTS BUSINESS TRUST. This Agreement shall be governed by and provisions
shall be construed in accordance with the laws of the State of Ohio. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Trust personally, but shall bind only the trust property of the
Trust. The execution and delivery of this Agreement have been authorized by the
Trustees, and this Agreement has been signed and delivered by an authorized
officer of the Trust, acting as such, and neither such authorization by the
Trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Trust as provided in
the Trust's Agreement and Declaration of Trust.
ARTICLE 14. MULTIPLE ORIGINALS. This Agreement may be executed in two
or more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
7
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
PUGET SOUND ALTERNATIVE
INVESTMENT SERIES TRUST
By:
---------------------------------
Title:
------------------------------
BISYS FUND SERVICES OHIO, INC.
By:
---------------------------------
Title:
------------------------------
8
<PAGE> 10
SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
DATED AS OF JUNE _____, 1998
BETWEEN
PUGET SOUND ALTERNATIVE INVESTMENT SERIES TRUST
AND
BISYS FUND SERVICES OHIO, INC.
Portfolios: This Agreement shall apply to all Portfolios of the Trust,
either now or hereafter created (collectively, the
"Portfolios"). As of June _____, 1998, the Trust consists
of the following Portfolios:
Puget Sound Market Neutral Portfolio
Fees: Pursuant to Article 4, in consideration of services rendered
and expenses assumed pursuant to this Agreement, the Trust
will pay the Administrator on the first business day of each
month, or at such time(s) as the Administrator shall request
and the parties hereto shall agree, a fee computed daily at
the annual rate of:
Fifteen one-hundredths of one percent (.15%) of each
Fund's average daily net assets
The fee for the period from the day of the month this
Agreement is entered into until the end of that month shall be
prorated according to the proportion which such period bears
to the full monthly period. Upon any termination of this
Agreement before the end of any month, the fee for such part
of a month shall be prorated according to the proportion which
such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
For purposes of determining the fees payable to the
Administrator, the value of the net assets of a particular
Portfolio shall be computed in the manner described in the
Trust's Declaration of Trust or in the Prospectus or Statement
of Additional Information respecting that Portfolio as from
time to time is in effect for the computation of the value of
such net assets in connection with the determination of the
liquidating value of the shares of such Portfolio.
The parties hereby confirm that the fees payable hereunder
shall be applied to each Portfolio as a whole, and not to
separate classes of shares within the Portfolios.
Term: The initial term of this Agreement (the "Initial Term") shall
be for a period commencing on the date first written above and
ending on June _____, 1999. This Agreement shall be renewed
automatically for successive periods of one year after
A-1
<PAGE> 11
the Initial Term, unless written notice of nonrenewal is
provided by either party not less than 90 days prior to the
end of the then-current term. In the event of a material
breach of this Agreement by either party, the non-breaching
party shall notify the breaching party in writing of such
breach and upon receipt of such notice, the breaching party
shall have 45 days to remedy the breach. In the event the
breach is not remedied within such time period, the
nonbreaching party may immediately terminate this Agreement.
Notwithstanding the foregoing, after such termination for so
long as the Administrator, with the written consent of the
Trust, in fact continues to perform any one or more of the
services contemplated by this Agreement or any schedule or
exhibit hereto, the provisions of this Agreement, including
without limitation the provisions dealing with
indemnification, shall continue in full force and effect.
Compensation due the Administrator and unpaid by the Trust
upon such termination shall be immediately due and payable
upon and notwithstanding such termination. The Administrator
shall be entitled to collect from the Trust, in addition to
the compensation described in this Schedule A, the amount of
all of the Administrator's reasonable cash disbursements for
services in connection with the Administrator's activities in
effecting such termination, including without limitation, the
delivery to the Trust and/or its designees of the Trust's
property, records, instruments and documents, or any copies
thereof. Subsequent to such termination, for a reasonable fee,
the Administrator will provide the Trust with reasonable
access to any Trust documents or records remaining in its
possession.
If, for any reason other than a material breach of this
Agreement, the Administrator is replaced as administrator, or
if a third party is added to perform all or a part of the
services provided by the Administrator under this Agreement
(excluding any sub-administrator appointed by the
Administrator as provided in Article 8 hereof), then the Trust
shall make a one-time cash payment, as liquidated damages, to
the Administrator equal to the balance due the Administrator
for the remainder of the term of this Agreement, assuming for
purposes of calculation of the payment that the asset level of
the Trust on the date the Administrator is replaced, or a
third party is added, will remain constant for the balance of
the contract term.
In the event the Trust is merged into another legal entity in
part or in whole pursuant to any form of business
reorganization or is liquidated in part or in whole prior to
the expiration of the then-current term of this Agreement, the
parties acknowledge and agree that (i) the liquidated damages
provision set forth above shall be applicable in those
instances in which the Administrator is not retained to
provide administration services and (ii) for purposes of
calculating the payment amount representing liquidated
damages, the appropriate asset level of the Trust shall be the
greater of: (i) the asset level calculated for the Trust at
the time the Trust's Board of Trustees
A-2
<PAGE> 12
receives notification of an intention on the part of Fund
management to effect such a business reorganization or
liquidation; (ii) the asset level calculated for the Trust at
the time the Trust's Board of Trustees formally approves such
a business reorganization or liquidation; or (iii) the asset
level calculated for the Trust on the day prior to the first
day during which assets are transferred by the Trust pursuant
to the plan of reorganization or liquidation. The one-time
cash payment referenced above shall be due and payable on the
day prior to the first day during which assets are transferred
pursuant to the plan of reorganization or liquidation.
The parties further acknowledge and agree that, in the event
the Administrator ceases to be retained, as set forth above,
(i) a determination of actual damages incurred by the
Administrator would be extremely difficult, and (ii) the
liquidated damages provision contained herein is intended to
adequately compensate the Administrator for damages incurred
and is not intended to constitute any form of penalty.
A-3
<PAGE> 1
EXHIBIT
-------
EX-99.9(c):
-----------
FORM OF FUND ACCOUNTING AGREEMENT BETWEEN THE TRUST AND BISYS FUND SERVICES,
INC.
<PAGE> 2
FUND ACCOUNTING AGREEMENT
AGREEMENT made this _______ day of June, 1998, between PUGET SOUND ALTERNATIVE
INVESTMENT SERIES TRUST (the "Trust"), a Massachusetts business trust, and BISYS
FUND SERVICES, INC. ("Fund Accountant"), a corporation organized under the laws
of the State of Delaware.
WHEREAS, the Trust desires that Fund Accountant perform certain fund
accounting services for each investment portfolio of the Trust, all as now or
hereafter may be established from time to time (individually referred to herein
as the "Fund" and collectively as the "Funds"); and
WHEREAS, Fund Accountant is willing to perform such services on the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as Fund Accountant.
----------------------------
(a) MAINTENANCE OF BOOKS AND RECORDS. Fund Accountant
will keep and maintain the following books and
records of each Fund pursuant to Rule 31a-1 under the
Investment Company Act of 1940 (the "Rule"):
(i) Journals containing an itemized daily record
in detail of all purchases and sales of
securities, all receipts and disbursements
of cash and all other debits and credits, as
required by subsection (b)(1) of the Rule;
(ii) General and auxiliary ledgers reflecting all
asset, liability, reserve, capital, income
and expense accounts, including interest
accrued and interest received, as required
by subsection (b)(2)(I) of the Rule;
(iii) Separate ledger accounts required by
subsection (b)(2)(ii) and (iii) of the Rule;
and
(iv) A monthly trial balance of all ledger
accounts (except shareholder accounts) as
required by subsection (b)(8) of the Rule.
(b) PERFORMANCE OF DAILY ACCOUNTING SERVICES. In addition
to the maintenance of the books and records specified
above, Fund Accountant shall perform the following
accounting services daily for each Fund:
<PAGE> 3
(i) Calculate the net asset value per share
utilizing prices obtained from the sources
described in subsection 1(b)(ii) below;
(ii) Obtain security prices from independent
pricing services, or if such quotes are
unavailable, then obtain such prices from
each Fund's investment adviser or its
designee, as approved by the Trust's Board
of Trustees;
(iii) Verify and reconcile with the Fund's
custodian all daily trade activity;
(iv) Compute, as appropriate, each Fund's net
income and capital gains, dividend payables,
dividend factors, 30-day yields, including
tax- equivalent yields, and weighted average
portfolio maturity;
(v) Review daily the net asset value calculation
and dividend factor (if any) for each Fund
prior to release to shareholders, check and
confirm the net asset values and dividend
factors for reasonableness and deviations,
and distribute net asset values and yields
to NASDAQ;
(vi) Report to the Trust the daily market pricing
of securities in any money market Funds,
with the comparison to the amortized cost
basis;
(vii) Determine unrealized appreciation and
depreciation on securities held in variable
net asset value Funds;
(viii) Amortize premiums and accrete discounts on
securities purchased at a price other than
face value, if requested by the Trust;
(ix) Update fund accounting system to reflect
rate changes, as received from a Fund's
investment adviser, on variable interest
rate instruments;
(x) Post Fund transactions to appropriate
categories;
(xi) Accrue expenses of each Fund according to
instructions received from the Trust's
Administrator;
(xii) Determine the outstanding receivables and
payables for all (1) security trades, (2)
Fund share transactions and (3) income and
expense accounts;
2
<PAGE> 4
(xiii) Provide accounting reports in connection
with the Trust's regular annual audit and
other audits and examinations by regulatory
agencies; and
(xiv) Provide such periodic reports as the parties
shall agree upon, as set forth in a separate
schedule.
(c) SPECIAL REPORTS AND SERVICES.
(i) Fund Accountant may provide additional
special reports upon the request of the
Trust or a Fund's investment adviser, which
may result in an additional charge, the
amount of which shall be agreed upon between
the parties.
(ii) Fund Accountant may provide such other
similar services with respect to a Fund as
may be reasonably requested by the Trust,
which may result in an additional charge,
the amount of which shall be agreed upon
between the parties.
(d) ADDITIONAL ACCOUNTING SERVICES. Fund Accountant shall
also perform the following additional accounting
services for each Fund:
(i) Provide monthly a download (and hard copy
thereof) of the financial statements
described below, upon request of the Trust.
The download will include the following
items:
Statement of Assets and Liabilities,
Statement of Operations,
Statement of Changes in Net Assets, and
Condensed Financial Information;
(ii) Provide accounting information for the
following:
(A) federal and state income tax returns
and federal excise tax returns;
(B) the Trust's semi-annual reports with
the Securities and Exchange
Commission ("SEC") on Form N-SAR;
(C) the Trust's annual, semi-annual and
quarterly (if any) shareholder
reports;
3
<PAGE> 5
(D) registration statements on Form N-1A
and other filings relating to the
registration of Shares;
(E) the Administrator's monitoring of
the Trust's status as a regulated
investment company under Subchapter
M of the Internal Revenue Code, as
amended;
(F) annual audit by the Trust's
auditors; and
(G) examinations performed by the SEC.
2. Subcontracting.
---------------
Fund Accountant may, at its expense, subcontract with any
entity or person concerning the provision of the services contemplated
hereunder; provided, however, that Fund Accountant shall not be relieved of any
of its obligations under this Agreement by the appointment of such subcontractor
and provided further, that Fund Accountant shall be responsible, to the extent
provided in Section 6 hereof, for all acts of such subcontractor as if such acts
were its own.
3. Compensation.
-------------
The Trust shall pay Fund Accountant for the services to be
provided by Fund Accountant under this Agreement in accordance with, and in the
manner set forth in, Schedule A hereto, as such Schedule may be amended from
time to time.
4. Reimbursement of Expenses.
--------------------------
In addition to paying Fund Accountant the fees described in
Section 3 hereof, the Trust agrees to reimburse Fund Accountant for its
out-of-pocket expenses in providing services hereunder, including without
limitation the following:
(a) All freight and other delivery and bonding charges incurred by
Fund Accountant in delivering materials to and from the Trust;
(b) All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred by Fund
Accountant in communication with the Trust, the Trust's
investment advisor or custodian, dealers or others as required
for Fund Accountant to perform the services to be provided
hereunder;
(c) The cost of obtaining security market quotes pursuant to
Section l(b)(ii) above;
(d) The cost of microfilm or microfiche of records or other
materials;
4
<PAGE> 6
(e) Any expenses Fund Accountant shall incur at the written
direction of an officer of the Trust thereunto duly
authorized; and
(f) Any additional expenses reasonably incurred by Fund Accountant
in the performance of its duties and obligations under this
Agreement.
5. Effective Date.
---------------
This Agreement shall become effective with respect to a Fund
as of the date first written above (the "Effective Date").
6. Term.
-----
The initial term of this Agreement (the "Initial Term") shall
be for a period commencing on the Effective Date and ending on June _____, 1999.
Thereafter, this Agreement shall be renewed automatically for successive
one-year terms unless written notice not to renew is given by the non-renewing
party to the other party at least 60 days prior to the expiration of the
then-current term. Notwithstanding the foregoing, either party may terminate
this Agreement, without penalty, during the Initial Term or any subsequent
one-year term, upon the provision of 90 days written notice to the other party.
After such termination for so long as Fund Accountant, with the written consent
of the Trust, in fact continues to perform any one or more of the services
contemplated by this Agreement or any schedule or exhibit hereto, the provisions
of this Agreement, including without limitation the provisions dealing with
indemnification, shall continue in full force and effect. Compensation due Fund
Accountant and unpaid by the Trust upon such termination shall be immediately
due and payable upon and notwithstanding such termination. Fund Accountant shall
be entitled to collect from the Trust, in addition to the compensation described
under Section 3 hereof, the amount of all of Fund Accountant's cash
disbursements for services in connection with Fund Accountant's activities in
effecting such termination, including without limitation, the delivery to the
Trust and/or its designees of the Trust's property, records, instruments and
documents, or any copies thereof. Subsequent to such termination, for a
reasonable fee, Fund Accountant will provide the Trust with reasonable access to
any Trust documents or records remaining in its possession.
In the event of a material breach of this Agreement by either
party, the non-breaching party shall notify the breaching party in writing of
such breach and, upon receipt of such notice, the breaching party shall have 45
days to remedy the breach. In the event the breach is not remedied within such
time period, the nonbreaching party may immediately terminate this Agreement.
7. Standard of Care; Reliance on Records and Instructions;
-------------------------------------------------------
Indemnification.
----------------
Fund Accountant shall use its best efforts to insure the
accuracy of all services performed under this Agreement, but shall not be liable
to the Trust for any action taken or omitted by Fund Accountant in the absence
of bad faith, willful misfeasance, negligence or reckless
5
<PAGE> 7
disregard by it of its obligations and duties. A Fund agrees to indemnify and
hold harmless Fund Accountant, its employees, agents, directors, officers and
nominees from and against any and all claims, demands, actions and suits,
whether groundless or otherwise, and from and against any and all judgments,
liabilities, losses, damages, costs, charges, counsel fees and other expenses of
every nature and character arising out of or in any way relating to Fund
Accountant's actions taken or nonactions with respect to the performance of
services under this Agreement with respect to such Fund or based, if applicable,
upon reasonable reliance on information, records, instructions or requests with
respect to such Fund given or made to Fund Accountant by a duly authorized
representative of the Trust; provided that this indemnification shall not apply
to actions or omissions of Fund Accountant (including actions or omissions by
its employees, agents, directors, officers or nominees) in cases of its own bad
faith, willful misfeasance, negligence or reckless disregard by it of its
obligations and duties, and further provided that prior to confessing any claim
against it which may be the subject of this indemnification, Fund Accountant
shall give the Trust written notice of and reasonable opportunity to defend
against said claim in its own name or in the name of Fund Accountant.
8. Record Retention and Confidentiality.
-------------------------------------
Fund Accountant shall keep and maintain on behalf of the Trust
all books and records which the Trust and Fund Accountant is, or may be,
required to keep and maintain pursuant to any applicable statutes, rules and
regulations, including without limitation Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940, as amended (the "1940 Act"), relating to the
maintenance of books and records in connection with the services to be provided
hereunder. Fund Accountant further agrees that all such books and records shall
be the property of the Trust and to make such books and records available for
inspection by the Trust or by the Securities and Exchange Commission at
reasonable times and otherwise to keep confidential all books and records and
other information relative to the Trust and its shareholders; except when
requested to divulge such information by duly-constituted authorities or court
process.
9. Uncontrollable Events.
----------------------
Fund Accountant assumes no responsibility hereunder, and shall
not be liable, for any damage, loss of data, delay or any other loss whatsoever
caused by events beyond its reasonable control.
10. Reports.
--------
Fund Accountant will furnish to the Trust and to its properly
authorized auditors, investment advisers, examiners, distributors, dealers,
underwriters, salesmen, insurance companies and others designated by the Trust
in writing, such reports and at such times as are prescribed
6
<PAGE> 8
pursuant to the terms and the conditions of this Agreement to be provided or
completed by Fund Accountant, or as subsequently agreed upon by the parties
pursuant to an amendment hereto.
11. Rights of Ownership.
--------------------
All computer programs and procedures developed to perform
services required to be provided by Fund Accountant under this Agreement are the
property of Fund Accountant. All records and other data except such computer
programs and procedures are the exclusive property of the Trust and all such
other records and data will be furnished to the Trust in appropriate form as
soon as practicable after termination of this Agreement for any reason.
12. Return of Records.
------------------
Fund Accountant may at its option at any time, and shall
promptly upon the Trust's demand, turn over to the Trust and cease to retain
Fund Accountant's files, records and documents created and maintained by Fund
Accountant pursuant to this Agreement which are no longer needed by Fund
Accountant in the performance of its services or for its legal protection. If
not so turned over to the Trust, such documents and records will be retained by
Fund Accountant for six years from the year of creation. At the end of such
six-year period, such records and documents will be turned over to the Trust
unless the Trust authorizes in writing the destruction of such records and
documents.
13. Representations of the Trust.
-----------------------------
The Trust certifies to Fund Accountant that: (1) as of the
close of business on each Conversion Date, each Fund that is in existence as of
the Conversion Date has authorized unlimited shares, and (2) this Agreement has
been duly authorized by the Trust and, when executed and delivered by the Trust,
will constitute a legal, valid and binding obligation of the Trust, enforceable
against the Trust in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
14. Representations of Fund Accountant.
-----------------------------------
Fund Accountant represents and warrants that: (1) the various
procedures and systems which Fund Accountant has implemented with regard to
safeguarding from loss or damage attributable to fire, theft, or any other cause
the records, and other data of the Trust and Fund Accountant's records, data,
equipment, facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as are required for the secure performance of its obligations
hereunder, and (2) this Agreement has been duly authorized by Fund Accountant
and, when executed and delivered by Fund Accountant, will constitute a legal,
valid and binding obligation of Fund Accountant, enforceable against Fund
Accountant in accordance with its terms, subject to bankruptcy, insolvency,
reorganization,
7
<PAGE> 9
moratorium and other laws of general application affecting the rights and
remedies of creditors and secured parties.
15. Insurance.
----------
Fund Accountant shall notify the Trust should any of its
insurance coverage be canceled or reduced. Such notification shall include the
date of change and the reasons therefor. Fund Accountant shall notify the Trust
of any material claims against it with respect to services performed under this
Agreement, whether or not they may be covered by insurance, and shall notify the
Trust from time to time as may be appropriate of the total outstanding claims
made by Fund Accountant under its insurance coverage.
16. Information to be Furnished by the Trust and Funds.
---------------------------------------------------
The Trust has furnished to Fund Accountant the following:
(a) Copies of the Declaration of Trust of the Trust and
of any amendments thereto, certified by the proper
official of the state in which such document has been
filed.
(b) Copies of the following documents:
(i) The Trust's Bylaws and any amendments
thereto; and
(ii) Certified copies of resolutions of the Board
of Trustees covering the approval of this
Agreement, authorization of a specified
officer of the Trust to execute and deliver
this Agreement and authorization for
specified officers of the Trust to instruct
Fund Accountant thereunder.
(c) A list of all the officers of the Trust, together
with specimen signatures of those officers who are
authorized to instruct Fund Accountant in all
matters.
(d) Two copies of the Prospectuses and Statements of
Additional Information for each Fund.
17. Information Furnished by Fund Accountant.
-----------------------------------------
(a) Fund Accountant has furnished to the Trust the
following:
(i) Fund Accountant's Articles of Incorporation;
and
(ii) Fund Accountant's Bylaws and any amendments
thereto.
8
<PAGE> 10
(b) Fund Accountant shall, upon request, furnish
certified copies of corporate actions covering the
following matters:
(i) Approval of this Agreement, and
authorization of a specified officer of Fund
Accountant to execute and deliver this
Agreement; and
(ii) Authorization of Fund Accountant to act as
fund accountant for the Trust and to provide
accounting services for the Trust.
18. Amendments to Documents.
------------------------
The Trust shall furnish Fund Accountant written copies of any
amendments to, or changes in, any of the items referred to in Section 16 hereof
forthwith upon such amendments or changes becoming effective. In addition, the
Trust agrees that no amendments will be made to the Prospectuses or Statements
of Additional Information of the Trust which might have the effect of changing
the procedures employed by Fund Accountant in providing the services agreed to
hereunder or which amendment might affect the duties of Fund Accountant
hereunder unless the Trust first obtains Fund Accountant's approval of such
amendments or changes.
19. Compliance with Law.
--------------------
Except for the obligations of Fund Accountant set forth in
Section 8 hereof, the Trust assumes full responsibility for the preparation,
contents and distribution of each prospectus of the Trust as to compliance with
all applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the 1940 Act and any other laws, rules and regulations of
governmental authorities having jurisdiction. Fund Accountant shall have no
obligation to take cognizance of any laws relating to the sale of the Trust's
Shares. The Trust represents and warrants that no Shares of the Trust will be
offered to the public until the Trust's registration statement under the
Securities Act and the 1940 Act has been declared or becomes effective.
20. Notices.
--------
Any notice provided hereunder shall be sufficiently given when
sent by registered or certified mail to the party required to be served with
such notice, at the following address: 3435 Stelzer Road, Columbus, Ohio 43219,
or at such other address as such party may from time to time specify in writing
to the other party pursuant to this Section.
21. Headings.
---------
Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
9
<PAGE> 11
22. Assignment.
-----------
This Agreement and the rights and duties hereunder shall not
be assignable with respect to a Fund by either of the parties hereto except by
the specific written consent of the other party. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns.
23. Governing Law and Matters Relating to the Trust as a
----------------------------------------------------
Massachusetts Business Trust.
-----------------------------
This Agreement shall be governed by and provisions shall be
construed in accordance with the laws of the State of Ohio. It is expressly
agreed that the obligations of the Trust hereunder shall not be binding upon any
of the Trustees, shareholders, nominees, officers, agents or employees of the
Trust personally, but shall bind only the trust property of the Trust. The
execution and delivery of this Agreement have been authorized by the Trustees,
and this Agreement has been signed and delivered by an authorized officer of the
Trust, acting as such, and neither such authorization by the Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust as provided in the Trust's
Agreement and Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
PUGET SOUND ALTERNATIVE
INVESTMENT SERIES TRUST
By:
--------------------------------
Title:
-----------------------------
BISYS FUND SERVICES, INC.
By:
--------------------------------
Title:
-----------------------------
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<PAGE> 12
Dated: June _____, 1998
SCHEDULE A
TO THE FUND ACCOUNTING AGREEMENT
BETWEEN
PUGET SOUND ALTERNATIVE INVESTMENT SERIES TRUST
AND
BISYS FUND SERVICES, INC.
FEES
----
Fund Accountant shall be entitled to receive an annual fee from each
Fund in accordance with the following schedule, subject to the annual minimum
fees per Fund set forth below; provided, however, that the total fees payable
hereunder for the first year of operations shall not exceed $40,000:
Three one-hundredths of one percent (.03%) of each
Fund's average daily net assets
Such fees shall be subject to the following annual minimum fees per
Fund:
$35,000
Multiple Classes of Shares:
- ---------------------------
An additional annual charge of $10,000 per class per Fund
shall be imposed in the event new classes of shares are
created after the Effective Date of this Agreement.
A-1
<PAGE> 13
Reimbursement of Expenses:
- --------------------------
In addition to the fees set forth above, Fund Accountant shall
be entitled to be reimbursed for its out-of-pocket expenses,
as described in Section 4 of this Agreement.
PUGET SOUND ALTERNATIVE BISYS FUND SERVICES, INC.
INVESTMENT SERIES TRUST
By: By:
--------------------------- --------------------------------
Title: Title:
----------------------- -----------------------------
A-2
