As filed with the Securities and Exchange Commission
on May 18, 2000
Registration Nos. 333-
811-
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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)
NVEST COMPANIES TRUST I
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(Exact Name of Registrant as Specified in Charter)
399 Boylston Street, Boston, Massachusetts 02116
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(Address of Principal Executive Offices) (Zip Code)
(617) 578-1132
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Registrant's Telephone Number, including Area Code
John E. Pelletier, Esq.
Executive Vice President and General Counsel
Nvest Services Company, Inc.
399 Boylston Street
Boston, Massachusetts 02116
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(Name and address of agent for service)
Copy to:
John Loder, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this registration statement.
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Pursuant to Regulation 270.24f-2 under the Investment Company Act of 1940, the
Registrant hereby elects to register an indefinite number of shares of
beneficial interest.
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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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<PAGE>
AEW Management and Advisors, L.P.
<AEW Logo goes here>
AEW Real Estate Securities Fund
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Prospectus
___________, 2000
What's Inside
Goals, Strategies & Risks
Page 1
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Fund Fees & Expenses
Page 2
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Management Team
Page 4
-----------------------------------
Fund Services
Page 5
-----------------------------------
The Securities and
Exchange Commission (the
"SEC") has not approved
the Fund's shares or
determined whether this
Prospectus is accurate
or complete. Anyone who
tells you otherwise is
committing a crime.
For general information
on the Fund or any of
its services and for
assistance in opening an AEW Funds
account, call 399 Boylston Street, Boston, Massachusetts 02110
877-637-REIT. 877-637-REIT
<PAGE>
TABLE OF CONTENTS
GOALS, STRATEGIES & RISKS
AEW Real Estate Securities Fund...............................................1
FUND FEES & EXPENSES
Fund Fees & Expenses..........................................................2
MORE ABOUT RISK
More About Risk...............................................................3
MANAGEMENT TEAM
Meet the Fund's Investment Adviser............................................4
Meet the Fund's Portfolio Manager.............................................4
Adviser's Past Performance....................................................5
FUND SERVICES
It's Easy to Open an Account..................................................6
Buying Shares.................................................................7
Selling Shares................................................................7
Selling Shares in Writing.....................................................8
Restrictions on Buying and Selling Shares.....................................9
How Fund Shares Are Priced...................................................10
Dividends and Distributions..................................................11
Tax Consequences.............................................................11
Glossary of Terms............................................................12
If you have questions about any of the terms used in this Prospectus, please
refer to the "Glossary of Terms."
To learn more about the possible risks of investing in the Fund, please refer to
the section entitled "More About Risk." This section details the risks of
practices in which the Fund may engage. Please read this section carefully
before you invest.
Fund shares are not bank deposits and are not guaranteed, endorsed or insured by
the Federal Deposit Insurance Corporation or any other government agency, and
are subject to investment risks, including possible loss of the principal
invested.
<PAGE>
AEW REAL ESTATE SECURITIES FUND
ADVISER: AEW Management and Advisors, L.P. ("AEW")
MANAGER: Matthew A. Troxell, CFA
FUND FOCUS
Stability Income Growth
| |
High | X |
-------------------------
Mod. X | | X
-------------------------
Low | |
| |
INVESTMENT GOAL
The Fund seeks to provide investors with above-average income and long-term
growth of capital.
INVESTMENT STRATEGIES
Under normal market conditions, the Fund will invest principally in publicly
traded equity securities issued by real estate investment trusts ("REITs").
REITs are generally dedicated to owning, and usually operating, income-producing
real estate, or dedicated to financing real estate. The Fund primarily invests
in equity REITs, which own or lease real estate and derive their income
primarily from rental income. The Fund may also invest in publicly traded
securities issued by other companies whose principal activity involves the
development, ownership, construction, management or sale of real estate;
companies with significant real estate holdings; and companies that provide
products or services related to the real estate industry.
AEW employs a value-oriented investment strategy designed to identify securities
that are priced below what it believes is their intrinsic value. AEW believes
that ultimately the performance of real estate equity securities is dependent
upon the performance of the underlying real estate assets and company management
as well as the overall influence of capital markets. Consequently, when
selecting securities for the Fund, AEW draws upon the combined expertise of its
real estate, research and securities professionals.
When selecting investments for the Fund, AEW generally considers the following
factors that it believes helps to identify those companies whose shares
represent the greatest value and price appreciation potential:
o Valuation - AEW has developed a proprietary model to assess the
relative value of each stock in the Fund's investment universe.
This model is designed to estimate what an issuer's anticipated
cash flows are worth to a stock investor (a capital markets
value) and to a direct real estate investor (a real estate
value). The model helps AEW to identify stocks that it believes
trade at discounts to either or both of these model values
relative to similar stocks.
o Price - AEW examines the historic pricing of each company in the
Fund's universe of potential investments. Those stocks that have
underperformed in price, either in absolute terms or relative to
the Fund's universe in general, are generally given greater
weight than those that have overperformed.
o Catalysts - When evaluating a security, AEW also seeks to
identify potential catalysts that, in its opinion, could cause
the marketplace to re-value the security upwards in the near
term. These catalysts can be macro-economic, market-driven or
company-specific in nature.
The Fund may also:
o Hold cash and/or invest up to 100% of its assets in U.S.
government securities or money market instruments for temporary
defensive purposes in response to adverse market, economic or
political conditions. These investments may prevent the Fund from
achieving its goal.
INVESTMENT RISKS
EQUITY Subject to market risks. This means that you may lose money on
SECURITIES: your investment due to sudden, unpredictable drops in value or
periods of below-average performance in a given stock or in the
stock market as a whole.
REAL Because the Fund concentrates its investments in the real estate
ESTATE industry, the Fund's performance will be dependent in part on the
SECURITIES: performance of the real estate market. The real estate industry
is particularly sensitive to economic downturns. Securities of
companies in the real estate industry, including REITs, are
sensitive to factors such as changes in real estate values,
property taxes, interest rates, cash flow of underlying real
estate assets, occupancy rates, government regulations affecting
zoning, land use and rents, and the management skill and
creditworthiness of the issuer. Companies in the real estate
industry may also be subject to liabilities under environmental
and hazardous waste laws.
SMALL-CAP Companies in the real estate industry, including REITs, in which
COMPANIES: the Fund may invest may have relatively small market
capitalizations, which tend to have more limited markets and
resources than large-cap companies. Consequently, share prices of
small cap companies and REITs can be more volatile than, and
perform differently from, larger company stocks.
1
<PAGE>
FUND FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the Fund.
SHAREHOLDER FEES
(fees paid directly from your investment)
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REAL ESTATE
SECURITIES FUND
- ---------------------------------------------- ------------------
Maximum sales charge (load) imposed on None
purchases
Maximum deferred sales charge (load) None
Redemption fees None*
* Generally, a transaction fee will be charged for expedited payment of
redemption proceeds such as by wire or overnight delivery.
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets, as a percentage of average net
assets)
- ----------------------------------------------- -----------------
REAL ESTATE
SECURITIES FUND
- ----------------------------------------------- -----------------
Management Fees ____%
Distribution and/or Service (12b-1) Fees ____%
Other Expenses* ____%
Total Annual Fund Operating Expenses ____%
Fee Waiver/Expense Reimbursement ____%**
Net Expenses ____%
* Other expenses are based on estimated amounts for the current fiscal year.
** AEW has given a binding undertaking to the Fund to limit the amount of its
total fund operating expense to ____% of the Fund's total net assets. This
binding undertaking will be in effect for the life of this Prospectus.
EXAMPLE
This example, which is based on the net expenses shown above, is intended to
help you compare the cost of investing in the Fund with the cost of investing in
other mutual funds.
The example assumes that:
o You invest $10,000 in the Fund for the time periods indicated;
o Your investment has a 5% return each year; and
o The Fund's operating expenses remain the same.
Although your actual costs and returns may be higher or lower, based on these
assumptions your costs would be:
- ----------------------------------------------- -----------------
REAL ESTATE
SECURITIES FUND
- ----------------------------------------------- -----------------
1 year $ ____
3 years $ ____
2
<PAGE>
MORE ABOUT RISK
The principal investment strategies of the Fund come with inherent risks. The
following is a list of risks to which the Fund may be subject by investing in
various types of securities or engaging in various practices.
MARKET RISK The risk that the market value of a security may move up and down,
sometimes rapidly and unpredictably, based upon a change in an issuer's
financial condition as well as overall market and economic conditions.
RISK ASSOCIATED WITH REITS The value of a REIT is affected by changes in the
value of the properties owned by the REIT or securing mortgage loans held by the
REIT. REITs are dependent upon cash flow from their investments to repay
financing costs and the ability of the REITs' managers. REITs are also subject
to risks generally associated with investments in real estate (see "Goals,
Strategies & Risks" above). The Fund will indirectly bear its proportionate
share of expenses, including management fees, paid by each REIT in which it
invests.
MANAGEMENT RISK The risk that a strategy used by the Fund's portfolio management
may fail to produce the intended result.
CREDIT RISK The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation.
INTEREST RATE RISK The risk of market losses attributable to changes in interest
rates. A rise in interest rates typically causes a fall in value. Rising
interest rates may cause investors in REITs or real estate operating companies
to demand a higher annual yield, which may in turn decrease market prices for
equity securities issued by REITs or real estate operating companies. Rising
interest rates also generally increase the costs of obtaining financing, which
could cause the value of the Fund's investments to decline. Also, during periods
of declining interest rates, many mortgages may be refinanced, which may reduce
the yield from REITs that invest primarily in loans secured by real estate and
generally derive their income primarily from interest payments on its mortgage
loans.
INFORMATION RISK The risk that key information about a security is inaccurate or
unavailable.
OPPORTUNITY RISK The risk of missing out on an investment opportunity because
the assets necessary to take advantage of it are tied up in less advantageous
investments.
LIQUIDITY RISK The risk that certain securities may be difficult or impossible
to sell at the time and at the price that the seller would like. This may result
in a loss or may otherwise be costly to the Fund.
VALUATION RISK The risk that the Fund has valued certain securities at a higher
price than it can sell them for.
PREPAYMENT RISK The risk that unanticipated prepayments may occur, reducing the
value of mortgage- or asset-backed securities or REITs.
POLITICAL RISK The risk of losses directly attributable to government or
political actions.
"EURO CONVERSION" Many European countries have adopted a single European
currency, the "euro." The consequences of this conversion for foreign exchange
rates, interest rates and the value of European securities are presently
unclear. Such consequences may adversely affect the value and/or increase the
volatility of securities held by the Fund.
3
<PAGE>
MEET THE FUND'S INVESTMENT ADVISER
AEW MANAGEMENT AND ADVISORS, L.P.
AEW, located at 225 Franklin Street, Boston, Massachusetts 02110, serves as the
adviser to the Fund. AEW, together with other AEW advisor affiliates, manages
approximately $____ billion of client capital as of June 30, 2000. The Fund is
distributed through Nvest Funds Distributor, L.P. (the "Distributor"). AEW and
the Distributor are subsidiaries of Nvest Companies, L.P. ("Nvest Companies"),
which is part of an affiliated group including Nvest, L.P., a publicly traded
company listed on the New York Stock Exchange (the "Exchange"). As of June 30,
2000, Nvest Companies' 18 principal subsidiary or affiliated asset management
firms, collectively, had more than $____ billion in assets under management. AEW
manages the Fund's investments and also provides general business management and
administration to the Fund.
The Fund pays advisory fees at the annual rate of ____% of the first $____
million of the Fund's average daily net assets and ____% of such assets in
excess of $____ million.
MEET THE FUND'S PORTFOLIO MANAGER
MATTHEW A. TROXELL, CFA
Matthew Troxell has managed the Fund since its inception. Mr. Troxell joined AEW
in 1994 and is a Director of the company. Prior to joining AEW, Mr. Troxell was
a Vice President and Assistant to the President of Landmark Land Company, and an
equity analyst at A.G. Becker Paribas. He also holds the designation of
Chartered Financial Analyst (CFA) and is a member of the National Association of
Real Estate Investment Trusts (NAREIT). Mr. Troxell earned a B.A. from Tufts
University and has over 19 years of experience in investment analysis and
portfolio management.
PORTFOLIO TRADES
In placing portfolio trades, AEW may use brokerage firms that market the Fund's
shares or are affiliated with Nvest Companies or AEW. In placing trades, AEW
will seek to obtain the best combination of price and execution, which involves
a number of judgmental factors. Such portfolio trades are subject to applicable
regulatory restrictions and related procedures adopted by the Fund's Board of
Trustees.
4
<PAGE>
ADVISER'S PAST PERFORMANCE
The account returns shown below represent composite returns derived from
performance data furnished by AEW ("AEW Composite") relating to certain accounts
managed by AEW Capital Management, L.P. (the "Accounts"). (AEW is a wholly-owned
subsidiary of AEW Capital Management, L.P.) The account returns are compared
against the Morgan Stanley REIT Index (the "Benchmark"). Each of the Accounts
included in the AEW Composite has an investment objective substantially similar
to the Fund's objective and was managed using investment policies and strategies
substantially similar to those of the Fund. The same AEW personnel responsible
for the Fund's management were responsible for managing the Accounts. Matthew
Troxell, the Fund's portfolio manager, has been the lead manager for the
Accounts since July 1999 and has been a member of the Accounts' management team
since their inception.
The Accounts have not been subject to the same types of expenses to which the
Fund is subject nor to the diversification requirements, investment limitations
and other restrictions to which the Fund is subject under the Investment Company
Act and the Internal Revenue Code. The Accounts' performance results may have
been less favorable had they been subject to these expenses or restrictions or
to other restrictions applicable to investment companies under relevant laws.
THE INFORMATION REGARDING THE PERFORMANCE OF THE ACCOUNTS DOES NOT REPRESENT THE
FUND'S PERFORMANCE. SUCH INFORMATION SHOULD NOT BE CONSIDERED A PREDICTION OF
THE FUTURE PERFORMANCE OF THE FUND. THE FUND IS NEWLY ORGANIZED AND HAS NO
PERFORMANCE RECORD OF ITS OWN.
The table below shows the average annual total returns of the Accounts managed
by AEW Capital Management, L.P. and the Benchmark from the inception of the
Accounts to the period ended June 30, 2000. The past performance data for the
Accounts has been adjusted to reflect the management fees actually paid by the
Accounts and assumes the reinvestment of all dividends and distributions. THE
FEES AND EXPENSES PAID BY THE FUND WILL BE HIGHER THAN THE FEES AND EXPENSES
PAID BY THE ACCOUNTS. THE PERFORMANCE OF THE ACCOUNTS WOULD HAVE BEEN LOWER THAN
THAT SHOWN BELOW IF THEY HAD BEEN SUBJECT TO THE FEES AND EXPENSES OF THE FUND.
AVERAGE ANNUAL TOTAL RETURNS(1)
-----------------------------------------
AEW BENCHMARK
ACCOUNTS RETURNS
------------------- -------------------
1995
1996
1997
1998
1999
2000(2)
1. Average Annual Total Returns: The AEW Composite consists of all client
accounts whose portfolios were managed by AEW Capital Management, L.P.
continuously during a 5-year period commencing on March 1, 1995 and which
were managed using investment policies and strategies substantially similar
to those that will be used to manage the Fund. The Morgan Stanley REIT
Index is a market capitalization-weighted, unmanaged, total-return index of
REITs that meet certain liquidity requirements. The index was designed to
track the total-return performance of a broad group of REIT stocks assuming
dividend reinvestment in the index.
2. The returns shown are for the period ended June 30, 2000.
5
<PAGE>
IT'S EASY TO OPEN AN ACCOUNT
TO OPEN AN ACCOUNT WITH AEW:
1. Read this Prospectus carefully.
2. Read the following eligibility and minimum investment requirements to
determine who may purchase shares of the Fund:
To invest in the Fund, the minimum initial investment is $2,500 and the
minimum subsequent investment is $100, except as indicated below.
There is no initial or subsequent investment minimum for:
o EMPLOYEES OF AEW.
o RETIREMENT PLANS (401(a), 401(k), 457 or 403(b) plans) that have
total investment assets of at least $____ million. Plan sponsor
accounts can be aggregated to meet this minimum. Your 401(k) or
other retirement plan will provide shareholder services to you as
required in accordance with your plan agreement. You should
contact your plan sponsor or service provider for information
about the services available to you under the terms of your plan.
o INSURANCE COMPANY ACCOUNTS of New England Financial, Metropolitan
Life Insurance Company ("MetLife") or their affiliates.
o SEPARATE ACCOUNTS of New England Financial, MetLife or their
affiliates.
o WRAP FEE PROGRAMS of certain broker-dealers not being paid by the
Fund, AEW or the Distributor. Such wrap fee programs may be
subject to additional or different conditions, including a wrap
account fee. Each broker-dealer is responsible for transmitting
to its customer a schedule of fees and other information
regarding any such conditions.
o CERTAIN SERVICE ACCOUNTS through an omnibus account by investment
advisers, financial planners, broker-dealers or other
intermediaries who have entered into a service agreement with the
Fund. A fee may be charged to shareholders purchasing through a
service account if they effect transactions through such parties
and should contact such parties regarding information regarding
such fees.
3. You should contact the Fund's transfer agent, Nvest Services Company, Inc.
("Transfer Agent"), at 877-637-REIT before attempting to purchase Fund
shares.
4. Use the following sections as your guide for purchasing shares.
6
<PAGE>
BUYING SHARES
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
--------------------------- -------------------------------------------------
BY MAIL
o Make out a check in o Make out a check in
U.S. dollars for the U.S. dollars for the
investment amount, the investment amount,
payable to "AEW Funds." payable to "AEW Funds."
o Note: Cash, drafts, starter o Note: Cash, drafts, starter
checks, third party checks or checks, third party checks or
checks drawn on banks outside checks drawn on banks outside
of the U.S. or purchase orders of the U.S. or purchase
specifying a particular purchase orders specifying a
date or price per share will particular purchase date or
not be accepted. price per share will not
be accepted.
o Mail the check with your
completed application to o Include with the check a
AEW Funds, P.O. Box 8062, letter specifying the Fund
Boston, MA 02266-8062 name, your account number and
Attention: T.A. Ops the registered account
name(s). Mail the check with
the letter to AEW Funds, P.O.
Box 8062, Boston, MA
02266-8062 Attention:
T.A. Ops
BY WIRE
o Call 877-637-REIT to obtain o Instruct your bank to
wire transfer instructions. transfer funds to State
Street Bank & Trust Company,
ABA#011000028, DDA#99054967.
o Specify the Fund name, your
account number and the
registered account name(s).
Your bank may charge you for
such a transfer.
SELLING SHARES
TO SELL SOME OR ALL OF YOUR SHARES
Certain restrictions may apply. See the section entitled "Restrictions on Buying
and Selling Shares" below.
BY MAIL
o Write a letter to request a redemption specifying the name of the
Fund, your account number, the exact registered account name(s), the
number of shares or the dollar amount to be redeemed and the method by
which you wish to receive your proceeds. Additional materials may be
required. See the section entitled "Selling Shares in Writing" below.
o The request must be signed by all of the owners of the shares
including the capacity in which they are signing, if appropriate.
o Mail your request by REGULAR mail to: AEW Funds, P.O. Box 8062,
Boston, MA 02266-8062 Attention: T.A. Ops or by REGISTERED, EXPRESS OR
CERTIFIED mail to: AEW Funds, 66 Brooks Drive, Braintree, MA 02184.
o Your proceeds will be delivered by the method chosen in your letter.
If you choose to have your proceeds delivered by mail, they will
generally be mailed to you on the business day after the request is
received. You may also choose to redeem by wire (see below).
BY WIRE
o Fill out the "Telephone Withdrawal" and "Bank Information" sections on
your account application.
o Call 877-637-REIT or indicate in your redemption request letter (see
above) that you wish to have your proceeds wired to your bank.
o Proceeds will generally be wired on the next business day. A wire fee
(currently $5.00) will be deducted from the proceeds.
BY TELEPHONE
o You may receive your proceeds by mail or by wire (see above).
o Call 877-637-REIT to choose the method you wish to use to redeem your
shares.
7
<PAGE>
SELLING SHARES IN WRITING
If you wish to redeem your shares in writing, all owners of the shares must sign
the redemption request in the exact names in which the shares are registered and
indicate any special capacity in which they are signing. In certain situations,
we also may require a signature guarantee or additional documentation.
A signature guarantee protects you against fraudulent orders and is necessary
if:
o Your address of record has changed within the past 30 days;
o You are selling more than $100,000 worth of shares and you are requesting
the proceeds by check; or
o A proceeds check for any amount is mailed to an address other than the
address of record or not payable to registered owner(s).
A notary public cannot provide a signature guarantee. A signature guarantee can
be obtained from one of the following sources:
o A financial representative or securities dealer;
o A federal savings bank, cooperative or other type of bank;
o A savings and loan or other thrift institution;
o A credit union; or
o A securities exchange or clearing agency.
8
<PAGE>
RESTRICTIONS ON BUYING AND SELLING SHARES
PURCHASE RESTRICTIONS
Although the Fund does not anticipate doing so, it reserves the right to suspend
or change the terms of purchasing shares. The Fund reserves the right to refuse
or limit any purchase order by a particular purchaser (or group of related
purchasers) if the transaction is deemed harmful to the best interest of the
Fund's other shareholders or would disrupt the management of the Fund.
SELLING RESTRICTIONS
The table below describes restrictions placed on selling shares of the Fund:
- --------------------------------------------------------------------------------
RESTRICTION SITUATION
- --------------------------------------------------------------------------------
The Fund may suspend the right o When the Exchange is closed
of redemption or postpone payment (other than a weekend/holiday);
for more than 7 days: o During an emergency; or
o Any other period permitted by
the SEC.
The Fund reserves the right to o With a notice of a dispute
suspend account services or between registered owners; or
refuse transaction requests: o Suspicion/evidence of a
fraudulent act.
The Fund may pay the redemption o When it is detrimental for the
price in whole or part by a Fund to make cash payments as
distribution in kind of readily determined in the sole discretion
marketable securities in lieu of of AEW.
cash or may take up to 7 days to
pay a redemption request in order
to raise capital:
The Fund may withhold redemption o When redemptions within 10
proceeds until the check or funds calendar days of purchase by
have cleared: check of the shares are being
redeemed.
- --------------------------------------------------------------------------------
SMALL ACCOUNT REDEMPTION
When the Fund account falls below a set minimum (currently $1,000 as set by the
Fund's Board of Trustees), the Fund may close your account and send you the
proceeds. You will have 60 days after being notified of the Fund's intention to
close your account to increase its amount to the set minimum. This does not
apply to certain qualified retirement plans or accounts that have fallen below
the minimum solely because of fluctuations in the Fund's net asset value per
share.
CERTIFICATES
You will not receive certificates representing Fund shares.
9
<PAGE>
HOW FUND SHARES ARE PRICED
"Net asset value" is the price of one share of the Fund without a sales charge
and is calculated each business day using this formula:
TOTAL VALUE OF SECURITIES + CASH AND OTHER ASSETS - LIABILITIES
NET ASSET VALUE = --------------------------------------------------------------
NUMBER OF OUTSTANDING SHARES
The net asset value of Fund shares is determined according to this schedule:
o A share's net asset value is determined at the close of regular trading on
the Exchange on the days it is open for trading. This is normally 4:00 p.m.
Eastern time.
o The price you pay for purchasing or redeeming a share will be based upon
the net asset value next calculated after your order is received by the
Fund's Transfer Agent.
o Requests received by the Transfer Agent after the Exchange closes will be
processed based upon the net asset value determined at the close of regular
trading on the next day that the Exchange is open.
Generally, Fund securities are valued as follows:
o EQUITY SECURITIES - most recent sales or quoted bid price as provided by a
pricing service.
o DEBT SECURITIES (OTHER THAN SHORT-TERM OBLIGATIONS) - based upon pricing
service valuations, which are determined for normal, institutional-size
trading units of such securities using market information, transactions for
comparable securities and various relationships between securities that are
generally recognized by institutional traders.
o SHORT-TERM OBLIGATIONS (REMAINING MATURITY OF LESS THAN 60 DAYS) -
amortized cost (which approximates market value).
o SECURITIES TRADED ON FOREIGN EXCHANGES - most recent sale/bid price on a
non-U.S. exchange, unless an occurrence after the closing of the exchange
will materially affect its value. In that case, the security is assigned a
fair value as determined by or under the direction of the Board of Trustees
at the close of regular trading on a U.S. exchange.
o OPTIONS - last sale price, or if not available, last offering price.
o FUTURES - unrealized gain or loss on the contract using current settlement
price. When a settlement price is not used, futures contracts will be
valued at their fair value as determined by or under the direction of the
Fund's Board of Trustees.
o ALL OTHER SECURITIES - fair market value as determined by or under the
direction of the Fund's Board of Trustees.
The effect of fair value pricing as described above under "Securities traded on
foreign exchanges" and "All other securities" is that securities may not be
priced on the basis of quotations from the primary market in which they are
traded, but, rather, may be priced by another method that the Board of Trustees
believes accurately reflects fair value.
10
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
The Fund generally distributes most or all of its net investment income (other
than long-term capital gains) in the form of dividends on a quarterly basis. The
Fund distributes all net realized long- and short-term capital gains annually,
after applying any available capital loss carryovers. The Fund's Board of
Trustees may adopt a different schedule as long as payments are made at least
annually.
Depending on your investment goals and priorities, you may choose to reinvest
distributions from dividends, interest and capital gains in additional shares of
the Fund at net asset value or you may receive all distributions in cash. If you
do not indicate how you wish to receive your distributions, they will
automatically be reinvested in shares of the Fund at net asset value. For more
information or to change your distribution option, contact the Fund's Transfer
Agent in writing or call 877-637-REIT.
If you earn more than $10 annually in taxable income you will receive a Form
1099 to help you report the prior calendar year's distributions on your federal
income tax return. Be sure to keep the 1099 as a permanent record. A fee may be
charged for any duplicate information requested.
TAX CONSEQUENCES
The Fund intends to meet all requirements of the Internal Revenue Code necessary
to qualify as a "regulated investment company" and thus does not expect to pay
any federal income tax on income and capital gains distributed to shareholders.
Fund distributions paid to you either in cash or reinvested in additional shares
are generally taxable to you either as ordinary income or as capital gains.
Distributions derived from short-term capital gains or investment income are
generally taxable at ordinary income rates. If you are a corporation investing
in the Fund, a portion of these dividends may qualify for the dividends-received
deduction provided that you meet certain holding period requirements. Any
distributions received by the Fund from REITs will not qualify, however, for the
corporate dividends-received deduction. Distributions of gains from investments
that the Fund owned for more than one year that are designated by the Fund as
capital gain dividends will generally be taxable to a shareholder receiving such
distributions as long-term capital gains, regardless of how long the shareholder
has held Fund shares.
If you purchase shares of the Fund shortly before it declares a capital gain
distribution or a dividend, a portion of the purchase price may be returned to
you as a taxable distribution.
Dividends derived from interest on securities issued by the U.S. government or
its agencies or instrumentalities may be exempt from state and local income
taxes. The Fund advises shareholders of the proportion of the Fund's dividends
that are derived from such interest. Also, REITs attempt to qualify for
beneficial tax treatment by distributing 95% of their taxable income to their
interest holders. If a REIT fails to qualify for such beneficial tax treatment,
it would be taxed as a corporation, and distributions to its shareholders
(including the Fund) would bear not only a proportionate share of the expenses
of the Fund, but also, indirectly, similar expenses of the REIT. The Fund's
investments in REIT equity securities may require the Fund to accrue and
distribute income not yet received or may result in the Fund making
distributions that constitute a return of capital to Fund shareholders for
federal income tax purposes. You should consult your tax adviser about any
federal, state and local taxes that may apply to the distributions you receive.
11
<PAGE>
GLOSSARY OF TERMS
BID PRICE - The price a prospective buyer is ready to pay. This term is used by
traders who maintain firm bid and offer prices in a given security by standing
ready to buy or sell security units at publicly quoted prices.
CAPITAL GAIN DISTRIBUTIONS - Payments to the Fund's shareholders of profits
earned from selling securities in the Fund's portfolio. Capital gain
distributions are usually paid once a year.
CREDIT RATING - Independent evaluation of a bond's creditworthiness. This
measurement is usually calculated through an index compiled by companies such as
Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service
("Moody's"). Bonds with a credit rating of BBB or higher by S&P or Baa or higher
by Moody's are generally considered investment grade.
DIVERSIFICATION - The strategy of investing in a wide range of securities
representing different market sectors to reduce the risk if an individual
company or sector suffers losses.
DIVIDEND YIELD - The current or estimated annual dividend divided by the market
price per share of a security.
EARNINGS GROWTH - A pattern of increasing rate of growth in earnings per share
from one period to another, which usually causes a stock's price to rise.
FFO MULTIPLE - The price per share of a REIT divided by its Funds from
Operations (FFO). The FFO of a REIT is the measure of its operating performance
showing its net income plus depreciation of real estate and excluding gains or
losses from sales of property or debt restructuring.
FUNDAMENTAL ANALYSIS - An analysis of the balance sheet and income statements of
a company in order to forecast its future stock price movements. Fundamental
analysts consider past records of assets, earnings, sales, products, management
and markets in predicting future trends in these indicators of a company's
success or failure. By appraising a company's prospects, these analysts assess
whether a particular stock or group of stocks is undervalued or overvalued at
its current market price.
INCOME DISTRIBUTIONS - Payments to the Fund's shareholders resulting from the
net interest or dividend income earned by the Fund's portfolio.
INFLATION - A general increase in prices coinciding with a fall in the real
value of money, as measured by the Consumer Price Index.
INTEREST RATE - Rate of interest charged for the use of money, usually expressed
at an annual rate.
MARKET CAPITALIZATION - The market price of a company's shares multiplied by the
number of shares outstanding. Large capitalization companies generally have over
$5 billion in market capitalization; medium capitalization companies between
$1.5 billion and $5 billion; and small capitalization companies less than $1.5
billion. These capitalization figures may vary depending upon the index and/or
the guidelines used by the adviser.
MATURITY - The final date on which the payment of a debt instrument (e.g.,
bonds, notes, and repurchase agreements) becomes due and payable. Short-term
bonds generally have maturities of up to 5 years; intermediate-term bonds
between 5 and 15 years; and long-term bonds over 15 years.
NET ASSET VALUE - The market value of one share of a mutual fund on any given
day without a front-end sales charge or contingent deferred sales charge. It is
determined by dividing a fund's total net assets by the number of shares
outstanding. See "How Fund Shares are Priced" above.
PRICE-TO-BOOK RATIO - Current market price of a stock divided by its book value,
or net asset value.
PRICE-TO-EARNINGS RATIO - Current market price of a stock divided by its
earnings per share. Also known as the "multiple," the price-to-earnings ratio
gives investors an idea of how much they are paying for a company's earning
12
<PAGE>
power and is a useful tool for evaluating the costs of different securities.
Some firms use the inverse ratio for this calculation (i.e. earnings-to-price
ratio).
RETURN ON EQUITY - The amount, expressed as a percentage, earned on a company's
common stock investment for a given period. It is calculated by dividing net
income for the period after preferred stock dividends, but before common stock
dividends by the common stock equity (net worth) average for the accounting
period. This tells common shareholders how effectively their money is being
employed.
TECHNICAL ANALYSIS - The research into the demand and supply for securities,
options, mutual funds and commodities based on trading volume and price studies.
Technical analysis uses charts or computer programs to identify and project
price trends in a market, security, fund or futures contract.
TOTAL RETURN - The change in value of a mutual fund investment over a specific
time period expressed as a percentage. Total returns assume all earnings are
reinvested in additional shares of the Fund.
VALUE INVESTING - A relatively conservative investment approach that focuses on
companies that may be temporarily out of favor or whose earnings or assets are
not fully reflected in their stock prices. Value stocks will tend to have a
lower price-to-earnings ratio than growth stocks.
VOLATILITY - The general variability of a portfolio's value resulting from price
fluctuations of its investments. In most cases, the more diversified a portfolio
is, the less volatile it will be.
YIELD - The rate at which a fund earns income, expressed as a percentage. Mutual
fund yield calculations are standardized, based upon a formula developed by the
SEC.
YIELD-TO-MATURITY - The concept used to determine the rate of return an investor
will receive if a long-term, interest-bearing investment, such as a bond, is
held to its maturity date. It takes into account purchase price, redemption
value, time to maturity, coupon yield (the interest rate on a debt security the
issuer promises to pay to the holder until maturity, expressed as an annual
percentage of face value) and the time between interest payments.
13
<PAGE>
AEW Management and Advisors, L.P.
AEW REAL ESTATE
SECURITIES FUND
If you would like more information about
the Fund, the following document is
available free upon request:
Statement of Additional Information
(SAI) - The SAI provides more detailed
information about the Fund, has been
filed with the SEC and is incorporated
into this Prospectus by reference.
========================================
To order a free copy of the Fund's SAI,
contact the Fund's Transfer Agent at:
Nvest Services Company, Inc.
399 Boylston Street
Boston, Massachusetts 02116
Telephone: 877-637-REIT
The Transfer Agent will also assist
you with questions and will provide
additional information that you may
require.
========================================
You can review the Fund's SAI at the
SEC's Public Reference Room in
Washington, D.C. Information on the
operation of the Public Reference Room
may be obtained by calling the SEC at
202-942-8090. The SAI and other
information about the Fund are available
on the EDGAR database on the SEC's
website at www.sec.gov.
Copies of these publications are also
available after payment of a duplication
fee by electronic request at the
following e-mail address:
[email protected], or by writing the
Public Reference Room of the SEC,
Washington, D.C. 20549-0102.
The Distributor and other firms selling
shares of the Fund are members of the
National Association of Securities
Dealers, Inc. ("NASD"). As a service to
investors, the NASD has asked that we
inform you of the availability of a
brochure on its Public Disclosure
Program. The program provides access to
information about securities firms and
their representatives. Investors may
obtain a copy by contacting the NASD at
800-289-9999 or by visiting their Web
site at www.NASDR.com.
(Investment Company Act File No. _____)
<PAGE>
- --------------------------------------------------------------------------------
AEW REAL ESTATE SECURITIES FUND
STATEMENT OF ADDITIONAL INFORMATION
_______________, 2000
This Statement of Additional Information (the "Statement") contains
information that may be useful to investors, but which is not included in the
Prospectus of the AEW Real Estate Securities Fund (the "Fund"). This Statement
is not a prospectus and is authorized for distribution only when accompanied or
preceded by the Prospectus of the Fund dated ______________, 2000. The Statement
should be read together with the Prospectus. Investors may obtain a free copy of
the Prospectus from the Fund's transfer agent, Nvest Services Company, Inc.
("Transfer Agent"), by writing to AEW Funds, 399 Boylston Street, Boston, MA
02116 or by calling 877-637-REIT. The Fund is a diversified fund of Nvest
Companies Trust I, a registered open-end management investment company (the
"Trust").
TABLE OF CONTENTS
Page
Investment Restrictions 1
Fund Charges and Expenses 2
Ownership of Fund Shares 3
Miscellaneous Investment Practices 3
Management of the Trust 8
Portfolio Transactions and Brokerage 12
Description of the Trust and Ownership of Shares 13
How to Buy Shares 15
Net Asset Value 15
Shareholder Services 16
Redemptions 17
Standard Performance Measures 18
Income Dividends, Capital Gain Distributions and Tax Status 20
Financial Statements 22
Appendix A - Description of Bond Ratings 23
Appendix B - Publications That May Contain 25
Fund Information
Appendix C - Advertising and Promotional 28
Literature
i
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------
The following is a description of restrictions on the Fund's investments.
Except in the case of those restrictions marked with a dagger (+) below, the
percentages set forth below and the percentage limitations set forth in the
Prospectus will apply at the time of the purchase of a security and shall not be
considered violated unless an excess or deficiency occurs or exists immediately
after and as a result of a purchase of such security.
Fundamental Restrictions
The following restrictions may not be changed without the vote of a majority of
the outstanding voting securities of the Fund (as defined in the Investment
Company Act of 1940, as amended (the "1940 Act")).
The Fund may not:
(1) with respect to 75% of the Fund's total assets, purchase the securities of
any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities ("U.S. Government
Securities")) if, as a result, (a) more than 5% of the Fund's total assets
would be invested in the securities of that issuer, or (b) the Fund would
hold more than 10% of the outstanding voting securities of that issuer;
(2) purchase the securities of any issuer (other than U.S. Government
Securities) if, as a result, more than 25% of the Fund's total assets would
be invested in the securities of companies whose principal business
activities are in the same industry, except that the Fund will invest more
than 25% of its total assets in securities of companies primarily engaged
in the real estate industry;
(3) issue senior securities, except as otherwise permitted by the 1940 Act;
(4) borrow money or pledge its assets; provided, however, that the Fund may
borrow money as a temporary measure for extraordinary or emergency purposes
or to meet redemptions, in amounts not exceeding 33 1/3% of its total
assets and pledge its assets to secure such borrowings; and, provided,
further, that the Fund will not purchase any additional portfolio
securities at any time that its borrowings exceed 5% of its total net
assets; for the purpose of this restriction, collateral arrangements with
respect to the writing of options, interest rate futures contracts, options
on interest rate futures contracts, and collateral arrangements with
respect to initial and variation margin are not deemed to be a pledge of
assets and neither such arrangements nor the purchase or sale of futures or
related options are deemed to be the issuance of a senior security;
(5) underwrite securities of other issuers except insofar as the Fund may be
deemed an underwriter under the Securities Act of 1933, as amended (the
"1933 Act") in the disposition of restricted securities;
(6) purchase and sell real estate unless acquired as a result of ownership of
securities or other instruments; provided, however, that this limitation
shall not prevent the Fund from investing in securities or other
instruments backed by real estate or securities of companies engaged in the
real estate business;
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; provided, however, that this
limitation shall not prevent the Fund from purchasing or selling options
and futures contracts or from investing in securities or other instruments
backed by physical commodities; or
(8) lend any portfolio security or make any other loan, if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, it being
understood that this limitation does not apply to purchases of debt
securities or to repurchase agreements.
The Fund may, notwithstanding any other fundamental investment policy or
limitation, invest all of its assets in the securities of a single open-end
management investment company managed by AEW Management and Advisors, L.P. or an
affiliate or successor with substantially the same fundamental investment
objective, policies and limitations as the Fund.
1
<PAGE>
Non-Fundamental Restrictions
- ----------------------------
The following investment restrictions are not fundamental, and may be changed
without shareholder approval.
The Fund may not:
(1) purchase any security on margin, except that the Fund may obtain such
short-term credits as may be necessary for the clearance of transactions;
for this purpose, the deposit or payment by the Fund of initial or
variation margin in connection with interest rate futures contracts or
related options transactions is not considered the purchase of a security
on margin;
(2) make short sales of securities or maintain a short position, unless at all
times when a short position is open it owns an equal amount of such
securities or securities convertible into or exchangeable, without payment
of any further consideration, for securities of the same issue as, and
equal in amount to, the securities sold short, and unless not more than 10%
of the Fund's net assets (taken at market value) is held as collateral for
such sales at any one time;
(3)+ invest more than 15% of the Fund's total net assets in illiquid securities
(excluding Rule 144A securities and certain Section 4(2) commercial paper
deemed to be liquid under guidelines established by the Fund's Board of
Trustees);
(4) write, purchase or sell puts, calls or combinations thereof, except that
the Fund may write, purchase and sell puts, calls or combinations thereof
with respect to U.S. Government Securities and with respect to interest
rate futures contracts; or
(5) invest in the securities of other investment companies, except by purchases
in the open market involving only customary brokers' commissions, or in
connection with a merger, consolidation or similar transaction; under the
1940 Act, the Fund may not (a) invest more than 10% of its total assets
(taken at current value) in such securities, (b) own securities of any one
investment company having a value in excess of 5% of the Fund's total
assets taken at current value, or (c) own more than 3% of the outstanding
voting stock of any one investment company.
The Fund does not currently intend to invest all of its assets in the securities
of a single open-end management investment company managed by AEW Management and
Advisors, L.P. or an affiliate or successor with substantially the same
fundamental investment objective, policies and limitations as the Fund.
- --------------------------------------------------------------------------------
FUND CHARGES AND EXPENSES
- --------------------------------------------------------------------------------
MANAGEMENT FEES
Pursuant to an advisory agreement dated ______________ (the "Advisory
Agreement"), AEW Management and Advisors, L.P. ("AEW" or the "Adviser") has
agreed, subject to the supervision of the Trust's Board of Trustees, to manage
the investment and reinvestment of the assets of the Fund and to provide certain
administrative services to the Fund. For the services described in the Advisory
Agreement, the Fund pays AEW a gross management fee at the annual rate of _____%
of the average daily net assets of the Fund for the first $___ million in assets
and ____% of the average daily net assets of amounts in excess of $___ million.
AEW has given a binding undertaking to the Fund to reduce its fees, and if
necessary, to bear certain expenses related to operating the Fund in order to
limit the Fund's total operating expenses to an annual rate of _____% of the
average daily net assets of the Fund. The undertaking will be binding on AEW for
the life of the Fund's Prospectus.
2
<PAGE>
- --------------------------------------------------------------------------------
OWNERSHIP OF FUND SHARES
- --------------------------------------------------------------------------------
As of _____________, 2000, to the Trusts' knowledge, the following persons
owned of record or beneficially 5% or more of the outstanding shares of the
Fund. In addition, each person that has direct or indirect beneficial ownership
of more than 25% of the outstanding shares of the Fund may be deemed to control
the Fund as defined in the 1940 Act.
Shareholder and Address Ownership Percentage
----------------------- --------------------
AEW Capital Management, L.P. 100%
225 Franklin Street
Boston, MA 02110
- --------------------------------------------------------------------------------
MISCELLANEOUS INVESTMENT PRACTICES
- --------------------------------------------------------------------------------
The Fund's primary strategies are detailed in its Prospectus. The following
is a list of certain investment practices in which the Fund may engage as
SECONDARY investment strategies.
Mortgage Real Estate Investment Trusts
Hybrid Real Estate Investment Trusts
Foreign Investments (Global Markets and Depository Receipts)
Certificates of Deposit, Demand and Time Deposits and Banker's Acceptances
Prime Commercial Paper, including Master Demand Notes
Repurchase Agreements secured by U.S. government securities
When-issued Securities
Zero Coupon Securities
Convertible Securities
Illiquid Securities and Restricted Securities (including Rule 144A
Securities)
Loans of Portfolio Securities
Short-term Investments
Fixed-Income Securities
Collateralized Mortgage Obligations
Collateralized Mortgage-backed Securities
Money Market Instruments
The following is a description of the various investment practices in which
the Fund may engage, whether as a primary or secondary strategy, and a summary
of certain attendant risks:
Equity Securities
- ------------------
The Fund may invest in equity securities. Equity securities are securities that
represent an ownership interest (or the right to acquire such an interest) in a
company and include common and preferred stocks and securities exercisable for
or convertible into common or preferred stocks (such as warrants, convertible
debt securities and convertible preferred stock). While offering great potential
for long-term growth, equity securities are more volatile and more risky than
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"
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.
Real Estate Securities
- ----------------------
The Fund invests primarily in securities of companies in the real estate
industry, including REITs, and is, therefore, subject to the special risks
associated with the real estate industry and market. Companies in the real
estate industry are those that (i) have principal activity involving the
development, ownership, construction management or sale of
3
<PAGE>
real estate; (ii) have significant real estate holdings, such as hospitality
companies, supermarkets and mining, lumber and paper companies; and/or (iii)
provide products or services related to the real estate industry, such as
financial institutions that make and/or service mortgage loans and manufacturers
or distributors of building supplies. Securities of companies in the real estate
industry are sensitive to factors such as changes in real estate values,
property taxes, interest rates, cash flow of underlying real estate assets,
occupancy rates, government regulations affecting zoning, land use, and rents,
and the management skill and creditworthiness of the issuer. Companies in the
real estate industry may also be subject to liabilities under environmental and
hazardous waste laws.
Real Estate Investment Trusts (REITs)
- -------------------------------------
The Fund may invest in REITs. REITs are pooled investment vehicles that invest
primarily in either real estate or real estate-related loans. REITs may be
characterized as equity REITs, mortgage REITs or hybrid REITs. An equity REIT
owns or leases real estate and derives its income primarily from rental income.
A mortgage REIT invests primarily in loans secured by real estate and generally
derives its income primarily from interest payments on its mortgage loans. A
hybrid REIT combines the characteristics of both equity REITs and mortgage
REITs, generally by holding both ownership and mortgage interests in real
estate. The Fund anticipates that under normal circumstances a majority of its
REIT investments will consist of equity REITs, but this is not a requirement of
the Fund.
Small Companies
- ----------------
The Fund may invest in small companies. Investments in companies with relatively
small capitalization may involve greater risk than is usually associated with
larger, more established companies. These companies often have sales and
earnings growth rates that 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 of the Fund therefore may fluctuate more widely than market
averages.
Warrants
- --------
The Fund may invest in warrants. A warrant is an instrument that gives the
holder a right to purchase a given number of shares of a particular security at
a specified price until a stated expiration date. Buying a warrant generally can
provide a greater potential for profit or loss than an investment of equivalent
amounts in the underlying common stock. The market value of a warrant does not
necessarily move with the value of the underlying securities. If a holder does
not sell the warrant, it risks the loss of its entire investment if the market
price of the underlying security does not, before the expiration date, exceed
the exercise price of the warrant plus the cost thereof. Investment in warrants
is a speculative activity. Warrants pay no dividends and confer no rights (other
than the right to purchase the underlying securities) with respect to the assets
of the issuer.
U.S. Government Securities
- --------------------------
The Fund may invest in some or all of the following U.S. Government Securities:
o U.S. Treasury Bills
-------------------
- Direct obligations of the United States Treasury that are issued in
maturities of one year or less. No interest is paid on Treasury bills;
instead, they are issued at a discount and repaid at full face value when
they mature. These obligations are backed by the full faith and credit of
the United States government.
o U.S. Treasury Notes and Bonds
-----------------------------
- Direct obligations of the United States Treasury issued in maturities
that vary between one and 40 years, with interest normally payable every
six months. These obligations are backed by the full faith and credit of
the United States government.
o "Ginnie Maes"
-------------
- Debt securities issued by a mortgage banker or other mortgagee, which
represent an interest in a pool of mortgages insured by the Federal Housing
Administration or the Farmer's Home Administration or guaranteed by the
Veterans Administration. The Government National Mortgage Association
("GNMA") guarantees the timely payment of principal and interest when such
payments are due, whether or not these amounts are collected by the issuer
of these certificates on the underlying mortgages. An assistant attorney
general of the United States has rendered an opinion that the guarantee by
GNMA is a general obligation of the United States backed by its full faith
and credit. Mortgages included in single family or multi-family residential
mortgage pools backing an issue of Ginnie Maes have a maximum maturity of
up to 30 years. Scheduled payments of principal and interest are made to
the registered holders of Ginnie Maes (such as the Fund) each month.
Unscheduled prepayments may be made by homeowners, or as a result of a
default. Prepayments are passed through to the registered holder (such as
the Fund, which reinvests any prepayments) of Ginnie Maes along with
regular monthly payments of principal and interest.
o "Fannie Maes"
-------------
- The Federal National Mortgage Association ("FNMA") is a
government-sponsored corporation owned entirely by private stockholders
that purchases residential mortgages from a list of approved
seller/servicers. Fannie
4
<PAGE>
Maes are pass-through securities issued by FNMA that are guaranteed as to
timely payment of principal and interest by FNMA, but are not backed by the
full faith and credit of the United States government.
o "Freddie Macs"
--------------
- The Federal Home Loan Mortgage Corporation ("FHLMC") is a corporate
instrumentality of the United States government. Freddie Macs are
participation certificates issued by FHLMC that represent an interest in
residential mortgages from FHLMC's National Portfolio. FHLMC guarantees the
timely payment of interest and ultimate collection of principal, but
Freddie Macs are not backed by the full faith and credit of the United
States government.
U.S. Government Securities generally do not involve the credit risks
associated with investments in other types of fixed-income securities, although,
as a result, the yields available from U.S. Government Securities are generally
lower than the yields available from corporate fixed-income securities. Like
other fixed-income securities, however, the values of U.S. Government Securities
change as interest rates fluctuate. Fluctuations in the value of portfolio
securities will not affect interest income on existing portfolio securities, but
will be reflected in the Fund's net asset value. Since the magnitude of these
fluctuations will generally be greater at times when the Fund's average maturity
is longer, under certain market conditions the Fund may, for temporary defensive
purposes, accept lower current income from short-term investments rather than
investing in higher-yielding long-term securities.
Foreign Investments
- -------------------
Investments in foreign securities present risks not typically associated with
investments in comparable securities of U.S. issuers.
Since most foreign securities are denominated in foreign currencies or
traded primarily in securities markets in which settlements are made in foreign
currencies, the value of these investments and the net investment income
available for distribution to shareholders of the Fund may be affected favorably
or unfavorably by changes in currency exchange rates or exchange control
regulations. Because the Fund may purchase securities denominated in foreign
currencies, a change in the value of any such currency against the U.S. dollar
will result in a change in the U.S. dollar value of the Fund's assets and the
Fund's income available for distribution.
In addition, although the Fund's income may be received or realized in
foreign currencies, the Fund will be required to compute and distribute its
income in U.S. dollars. Therefore, if the value of a currency relative to the
U.S. dollar declines after the Fund's income has been earned in that currency,
translated into U.S. dollars and declared as a dividend, but before payment of
such dividend, the Fund could be required to liquidate portfolio securities to
pay such dividend. Similarly, if the value of a currency relative to the U.S.
dollar declines between the time the Fund incurs expenses in U.S. dollars and
the time such expenses are paid, the amount of such currency required to be
converted into U.S. dollars in order to pay such expenses in U.S. dollars will
be greater than the equivalent amount in such currency of such expenses at the
time they were incurred.
There may be less information publicly available about a foreign corporate
or government issuer than about a U.S. issuer, and foreign corporate issuers are
not generally subject to accounting, auditing and financial reporting standards
and practices comparable to those in the United States. The securities of some
foreign issuers are less liquid and at times more volatile than securities of
comparable U.S. issuers. Foreign brokerage commissions and securities custody
costs are often higher than those in the United States, and judgments against
foreign entities may be more difficult to obtain and enforce. With respect to
certain foreign countries, there is a possibility of governmental expropriation
of assets, confiscatory taxation, political or financial instability and
diplomatic developments that could affect the value of investments in those
countries. The receipt of interest on foreign government securities may depend
on the availability of tax or other revenues to satisfy the issuer's
obligations.
The Fund may invest in foreign equity securities either by purchasing such
securities directly or by purchasing "depository receipts." Depository receipts
are instruments issued by a bank that represent an interest in equity securities
held by arrangement with the bank. Depository receipts can be either "sponsored"
or "unsponsored." Sponsored depository receipts are issued by banks in
cooperation with the issuer of the underlying equity securities. Unsponsored
depository receipts are arranged without involvement by the issuer of the
underlying equity securities. Less information about the issuer of the
underlying equity securities may be available in the case of unsponsored
depository receipts.
In determining whether to invest in securities of foreign issuers, the
Advisor will consider the likely effects of foreign taxes on the net yield
available to the Fund and its shareholders. Compliance with foreign tax law may
reduce the Fund's net income available for distribution to shareholders.
5
<PAGE>
When Issued Securities
- ----------------------
The Fund may purchase "when-issued" equity securities, which are traded on a
price basis prior to actual issuance. Such purchases will only be made to
achieve the Fund's investment objective and not for leverage. The when-issued
trading period generally lasts from a few days to months, or a year or more;
during this period dividends on equity securities are not payable. No dividend
income accrues to the Fund prior to the time it takes delivery. A frequent form
of when-issued trading occurs when corporate securities to be created by a
merger of companies are traded prior to the actual consummation of the merger.
Such transactions may involve a risk of loss if the value of the securities fall
below the price committed to prior to actual issuance. The Trust's custodian
will establish a segregated account for the Fund when it purchases securities on
a when-issued basis consisting of cash or liquid securities equal to the amount
of the when-issued commitments. Securities transactions involving delayed
deliveries or forward commitments are frequently characterized as when-issued
transactions and are similarly treated by the Fund.
Repurchase Agreements
- ----------------------
The Fund may enter into repurchase agreements, by which the Fund purchases a
security and obtains a simultaneous commitment from the seller to repurchase the
security at an agreed-upon price and date. The resale price is in excess of the
purchase price and reflects an agreed-upon market rate unrelated to the coupon
rate on the purchased security. Such transactions afford the Fund the
opportunity to earn a return on temporarily available cash at relatively low
market risk. While the underlying security may be a bill, certificate of
indebtedness, note or bond issued by an agency, authority or instrumentality of
the United States government, the obligation of the seller is not guaranteed by
the United States government, and there is a risk that the seller may fail to
repurchase the underlying security. In such event, the Fund would attempt to
exercise rights with respect to the underlying security, including possible
disposition in the market. However, the Fund may be subject to various delays
and risks of loss, 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) inability to enforce rights and the expenses involved
in the attempted enforcement.
Convertible Securities
- ----------------------
The Fund may invest in convertible securities, including corporate bonds, notes
or preferred stocks of U.S. issuers that can be converted into (that is,
exchanged for) common stock or other equity securities. Convertible securities
also include other securities, such as warrants, that provide an opportunity for
equity participation. Because convertible securities can be converted into
equity securities, their values will normally vary in some proportion with those
of the underlying equity securities. Convertible securities usually provide a
higher yield than the underlying equity, however, so that the price decline of a
convertible security may sometimes be less substantial than that of the
underlying equity security.
Illiquid Securities, Restricted Securities, Rule 144 Securities and Section 4(2)
- --------------------------------------------------------------------------------
Commercial Paper
- ----------------
Illiquid securities include those that are not readily resalable (restricted
securities), which may include securities whose disposition is restricted by
federal securities laws or those that are not readily marketable. Rule 144A
securities are privately offered securities that can be resold only to certain
qualified institutional buyers pursuant to Rule 144A under the 1933 Act. The
Fund may also purchase commercial paper issued under Section 4(2) of the 1933
Act. Investing in Rule 144A securities and Section 4(2) commercial paper could
have the effect of increasing the level of the Fund's illiquidity to the extent
that qualified institutional buyers become, for a time, uninterested in
purchasing these securities. Rule 144A securities and Section 4(2) commercial
paper are treated as illiquid, unless the adviser has determined, under
guidelines established by the Fund's Board of Trustees, that the particular
issue of Rule 144A securities is liquid. The Fund may also invest in securities
that are subject to restrictions relating to resale. Investment in restricted or
other illiquid securities involves the risk that the Fund may be unable to sell
such a security at the desired time. Also, the Fund may incur expenses, losses
or delays in the process of registering restricted securities prior to resale.
Loans of Portfolio Securities
- -------------------------------
The Fund may lend up to 33 1/3% of its total assets in the form of its portfolio
securities to broker-dealers under contracts calling for collateral equal to at
least the market value of the securities loaned, marked to market on a daily
basis. The Fund will continue to benefit from interest or dividends on the
securities loaned and may also receive interest through investment of the cash
collateral in short-term liquid investments, which may include shares of money
market funds subject to any investment restriction listed in this Statement. Any
voting rights or rights to consent relating to securities loaned pass to the
borrower. However, if a material event affecting the investment occurs, such
loans will be called so that the securities may be voted by the Fund. The Fund
pays various fees in connection with such loans, including shipping fees and
reasonable custodian and placement fees approved by the Fund's Board of Trustees
or persons acting pursuant to the direction of the Board.
These transactions must be fully collateralized at all times, but involve
some credit risk to the Fund if the other party should default on its obligation
and the Fund is delayed in or prevented from recovering the collateral.
6
<PAGE>
Short-Term Trading
- ------------------
The Fund may, consistent with its investment objectives, engage in portfolio
trading in anticipation of, or in response to, changing economic or market
conditions and trends. These policies may result in higher turnover rates in the
Fund's portfolio, which may produce higher transaction costs and a higher level
of taxable capital gains. Portfolio turnover considerations will not limit the
adviser's investment discretion in managing the Fund's assets.
Fixed-income Securities
- -----------------------
The Fund may invest in real estate related fixed-income securities. The Fund
will typically invest in fixed-income securities that are rated by an
independent ratings service, such as Standard & Poor's Ratings Group ("S&P") or
Moody's Investors Service, Inc. ("Moody's"). For a detailed description of the
ratings assigned by S&P and Moody's, please refer to the Statement's "Appendix A
- -- Description of Bond Ratings."
Fixed-income securities in which the Fund may invest include a broad array of
short, medium and long term obligations issued by the U.S. or foreign
governments, government or international agencies and instrumentalities, and
corporate issuers whose primary business is in the real estate industry. Some
fixed-income securities represent uncollateralized obligations of their issuers;
in other cases, the securities may be backed by specific assets (such as
mortgages or other receivables) that have been set aside as collateral for the
issuer's obligation. Fixed-income securities generally involve an obligation of
the issuer to pay interest or dividends on either a current basis or at the
maturity of the securities, as well as the obligation to repay the principal
amount of the security at maturity.
Fixed-income securities are subject to market and credit risk. Credit risk
relates to the ability of the issuer to make payments of principal and interest
and includes the risk of default. In the case of municipal bonds, the issuer may
make these payments from money raised through a variety of sources, including
(1) the issuer's general taxing power, (2) a specific type of tax such as a
property tax, or (3) a particular facility or project such as a highway. The
ability of an issuer of municipal bonds to make these payments could be affected
by litigation, legislation or other political events, or the bankruptcy of the
issuer. U.S. government securities do not involve the credit risks associated
with other types of fixed-income securities; as a result, the yields available
from U.S. government securities are generally lower than the yields available
from corporate fixed-income securities. Market risk is the risk that the value
of the security will fall because of changes in market rates of interest.
(Generally, the value of fixed-income securities falls when market rates of
interest are rising.) Some fixed-income securities also involve prepayment or
call risk. This is the risk that the issuer will repay the Fund the principal on
the security before it is due, thus depriving the Fund of a favorable stream of
future interest payments.
Because interest rates vary, it is impossible to predict the income of a fund
that invests in fixed-income securities for any particular period. Fluctuations
in the value of the Fund's investments in fixed-income securities will cause the
Fund's net asset value to increase or decrease.
Mortgage-Related Securities
- ---------------------------
Mortgage-related securities differ from traditional debt securities. Among the
major differences are that interest and principal payments are made more
frequently, usually monthly, and that principal may be prepaid at any time
because the underlying mortgage loans generally may be prepaid at any time. As a
result, if the Fund purchases these assets at a premium, a faster-than-expected
prepayment rate will reduce yield to maturity, and a slower-than-expected
prepayment rate will have the opposite effect of increasing yield to maturity.
If the Fund purchases mortgage-related securities at a discount,
faster-than-expected prepayments will increase, and slower-than-expected
prepayments will reduce, yield to maturity. Prepayments, and resulting amounts
available for reinvestment by the Fund, are likely to be greater during a period
of declining interest rates and, as a result, are likely to be reinvested at
lower interest rates. Accelerated prepayments on securities purchased at a
premium may result in a loss of principal if the premium has not been fully
amortized at the time of prepayment. Although these securities will decrease in
value as a result of increases in interest rates generally, they are likely to
appreciate less than other fixed-income securities when interest rates decline
because of the risk of prepayments. In addition, an increase in interest rates
would also increase the inherent volatility of the Fund by increasing the
average life of the Fund's portfolio securities.
Collateralized Mortgage Obligations ("CMOs")
- --------------------------------------------
A CMO is a security backed by a portfolio of mortgages or mortgage securities
held under an indenture. The underlying mortgages or mortgage securities are
issued or guaranteed by the U.S. government or an agency or instrumentality
thereof. The issuer's obligation to make interest and principal payments is
secured by the underlying portfolio of mortgages or mortgage securities. CMOs
are issued with a number of classes or series, which have different maturities
and which may represent interests in some or all of the interest or principal on
the underlying collateral or a combination thereof. CMOs of different classes
are generally retired in sequence as the underlying mortgage loans in the
mortgage pool are repaid. In the event of sufficient early prepayments on such
mortgages, the class or series of CMO first to mature generally will be retired
prior to its maturity. Thus, the early retirement of a particular class or
series of CMO held by the Fund would have the same effect as the prepayment of
mortgages underlying a mortgage pass-through security. CMOs may be considered
derivative securities.
7
<PAGE>
Money Market Instruments
- ------------------------
The Fund may seek to minimize risk by investing in money market instruments,
which are high-quality, short-term securities. Although changes in interest
rates can change the market value of a security, the Fund expects those changes
to be minimal and that a money market fund will be able to maintain the net
asset value of its shares at $1.00, although this value cannot be guaranteed.
Money market obligations of foreign banks or of foreign branches or
subsidiaries of U.S. banks may be subject to different risks than obligations of
domestic banks, such as foreign economic, political and legal developments and
the fact that different regulatory requirements apply.
Temporary Strategies
- --------------------
The Fund has the flexibility to respond promptly to changes in market and
economic conditions. In the interest of preserving shareholders' capital, the
adviser may employ a temporary defensive strategy if it determines such a
strategy to be warranted. Pursuant to such a defensive strategy, the Fund
temporarily may hold cash (U. S. dollars, foreign currencies, or multinational
currency units) and/or invest up to 100% of its assets in U.S. Government
Securities or money market instruments. It is impossible to predict whether,
when or for how long the Fund will employ defensive strategies.
In addition, pending investment of proceeds from new sales of Fund shares
or to meet ordinary daily cash needs, the Fund may temporarily hold cash (U.S.
dollars, foreign currencies or multinational currency units) and may invest any
portion of its assets in money market instruments. The use of defensive
strategies may prevent a Fund from achieving its goal.
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
- --------------------------------------------------------------------------------
The Fund is governed by a Board of Trustees, which is responsible for generally
overseeing the conduct of Fund business and for protecting the interests of the
shareholders. The Trustees meet periodically throughout the year to oversee the
Fund's activities, review contractual arrangements with companies that provide
services to the Fund and review the Fund's performance.
Trustees
- --------
Trustees of the Trust and their ages (in parentheses), address and
principal occupations during at least the past five years are listed below.
Those Trustees marked with an asterisk (*) may be deemed to be an "interested
person" of the Trust as defined in the 1940 Act.
GRAHAM T. ALLISON, JR.-- Trustee
-------
(60);79 John F. Kennedy Street, Cambridge, Massachusetts 02138 -- Member of
the Contract Review and Governance Committee for the Trust -- Douglas
Dillon Professor and Director for the Center of Science and International
Affairs, John F. Kennedy School of Government; Special Advisor to the
United States Secretary of Defense; formerly, Assistant Secretary of
Defense; formerly, Dean, John F. Kennedy School of Government.
DANIEL M. CAIN - Trustee
-------
(55); 452 Fifth Avenue, New York, New York 10018 -- Member of the Audit
Committee for the Trust -- President and CEO, Cain Brothers & Company,
Incorporated (investment banking); Trustee, Universal Health Realty Income
Trust (NYSE); Norman Rockwell Museum; Sharon Health Corporation and
National Committee for Quality Healthcare (all not-for-profit
organizations).
KENNETH J. COWAN -- Trustee
-------
(68); One Beach Drive, S.E. #2103, St. Petersburg, Florida 33701 -- Member
of the Contract Review and Governance Committee for the Trust -- Retired;
formerly, Senior Vice President-Finance and Chief Financial Officer, Blue
Cross of Massachusetts, Inc. and Blue Shield of Massachusetts, Inc.;
formerly, Director, Neworld Bank for Savings and Neworld Bancorp.
RICHARD DARMAN - Trustee
-------
(56); 1001 Pennsylvania Avenue, N.W., Washington, D.C. 20004 -- Member of
the Contract Review and Governance Committee for the Trust -- Partner, The
Carlyle Group (investments); Public Service Professor, Harvard Graduate
School of Government; Trustee, Council for Excellence in Government (a
not-for- profit organization); Director, Frontier Ventures (personal
investment); Director, Telcom Ventures (telecommunications); Director,
Prime Communications (cable communications); Director, Neptune
8
<PAGE>
Communications (undersea cable systems); formerly, Director of the U.S.
Office of Management and Budget and a member of President Bush's Cabinet;
formerly, Managing Director, Shearson Lehman Brothers (investments).
* JOHN T. HAILER - President and Trustee
---------------------
(39); President and Chief Executive Officer, Nvest Funds Distributor, L.P.;
President and Chief Executive Officer, Nvest Distribution Corporation;
President and Chief Executive Officer, Nvest Management; formerly, Senior
Vice President, Fidelity Investments Institutional Services Company;
formerly, Senior Vice President and Director of Retail Business
Development, Putnam Investments; Director, Home for Little Wanderers.
SANDRA O. MOOSE -- Trustee
-------
(58); Exchange Place, Boston, Massachusetts 02109 -- Member of the Audit
Committee for the Trust -- Senior Vice President and Director, The Boston
Consulting Group, Inc. (management consulting); Director, GTE Corporation
(communications services); Director, Rohm and Haas Company (specialty
chemicals); Trustee, Boston Public Library Foundation; Board of Overseers,
Museum of Fine Arts and Beth Israel/New England Deaconess Hospital;
Director, Harvard Graduate School Society Council; Member, Visiting
Committee, Harvard School of Public Health.
JOHN A. SHANE -- Trustee
-------
(67); 200 Unicorn Park Drive, Woburn, Massachusetts 01801 -- Member of the
Audit Committee for the Trust -- President, Palmer Service Corporation
(venture capital organization); General Partner, Palmer Partners L.P.;
Director, Arch Communications Group, Inc. (paging service); Director,
Eastern Bank Corporation; Director, Gensym Corporation (developer of expert
system software); Director, Overland Data, Inc. (manufacturer of computer
tape drives); Director, United Asset Management Corporation (holding
company for institutional money management firms).
* PETER S. VOSS -- Chairman of the Board, Chief Executive Officer, and Trustee
-----------------------------------------------------------
(53); Chairman of the Board and Director, President and Chief Executive
Officer, Nvest, L.P. and Nvest Companies, L.P. ("Nvest Companies");
Chairman of the Board and Director, President and Chief Executive Officer,
Nvest Corporation; Director, Nvest Services Company; Director, Nvest
Distribution Corporation; Director of various affiliates of Nvest
Management; formerly, Director, New England Financial; Board Member,
Investment Company Institute and United Way of Massachusetts Bay; Committee
Member, New York Stock Exchange Listed Company Advisory Committee.
PENDLETON P. WHITE -- Trustee
-------
(69); 6 Breckenridge Lane, Savannah, Georgia 31411; Member of the Contract
Review and Governance Committee for the Trust; Retired; formerly, President
and Chairman of the Executive Committee, Studwell Associates (executive
search consultants); formerly, Trustee, The Faulkner Corporation (community
hospital corporation).
The Contract Review and Governance Committee of the Fund is comprised solely of
disinterested Trustees and considers matters relating to advisory and
distribution arrangements, potential conflicts of interest between the adviser
and the Fund, and governance matters relating to the Fund.
The Audit Committee of the Fund is comprised solely of disinterested Trustees
and considers matters relating to the scope and results of the Fund's audits and
serves as a forum in which the independent accountants can raise any issues or
problems identified in the audit with the Board of Trustees. This Committee also
reviews and monitors compliance with stated investment objectives and policies,
SEC and Internal Revenue Service ("IRS") regulations as well as operational
issues relating to the transfer agent.
Officers
- --------
Officers of the Trust, in addition to Mr. Voss and Mr. Hailer, and their
ages (in parentheses) and principal occupations during at least the past five
years are listed below.
THOMAS P. CUNNINGHAM - Treasurer
---------
(54); Senior Vice President, Nvest Services Company; Senior Vice President,
Nvest Management; formerly, Vice President, Allmerica Financial Life
Insurance and Annuity Company; formerly, Treasurer, Allmerica Investment
Trust; formerly, Vice President, First Data Investor Services Group.
JOHN E. PELLETIER - Secretary and Clerk
--------------------
(35); Executive Vice President, General Counsel, Secretary and Clerk, Nvest
Services Company; Director, Nvest Distribution Corporation; Senior Vice
President, General Counsel, Secretary and Clerk, Nvest Funds Distributor,
L.P.; Senior Vice President, General Counsel, Secretary and Clerk, Nvest
Management; formerly, Senior Vice President and General Counsel, Funds
Distributor, Inc. (mutual funds service
9
<PAGE>
company); formerly, Vice President and General Counsel, Boston
Institutional Group (mutual funds service company); formerly, Senior Vice
President and General Counsel, Financial Research Corporation.
Previous positions during the past five years with New England Financial or
Metropolitan Life Insurance Company ("MetLife"), Nvest Funds Distributor, L.P.
or Nvest Management are omitted, if not materially different from a Trustee's or
officer's current position with such entity. As indicated below under "Trustee
Fees," each of the Trust's trustees is also a trustee of certain other
investment companies for which Nvest Funds Distributor, L.P. acts as principal
underwriter. Except as indicated above, the address of each Trustee and officer
of the Trust is 399 Boylston Street, Boston, Massachusetts 02116.
Trustee Fees
- ------------
The Trust pays no compensation to its officers or to its Trustees who
are interested persons thereof.
Each trustee who is not an interested person of the Trust receives, in the
aggregate for serving on the Board of Trustees of the Trust as well as Nvest
Funds Trust I, Nvest Funds Trust II, Nvest Funds Trust III, Nvest Cash
Management Trust and Nvest Tax Exempt Money Market Trust (all five Nvest Funds
Trusts collectively, the "Nvest Funds Trusts" and all six trusts collectively,
the "Trusts"), comprising as of June 30, 2000 a total of 23 mutual fund
portfolios, a retainer fee at the annual rate of $40,000 and meeting attendance
fees of $3,500 for each meeting of the Board of Trustees that he or she attends.
Each committee member receives an additional retainer fee at the annual rate of
$6,000. Furthermore, each committee chairman receives an additional retainer fee
(beyond the $6,000 fee) at the annual rate of $4,000. These fees are allocated
among the mutual fund portfolios in the Trusts based on a formula that takes
into account, among other factors, the relative net assets of each Fund.
During the calendar year ended December 31, 1999, the trustees of the
Trusts received the amounts set forth in the following table for serving as a
trustee of the Trust and for also serving as trustees of the Nvest Funds Trusts.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate
Aggregate Aggregate Aggregate Compensation Pension or
Compensation Compensation Compensation from Retirement Estimated Total
from from from Nvest Benefits Annual Compensation
Nvest Funds Nvest Funds Nvest Funds Companies Accrued as Part Benefits from the
Trust I Trust II Trust III Trust I of Fund Expenses Upon Trusts
Name of Trustee in 1999* in 1999* in 1999* in 1999** in 1999 Retirement in 1999*
--------------- -------- -------- -------- --------- ------- ---------- --------
Graham T. Allison, Jr. $40,775 $11,090 $1,552 $0 $0 $0 $60,000
Daniel M. Cain $43,623 $11,740 $1,597 $0 $0 $0 $64,000
Kenneth J. Cowan $43,623 $11,740 $1,597 $0 $0 $0 $64,000
Richard Darman $40,775 $11,090 $1,552 $0 $0 $0 $60,000
Sandra O. Moose $40,775 $11,090 $1,552 $0 $0 $0 $60,000
John A. Shane $40,775 $11,090 $1,552 $0 $0 $0 $60,000
Pendleton P. White $40,775 $11,090 $1,552 $0 $0 $0 $60,000
</TABLE>
[FN]
*Amounts include payments deferred by Trustees for 1999. The total amount of
deferred compensation for all periods to date accrued for the Trustees follows:
Allison ($810, 057); Cain ($16,000); Cowan ($55,777); Darman ($15,000).
** Nvest Companies Trust I was formed on March 17, 2000 and, therefore, its
trustees did not receive compensation for the calendar year ended December 31,
1999.
</FN>
The Fund provides no pension or retirement benefits to trustees, but
has adopted a deferred payment arrangement under which each trustee may elect
not to receive fees from the Fund on a current basis but to receive in a
subsequent period an amount equal to the value that such fees would have been if
they had been invested in a Fund or Funds selected by the Trustee on the normal
payment date for such fees. The Fund(s) will make an investment in the selected
Fund(s) in an amount equal to its pro rata share of the deferred fees. As a
result of this arrangement, each Fund, upon making the deferred payments, will
be in substantially the same financial position as if the deferred fees had been
paid on the normal payment dates.
At ______________, 2000, the officers and trustees of the Trust as a
group owned less than 1% of the outstanding shares of the Fund.
10
<PAGE>
Advisory Agreement
- ------------------
The Fund's Advisory Agreement between the Fund and AEW provides that AEW
will furnish or pay the expenses of the Fund for office space, facilities and
equipment, services of executive and other personnel of the Trust and certain
administrative services. AEW is responsible for obtaining and evaluating such
economic, statistical and financial data and information and performing such
additional research as is necessary to manage the Fund's assets in accordance
with its investment objectives and policies.
The Fund pays all expenses not borne by its Adviser, including, but not
limited to, the charges and expenses of the Fund's custodian and transfer agent,
independent auditors and legal counsel for the Fund and the Fund's independent
Trustees, all brokerage commissions and transfer taxes in connection with
portfolio transactions, all taxes and filing fees, the fees and expenses for
registration or qualification of its shares under federal and state securities
laws, all expenses of shareholders' and Trustees' meetings and of preparing,
printing and mailing reports to shareholders and the compensation of Trustees
who are not directors, officers or employees of the Adviser or its affiliates,
other than affiliated registered investment companies.
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, as that term is defined in the 1940 Act, 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 of the Trust or by
vote of a majority of the outstanding voting securities of the Fund, upon 60
days' written notice, or by the Adviser upon 90 days' written notice, and
terminates automatically in the event of its assignment.
The Advisory Agreement provides that the 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.
AEW is a registered investment adviser whose origins date back to 1981. AEW
is a limited partnership that is a wholly-owned subsidiary of AEW Capital
Management, L.P., which in turn is a wholly-owned subsidiary of Nvest Holdings,
L.P. ("Nvest Holdings"). Nvest Holdings is a wholly-owned subsidiary of Nvest
Companies. Nvest Distribution Corp. is also the sole general partner of Nvest
Funds Distributor, L.P. (the "Distributor") and the sole shareholder of Nvest
Services Company, Inc. ("Nvest Services Company"), the transfer and
dividend-disbursing agent of the Fund. Nvest Companies owns the entire limited
partnership interest in each of AEW and Nvest Funds Distributor, L.P. Nvest
Services Company may subcontract certain of its obligations as the transfer and
dividend-disbursing agent of the Fund to third parties. Nvest Services Company,
Inc. also does business as Nvest Services Company and Nvest Services Co.
Nvest Companies' managing general partner, Nvest Corporation, is a
wholly-owned subsidiary of MetLife New England Holdings, Inc., which in turn is
a wholly-owned subsidiary of MetLife, a stock life insurance company, which is
wholly-owned by MetLife, Inc., a publicly traded corporation. MetLife owns
approximately 47% (and in the aggregate, directly and indirectly, approximately
48%) of the outstanding limited partnership interests in Nvest Companies. Nvest
Companies' advising general partner, Nvest, L.P., is a publicly traded company
listed on the New York Stock Exchange (the "Exchange"). Nvest Corporation is the
sole general partner of Nvest, L.P. The eighteen principal subsidiary or
affiliated asset management firms of Nvest Companies, collectively, have more
than $____ billion in assets under management or administration as of
June 30, 2000.
Certain officers of AEW have responsibility for the management of other
client portfolios. The other clients served by AEW sometimes invest in
securities in which the Fund also invests. If the Fund and such other clients
advised by AEW desire to buy or sell the same portfolio securities at about the
same time, purchases and sales will 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
Fund's Trustees that the desirability of retaining AEW as Adviser outweighs the
disadvantages, if any, which might result from these practices.
11
<PAGE>
Distribution Agreements.
- ------------------------
Under an agreement with the Fund (the "Distribution Agreement"), the Distributor
serves as the principal underwriter of Fund shares. Under this agreement, the
Distributor conducts a continuous offering and is not obligated to sell a
specific number of shares. The Distributor bears the cost of making information
about the Fund available through advertising and other means and the cost of
printing and mailing Prospectuses to persons other than shareholders. The Fund
pays the cost of registering and qualifying its shares under state and federal
securities laws and the distribution of Prospectuses to existing shareholders.
The Distribution Agreement for the Fund may be terminated at any time on 60
days' written notice without payment of any penalty by the Distributor or by
vote of a majority of the outstanding voting securities of the Fund or by vote
of a majority of the disinterested Trustees.
The Distribution Agreement will continue in effect for successive one-year
periods, provided that such continuance is specifically approved (i) by the vote
of a majority of the disinterested Trustees and (ii) by the vote of a majority
of the entire Board of Trustees cast in person at a meeting called for that
purpose or by a vote of a majority of the outstanding securities of the Fund.
The Distributor controls the words "Nvest" in the name of the Trust and if
it should cease to be the principal distributor of the Fund's shares, Nvest
Companies Trust I may be required to change its name and delete these words or
letters. The Distributor also acts as principal distributor for Nvest Funds
Trust I, Nvest Funds Trust II, Nvest Funds Trust III, Kobrick Capital Fund,
Kobrick Emerging Growth Fund, Kobrick Growth Fund, Nvest Cash Management Trust
and Nvest Tax Exempt Money Market Trust. The address of the Distributor is 399
Boylston Street, Boston, Massachusetts, 02116.
Custodial Arrangements.
- -----------------------
State Street Bank and Trust Company ("State Street Bank" or the "Custodian"),
225 Franklin Street, Boston, Massachusetts 02110, is the Fund's custodian. As
such, State Street Bank holds in safekeeping certificated securities and cash
belonging to the Fund and, in such capacity, is the registered owner of
securities in book-entry form belonging to the Fund. Upon instruction, State
Street Bank 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. State Street Bank also maintains
certain accounts and records of the Trust and calculates the total net asset
value, total net income and net asset value per share of the Fund on a daily
basis.
Independent Accountants.
- ------------------------
The Fund's independent accountant is PricewaterhouseCoopers LLP, 160 Federal
Street, Boston, Massachusetts 02110. The independent accountants conduct an
annual audit of the Fund's financial statements, assist in the preparation of
federal and state income tax returns and consult with the Trust as to matters of
accounting and federal and state income taxation. The information concerning
financial highlights in the Prospectus, and financial statements contained in
the Fund's annual reports, have been so included in reliance on the reports of
the Fund's independent accountants, given on the authority of such firms as
experts in auditing and accounting.
Other Arrangements
- ------------------
Pursuant to a contract between the Trust and Nvest Services Company, Nvest
Services Company acts as shareholder servicing and transfer agent for the Fund
(in such capacity, the "Transfer Agent") and is responsible for services in
connection with the establishment, maintenance and recording of shareholder
accounts, including all related tax and other reporting requirements and the
implementation of investment and redemption arrangements offered in connection
with the sale of the Fund's shares. The Fund pays Nvest Services Company a fee
of $____ for these services.
In addition, pursuant to an Administrative Services Agreement between the
Trust and Nvest Services Company, Nvest Services Company performs certain
accounting and administrative services for the Fund (in such capacity, the
"Administrative Service Agent"). The Fund pays Nvest Services Company a fee for
these services. The Fund also reimburses Nvest Services Company for all or part
of Nvest Service Company's expenses of providing these services, which include
the following: (i) expenses for personnel performing bookkeeping, accounting,
internal auditing and financial reporting functions and clerical functions
relating to the Fund; (ii) expenses for services required in connection with the
preparation of registration statements and prospectuses, registration of shares
in various states, shareholder reports and notices, proxy solicitation material
furnished to shareholders of the Fund or regulatory authorities and reports and
questionnaires for SEC compliance; and (iii) registration, filing and other fees
in connection with requirements of regulatory authorities.
12
<PAGE>
The Trust, AEW and the Distributor have adopted Codes of Ethics pursuant to
the requirements of the 1940 Act. These Codes of Ethics permit personnel subject
to the Codes to invest in securities, including securities that may be purchased
or held by the Fund.
- --------------------------------------------------------------------------------
PORTFOLIO TRANSACTIONS AND BROKERAGE
- --------------------------------------------------------------------------------
In placing orders for the purchase and sale of equity securities, the
Adviser selects only brokers that it believes are financially responsible, will
provide efficient and effective services in executing, clearing and settling an
order and will charge commission rates that, 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 Adviser will use its best efforts to obtain
information as to the general level of commission rates being 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.
Subject to the overriding objective of obtaining the best possible
execution of orders, the Adviser may allocate brokerage transactions to
affiliated brokers. Any such transactions will comply with Rule 17e-1 under the
1940 Act. In order for the affiliated broker to effect portfolio transactions
for the Fund, the commissions, fees or other remuneration received by the
affiliated broker must be reasonable and fair compared to the commissions, fees
and other remuneration paid to other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period. Furthermore, the Fund's Board of
Trustees, including a majority of those Trustees who are not "interested
persons" of the Trust as defined in the 1940 Act have adopted procedures that
are reasonably designed to provide that any commissions, fees or other
remuneration paid to an affiliated broker are consistent with the foregoing
standard.
General
-------
Portfolio turnover is not a limiting factor with respect to investment
decisions. The Fund anticipates that its portfolio turnover rate will vary
significantly from time to time depending on the volatility of economic and
market conditions.
Under the 1940 Act, persons affiliated with the Trust are prohibited from
dealing with the Fund as principals in the purchase and sale of securities.
Since transactions in the over-the-counter market usually involve transactions
with dealers acting as principals for their own accounts, affiliated persons of
the Trust may not serve as the Fund's dealer in connection with such
transactions.
To the extent permitted by applicable law, and in all instances subject to
the foregoing policy of best execution, the Adviser may allocate brokerage
transactions in a manner that takes into account the sale of shares of one or
more Funds distributed by the Distributor. In addition, the Adviser may allocate
brokerage transactions to broker-dealers (including affiliates of the
Distributor) that have entered into arrangements in which the broker-dealer
allocates a portion of the commissions paid by the Fund toward the reduction of
the Fund's expenses, subject to the requirement that the adviser will seek best
execution.
It is expected that the portfolio transactions in fixed-income securities,
if any, will generally be with issuers or dealers on a net basis without a
stated commission. Securities firms may receive brokerage commissions on
transactions involving options, futures and options on futures and the purchase
and sale of underlying securities upon exercise of options. The brokerage
commissions associated with buying and selling options may be proportionately
higher than those associated with general securities transactions.
13
<PAGE>
- --------------------------------------------------------------------------------
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES
- --------------------------------------------------------------------------------
The Trust is organized as a Massachusetts business trust under the laws of
Massachusetts by an Agreement and Declaration of Trust (a "Declaration of
Trust") dated March 17, 2000, and is a "series" company as described in Section
18(f)(2) of the 1940 Act. The Fund commenced operations on _________, 2000.
The Declaration of Trust permits the Fund's Trustees to issue an unlimited
number of full and fractional shares of each series. The Fund is represented by
a particular series of shares. The Declaration of Trust further permits the
Fund's Board of Trustees to divide the shares of each series into any number of
separate classes, each having such rights and preferences relative to other
classes of the same series as the Fund's Board of Trustees may determine. When
you invest in the Fund, you acquire freely transferable shares of beneficial
interest that entitle you to receive annual or quarterly dividends as determined
by the Fund's Board of Trustees and to cast a vote for each dollar of net asset
value you own at shareholder meetings. Shares of the Fund do not have any
preemptive rights. The Declaration of Trust also permits the Board of Trustees
to charge shareholders directly for custodial, transfer agency and servicing
expenses.
The Declaration of Trust also permits the Fund's Board of Trustees, without
shareholder approval, to subdivide any series or class of shares or fund into
various sub-series or sub-classes with such dividend preferences and other
rights as the Trustees may designate. While the Fund's Board of Trustees has 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 that might affect various classes of shareholders differently. The
Fund's Board of Trustees may also, without shareholder approval unless as
provided therein, amend or supplement the Declaration of Trust so as to add to,
delete, replace or otherwise modify any provisions contained in the Declaration
of Trust, including, but not limited to, adding one or more additional series or
classes or merge two or more existing series or classes.
The Declaration of Trust provides for the perpetual existence of the Trust.
The Trust or the Fund, however, may be terminated at any time, subject to
applicable federal and state law, by (i) vote of at least two-thirds of the
outstanding shares of the Fund or (ii) without the vote or consent of
shareholders by a majority of the Trustees either at a meeting or by written
consent. The Trustees shall provide written notice to the affected shareholders
of a termination effected under clause (ii) above. The Trust also permits the
Board of Trustees, subject to applicable federal and state law, to reorganize,
merge or consolidate property of the Trust or any series thereof with other
trusts, corporations, partnerships or other organizations without shareholder
approval. The Trustees shall provide written notice to the affected shareholders
of such reorganization, merger or consolidation.
Voting Rights
- -------------
Shareholders of a series or class are entitled to one vote for each dollar
of net asset value (number of shares owned multiplied by net asset value per
share) of such series or class thereof, on any matter on which such shareholder
is entitled to vote, and each fractional dollar amount shall be entitled to a
proportionate fractional vote.
The Declaration of Trust provides that on any matter submitted to a vote of
all shareholders of the Trust, all Trust shares entitled to vote shall be voted
together irrespective of series or class unless the rights of a particular
series or class would be adversely affected by the vote, in which case a
separate vote of that series or class 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
series or class shall be deemed to be affected by a matter unless it is clear
that the interests of each series or class in the matter are substantially
identical or that the matter does not affect any interest of such series or
class. On matters affecting an individual series or class, only shareholders of
that series or class are entitled to vote. Consistent with the current position
of the SEC, shareholders of all series and classes vote together, irrespective
of series or class, on the election of Trustees and the selection of the Fund'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
and subadvisory agreement relating to that series, and shareholders of each
class within a series vote separately as to the Rule 12b-1 plan (if any)
relating to that class.
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
14
<PAGE>
majority of the Trustees holding office have been elected by shareholders, and
(ii) if there is a vacancy on the Board of Trustees, such vacancy may be filled
only by a vote of the shareholders unless, after filing such vacancy by other
means, at least two-thirds of the Trustees holding office shall have been
elected by 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 Fund'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 the holders of shares having a net asset value of
at least $25,000 or at least 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 will undertake to provide a list of shareholders or to
disseminate appropriate materials (at the expense of the requesting
shareholders).
Except as set forth above, the Trustees shall continue to hold office and
may appoint successor Trustees. Shareholder voting rights are not cumulative.
Shareholder and Trustee Liability
- ---------------------------------
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of a Trust. However, the
Declaration of Trust disclaims shareholder liability for acts or obligations of
the Trust 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 the
Fund's property for all loss and expense of any shareholder held personally
liable for the obligations of the Fund by reason of owning shares of such 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 Board of 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 or her office. The By-Laws of the Trust provide for
indemnification by the Trust of 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 his or her action was in, or not opposed to, the best
interests of the Trust. Such persons may not be indemnified against any
liability to the Trust or the Fund's shareholders 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.
- --------------------------------------------------------------------------------
HOW TO BUY SHARES
- --------------------------------------------------------------------------------
The procedures for purchasing shares of the Fund are summarized in the
Prospectus. All purchases made by check should be in U.S. dollars and made
payable to AEW Funds, or, in the case of a retirement account, a custodian or
trustee. Banks may charge a fee for transmitting funds by wire. With respect to
shares purchased by federal funds, shareholders should bear in mind that wire
transfers may take two or more hours to complete.
For purchases of Fund shares by mail, the settlement date is the first
business day after receipt of the check by the Transfer Agent so long as it is
received by the close of regular trading of the Exchange on a day when the
Exchange is open; otherwise the settlement date is the following business day.
- --------------------------------------------------------------------------------
NET ASSET VALUE
- --------------------------------------------------------------------------------
The method for determining the public offering price and net asset value
per share is summarized in the Prospectus.
15
<PAGE>
The total net asset value of Fund shares (the excess of the assets of
the Fund over its liabilities) is determined at the close of regular trading
(normally 4:00 p.m. Eastern time) on each day that the Exchange is open for
trading. The weekdays that the Exchange is expected to be closed are New Year's
Day, Martin Luther King Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Securities
listed on a national securities exchange or on the NASDAQ National Market System
are valued at their last sale price, or, if there is no reported sale during the
day, the last reported bid price estimated by a broker. Unlisted securities
traded in the over-the-counter market are valued at the last reported bid price
in the over-the-counter market or on the basis of yield equivalents as obtained
from one or more dealers that make a market in the securities. U.S. Government
Securities are traded in the over-the-counter market. Options, interest rate
futures and options thereon that are traded on exchanges are valued at their
last sale price as of the close of such exchanges. Securities for which current
market quotations are not readily available and all other assets are taken at
fair value as determined in good faith by the Board of Trustees, although the
actual calculations may be made by persons acting pursuant to the direction of
the Board.
Generally, trading in foreign government securities and other fixed-income
securities, as well as trading in equity securities in markets outside the
United States, is substantially completed each day at various times prior to the
close of the Exchange. Securities traded on a non-U.S. exchange will be valued
at their last sale price (or the last reported bid price, if there is no
reported sale during the day), on the exchange on which they principally trade,
as of the close of regular trading on such exchange. The value of other
securities principally traded outside the United States will be computed as of
the completion of substantial trading for the day on the markets on which such
securities principally trade. Securities principally traded outside the United
States will generally be valued several hours before the close of regular
trading on the Exchange, generally 4:00 p.m. Eastern Time, when the Fund
computes the net asset value of their shares. Occasionally, events affecting the
value of securities principally traded outside the United States may occur
between the completion of substantial trading of such securities for the day and
the close of the Exchange, which events will not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of the
Fund's securities occur during such period, then these securities will be valued
at their fair value as determined in good faith by or in accordance with
procedures approved by the Trusts' trustees. The effect of fair value pricing is
that securities may not be priced on the basis of quotations from the primary
market in which they are traded but rather, may be priced by another method that
the Board of Trustees believes accurately reflects fair value.
Trading in some of the portfolio securities of the Fund takes place in
various markets outside the United States on days and at times other than when
the Exchange is open for trading. Therefore, the calculation of the Fund's net
asset value does not take place at the same time as the prices of many of its
portfolio securities are determined, and the value of the Fund's portfolio may
change on days when the Fund is not open for business and its shares may not be
purchased or redeemed.
The net asset value of the Fund's shares is computed by dividing the number
of shares outstanding into the total net asset value. The public offering price
of a Fund share is the net asset value per share next-determined after a
properly completed purchase order is accepted by the Fund's Transfer Agent.
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
Open Accounts
- -------------
A shareholder's investment is automatically credited to an open account
maintained for the shareholder by the Transfer Agent. Following each transaction
in the account, a shareholder will receive a confirmation statement disclosing
the current balance of shares owned and the details of recent transactions in
the account. After the close of each calendar year, the Transfer Agent will send
each shareholder a statement providing federal tax information on dividends and
distributions paid to the shareholder during the year. This statement should be
retained as a permanent record. The Transfer Agent may charge a fee for
providing duplicate information.
The open account system provides for full and fractional shares expressed
to three decimal places and, by making the issuance and delivery of stock
certificates unnecessary, eliminates problems of handling and safekeeping, and
the cost and inconvenience of replacing lost, stolen, mutilated or destroyed
certificates. Certificates will not be issued for Fund shares.
16
<PAGE>
The costs of maintaining the open account system are paid by the Fund and
no direct charges are made to shareholders. Although the Fund 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.
Retirement Plans Offering Tax Benefits
- --------------------------------------
The federal tax laws provide for a variety of retirement plans offering tax
benefits. These plans may be funded with shares of the Fund or with certain
other investments. The reduced minimum initial investment available to
retirement plans offering tax benefits is referred to in the Prospectus. Income
dividends and capital gain distributions must be reinvested (unless the investor
is over age 59 1/2 or disabled). These types of accounts may be subject to fees.
Plan documents and further information can be obtained from the Distributor.
An investor should consult a competent tax or other adviser as to the
suitability of a Fund's shares as a vehicle for funding a plan, in whole or in
part, under the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and as to the eligibility requirements for a specific plan and its
state as well as federal tax aspects.
Broker Trading Privileges
- -------------------------
The Distributor may, from time to time, enter into agreements with one
or more brokers or other intermediaries to accept purchase and redemption orders
for Fund shares until the close of regular trading on the Exchange (normally,
4:00 p.m. Eastern Time on each day that the Exchange is open for trading); such
purchase and redemption orders will be deemed to have been received by the Fund
when the authorized broker or intermediary accepts such orders; and such orders
will be priced using the Fund's net asset value next computed after the orders
are placed with and accepted by such brokers or intermediaries. Any purchase and
redemption orders received by a broker or intermediary under these agreements
will be transmitted daily to the Distributor or the Transfer Agent, as the case
may be, no later than the time specified in such agreement; but, in any event,
no later than 6:00 a.m. following the day that such purchase or redemption
orders are received by the broker or intermediary.
- --------------------------------------------------------------------------------
REDEMPTIONS
- --------------------------------------------------------------------------------
The procedures for redemption of Fund shares are summarized in the
Prospectus.
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 Transfer Agent in proper form. Payment normally will be made by
the Transfer Agent on behalf of the Fund within seven days thereafter. However,
in the event of a request to redeem shares for which the Fund has not yet
received good payment, the Fund reserves the right to withhold payments of
redemption proceeds if the purchase of shares was made by a check that was
deposited less than fifteen days prior to the redemption request (unless the
Fund is aware that the check has cleared).
Signatures on redemption requests must be guaranteed by an "Eligible
Guarantor Institution," as defined in Rule 17Ad-15 under the Securities Exchange
Act of 1934, as amended (the "1934 Act"). However, a signature guarantee will
not be required if the proceeds of the redemption do not exceed $100,000 and the
proceeds check is made payable to the registered owner(s) and mailed to the
record address.
If you select the telephone redemption service in the manner described in
the next paragraph, shares of a Fund may be redeemed by calling toll free
877-637-REIT. A wire fee, currently $5.00, will be deducted from the proceeds.
Telephone redemption requests must be received by the close of regular trading
on the Exchange. Requests made after that time or on a day when the Exchange is
not open for business cannot be accepted and a new request on a later day will
be necessary. The proceeds of a telephone withdrawal will normally be sent on
the first business day following receipt of a proper redemption request.
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 Transfer Agent. When selecting the
17
<PAGE>
service, a shareholder must designate a bank account to which the redemption
proceeds should be sent. Any change in the bank account so designated may be
made by furnishing to the Transfer Agent 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 the designated 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 Fund, the Distributor and State Street Bank
are not responsible for the authenticity of withdrawal instructions received by
telephone, subject to established verification procedures.
The Fund will normally redeem shares for cash; however, the Fund reserves
the right to pay the redemption price wholly or partially in kind if the Fund's
Board of Trustees determines it to be advisable and in the interest of the
remaining shareholders of the Fund. The redemptions in kind will be selected by
the Adviser in light of the Fund's objective and will not generally represent a
pro rata distribution of each security held in the Fund's portfolio. 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 Fund has elected to be governed by Rule 18f-1 under the
1940 Act, pursuant to which the Fund 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 Fund at the beginning of such period.
The Fund does not currently intend to impose any redemption charge, although it
reserves the right to charge such a fee. A redemption constitutes a sale of
shares for federal income tax purposes on which the investor may realize a long-
or short-term capital gain or loss. See also "Income Dividends, Capital Gain
Distributions and Tax Status," below.
The Fund may also close your account and send you the proceeds if the
balance in your account falls below a minimum amount set by the Fund's Board of
Trustees (currently $1,000). Shareholders who are affected by this policy will
be notified of the Fund's intention to close the account and will have 60 days
immediately following the notice to bring the account up to the minimum.
- --------------------------------------------------------------------------------
STANDARD PERFORMANCE MEASURES
- --------------------------------------------------------------------------------
Calculation of Total Return.
------------------------------
Total return is a measure of the change in value of an investment in the Fund
over the period covered, which assumes that any dividends or capital gains
distributions are automatically reinvested in shares of the Fund rather than
paid to the investor in cash. The Fund may show its average annual total return
for the one-year, five-year and ten-year periods through the end of the most
recent calendar quarter. The formula for total return used by the Fund is
prescribed by the SEC and includes three steps: (1) adding to the total number
of shares that would be purchased by a hypothetical $10,000 investment in the
Fund (with or without giving effect to the deduction of sales charge or
contingent deferred sales charge, if applicable) all additional shares that
would have been purchased if all dividends and distributions paid or distributed
during the period had been automatically reinvested; (2) calculating the value
of the hypothetical initial investment as of the end of the period by
multiplying the total of shares owned at the end of the period by the net asset
value per share on the last trading day of the period; (3) dividing this account
value for the hypothetical investor by the amount of the initial investment, and
annualizing the result for periods of less than one year. Total return may be
stated with or without giving effect to any expense limitations in effect for
the Fund. If the Fund presents returns reflecting an expense limitation or
waiver, its total return would be been lower if no limitation or waiver were in
effect.
Performance Comparisons
- -----------------------
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, Inc. ("Lipper") or Morningstar, Inc. ("Morningstar") as
having similar investment objectives.
The Fund may cite its ratings, recognition, or other mention by
Morningstar, Inc. ("Morningstar") or any other entity. Morningstar's rating
system is based on risk-adjusted total return performance and is expressed in a
star-rating format. The risk-adjusted number is computed by subtracting a Fund's
risk score (which is a function of the fund's monthly returns less the 3-month
T-bill return) from the Fund's load adjusted total return score. This numerical
score is then
18
<PAGE>
translated into rating categories with the top 10% labeled five star, the next
22.5% labeled four star, the next 35% labeled three star, the next 22.5% labeled
two star and the bottom 10% one star. A high rating reflects either
above-average returns or below-average risk or both. Each Fund may also compare
its performance or ranking against all funds tracked by Morningstar or another
independent service, including Lipper, Inc. ("Lipper").
Lipper Indices and Averages are calculated and published by Lipper, an
independent service that monitors the performance of more than 1,000 funds. The
Fund may also use comparative performance as computed in a ranking by Lipper or
category averages and rankings provided by another independent service. Should
Lipper or another service reclassify the Fund to a different category or develop
(and place the Fund into) a new category, the Fund may compare its performance
or ranking against other funds in the newly assigned category, as published by
the service.
Total return may also be used to compare the performance of the Fund
against certain widely acknowledged standards or indices for stock and bond
market performance or against the U.S. Bureau of Labor Statistics' Consumer
Price Index. The Consumer Price Index, published by the U.S. Bureau of Labor
Statistics, is a statistical measure of changes, over time, in the prices of
goods and services in major expenditure groups.
The Morgan Stanley REIT Index is a market capitalization-weighted,
unmanaged, total-return index of REITs that meet certain liquidity requirements.
The index was designed to track the total-return performance of a broad group of
REIT stocks assuming dividend reinvestment in the index on the ex-dividend date.
The index is composed only of publicly traded equity REITs and does not include
REITs that invest primarily in healthcare facilities, real estate mortgages, or
debt securities.
The Whilshire REIT Index is a market capitalization-weighted and unmanaged
index of U.S. publicly traded REITs. This index is a subset of the Whilshire
Real Estate Securities Index.
The Whilshire Real Estate Securities Index is a market
capitalization-weighted and unmanaged index of equity securities whose primary
business is equity ownership of commercial real estate, equity (non-health)
REITs, and storage properties.
The NAREIT Equity Index is a market capitalization-weighted, unmanaged
index of equity REITs, which are defined as REITs with 75% or greater of their
gross invested book assets invested directly or indirectly in the equity
ownership of real estate.
The Standard & Poor's Composite Index of 500 Stocks (the "S&P 500") is a
market capitalization-weighted and unmanaged index showing the changes in the
aggregate market value of 500 stocks relative to the base period 1941-43. The
S&P 500 is composed almost entirely of common stocks of companies listed on the
Exchange, although the common stocks of a few companies listed on the American
Stock Exchange or traded over-the-counter are included.
Articles and releases, developed by the Fund and other parties, about the
Fund regarding performance, rankings, statistics and analyses and the fund
group's asset levels and sales volumes, numbers of Fund shareholders, statistics
and analyses of industry sales volumes and asset levels, and other
characteristics may appear in advertising, promotional literature, publications,
including, but not limited to, those publications listed in Appendix B to this
Statement, and on various computer networks, including, the Internet. In
particular, some or all of these publications may publish their own rankings or
performance reviews of mutual funds, including, but not limited to, Lipper and
Morningstar. References to these rankings or reviews or reprints of such
articles may be used in the Fund's advertising and promotional literature. Such
advertising and promotional material may refer to Nvest Companies, its
structure, goals and objectives and the advisory subsidiaries of Nvest
Companies, including their portfolio management responsibilities, portfolio
managers and their categories and background; their tenure, styles and
strategies and their shared commitment to fundamental investment principles and
may identify specific clients, as well as discuss the types of institutional
investors who have selected the advisers to manage their investment portfolios
and the reasons for that selection. The references may discuss the independent,
entrepreneurial nature of each advisory organization and allude to or include
excerpts from articles appearing in the media regarding Nvest Companies, its
advisory subsidiaries and their personnel. For additional information about the
Fund's advertising and promotional literature, see Appendix C.
The Fund may use the accumulation charts below in its advertisements to
demonstrate the benefits of monthly savings at an 8% and 10% rate of return,
respectively.
19
<PAGE>
<TABLE>
INVESTMENTS AT 8% RATE OF RETURN
<S> <C> <C> <C> <C> <C> <C>
5 yrs. 10 15 20 25 30
------------ ------------ ------------ ------------ ------------ ------------
$50 3,698 9,208 17,417 29,647 47,868 75,015
75 5,548 13,812 26,126 44,471 71,802 112,522
100 7,396 18,417 34,835 59,295 95,737 150,029
150 11,095 27,625 52,252 88,942 143,605 225,044
200 14,793 36,833 69,669 118,589 191,473 300,059
500 36,983 92,083 174,173 296,474 478,683 750,148
INVESTMENTS AT 10% RATE OF RETURN
5 yrs. 10 15 20 25 30
------------ ------------ ------------ ------------ ------------ ------------
$50 3,904 10,328 20,896 38,285 66,895 113,966
75 5,856 15,491 31,344 57,427 100,342 170,949
100 7,808 20,655 41,792 76,570 133,789 227,933
150 11,712 30,983 62,689 114,855 200,684 341,899
200 15,616 41,310 83,585 153,139 267,578 455,865
500 39,041 103,276 208,962 382,848 668,945 1,139,663
</TABLE>
The Fund's advertising and sales literature may refer to historical,
current and prospective political, social, economic and financial trends and
developments that affect domestic and international investment as it relates to
the Fund. The Fund's advertising and sales literature may include historical and
current performance and total returns of investment alternatives to the Fund.
Articles, releases, advertising and literature may discuss the range of services
offered by the Trust, the Distributor, and the Transfer Agent of the Fund, with
respect to investing in shares of the Fund and customer service.
The Distributor may make reference in its advertising and sales literature
to awards, citations and honors bestowed on it by industry organizations and
other observers and raters. Such reference may explain the criteria for the
award, indicate the nature and significance of the honor and provide statistical
and other information about the award and the Distributor's selection including,
but not limited to, the scores and categories in which the Distributor excelled,
the names of funds and fund companies that have previously won the award and
comparative information and data about those against whom the Distributor
competed for the award, honor or citation.
The Distributor may publish, allude to or incorporate in its advertising
and sales literature testimonials from shareholders, clients, brokers who sell
or own shares, broker-dealers, industry organizations and officials and other
members of the public, including, but not limited to, Fund performance, features
and attributes, or service and assistance provided by departments within the
organization, employees or associates of the Distributor.
Advertising and sales literature may also refer to the beta coefficient of
the Fund. A beta coefficient is a measure of systematic or undiversifiable risk
of a stock. A beta coefficient of more than 1 means that the company's stock has
shown more volatility than the market index (e.g., the S&P 500) to which it is
being related. If the beta is less than 1, it is less volatile than the market
average to which it is being compared. If it equals 1, its risk is the same as
the market index. High variability in stock price may indicate greater business
risk, instability in operations and low quality of earnings. The beta
coefficients of the Fund may be compared to the beta coefficients of other
funds.
The Fund may enter into arrangements with banks exempted from broker-dealer
registration under the 1934 Act. Advertising and sales literature developed to
publicize such arrangements will explain the relationship of the bank to the
Fund and the Distributor as well as the services provided by the bank relative
to the Fund. The material may identify the bank by name and discuss the history
of the bank including, but not limited to, the type of bank, its asset size, the
nature of its business and services and its status and standing in the industry.
In addition, sales literature may be published concerning topics of general
investor interest for the benefit of registered representatives and the Fund's
prospective shareholders. These materials may include, but are not limited to,
discussions of college planning, retirement planning and reasons for investing
and historical examples of the investment performance of various classes of
securities, securities markets and indices.
20
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- --------------------------------------------------------------------------------
INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS
- --------------------------------------------------------------------------------
As described in the Prospectus, 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 long-term capital gains, if any, after
offsetting any capital loss carryovers.
Ordinary income dividends and capital gain distributions are payable in
full and fractional shares of the particular Fund based upon the net asset value
determined as of the close of the Exchange on the record date for each dividend
or distribution. Shareholders, however, may elect to receive their ordinary
income dividends or capital gain distributions, or both, in cash. The election
may be made at any time by submitting a written request directly to AEW Funds.
In order for a change to be in effect for any dividend or distribution, it must
be received by AEW Funds on or before the record date for such dividend or
distribution.
If you elect to receive your dividends in cash and the dividend checks sent
to you are returned "undeliverable" to the Fund or remain uncashed for six
months, your cash election will automatically be changed and your future
dividends will be reinvested. No interest will accrue on amounts represented by
uncashed dividend or redemption checks.
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 of 1986, as amended (the
"Code"). In order to qualify, the Fund must, among other things, (i) derive at
least 90% of its gross income in each taxable year from dividends, interest,
payments with respect to certain securities loans, gains from the sale of
securities or foreign currencies, 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, securities or currencies; (ii)
distribute at least 90% of its dividend, interest and certain other taxable
income each year; and (iii) diversify its holdings so that at the end of each
fiscal quarter, (a) at least 50% of the value of its total assets consists of
cash, U.S. Government Securities, securities of other regulated investment
companies, and other securities limited generally, with respect to any one
issuer, to no more than 5% of the value of the Fund's total assets and 10% of
the outstanding voting securities of such issuer, and (b) not more than 25% of
the value of its assets is 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 or businesses. So long as it qualifies for treatment
as a regulated investment company, the Fund will not be subject to federal
income tax on income paid to its shareholders in the form of dividends or
capital gains distributions.
An excise tax at the rate of 4% will be imposed on the excess, if any, of
the Fund's "required distribution" 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 (or December 31, if the Fund is
so permitted to elect and so elects) plus undistributed amounts from prior
years. The Fund intends to make distributions sufficient to avoid imposition of
the excise tax. Distributions declared and payable 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.
Fund distributions paid to you either in cash or reinvested in additional
shares are generally taxable to you either as ordinary income or as capital
gains. Distributions derived from short-term capital gains or investment income
are generally taxable at ordinary income rates. If you are a corporation
investing in a Fund, a portion of these dividends may qualify for the
dividends-received deduction provided that you meet certain holding period
requirements. However, any distributions received by the Fund from REITs will
not qualify for the corporate dividends-received deduction. Distributions of net
long-term capital gains (i.e., 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) that are designated by a Fund as capital gain dividends will
generally be taxable to a shareholder receiving such distributions as long-term
capital gain (generally taxed at a 20% tax rate for noncorporate shareholders)
regardless of how long the shareholder has held Fund shares. To avoid an excise
tax, the Fund intends to
21
<PAGE>
distribute dividends prior to calendar year-end. Some dividends paid in January
may be taxable as if they were received in the previous December.
Dividends and distributions on a Fund's shares are generally subject to
federal income tax as described herein 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. Such realized gains may be required to be
distributed even when the Fund's net asset value also reflects unrealized
losses.
The Fund's transactions, if any, in foreign currencies and foreign currency
denominated bonds and hedging activities are likely to result in a difference
between the Fund's book income and taxable income. This difference may cause a
portion of the Fund's income distributions to constitute a return of capital or
capital gain for tax purposes or require the Fund to make distributions
exceeding book income to avoid excise tax liability and to qualify as a
regulated investment company.
Redemptions of the Fund's shares is a taxable event and, accordingly,
shareholders may realize gains and losses on such transactions. Currently, if
shares have been held for more than one year, gain or loss realized will be
taxed at long-term federal tax rates (generally 20% for noncorporate
shareholders), provided the shareholder holds the shares as a capital asset.
Furthermore, 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.
A loss on the sale of shares held for six months or less will be disallowed
for federal income tax purposes to the extent of exempt-interest dividends
received with respect to such shares and thereafter 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.
The Fund's investments in REIT equity securities may require the Fund to
accrue and distribute income not yet received. In order to generate sufficient
cash to make required distributions, the Fund may be required to sell securities
in its portfolio that it otherwise would have continued to hold (including when
it is advantageous to do so). The Fund's investments in REIT equity securities
may at other times result in the Fund's receipt of cash in excess of the REIT's
earnings; if the Fund distributes such amounts, such distribution could
constitute a return of capital to Fund shareholders for federal income tax
purposes.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and related 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 actions.
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, state or local taxes.
The Fund is required to withhold 31% of all income dividends and capital
gains distributions it pays to you if you do not provide a correct, certified
taxpayer identification number, if the Fund is notified that you have
underreported income in the past or if you fail to certify to the Fund that you
are not subject to such withholding. If you are a tax-exempt shareholder,
however, these backup withholding rules will not apply so long as you furnish
the Fund with an appropriate certification.
The foregoing discussion relates solely to U.S. federal income tax law.
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% U.S. withholding tax (or a reduced rate of
withholding provided by treaty).
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
[To be filed by amendment]
22
<PAGE>
APPENDIX A
DESCRIPTION OF BOND RATINGS
STANDARD & POOR'S RATINGS GROUP
- -------------------------------
AAA -- This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay interest and repay
principal.
AA -- Bonds rated AA also qualify as high quality debt obligations. Capacity to
pay interest and repay principal is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A -- Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB -- Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to repay principal and pay interest for
bonds in this category than for bonds in higher rated categories.
BB, B, CCC, CC, C -- Bonds rated BB, B, CCC, CC and C are regarded, on balance,
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
bonds will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
CI -- The rating CI is reserved for income bonds on which no interest is being
paid.
D -- Bonds rated D are in default, and payment of interest and/or repayment of
principal is in arrears.
Plus (+) or Minus (-); The ratings from "AA" to "B" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
MOODY'S INVESTORS SERVICE, INC.
- -------------------------------
Aaa -- Bonds that are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large, or by an exceptionally
stable, margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa -- Bonds that are rated Aa are judged to be high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present that make the
long-term risks appear somewhat larger than in Aaa securities.
A -- Bonds that are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds that are rated Baa are considered as medium grade obligations;
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
23
<PAGE>
Ba -- Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues may be in
default of there may be present elements of danger with respect to principal or
interest.
Ca -- Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Should no rating be assigned by Moody's, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities that are not
rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is not longer
available reasonable up-to-date data to permit a judgment to be formed; if a
bond is called for redemption; or for other reasons.
Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's believes
possess the strongest investment attributes are designated by the symbols
Aa1, A1, Baa1, and B1.
FITCH INVESTOR SERVICES, INC.
- -----------------------------
AAA -- This is the highest rating assigned by Fitch to a debt obligation and
indicates an extremely strong capacity to pay interest and repay principal.
AA -- Bonds rated AA also qualify as high quality debt obligations. Capacity to
pay interest and repay principal is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A -- Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB -- Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to repay principal and pay interest for
bonds in this category than for bonds in higher rated categories.
BB, B, CCC, CC, C -- Bonds rated BB, B, CCC, CC and C are regarded, on balance,
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
bonds will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
CI -- The rating CI is reserved for income bonds on which no interest is being
paid.
D -- Bonds rated D are in default, and payment of interest and/or repayment of
principal is in arrears.
Plus (+) or Minus (-); The ratings from "AA" to "B" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.
24
<PAGE>
APPENDIX B
PUBLICATIONS THAT MAY CONTAIN FUND INFORMATION
ABC and affiliates
Adam Smith's Money World
America OnLine
Anchorage Daily News
Arizona Republic
Atlanta Constitution
Atlanta Journal
Austin American Statesman
Baltimore Sun
Bank Investment Marketing
Barron's
Bergen County Record (NJ)
Bloomberg
Business News
B'nai B'rith Jewish Monthly
Bond Buyer
Boston Business Journal
Boston Globe
Boston Herald
Broker World
Business Radio Network
Business Week
CBS and affiliates
CFO
Changing Times
Chicago Sun Times
Chicago Tribune
Christian Science Monitor
Christian Science Monitor News Service
Cincinnati Enquirer
Cincinnati Post
CNBC
CNN
Columbus Dispatch
CompuServe
Dallas Morning News
Dallas Times-Herald
Denver Post
Des Moines Register
Detroit Free Press
Donoghues Money Fund Report
Dorfman, Dan (syndicated column)
Dow Jones News Service
Economist
FACS of the Week
Fee Adviser
Financial News Network
Financial Planning
Financial Planning on Wall Street
Financial Research Corp.
Financial Services Week
Financial World
Fitch Insights
25
<PAGE>
Forbes
Fort Worth Star-Telegram
Fortune
Fox Network and affiliates
Fund Action
Fund Decoder
Global Finance
(the)Guarantor
Hartford Courant
Houston Chronicle
INC
Indianapolis Star
Individual Investor
Institutional Investor
International Herald Tribune
Internet
Investment Advisor
Investment Company Institute
Investment dealers Digest
Investment Profiles
Investment Vision
Investor's Business Daily
IRA Reporter
Journal of Commerce
Kansas City Star
KCMO (Kansas City)
KOA-AM (Denver)
LA Times
Leckey, Andrew (syndicated column)
Lear's
Life Association News
Lifetime Channel
Miami Herald
Milwaukee Sentinel
Money
Money Maker
Money Management Letter
Morningstar
Mutual Fund Market News
Mutual Funds Magazine
National Public Radio
National Underwriter
NBC and affiliates
New England Business
New England Cable News
New Orleans Times-Picayune
New York Daily News
New York Times
Newark Star Ledger
Newsday
Newsweek
Nightly Business Report
Orange County Register
Orlando Sentinel
26
<PAGE>
Palm Beach Post
Pension World
Pensions and Investments
Personal Investor
Philadelphia Inquirer
Porter, Sylvia (syndicated column)
Portland Oregonian
Prodigy
Public Broadcasting Service
Quinn, Jane Bryant (syndicated column)
Registered Representative
Research Magazine
Resource
Reuters
Rocky Mountain News
Rukeyser's Business (syndicated column)
Sacramento Bee
San Diego Tribune
San Francisco Chronicle
San Francisco Examiner
San Jose Mercury
Seattle Post-Intelligencer
Seattle Times
Securities Industry Management
Smart Money
St. Louis Post Dispatch
St. Petersburg Times
Standard & Poor's Outlook
Standard & Poor's Stock Guide
Stanger's Investment Advisor
Stockbroker's Register
Strategic Insight
Tampa Tribune
Time
Tobias, Andrew (syndicated column)
Toledo Blade
UPI
US News and World Report
USA Today
USA TV Network
Value Line
Wall St. Journal
Wall Street Letter
Wall Street Week
Washington Post
WBZ
WBZ-TV
WCVB-TV
WEEI
WHDH
Worcester Telegram
World Wide Web
Worth Magazine
WRKO
27
<PAGE>
APPENDIX C
ADVERTISING AND PROMOTIONAL LITERATURE
References may be included in the Fund's advertising and promotional
literature to Nvest Companies and its affiliates that perform advisory functions
for the Fund, including, but not limited to AEW.
References may be included in the Fund's advertising and promotional literature
to other Nvest Companies affiliates including, but not limited to, Nvest
Corporation, Back Bay Advisors, L.P., Harris Associates L.P., Loomis, Sayles &
Company, L.P., Capital Growth Management Limited Partnership, Westpeak
Investment Advisors, L.P., Kobrick Funds LLC, Snyder Capital Management, L.P.,
Reich & Tang Capital Management, Reich and Tang Mutual Funds Group and Jurika &
Voyles, L.P. and their fund groups.
The Fund's advertising and promotional material will include, but is not
limited to, discussions of the following information about both affiliated and
unaffiliated entities:
o Specific and general assessments and forecasts regarding U.S. and world
economies, and the economies of specific nations and their impact on the
Fund;
o Specific and general investment emphasis, specialties, fields of expertise,
competencies, operations and functions;
o Specific and general investment philosophies, strategies, processes,
techniques and types of analysis;
o Specific and general sources of information, economic models, forecasts and
data services utilized, consulted or considered in the course of providing
advisory or other services;
o The corporate histories, founding dates and names of founders of the
entities;
o Awards, honors and recognition given to the entities;
o The names of those with ownership interest and the percentage of ownership
interest;
o The industries and sectors from which clients are drawn and specific client
names and background information on current individual, corporate and
institutional clients, including pension and profit sharing plans;
o Current capitalizations, levels of profitability and other financial and
statistical information;
o Identification of portfolio managers, researchers, economists, principals
and other staff members and employees;
o The specific credentials of the above individuals, including, but not
limited to, previous employment, current and past positions, titles and
duties performed, industry experience, educational background and degrees,
awards and honors;
o Specific and general reference to past and present notable and renowned
individuals including reference to their field of expertise and/or specific
accomplishments;
o Current and historical statistics regarding:
-total dollar amount of assets managed
-the growth of assets
-asset types managed
-numbers of principal parties and employees, and the length of their
tenure, including officers, portfolio managers, researchers, economists,
technicians and support staff
-the above individuals' total and average number of years of industry
experience and the total and average length of their service to the
adviser or sub-adviser;
28
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o The general and specific strategies applied by the advisers in the
management of the Fund, including, but not limited to:
-the pursuit of growth, value, income oriented, risk management or other
strategies
-the manner and degree to which the strategy is pursued
-whether the strategy is conservative, moderate or extreme and an
explanation of other features and attributes
-the types and characteristics of investments sought and specific portfolio
holdings
-the actual or potential impact and result from strategy implementation
-through its own areas of expertise and operations, the value added by
sub-advisers to the management process
-the disciplines it employs; and
o Specific and general references to portfolio managers and funds that they
serve as portfolio manager of and those families of funds. Any such
references will indicate that the Fund and other funds of the managers
differ as to performance, objectives, investment restrictions and
limitations, portfolio composition, asset size and other characteristics,
including fees and expenses. References may also be made to industry
rankings and ratings of the Fund and other funds managed by AEW, including,
but not limited to, those provided by Morningstar, Lipper Analytical
Services, Forbes and Worth.
In addition, communications and materials developed by the Fund will make
reference to the following information about Nvest Companies and its affiliates:
Nvest Companies is part of an affiliated group including Nvest, L.P. a
publicly traded company listed on the Exchange. Nvest Companies has 14 principal
subsidiary or affiliated asset management firms, which collectively had more
than $___ billion of assets under management as of June 30, 2000. In addition,
promotional materials may include:
Nvest Advisor Services ("NAS"), Nvest Managed Account Services ("NMAS") and
Nvest Retirement Services ("NRS"), divisions of Nvest Companies, may be
referenced in Fund advertising and promotional literature concerning the
marketing services it provides to Nvest Companies affiliated fund groups.
NAS, NMAS and NRS will provide marketing support to Nvest Companies
affiliated fund groups targeting financial advisers, financial intermediaries
and institutional clients who may transact purchases and other fund-related
business directly with these fund groups. Communications will contain
information including, but not limited to: descriptions of clients and the
marketplaces to which it directs its efforts; the mission and goals of NAS, NMAS
and NRS and the types of services it provides which may include: seminars; its
1-800 number, web site, Internet or other electronic facilities; qualitative
information about the funds' investment methodologies; information about
specific strategies and management techniques; performance data and features of
the funds; institutional oriented research and portfolio manager insight and
commentary. Additional information contained in advertising and promotional
literature may include: rankings and ratings of the funds including, but not
limited to, those of Morningstar and Lipper Analytical Services; statistics
about the advisers', fund groups' or a specific fund's assets under management;
the histories of the advisers and biographical references to portfolio managers
and other staff including, but not limited to, background, credentials, honors,
awards and recognition received by the advisers and their personnel; and
commentary about the advisers, their funds and their personnel from third-party
sources including newspapers, magazines, periodicals, radio, television or other
electronic media.
References may be included in the Fund's advertising and promotional
literature about 401(k) and retirement plans. The information may include, but
is not limited to:
o Specific and general references to industry statistics regarding 401(k) and
retirement plans including historical information, industry trends and
forecasts regarding the growth of assets, numbers of plans, funding
vehicles, participants, sponsors and other demographic data relating to
plans, participants and sponsors, third party and other administrators,
benefits consultants and firms including, but not limited to, DC Xchange,
William Mercer and other organizations involved in 401(k) and retirement
programs.
29
<PAGE>
o Specific and general discussion of economic, legislative, and other
environmental factors affecting 401(k) and retirement plans, including, but
not limited to, statistics, detailed explanations or broad summaries of:
-past, present and prospective tax regulation, Internal Revenue Service
requirements and rules, including, but not limited to, reporting
standards, minimum distribution notices, Form 5500, Form 1099R and other
relevant forms and documents, Department of Labor rules and standards and
other regulations. This includes past, current and future initiatives,
interpretive releases and positions of regulatory authorities about the
past, current or future eligibility, availability, operations,
administration, structure, features, provisions or benefits of 401(k) and
retirement plans;
-information about the history, status and future trends of Social
Security and similar government benefit programs including, but not
limited to, eligibility and participation, availability, operations and
administration, structure and design, features, provisions, benefits and
costs; and
-current and prospective ERISA regulation and requirements.
o Specific and general discussion of the benefits of 401(k) investment and
retirement plans to the participant and plan sponsor, including
explanations, statistics and other data, about:
-increased employee retention
-reinforcement or creation of morale
-deductibility of contributions for participants
-deductibility of expenses for employers
-tax deferred growth, including illustrations and charts
-loan features and exchanges among accounts
-educational services materials and efforts, including, but not limited
to, videos, slides, presentation materials, brochures, an investment
calculator, payroll stuffers, quarterly publications, releases and
information on a periodic basis and the availability of wholesalers and
other personnel.
o Specific and general reference to the benefits of investing in mutual funds
for 401(k) and retirement plans, including, but not limited to:
-the significant economies of scale experienced by mutual fund companies in
the 401(k) and retirement benefits arena
-broad choice of investment options and competitive fees
-plan sponsor and participant statements and notices
-the plan prototype, summary descriptions and board resolutions
-plan design and customized proposals
-trusteeship, record keeping and administration
-the services of State Street Bank, including, but not limited to, trustee
services and tax reporting
-the services of DST and BFDS, including, but not limited to, mutual fund
processing support, participant 800 numbers and participant 401(k)
statements
-the services of Trust Consultants Inc. (TCI), including, but not limited
to, sales support, plan record keeping, document service support, plan
sponsor support, compliance testing and Form 5500 preparation.
o Specific and general reference to the role of the investment dealer and the
benefits and features of working with a financial professional including:
-access to expertise on investments
-assistance in interpreting past, present and future market trends and
economic events
-providing information to clients including participants during enrollment
and on an ongoing basis after participation
-promoting and understanding the benefits of investing, including mutual
fund diversification and professional management.
30
<PAGE>
NVEST COMPANIES TRUST I
PART C
OTHER INFORMATION
Item 23. Exhibits
(a) Articles of Incorporation.
(1) The Registrant's Agreement and Declaration of Trust dated March 17,
2000 (the "Agreement and Declaration") is filed herewith.
(b) By-Laws.
(1) The Registrant's By-Laws are filed herewith.
(c) Instruments Defining Rights of Security Holders.
Rights of shareholders are described in Article III (Shares), and
Article V (Shareholders' Voting Power and Meetings) of the
Registrant's Agreement and Declaration filed as Exhibit 1(a).
(d) Investment Advisory Contracts.
(1) Advisory Agreement between the Registrant on behalf of AEW Real Estate
Securities Fund and AEW Management and Advisors, L.P. or an affiliate
thereof will be filed by amendment.
(e) Underwriting Contracts.
(1) Distribution Agreement between Registrant on behalf of AEW Real Estate
Securities Fund and Nvest Funds Distributor, L.P. will be filed by
amendment.
(2) Form of Dealer Agreement used by Nvest Funds Distributor, L.P. will be
filed by amendment.
(f) Bonus or Profit Sharing Contracts.
Not applicable.
(g) Custodian Agreements.
(1) Custodian Contract between Registrant, on behalf of AEW Real Estate
Securities Fund and State Street Bank and Trust Company ("State Street
Bank") will be filed by amendment.
(h) Other Material Contracts.
(1) Transfer Agency and Service Agreement between the Registrant on behalf
of AEW Real Estate Securities Fund and Nvest Services Company, Inc.
("NSC") will be filed by amendment.
(2) Administrative Services Agreement between Registrant on behalf of AEW
Real Estate Securities Fund and NSC will be filed by amendment.
1
<PAGE>
(3) Fee Waiver/Reimbursement Undertakings between AEW and the Registrant
on behalf of AEW Real Estate Securities Fund will be filed by
amendment.
(i) Legal Opinion.
(1) Opinion and consent of counsel with respect to the Registrant's AEW
Real Estate Securities Fund will be filed by amendment.
(j) Other Opinions.
Consent of PricewaterhouseCoopers LLP will be filed by amendment.
(k) Omitted Financial Statements.
Not applicable.
(l) Initial Capital Agreements.
Subscription Agreement between Registrant on behalf of AEW Real Estate
Securities Fund and AEW Capital Management, L.P. or an affiliate
thereof will be filed by amendment.
(m) Rule 12b-1 Plans.
Not applicable.
(n) Rule 18f-3 Plan.
Not applicable.
(p) Code of Ethics.
(1) Code of Ethics for Registrant will be filed by amendment.
(2) Code of Ethics for AEW and Nvest Funds Distributor, L.P. will be filed
by amendment.
(q) Power of Attorney is filed herewith.
Item 24. Persons Controlled by or under Common Control with the Fund.
None.
Item 25. Indemnification.
Under Article 4 of the Registrant's By-laws, any past or present
Trustee or officer of the Registrant (hereinafter referred to as a "Covered
Person ") shall be indemnified to the fullest extent permitted by law against
all liability and all expenses reasonably incurred by him or her in connection
with any claim, action, suit or proceeding to which he or she may be a party or
otherwise involved by reason of
2
<PAGE>
his or her being or having been a Covered Person. That provision does not
authorize indemnification when it is determined that such covered person would
otherwise be liable to the Registrant or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of his or her
duties. This description is modified in its entirety by the provision of Article
4 of the Registrant's By-laws filed as Exhibit 1(b) herewith.
The Distribution Agreement, the Custodian Contract, the Transfer Agency
Services Agreement and the Administrative Services Agreement (the "Agreements ")
described in this Registration Statement provide for indemnification. The
general effect of these provisions is to indemnify entities contracting with the
Registrant against liability and expenses in certain circumstances. This
description is modified in its entirety by the provisions of the Agreements as
contained from time to time in this Registration Statement and incorporated
herein by reference.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act "), may be permitted to Trustees,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a Trustee, officer
or controlling person of the Registrant in connection with the successful
defense of any claim, action, suit or proceeding) is asserted against the
Registrant by such Trustee, officer or controlling person in connection with the
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
Registrant and its Trustees, officers and employees are insured, under a
policy of insurance maintained by the Registrant in conjunction with Nvest
Companies, L.P. and its affiliates, within the limits and subject to the
limitations of the policy, against certain expenses in connection with the
defense of actions, suits or proceedings, and certain liabilities that might be
imposed as a result of such actions, suits or proceedings, to which they are
parties by reason of being or having been such Trustees or officers. The policy
expressly excludes coverage for any Trustee or officer for any claim arising out
of any fraudulent act or omission, any dishonest act or omission or any criminal
act or omission of the Trustee or officer.
Item 26. Business and Other Connections of Investment Adviser.
(a) AEW, the adviser of the Registrant's AEW Real Estate Securities
Fund, provides investment advice to a number of other
organizations, institutional clients and individuals.
The list required by this Item 26 regarding any other business,
profession, vocation or employment of a substantial nature
engaged in by officers and directors of AEW during the past two
years is incorporated herein by reference to schedule A and D
of Form ADV filed by AEW pursuant to the Advisers Act (SEC file
No. 801-48034).
Item 27. Principal Underwriters.
(a) Nvest Funds Distributor, L.P., the Registrant's principal underwriter, also
serves as principal underwriter for:
Nvest Funds Trust I
Nvest Funds Trust II
Nvest Funds Trust III
Nvest Tax Exempt Money Market Trust
Nvest Cash Management Trust
Nvest Kobrick Investment Trust
3
<PAGE>
(b) The general partner and officers of the Registrant's principal underwriter,
Nvest Funds Distributor, L.P., and their address are as follows:
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH PRINCIPAL UNDERWRITER WITH REGISTRANT
- --------------------------------------------------------------------------------
Nvest Distribution Corp. General Partner None
John T. Hailer President and Chief President
Executive Officer
John E. Pelletier Senior Vice President, Secretary
General Counsel, and Clerk
Secretary and Clerk
Scott E. Wennerholm Senior Vice President, None
Treasurer, Chief
Financial Officer and
Chief Operating Officer
Coleen D. Dinneen Vice President, Associate
Counsel, Assistant Assistant
Secretary and Assistant Secretary
Clerk
Kristin S. Vigneaux Vice President, Assistant Assistant
Secretary and Assistant Secretary
Clerk
Beatriz Pina Smith Vice President and None
Assistant Treasurer
Christine Howe Controller None
Frank S. Maselli Senior Vice President None
Kirk Williamson Senior Vice President None
Daniel Lynch Vice President None
Marla McDougall Vice President None
The principal business address of all the above persons or entities is 399
Boylston Street, Boston, MA 02116.
(c) Not applicable.
Item 28. Location of Accounts and Records
The following companies maintain possession of the documents required by the
specified rules:
(a) For all series of Registrant:
Registrant
399 Boylston Street
Boston, Massachusetts 02116
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Nvest Funds Distributor, L.P.
399 Boylston Street
4
<PAGE>
Boston, Massachusetts 02116
(b) (i) For the series of the Registrant managed by AEW:
AEW Management and Advisors, L.P.
225 Franklin Street
Boston, Massachusetts 02110
Item 29. Management Services.
None.
Item 30. Undertakings.
The Registrant undertakes to provide the annual report of any of its
series to any person who receives a prospectus for such series and who requests
the annual report.
<PAGE>
NVEST COMPANIES TRUST I
NOTICE
A copy of the Agreement and Declaration of Trust of Nvest Companies Trust I
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
Registrant by an officer of the Registrant as an officer and not individually
and the obligations of or arising out of this instrument are not binding upon
any of the Trustees, officers or shareholders individually, but are binding only
upon the assets and property of the AEW Real Estate Securities Fund series of
the Registrant.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Boston, and The Commonwealth of Massachusetts on the
18th day of May, 2000.
Nvest Companies Trust I
By: /s/ PETER S. VOSS*
------------------
Peter S. Voss
Chief Executive Officer
*By: /s/ JOHN E. PELLETIER
--------------------------
John E. Pelletier
Attorney-In-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ PETER S. VOSS*
- -------------------------
Peter S. Voss Chairman of the Board; Chief May 18, 2000
Executive Officer;
Trustee
/s/ THOMAS CUNNINGHAM
- -------------------------
Thomas Cunningham Treasurer May 18, 2000
/s/ GRAHAM ALLISON
- ----------------------------
Graham Allison Trustee May 18, 2000
/s/ SANDRA O. MOOSE
- ----------------------------
Sandra O. Moose Trustee May 18, 2000
/s/ DANIEL M. CAIN
- ----------------------------
Daniel M. Cain Trustee May 18, 2000
/s/ JOHN A. SHANE
- ----------------------------
John A. Shane Trustee May 18, 2000
/s/ KENNETH J. COWAN
- ----------------------------
Kenneth J. Cowan Trustee May 18, 2000
/s/ RICHARD DARMAN
- ----------------------------
Richard Darman Trustee May 18, 2000
/s/ PENDLETON P. WHITE
- ----------------------------
Pendleton P. White Trustee May 18, 2000
/s/ JOHN T. HAILER
- ----------------------------
John T. Hailer Trustee May 18, 2000
*By: /s/ JOHN E. PELLETIER
---------------------
John E. Pelletier
Attorney-In-Fact
May 18, 2000
<PAGE>
NVEST COMPANIES TRUST I
EXHIBIT INDEX
EXHIBITS FOR ITEM 23 OF FORM N-1A
EXHIBIT EXHIBIT DESCRIPTION
- ------- -------------------
(a)(1) Agreement and Declaration of Trust
(b)(1) By-Laws
(q) Powers of Attorney
Exhibit (a)(1)
NVEST COMPANIES TRUST I
AGREEMENT AND DECLARATION OF TRUST
----------------------------------
THIS AGREEMENT AND DECLARATION OF TRUST made at Boston, Massachusetts this
17th day of March, 2000 by the Trustees whose signature is affixed hereto and
the holders of shares of beneficial interest issued hereunder and 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
Section 1.
----------
This Trust shall be known as "Nvest Companies Trust I" 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.
Section 2. Definitions.
-----------------------
Whenever used herein, unless otherwise required by the context or specifically
provided:
(a) "By-Laws" shall mean the By-Laws of the Trust, if any, as amended from
time to time;
(b) The terms "Class" and "Class of Shares" refer to each class of Shares
into which the Shares of any Multi-Class Series may from time to time be divided
in accordance with the provisions hereof.
(c) The terms "Commission," "Majority Shareholder Vote" (the 67% or 50%
-1-
<PAGE>
requirement of the third sentence of Section 2(a)(42) of the 1940 Act, whichever
may be applicable) and "Principal Underwriter" shall have the meanings given
them in the 1940 Act, as defined herein;
(d) "Declaration of Trust" or "Declaration" shall mean this Agreement and
Declaration of Trust, as amended or restated from time to time;
(e) "Multi-Class Series" refers to each Series of Shares established and
designated as Multi-Class Series under or in accordance with the provisions
hereof;
(f) "Shareholder" means a record owner of Shares;
(g) "Shares" means the equal proportionate transferable units of interest
into which the beneficial interest in the Trust or in the Trust property
belonging to any Series of the Trust shall be divided from time to time,
including such Class or Classes of Shares as the Trustees may from time to time
create and establish and including fractions of Shares as well as whole Shares
as consistent with the requirements of Federal and/or state securities laws;
(h) "Series" refers to any series of Shares established and designated
under or in accordance with the provisions hereof;
(i) "Series Company" refers to the form of registered open-end investment
company described in Section 18(f)(2) of the 1940 Act or in any successor
statutory provision;
(j) "Trust" refers to the Massachusetts business trust established by this
Agreement and Declaration of Trust, as amended from time to time;
(k) "Trustees" refers to the individual trustees of the Trust in their
capacity as trustees hereunder and their successor or successors for the time
being in office as such trustee or trustees; and
(l) "1940 Act" refers to the Investment Company Act of 1940 and the rules
and regulations thereunder, all as amended from time to time or as modified by
or interpreted by any applicable order or orders of the Commission or
interpretive releases of the Commission thereunder.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to provide investors a continuous source of
managed investment primarily in securities.
-2-
<PAGE>
ARTICLE III
Shares
Section 1. Division of Beneficial Interest.
-------------------------------------------
The beneficial interest in the Trust shall at all times be divided into an
unlimited number of Shares. Each Share shall be without par value and shall be
fully paid and non-assessable. Subject to the provisions of Section 6 of this
Article III, each Share shall have voting rights as provided in Article V
hereof, and holders of the Shares of any Series or Class shall be entitled to
receive dividends, when and as declared with respect thereto in the manner
provided in Article VI, Section 1 hereof. Except as otherwise provided in
Section 6 of this Article III with respect to Shares of Multi-Class Series, no
Share shall have any priority or preference over any other Share of the same
Series with respect to dividends or distributions upon termination of the Trust
or of such Series made pursuant to Article VIII, Section 6 hereof. Except as
otherwise provided in Section 6 of this Article III with respect to Shares of
Multi-Class Series, all dividends and distributions shall be made ratably among
all Shareholders of a particular Series from the assets belonging to such Series
according to the number of Shares of such Series held of record by such
Shareholders on the record date for any dividend or distribution or on the date
of termination, as the case may be.
The Trustees may from time to time (a) divide or combine the Shares of any
particular Series or Class into a greater or lesser number of Shares of that
Series or Class without thereby changing the proportionate beneficial interest
of the Shares of that Series or Class in the assets belonging to that Series or
attributable to that Class or in any way affecting the rights of Shares of any
other Series or Class or (b) take such other action with respect to the Shares
as the Trustees may deem necessary or desirable.
Section 2. Ownership of Shares.
--------------------------------
The ownership of Shares shall be recorded on the books of the Trust or a
transfer or similar agent for the Trust, which books shall be maintained
separately for the Shares of each Series and Class. 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 transfer of Shares of each Series and Class 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.
Section 3. Investments in the Trust.
------------------------------------
The Trustees shall accept investments in the Trust from such persons and on such
terms and for such consideration as they from time to time authorize. The
Trustees may, in their sole discretion impose a sales charge or other fee upon
investments in the Trust or Series or any Classes thereof and issue fractional
Shares.
Section 4. Status of Shares and Limitation of Personal Liability.
-------------------------------------------------------------------
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the
-3-
<PAGE>
terms hereof 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
entitles such representative only to the rights of said deceased Shareholder
under this Trust. Ownership of Shares shall not entitle the Shareholder to any
title in or to the whole or any part of the Trust property or right to call for
a partition or division of the same or for an accounting, nor shall the
ownership of Shares constitute the Shareholders partners. Neither the Trust nor
the Trustees, nor any officer, employee or agent of the Trust, shall have any
power to bind personally any Shareholders, nor, except as specifically provided
herein, to call upon any Shareholder for the payment of any sum of money or
assessment whatsoever other than such as the Shareholder may at any time
personally agree to pay.
Section 5. Power of Trustees to Change Provisions Relating to Shares.
---------------------------------------------------------------------------
Notwithstanding any other provisions of this Declaration of Trust and without
limiting the power of the Trustees to amend the Declaration of Trust as provided
elsewhere herein, the Trustees shall have the power to amend this Declaration of
Trust, at any time and from time to time, in such manner as the Trustees may
determine in their sole discretion, without the need for Shareholder action, so
as to add to, delete, replace or otherwise modify any provisions relating to the
Shares contained in this Declaration of Trust for the purpose of responding to
or complying with any regulations, orders, rulings or interpretations of any
governmental agency or any laws, now or hereafter applicable to the Trust or
otherwise; provided that before adopting any such amendment the Trustees shall
determine that it is consistent with the fair and equitable treatment of all
Shareholders.
Without limiting the generality of the foregoing, the Trustees may:
(a) create one or more Series or Classes of Shares (in addition to any
Series or Classes already existing or otherwise) with such rights and
preferences and such eligibility requirements for investment therein as the
Trustees shall determine and reclassify any or all outstanding Shares as shares
of particular Series or Classes in accordance with such eligibility
requirements;
(b) amend any of the provisions set forth in paragraphs (a) through (j) of
Section 6 of this Article III;
(c) combine one or more Series or Classes of Shares into a single Series or
Class on such terms and conditions as the Trustees shall determine;
(d) change or eliminate any eligibility requirements for investment in
Shares of any Series or Class, including, without limitation, the power to
provide for the issuance of Shares of any Series or Class in connection with any
merger or consolidation of the Trust with another trust or company or any
acquisition by the Trust of part or all of the assets of another trust or
company;
-4-
<PAGE>
(e) change the designation of any Series or Class of Shares;
(f) change the method of allocating dividends among the various Series and
Classes of Shares;
(g) allocate any specific assets or liabilities of the Trust or any
specific items of income or expense of the Trust to one or more Series or
Classes of Shares; and
(h) specifically allocate assets to any or all Series of Shares or create
one or more additional Series of Shares that are preferred over all other Series
of Shares in respect of assets specifically allocated thereto or any dividends
paid by the Trust with respect to any net income, however determined, earned
from the investment and reinvestment of any assets so allocated or otherwise and
provide for any special voting or other rights with respect to such Series or
any Classes of Shares thereof.
Section 6. Establishment and Designation of Series and Classes.
----------------------------------------------------------------------
The establishment of any Series or Class thereof shall be effective upon the
adoption of a resolution by a majority of the then Trustees setting forth such
establishment and designation and the relative rights and preferences of the
Shares of such Series or Class. Whether directly in such resolution or by
reference to, or approval of, another document that sets forth such relative
rights and preferences of the shares of such Series or Class, including, without
limitation, any registration statement of the Trust, or as otherwise provided in
such resolution. At any time that there are no Shares outstanding of any
particular Series or Class previously established and designated, the Trustees
may by a majority vote or written consent abolish such Series or Class and the
establishment and designation thereof.
Shares of each Series established shall have the following rights and
preferences relative to Shares of each other Series, and Shares of each Class of
a Multi-Class Series shall have such rights and preferences relative to other
Classes of the same Series as are set forth below, together with such other
rights and preferences relative to such other Classes as are set forth in any
resolution of the Trustees establishing and designating such Series or Class of
Shares:
(a) Assets belonging to Series.
-------------------------------
Subject to the provisions of paragraph (c) of this Section 6:
All consideration received by the Trust for the issue or sale of Shares of
a particular Series, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits and proceeds thereof from
whatever source derived, including, without limitation, any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may be,
shall irrevocably belong to that Series for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books of account of the
Trust. Such consideration,
-5-
<PAGE>
assets, income, earnings, profits and proceeds thereof, from whatever source
derived, including, without limitation, any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments derived from
any reinvestment of such proceeds, in whatever form the same may be, are herein
referred to as "assets belonging to" that Series. In the event that there are
any assets, income, earnings, profits and proceeds thereof, funds or payments
that are not readily identifiable as belonging to any particular Series
(collectively "General Assets"), the Trustees shall allocate such General Assets
to, between or among any one or more of the Series established and designated
from time to time in such manner and on such basis as they, in their sole
discretion, deem fair and equitable, and any General Asset so allocated to a
particular Series shall belong to that Series. Each such allocation by the
Trustees shall be conclusive and binding upon the Shareholders of all Series for
all purposes. No Shareholder or former Shareholder of any Series shall have a
claim on or any right to any assets allocated or belonging to any other Series.
(b) Liabilities Belonging to Series.
------------------------------------
Subject to the provisions of paragraph (c) of this Section 6:
The assets belonging to each particular Series shall be charged solely with
the liabilities of the Trust in respect to that Series, the expenses, costs,
charges and reserves attributable to that Series, and any general liabilities of
the Trust that are not readily identifiable as belonging to any particular
Series, but which are allocated and charged by the Trustees to and among any one
or more of the Series established and designated from time to time in a manner
and on such basis as the Trustees in their sole discretion deem fair and
equitable. The liabilities, expenses, costs, charges and reserves so charged to
a Series are herein referred to as "liabilities belonging to" that Series. Each
allocation of liabilities, expenses, costs, charges and reserves by the Trustees
shall be conclusive and binding upon the Shareholders of all Series for all
purposes.
(c) Apportionment of Assets etc. in Case of Multi-Class Series.
---------------------------------------------------------------
In the case of any Multi-Class Series, to the extent necessary or appropriate to
give effect to the relative rights and preferences of any Classes of Shares of
such Series, (i) any assets, income, earnings, profits, proceeds, liabilities,
expenses, charges, costs and reserves belonging or attributable to that Series
may be allocated or attributed to a particular Class of Shares of that Series or
apportioned among two or more Classes of Shares of that Series; and (ii) Shares
of any Class of such Series may have priority or preference over shares of other
Classes of such Series with respect to dividends or distributions upon
termination of the Trust or of such Series or Class or otherwise, provided that
no Share shall have any priority or preference over any other Shares of the same
Class and that all dividends and distributions to Shareholders of a particular
Class shall be made ratably among all Shareholders of such Class according to
the number of Shares of such Class held of record by such Shareholders on the
record date for any dividend or distribution or on the date of termination, as
the case may be.
(d) Dividends, Distributions, Redemptions and Repurchases.
-----------------------------------------------------------
Notwithstanding any other provisions of this Declaration, including, without
limitation, Article VI, no dividend or
-6-
<PAGE>
distribution (including, without limitation, any distribution paid upon
termination of the Trust or of any Series or Class) with respect to, nor any
redemption or repurchase of, the Shares of any Series or Class shall be effected
by the Trust other than from the assets belonging to such Series or attributable
to such Class, nor shall any Shareholder of any particular Series or Class
otherwise have any right or claim against the assets belonging to any other
Series or attributable to any other Class except to the extent that such
Shareholder has such a right or claim hereunder as a Shareholder of such other
Series or Class.
(e) Voting.
------------
Notwithstanding any of the other provisions of this Declaration, including,
without limitation, Section 1 of Article V, the Shareholders of any particular
Series or Class shall not be entitled to vote on any matters as to which such
Series or Class is not affected. On any matter submitted to a vote of
Shareholders, all Shares of the Trust then entitled to vote shall, except as
otherwise provided in the By-Laws, be voted in the aggregate as a single Class
without regard to Series or Class of Shares, except that (i) 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 (ii) 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.
(f) Equality.
-------------
Except to the extent necessary or appropriate to give effect to the relative
rights and preferences of any Classes of Shares of a Multi-Class Series, all the
Shares of each particular Series shall represent an equal proportionate interest
in the assets belonging to that Series (subject to the liabilities belonging to
that Series), and each Share of any particular Series shall be equal to each
other Share of that Series. All the Shares of each particular Class of Shares
within a Multi-Class Series shall represent an equal proportionate interest in
the assets belonging to such Series that are attributable to such Class (subject
to the liabilities attributable to such Class), and each Share of any particular
Class within a Multi-Class Series shall be equal to each other Share of such
Class.
(g) Fractions.
---------------
Any fractional Share of a Series or Class shall carry proportionately all the
rights and obligations of a whole Share of that Series or Class, including
rights with respect to voting, receipt of dividends and distributions,
redemption of Shares and termination of the Trust.
(h) Exchange Privilege.
------------------------
The Trustees shall have the authority to provide that the holders of Shares of
any Series or Class shall have the right to exchange said Shares for Shares of
one or more other Series or Classes of Shares in this Trust or in any other
trust in accordance with such requirements and procedures as may be established
by the Trustees.
(i) Combination of Series or Classes.
------------------------------------------
The Trustees shall have the authority, without the approval of the Shareholders
of any Series or Class unless otherwise required by applicable
-7-
<PAGE>
law, to combine the assets and liabilities belonging to any two or more Series
or attributable to any Class into assets and liabilities belonging to a single
Series or attributable to a single Class.
(j) Elimination of Series or Class.
-------------------------------------
At any time that there are no Shares outstanding of any particular Series
previously established and designated, the Trustees may abolish that Series and
rescind the establishment and designation thereof, such action to be effected in
the manner provided above. At any time that there are no Shares outstanding of
any particular Class of Shares, the Trustees may abolish that Class and rescind
the establishment and designation thereof, such action to be effected in the
manner provided above.
Section 7. Indemnification of Shareholders.
----------------------------------------------
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.
Section 8. No Preemptive Rights.
---------------------------------
Shareholders shall have no preemptive or other right to subscribe to any
additional Shares or other securities issued by the Trust.
Section 9. Derivative Claims.
------------------------------
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.
-8-
<PAGE>
ARTICLE IV
The Trustees
Section 1. Election and Tenure.
-------------------------------
The initial trustee or trustees shall be the individual(s) who shall affix their
signatures hereto. On a date fixed by the Trustees, the Shareholders shall elect
not less than three Trustees. A Trustee shall not be required to be a
Shareholder of the Trust. The Trustees may fix or change 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, is removed, reaches such mandatory retirement age as
may be determined by the Trustees from time to time, 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.
Section 2. Effect of Death, Resignation, etc. of a Trustee.
---------------------------------------------------------------
The death, declination, resignation, retirement, removal or incapacity of the
Trustees, or any 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.
Section 3. Powers.
------------------
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, including the power to engage in
securities transactions of all kinds on behalf of the Trust. 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 elect and remove such
officers and appoint and terminate such agents as they consider appropriate;
they may appoint from their own number and terminate one or more committees
consisting of two or more Trustees, which may exercise the powers and authority
of the Trustees to the extent that the Trustees determine; they may employ one
or more custodians of the assets of the Trust and may authorize such custodians
to employ subcustodians and to deposit all or any part of such assets in a
system or systems for the central handling of securities or with a Federal
Reserve Bank, retain a transfer
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<PAGE>
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 investment adviser, manager, custodian,
underwriter or other agent or independent contractor.
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 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;
(d) To exercise powers and rights of subscription or otherwise that in any
manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form, or in its own name or
in the name of a custodian or subcustodian or a nominee or nominees or
otherwise;
(f) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article III and to establish Classes of such
Series having relative rights, powers and duties as the Trustees may provide
consistent with applicable laws;
(g) To allocate assets, liabilities, and expenses of the Trust to a
particular Series or Class, as appropriate, or to apportion the same between or
among two or more Series or Classes, as appropriate, provided that any
liabilities or expenses incurred by a particular Series or Class shall be
payable solely out of the assets belonging to that Series as provided for in
Article III.
(h) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer of any security that is
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
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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 make distributions of income and of capital gains to Shareholders as
provided herein;
(m) To borrow money or other property, and to pledge, mortgage or
hypothecate the assets of the Trust, subject to the applicable requirements of
the 1940 Act;
(n) To endorse or guarantee the payment of any notes or other obligations
of any person; and to make contracts of guaranty or suretyship, or otherwise
assume liability for payment of such notes or other obligations;
(o) To purchase and pay for entirely out of Trust property such insurance
as they may deem necessary or appropriate for the conduct of the business of the
Trust, 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, principal underwriters or
independent contractors of the Trust individually against all claims and
liabilities of every nature arising by reason of holding, being or having held
any such office or position, or by reason of any action alleged to have been
taken or omitted by any such person as Trustee, officer, employee, agent,
investment adviser, principal underwriter or independent contractor, including
any action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such person against
liability;
(p) To pay pensions as deemed appropriate by the Trustees and to adopt,
establish and carry out deferred compensation, 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;
(q) To operate and carry on the business of an investment company and to
exercise all the powers necessary and appropriate to the conduct of such
operations;
(r) To interpret the investment policies, practices or limitations of any
Series;
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<PAGE>
(s) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers; and
(t) Nothwithstanding any other provision hereof, to invest all of the
assets of any Series in a single open-end investment company, including
investment by means of transfer of such assets in exchange for an interest or
interests in such investment company or by any other method approved by the
Trustees.
The foregoing clauses shall be construed both as objects and powers, and
the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees. Any action by one or
more of the Trustees in their capacity as such hereunder shall be deemed an
action on behalf of the Trust or the applicable Series and not an action in an
individual capacity.
Except as otherwise provided herein or in the 1940 Act, 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.
Section 4. Payment of Expenses by the Trust.
--------------------------------------------
The Trustees are authorized to pay or cause to be paid out of the principal or
income of the Trust, or partly out of principal and partly out of income, as
they deem fair, all expenses, fees, charges, taxes and liabilities incurred or
arising in connection with the Trust, or in connection with the management
thereof, including, but not limited to, the Trustees' compensation and such
expenses and charges for the services of the Trust's officers, employees,
administrators, investment advisers or managers, 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.
Section 5. Payment of Expenses by Shareholders.
-----------------------------------------------
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 that represents the outstanding amount of such charges
due from such Shareholder.
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Section 6. Ownership of Assets of the Trust.
--------------------------------------------
Title to all of the assets of the Trust shall at all times be considered as
vested in the Trustees.
Section 7. Advisory, Management and Distribution Contracts.
-------------------------------------------------------------
The Trustees may, at any time and from time to time, contract for exclusive or
nonexclusive advisory and/or management services for the Trust or for any Series
or Class with any corporation, trust, partnership, limited liability company,
association or other organization (the "Manager"); and any such contract may
contain such other terms as the Trustees may determine, including, without
limitation, authority for a Manager to determine from time to time without prior
consultation with the Trustees 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; and any
such contract may contain such other terms 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 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 or principal underwriter's or distributor's
contract, or transfer, shareholder servicing or other agency contract may have
been or may hereafter be made also has an advisory or management contract, or
principal underwriter's or distributor's contract or transfer, shareholder
servicing or other agency contract with one or more other corporations, trusts,
associations or other organizations, or has other 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.
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ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers.
-------------------------
The Shareholders shall have power to vote only (a) for the election of Trustees
as provided in Article IV, Section 1, (b) with respect to any amendment of this
Declaration of Trust to the extent and as provided in Article VIII, Section 11,
(c) 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, (d) with respect to the termination, merger,
consolidation, reorganization or sale of assets of the Trust or any Series or
Class to the extent and as provided in Article VIII, (e) to remove Trustees from
office to the extent and as provided in Article V, Section 7 and (f) with
respect to such additional matters relating to the Trust as may be required by
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. A Shareholder of each Series or Class shall be
entitled to one vote for each dollar of net asset value (number of shares owned
times net asset value per share) of such Series or Class thereof, on any matter
on which such Shareholder is entitled to vote, and each fractional dollar amount
shall be entitled to a proportionate fractional vote. There shall be no
cumulative voting in the election of Trustees. Shares may be voted in person or
by proxy. A proxy with respect to Shares held in the name of two or more persons
shall be valid if executed by any one of them unless at or prior to exercise of
the proxy the Trust receives a specific written notice to the contrary from any
one of them. A proxy purporting to be executed by or on behalf of a Shareholder
shall be deemed valid unless challenged at or prior to its exercise and the
burden of proving invalidity shall rest on the challenger. At any time when no
Shares of a Series or Class are outstanding the Trustees may exercise all rights
of Shareholders of that Series or Class with respect to matters affecting that
Series or Class and may with respect to that Series or Class take any action
required by law, this Declaration of Trust or the By-Laws to be taken by the
Shareholders thereof.
Section 2. Voting Power and Meetings.
-------------------------------------
Meetings of the Shareholders may be called by the Trustees for the purpose of
electing Trustees as provided in Article IV, Section 1 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. Notice of any meeting of Shareholders,
stating the time and place of the meeting, shall be given or caused to be given
by the Trustees to each Shareholder by mailing such notice, postage prepaid, at
least seven days before such meeting, at the Shareholder's address as it appears
on the records of the Trust, or by facsimile or other form of electronic
transmission, at least seven days before such meeting, to the telephone or
facsimile number or e-mail or other electronic address most recently furnished
to the Trust (or its agent) by the Shareholder. 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 attorney
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<PAGE>
thereunto authorized and filed with the records of the meeting, shall be deemed
equivalent to such notice.
Section 3. Quorum and Required Vote.
-----------------------------------------
Except when a larger quorum is required by law, by the By-Laws or by this
Declaration of Trust, 40% of the Shares entitled to vote shall constitute a
quorum at a Shareholders' meeting. When any one or more Series or Classes is to
vote as a single Class separate from any other Shares which are to vote on the
same matters as a separate Class or Classes, 40% of the Shares of each such
Class entitled to vote shall constitute a quorum at a Shareholders' meeting of
that Class. Any meeting of Shareholders may be adjourned from time to time by a
majority of the votes properly cast upon the question, whether or not a quorum
is present, and the meeting may be held as adjourned within a reasonable time
after the date set for the original meeting without further notice. When a
quorum is present at any meeting, a majority of the Shares voted shall decide
any questions and a plurality shall elect a Trustee, except when a larger vote
is required by any provision of this Declaration of Trust or the By-Laws or by
law. If any question on which the Shareholders are entitled to vote would
adversely affect the rights of any Series or Class of Shares, the vote of a
majority (or such larger vote as is required as aforesaid) of the Shares of such
Series or Class that are entitled to vote, voting separately, shall also be
required to decide such question.
Section 4. Action by Written Consent.
-------------------------------------
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 this
Declaration of Trust or by the By-Laws) and 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.
Section 5. Record Dates.
------------------------
For the purpose of determining the Shareholders of any Series or Class who are
entitled to vote or act at any meeting or any adjournment thereof, 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, as the record date for determining the
Shareholders of such Series or Class having the right to notice of and to vote
at such meeting and any adjournment thereof, 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. For the
purpose of determining the Shareholders of any Series or Class who are entitled
to receive payment of any dividend or of any other distribution, the Trustees
may from time to time fix a date, which shall be on or before the date for the
payment of such dividend or such other payment, as the record date for
determining the Shareholders of such Series or Class having the right to receive
such dividend or distribution. Without fixing a record date, the Trustees may
for voting and/or distribution purposes close the register or transfer books for
one or more Series or Classes for all or any part of the period prior to a
meeting of Shareholders or the payment of a
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distribution. Nothing in this Section shall be construed as precluding the
Trustees from setting different record dates for different Series or Classes.
Section 6. Additional Provisions.
-------------------------------------
The By-Laws may include further provisions for Shareholders' votes and meetings
and related matters.
Section 7. Removal of Trustees.
--------------------------------
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 in
writing so to do by the record holders of not less than 10 per centum of the
outstanding Shares.
Unless otherwise provided under applicable law, whenever ten or more
Shareholders of record who have been such for at least six months preceding the
date of application, and who hold in the aggregate Shares having a net asset
value of at least 1 per centum 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 a request for a meeting
pursuant to this Section and accompanied by a form of communication and request
that they wish to transmit, the Trustees shall within five (5) 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 number of
Shareholders of record, and the approximate cost of transmitting to them the
proposed communication and form of request. If the Trustees elect to follow the
course specified in clause (b), unless otherwise provided under applicable law,
the Trustees, upon the written request of such applicants, accompanied by a
tender of the material to be transmitted and of the reasonable expenses of
transmittal, shall, with reasonable promptness, transmit such material to all
Shareholders of record at their addresses as recorded on the books of the Trust
(or at the telephone or facsimile number or e-mail or other electronic address
most recently furnished to the Trust (or its agent) by the Shareholder), unless
within five business days after such tender the Trustees shall transmit to such
applicants and file with the Commission, together with a copy of the material
proposed to be transmitted, 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, unless otherwise provided under
applicable law, transmit copies of such material to all Shareholders with
reasonable promptness after the entry of such order and the renewal of such
tender.
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ARTICLE VI
Net Income, Distributions and Redemptions and Repurchases
Section 1. Distributions of Net Income.
-----------------------------------------
The Trustees shall each year, or more frequently if they so determine in their
sole discretion, distribute to the Shareholders of each Series, in Shares of
that Series, cash or otherwise, an amount approximately equal to the net income
attributable to the assets belonging to such Series and may, from time to time,
distribute to the Shareholders of each Series, in Shares of that Series, cash or
otherwise, such additional amounts, but only from the assets belonging to such
Series, as they may authorize. Except as otherwise permitted by paragraph (c) of
Section 6 of Article III in the case of Multi-Class Series, all dividends and
distributions on Shares of a particular Series shall be distributed pro rata to
the holders of that Series in proportion to the number of Shares of that Series
held by such holders and recorded on the books of the Trust at the date and time
of record established for the payment of such dividend or distributions.
The manner of determining net income, income, asset values, capital gains,
expenses, liabilities and reserves of any Series or Class may, from time to
time, be altered as necessary or desirable in the judgment of the Trustees to
conform such manner of determination to any other method prescribed or permitted
by applicable law. Net income shall be determined by the Trustees or by such
person as they may authorize at the times and in the manner provided in the
By-Laws. Determinations of net income of any Series or Class and determinations
of income, asset value, capital gains, expenses and liabilities made by the
Trustees, or by such person as they may authorize, in good faith, shall be
binding on all parties concerned. The foregoing sentence shall not be construed
to protect any Trustee, officer or agent of the Trust against any liability to
the Trust or its security holders 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 office.
If, for any reason, the net income of any Series or Class determined at any
time is a negative amount, the pro rata share of such negative amount allocable
to each Shareholder of such Series or Class shall constitute a liability of such
Shareholder to that Series or Class, which shall be paid out of such
Shareholder's account at such times and in such manner as the Trustees may from
time to time determine (a) out of the accrued dividend account of such
Shareholder, (b) by reducing the number of Shares of that Series or Class in the
account of such Shareholder or (c) otherwise.
Section 2. Redemptions and Repurchases.
------------------------------------------
The Trust shall purchase such Shares as are offered by any Shareholder for
redemption, upon the presentation of a proper instrument of transfer together
with 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 next determined. 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 obligation set forth in this
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Section 2 is subject to the provision that in the event that any time the New
York Stock Exchange is closed for other than weekends or holidays, or if
permitted by the rules of the Commission during periods when trading on the New
York Stock Exchange is restricted or during any emergency that makes it
impracticable for the Trust to dispose of the investments of the applicable
Series or to determine fairly the value of the net assets belonging to such
Series or attributable to any Class thereof or during any other period permitted
by order of the Commission for the protection of investors, such obligations may
be suspended or postponed by the Trustees. 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.
The redemption price may, in any case or cases, be paid wholly or partly in
kind if the Trustees determine that such payment is advisable in the interest of
the remaining Shareholders of the Series the Shares of which are being redeemed.
In making any such payment wholly or partly in kind, the Trust shall, so far as
may be practicable, deliver assets that approximate the diversification of all
of the assets belonging at the time to the Series the Shares of which are being
redeemed. Subject to the foregoing, the fair value, selection and quantity of
securities or other property so paid or delivered as all or part of the
redemption price may be determined by or under authority of the Trustees. In no
case shall the Trust be liable for any delay of any corporation or other person
in transferring securities selected for delivery as all or part of any payment
in kind.
Section 3. Redemptions at the Option of the Trust.
--------------------------------------------------
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 described in Section 1 of this
Article VI (a) if, at such time, such Shareholder owns Shares of any Series or
Class having an aggregate net asset value of less than an amount determined from
time to time by the Trustees; (b) to the extent that such Shareholder owns
Shares equal to or in excess of a percentage determined from time to time by the
Trustees of the outstanding Shares of the Trust or of any Series or Class; (c)
if the Trustees determine that such Shareholder is engaging in conduct that is
harmful to the Trust or any Series or Class thereof; or (d) if the Trustees
otherwise determine such redemption to be necessary or appropriate.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
Section 1 Compensation.
-------------------------
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 or other services and payment for the same by the
Trust.
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Section 2. Limitation of Liability.
------------------------------------
The Trustees shall not be responsible or liable in any event for any neglect or
wrong-doing 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
Miscellaneous
Section 1. Trust Not A Partnership, etc.
-----------------------------------------
It is hereby expressly declared that a trust is created hereby and not a
partnership, join stock association, corporation, bailment, or any form of a
legal relationship other than a trust. No Trustee hereunder shall have any power
to personally bind either the Trust's officers or any Shareholder.
Section 2. Trustees, Shareholders, etc. Not Personally Liable; Notice.
-----------------------------------------------------------------------
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 of the Trust may have been expressly limited by
contract to the assets of a particular Series or attributable to a particular
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.
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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.
Section 3. Trustee's Good Faith Action, Expert Advice, No Bond or Surety.
---------------------------------------------------------------------------
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 errors of judgment or mistakes of fact or law. The
Trustees may take advice of counsel or other experts with respect to the meaning
and operation of this Declaration of Trust and shall be under no liability for
any act or omission in accordance with such advice or for failing to follow such
advice. The Trustees shall not be required to give any bond as such, nor any
surety if a bond is required.
Section 4. Liability of Third Persons Dealing with Trustees.
----------------------------------------------------------------
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.
Section 5. Duration of Trust.
-----------------------------
The Trust shall continue without limitation of time, but subject to the
provisions of this Article VIII.
Section 6. Termination of Trust, a Series or a Class.
---------------------------------------------------------
(a) Subject to applicable Federal and state law, the Trust or any Series or
Class thereof may be terminated (i) by Majority Shareholder Vote of the Trust,
each Series affected, or each Class affected, as the case may be; or (ii)
without the vote or consent of Shareholders by a majority of the Trustees either
at a meeting or by written consent. The Trustees shall provide written notice to
the affected Shareholders of a termination effected under clause (ii) above.
Upon termination of the Trust or the Series or Class,
(i) the Trust or the Series or Class shall carry on no business except for
the purpose of winding up its affairs;
(ii) the Trustees shall proceed to wind up the affairs of the Trust or the
Series or
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<PAGE>
Class, and all of the powers of the Trustees under this Declaration of Trust
shall continue until the affairs of the Trust shall have been wound up,
including the power to fulfill or discharge the contracts of the Trust or the
Series or Class thereof; collect its assets; sell, convey, assign, exchange,
transfer, or otherwise dispose of all or any part of the remaining Trust
property or Trust property allocated or belonging to such Series or Class to one
or more persons at public or private sale for consideration that may consist in
whole or in part of cash, securities, or other property of any kind; discharge
or pay its liabilities; and do all other acts appropriate to liquidate its
business; provided that any sale, conveyance, assignment, exchange, transfer, or
other disposition of all or substantially all the Trust property or Trust
property allocated or belonging to such Series or Class (other than as provided
in (iii) below) shall require Shareholder approval in accordance with Section 7
below; and
(iii) after paying or adequately providing the payment of all liabilities,
and upon receipt of such releases, indemnities, and refunding agreements as they
deem necessary for their protection, the Trustees may distribute the remaining
Trust property or the remaining property of the terminated Series or Class
according to their prospective rights; and
(b) after termination of the Trust or the Series or Class and distribution
to the Shareholders as herein provided, a majority of the Trustees shall execute
and lodge among the records of the Trust and file with the Secretary of The
Commonwealth of Massachusetts, as appropriate, an instrument in writing setting
forth the fact of such termination, and the Trustees shall thereupon be
discharged from all further liabilities and duties with respect to the Trust or
the terminated Series or Class, and the rights and interests of all Shareholders
of the Trust or the terminated Series or Class shall thereupon cease.
Section 7. Merger, Consolidation, and Sales of Assets.
------------------------------------------------------
Subject to applicable Federal and state law and except as otherwise provided in
Section 8 below, the Trust or any Series thereof may merge or consolidate with
any other corporation, association, trust, or other organization or may sell,
lease, or exchange all or substantially all of the Trust property or Trust
property allocated or belonging to such Series, including its good will, upon
such terms and conditions and for such consideration when and as authorized at
any meeting of Shareholders called for such purpose by a Majority Shareholder
Vote of the Trust or affected Series, as the case may be. Such transactions may
be effected through share-for-share exchanges, transfers or sale of assets,
shareholder in-kind redemptions and purchases, exchange offers, or any other
method approved by the Trustees
Section 8. Incorporation; Reorganization.
-----------------------------------------
Subject to applicable Federal and state law, the Trustees may without the vote
or consent of Shareholders cause to be organized or assist in organizing a
corporation or corporations under the laws of any jurisdiction or any other
trust,
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<PAGE>
partnership, limited liability company, association, or other organization to
take over all of the Trust property or the Trust property allocated or belonging
to such Series to carry on any business in which the Trust shall directly or
indirectly have any interest, and to sell, convey and transfer the Trust
property or the Trust property allocated or belonging to such Series to any such
corporation, trust, limited liability company, partnership, association, or
organization in exchange for the shares or securities of, and enter into any
contracts with any such corporation, trust, partnership, limited liability
company, association, or organization, or any corporation, partnership, limited
liability trust company, trust, association, or organization in which the Trust
or such Series holds or is about to acquire shares or any other interest.
Subject to applicable Federal and state law, the Trustees may also cause a
merger or consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, limited liability company, association, or
other organization. Nothing contained herein shall be construed as requiring
approval of Shareholders for the Trustee to organize or assist in organizing one
or more corporations, trusts, partnerships, limited liability companies,
associations, or other organizations and selling, conveying, or transferring the
Trust property or a portion of the Trust property to such organizations or
entities; provided, however, that the Trustees shall provide written notice to
the affected Shareholders of any transaction whereby, pursuant to this Section
8, the Trust or any Series thereof sells, conveys, or transfers substantially
all of its assets to another entity or merges or consolidates with another
entity. Such transactions may be effected through share-for-share exchanges,
transfers or sale of assets, shareholder in-kind redemptions and purchases,
exchange offers, or any other method approved by the Trustees.
Section 9. Filing of Copies, Reference, Headings.
-------------------------------------------------
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 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 to 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.
-22-
<PAGE>
Section 10. Applicable Law.
------------------------------
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 that are ordinarily
exercised by such a trust, and the absence of a specific reference herein to any
such power, privilege or action shall not imply that the Trust may not exercise
such power or privilege or take such actions.
Section 11. Amendments.
-------------------------
Except as specifically provided herein, the Trustees may without shareholder
vote, amend or otherwise supplement this Declaration of Trust by making an
amendment, a Declaration of Trust supplemental hereto or an amended and restated
Declaration of Trust. Shareholders shall have the right to vote (a) on any
amendment that would affect their right to vote granted in Section 1 of Article
V; (b) on any amendment to this Section 11; (c) on any amendment as may be
required by law or by the Trust's registration statement files with the
Commission; and (d) on any amendment submitted to them by the Trustees. Any
amendment required or permitted to be submitted to Shareholders that, as the
Trustees determine, shall affect the Shareholders of one or more Series or
Classes shall be authorized by vote of the Shareholders of each Series or Class
affected and no vote of shareholders of a Series or Class not affected shall be
required. Notwithstanding anything else herein, any amendment to Article VII
shall not limit the rights to limited liability provided therein with respect to
action or omission of the Trustees prior to such amendment.
Section 12. Fiscal Year.
--------------------------
The fiscal year of the Trust and/or any Series thereof shall be established by
the Trustees as set forth in the By-Laws.
Section 13. Use of the Word "Nvest".
------------------------------------------
Nvest Companies, L.P. (Nvest Companies) has consented to the use by any Series
of the Trust of the identifying word "Nvest" in the name of any Series of the
Trust at some future date. Such consent is conditioned upon the employment of
Nvest Companies or a subsidiary or affiliate thereof as investment adviser of
such Series. As between the Trust and itself, Nvest Companies controls the use
of the name of the Trust insofar as such name contains the identifying word
"Nvest." Nvest Companies may from time to time use the identifying word "Nvest"
in other connections and for other purposes, including, without limitation, in
the names of other investment companies, corporations, or businesses that it may
manage, advise, sponsor or own or in which it may have a financial interest.
Nvest Companies may require the Trust or any Series thereof to cease using the
identifying word "Nvest" in the name of the Trust or any Series thereof if the
Trust or any Series thereof ceases to employ Nvest Companies or a subsidiary or
affiliate thereof as investment adviser.
Section 14. Provisions in Conflict with Law or Regulations.
--------------------------------------------------------------
(a) The provisions of this Declaration of Trust are severable, and, if the
Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, the regulated investment company
provision of the Internal Revenue Code or with other applicable laws and
regulations, the conflicting provision shall be deemed never to have constituted
a part of this Declaration of Trust; provided, however, that such determination
shall not affect any of the remaining provisions of this Declaration of Trust;
provided, however, that such determination shall not affect any of the remaining
provisions of this Declaration of
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<PAGE>
Trust or render invalid or improper any action taken or omitted prior to such
determination.
(b) If any provision of this Declaration Trust shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdictions and shall not in any manner
affect such provisions in any other jurisdiction or any other provision of this
Declaration of Trust in any jurisdiction.
Section 15. Addresses.
-----------------------
The address of the Trust is 399 Boylston Street, Boston, Massachusetts 02116.
The address of the Trustees is c/o Nvest Services Company, Inc., 399 Boylston
Street, Boston, Massachusetts 02116.
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<PAGE>
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have executed this instrument as of the date set forth above.
/s/ Neal G. Litvack
-------------------------
Neal G. Litvack, Trustee
THE COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. Boston, March 17, 2000
Then personally appeared the above named Neal G. Litvack and
acknowledged the foregoing instrument to be their free acts and deeds, before
me.
/S/ Janice E. Badessa
-------------------------
Notary Public
My commission expires: 12-08-06
Exhibit (b)(1)
BY-LAWS
OF
NVEST COMPANIES TRUST I
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 Nvest Companies
Trust I (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 Boston, Massachusetts.
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
of the time, date and place of such meeting by (a) mail or courier at least
forty-eight hours in advance of the meeting; (b) by telegram, telefax, e-mail or
by other electro-mechanical means addressed to the Trustee at his or her usual
or last known business or residence address (or fax number or e-mail address as
the case may be) at least twenty-four hours before the meeting; or (c) 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 to any Trustee if a written
waiver of notice, executed by him or her before or after the meeting, is filed
with the records of the meeting, or to any Trustee who attends the meeting
without protesting prior thereto or at its commencement the lack of notice to
him or her. Except as required by law, neither notice of a meeting nor a waiver
of a notice need specify the purposes of the meeting.
-1-
<PAGE>
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 votes cast upon the question, whether or not a quorum is
present, and the meeting may be held as adjourned without further notice to any
Trustee who was present at the time of such adjournment; notice of the time and
place of any adjourned session of such meeting shall, however, be given in the
manner provided in Section 2.3 of these By-Laws to each Trustee who was not
present at the time of such adjournment.
2.5 Action by Vote.
- --------------------
When a quorum is present at any meeting, a majority of Trustees present may take
any action, except when a larger vote is expressly required by law, by the
Declaration of Trust or by these By-Laws. Subject to applicable law, the
Trustees by majority vote may delegate to any one of their number their
authority to approve particular matters or take particular actions on behalf of
the Trust.
2.6 Action by Writing.
- ------------------------
Except as required by law, any action required or permitted to be taken at any
meeting of the Trustees may be taken without a meeting if a majority of the
Trustees (or such larger proportion thereof as shall be required by any express
provision of the Declaration of Trust or these By-Laws) consent to the action in
writing and such written consents are filed with the records of the meetings of
the Trustees. Such consent shall be treated for all purposes as a vote taken at
a meeting of Trustees. Written consents of the Trustees may be executed in one
or more counterparts. Execution of a written consent or waiver and delivery
thereof to the Trust may be accomplished by telefax, e-mail or other
electro-mechanical means.
2.7 Presence through Communications Equipment.
- ----------------------------------------------
Except as required by applicable law, the Trustees may participate in a meeting
of Trustees by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other at the same time, and participation by such means shall constitute
presence in person at a meeting.
ARTICLE 3
Officers
3.1 Enumeration; Qualification.
- --------------------------------
The officers of the Trust shall be a President, a Treasurer, a Secretary, a
Clerk 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 from
time to time may in their discretion appoint. 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, the Clerk and such other officers
as the Trustees may in their discretion from time to time elect shall each be
elected
-2-
<PAGE>
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 set forth in the Declaration of
Trust, 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 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 the Trustees with a custodian, investment adviser or
manager, administrator 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 and Clerk.
- ------------------------
The Secretary or Clerk 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 or
Clerk 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 secretary 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
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<PAGE>
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) (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 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 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, provided that in
the case of approval pursuant to clause (b) or (c) there has been obtained an
opinion in writing of independent legal counsel to the effect that such Covered
Person appears to have acted in good faith in the reasonable belief that his or
her action was in the best interests of the Trust and that such indemnification
would not protect such person against any liability to the Trust or its
-4-
<PAGE>
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; 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. 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 to such Covered Person in accordance with any of such
clauses as indemnification 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,
nor 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 additional reports as they may deem desirable or as may from time to
time be required by the Trustees.
ARTICLE 6
Fiscal Year
6.1 General.
- -------------
The Trustees shall have the power and authority to establish or amend the
year-end date for the fiscal year of the Trust and/or any Series thereof. The
Trust and any such Series thereof may have different fiscal year-end dates if
deemed necessary or appropriate by the Trustees.
-5-
<PAGE>
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, but, unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on, and its absence shall
not impair the validity of, any document, instrument or other paper executed and
delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
8.1 General.
- -------------
Except as the Trustees may generally or in particular cases authorize 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 the Chairman, if any, the President, any Vice President,
Secretary, Clerk or 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
Provisions Relating to the Conduct of the Trust's Business
9.1 Determination of Net Asset Value.
- -------------------------------------
The Trustees or any officer or officers or agent or agents of the Trust
designated from time to time for this purpose by the Trustees shall determine at
least once daily the net income and the value of all the assets belonging to any
Series or attributable to any class of Shares of the Trust on each day upon
which the New York Stock Exchange is open for unrestricted trading and at such
other times as the Trustees shall designate. In determining asset values, all
securities for which representative market quotations are readily available
shall be valued at market value (unless the Trustees determine that some event
has caused the market value to be unreliable in which case fair value will be
determined in good faith by the Trustees), and all securities and other assets
for which representative market quotations are not readily available shall be
valued at fair value, all as determined in good faith by the Trustees or an
officer or officers or agent or agents, as aforesaid, in accordance with
accounting principles generally accepted at the time. Notwithstanding the
foregoing, the assets belonging to any Series or attributable to any class of
Shares of the Trust may, if so authorized by the Trustees, be valued in
accordance with the amortized cost method, and the asset value so determined,
subject to the power of the Trustees to alter the asset value so determined,
less total liabilities belonging to that Series or attributable to any class of
Shares (exclusive of capital stock and surplus) shall be the net asset value
until a new asset value is determined by the Trustees or such officers or
agents. In determining the net asset value, the Trustees or such
-6-
<PAGE>
officers or agents may include in liabilities such reserves for taxes, estimated
accrued expenses and contingencies in accordance with accounting principles
generally accepted at the time as the Trustees or such officers or agents may in
their best judgment deem fair and reasonable under the circumstances. The manner
of determining net asset value may, from time to time, be altered as necessary
or desirable in the judgment of the Trustees to conform it to any other method
prescribed or permitted by applicable law or regulation. Determinations of net
asset value made by the Trust or such officers or agents in good faith shall be
binding on all parties concerned. The foregoing sentence shall not be construed
to protect any Trustee, officer or agent of the Trust against any liability to
the Trust or its security holders 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.
ARTICLE 10
Amendments to the By-Laws
10.1 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, or by written
consent in lieu thereof.
ARTICLE 11
Proxy Instructions
11.1 Proxy Instructions Transmitted by Telephonic or Electronic Means.
- ---------------------------------------------------------------------------
The placing of a Shareholder's name on a proxy pursuant to telephonic or
electronically transmitted instructions obtained pursuant to procedures
reasonably designed to verify that such instructions have been authorized by
such Shareholder shall constitute execution of such proxy by or on behalf of
such Shareholder.
-7-
Exhibit (q)
NVEST COMPANIES TRUST I
POWER OF ATTORNEY
We, the undersigned, hereby constitute John M. Loder, John T Hailer, John
E. Pelletier, Thomas P. Cunningham and James M. Wall, each of them singly, our
true and lawful attorneys, with full power to them and each of them to sign for
us, and in our names in the capacity indicated below, any and all registration
statements and any and all amendments thereto to be filed with the Securities
and Exchange Commission for the purpose of registering from time to time
investment companies of which we are now or hereafter a Director or Trustee and
to register the shares of such companies and generally to do all such things in
our names and on our behalf to enable such registered investment companies to
comply with the provisions of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, and all requirements and regulations
of the Securities and Exchange Commission, hereby ratifying and confirming our
signatures as it may be signed by our said attorneys and any and all
registration statements and amendments thereto.
Witness our hands on the 12th day of May, 2000.
/s/ Graham Allison /s/ Sandra O. Moose
- ---------------------------- ----------------------------
Graham Allison - Trustee Sandra O. Moose - Trustee
/s/ Daniel M. Cain /s/ John A. Shane
- ---------------------------- ----------------------------
Daniel M. Cain - Trustee John A. Shane - Trustee
/s/ Kenneth J. Cowan /s/ Peter S. Voss
- ---------------------------- ----------------------------
Kenneth J. Cowan - Trustee Peter S. Voss - Trustee
/s/ Richard Darman /s/ Pendleton P. White
- ---------------------------- ----------------------------
Richard Darman - Trustee Pendleton P. White - Trustee
/s/ John T. Hailer
- ----------------------------
John T. Hailer - Trustee
