File Nos. 333-[ ]
811-[ ]
As filed with the Securities and Exchange Commission on January 20, 2000
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
---
Pre-Effective Amendment No. __ /___/
Post-Effective Amendment No. __ /___/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 / X /
---
Amendment No. __ /___/
(Check appropriate box or boxes)
JULIUS BAER MULTISTOCK FUNDS
(Exact Name of Registrant as Specified in Charter)
21 Milk Street, Boston, Massachusetts 02109
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 423-0800
Philip W. Coolidge, 21 Milk Street, Boston, Massachusetts 02109
(Name and Address of Agent for Service)
Copy to:
Marianne K. Smythe, Wilmer, Cutler & Pickering, 2445 M. Street, N.W.
Washington, D.C. 20037-1420
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this registration statement under the Securities Act of 1933.
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 Securities and Exchange Commission, acting
pursuant to Section 8(a), may determine.
<PAGE>
JULIUS BAER MULTISTOCK
FUNDS
Prospectus
March 15, 2000
Julius Baer Swiss Stock Fund
Neither the Securities and Exchange Commission nor any state securities
commission has approved the Fund's shares as an investment or determined whether
this prospectus is accurate or complete. Anyone who tells you otherwise is
committing a crime.
<PAGE>
Contents
The Fund Page
What every investor
should know about Julius Baer Multistock Funds 3
the Fund
Risk/Return Summary 3
Introduction 3
Investments, Risks, Performance
and Fees 3
Investment Strategies and Risks 8
The Fund's Management 15
Your Investment
Information for
managing your Investing in the Fund 16
Fund account Opening an Account 16
Pricing of Fund Shares 16
Purchasing Your Shares 17
Which Class is Best for Me? 21
Selling Your Shares 23
Distribution and Shareholder
Servicing Plans 25
Distributions and Taxes 25
Distributions 25
Tax Information 25
Other Information 25
For More Information
Where to find more information
about Julius Baer Multistock Funds Back Cover
<PAGE>
JULIUS BAER MULTISTOCK FUNDS
RISK/RETURN SUMMARY
Introduction
Julius Baer Multistock Funds (the Trust) currently offers the Julius Baer Swiss
Stock Fund (the Fund). The Fund may offer class A shares, class B shares, and
class I shares. The Trust invests all of the Fund's assets through the Swiss
Stock Portfolio (the Portfolio). Bank Julius Baer & Co. Ltd. (the Adviser)
manages all of the assets which are invested through the Portfolio (Portfolio's
assets).
Investments, Risks, Performance and Fees
The following information is only a summary of important information that you
should know about the Fund. More detailed information is included elsewhere in
this Prospectus and in the Statement of Additional Information (SAI) and should
be read in addition to this summary.
As with any mutual fund, there is no guarantee that the Fund will achieve its
goals. The Fund's share price will fluctuate and you may lose money on your
investment.
1
<PAGE>
JULIUS BAER SWISS STOCK FUND
The Fund's Investment Goal
Q. What is the Fund's investment goal?
A. The Fund seeks long term growth of capital.
Its Principal Investment Strategies
Q. What is the Fund's principal investment strategy?
A. The Fund invests through the Portfolio primarily in a wide variety of
equity securities issued by large companies with their registered office
or the major part of their business activities in Switzerland.
<TABLE>
<S> <C>
Under ordinary conditions, the Adviser will "Recognized securities" are (a) quoted and
invest at least two-thirds of the Portfolio's transferable on a stock exchange or other
assets in Swiss equity securities, which regulated public market in a "recognized
include common stock, preferred stock and country," or (b) new issues that have
warrants. The Adviser may invest up to 15% of undertaken to apply for listing on a stock
the Portfolio's assets in warrants, options or exchange or other regulated market and that such
other instruments that give the right to listing is granted within one year of issue.
purchase or sell Swiss equities or other types Recognized securities include warrants.
of equities, equity indexes, and interest rate
indexes. "Recognized country" is a country in the
Organization of Economic Cooperation and
The Adviser will invest at least 90% of the Development, North or South American, Europe
Portfolio's assets in "recognized securities." Asia, Africa, Australia and the Pacific Basin.
</TABLE>
The Adviser may invest up to one-third of the Portfolio's assets in the
Principality of Liechtenstein or in fixed-interest or variable-rate debt
instruments, convertible bonds or bonds with warrants attached, from issuers
from recognized countries.
The Adviser may temporarily depart from its normal investment policies
- -- for instance, by investing substantially in cash reserves, money market
instruments or short-term securities -- in response to extraordinary market,
economic, political or other conditions. In doing so, the Adviser may fail to
achieve its investment goal.
The Key Risks
You could lose money on your investment in the Fund, or the Fund could return
less than other investments. Some of the main risks of investing in the Fund are
listed below:
Market Risk: the possibility that the equity securities being held through the
Portfolio will lose value because of declines in the stock market.
Foreign Investing Risk: the possibility that the foreign securities being held
through the Portfolio will lose value because of currency exchange rate
fluctuations, price volatility, uncertain political conditions and other
factors.
Diversification Risk: The Fund and the Portfolio are classified as
"non-diversified" for purposes of the Investment Company Act of 1940 (1940 Act),
which means that each is limited with respect to the portion of its assets which
may be invested in the securities of a single issuer only by certain
requirements of federal tax law. The possible assumption of large positions in
the securities of a small number of issuers may cause performance to fluctuate
to a greater extent than that of a diversified investment company as a result of
changes in the financial condition or in the market's assessment of the issuers.
The use of warrants, futures, options and forward contracts may expose the Fund
to additional investment risks and transaction costs. These are described more
2
<PAGE>
fully under the heading Investment Strategies and Risks and in the SAI.
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.
The Fund's Performance
The chart and table below give an indication of the Fund's risk and performance
by showing the yearly changes in and the variability of the performance of one
class of Fund's shares, Class [ ]. When considering this information, please
remember that the Fund's past performance is not necessarily an indication of
how it will perform in the future.
The historical performance in the chart and table for the period before [DATE]
is the performance of the Julius Baer Multistock Swiss Stock Fund (Non-U.S.
Fund), which had investment policies, objectives, guidelines, and restrictions
that are in all material respects equivalent to those of the Fund. The Non-U.S.
Fund, however, was not a registered investment company under the 1940 Act and,
thus, was not subject to certain investment restrictions that are imposed on
registered investment companies by the 1940 Act. If the Non-U.S. Fund had been
registered under the 1940 Act, its performance may have been different.
The Non-U.S. Fund was the predecessor to the Portfolio, through which the Fund
also will invest. The Portfolio commenced operations on [DATE], when the
Non-U.S. Fund first began investing its assets through the Portfolio. The
Non-U.S. Fund continues to exist, but it now invests all of its assets through
the Portfolio.
As of [date], the historical performance has been restated using the
anticipated expenses of each class of the Fund's shares. The expenses of each
class of shares may be greater or less than the expenses of the Non-U.S. Fund
and, for this reason, the performance of each class may be better or worse than
the actual performance of the Non-U.S. Fund.
Swiss Stock Fund - Class [ ] Shares
30%
20%
10%
0%
Total Return -10%
-20%
-30%
-40%
1990 1991 1992 1993 1994 1995 1996 1997 1998
Calendar Year
Performance figures in the bar chart do not reflect the impact of sales
charges. If they did, performance would be less than that shown. During
the periods shown in the Bar Chart, the highest quarterly return was [ ]%
(for the quarter ended [ ]) and the lowest quarterly return was [ ]% (for
the quarter ended [ ]).
The table below shows how the Fund's average annual total returns for the
periods shown compare to that of Swiss Performance Index (the Index). The Index
is a dividend-adjusted index comprised of the top-tier and secondary shares of
Swiss companies (including those of Liechtenstein) listed on the SWX Swiss Stock
Exchange excluding investment companies.
<TABLE>
<CAPTION>
Average Annual Total Returns
(for the periods ended December 31, 1999)
<S> <C> <C> <C>
- ---------------------------------- -------------------------------- --------------------------------- ---------------------------
Past One Year Past Five Years Since
Inception
- ---------------------------------- -------------------------------- --------------------------------- ---------------------------
Class A % % %
- ---------------------------------- -------------------------------- --------------------------------- ---------------------------
Class B % % %
- ---------------------------------- -------------------------------- --------------------------------- ---------------------------
Class I % % %
- ---------------------------------- -------------------------------- --------------------------------- ---------------------------
Swiss Performance Index % % %
- ---------------------------------- -------------------------------- --------------------------------- ---------------------------
<FN>
Unlike the bar chart, this performance information reflects the impact of sales
charges. Class A share performance reflects the current maximum initial sales
charges; class B share performance reflect the maximum applicable deferred sales
charge if shares had been redeemed on [ ].
</FN>
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
The Fund's Fees and Expenses
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the Fund.
<S> <C> <C> <C>
- ---------------------------------------------------- ------------- ------------- -------------
Shareholder Fees Class A Class B Class I
(fees paid directly from your investment)
- ---------------------------------------------------- ------------- ------------- -------------
- ---------------------------------------------------- ------------- ------------- -------------
Maximum Sales Charge (Load) Imposed on Purchases 5.00% NONE NONE
(as a percentage of the offering price)
- ---------------------------------------------------- ------------- ------------- -------------
- ---------------------------------------------------- ------------- ------------- -------------
Maximum Deferred Sales Charge (Load) (as a NONE* 5.00% NONE
percentage of the original purchase price or
redemption proceeds, whichever is lower)
- ---------------------------------------------------- ------------- ------------- -------------
<FN>
* A deferred sales charge may apply to Class A shares purchased without an
initial sales charge, if such shares are redeemed within two years of purchase.
</FN>
</TABLE>
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------- ------------- ------------- -------------
Annual Fund Operating Expenses--expenses that are deducted from Fund assets Class A Class B Class I
- -------------------------------------------------------------------------------- ------------- ------------- -------------
- -------------------------------------------------------------------------------- ------------- ------------- -------------
Management Fees 0.85% 0.85% 0.85%
- -------------------------------------------------------------------------------- ------------- ------------- -------------
- -------------------------------------------------------------------------------- ------------- ------------- -------------
Distribution and/or Service (12b-1) Fees 0.25% 0.50% 0.00%
- -------------------------------------------------------------------------------- ------------- ------------- -------------
- -------------------------------------------------------------------------------- ------------- ------------- -------------
Other Expenses* 0.15% 0.15% 0.15%
- -------------------------------------------------------------------------------- ------------- ------------- -------------
- -------------------------------------------------------------------------------- ------------- ------------- -------------
Total Annual Fund Operating Expenses 1.25% 1.50% 1.00%
- -------------------------------------------------------------------------------- ------------- ------------- -------------
<FN>
*The amounts of other expenses listed in the fee table are based on estimated
amounts for the current fiscal year.
</FN>
</TABLE>
Example of Effect of the Fund's Operating Expenses
The following Example 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 you invest $10,000 in the Fund for the time periods indicated and then,
except as shown for class B shares, sell all of your shares at the end of those
periods. While your return may vary, the Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same.
Although your actual returns and expenses may be higher or lower, based on these
assumptions your costs would be:
---------------------- -----------------------
1 Year 3 Years
---------------------- -----------------------
- ------------------ ---------------------- -----------------------
Class A $ $
- ------------------ ---------------------- -----------------------
- ------------------ ---------------------- -----------------------
Class B
- ------------------ ---------------------- -----------------------
- ------------------ ---------------------- -----------------------
Class B
(No Redemption)
- ------------------ ---------------------- -----------------------
- ------------------ ---------------------- -----------------------
Class I
- ------------------ ---------------------- -----------------------
* Reflects conversion of class B shares to class A shares, which pay
lower 12b-1 fees. Conversion occurs no more than eight years after
purchase.
4
<PAGE>
INVESTMENT STRATEGIES AND RISKS
The Fund's Investment Goal
The Fund seeks long term growth of capital.
The Fund's Investment Strategies
The Fund seeks to achieve its goal by investing primarily in a
non-diversified portfolio of common stock, convertible securities and preferred
stock. Ordinarily, the Fund will invest at least two thirds of its assets in
common or preferred stock -- together with warrants, options, or other
instruments that give the holder the right to acquire such stock -- issued by
companies that have their registered office or a major part of their business in
Switzerland. For this portion of the portfolio, the Fund seeks to invest among
industrial categories (not individual companies) in roughly the same proportion
as the Swiss Performance Index, although the Fund may under- or over-weight its
investment by up to __ % of Fund assets in any particular category.
The Fund may invest up to one-third of its assets in either securities of
companies with their registered office or major portion of their business
located in the Principality of Liechtenstein, or in fixed-interest or variable
interest debt instruments, convertible bonds or bonds with warrants attached,
from issuers from recognized countries.
The Fund also may invest up to 15% of its assets in equity and interest rate
warrants and options. Equity warrants give the right to buy newly issued or
outstanding securities of a company at a fixed price. Interest rate warrants
give the right to buy or sell a specific bond issue or interest rate index at a
set price.
The Fund uses both a top-down and bottom-up approach. A top-down analysis
focuses on macroeconomic factors, such as inflation, interest and tax rates,
currency and political climate. A bottom-up analysis focuses on company-specific
variables (such as competitive industry dynamics, market leadership, proprietary
products and services, and management expertise) and financial characteristics
(such as returns on sales and equity, debt/equity ratios and earnings and cash
flow growth). Although the Fund will generally invest in large and
well-established companies, it may also invest in smaller emerging growth
companies.
The Fund plans to invest principally in securities denominated in Swiss Francs.
The Fund also may invest in securities denominated in other currencies,
including the Euro. The Fund may enter into currency hedging transactions in an
attempt to protect its assets from a change in the value of such currencies in
relation to Swiss Francs. The Fund also may at times use futures, options and
forwards contracts for hedging purposes, including to protect the Fund from
changes in market conditions or to gain exposure to equity or currency positions
pending the actual purchase or sale of such positions.
As noted above, the Fund may temporarily depart from its normal investment
policies in response to extraordinary market, economic, political or other
conditions. In doing so, the Adviser may fail to achieve its investment goal.
Principal Risks
Market Risk. Investing in common stocks is subject to stock market risk. Stock
prices in general may decline over short or even extended periods, regardless of
the success or failure of a particular company's operations. Stock markets tend
to run in cycles, with periods when stock prices generally go up and periods
when they generally go down. Common stock prices tend to go up and down more
than those of bonds.
Credit Risk. Debt securities are subject to credit risk. Credit risk is the
possibility that an issuer will fail to make timely payments of interest or
principal. Securities rated in the lowest category of Investment Grade
securities have some risky characteristics and changes in economic conditions
are more likely to cause issuers of these securities to be unable to make
payments.
5
<PAGE>
Income Risk. Income risk is the chance that falling interest rates will cause
the income from debt securities to decline. Income risk is generally higher for
short-term bonds.
Diversification Risk. The Fund and the Portfolio are classified as
"non-diversified", which means that the only limits with respect to the portion
of their assets which may be invested in the securities of a single issuer are
certain requirements of federal income tax law. The possible assumption of large
positions in the securities of a small number of issuers may cause performance
to fluctuate to a greater extent than that of a diversified investment company
as a result of changes in the financial condition or in the market's assessment
of the issuers.
Foreign Investing Risk. Investing in securities of non-U.S. issuers, which
securities are generally denominated in foreign currencies, and utilizing
contracts to hedge changes in the values of foreign currencies involve both
opportunities and risks not typically associated with investing in U.S.
securities. The principal risks may include: fluctuations in exchange rates of
foreign currencies; possible imposition of exchange control regulation or
currency restrictions that would prevent cash from being brought back to the
United States; less public information about the issuers of securities; less, or
different kinds of, governmental supervision of stock exchanges, securities
brokers and issuers of securities; different accounting, auditing and financial
reporting standards; different settlement periods and trading practices; less
liquidity and frequently greater price volatility in foreign markets than in the
United States; and imposition of foreign taxes.
Single Country Risk. The Adviser focuses its investments on the
securities of one country, Switzerland, thereby increasing its
vulnerability to economic, political or regulatory developments within
that one country.
Foreign Currency Risk. The Adviser does not intend to engage in
transactions to protect against the currency risks of investing in Swiss
Francs and other foreign currencies, when compared to U.S. Dollars. For
this reason, the Fund may be exposed to increased risk of changes in
currency valuations.
Interest Rate Risk. Investing in debt securities is subject to the risk that the
market value of the debt securities will decline because of rising interest
rates. The prices of debt securities are generally linked to the prevailing
market interest rates. In general, when interest rates rise, the prices of debt
securities fall, and when interest rates fall, the prices of debt securities
rise. The price volatility of a debt security also depends on its maturity.
Generally, the longer the maturity of a debt security the greater its
sensitivity to changes in interest rates. To compensate investors for this
higher risk, debt securities with longer maturities generally offer higher
yields than debt securities with shorter maturities.
6
<PAGE>
THE FUND'S MANAGEMENT
Investment Adviser
Bank Julius Baer & Co. Ltd., 330 Madison Avenue, New York, NY 10017 is
responsible for the day-to-day management of the Portfolio's assets.
The Adviser is the New York branch of a Swiss bank that has over 50 years of
experience in international and global portfolio management. As of December 31,
1999, the Adviser with its affiliates had approximately $70 billion in assets
under management.
The Fund pays the Adviser a fee for its services. The fee payable by the Fund
for the fiscal year ending December 31, 2000 is shown in the table below.
---------------------------- --------------------------------------------
Fund Fee (as a % of average daily net assets)
---------------------------- --------------------------------------------
Swiss Stock Fund [ ]%
---------------------------- --------------------------------------------
Portfolio Management
Mr. Lorenz Reinhard and Mr. Urs Heiniman are responsible for the day-to-day
portfolio management. Mr. Reinhard serves as a portfolio manager and financial
analyst for Bank Julius Baer. He joined Bank Julius Baer in 1995. Prior to
joining Bank Julius Baer, Mr. Reinhard was Primary Financial Analyst for Zurich
Cantonal Bank. Mr. Urs Heiniman serves as first vice president and portfolio
manager of Bank Julius Baer. He joined Bank Julius Baer in July of 1999. Prior
to joining Bank Julius Baer, Mr. Heiniman was a student at Swiss Banking School.
7
<PAGE>
INVESTING IN THE FUND
Opening an Account
To invest in the Fund, you must first complete and sign an account application.
A copy of the application is included with this Prospectus. You can also obtain
an account application by calling 1-800-[] or by writing to the Fund's Transfer
Agent, [] ("[]") at:
[]
Completed and signed account applications may be mailed to [ ] at the above
address.
You can also invest in the Fund through your broker. If your broker does not
have a relationship with [], the Fund's distributor (Distributor), you may be
charged a transaction fee.
Investor Alert: The Fund may choose to refuse any purchase order.
Retirement Plans. For information about investing in the Fund through a
tax-deferred retirement plan, such as an Individual Retirement Account (IRA),
self-employed retirement plan (H.R.10), a Simplified Employee Pension IRA
(SEP-IRA) or a profit sharing and money purchase plan, an investor should
telephone the Transfer Agent at 1-800-435-4659 or write to [] at the address set
forth above.
Investor Alert: You should consult your tax adviser about the establishment of
retirement plans.
Pricing of Fund Shares
The price to buy one share of class A is the class's offering price or the
class's net asset value per share (NAV), depending on whether you pay a
front-end sales charge. If you pay a front-end sales charge, your price will be
class A's offering price. When you buy class A shares at the offering price, the
appropriate sales charge is deducted and the rest is invested in class A shares
of the Fund. If you qualify for a front-end sales charge waiver, your price will
be class A's NAV.
For class B and class I shares the price to buy one share is the class's NAV.
Class B shares are sold without a front-end sales charge, but may be subject to
a Contingent Deferred Sales Charge (CDSC) upon redemption. Class I shares are
sold without sales charges.
The Fund's share price, also called net asset value (NAV), is determined as of
4:00 p.m., Eastern time every day the banks in Luxembourg are open for business.
The Fund calculates the NAV per share, generally using market prices, by
dividing the total value of the Fund's net assets by the number of the shares
outstanding. Shares are purchased or sold at the next offering price determined
after your purchase or sale order is received and accepted by the Distributor.
The offering price is the NAV.
The investments being held through the Portfolio are valued based on market
value or, if no market value is available, based on fair value. Some specific
pricing strategies follow:
Securities mainly traded on a U.S. exchange are valued at the last sale price
on that exchange or, if no sales occurred during the day, at the mean of the
current quoted bid and asked prices; and
Securities mainly traded on a non-U.S. exchange are generally valued according
to the preceding closing values on that exchange. However, if an event that may
change the value of a security occurs after the time the value was determined,
that closing value might be adjusted.
8
<PAGE>
Purchasing Your Shares
You should read this Prospectus carefully and then determine how much you want
to invest. Check below to find the minimum investment amount required as well as
to learn about the various ways you can purchase your shares.
<TABLE>
<S> <C> <C>
---------------------------- ---------------------------- ------------------------------------
Type of Investment Initial Investment* Additional Investment*
---------------------------- ---------------------------- ------------------------------------
---------------------------- ---------------------------- ------------------------------------
Regular account $[ ] $[ ]
---------------------------- ---------------------------- ------------------------------------
Individual $[ ] $[ ]
Retirement Account (IRA)
---------------------------- ---------------------------- ------------------------------------
Tax deferred retirement $[ ] $[ ]
plan other than an IRA
---------------------------- ---------------------------- ------------------------------------
<FN>
* Initial and subsequent purchases must satisfy the minimums stated above,
except that (i) certain persons who are already shareholders may make additional
purchases of $[ ] or more by sending funds directly to [], and (ii) for
investors participating in automatic investment plans and military allotment
plans, the initial and subsequent purchases must be $[ ] or more.
</FN>
</TABLE>
<TABLE>
<CAPTION>
You can invest in Fund shares in the following ways:
<S> <C> <C>
-------------------------------------------------- -------------------------------------------------
Opening an account Adding to your account
-------------------------------------------------- -------------------------------------------------
Through A Broker You can purchase shares through a broker that has You may add to an account established through any
a relationship with the Distributor. broker either by contacting your broker or
directly through [] by using one of the methods
If you buy shares through a broker, the broker is described below.
responsible for forwarding your order to [] in a
timely manner. If you place an order with a
broker by 4:00 p.m. (Eastern time) on a day when
the NYSE is open for regular trading, and the
order is received by [] by the end of its business
day, you will receive that day's price and be
invested in the Fund on that day.
You may also be able to purchase shares through a
broker that does not have a relationship with the
Distributor. Orders from such a broker received by
[] by 4:00 p.m. (Eastern time) on a day when the
NYSE is open for regular trading will be effected
that day. You may be charged a transaction fee by
your broker.
---------------------------------------------------- ----------------------------------------------------
By Check Please make your check (in U.S. dollars) payable Make your check payable to the Julius Baer
to the Julius Baer Multistock Funds or the Fund. Multistock Funds or the Fund. The Fund does not
Write the Fund name and applicable class on the accept third party checks.
check. Write your account number, Fund name and
Send your check with the completed account applicable class on the check.
application to: Mail your check directly to the Fund at the
[] address shown at left.
Attention: Julius Baer Multistock Funds
Your application will be processed subject to
your check clearing.
---------------------------------------------------- ----------------------------------------------------
By Wire First, telephone the Transfer Agent at (800) Refer to wire instructions for opening an
[]-[] to notify the Transfer Agent that a bank account.
wire is being sent and to receive an account Specify in the wire: (1) the name of the Fund,
number. A bank wire received by 4:00 p.m. (Eastern (2) the account number, and (3) your name. If []
time) on a day when the NYSE is open for regular receives the federal funds before the close of
trading will be effected that day. regular trading of the NYSE on a day the NYSE is
Transfer funds by wire to the following address: open for regular trading, your purchase of Fund
ABA [] shares will be effected as of that day.
Swiss Stock Fund DDA No. [ ]
Specify in the wire: (1) the name of the
Fund, (2) the applicable class, (3) the account
number which [] assigned to you, and (4) your
name.
---------------------------------------------------- ----------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
<S> <C> <C>
---------------------------------------------------- ----------------------------------------------------
Opening an account Adding to your account
---------------------------------------------------- ----------------------------------------------------
By Exchange First, you should follow the procedures under "By You may exchange your Fund shares for shares of
Check" or "By Wire" in order to get an account certain classes of shares of another Fund
number for Fund(s) which you do not currently own described in the Prospectus at its respective NAV
shares of, but which you desire to exchange shares or offering price, as the case may be.
into. You should review the disclosure provided in this
You may exchange shares of the Fund for shares Prospectus relating to the other Fund carefully
of certain classes of shares of another before making an exchange of your Fund shares.
Fund at its respective NAV or offering price, as the
case may be.
You should review the disclosure provided in
this Prospectus relating to the other Fund
carefully before making an exchange of your Fund
shares.
---------------------------------------------------- ----------------------------------------------------
---------------------------------------------------- ----------------------------------------------------
Through Retirement Plans You may invest in the Fund through various
Retirement Plans. The Fund's shares are designed
for use with certain types of tax qualified
retirement plans including defined benefit and
defined contribution plans.
For further information about any of the plans,
agreements, applications and annual fees, contact
[] or your financial adviser.
---------------------------------------------------- ----------------------------------------------------
</TABLE>
More information about wire transfers: A $12.00 service charge is imposed on
shareholders for effecting wire transfers.
More information about exchanges: If you exchange shares subject to a deferred
sales charge, the transaction will not be subject to a deferred sales charge.
When you redeem the shares acquired through the exchange, the redemption may be
subject to the deferred sales charge, depending upon when you originally
purchased the shares. The deferred sales charge will be computed using the
schedule of any fund into or from which you have exchanged your shares that
would result in your paying the highest deferred sales charge applicable to your
class of shares. For purposes of computing the deferred sales charge, the length
of time you have owned your shares will be measured from the date of original
purchase and will not be affected by any exchange.
Special Tax Consideration: For federal income tax purposes, an
exchange of shares is treated as a sale of the shares you currently
own and a purchase of the shares you receive in exchange. Therefore,
you may incur a taxable gain or loss in connection with the exchange.
Automatic Investment Plan
You can pre-authorize monthly or quarterly investments of $100 or more in the
Fund to be processed electronically from a checking or savings account. You will
need to complete the appropriate portion of an account application or separate
forms to do this. Contact your broker or the Distributor for more information.
Processing Organizations
You may also purchase shares of the Fund through a "Processing Organization,"
(e.g., a mutual fund supermarket) which is a broker-dealer, bank or other
financial institution that purchases shares for its customers. The Fund has
authorized certain Processing Organizations to accept purchase and sale orders
on its behalf. Before investing in the Fund through a Processing Organization,
you should read any materials provided by the Processing Organization in
conjunction with this Prospectus.
When shares are purchased this way, there may be various differences. The
Processing Organization may:
charge a fee for its services;
act as the shareholder of record of the shares;
set different minimum initial and additional investment
requirements;
impose other charges and restrictions; and
designate intermediaries to accept purchase and sale orders on
the Fund's behalf.
The Fund considers a purchase or sales order as received when an authorized
Processing Organization, or its authorized designee, accepts the order. These
orders will be priced based on the Fund's NAV determined after such order is
accepted.
10
<PAGE>
Shares held through a Processing Organization may be transferred into your name
following procedures established by your Processing Organization and the Fund.
Certain Processing Organizations may receive compensation from the Fund, the
Adviser or their affiliates.
Which Class of Shares Is Best For Me?
This prospectus offers you a choice of three classes of fund shares: A,
B and I. This allows you to choose among different types of sales charges and
different levels of ongoing operating expenses, as illustrated in the "Fees and
expenses" section. The class of shares that is best for you depends on a number
of factors, including the amount you plan to invest and how long you plan to
hold the shares. Please note that Class I shares, which are not subject to sales
charges or a CDSC, are available only to certain investors.
Here is a summary of the differences among the classes of shares:
Class A Shares
Initial sales charge of up to 5.00%
Lower sales charge for investments of $50,000 or more
No deferred sales charge (except on certain redemptions of shares bought without
an initial sales) Lower annual expenses, and higher dividends, than class B
shares because of lower 12b-1 fee
Class B Shares
No initial sales charge; your entire investment goes to work for you
Deferred sales charge of up to 5% if you sell shares within 6 years after you
bought them
Higher annual expenses, and lower dividends, than class A or I shares
because of higher 12b-1 fee
Convert automatically to class A shares after 7 years, reducing the future
12b-1 fee (may convert sooner in some cases)
Orders for class B shares for more than $250,000 are treated as orders for
class A shares or refused
Class I Shares
No initial sales charge, your entire investment goes to work for you
No deferred sales charge
Lower annual expenses, and higher dividends than all other classes
Initial sales charges for class A shares
- ----------------------------------------------- ----------------------------
Class A sales charge as a
percentage of:
- ----------------------------------------------- ----------------------------
- ----------------------------------------------- ------------- --------------
Amount of purchase at offering price ($) Net amount Offering
invested price*
- ----------------------------------------------- ------------- --------------
- ----------------------------------------------- ------------- --------------
Under 50,000 % %
- ----------------------------------------------- ------------- --------------
- ----------------------------------------------- ------------- --------------
50,000 but under 100,000
- ----------------------------------------------- ------------- --------------
- ----------------------------------------------- ------------- --------------
100,000 but under 250,000
- ----------------------------------------------- ------------- --------------
- ----------------------------------------------- ------------- --------------
250,000 but under 500,000
- ----------------------------------------------- ------------- --------------
- ----------------------------------------------- ------------- --------------
500,000 but under 1,000,000
- ----------------------------------------------- ------------- --------------
- ----------------------------------------------- ------------- --------------
1,000,000 and above NONE NONE
- ----------------------------------------------- ------------- --------------
* Offering price includes sales charge
Deferred Sales Charges for Class B and Certain Class A Shares
If you sell (redeem) class B shares within six years after you bought them, you
will generally pay a deferred sales charge according to the following schedule.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------- ------------- ------------ ------------ ------------ ------------ ------------- -------
Year after Purchase 1 2 3 4 5 6 7+
- ------------------------------------------- ------------- ------------ ------------ ------------ ------------ ------------- -------
- ------------------------------------------- ------------- ------------ ------------ ------------ ------------ ------------- -------
Charge 5% 4% 3% 3% 2% 1% 0%
- ------------------------------------------- ------------- ------------ ------------ ------------ ------------ ------------- -------
</TABLE>
11
<PAGE>
A deferred sales charge of up to 1% may apply to class A shares purchased
without an initial sales charge, if redeemed within two years after purchase.
Deferred sales charges will be based on the lower of the shares' cost and
current NAV. Shares not subject to any charge will be redeemed first, followed
by shares held longest. You may sell shares acquired by reinvestment of
distributions without a charge at any time.
You May Be Eligible For Reductions and Waivers of Sales Charges
Sales charges may be reduced or waived under certain circumstances and for
certain groups. Information about reductions and waivers of sales charges is
included in the SAI. You may consult your broker or [] for assistance.
Selling Your Shares
You may sell some or all of your Fund shares on any day that the Fund calculates
its NAV, minus any CDSC. If your request is accepted before the close of regular
trading on the NYSE, you will receive a price based on that day's NAV, minus any
CDSC, for the shares your sell. Otherwise, the price you receive will be based
on the NAV, minus any CDSC, that is next calculated.
------------------------------------------------
By Telephone You can sell or exchange your shares over the
telephone, unless you have specifically
declined this option. If you do not wish to have
this ability, you must mark the appropriate
section of the New Account Application Form.
To sell your Fund shares by telephone call (800)
[] between the hours of 9:00 a.m. and 4:00 p.m.
(Eastern time) on a day when the NYSE is open for
regular trading. You will be asked to:
specify the name of the Fund and class from which the sale
is to be made;
indicate the number of shares or dollar amount to be sold;
include your name as it exists on the Fund's records; and
indicate your account number.
-----------------------------------------------------------
By Mail To sell your Fund shares by mail you must write to [] at:
[]
Attention: Julius Baer Multistock Funds
specify the name of the Fund and class from which the
sale is to be made;
indicate the number of shares or dollar amount to be
sold;
include your name as it exists on the Fund's records;
indicate your account number; and
sign redemption request exactly as the shares are
registered.
-----------------------------------------------------------
Investor Alert: Unless otherwise specified, proceeds will be sent to
the record owner.
Signature guarantees: Some circumstances (e.g., changing the bank account
designated to receive sale proceeds) require that the request for the sale of
shares have a signature guarantee. A signature guarantee helps protect you
against fraud. You can obtain one from most banks or securities dealers, but not
from a notary public.
Telephone sales: If we receive your share sale request before 4:00 p.m. (Eastern
time), on a day when the NYSE is open for regular trading, the sale of your
shares will be processed that day. Otherwise it will occur on the next business
day.
Interruptions in telephone service could prevent you from selling your shares in
this manner when you want to. When you have difficulty making telephone sales,
you should mail (or send by overnight delivery) a written request for sale of
your shares to [].
In order to protect your investment assets, [] intends to only follow
instructions received by telephone that it reasonably believes to be genuine.
However, there is no guarantee that the instructions relied upon will always be
genuine and the Trust will not be liable for those cases. The Trust has certain
procedures to confirm that telephone instructions are genuine. If the Trust does
not follow such procedures in a particular case it may be liable for any losses
due to unauthorized or fraudulent instructions.
12
<PAGE>
Low Account Balances
[] may sell your Fund shares if your account (excluding IRA and other tax
deferred retirement accounts) balance falls below $1,000 as a result of
redemptions that you have made (as opposed to a reduction from market changes).
[] will let you know that your shares are about to be sold and you will have 60
days to increase your account balance to more than $1,000.
Special consideration: Involuntary sales may result in sale of your
Fund shares at a loss or may result in taxable investment gains.
Receiving Sale Proceeds
[] will forward the proceeds of your sale to you within seven days.
Fund Shares Purchased By Check: If you purchase Fund shares by personal check,
the proceeds of a sale of those shares will not be sent to you until the check
has cleared, which may take up to 10 days. If you may need your money more
quickly, you should purchase shares by federal funds, bank wire, or with a
certified or cashier's check.
It is possible that the payments of your sale proceeds could be
postponed or your right to sell your shares could be suspended during
certain circumstances.
Redemptions in Kind: The Fund reserves the right to redeem your shares by giving
you securities under certain circumstances, generally in connection with very
large redemptions.
Distribution and Shareholder Servicing Plans
The Fund has adopted distribution and service plans under Rule 12b-1 of the 1940
Act for its shares. These plans allow the Fund to pay distribution and other
fees for the sale and distribution of its shares and for services provided to
holders of the shares.
Distribution (12B-1) Plans.
The Fund has adopted distribution plans to pay for the marketing of
fund shares and for services provided to shareholders. The plans
provide for payments at annual rates (based on average net assets) of
up to 0.25% on class A shares and 0.50% on class B shares. Because
12b-1 fees are paid on an on-going basis, over time these fees will
increase the cost of your investment and may cost you more than paying
other types of sales charges.
13
<PAGE>
DISTRIBUTIONS AND TAXES
Distributions
The Fund intends to distribute to its shareholders substantially all of its
income and capital gains. The table below outlines when income dividends are
declared and paid for the Fund.
<TABLE>
<S> <C> <C>
- ----------------------------------------------- ---------------------------------------------- ------------------------------------
Fund Dividends Declared Dividends Paid
- ----------------------------------------------- ---------------------------------------------- ------------------------------------
- ----------------------------------------------- ---------------------------------------------- ------------------------------------
Swiss Stock Fund Annually Annually
- ----------------------------------------------- ---------------------------------------------- ------------------------------------
</TABLE>
Distributions of any capital gains earned by the Fund will be made at least
annually. All distributions will automatically be reinvested in the Fund unless
the shareholder instructs otherwise.
Tax Information
Distributions: The Fund will make distributions that may be taxed as ordinary
income or capital gains depending on the source of the distributions. The Fund's
distributions are subject to U.S. federal income tax regardless of whether you
reinvest such dividends in additional shares of the Fund or choose to receive
cash.
Ordinary Income: Income and short-term capital gains that are distributed to you
are taxable as ordinary income for U.S. federal income tax purposes regardless
of how long you have held your Fund shares.
Long-Term Capital Gains: Long-term capital gains distributed to you are taxable
as long-term capital gains for federal income tax purposes regardless of how
long you have held your Fund shares.
Tax on Sale of Shares: Selling your shares may cause you to incur
taxable capital gain or loss.
Statements and Notices: You will receive an annual statement outlining the tax
status of your distributions. You will also receive written notices of certain
foreign taxes paid by the Fund and certain distributions paid by the Fund during
the prior taxable year.
Special tax consideration: You should consult with your tax adviser to
address your own tax situation.
Other Information
Global Hub and SpokeSM Structure
The Fund is a Spoke fund in a Global Hub and SpokeSM structure and invests
through the Portfolio along with other foreign or domestic funds or
institutional investors. These other parties may have different operating
expenses and thus may have different performance than the Fund. Currently, the
Non-U.S. Fund also invests through the Portfolio.
Other entities that invest through the Portfolio may be subject to investment
restrictions in addition to those applicable to the Fund. The Portfolio will
conform to the strictest restrictions that apply to any investor that invests
through the Portfolio. If additional parties invest through the Portfolio, the
Fund will be subject to any additional restrictions that may apply.
Any matter upon which the parties who invest through the Portfolio are entitled
to vote will be put to a vote of the shareholders of the Fund. If Fund
shareholders vote differently from other Portfolio participants, the Fund may
have to cease investing through the Portfolio.
The Fund also may cease investing through the Portfolio if the Fund's Trustees
determine that such action is in the best interests of the Fund. In such a case,
the Trustees would consider whether the Fund should continue to use its
Investment Adviser, hire a different adviser, invest through a different
portfolio, or take other action.
References in this prospectus to the activities of the Fund refer to investments
made through the Portfolio.
___________________________
"GLOBAL HUB AND SPOKEsm" is a service mark of Signature Financial Group, Inc.
14
<PAGE>
For investors who want more information about the Fund, the following documents
are available free upon request:
Statement of Additional Information (SAI): The SAI provides more detailed
information about the Fund and is legally a part of this Prospectus.
Annual/Semi-Annual Reports: The Fund's Annual and Semi-Annual Reports provide
additional information about the Fund's investments. In the Fund's Annual
Report, you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund's performance during its last
fiscal year. In the Fund's Annual Report, you will also find certain financial
highlight information which is legally a part of this Prospectus.
You can get free copies of the SAI, the reports, other information and answers
to your questions about the Fund by contacting the Fund's transfer agent at:
[]
You can view the Fund's SAI and the reports at the Public
Reference Room of the Securities and Exchange Commission
(SEC).
For a fee, you can get text-only copies by writing to the
Public Reference Room of the SEC, Washington, D.C.
20549-6009. You can also call 1-202-942-8090. Additionally,
this information is available on the EDGAR database at the
SEC's internet site http://www.sec.gov. A copy may be
obtained after paying a duplicating fee, by electronic
request at the following E-mail address: [email protected]
Investment Company Act
file no. [ ]
<PAGE>
JULIUS BAER MULTISTOCK FUNDS
Julius Baer Swiss Stock Fund
STATEMENT OF ADDITIONAL INFORMATION
[ ], 1999
This Statement of Additional Information (the "SAI") is not a Prospectus, but it
relates to the Prospectus of Julius Baer Multistock Funds dated March 15, 2000.
You can get a free copy of the Prospectus for the Julius Baer Multistock Funds
or the Fund's most recent annual and semi-annual reports, request other
information and discuss your questions about the Fund by contacting the Transfer
Agent at:
[TRANSFER AGENT NAME,
ADDRESS,
PHONE NUMBER ]
You can view the Fund's Prospectus as well as other reports at the Public
Reference Room of the Securities and Exchange Commission. For a fee, you can get
text-only copies by writing to the Public Reference Room of the SEC, Washington,
D.C. 20549-6009. You can also call 1-202-942-8090. Additionally, this
information is available on the EDGAR database at the SEC's internet site
http://www.sec.gov. A copy may be obtained after paying a duplicating fee, by
electronic request at the following E-mail address: [email protected]
<PAGE>
Contents
Page
The Trust and the Fund 3
Description of the Fund, its Investments and Risks 3
Equity Investments
Fixed Income Investments
Money Market Investments
Investment Techniques
Hedging Techniques
Investment Limitations 24
Management of the Trust and the Portfolio 26
Capital Stock 34
Additional Purchase and Redemption Information 36
Additional Information Concerning Taxes 38
Calculation of Performance Data 39
Independent Auditors 42
Counsel 42
Appendix 43
2
<PAGE>
THE TRUST AND THE FUND
The Julius Baer Swiss Stock Fund (the Fund) is a series of the Julius
Baer Multistock Funds (the Trust). Bank Julius Baer & Co, Ltd. (the Adviser)
manages all of the assets which are invested through the Portfolio (Portfolio's
assets).
The Trust was formed as a Massachusetts business trust under the laws
of the Commonwealth of Massachusetts pursuant to a Master Trust Agreement dated
January 14, 2000.
The Prospectus, dated March 15, 2000, provides the basic information
investors should know before investing, and may be obtained without charge by
calling [NAME OF TRANSFER AGENT] (the "Transfer Agent") at the telephone number
listed on the cover. This SAI, which is not a prospectus, is intended to provide
additional information regarding the activities and operations of the Trust and
should be read in conjunction with the Prospectus. This SAI is not an offer of
any Fund for which an investor has not received a Prospectus.
DESCRIPTION OF THE FUND, ITS INVESTMENTS AND RISKS
The Fund is a non-diversified open-end management investment company.
Under ordinary conditions, the Adviser will invest at least two-thirds of the
Portfolio's assets in Swiss equity securities, which include common stock,
preferred stock and warrants. The Adviser may invest up to 15% of the
Portfolio's assets in warrants, options or other instruments that give the right
to purchase or sell Swiss equities or other types of equities, equity indexes,
and interest rate indexes.
The Adviser will invest at least 90% of the Portfolio's assets in
"recognized securities." Recognized securities are (a) quoted and transferable
on a stock exchange or other regulated public market in a "recognized country,"
or (b) new issues that have undertaken to apply for listing on a stock exchange
or other regulated market and that such listing is granted within one year of
issue. Recognized securities include warrants.
Recognized country is a country in the Organization of Economic
Cooperation and Development, North or South America, Europe, Asia, Africa,
Australia and the Pacific Basin. The Adviser may invest up to one-third of the
Portfolio's assets in the Principality of Liechtenstein or in fixed-interest or
variable-rate debt instruments, convertible bonds or bonds with warrants
attached, from issuers from recognized countries.
The Adviser will invest substantially all of the Portfolio's assets in
transferable equity securities when it believes that the relevant market
environment favors profitable investing in those securities. Equity investments
are selected in industries and companies that the Adviser believes are
experiencing favorable demand for their products and services, and which operate
in a favorable regulatory and competitive climate. The Adviser's analysis and
selection process focuses on growth potential; investment income is not a
consideration. In addition, factors such as expected levels of inflation,
government policies influencing business conditions, the outlook for currency
relationships and prospects for economic growth among countries, regions or
geographic areas may warrant consideration in selecting foreign equity
securities. Generally, the Adviser intends to invest in marketable securities
that are not restricted as to public sale. Most of the purchases and sales of
securities will be effected in the primary trading market for the securities.
The primary trading market for a given security generally is located in the
country in which the issuer has its principal office. While no assurances can be
given as to the specific issuers of the equity securities in which the Adviser
will invest, the Adviser intends to seek out the securities of large
well-established issuers. However, the Adviser will invest in the equity
securities of smaller emerging growth companies when it believes that such
investments represent a beneficial investment opportunity.
3
<PAGE>
Although the Adviser normally invests primarily in equity securities,
it may increase the cash or non-equity position when it is unable to locate
investment opportunities with desirable risk/reward characteristics. The Adviser
may invest in preferred stocks that are not convertible into common stock,
government securities, corporate bonds and debentures, high-grade commercial
paper, certificates of deposit or other debt securities when it perceives an
opportunity for capital growth from such securities or so that a return on idle
cash may be received.
EQUITY INVESTMENTS
When-Issued Securities and Delayed Delivery Transactions
Securities may be purchased on a when-issued basis and purchased or
sold on a delayed-delivery basis. In these transactions, payment for and
delivery of the securities occurs beyond the regular settlement dates, normally
within 30-45 days after the transaction. When-issued or delayed-delivery
transactions will not be entered into for the purpose of leverage, although, to
the extent the Fund is fully invested through the Portfolio, these transactions
will have the same effect on net asset value per share as leverage. The right to
acquire a when-issued security may be sold prior to its acquisition or its right
to deliver or receive securities in a delayed-delivery transaction may be
disposed of if the Adviser deems it advantageous to do so. The payment
obligation and the interest rate that will be received in when-issued and
delayed-delivery transactions are fixed at the time the buyer enters into the
commitment. Due to fluctuations in the value of securities purchased or sold on
a when-issued or delayed-delivery basis, the yields obtained on such securities
may be higher or lower than the yields available in the market on the dates when
the investments are actually delivered to the buyers. Income will not be accrued
with respect to a debt security purchased on a when-issued or delayed-delivery
basis prior to its stated delivery date but income will continue to accrue on a
delayed-delivery security that has been sold. When-issued securities may include
securities purchased on a "when, as and if issued" basis under which the
issuance of the security depends on the occurrence of a subsequent event, such
as approval of a merger, corporate reorganization or debt restructuring. To
facilitate acquisitions, a segregated account with the Custodian is maintained
with liquid assets in an amount at least equal to such commitments. Such a
segregated account consists of liquid, high grade debt securities marked to the
market daily, with additional liquid assets added when necessary to insure that
at all times the value of such account is equal to the commitments. On delivery
dates for such transactions, such obligations are met from maturities or sales
of the securities held in the segregated account and/or from cash flow.
Rule 144A Securities
The Adviser may purchase securities that are not registered under the
Securities Act of 1933 (1933 Act), but that can be sold to "qualified
institutional buyers" in accordance with the requirements stated in Rule 144A
under the 1933 Act (Rule 144A Securities). A Rule 144A Security may be
considered illiquid and therefore subject to the 10% limitation on the purchase
of illiquid securities, unless it is determined on an ongoing basis that an
adequate trading market exists for the security. Guidelines may be adopted and
the daily function of determining and monitoring liquidity of Rule 144A
Securities may be delegated to the Adviser, although the Board of Trustees will
retain ultimate responsibility for any determination regarding liquidity. All
factors will be considered in determining the liquidity of Rule 144A Securities
and all investments in Rule 144A Securities will be carefully monitored.
4
<PAGE>
International Warrants
The Adviser may invest up to 15% of the Portfolio's assets in warrants
on transferable securities of international issuers. Warrant holdings will
consist of equity warrants, index warrants, covered warrants, interest rate
warrants and long term options of, or relating to, international issuers.
Warrants are securities that give the holder the right, but not the obligation,
to subscribe to, in the case of a call, or sell, in the case of a put, equity
issues (consisting of common and preferred stock, convertible preferred stock
and warrants that themselves are only convertible into common, preferred or
convertible preferred stock) of the issuing company or a related company at a
fixed price either on a certain date or during a set period. The equity issue
underlying an equity warrant is outstanding at the time the equity warrant is
issued or is issued together with the warrant. At the time an equity warrant
convertible into a warrant is acquired or sold, the terms and conditions under
which the warrant received upon conversion can be exercised will have been
determined; the warrant received upon conversion will only be convertible into a
common, preferred or convertible preferred stock.
Equity warrants are generally issued in conjunction with an issue of
bonds or shares, although they also may be issued as part of a rights issue or
scrip issue. When issued with bonds or shares, they usually trade separately
from the bonds or shares after issuance. Bonds may be bought with warrants
attached. Most warrants trade in the same currency as the underlying stock
("domestic warrants"), but also may be traded in different currency
("euro-warrants"). Equity warrants are traded on a number of exchanges,
including but not limited to France, Germany, Japan, Netherlands, Switzerland
and the United Kingdom, and in over-the-counter markets. Since there is a
readily available market for these securities, the Adviser believes that
international warrants should be considered a liquid investment.
Index warrants are rights created by an issuer, typically a financial
institution, entitling the holder to purchase, in the case of a call, or sell,
in the case of a put, an equity index at a certain level over a fixed period of
time. Index warrant transactions settle in cash.
Covered warrants are rights created by an issuer, typically a financial
institution, normally entitling the holder to purchase from the issuer of the
covered warrant outstanding securities of another company (or in some cases a
basket of securities), which issuance may or may not have been authorized by the
issuer or issuers of the securities underlying the covered warrants. In most
cases, the holder of the covered warrant is entitled on its exercise to delivery
of the underlying security, but in some cases the entitlement of the holder is
to be paid in cash the difference between the value of the underlying security
on the date of exercise and the strike price. The securities in respect of which
covered warrants are issued are usually common stock, although they may entitle
the holder to acquire warrants to acquire common stock. Covered warrants may be
fully covered or partially covered. In the case of a fully covered warrant, the
issuer of the warrant will beneficially own all of the underlying securities or
will itself own warrants (which are typically issued by the issuer of the
underlying securities in a separate transaction) to acquire the securities. The
underlying securities or warrants are, in some cases, held by another member of
the issuer's group or by a custodian or other fiduciary for the holders of the
covered warrants.
Interest rate warrants are rights that are created by an issuer,
typically a financial institution, entitling the holder to purchase, in the case
of a call, or sell, in the case of a put, a specific bond issue or an interest
rate index (Bond Index) at a certain level over a fixed time period. Interest
rate warrants can typically be exercised in the underlying instrument or settle
in cash.
5
<PAGE>
Long term options operate much like covered warrants. Like covered
warrants, long term options are options created by an issuer, typically a
financial institution, entitling the holder to purchase from the issuer, in the
case of a call, or sell, in the case of a put, outstanding securities of another
issuer. Long term options have an initial period of one year or more, but
generally have terms between three and five years. At present, long term options
are traded only in the Netherlands, where a distinct market does not exist.
Unlike U.S. options, long term European options do not settle through a clearing
corporation that guarantees the performance of the counterparty. Instead, they
are traded on an exchange and subject to the exchange's trading regulations.
Only covered warrants, index warrants, interest rate warrants and long
term options issued by entities deemed to be creditworthy will be acquired. The
Adviser will monitor the creditworthiness of such issuers on an on-going basis.
Investment in these instruments involves the risk that the issuer of the
instrument may default on its obligation to deliver the underlying security or
warrants to acquire the underlying security (or cash in lieu thereof). To reduce
this risk, the holdings of covered warrants, index warrants, interest rate
warrants and long term options will be limited to those issued by entities that
either have a class of outstanding debt securities that is rated investment
grade or higher by a recognized rating service or otherwise are considered to
have the capacity to meet their obligations.
Options on Securities
Call options may be purchased and put options may be sold that are
quoted or traded on an official stock exchange or other regulated market as long
as premiums do not exceed 15% of the Portfolio's net asset value. Purchases of
call options and sales of put options are permitted only with respect to the
kind of underlying securities whose purchase is permitted through the Portfolio.
The equivalent of the bought call options and the sold put options
calculated at the strike price must be continually covered by liquid assets
until the corresponding positions are closed out.
The contract value of the call options purchased and the put options
sold in respect of a particular company together with the market value of the
securities of the same company already held through the Portfolio may not
permanently exceed 10% of the Portfolio's assets. Thereby the contract value
corresponds in the case of:
a) call options, to the exercise price plus the market value of the
options times number of units;
b) put options, to the exercise price less the market value of the option
times number of units
The contract value of the transactions effected according to the above
mentioned requirements which do not serve hedging purposes may not permanently
exceed 49% of the Portfolio's assets.
If a call option purchased is not sold or exercised when it has
remaining value, or if the market price of the underlying security remains equal
to or below the exercise price during the life of the option, the option will
expire worthless and the premium paid for the option will be lost.
For further information please refer to "Hedging Techniques".
6
<PAGE>
Depository Receipts
The Adviser may invest in securities issued in multi-national currency
units, such as the Euro, American Depository Receipts ("ADRs"), Global
Depository Receipts ("GDRs") or European Depository Receipts ("EDRs")
(collectively, "Depository Receipts"). ADRs are receipts, typically issued by a
U.S. bank or trust company, which evidence ownership of underlying securities
issued by a foreign corporation. GDRs may be traded in any public or private
securities market and may represent securities held by institutions located
anywhere in the world. EDRs are receipts issued in Europe which evidence a
similar ownership arrangement. Generally, ADRs, in registered form, are designed
for use in the U.S. securities markets and EDRs, in bearer form, are designed
for use in European securities markets. The Adviser may invest in Depository
Receipts through "sponsored" or "unsponsored" facilities if issues of such
Depository Receipts are available and are consistent with the Fund's investment
objective. A sponsored facility is established jointly by the issuer of the
underlying security and a depository, whereas a depository may establish an
unsponsored facility without participation by the issuer of the deposited
security. Holders of unsponsored Depository Receipts generally bear all the
costs of such facilities and the depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.
In order to seek to protect against a decline in value of the Portfolio's assets
due to fluctuating currency rates, the Adviser may engage in certain hedging
strategies, as described under "Hedging Techniques" below.
Securities of Other Investment Companies
The Adviser may invest in securities of another investment company
which are recognized as undertakings for collective investments in transferable
securities under the Council Directive 85/611 of the European Union in amounts
which (a) do not exceed 3% of the total outstanding voting stock of such
company, (b) do not exceed 5% of the value of the Portfolio's assets and (c)
when added to all other investment company securities held through the
Portfolio, the open-ended investment company holdings do not exceed 5% of the
value of the Portfolio's assets and the closed-end investment companies do not
exceed 10% of the value of the Portfolio's assets. Investors should note that
investment in the securities of other investment companies would involve the
payment of duplicative fees.
FIXED-INCOME INVESTMENTS
The Adviser may invest up to one-third of the Portfolio's assets in
transferable fixed-income investments from recognized countries. When the
Adviser invests in such debt securities, investment income may increase and may
constitute a large portion of the return of the Fund but, under these certain
circumstances, the Adviser would not expect the Fund to participate in market
advances or declines to the extent that it would if the Adviser remained fully
invested in equity securities.
The performance of the debt component of the securities being held
through the Portfolio depends primarily on interest rate changes, average
weighted maturity and the quality of the securities held. The debt component
will tend to decrease in value when interest rates rise and increase when
interest rates fall. Generally, shorter term securities are less sensitive to
interest rate changes, but longer term securities offer higher yields. The
Fund's share price and yield will also depend, in part, on the quality of the
investments being held through the Portfolio. While U.S. Government securities
are generally of high quality, government securities that are not backed by the
full faith and credit of the United States and other debt securities may be
affected by changes in the creditworthiness of the issuer of the security. The
extent that such changes are reflected in the Fund's share price will depend on
the extent of the investment in such securities.
7
<PAGE>
Unrated Debt Securities
The Adviser may invest in unrated debt instruments of foreign and
domestic issuers. Unrated debt, while not necessarily of lower quality than
rated securities, may not have as broad a market. Sovereign debt of foreign
governments is generally rated by country. Because these ratings do not take
into account individual factors relevant to each issue and may not be updated
regularly, the Adviser may treat such securities as unrated debt. See the
Appendix for a description of bond rating categories.
Convertible Securities
Transferable convertible securities in which the Adviser may invest,
comprised of both convertible debt and convertible preferred stock, may be
converted at either a stated price or at a stated rate into underlying shares of
common stock. Because of this feature, convertible securities enable an investor
to benefit from increases in the market price of the underlying common stock.
Convertible securities provide higher yields than the underlying equity
securities, but generally offer lower yields than non-convertible securities of
similar quality. The value of convertible securities fluctuates in relation to
changes in interest rates like bonds, and, in addition, fluctuates in relation
to the underlying common stock. The common stock received upon the conversion of
a convertible security or the exercise of a warrant may be retained.
MONEY MARKET INVESTMENTS
Although it is intended that the Portfolio's assets stay invested in
the equity and fixed income securities described herein and in the Prospectus to
the extent practical in light of the Fund's investment objective and long-term
investment perspective, the Portfolio's assets may be invested in bank deposits
and money market instruments maturing in less than 12 months to meet anticipated
expenses or for day-to-day operating purposes and when, in the Adviser's
opinion, it is advisable to adopt a temporary defensive position because of
unusual and adverse conditions affecting the equity market. In addition, when
large cash inflows are experienced through additional investments or the sale of
portfolio securities, and desirable securities that are consistent with the
investment objective are unavailable in sufficient quantities, assets may be
held in short-term investments for a limited time pending availability of such
securities. To the extent short-term trading is engaged in, short-term capital
gains or losses may be realized and increased transaction costs may be incurred.
U.S. Government Securities
The Adviser may invest the Portfolio's assets in debt obligations of
varying maturities issued or guaranteed by the United States government, its
agencies or instrumentalities. Direct obligations of the U.S. Treasury include a
variety of securities that differ in their interest rates, maturities and dates
of issuance. U.S. Government securities also include securities issued or
guaranteed by the Federal Housing Administration, Farmers Home Loan
Administration, Export-Import Bank of the United States, Small Business
Administration, Government National Mortgage Association, General Services
Administration, Central Bank for Cooperatives, Federal Farm Credit Banks,
Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal
Intermediate Credit Banks, Federal Land Banks, Federal National Mortgage
Association, Maritime Administration, Tennessee Valley Authority, District of
Columbia Armory Board and Student Loan Marketing Association. The Adviser also
may invest in instruments that are supported by the right of the issuer to
borrow from the United States Treasury and instruments that are supported by the
credit of the instrumentality. Because the United States government is not
obligated by law to provide support to an instrumentality it sponsors, the
Adviser will invest in obligations issued by such an instrumentality only if it
determines that the credit risk with respect to the instrumentality does not
make the securities unsuitable for investment.
8
<PAGE>
Foreign Government Securities
Foreign government securities generally consist of fixed income
securities supported by national, state or provincial governments or similar
political subdivisions. Foreign government securities also include debt
obligations of supranational entities, such as international organizations
designed or supported by governmental entities to promote economic
reconstruction or development, international banking institutions and related
government agencies. Examples of these include, but are not limited to, the
International Bank for Reconstruction and Development (the World Bank), the
Asian Development Bank, the European Investment Bank and the Inter-American
Development Bank.
Foreign government securities also include fixed income securities of
quasi-governmental agencies that are either issued by entities owned by a
national, state or equivalent government or are obligations of a political unit
that are not backed by the national government's full faith and credit. Further,
foreign government securities include mortgage-related securities issued or
guaranteed by national, state or provincial overnmental instrumentalities,
including quasi-governmental agencies.
Repurchase Agreements
Repurchase agreements may be entered into with high quality
counterparties, member banks of the Federal Reserve System and certain non-bank
dealers. Repurchase agreements are contracts under which the buyer of a security
simultaneously commits to resell the security to the seller at an agreed-upon
price and date.
Under the terms of a typical repurchase agreement, an underlying
security would be acquired for a relatively short period (usually not more than
one week) subject to an obligation of the seller to repurchase, and the buyer to
resell, the obligation at an agreed-upon price and time, thereby determining the
yield during the holding period. This arrangement results in a fixed rate of
return that is not subject to market fluctuations during the holding period. The
value of the underlying securities will at all times be at least equal to the
total amount of the purchase obligation, including interest. The buyer bears a
risk of loss in the event that the other party to a repurchase agreement
defaults on its obligations or becomes bankrupt and the buyer is delayed or
prevented from exercising the right to dispose of the collateral securities,
including the risk of a possible decline in the value of the underlying
securities during the period while the buyer seeks to assert this right. In
order to evaluate the risks, the Adviser, acting under the supervision of the
Trust's Board of Trustees, monitors the creditworthiness of those bank and
non-bank dealers with which repurchase agreements are entered into. A repurchase
agreement is considered to be a loan under the 1940 Act.
Reverse Repurchase Agreements
Reverse repurchase agreements may be entered into only with high
quality counterparties, member banks of the Federal Reserve System and certain
non-bank dealers. This is an agreement in which the Seller agrees to repurchase
securities sold by it at a mutually agreed upon time and price. As such, it is
viewed as the borrowing of money. Proceeds of borrowings under reverse
repurchase agreements are invested. This is the speculative factor known as
"leverage." If interest rates rise during the term of a reverse repurchase
agreement utilized for leverage, the value of the securities to be repurchased
as well as the value of securities purchased with the proceeds will decline.
Proceeds of a reverse repurchase transaction are not invested for a period which
exceeds the duration of the reverse repurchase agreement. A reverse repurchase
agreement is not entered into if, as a result, more than one-third of the market
9
<PAGE>
value of the Portfolio's assets, less liabilities other than the obligations
created by reverse repurchase agreements, is engaged in reverse repurchase
agreements. In the event that such agreements exceed, in the aggregate,
one-third of such market value, the amount of the obligations created by reverse
repurchase agreements is reduced within three days thereafter (not including
Sundays and holidays) or such longer period as the SEC may prescribe. A
segregated account with the Custodian is established and maintained with liquid
assets in an amount at least equal to the purchase obligations under the reverse
repurchase agreements. Such a segregated account consists of liquid, high grade
debt securities marked to the market daily, with additional liquid assets added
when necessary to insure that at all times the value of such account is equal to
the purchase obligations.
4(2) Commercial Paper
Under procedures adopted by the Board of Trustees, 4(2) Commercial
Paper may be considered to be liquid. If not considered liquid, such 4(2)
Commercial Paper will be subject to the 10% limitation of the purchase of
illiquid securities.
INVESTMENT TECHNIQUES
Foreign Investments
Investors should recognize that investing in foreign companies involves
certain considerations, including those discussed below, which are not typically
associated with investing in U.S. issuers. Since the Adviser will be investing
the Portfolio's assets substantially in securities denominated in Swiss Francs,
and since funds may be temporarily held in bank deposits denominated in Swiss
Francs, the Fund may be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rate between the Swiss Franc or such
other currencies, on the one hand, and the dollar on the other. A change in the
value of a foreign currency relative to the U.S. dollar will result in a
corresponding change in the dollar value of the assets denominated in that
foreign currency. Changes in foreign currency exchange rates may also affect the
value of dividends and interest earned, gains and losses realized on the sale of
securities and net investment income and gains, if any, to be distributed.
The rate of exchange between the U.S. dollar and other currencies is
determined by the forces of supply and demand in the foreign exchange markets.
Changes in the exchange rate may result over time from the interaction of many
factors directly or indirectly affecting economic and political conditions in
the United States and a particular foreign country, including economic and
political developments in other countries. Of particular importance are rates of
inflation, interest rate levels, the balance of payments and the extent of
government surpluses or deficits in the United States and the particular foreign
country, all of which are in turn sensitive to the monetary, fiscal and trade
policies pursued by the governments of the United States and other foreign
countries important to international trade and finance. Governmental
intervention may also play a significant role. National governments rarely
voluntarily allow their currencies to float freely in response to economic
forces. Sovereign governments use a variety of techniques, such as intervention
by a country's central bank or imposition of regulatory controls or taxes, to
affect the exchange rates of their currencies.
Many of the foreign securities held will not be registered with, nor
the issuers thereof be subject to reporting requirements of, the SEC.
Accordingly, there may be less publicly available information about the
securities and about the foreign company or government issuing them than is
available about a domestic company or government entity. Foreign issuers are
generally not subject to uniform financial reporting standards, practices and
requirements comparable to those applicable to U.S. issuers. In addition, with
10
<PAGE>
respect to some foreign countries, there is the possibility of expropriation or
confiscatory taxation, limitations on the removal of funds or other assets,
political or social instability, or domestic developments which could affect
U.S. investments in those countries. Moreover, individual foreign economies may
differ favorably or unfavorably from the U.S. economy in such respects as growth
of gross national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payment positions. The Adviser may invest in
securities of foreign governments (or agencies or instrumentalities thereof),
and many, if not all, of the foregoing considerations apply to such investments
as well.
The interest payable on foreign securities may be subject to foreign
withholding taxes, and while investors may be able to claim some credit or
deduction for such taxes with respect to their allocated shares of such foreign
tax payments, the general effect of these taxes will be to reduce the Fund's
income.
HEDGING TECHNIQUES
Futures Activities
Futures contracts for the purchase and sale of fixed-income securities
or foreign currencies may be entered into and related options that are traded on
foreign as well as U.S. exchanges may be purchased or written. These investments
may be made solely for the purpose of hedging against changes in the value of
portfolio securities due to anticipated changes in interest rates, currency
values and/or market conditions when the transactions are economically
appropriate to the reduction of risks inherent in the management of the
Portfolio's assets and not for purposes of speculation. Positions in currency
futures and interest rate futures transactions will not be entered into if the
value of such contracts exceeds the value of the assets of the Portfolio in the
applicable currency, and their terms are longer than the maturity dates of the
assets.
Futures Contracts. A futures contract for the purchase or sale of
fixed-income securities provides for the future sale by one party and the
purchase by the other party of a certain amount of a specific debt instrument at
a specified price, date, time and place. A foreign currency futures contract
provides for the future sale by one party and the purchase by the other party of
a certain amount of a specified foreign currency at a specified price, date,
time and place.
The purpose of entering into a futures contract is to protect the
Portfolio's assets from fluctuations in value without necessarily buying or
selling the securities. Of course, since the value of portfolio securities will
far exceed the value of the futures contracts sold, an increase in the value of
the futures contracts could only mitigate but not totally offset the decline in
the value of such assets. No consideration is paid or received upon entering
into a futures contract. Upon entering into a futures contract, an amount of
cash or other liquid obligations equal to a portion of the contract amount must
be deposited in a segregated account with the Custodian or approved Futures
Commodity Merchant (FCM). This amount is known as "initial margin" and is in the
nature of a performance bond or good faith deposit on the contract which is
returned upon termination of the futures contract, assuming all contractual
obligations have been satisfied. The broker will have access to amounts in the
margin account if the contractual obligations are not met. Subsequent payments,
known as "variation margin," to and from the broker, will be made daily as the
price of the securities underlying the futures contract fluctuates, making the
long and short positions in the futures contract more or less valuable, a
process known as "marking-to-market." At any time prior to the expiration of a
futures contract, the position may be closed by taking an opposite position,
which will operate to terminate the existing position in the contract.
There are several risks in connection with the use of futures contracts
as a hedging device. Successful use of futures contracts is subject to the
ability of the Adviser to predict correctly movements in the price of the
11
<PAGE>
securities or currencies and the direction of the stock indices underlying the
particular hedge. These predictions and, thus, the use of futures contracts
involve skills and techniques that are different from those involved in the
management of the portfolio securities being hedged. In addition, there can be
no assurance that there will be a correlation between movements in the price of
the underlying securities or currencies and movements in the price of the
securities which are the subject of the hedge. A decision concerning whether,
when and how to hedge involves the exercise of skill and judgment and even a
well-conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or trends in interest rates.
Positions in futures contracts and options on futures contracts may be
closed out only on the exchange on which they were entered into (or through a
linked exchange). No secondary market exists for such contracts. Although it is
intended that futures contracts will only be entered into if there is an active
market for such contracts, there is no assurance that an active market will
exist for the contracts at any particular time. Some futures exchanges limit the
amount of fluctuation permitted in futures contract prices during a single
trading day. Once the daily limit has been reached in a particular contract, no
trades may be made that day at a price beyond that limit. It is possible that
futures contract prices could move to the daily limit for several consecutive
trading days with little or no trading, thereby preventing prompt liquidation of
futures positions and subjecting the Fund to substantial losses. In such event,
and in the event of adverse price movements, daily cash payments of variation
margin would be required. In such circumstances, an increase in the value of the
portion of the securities being hedged, if any, may partially or completely
offset losses on the futures contract. However, as described above, there is no
guarantee that the price of the securities being hedged will, in fact, correlate
with the price movements in a futures contract and thus provide an offset to
losses on the futures contract.
If the Adviser has hedged against the possibility of an event adversely
affecting the value of securities being held through the Portfolio and that
event does not occur, part or all of the benefit of the increased value of
securities which have been hedged will be lost due to the offsetting losses in
futures positions. Losses incurred in hedging transactions and the costs of
these transactions will affect performance. In addition, in such situations, if
there is insufficient cash, securities might have to be sold to meet daily
variation margin requirements at a time when it would be disadvantageous to do
so. These sales of securities could, but will not necessarily, be at increased
prices which reflect the change in interest rates or currency values, as the
case may be.
Interest Rate Futures. Interest rate futures contracts are standardized
contracts traded on commodity exchanges involving an obligation to purchase or
sell a predetermined amount of debt security at a fixed date and price.
When deemed advisable, interest rate futures contracts or related
options that are traded on U.S. or foreign exchanges may be entered into. Such
investments will be made solely for the purpose of hedging against the effects
of changes in the value of securities due to anticipated changes in interest and
when the transactions are economically appropriate to the reduction of risks
inherent in the management of the Portfolio's assets.
Options on Futures Contracts. Put and call options may be purchased and
written on interest rate and foreign currency futures contracts that are quoted
or traded on an official stock exchange or other regulated market as a hedge
against changes in interest rates and market conditions, and closing
transactions may be entered into with respect to such options to terminate
existing positions. There is no guarantee that such closing transactions can be
effected.
12
<PAGE>
An option on an interest rate futures contract, as contrasted with the
direct investment in such a contract, gives the purchaser the right, in return
for the premium paid, to assume a position in a fixed-income security futures
contract at a specified exercise price at any time prior to the expiration date
of the option. An option on a foreign currency futures contract, as contrasted
with the direct investment in the contract, gives the purchaser the right, but
not the obligation, to assume a long or short position in the relevant
underlying currency at a predetermined exercise price at a time in the future.
Upon exercise of an option, the delivery of the futures position by the writer
of the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's futures margin account, which represents the
amount by which the market price of the futures contract exceeds, in the case of
a call, or is less than, in the case of a put, the exercise price of the option
on the futures contract. The potential loss related to the purchase of an option
on futures contracts is limited to the premium paid for the option (plus
transaction costs). Because the value of the option is fixed at the point of
sale, there are no daily cash payments to reflect changes in the value of the
underlying contract; however, the value of the option does change daily and that
change would be reflected in the net asset value of the Fund.
There are several risks relating to options on futures contracts. The
ability to establish and close out positions on such options will be subject to
the existence of a liquid market. In addition, the purchase of put or call
options will be based upon predictions as to anticipated trends in interest
rates and securities markets by the Adviser, which could prove to be incorrect.
Even if those expectations were correct, there may be an imperfect correlation
between the change in the value of the options and of the portfolio securities
hedged.
Equity Index Futures Contracts. The Adviser also may enter into equity
index futures contracts to offset anticipated price changes in securities that
are currently held or are anticipated to be purchased. An equity index future
contract is an agreement to buy or sell an index relating to equity securities
at a mutually agreed upon date and price. Equity index futures contracts are
often used to hedge against anticipated changes in the level of stock prices. As
with other types of futures contracts, as noted above, when this type of
contract is entered into a deposit called an "initial margin" will be made. This
initial margin must be equal to a specified percentage of the value of the
contract and it is in the nature of a performance bond or good faith deposit on
the contract. Subsequent payments may also be made, known as "variation margin,"
on a daily basis as the positions in the futures contract become more or less
valuable.
Limitations on Futures and Options Transactions. The Commodity Exchange
Act prohibits U.S. persons, such as the Fund, from buying or selling certain
foreign futures contracts or options on such contracts. Accordingly, foreign
futures or options transactions will not be engaged in unless the contracts in
question may lawfully be purchased and sold by U.S. persons in accordance with
applicable Commodity Futures Trading Commission (CFTC) regulations or CFTC staff
advisories, interpretations and no action letters. The Fund has filed a notice
of eligibility for exclusion from the definition of the term "commodity pool
operator" with the CFTC and the National Futures Association, which regulate
trading in the futures markets. The Fund intends to comply with Rule 4.5 under
the Commodity Exchange Act, which limits the extent to which the Fund can commit
assets to initial margin deposits and option premiums.
In addition, in order to assure that the Fund will not be considered a
"commodity pool" for purposes of CFTC rules, transaction in futures contracts or
options on futures contracts will only be entered into if (1) such transactions
constitute bona fide hedging transactions, as defined under CFTC rules or (2) no
more than 5% of the Portfolio's assets are committed as initial margin or
premiums to positions that do not constitute bona fide hedging transactions.
13
<PAGE>
Currency Hedging Transactions
Investments in foreign securities involve foreign currencies. The value
of the Portfolio's assets may be affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange control regulations, including
blockage of currency conversions, and costs may be incurred in connection with
conversions between various currencies. As discussed in this section on currency
hedging transactions, the Adviser may engage in currency hedging transactions to
protect against uncertainty in the level of future exchange rates. The Adviser
may seek to protect principally against changes in the value of foreign
currencies when compared to the Swiss Franc, the principal denomination of the
Portfolio's assets.
The value of the Fund's assets as measured in U.S. dollars also may be
affected favorably or unfavorably by changes in currency rates and in exchange
control regulations. The Adviser, however, does not presently intend to engage
in currency transactions to hedge the currency risks of investing in Swiss
Francs and other currencies, when compared to U.S. dollars. For this reason, the
Fund may be exposed to increased risk of changes in currency valuations.
Income received from currency hedging transactions could be used to pay
expenses and would increase total return. Foreign currency transactions will be
conducted either on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency market or through forward foreign exchange contracts to
purchase or sell currency. Listed foreign currency options and options on
foreign currency futures may be purchased and sold for hedging purposes.
Instruments offered by brokers that combine forward contracts, options
and securities in order to reduce foreign currency exposure may also be invested
in.
The following is a description of the hedging instruments which may be
utilized with respect to foreign currency exchange rate fluctuation risks.
Forward Currency Contracts. A forward currency contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. Dealings in forward
currency exchange will be limited to hedging involving either specific
transactions or portfolio positions. Transaction hedging is the purchase or sale
of forward currency with respect to specific receivables or payables generally
accruing in connection with the purchase or sale of portfolio securities.
Position hedging is the sale of forward currency with respect to portfolio
security positions denominated or quoted in that currency or in another currency
in which portfolio securities are denominated, the movements of which tend to
correlate to the movement in the currency sold forward (the "hedged currency").
A hedge with respect to a particular currency may not be positioned to an extent
greater than the aggregate market value (at the time of making such sale) of the
securities denominated or quoted in or currently convertible into that
particular currency or the hedged currency. If a position hedging transaction is
entered into, cash or liquid securities will be placed in a segregated account
in an amount equal to the value of the assets committed to the consummation of
the forward contract or the currency will be owned subject to the hedge, or the
right to buy or sell it as the case may be. If the value of the securities
placed in the segregated account declines, additional cash or securities will be
placed in the account so that the value of the account will equal the amount of
the commitment with respect to the contract. Hedging transactions may be made
from any non-Swiss currency into Swiss francs or into other appropriate
currencies.
14
<PAGE>
Forward contracts are entered into in the interbank market conducted
directly between currency traders (usually large U.S. or foreign commercial
banks) and their customers. Forward contracts may be entered into in the
following two circumstances:
(1) When a foreign currency denominated security is purchased for
settlement in the near future, the foreign currency needed to
pay for and settle the transaction, may immediately be
purchased in the forward market.
(2) When the Adviser believes that the currency of a specific
country may deteriorate against another currency, a forward
contract may be entered into to sell the less attractive
currency and buy the more attractive one. The amount in
question could be more or less than the value of the
securities being held through the Portfolio denominated in the
less attractive currency. While such actions are intended to
protect the Fund from adverse currency movements, there is a
risk that the currency movements involved will not be properly
anticipated. Use of this currency hedging technique may also
be limited by management's need to protect the U.S. tax status
of the Fund as a regulated investment company.
At or before the maturity of a forward contract, a portfolio security
may be sold and delivery of the currency may be taken, or the security may be
retained and the contractual obligation to deliver the currency may be offest by
purchasing a second contract pursuant to which, on the same maturity date, the
same amount of the currency that is obligated to be delivered will be obtained.
If the portfolio security is retained and an offsetting transaction is engaged
in, at the time of execution of the offsetting transaction, a gain or a loss
will be incurred to the extent that movement has occurred in forward contract
prices. Should forward prices decline during the period between entering into a
forward contract for the sale of a currency and the date an offsetting contract
is entered into for the purchase of the currency, a gain will be realized to the
extent the price of the currency to be sold exceeds the price of the currency to
be purchased. Should forward prices increase, a loss will be suffered to the
extent the price of the purchased currency exceeds the price of the sold
currency.
The cost of engaging in currency transactions varies with factors such
as the currency involved, the length of the contract period and the market
conditions then prevailing. Because transactions in currency exchange are
usually conducted on a principal basis, no fees or commissions are involved. The
use of forward currency contracts does not eliminate fluctuations in the
underlying prices of the securities, but it does establish a rate of exchange
that can be achieved in the future. In addition, although forward currency
contracts limit the risk of loss due to a decline in the value of the hedged
currency, at the same time, they limit any potential gain that might result
should the value of the currency increase.
If a devaluation is generally anticipated, it may not be possible to
contract to sell the currency at a price above the devaluation level it
anticipates.
Foreign Currency Options. Put and call options on foreign currencies
may be purchased for the purpose of hedging against changes in future currency
exchange rates. Foreign currency options generally have three, six and nine
month expiration cycles. Put options convey the right to sell the underlying
currency at a price which is anticipated to be higher than the spot price of the
currency at the time the option expires. Call options convey the right to buy
the underlying currency at a price which is expected to be lower than the spot
price of the currency at the time the option expires.
Foreign currency options may be used under the same circumstances that
forward currency exchange transactions may be used. A decline in the value of a
15
<PAGE>
foreign currency in which securities are denominated, for example, will reduce
the value of the securities, even if their value in the foreign currency remains
constant. In order to protect against such diminution in the value of
securities, put options on the foreign currency may be purchased. If the value
of the currency does decline the right to sell the currency for a fixed amount
will be maintained and will thereby offset, in whole or in part, the adverse
effect on its securities that otherwise would have resulted. Conversely, if a
rise in the value of a currency in which securities to be acquired are
denominated is projected, thereby potentially increasing the cost of the
securities, call options on the particular currency may be purchased. The
purchase of these options could offset, at least partially, the effects of the
adverse movements in exchange rates. The benefit derived from purchases of
foreign currency options, like the benefit derived from other types of options,
will be reduced by the amount of the premium and related transaction costs. In
addition, if currency exchange rates do not move in the direction or to the
extent anticipated, losses on transactions in foreign currency options could be
sustained that would require a portion or all of the benefits of advantageous
changes in the rates to be forgone.
Options on Securities
Call options may be sold and put options may be bought that are quoted
or traded on an official stock exchange or other regulated market exclusively
for hedging purposes i.e. at the time of selling call options or buying put
options on securities, either the underlying securities or equivalent call
options or other instruments which may be used to adequately cover the
liabilities arising therefrom, such as warrants must be held. The underlying
securities to said call options sold (or put options bought) may not be realized
as long as the options thereon have not expired, unless these are covered
(closed) by matching options or by other instruments which may be used to this
effect.
The contract value of the hedging transactions effected may not exceed
100% of the Portfolio's assets at the time the contract is concluded.
Potential commitments from sales of covered call options will not be
taken which, valued at the strike price, exceed 25% of the Portfolio's assets
less the options held through the Portfolio.
By buying a put, the risk of loss from a decline in the market value of
the security is limited until the put expires. Any appreciation in the value of
and the yield otherwise available from the underlying security, however, will be
partially offset by the amount of the premium paid for the put option and any
related transaction costs. In order to generate income or as a hedge to reduce
investment risk, the adviser may write covered call options (within the limits
described above). Fees (referred to as "premiums") are realized for granting the
rights evidenced by the call options written. If a put purchased is not sold or
exercised when it has remaining value, or if the market price of the underlying
security remains equal to or greater than the exercise price, during the life of
the option, the put will expire worthless and the premium paid for the option
will be lost.
Only covered call options may be written. Accordingly, whenever a call
option is written the ownership or the present right to acquire the underlying
security will be retained without additional consideration for as long as the
obligation, as the writer of the option, continues. To support the obligation to
purchase the underlying security, if a put option is exercised, either (1) cash,
U.S. Government securities or other liquid assets having a value at least equal
to the exercise price of the underlying securities will be deposited with the
Custodian in a segregated account or (2) an equivalent number of puts of the
same "series" (that is, puts on the same underlying security having the same
exercise prices and expiration dates as those written), or an equivalent number
of puts of the same "class" (that is, puts on the same underlying security) with
exercise prices greater than those that have been written (or, if the exercise
prices of the puts held are less than the exercise prices of those written, the
16
<PAGE>
difference will be deposited with the Custodian in a segregated account) will be
maintained.
The principal reason for writing covered call options on a security is
to attempt to realize, through the receipt of premiums, a greater return than
would be realized on the securities alone. In return for a premium, the writer
of a covered call option forfeits the right to any appreciation in the value of
the underlying security above the strike price for the life of the option (or
until a closing purchase transaction can be effected). Nevertheless, the call
writer retains the risk of a decline in the price of the underlying security.
The size of the premiums may be received may be adversely affected as new or
existing institutions, including other investment companies, engage in or
increase their option-writing activities.
Options written will normally have expiration dates between one and
nine months from the date written. The exercise price of the options may be
below, equal to or above the market values of the underlying securities at the
times the options are written. In the case of call options, these exercise
prices are referred to as "in-the-money," "at-the-money" and "out-of-the-money,"
respectively. In-the-money call options may be written when the Adviser expects
that the price of the underlying security will remain flat or decline moderately
during the option period. At-the-money call options may be written when the
Adviser expects that the price of the underlying security will remain flat or
advance moderately during the option period. Out-of-the-money call options may
be written when the Adviser expects that the premiums received from writing the
call option plus the appreciation in market price of the underlying security up
to the exercise price will be greater than the appreciation in the price of the
underlying security alone. In any of the preceding situations, if the market
price of the underlying security declines and the security is sold at this lower
price, the amount of any realized loss will be offset wholly or in part by the
premium received.
Upon the exercise of a put option written an economic loss may be
suffered equal to the difference between the price required to purchase the
underlying security and its market value at the time of the option exercise,
less the premium received for writing the option. Upon the exercise of a call
option written, an economic loss may be suffered equal to the excess of the
security's market value at the time of the option's exercise over the greater of
(i) the acquisition cost of the security and (ii) the exercise price, less the
premium received for writing the option.
So long as the obligation of the writer of an option continues, the
writer may be assigned an exercise notice by the broker-dealer through which the
option was sold, requiring the writer to deliver the underlying security against
payment of the exercise price. This obligation terminates when the option
expires or the writer effects a closing purchase transaction. The writer can no
longer effect a closing purchase transaction with respect to an option once it
has been assigned an exercise notice. To secure its obligation to deliver the
underlying security when it writes a call option, the writer will be required to
deposit in escrow the underlying security or other assets in accordance with the
rules of the Options Clearing Corporation (the "Clearing Corporation") and of
the securities exchange on which the option is written.
A closing purchase transaction may be engaged in to realize a profit,
to prevent an underlying security from being called or put or, in the case of a
call option, to unfreeze an underlying security (thereby permitting its sale or
the writing of a new option on the security prior to the outstanding option's
expiration). To effect a closing purchase transaction, prior to the holder's
exercise of an option, an option would be purchased of the same series as that
on which there is a desire to terminate the obligation. The obligation under an
option that has been written would be terminated by a closing purchase
transaction, but an option would not be deemed to be owned as the result of the
transaction. There can be no assurance that the Adviser will be able to effect
closing purchase transactions at a time when it wishes to do so. To facilitate
17
<PAGE>
closing purchase transactions, however, options will be written if a secondary
market for the option exists on a recognized securities exchange or in the
over-the-counter market. Option writing may be limited by position and exercise
limits established by securities exchanges and the National Association of
Securities Dealers, Inc. (the "NASD"). Furthermore, at times, option writing may
be limited in order for the Fund to qualify as a regulated investment company
under the Code. Options transactions may be entered into as hedges to reduce
investment risk, generally by making an investment expected to move in the
opposite direction of a portfolio position. A hedge is designed to offset a loss
on a portfolio position with a gain on the hedge position. The Fund bears the
risk that the prices of the securities being hedged will not move in the same
amount as the hedge. Hedging transactions will only be engaged in when the
Adviser deems advisable. Successful use of options will depend on the Adviser's
ability to correctly predict movements in the direction of the security or
currency underlying the option used as a hedge. Losses incurred in hedging
transactions and the costs of these transactions will affect the Fund's
performance.
A profit or loss may be realized upon entering into a closing
transaction. In cases where an option has been written, a profit will be
realized if the cost of the closing purchase transaction is less than the
premium received upon writing the original option and a loss will be incurred if
the cost of the closing purchase transaction exceeds the premium received upon
writing the original option. Similarly, when an option has been purchased and a
closing sale transaction has been engaged in, whether a profit or loss is
realized will depend upon whether the amount received in the closing sale
transaction is more or less than the premium initially paid for the original
option plus the related transaction costs.
Only those options for which the Adviser believes there is an active
secondary market so as to facilitate closing transactions will generally be
purchased or written. There is no assurance that sufficient trading interest
will exist to create a liquid secondary market on a securities exchange for any
particular option or at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an option may cease to
exist for a variety of reasons. In the past, for example, higher than
anticipated trading activity or order flow or other unforeseen events have at
times rendered certain of the facilities of the Clearing Corporation and various
securities exchanges inadequate and resulted in the institution of special
procedures, such as trading rotations, restrictions on certain types of orders
or trading halts or suspensions in one or more options. There can be no
assurance that similar events, or events that may otherwise interfere with the
timely execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options. Moreover,
the ability to terminate options positions established in the over-the-counter
market may be more limited than for exchange-traded options and also may involve
the risk that securities dealers participating in over-the-counter transactions
would fail to meet their obligations. Over-the-counter options will only be
purchased from dealers whose debt securities are considered to be investment
grade. If a covered call option writer is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
security until the option expires or it delivers the underlying security upon
exercise. In either case, the writer would continue to be at market risk on the
security and could face higher transaction costs, including brokerage
commissions.
Securities exchanges generally have established limitations governing
the maximum number of calls and puts of each class which may be held or written,
or exercised within certain time periods, by an investor or group of investors
acting in concert (regardless of whether the options are written on the same or
different securities exchanges or are held, written or exercised in one or more
accounts or through one or more brokers). It is possible that the Fund and other
clients of the Adviser and certain of its affiliates may be considered to be
such a group. A securities exchange may order the liquidation of positions found
to be in violation of these limits and it may impose certain other sanctions.
Dollar amount limits apply to U.S. Government securities. These limits may
restrict the number of options that may be purchased on a particular security.
18
<PAGE>
In the case of options written that are deemed covered by virtue of
holding convertible or exchangeable preferred stock or debt securities, the time
required to convert or exchange and obtain physical delivery of the underlying
common stock with respect to options which have been written may exceed the time
within which delivery must be made in accordance with an exercise notice. In
these instances, the underlying securities may be purchased or temporarily
borrowed for purposes of physical delivery. By so doing, no market risk will be
born, since the absolute right to receive from the issuer of the underlying
security an equal number of shares to replace the borrowed stock will be
retained. However, additional transaction costs or interest expenses in
connection with any such purchase or borrowing may be incurred.
Additional risks exist with respect to certain of the U.S. Government
securities for which covered call options may be written. If covered call
options are written on mortgage-backed securities, the mortgage-backed
securities that are held as cover may, because of scheduled amortization or
unscheduled prepayments, cease to be sufficient cover. If this occurs, an
appropriate additional amount of mortgage-backed securities will be purchased to
compensate for the decline in the value of the cover.
In addition to covered options being written for other purposes,
options transactions may be entered into as hedges to reduce investment risk,
generally by making an investment expected to move in the opposite direction of
a portfolio position. A hedge is designed to offset a loss on a portfolio
position with a gain on the hedged position; at the same time, however, a
properly correlated hedge will result in a gain on the portfolio position being
offset by a loss on the hedged position. There is a risk that the prices of the
securities being hedged will not move in the same amount as the hedge. Hedging
transactions will only be engaged in when the Adviser deems advisable.
Successful use of options will be subject to the Adviser's ability to predict
correctly movements in the direction of the securities underlying the option
used as a hedge. Losses incurred in hedging transactions and the costs of these
transactions will affect the Fund's performance.
Options on Share Indices
Call options may be sold and put options may be bought on share indices
for hedging purposes only. The following provisions apply:
a) there must be a high degree of correlation between the composition
of the share index and the composition of the underlying securities to
be hedged.
b) the contract value of the hedging transactions carried out according to
this paragraph may not exceed 100% of the market value of the underlying
securities to be hedged at the time the contract is concluded.
Options on indices are similar to options on securities except that on
exercise or assignment, the parties to the contract pay or receive an amount of
cash equal to the difference between the closing value of the index and the
exercise price of the option times a specified multiple. The effectiveness of a
hedge employing stock index options will depend primarily on the degree of
correlation between movements in the value of the index underlying the option
and in the portion of the portfolio being hedged.
INVESTMENT LIMITATIONS
The following investment limitations apply to the Portfolio's assets.
These limitations will continue to apply to all of the assets being held through
the Portfolio unless a majority of the entities investing through the Portfolio
decide otherwise. These limitations have been adopted by the Trust with respect
to the Fund as fundamental policies and may not be changed without the
affirmative vote of the holders of a majority of the Fund's outstanding shares.
Such majority is defined as the lesser of (a) 67% or more of the shares present
19
<PAGE>
at the meeting, if the holders of more than 50% of the outstanding shares of the
Fund are present or represented by proxy, or (b) more than 50% of the
outstanding shares.
The Adviser may not:
1 issue senior securities through the Portfolio. For purposes of this
restriction, borrowing money in accordance with paragraph 2 below,
making loans in accordance with paragraph 6 below, the issuance of
shares in multiple classes or series, the purchase or sale of options,
futures contracts, forward commitments, swaps and transactions in
repurchase agreements are not deemed to be senior securities;
2 borrow money, except in amounts not to exceed one third of the total
assets being held through the Portfolio (including the amount borrowed)
(i) from banks for temporary or short-term purposes or for the
clearance of transactions, (ii) in connection with the redemption of
Fund shares or to finance failed settlements of portfolio trades
without immediately liquidating portfolio securities or other assets,
(iii) in order to fulfill commitments or plans to purchase additional
securities pending the anticipated sale of other portfolio securities
or assets and (iv) pursuant to reverse repurchase agreements entered
into through the Portfolio. For purposes of this restriction, (a) the
deposit of assets in escrow in connection with the purchase of
securities on a when-issued or delayed-delivery basis and (b)
collateral arrangements with respect to options, futures or forward
currency contracts will not be deemed to be borrowings or pledges of
the assets being held through the Portfolio;
3 underwrite any issue of securities through the Portfolio except to the
extent that the investment in restricted securities and the purchase of
fixed-income securities directly from the issuer thereof in accordance
with the Portfolio's investment objective, policies and limitation may
be deemed to be underwriting or as otherwise permitted by law;
4 purchase or sell real estate or related option rights through the
Portfolio except that the Adviser may (i) acquire or lease office space
for the use of the Fund, (ii) invest through the Portfolio in
securities of issuers that invest in real estate or interests therein,
(iii) invest through the Portfolio in securities that are secured by
real estate or interests therein, (iv) purchase and sell
mortgage-related securities through the Portfolio, and (v) hold and
sell real estate acquired through the Portfolio as a result of the
ownership of securities;
5 acquire commodities or commodity contracts (including precious metals
and certificates representing them), except the Adviser may purchase
and sell financial futures contracts, options on financial futures
contracts and warrants and may enter into swap and forward commitment
transactions through the Portfolio. The entry into forward foreign
currency exchange contracts is not and shall not be deemed to involve
investing in commodities;
6 make loans, except that the Adviser may (i) lend portfolio securities
with a value not exceeding one-third of the net assets being held
through the Portfolio, (ii) enter into repurchase agreements, and (iii)
purchase all or a portion of an issue of debt securities (including
privately issued debt securities), bank loan participation interests,
bank certificates of deposit, bankers' acceptances, debentures or other
securities, whether or not the purchase is made upon the original
issuance of the securities.
Non-Fundamental Investment Restrictions. The investment restrictions described
below are not fundamental policies and may be changed by the Board of Trustees
without a shareholder vote.
20
<PAGE>
The Adviser may not:
(i) purchase securities of other investment companies if as a result (i)
more than 5% of the total assets being held through the Portfolio will
be invested in the securities of one investment company, (ii) more than
5% of the total assets being held through the Portfolio will be
invested in the aggregate in securities of open-ended investment
companies as a group, (ii) more than 10% of the total assets being held
through the Portfolio will be invested in the aggregate in securities
of open-ended investment companies as a group, or (iv) more than 3% of
the outstanding voting stock of any one investment company will be held
through the Portfolio. Such investments may only be made if the
investment company in question is recognized as an UCITS.
(ii) invest more than 10% of the value of the net assets being held through
the Portfolio in securities which may be illiquid because of legal or
contractual restrictions on resale or securities for which there are no
readily available market quotations. For purposes of this limitation,
repurchase agreements with maturities greater than seven days and time
deposits maturing in more than seven calendar days shall be considered
illiquid;
(iii) make short sales of securities through the Portfolio or maintain a
short position through the Portfolio, except that the Adviser may
maintain short positions through the Portfolio in forward currency
contracts, options and futures contracts;
(iv) purchase securities through the Portfolio on margin, except that the
Adviser may obtain any short-term credits necessary for the clearance
of purchases and sales of securities through the Portfolio. For
purposes of this restriction, the maintenance of margin in connection
with options, forward contracts and futures contracts or related
options will not be deemed to be a purchase of securities on margin;
(v) invest more than 10% of the net assets being held through the Portfolio
in securities that are not Recognized Securities or in debt instruments
that are treated as equivalent to transferable securities;
(vi) invest more than 10% of the net assets being held through the Portfolio
in securities of any one issuer or invest more than 40% of the total
assets being held through the Portfolio in the aggregate in the
securities of those issuers in which the Adviser has invested in excess
of 5% but not more than 10% of the net assets being held through the
Portfolio;
(vii) invest more than 35% of the net assets being held through the Portfolio
in securities issued or guaranteed by an EU member state, its local
authorities, another recognized country or a public international body
of which one or more member states of the EU are members. Such
securities are not taken into account in determining the 40% maximum in
subsection (vi) above. The limits in paragraphs (vi) and (vii) are not
cumulative. As a result, the investments in securities of the same
issuer as defined in paragraphs (vi) or (vii) may not under any
circumstances exceed a total of 35% of the net assets being held
through the Portfolio. By way of derogation from sections (vi) and
(vii), the Adviser may invest in accordance with the principle of risk
diversification up to 100% of the net assets being held through the
Portfolio in transferable securities issued or guaranteed by an EU
member state, its local authorities, another recognized country or a
public international body of which one or more member states of the EU
are members, provided however, that the Adviser must hold through the
Portfolio securities from at least six different issues and that the
securities from any one issue may not account for more than 30% of the
net assets being held through the Portfolio;
21
<PAGE>
(viii) invest more than 10% in the securities in circulation of a particular
category from the same issuer or acquire shares through the Portfolio
carrying voting rights which would result in de jure or de facto
control or the exercise of a significant influence over the management
of the issuer;
(ix) grant loans through the Portfolio to third parties or act as guarantor
on behalf of third parties;
(x) take up loans through the Portfolio exceeding a total of 10% of the net
assets being held through the Portfolio at market, and only then in the
form of short-term credits from highly rated banks;
(xi) pledge securities through the Portfolio as collateral for a secured
loan, mortgage them or otherwise lend them through the Portfolio as
collateral security unless necessary with regard to the lendings
permitted in paragraph (x). In this case, such mortgaging, collateral
lending or pledging may not account for more than 10% of the net assets
being held through the Portfolio at market. The lodgement of securities
or other assets in a special safe custody account in connection with
options and financial futures contracts are not deemed to constitute
collateral lending or pledging for the purpose of this provision;
(xii) invest through the Portfolio in any assets associated with an unlimited
liability;
(xiii) borrow money, except in amounts not to exceed 10% of the total assets
being held through the Portfolio (including the amount borrowed) (i)
from banks for temporary or short-term purposes or for the clearance of
transactions, (ii) in connection with the redemption of Fund shares or
to finance failed settlements of portfolio trades without immediately
liquidating portfolio securities or other assets, (iii) in order to
fulfill commitments or plans to purchase additional securities pending
the anticipated sale of other portfolio securities or assets and (iv)
pursuant to reverse repurchase agreements entered into through the
Portfolio. For purposes of this restriction, (a) the deposit of assets
in escrow in connection with the purchase of securities on a
when-issued or delayed-delivery basis and (b) collateral arrangements
with respect to options, futures or forward currency contracts will not
be deemed to be borrowings or pledges of the assets being held through
the Portfolio;
In addition:
(xv) No associated party may (with the exception of shares), for its own
account, acquire securities from, sell securities to or lend securities
as collateral through the Portfolio, nor for its own account , extend
loans to or obtain loans through the Portfolio, where such transactions
do not fall within the restrictions and other regulations imposed by
the Trustees or their delegates and either a) in the case of securities
the price of the security cannot be determined through a publicly
available listing on an internationally recognized securities market,
or , on a case-by-case basis, by the Trustees or their delegates using
market prices b) in the case of loans, the interest rates are not in
line with those applicable on internationally recognized money markets.
In this connection, "associated parties" are the investment advisers
and the custodian, all managers and employees, and all their
significant shareholders (this means investors which, in the knowledge
of the board of directors, hold on their own behalf or on behalf of
others more than 10% of the issued and outstanding shares of a
company).
22
<PAGE>
If a percentage restriction is adhered to at the time of an investment,
a later increase or decrease in the percentage of assets resulting from a change
in the values of portfolio securities or in the amount of the Fund's assets will
not constitute a violation of such restriction. It is the intention of the
Funds, unless otherwise indicated, that with respect to the Fund's policies that
are the result of the application of law the Funds will take advantage of the
flexibility provided by rules or interpretations of the SEC currently in
existence or promulgated in the future or changes to such laws.
MANAGEMENT OF THE TRUST AND THE PORTFOLIO
Overall responsibility for management and supervision of the Trust and
the Fund rests with the Board of Trustees. The Trustees approve all significant
agreements between the Trust and the persons and companies that furnish services
to the Trust or the Fund, including agreements with its distributor, custodian,
transfer agent, investment adviser and administrator. The day-to-day operations
of the Fund are delegated to its administrator. Overall responsibility for
management and supervision of the Portfolio rests with the Supervisors.
Investment decisions for the Portfolio are delegated to the Adviser.
Trustees, Officers and Supervisors
The names of the Trustees of the Trust, Supervisors of the Portfolio
and the executive officers of the Trust and the Portfolio, their addresses,
birthdates, principal occupations during the past five years and other
affiliations are set forth below.
[INSERT TRUSTEE/SUPERVISOR/OFFICER (NAME, ADDRESS, 5 YEAR BIO)]
* Trustee who has a discretionary account with Julius Baer Securities
(less than $100,000).
** "Interested person" of the Trust.
Messrs. [ ] and [ ] are members of the Audit Committee of the Board of
Trustees. The Audit Committee advises the Board with respect to accounting,
auditing and financial matters affecting the Fund. Messrs. [ ] and [ ] are
members of the Nominating Committee of the Board of Trustees. The Nominating
Committee selects and nominates candidates for election to the Board as
"non-interested" Trustees.
No director, officer or employee of the Adviser, the Servicing Agent,
the Distributor, the Administrator, or any parent or subsidiary thereof receives
any compensation from the Fund or the Portfolio for serving as an officer,
Trustee or Supervisor. The Trust intends to pay each of its Trustees who is not
a director, officer or employee of the Adviser, the Servicing Agent, the
Distributor or the Administrator or any affiliate thereof an annual fee of
[$5,000] plus [$250] for each Board of Trustees meeting attended and reimburse
them for travel and out-of-pocket expenses. [INSERT SUPERVISOR COMPENSATION]
Investment Advisory and Other Services
Bank Julius Baer & Co. Ltd., 330 Madison Avenue, New York, NY 10017,
serves as the investment adviser to the Fund. The Adviser is the New York branch
of a Swiss bank.
23
<PAGE>
[] ("[]" or the "Administrator"), located at [ADDRESS], serves as
administrator to the Fund. The Adviser and the Administrator each serve pursuant
to separate written agreements (the "Advisory Agreement" and the "Administration
Agreement," respectively).
Brokerage Allocation and Other Practices
The Adviser is responsible for establishing, reviewing and, where
necessary, modifying the investment program to achieve the investment objective
of the Fund. Purchases and sales of newly-issued portfolio securities are
usually principal transactions without brokerage commissions effected directly
with the issuer or with an underwriter acting as principal. Other purchases and
sales may be effected on a securities exchange or over-the-counter, depending on
where it appears that the best price or execution will be obtained. The purchase
price paid by to underwriters of newly issued securities usually includes a
concession paid by the issuer to the underwriter, and purchases of securities
from dealers, acting as either principals or agents in the after market, are
normally executed at a price between the bid and asked price, which includes a
dealer's mark-up or mark-down. Transactions on U.S. stock exchanges and some
foreign stock exchanges involve the payment of negotiated brokerage commissions.
On exchanges on which commissions are negotiated, the cost of transactions may
vary among different brokers. On most foreign exchanges, commissions are
generally fixed. There is generally no stated commission in the case of
securities traded in domestic or foreign over-the-counter markets, but the price
of securities traded in over-the-counter markets includes an undisclosed
commission or mark-up. U.S. Government securities are generally purchased from
underwriters or dealers, although certain newly-issued U.S. Government
securities may be purchased directly from the United States Treasury or from the
issuing agency or instrumentality.
The Adviser will select specific portfolio investments and effect
transactions. The Adviser seeks to obtain the best net price and the most
favorable execution of orders. In evaluating prices and executions, the Adviser
will consider the factors it deems relevant, which may include the breadth of
the market in the security, the price of the security, the financial condition
and execution capability of a broker or dealer and the reasonableness of the
commission, if any, for the specific transaction and on a continuing basis. In
addition, to the extent that the execution and price offered by more than one
broker or dealer are comparable, an Adviser may, in its discretion, effect
transactions in portfolio securities with dealers who provide brokerage and
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) to the Fund and/or other accounts over which the Adviser
exercises investment discretion. Research and other services received may be
useful to the Adviser in serving both the Fund and its other clients and,
conversely, research or other services obtained by the placement of business of
other clients may be useful to the Adviser in carrying out its obligations to
the Fund. The fee to the Adviser under its advisory agreement with the Fund is
not reduced by reason of its receiving any brokerage and research services.
Investment decisions made through the Portfolio concerning specific
portfolio securities are made independently from those for other clients advised
by its Adviser. Such other investment clients may invest in the same securities
that are being held through the Portfolio. When purchases or sales of the same
security are made at substantially the same time on behalf of such other
clients, transactions are averaged as to price and available investments
allocated as to amount, in a manner which the Adviser believes to be equitable
to each client. In some instances, this investment procedure may adversely
affect the price paid or received or the size of the position obtained or sold
through the Portfolio. To the extent permitted by law, the Adviser may aggregate
the securities to be sold or purchased through the Portfolio with those to be
sold or purchased for such other investment clients in order to obtain best
execution.
24
<PAGE>
Any portfolio transaction entered into through the Portfolio may be
executed through [] ("[]"), the Funds' distributor (the "Distributor"), or
Julius Baer Securities Inc., or any of their affiliates if, in its Adviser's
judgment, the use of such entity is likely to result in price and execution at
least as favorable as those of other qualified brokers, and if, in the
transaction, such entity charges a commission rate consistent with those charged
by such entity to comparable unaffiliated customers in similar transactions.
Portfolio securities will not be purchased from or sold to the Adviser,
the Distributor or any affiliated person of such companies as principal unless
permitted by SEC rules, orders or interpretive or no-action positions of the SEC
or its staff.
The Adviser may participate, if and when practicable, in bidding for
the purchase of securities directly from an issuer in order to take advantage of
the lower purchase price available to members of such a group. The Adviser will
engage in this practice, however, only when it, in its sole discretion, believes
such practice to be otherwise in the Fund's interest.
Portfolio Turnover
The Adviser does not intend to seek profits through short-term trading,
but the rate of turnover will not be a limiting factor when the Adviser deems it
desirable to sell or purchase securities. The Portfolio turnover rate is
calculated by dividing the lesser of purchases or sales of securities being held
through the Portfolio for the year by the monthly average value of the portfolio
securities. Securities with remaining maturities of one year or less at the date
of acquisition are excluded from the calculation.
High rates of portfolio turnover can lead to increased taxable gains
and higher expenses.
Certain practices that may be employed by the Adviser could result in
high portfolio turnover. For example, options on securities may be sold in
anticipation of a decline in the price of the underlying security (market
decline) or purchased in anticipation of a rise in the price of the underlying
security (market rise) and later sold.
Distributor
[], is a wholly-owned subsidiary of []. The principal executive offices
of [] are located at [ADDRESS]. The Distributor is registered with the SEC as a
broker-dealer under the Securities Exchange Act of 1934 and is a member of the
NASD.
The Trust intends to enter into distribution agreements or shareholder
servicing agreements ("Agreements") with certain financial institutions
("Servicing Organizations") to perform certain distribution, shareholder
servicing, administrative and accounting services for their customers
("Customers") who are beneficial owners of shares of the Fund.
A Service Organization may charge a Customer one or more of the
following types of fees, as agreed upon by the Service Organization and the
Customer, with respect to the cash management or other services provided by the
Service Organization: (1) account fees (a fixed amount per month or per year);
(2) transaction fees (a fixed amount per transaction processed); (3)
compensating balance requirements (a minimum dollar amount a Customer must
maintain in order to obtain the services offered); or (4) account maintenance
fees (a periodic charge based upon the percentage of assets in the account or of
the dividend paid on those assets). A Customer of a Service Organization should
read the Prospectus and SAI in conjunction with the service agreement and other
25
<PAGE>
literature describing the services and related fees that will be provided by the
Service Organization to its Customers prior to any purchase of shares. No
preference will be shown in the selection of portfolio investments for the
instruments of Service Organizations.
Distribution and Shareholder Servicing
Any distribution or shareholder servicing agreements will be governed
by a Distribution Plan or a Shareholder Services Plan (the "Plans"). The Plans
require that the Board of Trustees receive, at least quarterly, written reports
of amounts expended under the Plans and the purpose for which such expenditures
were made. A Plan will continue in effect for so long as its continuance is
specifically approved at least annually by the Board of Trustees, including a
majority of the Trustees who are not interested persons of the Trust and who
have no direct or indirect financial interest in the operation of the Plan. Any
material amendment of the Plans would require the approval of the Trustees in
the manner described above. A Plan may be terminated at any time, without
penalty, by vote of a majority of the Trustees or by a vote of a majority of the
outstanding voting shares of the Trust that have invested pursuant to the Plan.
The Adviser and Administrator may also pay for distribution related costs out of
their revenues.
Custodian and Transfer Agent
Banque Internationale a Luxembourg ("BIL") is custodian of assets being
held through the Portfolio pursuant to a custodian agreement (the "Custodian
Agreement"). For its services under the Custodian Agreement and for
administrative, fund accounting and other services, BIL receives an annual fee
equal to [ ]% of the Fund's average daily net assets. Under the Custodian
Agreement, BIL (a) maintains a separate account in the name of the Fund, (b)
holds and transfers portfolio securities, (c) makes receipts and disbursements
of money, (d) collects and receives all income and other payments and
distributions on account of the securities being held through the Portfolio and
(e) makes periodic reports to the Board of Trustees concerning the Fund's
operations. BIL is authorized to select one or more foreign or domestic banks or
trust companies to serve as sub-custodian on behalf of the Fund, subject to the
approval of the Board of Trustees. The assets of the Trust are held under bank
custodianship in accordance with the 1940 Act.
Rules adopted under the 1940 Act permit the Adviser to maintain
securities and cash in the custody of certain eligible foreign banks and
depositories. All non-U.S. securities are held by the Custodian or by
sub-custodians which are approved by the Trustees or a foreign custody manager
appointed by the Trustees in accordance with these rules. The Board has
appointed [ ] to be its foreign custody manager. The determination to place
assets with a particular foreign sub-custodian is made pursuant to these rules
which require a consideration of a number of factors including, but not limited
to, the reliability and financial stability of the sub-custodian; the
sub-custodian's practices, procedures and internal controls; and the reputation
and standing of the sub-custodian in its national market.]
[ ] has agreed to serve as the Trust's transfer and dividend disbursing
agent pursuant to a Transfer Agency Agreement, under which the Transfer Agent
(a) issues and redeems shares of the Trust, (b) addresses and mails all
communications by the Trust to record owners of Trust shares, including reports
to shareholders, dividend and distribution notices and proxy material for its
meetings of shareholders, (c) maintains shareholder accounts and, if requested,
sub-accounts and (d) makes periodic reports to the Board of Trustees concerning
the Fund's operations.
26
<PAGE>
CAPITAL STOCK
Under the Trust Agreement, the Trustees have authority to issue an
unlimited number of shares of beneficial interest, par value $.001 per share.
The Fund offers classes of shares with different sales charges and expenses.
Because of these different sales charges and expenses, the investment
performance of the classes will vary. For more information, including your
eligibility to purchase certain classes of shares, contact your broker or the
Fund at [ ]. When matters are submitted for shareholder vote, each shareholder
will have one vote for each share owned and proportionate, fractional votes for
fractional shares held. Shares of all classes will vote together as a single
class except when the otherwise required by law or determined by the Trustees.
There will normally be no meeting of shareholders for the purpose of electing
Trustees unless and until such time as less than a majority of the Trustees
holding office have been elected by shareholders. The Trustees will call a
meeting for any purpose upon the written request of shareholders holding at
least 10% of the Trust's outstanding shares.
Shares do not have cumulative voting rights, which means that holders
of more than 50% of the shares voting for the election of Trustees can elect all
Trustees. Shareholders generally vote by Fund, except with respect to the
election of Trustees and the selection of independent public accountants. Shares
are transferable but have no preemptive, conversion or subscription rights.
Massachusetts law provides that shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust. The
Trust Agreement disclaims shareholder liability for acts or obligations of the
Trust, however, and requires that notice of the disclaimer be given in each
agreement, obligation or instrument entered into or executed by the Trust or a
Trustee. The Trust Agreement provides for indemnification from the Trust's
property for all losses and expenses of any shareholder held personally liable
for the obligations of the Trust. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Trust would be unable to meet its obligations, a possibility that
the Trust's management believes is remote. Upon payment of any liability
incurred by the Trust, the shareholder paying the liability will be entitled to
reimbursement from the general assets of the Trust. The Trustees intend to
conduct the operations of the Trust in such a way so as to avoid, as far as
possible, ultimate liability of the shareholders for liabilities of the Trust.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
How To Purchase Shares
The prospectus contains a general description of how investors may buy
shares of the Fund. This SAI contains additional information which may be of
interest to investors.
Class A shares are generally sold with a sales charge payable at the
time of purchase. The prospectus contains a table of applicable sales charges.
For information about how to purchase class A shares of a Julius Baer Multistock
fund at net asset value through an employer sponsored retirement plan, please
consult your employer. Certain purchases of class A shares may be exempt from a
sales charge or may be subject to a contingent deferred sales charge ("CDSC").
Class B shares are sold subject to a CDSC payable upon redemption
within a specified period after purchase. The prospectus contains a table of
applicable CDSCs.
Class B shares will automatically convert into class A shares no later
than the end of the month seven years after the purchase date, and may, in the
discretion of the Trustees, convert to class A shares earlier. Class B shares
27
<PAGE>
acquired by exchanging class B shares of another Julius Baer Multistock fund
will convert into class A shares based on the time of the initial purchase.
Class B shares acquired through reinvestment of distributions will convert into
Class A shares based on the date of the initial purchase to which such shares
relate. For this purpose, class B shares acquired through reinvestment of
distributions will be attributed to particular purchases of class B shares in
accordance with such procedures as the Trustees may determine from time to time.
The conversion of class B shares to class A shares is subject to the condition
that such conversions will not constitute taxable events for Federal tax
purposes.
Class I shares, which are not subject to sales charges or a CDSC, are
available only to certain investors.
The Fund is currently making a continuous offering of its shares. The
Fund receives the entire net asset value of shares sold. The Fund will accept
unconditional orders for shares to be executed at the public offering price
based on the net asset value per share next determined after the order is
placed. In the case of class A shares, the public offering price is the net
asset value plus the applicable sales charge, if any. No sales charge is
included in the public offering price of other classes of shares. In the case of
orders for purchase of shares placed through brokers, the public offering price
will be based on the net asset value determined on the day the order is placed,
but only if the broker receives the order before 4:00 p.m. (Eastern time) on a
day when the NYSE is open for regular trading, and the order is received by [ ]
by the end of the business day. If the broker receives the order after 4:00 p.m.
(Eastern time), the price will be based on the net asset value next determined.
If funds for the purchase of shares are sent directly to [ ], they will be
invested at the public offering price based on the net asset value next
determined after receipt. Payment for shares of the Fund must be in U.S.
dollars; if made by check, the check must be drawn on a U.S. bank.
Initial and subsequent purchases must satisfy the minimums stated in
the prospectus, except that (i) individual investments under certain types of
tax qualified retirement plans may be lower, (ii) persons who are already
shareholders may make additional purchases of $[ ] or more by sending funds
directly to [], and (iii) for investors participating in automatic investment
plans and military allotment plans, the initial and subsequent purchases must be
$[ ] or more. Information about these plans is available from your broker or
from [ ].
As a convenience to investors, shares may be purchased through a
automatic investment plan. Pre- authorized monthly bank drafts for a fixed
amount (at least $[ ]) are used to purchase fund shares at the applicable public
offering price next determined after [ ] receives the proceeds from the draft. A
shareholder may choose any day of the month and, if a given month (for example,
February) does not contain that particular date, or if the date falls on a
weekend or holiday, the draft will be processed on the next business day.
Further information and application forms are available from your broker or from
[ ].
Distributions to be reinvested are reinvested without a sales charge in
shares of the same class as of the ex-dividend date using the net asset value
determined on that date, and are credited to a shareholder's account on the
payment date.
Payment in securities. In addition to cash, securities may be accepted
as payment for Fund shares at the applicable net asset value. Generally,
securities will only be accepted for payment to increase a portfolio security
held through the Portfolio, or if the Adviser determines that the offered
securities are a suitable investment and in a sufficient amount for efficient
management. While no minimum has been established, it is expected securities
would not be accepted with a value of less than $[ ] per issue as payment for
shares. Any or all offers to pay for purchases of fund shares with securities
may be rejected in whole or in part, partial payment in cash for such purchases
to provide funds for applicable sales charges may be required, and the
28
<PAGE>
acceptance of securities in exchange for Fund shares may be discontinued at any
time without notice. The Fund will value accepted securities in the manner
described in the section "Portfolio Valuation" for valuing shares of the Fund.
The Fund will only accept securities which are delivered in proper form. The
Fund will not accept options or restricted securities as payment for shares. The
acceptance of securities by certain funds in exchange for Fund shares is subject
to additional requirements. For federal income tax purposes, a purchase of Fund
shares with securities will be treated as a sale or exchange of such securities
on which the investor will generally realize a taxable gain or loss. The
processing of a purchase of fund shares with securities involves certain delays
while the Fund considers the suitability of such securities and while other
requirements are satisfied. For information regarding procedures for payment in
securities, contact [ ]. Investors should not send securities to the fund except
when authorized to do so and in accordance with specific instructions received
from [ ].
Sales without sales charges or contingent deferred sales charges. The
Fund may sell shares without a sales charge or CDSC to:
(i) current and retired Trustees of the Fund; officers of the
Fund; directors and current and retired U.S. full-time
employees of the Adviser, the Trust, their parent corporations
and certain corporate affiliates; family members of and
employee benefit plans for the foregoing; and partnerships,
trusts or other entities in which any of the foregoing has a
substantial interest;
(ii) employer sponsored retirement plans, for the repurchase of
shares in connection with repayment of plan loans made to plan
participants (if the sum loaned was obtained by redeeming
shares of a Julius Baer Multistock fund sold with a sales
charge);
(iii) clients of administrators of tax qualified employer sponsored
retirement plans which have entered into agreements with [ ];
(iv) registered representatives and other employees of brokers
having sales agreements with [ ]; employees of financial
institutions having sales agreements with [ ] or otherwise
having an arrangement with any such broker-dealer or financial
institution with respect to sales of Fund shares; and their
spouses and children under age 21 is regarded as the broker of
record for all such accounts);
(v) a trust department of any financial institution purchasing
shares of the Fund in its capacity as trustee of any trust
(other than a tax-qualified retirement plan trust), through an
arrangement approved by [ ], if the value of the shares of the
Fund and other Julius Baer Multistock Funds purchased or held
by all such trusts exceeds $1 million in the aggregate; and
(vi) "wrap accounts" maintained for clients of broker-dealers,
financial institutions or financial intermediaries who have
entered into agreements with [ ] with respect to such
accounts, which in all cases shall be subject to a wrap fee
economically comparable to a sales charge. Fund shares offered
pursuant to this waiver may not be advertised as "no load," or
otherwise offered for sale at NAV without a wrap fee.
In addition, the Fund may issue its shares at net asset value without
an initial sales charge or a CDSC in connection with the acquisition of
substantially all of the securities owned by other investment companies or
personal holding companies, and the CDSC will be waived on redemptions of shares
arising out of death or post-purchase disability of a shareholder or settlor of
a living trust account and on redemptions in connection with certain withdrawals
29
<PAGE>
from IRA or other retirement plans. Up to[]% of the value of shares subject to a
automatic withdrawal plan may also be redeemed each year without a CDSC. The
Fund may sell class A, at net asset value to members of qualified groups. Class
A shares are available without an initial sales charge to "class A qualified
benefit plans", as described below.
Payments to brokers. Julius Baer Multistock Funds may, at its expense,
pay concessions in addition to the payments disclosed in the prospectus to
brokers which satisfy certain criteria established from time to time by Julius
Baer Multistock Funds relating to increasing net sales of shares of the Julius
Baer Multistock Funds over prior periods, and certain other factors.
Additional Information About Class A Shares
The underwriter's commission is the sales charge shown in the
prospectus less any applicable broker discount. [ ] will give brokers ten days'
notice of any changes in the broker discount. [ ] retains the entire sales
charge on any retail sales made by it.
The Trust offers several plans by which an investor may obtain reduced
sales charges on purchases of class A shares. The variations in sales charges
reflect the varying efforts required to sell shares to separate categories of
purchasers. These plans may be altered or discontinued at any time. The public
offering price of class A shares is the net asset value plus a sales charge that
varies depending on the size of your purchase. The Fund receives the net asset
value. The sales charge is allocated between your investment broker and [ ] as
shown in the following table, except when [ ], in its discretion, allocates the
entire amount to your investment broker.
- ----------------------------- -------------------------
CLASS A
- ----------------------------- -------------------------
- ----------------------------- ------------ ------------
Amount of transaction at Amount of Sales
offering price ($) sales charge as
charge a
reallowed percentage
to brokers of
as a offering
percentage price
of
offering
price
- ----------------------------- ------------ ------------
- ----------------------------- ------------ ------------
Under 50,000 []% []%
- ----------------------------- ------------ ------------
- ----------------------------- ------------ ------------
50,000 but under 100,000 [] []
- ----------------------------- ------------ ------------
- ----------------------------- ------------ ------------
100,000 but under 250,000 [] []
- ----------------------------- ------------ ------------
- ----------------------------- ------------ ------------
250,000 but under 500,000 [] []
- ----------------------------- ------------ ------------
- ----------------------------- ------------ ------------
500,000 but under 1,000,000 [] []
- ----------------------------- ------------ ------------
- ----------------------------- ------------ ------------
1,000,000 and above NONE NONE
- ----------------------------- ------------ ------------
Combined purchase privilege. The following persons may qualify for the
sales charge reductions or eliminations shown in the prospectus by combining
into a single transaction the purchase of class A shares with other purchases of
any class of shares:
(i) an individual, or a "company" as defined in Section 2(a)(8) of
the 1940 Act (which includes corporations which are corporate
affiliates of each other);
30
<PAGE>
(ii) an individual, his or her spouse and their children under
twenty-one, purchasing for his, her or their own account;
(iii) a trustee or other fiduciary purchasing for a single trust
estate or single fiduciary account (including a pension,
profit-sharing, or other employee benefit trust created
pursuant to a plan qualified under Section 401 of the Internal
Revenue Code of 1986, as amended (the "Code"));
(iv) tax-exempt organizations qualifying under Section 501(c)(3) of
the Internal Revenue Code (not including tax exempt
organizations qualifying under Section 403(b)(7) (a "403(b)
plan") of the Code; and
(v) employee benefit plans of a single employer or of affiliated
employers, other than 403(b) plans. A combined purchase
currently may also include shares of any class of other
continuously offered Julius Baer Multistock Funds purchased at
the same time through a single investment broker, if the
broker places the order for such shares directly with [ ].
Cumulative quantity discount (right of accumulation). A
purchaser of class A shares may qualify for a cumulative
quantity discount by combining a current purchase (or combined
purchases as described above) with certain other shares of any
class of Julius Baer Multistock Funds already owned. The
applicable sales charge is based on the total of:
(i) the investor's current purchase; and
(ii) the maximum public offering price (at the close of
business on the previous day) of all shares held by
the investor in all of the Julius Baer Multistock
Funds.
(iii) the maximum public offering price of all shares
described in paragraph (ii) owned by another
shareholder eligible to participate with the investor
in a "combined purchase."
To qualify for the combined purchase privilege or to obtain the
cumulative quantity discount on a purchase through a broker, when each purchase
is made the investor or broker must provide the Fund with sufficient information
to verify that the purchase qualifies for the privilege or discount. The
shareholder must furnish this information to [ ] when making direct cash
investments.
Statement of Intention. Investors may also obtain the reduced sales
charges for class A shares shown in the prospectus for investments of a
particular amount by means of a written Statement of Intention, which expresses
the investor's intention to invest that amount (including certain "credits," as
described below) within a period of 13 months in shares of any class of the Fund
or any other continuously offered Julius Baer Multistock Fund. Each purchase of
class A shares under a Statement of Intention will be made at the public
offering price applicable at the time of such purchase to a single transaction
of the total dollar amount indicated in the Statement of Intention. A Statement
of Intention may include purchases of shares made not more than 90 days prior to
the date that an investor signs a Statement; however, the 13-month period during
which the Statement of Intention is in effect will begin on the date of the
earliest purchase to be included.
An investor may receive a credit toward the amount indicated in the
Statement of Intention equal to the maximum public offering price as of the
close of business on the previous day of all shares he or she owns on the date
of the Statement of Intention which are eligible for purchase under a Statement
of Intention (plus any shares of money market funds acquired by exchange of such
eligible shares). Investors do not receive credit for shares purchased by the
reinvestment of distributions. Investors qualifying for the "combined purchase
privilege" (see above) may purchase shares under a single Statement of
Intention.
31
<PAGE>
The Statement of Intention is not a binding obligation upon the
investor to purchase the full amount indicated. The minimum initial investment
under a Statement of Intention is []% of such amount, and must be invested
immediately. Class A shares purchased with the first []% of such amount will be
held in escrow to secure payment of the higher sales charge applicable to the
shares actually purchased if the full amount indicated is not purchased. When
the full amount indicated has been purchased, the escrow will be released. If an
investor desires to redeem escrowed shares before the full amount has been
purchased, the shares will be released from escrow only if the investor pays the
sales charge that, without regard to the Statement of Intention, would apply to
the total investment made to date.
To the extent that an investor purchases more than the dollar amount
indicated on the Statement of Intention and qualifies for a further reduced
sales charge, the sales charge will be adjusted for the entire amount purchased
at the end of the 13-month period, upon recovery from the investor's broker of
its portion of the sales charge adjustment. Once received from the broker, which
may take a period of time or may never occur, the sales charge adjustment will
be used to purchase additional shares at the then current offering price
applicable to the actual amount of the aggregate purchases. These additional
shares will not be considered as part of the total investment for the purpose of
determining the applicable sales charge pursuant to the Statement of Intention.
No sales charge adjustment will be made unless and until the investor's broker
returns any excess commissions previously received.
To the extent that an investor purchases less than the dollar amount
indicated on the Statement of Intention within the 13month period, the sales
charge will be adjusted upward for the entire amount purchased at the end of the
13-month period. This adjustment will be made by redeeming shares from the
account to cover the additional sales charge, the proceeds of which will be paid
to the investor's broker and the Trust in accordance with the prospectus. If the
account exceeds an amount that would otherwise qualify for a reduced sales
charge, that reduced sales charge will be applied.
Statements of Intention are not available for certain employee benefit
plans.
Statement of Intention forms may be obtained from [ ] or from your
broker. Interested investors should read the Statement of Intention carefully.
Group purchases of class A shares. Members of qualified groups may
purchase class A shares of the Fund at a group sales charge rate of []% of the
public offering price ([]% of the net amount invested). The broker discount on
such sales is []% of the offering price.
To receive the class A group rate, group members must purchase shares
through a single investment broker designated by the group. The designated
broker must transmit each member's initial purchase to [ ], together with
payment and completed application forms. After the initial purchase, a member
may send funds for the purchase of shares directly to [ ]. Purchases of shares
are made at the public offering price based on the net asset value next
determined after [ ] or [ ] receives payment for the shares. The minimum
investment requirements described above apply to purchases by any group member.
Only shares purchased under the class A group discount are included in
calculating the purchased amount for the purposes of these requirements.
Qualified groups include the employees of a corporation or a sole
proprietorship, members and employees of a partnership or association, or other
organized groups of persons (the members of which may include other qualified
groups) provided that: (i) the group has at least 25 members of which at least
10 members participate in the initial purchase; (ii) the group has been in
32
<PAGE>
existence for at least six months; (iii) the group has some purpose in addition
to the purchase of investment company shares at a reduced sales charge; (iv) the
group's sole organizational nexus or connection is not that the members are
credit card holders of a company, policy holders of an insurance company,
customers of a bank or broker, clients of an investment adviser or security
holders of a company; (v) the group agrees to provide its designated investment
broker access to the group's membership by means of written communication or
direct presentation to the membership at a meeting on not less frequently than
an annual basis; (vi) the group or its investment broker will provide annual
certification in form satisfactory to [ ] that the group then has at least 25
members and that at least ten members participated in group purchases during the
immediately preceding 12 calendar months; and (vii) the group or its investment
broker will provide periodic certification in form satisfactory to [] as to the
eligibility of the purchasing members of the group.
Members of a qualified group include: (i) any group which meets the
requirements stated above and which is a constituent member of a qualified
group; (ii) any individual purchasing for his or her own account who is carried
on the records of the group or on the records of any constituent member of the
group as being a good standing employee, partner, member or person of like
status of the group or constituent member; or (iii) any fiduciary purchasing
shares for the account of a member of a qualified group or a member's
beneficiary. For example, a qualified group could consist of a trade association
which would have as its members individuals, sole proprietors, partnerships and
corporations. The members of the group would then consist of the individuals,
the sole proprietors and their employees, the members of the partnerships and
their employees, and the corporations and their employees, as well as the
trustees of employee benefit trusts acquiring class A shares for the benefit of
any of the foregoing.
A member of a qualified group may, depending upon the value of class A
shares of the fund owned or proposed to be purchased by the member, be entitled
to purchase class A shares of the fund at non-group sales charge rates shown in
the prospectus which may be lower than the group sales charge rate, if the
member qualifies as a person entitled to reduced non-group sales charges. Such a
group member will be entitled to purchase at the lower rate if, at the time of
purchase, the member or his or her investment broker furnishes sufficient
information for the Trust or [] to verify that the purchase qualifies for the
lower rate.
Interested groups should contact their investment broker or the Trust.
The fund reserves the right to revise the terms of or to suspend or discontinue
group sales at any time.
Qualified benefit plans; Individual account plans. The term "class A
qualified benefit plan" means any employer-sponsored plan or arrangement,
whether or not tax-qualified, for which [] or its affiliates provide
recordkeeping or other services in connection with the purchase of class A
shares. The term "affiliated employer" means employers who are affiliated with
each other within the meaning of Section 2(a)(3)(C) of 1940 Act. The term
"individual account plan" means any employee benefit plan whereby (i) class A
shares are purchased through payroll deductions or otherwise by a fiduciary or
other person for the account of participants who are employees (or their
spouses) of an employer, or of affiliated employers, and (ii) a separate
investing account is maintained in the name of such fiduciary or other person
for the account of each participant in the plan.
The table of sales charges in the prospectus applies to sales to
employer-sponsored retirement plans that are not class A qualified benefit
plans, except that the fund may sell class A shares at net asset value to
employee benefit plans, including individual account plans, of employers or of
affiliated employers which have at least 750 employees to whom such plan is made
available, in connection with a payroll deduction system of plan funding (or
other system acceptable to [ ]) by which contributions or account information
for plan participation are transmitted to [ ] by methods acceptable to [ ]. The
33
<PAGE>
Fund may also sell class A shares at net asset value to employer-sponsored
retirement plans that initially invest at least $1 million in the Fund or that
have at least 200 eligible employees.
An employer-sponsored retirement plan participating in a "multifund"
program approved by Julius Baer Multistock Funds may include amounts invested in
the other mutual funds participating in such program for purposes of determining
whether the plan may purchase class A shares at net asset value based on the
size of the purchase. These investments will also be included for purposes of
the discount privileges and programs described above.
Additional information about qualified benefit plans and individual
account plans is available from your broker or from [ ].
Contingent Deferred Sales Charges; Commissions
Class A shares. Except as described below, a CDSC of []% ([]% in the
case of plans for which [ ] and its affiliates do not act as trustee or
record-keeper) of the total amount redeemed is imposed on redemptions of shares
purchased by class A qualified benefit plans if, within two years of a plan's
initial purchase of class A shares, it redeems 90% or more of its cumulative
purchases. Thereafter, such plan is no longer liable for any CDSC. The two-year
CDSC applicable to class A qualified benefit plans for which [ ] or its
affiliates serve as trustee or recordkeeper ("full service plans") is []% of the
total amount redeemed, for full service plans that initially invest at least $5
million but less than $10 million in Julius Baer Multistock Funds and other
investments managed by the Adviser or its affiliates ("Julius Baer Assets"), and
is []% of the total amount redeemed for full service plans that initially invest
at least $10 million but less than $20 million in Julius Baer Assets. Class A
qualified benefit plans that initially invest at least $20 million in Julius
Baer Assets, or whose broker of record has, with the Fund's approval, waived its
commission or agreed to refund its commission to Julius Baer Multistock Funds in
the event a CDSC would otherwise be applicable, are not subject to any CDSC.
Similarly, class A shares purchased at net asset value by any investor
other than a class A qualified benefit plan, including purchases pursuant to any
Combined Purchase Privilege, Right of Accumulation or Statement of Intention,
are subject to a CDSC of []% or []%, respectively, if redeemed within the first
or second year after purchase, unless the broker of record waived its commission
with Julius Baer Multistock Funds' approval. The class A CDSC is imposed on the
lower of the cost and the current net asset value of the shares redeemed.
Except as described below for sales to class A qualified benefit plans,
the Fund pays brokers of record commissions on sales of class A shares of $1
million or more and sales to employer-sponsored benefit plans that have at least
200 eligible employees and that are not class A qualified benefit plans based on
cumulative purchases of such shares, including purchases pursuant to any
Combined Purchase Privilege, Right of Accumulation or Statement of Intention,
during the one-year period beginning with the date of the initial purchase at
net asset value. Each subsequent one-year measuring period for these purposes
will begin with the first net asset value purchase following the end of the
prior period. Such commissions are paid at the rate of []% of the amount under
$3 million, []% of the next $47 million and []% thereafter.
On sales at net asset value to a class A qualified benefit plan, the
Fund pays commissions to the broker of record at the time of the sale on net
monthly purchases at the following rates: []% of the first $1 million, []% of
the next $1 million, []% of the next $3 million, []% of the next $5 million, []%
of the next $10 million, []% of the next $10 million and []% thereafter, except
that commissions on sales to class A qualified benefit plans initially investing
less than $20 million in Julius Baer Multistock Funds and other investments
34
<PAGE>
managed the Adviser or its affiliates are based on cumulative purchases over a
one-year measuring period at the rate of []% of the first $2 million, []% of the
next $1 million, and []% thereafter. On sales at net asset value to all other
class A qualified benefit plans of the Fund pays commissions on the initial
investment and on subsequent net quarterly sales (gross sales minus gross
redemptions during the quarter) at the rate of []%. Commissions on sales at net
asset value to such plans are subject to the Fund's right to reclaim such
commissions if the shares are redeemed within two years.
All shares. Investors who set up an Automatic Cash Withdrawal Plan
("ACWP") for a share account (see "Plans available to shareholders -- Automatic
Cash Withdrawal Plan") may withdraw through the ACWP up to []% of the net asset
value of the account (calculated as set forth below) each year without incurring
any CDSC. Shares not subject to a CDSC (such as shares representing reinvestment
of distributions) will be redeemed first and will count toward the []%
limitation. If there are insufficient shares not subject to a CDSC, shares
subject to the lowest CDSC liability will be redeemed next until the []% limit
is reached. The []% figure is calculated on a pro rata basis at the time of the
first payment made pursuant to an ACWP and recalculated thereafter on a pro rata
basis at the time of each ACWP payment. Therefore, shareholders who have chosen
an ACWP based on a percentage of the net asset value of their account of up to
[]% will be able to receive ACWP payments without incurring a CDSC. However,
shareholders who have chosen a specific dollar amount (for example, $100 per
month from a fund that pays income distributions monthly) for their periodic
ACWP payment should be aware that the amount of that payment not subject to a
CDSC may vary over time depending on the net asset value of their account. For
example, if the net asset value of the account is $10,000 at the time of
payment, the shareholder will receive $100 free of the CDSC ([]% of $10,000
divided by 12 monthly payments). However, if at the time of the next payment the
net asset value of the account has fallen to $9,400, the shareholder will
receive $94 free of any CDSC ([]% of $9,400 divided by 12 monthly payments) and
$6 subject to the lowest applicable CDSC. This ACWP privilege may be revised or
terminated at any time.
No CDSC is imposed on shares of any class subject to a CDSC ("CDSC
Shares") to the extent that the CDSC Shares redeemed (i) are no longer subject
to the holding period therefor, (ii) resulted from reinvestment of distributions
on CDSC Shares, or (iii) were exchanged for shares of another Julius Baer
Multistock fund, provided that the shares acquired in such exchange or
subsequent exchanges will continue to remain subject to the CDSC, if applicable,
until the applicable holding period expires. In determining whether the CDSC
applies to each redemption of CDSC Shares, CDSC Shares not subject to a CDSC are
redeemed first.
The Fund will waive any CDSC on redemptions, in the case of individual,
joint or Uniform Transfers to Minors Act accounts, in the event of death or
post-purchase disability of a shareholder, for the purpose of paying benefits
pursuant to tax-qualified retirement plans ("Benefit Payments"), or, in the case
of living trust accounts, in the event of the death or post-purchase disability
of the settlor of the trust). Benefit payments currently include, without
limitation, (1) distributions from an IRA due to death or disability, (2) a
return of excess contributions to an IRA or 401(k) plan, and (3) distributions
from retirement plans qualified under Section 401(a) of the Code or from a
403(b) plan due to death, disability, retirement or separation from service.
These waivers may be changed at any time. Additional waivers may apply to IRA
accounts opened prior to [ ].
Limitations on Redemptions
Under the 1940 Act, the Fund may suspend the right of redemption or
postpone the date of payment upon redemption for any period during which the New
York Stock Exchange, Inc. (the "NYSE") is closed, other than customary weekend
and holiday closings, or during which trading on the NYSE is restricted, or
during which (as determined by the SEC) an emergency exists as a result of which
disposal or valuation of portfolio securities is not reasonably practicable, or
for such other periods as the SEC may permit.
35
<PAGE>
If the Board of Trustees determines that conditions exist which make
payment of redemption proceeds wholly in cash unwise or undesirable, the Fund
may make payment wholly or partly in securities or other property. If a
redemption is paid wholly or partly in securities or other property, a
shareholder would incur transaction costs in disposing of the redemption
proceeds.
The Fund compensates qualifying brokers (including, for this purpose,
certain financial institutions) for sales of shares and the maintenance of
shareholder accounts.
Class A shares:
The Fund makes quarterly payments to brokers at the annual rates equal
to [ ]% (as a percentage of the average net asset value of class A shares for
which such brokers are designated the broker of record) except that payments to
brokers for shares held by class A qualified benefit plans are made at other
rates, as described below. No payments are made during the first year after
purchase on shares purchased at net asset value by shareholders investing at
least $1 million or by employer sponsored retirement plans that have at least
200 eligible employees or that are class A qualified benefit plans, unless the
shareholder has made arrangements with the Fund and the broker of record has
waived the sales commission.
The Fund pays service fees to the broker of record for plans for which
[ ] or its affiliates serve as trustee and recordkeeper at the following annual
rates (expressed as a percentage of the average net asset value of the plan's
class A shares): []% of the first $5 million, []% of the next $5 million, []% of
the next $10 million, []% of the next $30 million, and []% thereafter. For class
A qualified benefit plans for which [ ] or its affiliates provide some services
but do not act as trustee and recordkeeper, The Fund will pay service fees to
the broker of record of up to []% of average net assets, depending on the level
of service provided by [ ] or its affiliates, by the broker of record, and by
third parties. Service fees are paid quarterly to the broker of record for that
quarter.
Class B shares:
The Fund makes quarterly payments to brokers at the annual rates of [
]% (as a percentage of the average net asset value of class B shares for which
such brokers are designated the broker of record).
The Fund may suspend or modify its payments to brokers. The payments
are also subject to the continuation of the relevant distribution plan, the
terms of the service agreements between the brokers and the Fund and any
applicable limits imposed by the National Association of Securities Dealers,
Inc.
Financial institutions receiving payments from the Fund as described
above may be required to comply with various state and federal regulatory
requirements, including among others those regulating the activities of
securities brokers or dealers.
Except as otherwise agreed between the Fund and a broker, for purposes
of determining the amounts payable to brokers for shareholder accounts for which
such brokers are designated as the broker of record, "average net asset value"
means the product of (i) the average daily share balance in such account(s) and
(ii) the average daily net asset value of the relevant class of shares over the
quarter.
36
<PAGE>
Financial institutions receiving payments from the Fund as described
above may be required to comply with various state and federal regulatory
requirements, including among others those regulating the activities of
securities brokers or dealers.
Reinstatement Privilege
An investor who has redeemed shares of the Fund may reinvest (within 1
year) the proceeds of such sale in shares of the same class of the fund, or may
be able to reinvest (within 1 year) the proceeds in shares of the same class of
one of the other continuously offered Julius Baer Multistock Fund (through the
exchange privilege described in the prospectus), including, in the case of
shares subject to a CDSC, the amount of CDSC charged on the redemption. Any such
reinvestment would be at the net asset value of the shares of the fund(s) the
investor selects, next determined after theTrust receives a Reinstatement
Authorization. The time that the previous investment was held will be included
in determining any applicable CDSC due upon redemptions and, in the case of
class B shares[, the eight-year period for conversion to class A shares.][?]
Shareholders will receive from Julius Baer Multistock Funds the amount of any
CDSC paid at the time of redemption as part of the reinstated investment, which
may be treated as capital gains to the shareholder for tax purposes. Exercise of
the Reinstatement Privilege does not alter the federal income tax treatment of
any capital gains realized on a sale of Fund shares, but to the extent that any
shares are sold at a loss and the proceeds are reinvested in shares of the Fund,
some or all of the loss may be disallowed as a deduction. Consult your tax
adviser. Investors who desire to exercise the Reinstatement Privilege should
contact their broker or [ ].
Exchange Privilege
The exchange privilege enables shareholders to acquire shares in a Fund
with different investment objectives when they believe that a shift between
Funds is an appropriate investment decision. This privilege is available to all
shareholders resident in any state in which Fund shares being acquired may be
legally sold. Prior to any exchange, the shareholder should obtain and review a
copy of the current Prospectus of the Funds. Except as otherwise set forth in
this section, by calling [ ], investors may exchange shares valued up to
$500,000 between accounts with identical registrations, provided that no
certificates are outstanding for such shares and no address change has been made
within the preceding 15 days.
During periods of unusual market changes and shareholder activity,
shareholders may experience delays in contacting [ ] by telephone to exercise
the Telephone Exchange Privilege.
[ ] also makes exchanges promptly after receiving a properly completed
[Exchange Authorization Form] and, if issued, share certificates. If the
shareholder is a corporation, partnership, agent, or surviving joint owner, [ ]
will require additional documentation of a customary nature. Because an exchange
of shares involves the redemption of fund shares and reinvestment of the
proceeds in shares of another Julius Baer Multistock Fund, completion of an
exchange may be delayed under unusual circumstances if the Fund were to suspend
redemptions or postpone payment for the fund shares being exchanged, in
accordance with federal securities laws. The Fund reserves the right to change
or suspend the Exchange Privilege at any time. Shareholders would be notified of
any change or suspension. Additional information is available from [ ].
Shareholders of other Julius Baer Multistock Funds may also exchange
their shares at net asset value for shares of the Fund, as set forth in the
current prospectus of each fund.
For federal income tax purposes, an exchange is considered a sale on
which the investor generally will realize a capital gain or loss depending on
whether the
37
<PAGE>
net asset value at the time of the exchange is more or less than the investor's
adjusted basis in the shares exchanged. The gain or loss will be long term if
the investor has held the shares for more than one year and short term if the
investor has held the shares for one year or less. The Exchange Privilege may be
revised or terminated at any time. Shareholders would be notified of any such
change or suspension.
Reinvestment of Dividends
Shareholders may invest the Fund's distributions of net investment
income or distributions combining net investment income and short-term capital
gains in shares of the same class of another continuously offered Julius Baer
Multistock Fund (the "receiving fund") using the net asset value per share of
the receiving fund determined on the date the fund's distribution is payable. No
sales charge or CDSC will apply to the purchased shares. The prospectus of each
fund describes its investment objective(s) and policies, and shareholders should
obtain a prospectus and consider these objective(s) and policies carefully
before investing their distributions in the receiving fund. Shares of certain
Julius Baer Multistock Funds are not available to residents of all states.
The minimum account size requirement for the receiving fund will not
apply if the current value of your account in the fund paying the distribution
is more than $[ ].
Shareholders of other Julius Baer Multistock Funds may also use their
distributions to purchase shares of the Fund at net asset value.
For federal income tax purposes, distributions from the Fund which are
reinvested in another fund are treated as paid by the Fund to the shareholder
and invested by the shareholder in the receiving fund and thus, to the extent
comprised of taxable income and deemed paid to a taxable shareholder, are
taxable.
The reinvestment privilege may be revised or terminated at any time.
Plans Available To Shareholders
The plans described below are fully voluntary and may be terminated at
any time without the imposition by the Fund or [ ] of any penalty. All plans
provide for automatic reinvestment of all distributions in additional shares of
the Fund at net asset value. The Fund, Julius Baer Multistock Funds or [ ] may
modify or cease offering these plans at any time.
Automatic cash withdrawal plan ("ACWP"). An investor who owns or buys
shares of the fund valued at $[ ] or more at the current public offering price
may open an ACWP plan and have a designated sum of money ($[ ] or more) paid
monthly, quarterly, semi-annually or annually to the investor or another person.
(Payments from the Fund can be combined with payments from other Julius Baer
Multistock Funds into a single check through a designated payment plan.) Shares
are deposited in a plan account, and all distributions are reinvested in
additional shares of the Fund at net asset value (except where the plan is
utilized in connection with a charitable remainder trust). Shares in a plan
account are then redeemed at net asset value to make each withdrawal payment.
Payment will be made to any person the investor designates; however, if shares
are registered in the name of a trustee or other fiduciary, payment will be made
only to the fiduciary, except in the case of a profit-sharing or pension plan
where payment will be made to a designee. As withdrawal payments may include a
return of principal, they cannot be considered a guaranteed annuity or actual
yield of income to the investor.
The redemption of shares in connection with a plan generally will
result in a gain or loss for tax purposes. Some or all of the losses realized
38
<PAGE>
upon redemption may be disallowed pursuant to the so-called wash sale
rules if shares of the same fund from which shares were redeemed are purchased
(including through the reinvestment of fund distributions) within a period
beginning 30 days before, and ending 30 days after, such redemption. In such a
case, the basis of the replacement shares will be increased to reflect the
disallowed loss. Continued withdrawals in excess of income will reduce and
possibly exhaust invested principal, especially in the event of a market
decline. The maintenance of a plan concurrently with purchases of additional
shares of the Fund would be disadvantageous to the investor because of the sales
charge payable on such purchases. For this reason, the minimum investment
accepted while a plan is in effect is $[ ], and an investor may not maintain a
plan for the accumulation of shares of the Fund (other than through reinvestment
of distributions) and a plan at the same time. The cost of administering these
plans for the benefit of those shareholders participating in them is borne by
the Fund as an expense of all shareholders. The Fund, Julius Baer Multistock
Funds or [ ] may terminate or change the terms of the plan at any time. A plan
will be terminated if communications mailed to the shareholder are returned as
undeliverable.
Investors should consider carefully with their own financial advisers
whether the plan and the specified amounts to be withdrawn are appropriate in
their circumstances. The Fund and [ ] make no recommendations or representations
in this regard.
Tax Qualified Retirement Plans; 403(b) and SEP Plans
Investors may purchase shares of the fund through the following Tax
Qualified Retirement Plans, available to qualified individuals or organizations:
Standard and variable profit-sharing (including 401(k));
Money purchase pension plans; and
Individual Retirement Account Plans (IRAs).
Each of these Plans has been qualified as a prototype plan by the
Internal Revenue Service. [ ] will furnish services under each plan at a
specified annual cost. [ ] serves as trustee under each of these Plans.
Forms and further information on these Plans are available from brokers
or from Julius Baer Multistock Funds. In addition, specialized professional plan
administration services are available on an optional basis; contact [ ] at [ ].
Portfolio Valuation
The Fund's share price, also called net asset value (NAV), is
determined as of 4:00 p.m., Eastern time every day the banks in Luxembourg are
open for business. Banks in Luxembourg are closed for business on April 24th,
May 1st, June 1st, 12th and 23rd, August 15th, November 1st and December 25th
and 26th. The Fund calculates the NAV per share, generally using market prices,
by dividing the total value of the Fund's net assets by the number of the shares
outstanding. Shares are purchased or sold at the next offering price determined
after your purchase or sale order is received and accepted by the Distributor.
The offering price is the NAV.
Because of the need to obtain prices as of the close of trading on
various exchanges throughout the world, the calculation of the Fund's net asset
value may not take place contemporaneously with the determination of the prices
of certain of the portfolio securities used in such calculation. A security
which is listed or traded on more than one exchange is valued at the quotation
on the exchange determined to be the primary market for such security. All
assets and liabilities initially expressed in foreign currency values will be
39
<PAGE>
converted into U.S. dollar values at the mean between the bid and offered
quotations of such currencies against U.S. dollars as last quoted by any
recognized dealer. If such quotations are not available, the rate of exchange
will be determined in good faith by the Board of Trustees. In carrying out the
Board's valuation policies, BIL, as the Fund's accounting agent, may consult
with an independent pricing service.
Securities listed on a U.S. securities exchange (including securities
traded through the National Market System) or on a foreign securities exchange
will be valued on the basis of the closing value on the date on which the
valuation is made or, in the absence of sales, at the mean between the closing
bid and asked prices. U.S. over-the-counter securities and securities listed or
traded on certain foreign stock exchanges whose operations are similar to the
U.S. over-the-counter market will be valued on the basis of the bid price at the
close of business on each day, or, if market quotations for those securities are
not readily available, at fair value, as determined by or under the direction of
the Board of Trustees. Securities listed on a national securities exchange will
be valued on the basis of the last sale on the date on which the valuation is
made or, in the absence of sales, at the mean between the closing bid and asked
prices. The valuation of fixed-income securities (other than U.S. Government
securities and short-term investments) is made by the Administrator after
consultation with an independent pricing service (the "Pricing Service")
approved by the Board of Trustees. When, in the judgement of the Pricing
Service, quoted bid prices for investments are readily available and are
representative of the bid side of the market, these investments are valued at
the mean between the quoted bid prices and asked prices. Investments for which,
in the judgement of the Pricing Service, there is no readily obtainable market
quotation are carried at fair value as determined by the Pricing Service. For
the most part, such investments are liquid and may be readily sold.
Notwithstanding the above, the Pricing Service may employ electronic data
processing techniques and/or a matrix system to determine valuations. The
procedures of the Pricing Service are reviewed periodically by the officers of
the Fund under the general supervision and responsibility of the Board of
Trustees, which may replace any such Pricing Service at any time. Short-term
obligations with maturities of 60 days or less are valued at amortized cost,
which constitutes fair value as determined by the Board of Trustees. Amortized
cost involves valuing an instrument at its original cost and thereafter assuming
a constant amortization to maturity of any discount or premium, regardless of
the impact of fluctuating interest rates on the market value of the instrument.
All other securities and other assets will be valued at their fair value as
determined in good faith by the Board of Trustees.
ADDITIONAL INFORMATION CONCERNING TAXES
The Fund has qualified, and intends to qualify each year, as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended (the "Code"). Provided that the Fund (a) is a regulated investment
company and (b) distributes to its shareholders at least 90% of the sum of its
investment company taxable income (including net realized short-term capital
gains), the Fund will not be subject to federal income tax to the extent its
entire investment company taxable income and its entire net realized long-term
and short-term capital gains are distributed to its shareholders.
The Fund is subject to a 4% nondeductible excise tax to the extent that
it fails to distribute to its shareholders during each calendar year an amount
equal to at least the sum of (a) 98% of its taxable ordinary investment income
(excluding long-term and short-term capital gain or less) for the calendar year;
plus (b) 98% of its capital gain net income for the one year period ending on
October 31 of such calendar year; plus (c) 100% of its ordinary investment
income and capital gain net income from the preceding calendar year which was
neither distributed to shareholders nor taxed to the Fund during such year. The
Fund intends to distribute to shareholders each year an amount sufficient to
avoid the imposition of such excise tax.
Transactions in foreign currencies, forward contracts, options and
futures contracts (including options and futures contracts on foreign
currencies) will be subject to special provisions of the Code that, among other
40
<PAGE>
things, may affect the character of gains and losses realized by the Fund (i.e.,
may affect whether gains or losses are ordinary or capital), accelerate
recognition of income to the Fund and defer Fund losses. These rules could
therefore affect the character, amount and timing of distributions to
shareholders. These provisions also (a) will require the Adviser to
mark-to-market certain types of the positions (i.e., treat them as if they were
closed out), and (b) may cause the Fund to recognize income without receiving
cash with which to pay dividends or make distributions in amounts necessary to
satisfy the 90% and 98% distribution requirements for avoiding income and excise
taxes, respectively. The Adviser will monitor its transactions, will make the
appropriate tax elections and will make the appropriate entries in the books and
records when it acquires any foreign currency, forward contract, option, futures
contract or hedged investment in order to mitigate the effect of these rules.
Net realized long-term capital gains will be distributed as described
in the Prospectus. Such distributions ("capital gain dividends"), if any, will
be taxable to a shareholder as long-term capital gains, regardless of how long a
shareholder has held shares. If, however, a shareholder receives a capital gain
dividend with respect to any share in the Fund and then sells or redeems the
share at a loss within six months after purchasing the share, the loss on the
sale or redemption of such share will be treated as a long-term capital loss to
the extent of the capital gain dividend.
If a shareholder fails to furnish a correct taxpayer identification
number, fails to report fully dividend or interest income or fails to certify
that he or she has provided a correct taxpayer identification number and that he
or she is not subject to backup withholding, then the shareholder may be subject
to a 31% "backup withholding tax" with respect to (a) dividends and
distributions and (b) the proceeds of any redemptions of Fund shares. An
individual's taxpayer identification number generally is his or her social
security number. The 31% "backup withholding tax" is not an additional tax and
may be credited against a taxpayer's regular federal income tax liability.
The foregoing is only a summary of certain tax considerations generally
affecting the Fund and shareholders, and is not intended as a substitute for
careful tax planning. Shareholders are urged to consult their tax advisers with
specific reference to their own tax situations, including their state and local
tax liabilities.
CALCULATION OF PERFORMANCE DATA
From time to time, the Trust may quote a Fund's performance in
advertisements or in reports and other communications to shareholders.
Average Annual Total Return
From time to time, the Fund may advertise the average annual total
return for each class of shares of the Fund. Average annual total return figures
show the average percentage change in value of an investment in a certain class
of shares of the Fund from the beginning of the measuring period to the end of
the measuring period. The figures reflect changes in the price of the Class'
shares assuming that any income dividends and/or capital gain distributions made
by the Fund during the period were reinvested in the same class of shares.
Average annual total return will be shown for recent one-, five- and ten-year
periods, and may be shown for other periods as well (such as from commencement
of the Fund's operations or on a year-to-date or quarterly basis). When
considering average annual total return figures for periods longer than one
year, it is important to note that the average annual total return for one year
in the period might have been greater or less than the average for the entire
period. When considering average annual total return figures for periods shorter
than one year, investors should bear in mind that such return may not be
41
<PAGE>
representative of the return over a longer market cycle. The Funds may also
advertise aggregate total return figures for each class of shares for various
periods, representing the cumulative change in value of an investment in the
class for the specific period (again reflecting changes in the class' share
prices and assuming reinvestment of dividends and distributions). Aggregate and
average annual total returns may be shown by means of schedules, charts or
graphs, and may indicate various components of total return (i.e., change in
value of initial investment, income dividends and capital gain distributions).
Investors should note that yield and total return figures are based on
historical earnings and are not intended to indicate future performance. Current
yield and total return figures may be obtained by calling the Transfer Agent at
[ ].
In reports or other communications to investors or in advertising
material, the Fund may describe general economic and market conditions affecting
the Fund and may compare the performance of each class of shares with (1) that
of other mutual funds as listed in the rankings prepared by Lipper Analytical
Services, Inc. or similar investment services that monitor the performance of
mutual funds or (2) appropriate indices of investment securities. The Fund may
also include evaluations of the Fund published by nationally recognized ranking
services and by financial publications that are nationally recognized, such as
Barron's, Business Week, Changing Times, Financial Times, Forbes, Fortune,
Institutional Investor, The International Herald Tribune, Money, Inc.,
Morningstar, Inc., The New York Times, The Wall Street Journal and USA Today.
"Average annual total return" figures are computed according to a
formula prescribed by the SEC. The formula can be expressed as follows:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of a hypothetical
$1,000 investment made at the beginning of a 1-, 5-
or 10-year period at the end of the 1-, 5- or 10-year
period (or fractional portion thereof), assuming
reinvestment of all dividends and distributions.
The performance of each class of shares of the Fund will vary from time
to time depending upon market conditions, the composition of the securities
being held through the Portfolio and its operating expenses of such class. As
described above, total return is based on historical earnings and is not
intended to indicate future performance. Consequently, any given performance
quotation should not be considered as representative of the performance of any
class of shares of the Fund for any specified period in the future. Performance
information may be useful as a basis for comparison with other investment
alternatives. However, the performance of each class of shares of the Fund will
fluctuate, unlike certain bank deposits or other investments which pay a fixed
yield for a stated period of time.
Aggregate Total Return
"Aggregate total return" figures represent the cumulative change in the
value of an investment for the specified period and are computed by the
following formula:
42
<PAGE>
ERV-P
P
Where: P = a hypothetical initial payment of $10,000.
ERV = Ending Redeemable Value of a hypothetical
$10,000 investment made at the beginning of a 1-, 5-
or 10-year period at the end of the 1-, 5- or 10-year
period (or fractional portion thereof), assuming
reinvestment of all dividends and distributions.
INDEPENDENT AUDITORS
PriceWaterhouseCoopers LLP, independent auditors serve as auditors of
the Trust and performs annual audits of the Fund's financial statements.
COUNSEL
Paul, Weiss, Rifkind, Wharton & Garrison serves as counsel for the
Trust and from time to time provides advice to the Adviser.
43
<PAGE>
APPENDIX -- DESCRIPTION OF RATINGS
Commercial Paper Ratings
Standard and Poor's Ratings Group Commercial Paper Ratings
A S&P commercial paper rating is a current assessment of the likelihood
of timely payment of debt having an original maturity of no more than 365 days.
Ratings are graded into several categories, ranging from "A-1" for the highest
quality obligations to "D" for the lowest.
A-1 - This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus (+) sign designation.
A-2 - Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".
Moody's Investors Service's Commercial Paper Ratings
Prime-1 - Issuers (or related supporting institutions) rated "Prime-1"
have a superior ability for repayment of senior short-term debt obligations.
"Prime-1" repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries, high
rates of return on funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad margins in earnings
coverage of fixed financial charges and high internal cash generation, and
well-established access to a range of financial markets and assured sources of
alternate liquidity.
Prime-2 - Issuers (or related supporting institutions) rated "Prime-2"
have a strong ability for repayment of senior short-term debt obligations. This
will normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions.
Ample alternative liquidity is maintained.
Corporate Bond Ratings
The following summarizes the ratings used by S&P for corporate bonds:
AAA -- This is the highest rating assigned by S&P 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 differs 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 than debt
in higher-rated categories.
BBB -- Bonds rated "BBB" are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit adequate
44
<PAGE>
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for bonds in this category than for bonds in higher rated categories.
BB, B, CCC, CC and C -- Bonds rated "BB", "B" , "CCC", "CC" and "C" are
regarded, on balance, as predominantly speculative with respect to the issuer's
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 - Bonds rated "CI" are income bonds on which no interest is being
paid.
To provide more detailed indications of credit quality, the ratings set
forth above may be modified by the addition of a plus or minus sign to show
relative standing within the major rating categories.
The following summarizes the ratings used by Moody's for corporate
bonds:
Aaa -- Bonds that are rated "Aaa" are judged to be of the best quality
and carry the smallest degree of investment risk. Interest payments are
protected by a large or 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 of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A -- Bonds 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 which suggest a susceptibility to impairment sometime in the
future.
Baa -- Bonds that are rated "Baa" are considered to be medium grade
obligations, that is, they are neither highly protected nor poorly secured.
Interest payment 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. These bonds lack outstanding
investment characteristics and may have speculative characteristics as well.
Ba -- Bonds that 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 that are rated "B" generally lack characteristics of
desirable investments. 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 that are rated "Caa" are of poor standing. These issues
may be in default or present elements of danger may exist with respect to
principal or interest.
45
<PAGE>
Ca -- Bonds that are rated "Ca" represent obligations that are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds that 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.
Moody's applies numerical modifiers (1, 2 and 3) with respect to the
bonds rated "Aa" through "B." The modifier 1 indicates that the bond being rated
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the bond ranks in the
lower end of its generic rating category.
46
<PAGE>
PART C
ITEM 23. EXHIBITS.
(a) Master Trust Agreement of the Registrant.
(b) By-Laws of the Registrant.
(c) Not Applicable.
(d) Investment Management Agreement between the Registrant and
Bank Julius Baer & Co., Ltd., New York Branch.(1)
(e) Distribution Agreement between the Registrant
and [INSERT DISTRIBUTOR].(1)
(f) Not Applicable.
(g) Custodian Agreement between the Registrant and Banque Internationale a
Luxembourg. (1)
(h)(1) Transfer Agency Agreement between the Registrant and [INSERT TA]. (1)
(h)(2) Admininistration Agreement between the Registrant and
[INSERT ADMINISTRATOR]. (1)
(i) Opinion of Counsel (including consent). (1)
(j) Independent auditors' consent. (1)
(k) Not Applicable.
(l) Representation letters from initial shareholders. (1)
(m) Distribution Plan. (1)
(n) Multiple Class Plan Pursuant to Rule 18f-3. (1)
(o) Not Applicable.
(p) Code of Ethics. (1)
(1) To be filed by Amendment.
<PAGE>
Item 24. Persons Controlled by or Under Common Control with Registrant.
See "Directors and Officers" in the Statement of Additional Information
filed as part of this Registration Statement.
Item 25. Indemnification
Except for the material contracts attached as exhibits hereto and the
Master Trust Agreement, dated January 19, 2000 (the "Declaration"), establishing
the Julius Baer Multistock Funds (the "Trust") as a business trust under
Massachusetts law, there is no contract, arrangement or statute under which any
Trustee, officer, underwriter or affiliated person of the Trust is insured or
indemnified. The Declaration provides that no Trustee or officer will be
indemnified against any liability to which the Trust would otherwise be subject
by reason of or for willful misfeasance, bad faith, gross negligence or reckless
disregard of such person's duties.
Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended (the "1933 Act"), may be available to Trustees, officers
and controlling persons of the Trust pursuant to the foregoing provisions, or
otherwise, the Trust has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Trust of expenses incurred or
paid by a Trustee, officer or controlling person of the Trust in the successful
defense of any action, suit or proceeding) is asserted by such Trustee, officer
or controlling person in connection with the securities being registered, the
Trust will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.
Item 26. Business and Other Connections of Investment Adviser.
Bank Julius Baer & Co., Ltd., New York Branch ("BJB-NY") serves as the
investment adviser to Julius Baer International Equity Fund, Julius Baer Global
Income Fund and Swiss Stock Portfolio. BJB-NY also provides Julius Baer
International Equity Fund with certain administrative and shareholder services
that are not provided by the Administrator and also acts as servicing agent to
Julius Baer Global Income Fund. BJB-NY is a Swiss bank that has over 50 years
experience in international portfolio management. A list of officers and
directors of BJB-NY as of January 1, 1999 is set forth below. The address of the
following individuals is 330 Madison Avenue, New York, New York.
Officers of BJB-NY are Brian Ach (Vice President), Karen Arrese (Vice
President), Jeanette Attina (Vice President), Nuri Benturk (First Vice
President), Francoise Birnholz (Senior Vice President), John Boys (First Vice
President), David Broder (Vice President), Keith Christopher (Vice President),
Philip Ciriello (Senior Vice President), Paula Cirigliano (Vice President),
Edward Clapp (First Vice President), Louis Dempsey (Vice President), Michael Di
Leo (Vice President), Denise Downey (First Vice President), David Durrant (Vice
President), Balthasar Eggimann (Management Committee), Peter Embiricos (Vice
President), Cono Gallo (First Vice President), Gary Goldschmidt (First Vice
President), Barbara Hahn (First Vice President), Martin Hirlemann (Vice
President), Anita Hlibczuk (Vice President), Josef Huber (First Vice President),
David Kreisa (Vice President), Gary Lespinasse (Management Committee), Hanson
Liang (First Vice President), Mark Linnan (Management Committee), Maria Lipton
(First Vice President), Lisa Markowitz (Vice President), William Marr (Senior
Vice President), Elliot Mayerhoff (First Vice President), Gina Mendoza (Vice
President), Larry Millman (First Vice President), Richard Pell (Senior Vice
President), Brenda Pimentel (Vice President), Alphonse Pugliesi (Vice
President), Michael Quain (First Vice President), Manuel Reyes (First Vice
President), Terrence Reynolds (Vice President), Ashley Richards (First Vice
President), Sadakichi Robbins (Vice President), Michael Rosen (Vice President),
Hector Santiago (Vice President), Susan Scarborough (Vice President), Urs
Schwytter (Management Committee), Paolo Seiferle (Vice President), Walter Simon
(First Vice President), Bernard Spilko (General Manager/Senior Vice President),
Dominique Spillman (Vice President), Joachim Straehle (Deputy Branch
Manager/Senior Vice President), Benjamin Strauss (Vice President), Elaine
Taranto (Vice President), David Taylor (First Vice President), Michael Testorf
(Vice President), Vasili Tsamis (First Vice President), Keith Walter (Vice
President), Oskar Weiss (First Vice President), Rudolf-Riad Younes (First Vice
President), Nicholas Zografos (Vice President).
<PAGE>
Item 27. Principal Underwriters.
[INSERT]
Item 28. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained at the offices of:
Julius Baer Multistock Funds
21 Milk Street
Boston, MA 02109
Bank Julius Baer & Co., Ltd.
330 Madison Avenue
New York, NY 10017
[INSERT NAME AND ADDRESS OF ADMININISTRATOR]
(administrator)
[INSERT NAME AND ADDRESS OF DISTRIBUTOR]
(distributor)
Banque Internationale a Luxembourg
69, route d'Esch
L-2953 Luxembourg
(custodian)
[INSERT NAME AND ADDRESS OF TRANSFER AGENT]
(transfer agent)
Item 29. Management Services.
Not applicable.
Item 30. Undertakings.
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereto duly authorized
in the City of Boston, and Commonwealth of Massachusetts on the 20th day of
January, 2000.
JULIUS BAER MULTISTOCK FUNDS
By /s/ PHILIP W. COOLIDGE
Philip W. Coolidge, President
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 above.
Signature Title
/s/PHILIP W. COOLIDGE President (Principal
Philip W. Coolidge Executive Officer)
/S/ LINWOOD C. DOWNS Treasurer (Principal
Linwood C. Downs Accounting Officer)
/s/ PHILIP W. COOLIDGE Trustee
Philip W. Coolidge
/s/ LINDA T. GIBSON Trustee
Linda T. Gibson
/s/ LINWOOD C. DOWNS Trustee
Linwood C. Downs
<PAGE>
Exhibit No. Description of Exhibit
- ---------- ----------------------
EX99.(a) Master Trust Agreement
EX99.(b) By-laws
JULIUS BAER MULTISTOCK FUNDS
MASTER TRUST AGREEMENT
January 19, 2000
<PAGE>
Julius Baer Multistock Funds
CROSS-REFERENCE SHEET
Pursuant to CMR 109.00:
109.03 (a) Name of organization or trust:
Julius Baer Multistock Funds
(b) Date of organization:
January 19, 2000
(c) Names and addresses of the trustees:
Philip W. Coolidge
Linwood C. Downs
Linda T. Gibson
21 Milk Street
Boston, MA 02109
(d) Original signatures of all trustees:
See page 26
(e) Principal place of business:
21 Milk Street
Boston, MA 02109
(f) Statement that beneficial interest is divided into
transferable certificates of participation or shares;
See Section 4.1, pages 10-11.
(g) Ability to merge:
See Section 7.2, page 24.
<PAGE>
JULIUS BAER MULTISTOCK FUNDS
MASTER TRUST AGREEMENT
PAGE
ARTICLE I. NAME AND DEFINITIONS 2
Section 1.1 Name 2
Section 1.2 Definitions 2
a) "Trust" 2
b) "Trustees" 2
c) "Shares" 2
d) "Series" 2
e) "Shareholder" 2
f) "1940 Act" 2
g) "Commission" 2
h) "Declaration of Trust" 2
i) "By-Laws" 2
ARTICLE II. PURPOSE OF THE TRUST 2
ARTICLE III. THE TRUSTEES 3
Section 3.1 Number, Designation, Election, Term, etc. 3
a) Initial Trustees 3
b) Number 3
c) Election and Term 3
d) Resignation and Retirement 3
e) Removal 3
f) Vacancies 4
g) Effect of Death, Resignation, etc. 4
h) No Accounting 4
i) Retirement Policy 4
j) Trustees Emeritus 5
Section 3.2 Powers of Trustees
a) Investments 5
b) Disposition of Assets 6
c) Ownership Powers 6
d) Subscription 6
e) Form of Holding 6
f) Reorganization, etc. 6
g) Voting Trusts, etc. 7
h) Compromise 7
i) Partnerships, etc. 7
j) Borrowing and Security 7
k) Guarantees, etc. 7
l) Insurance 7
m) Pensions, etc. 7
Section 3.3 Certain Contracts
a) Advisory 8
b) Administration 8
c) Distribution 8
d) Custodian and Depository 8
e) Transfer and Dividend 9
Disbursing Agency
f) Shareholder Servicing 9
g) Accounting 9
Section 3.4 Payment of Trust Expenses and Compensation
of Trustees 10
Section 3.5 Ownership of Assets of the Trust 10
ARTICLE IV. SHARES 10
Section 4.1 Description of Shares 10
Section 4.2 Establishment and Designation of
Sub-Trusts 11
a) Assets Belonging to Sub-Trusts 12
b) Liabilities Belonging to Sub-Trusts 12
c) Dividends 13
d) Liquidation 13
e) Voting 13
f) Redemption by Shareholder 14
g) Redemption by Trust 14
h) Net Asset Value 14
i) Transfer 15
j) Equality 15
k) Fractions 15
l) Conversion of Rights 15
Section 4.3 Ownership of Shares 15
Section 4.4 Investment in the Trust 16
Section 4.5 No Pre-emptive Rights 16
Section 4.6 Status of Shares and Limitation of Personal Liability 16
ARTICLE V. SHAREHOLDERS' VOTING POWERS AND MEETINGS 17
- ---------- ----------------------------------------
Section 5.1 Voting Powers 17
Section 5.2 Meetings 17
Section 5.3 Record Dates 18
<PAGE>
Section 5.4 Quorum and Required Vote 18
Section 5.5 Action by Written Consent 18
Section 5.6 Inspection of Records 19
Section 5.7 Additional Provisions 19
Section 5.8 Shareholder Communications 19
ARTICLE VI. LIMITATION OF LIABILITY; INDEMNIFICATION 20
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable;
Notice 20
Section 6.2 Trustee's Good Faith Action; Expert Advice;
No Bond of Surety 20
Section 6.3 Indemnification of Shareholders 21
Section 6.4 Indemnification of Trustees, Officers, etc. 21
Section 6.5 Compromise Payment 22
Section 6.6 Indemnification Not Exclusive, etc. 23
Section 6.7 Liability of Third Persons Dealing with Trustees 23
ARTICLE VII. MISCELLANEOUS 23
Section 7.1 Duration and Termination of Trust 23
Section 7.2 Reorganization 24
Section 7.3 Amendments 24
Section 7.4 Resident Agent 25
Section 7.5 Filing of Copies; Reference; Headings 25
Section 7.6 Applicable Law 25
<PAGE>
JULIUS BAER MULTISTOCK FUNDS
MASTER TRUST AGREEMENT
AGREEMENT AND DECLARATION OF TRUST made at Boston, Massachusetts this
19th day of January, 2000, by the Trustees hereunder, and by the holders of
shares of beneficial interest to be issued hereunder as hereinafter provided.
WITNESSETH
WHEREAS this Trust has been formed to carry on the business of an
investment company; and
WHEREAS this Trust is authorized to issue its shares of beneficial
interest in separate series, each separate series to be a Sub-Trust hereunder,
all in accordance with the provisions hereinafter set forth; and
WHEREAS the Trustees have agreed to manage all property coming into
their hands as trustees of a Massachusetts business trust 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 of beneficial interest in this Trust or Sub-Trusts created
hereunder as hereinafter set forth.
<PAGE>
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 Name. This Trust shall be known as "Julius Baer Multistock
Funds" and the Trustees shall conduct the business of the Trust under that name
or any other name or names as they may from time to time determine.
Section 1.2 Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) The "Trust" refers to the Massachusetts business trust established by this
Trust Agreement, as amended from time to time, inclusive of each and every
Sub-Trust established hereunder;
(b) "Trustees" refers to the Trustees of the Trust and of each Sub-Trust
hereunder named herein or elected in accordance with Article III;
(c) "Shares" refers to the transferable units of interest into which the
beneficial interest in the Trust and each Sub-Trust of the Trust (as the context
may require) shall be divided from time to time;
(d) "Series" refers to Series of Shares established and designated under or in
accordance with the provisions of Article IV, each of which Series shall be a
Sub-Trust of the Trust;
(e) "Shareholder" means a record owner of Shares;
(f) The "1940 Act" refers to the Investment Company Act of 1940 and Rules and
Regulations thereunder, all as amended from time to time;
(g) The term "commission" shall have the meaning given it in the 1940 Act;
(h) "Declaration of Trust" shall mean this Agreement and Declaration of Trust as
amended or restated from time to time; and
(i) "By-Laws" shall mean the By-Laws of the Trust as amended from time to time.
<PAGE>
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to operate as an investment company and to
offer Shareholders of the Trust and each Sub-Trust of the Trust one or more
investment programs primarily in securities and debt instruments.
<PAGE>
ARTICLE III
THE TRUSTEES
Section 3.1 Number, Designation, Election, Term, etc.
(a) Initial Trustees. Upon the execution of this Declaration of Trust
or a counterpart hereof or some other writing in which he or she accepts such
Trusteeship and agrees to the provisions hereof, each of Philip W. Coolidge,
Linwood C. Downs and Linda T. Gibson, shall become a Trustee hereof and of each
Sub-Trust hereunder.
(b) Number. The Trustees serving as such, whether named above or
hereafter becoming a Trustee, may increase or decrease (to not less than two)
the number of Trustees to a number other than the number theretofore determined.
No decrease in the number of Trustees shall have the effect of removing any
Trustee from office prior to the expiration of his term, but the number of
Trustees may be decreased in conjunction with the removal of a Trustee pursuant
to subsection (e) of this Section 3.1.
(c) Election and Term. Trustees may be elected by the Shareholders of
the Trust at a meeting of Shareholders. Each Trustee, whether named above or
hereafter becoming a Trustee, shall serve as a Trustee of the Trust and, of each
Sub-Trust hereunder during the lifetime of this Trust and until its termination
as hereinafter provided except as such Trustee sooner dies, resigns or is
removed. Subject to Section 16(a) of the 1940 Act, the Trustees may elect their
own successors and may, pursuant to Section 3.1(f) hereof, appoint Trustees to
fill vacancies.
(d) Resignation and Retirement. Any Trustee may resign his trust or
retire as a Trustee, by written instrument signed by him and delivered to the
other Trustees or to any officer of the Trust, and such resignation or
retirement shall take effect upon such delivery or upon such later date as is
specified in such instrument and shall be effective as to the Trust and each
Sub-Trust hereunder.
(e) Removal. Any Trustee may be removed with or without cause at any
time: (i) by written instrument, signed by at least two-thirds of the number of
Trustees prior to such removal, specifying the date upon which such removal
shall become effective; or (ii) by vote of shareholders holding not less than
two-thirds of the Shares then outstanding, cast in person or by proxy at any
meeting called for the purpose; or (iii) by a written declaration signed by
Shareholders holding not less than two-thirds of the Shares then outstanding and
filed with the Trust's custodian. Any such removal shall be effective as to the
Trust and each Sub-Trust hereunder.
(f) Vacancies. Any vacancy or anticipated vacancy resulting from any
reason, including without limitation the death, resignation, retirement, removal
or incapacity of any of the Trustees, or resulting from an increase in the
number of Trustees by the other Trustees may (but so long as there are at least
two remaining Trustees, need not unless required by the 1940 Act) be filled by a
majority of the remaining Trustees, subject to the provisions of Section 16(a)
of the 1940 Act, through the appointment in writing of such other person as such
remaining Trustees in their discretion shall determine and such appointment
shall be effective upon the written acceptance of the person named therein to
serve as a Trustee and agreement by such person to be bound by the provisions of
this Master Trust Agreement, except that any such appointment in anticipation of
a vacancy to occur by reason of retirement, resignation or increase in number of
Trustees to be effective at a later date shall become effective only at or after
the effective date of said retirement, resignation or increase in number of
Trustees. As soon as any Trustee so appointed shall have accepted such
appointment and shall have agreed in writing to be bound by this Master Trust
Agreement and the appointment is effective, the Trust estate shall vest in the
new Trustee, together with the continuing Trustees, without any further act or
conveyance.
(g) Effect of Death, Resignation, etc. The death, resignation,
retirement, removal or incapacity of the Trustees, or any one of them, shall not
operate to annul or terminate the Trust or any Sub-Trust hereunder or to revoke
or terminate any existing agency or contract created or entered into pursuant to
the terms of this Master Trust Agreement.
(g) No Accounting. Except to the extent required by the 1940 Act or
under circumstances which would justify his or her removal for cause, no person
ceasing to be a Trustee as a result of his or her death, resignation,
retirement, removal or incapacity (nor the estate of any such person) shall be
required to make an accounting to the Shareholders or remaining Trustees upon
such cessation.
(h) Retirement Policy . Except for those individuals who (a) are
Trustees as of the date that the Commission declares the Trust's initial
Registration Statement on Form N-1A effective or (b) were members of the Board
of Directors or Trustees of an investment company having an investment adviser
or principal underwriter under common control with the Trust's investment
adviser or principal underwriter immediately prior to such investment company's
combination with the Trust by merger, acquisition of assets or similar
transaction, and of which Trustees may continue to be nominated as Trustees and
to serve as Trustees if elected or appointed in accordance with Section 3.1 (c)
of this Article III, an individual who has reached the age of seventy-two (72)
years may not be elected, re-elected or appointed to serve as a Trustee.
(i) Trustees Emeritus. An individual who has served as a Trustee for
minimum of five years (5) and who retires voluntarily or who may not stand for
re-election because of age may be designated by the remaining Trustees as a
Trustee Emeritus.
An individual designated as a Trustee Emeritus may, upon his or her
request, be permitted to attend meetings of the Trustees and to receive all
materials sent to active Trustees. A Trustee Emeritus shall not have voting
rights at meetings of the Trustees and shall not be under a duty to manage or
direct the business and affairs of the Trust. A Trustee Emeritus shall not be
deemed to stand in a fiduciary relation to the Trust and shall not be
responsible to discharge the duties of a Trustee or to exercise that diligence,
care or skill which a Trustee would ordinarily be required to exercise under the
laws of the Commonwealth of Massachusetts; provided, however, that a Trustee
Emeritus may be held liable to the Trust for any action amounting to bad faith,
willful misconduct or gross negligence, disclosure of any confidential
information of the Trust or appropriation of any opportunity of the Trust.
A stipend, the amount to be determined by the Trustees from time to
time, which shall not exceed the basis upon which Trustees of the Trust are
compensated, shall be paid to each Trustee Emeritus. A Trustee Emeritus shall be
indemnified to the full extent that an officer or Trustee of the Trust may be
indemnified under any provision of this Declaration of Trust or the By-Laws.
Section 3.2 Powers of Trustees. 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 and the purpose of the Trust. Without limiting the
foregoing, the Trustees may adopt By-Laws not inconsistent with this Declaration
of Trust providing for the conduct of the business and 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. Tthey may from time to time in accordance with the
provisions of Section 4.1 hereof establish Sub-Trusts, each Sub-Trust to operate
as a separate and distinct investment medium and with separately defined
investment objectives and policies and distinct investment purpose; they may as
they consider appropriate elect and remove officers and appoint and terminate
agents and consultants and hire and terminate employees, any one or more of the
foregoing of whom may be a Trustee, and may provide for the compensation of all
of the foregoing; they may appoint from their own number, and terminate, any one
or more committees consisting of two or more Trustees, including without implied
limitation an executive committee, which may, when the Trustees are not in
session and subject to the 1940 Act, exercise some or all of the power and
authority of the trustees as the Trustees may determine; in accordance with
Section 3.3 they may employ one or more advisers, administrators, distributor,
depositories and custodians and may authorize any depository or custodian to
employ subcustodians or agents and to deposit all or any part of such assets in
a system or systems for the central handling of securities and debt instruments,
retain transfer, dividend, accounting or Shareholder servicing agents or any of
the foregoing, provide for the distribution of Shares by the Trust through one
or more distributors, principal underwriters or otherwise, set record dates or
times for the determination of Shareholders or various of them with respect to
various matters; they may compensate or provide for the compensation of the
Trustees, officers, advisers, administrators, custodians, other agents,
consultants and employees of the Trust or the Trustees on such terms as they
deem appropriate; and in general they may delegate to any officer of the Trust,
to any committee of the Trustees and to any employee, adviser, administrator,
distributor, depository, custodian, transfer and dividend disbursing agent, or
any other agent or consultant of the Trust, such authority, powers, functions
and duties as they consider desirable or appropriate for the conduct of the
business and affairs of the Trust, including without implied limitation the
power and authority to act in the name of the Trust and of the Trustees, to sign
documents and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing and to the extent not inconsistent with
the 1940 Act or other applicable law, the Trustees shall have power and
authority for and on behalf of the Trust and each separate Sub-Trust established
hereunder:
(a) Investments. To invest and reinvest cash and other property and to
hold cash or other property uninvested without in any event being bound or
limited by any present or future law or custom in regard to investments by
trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the assets of the Trust;
(c) Ownership Powers. To vote or give assent, or exercise any rights of
ownership with respect to stock or other securities, debt instruments 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, debt instruments
or property as the Trustees shall deem proper;
(d) Subscription. To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of securities or debt
instruments;
(e) Form of Holding. To hold any security, debt instrument or property
in a form not indicating any trust, whether in bearer, unregistered or other
negotiable form, or in the name of the Trustees or of the Trust or of any
Sub-Trust or in the name of a custodian, subcustodian or other depository or a
nominee or nominees or otherwise;
(f) Reorganization, etc. To consent to or participate in any plan for
the reorganization, consolidation or merger of any corporation or issuer, any
security or debt instrument of which is or was held in the Trust; to consent to
any contract, lease, mortgage, purchase or sale of property by such corporation
or issuer; and to pay calls or subscriptions with respect to any security or
debt instrument held in the Trust;
(g) Voting Trusts, etc. To join with other holders of any securities or
debt instruments in acting through a committee, depository, voting trustee or
otherwise, and in that connection to deposit any security or debt instrument
with, or transfer any security or debt instrument to, any committee, depository
or trustee, and to delegate to them such power and authority with relation to
any security or debt instrument (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, depository or trustee as the
Trustees shall deem proper;
(h) Compromise. To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any Sub-Trust of any matter in controversy,
including but not limited to claims for taxes;
(i) Partnerships, etc. To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(j) Borrowing and Security. To borrow funds and to mortgage and pledge
the assets of the Trust or any part thereof to secure obligations arising in
connection with such borrowing;
(k) Guarantees, etc. To endorse or guarantee the payment of any notes
or other obligations of any person; to make contracts of guaranty or suretyship,
or otherwise assume liability for payment thereof; and to mortgage and pledge
the Trust property or any part thereof to secure any of or all such obligations;
(l) Insurance. To purchase and pay for entirely out of Trust property
such insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the assets
of the Trust and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, consultants, investment advisers, managers,
administrators, distributors, principal underwriters or independent contractors,
or any thereof (or any person connected therewith), 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 in any such capacity,
including any action taken or omitted that may be determined to constitute
negligence, whether or not the Trust would have the power to indemnify such
person against such liability; and
(m) Pensions, etc. To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry out pension,
profit-sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and provisions, including the
purchasing of life insurance and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the Trustees, officers,
employees and agents of the Trust.
Except as otherwise provided by the 1940 Act or other applicable law,
this Declaration of Trust or the By-Laws, any action to be taken by the Trustees
on behalf of the Trust or any Sub-Trust may be taken by a majority of the
Trustees present at a meeting of Trustees (a quorum, consisting of at least a
majority of the Trustees then in office, being present), within or without
Massachusetts, including any meeting held by means of a conference telephone or
other communications equipment by means of which all persons participating in
the meeting can hear each other at the same time and participation by such means
shall constitute presence in person at a meeting, or by written consents of a
majority of the Trustees then in office (or such larger or different number as
may be required by the 1940 Act or other applicable law).
Section 3.3 Certain Contracts. Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations of present and
future law or custom in regard to delegation of powers by trustees generally,
the Trustees may, at any time and from time to time and without limiting the
generality of their powers and authority otherwise set forth herein, enter into
one or more contracts with any one or more corporations, trusts, associations,
partnerships, limited partnerships, other types of organizations or individuals
("Contracting Party") to provide for the performance and assumption of some or
all of the following services, duties and responsibilities to, for or on behalf
of the Trust and/or any Sub-Trust and/or the Trustees, and to provide for the
performance and assumption of such other services, duties and responsibilities
in addition to those set forth below as the Trustees may determine appropriate:
(a) Advisory. Subject to the general supervision of the Trustees and in
conformity with the stated policy of the Trustees with respect to the
investments of the Trust or of the assets belonging to any Sub-Trust of the
Trust (as that phrase is defined in subsection (a) of Section 4.2), to manage
such investments and assets, make investment decisions with respect thereto and
to place purchase and sale orders for portfolio transactions relating to such
investments and assets;
(b) Administration. Subject to the general supervision of the Trustees
and in conformity with any policies of the Trustees with respect to the
operations of the Trust and each Sub-Trust, to supervise all or any part of the
operations of the Trust and each Sub-Trust and to provide all or any part of the
administrative and clerical personnel, office space and office equipment and
services appropriate for the efficient administration and operations of the
Trust and each Sub-Trust;
(c) Distribution. To distribute the Shares of the Trust and each
Sub-Trust, to be principal underwriter of such Shares, and/or to act as agent of
the Trust and each Sub-Trust in the sale of Shares and the acceptance or
rejection of orders for the purchase of Shares;
(d) Custodian and Depository. To act as depository for and to maintain
custody of the property of the Trust and each Sub-Trust and accounting records
in connection therewith;
(e) Transfer and Dividend Disbursing Agency. To maintain records of the
ownership of outstanding Shares, the issuance and redemption and the transfer
thereof, and to disburse any dividends declared by the Trustees and in
accordance with the policies of the Trustees and/or the instructions of any
particular Shareholder to reinvest any such dividends;
(f) Shareholder Servicing. To provide service with respect to the
relationship of the Trust and its Shareholders, records with respect to
Shareholders and their Shares and similar matters; and
(g) Accounting. To handle all or any part of the accounting
responsibilities, whether with respect to the Trust's properties, Shareholders
or otherwise.
The same person may be the Contracting Party for some or all of the
services, duties and responsibilities to, for and of the Trust and/or the
Trustees, and the contracts with respect thereto may contain such terms
interpretive of or in addition to the delineation of the services, duties and
responsibilities provided for, including provisions that are not inconsistent
with the 1940 Act relating to the standard of duty of and the rights to
indemnification of the Contracting Party and others, as the Trustees may
determine. Nothing herein shall preclude, prevent or limit the Trust or a
Contracting Party from entering into sub-contractual arrangements relative to
any of the matters referred to in Sections 3.3(a) through (g) hereof.
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 or distributor or
agent of or for any Contracting Party, or of or for any parent
or affiliate of any Contracting Party, or that the Contracting
Party or any parent or affiliate thereof is a Shareholder or
has an interest in the Trust or any Sub-Trust, or that
(ii) any Contracting Party may have a contract providing for the
rendering of any similar services to one or more other
corporations, trusts, associations, partnerships, limited
partnerships or other organizations, or have other business or
interests,
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust or any
Sub-Trust and/or the Trustees 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, any Sub-Trust or its Shareholders, provided that in
the case of any relationship or interest referred to in the preceding clause (i)
on the part of any Trustee or officer of the Trust either (x) the material facts
as to such relationship or interest have been disclosed to or are known by the
Trustees not having any such relationship or interest and the contract involved
is approved in good faith by a majority of such Trustees not having any such
relationship or interest (even though such unrelated or disinterested Trustees
are less than a quorum of all of the Trustees), (y) the material facts as to
such relationship or interest and as to the contract have been disclosed to or
are known by the Shareholders entitled to vote thereon and the contract involved
is specifically approved in good faith by vote of the Shareholders or (z) the
specific contract involved is fair to the Trust as of the time it is authorized,
approved or ratified by the Trustees or by the Shareholders.
Section 3.4 Payment of Trust Expenses and Compensation of Trustees. The
Trustees are authorized to pay or to cause to be paid out of the principal or
income of the Trust or any Sub-Trust, or partly out of principal and partly out
of income, and to charge or allocate the same to, between or among such one or
more of the Sub-Trusts that may be established and designated pursuant to
Article IV, as the Trustees deem fair, all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust or any Sub-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, investment adviser, administrator, distributor,
principal underwriter, auditor, counsel, depository, custodian, transfer agent,
dividend disbursing agent, accounting agent, shareholder servicing agent, and
such other agents, consultants, and independent contractors and such other
expenses and charges as the Trustees may deem necessary or proper to incur.
Without limiting the generality of any other provision hereof, the Trustees
shall be entitled to reasonable compensation from the Trust for their services
as Trustees and may fix the amount of such compensation.
Section 3.5 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.
<PAGE>
ARTICLE IV
SHARES
Section 4.1 Description of Shares. The beneficial interest in the Trust
shall be divided into Series of Shares and classes, all with a par value of
$.001. The Trustees shall have the authority from time to time to divide the
Shares into more Series of Shares (each of which Series of Shares shall be a
separate and distinct Sub-Trust of the Trust, including without limitation those
Sub-Trusts and specifically established and designated in Section 4.2) or
classes of Series, as they deem necessary or desirable. Each Sub-Trust shall be
deemed to be a separate trust established under, and subject to the terms of,
this Declaration of Trust. The Trustees shall have exclusive power without the
requirement of shareholder approval to establish and designate such separate and
distinct Sub-Trusts or classes thereof, and to fix and determine the relative
rights and preferences as between the shares of the separate Sub-Trusts or
classes thereof as to right of redemption and the price, terms and manner of
redemption, special and relative rights as to dividends and other distributions
and on liquidation, sinking or purchase fund provisions, conversion rights and
conditions under which the several Sub-Trusts or classes thereof shall have
separate voting rights or no voting rights.
The number of authorized Shares and the number of Shares of each
Sub-Trust that may be issued is unlimited, and theTrustees may issue Shares of
any Sub-Trust or any class of a Sub-Trust for such consideration and on such
terms as they may determine (or for no consideration if pursuant to a Share
dividend or split-up), all without action or approval of the Shareholders. All
Shares when so issued on the terms determined by the Trustees shall be fully
paid and non-assessable (but may be subject to mandatory contribution back to
the Trust as provided in subsection (h) of Section 4.2). The Trustees may
classify or reclassify any unissued Shares or any shares previously issued and
reacquired of any Sub-Trust or class into one or more Sub-Trusts or classes that
may be established and designated from time to time. The Trustees may hold as
treasury Shares, reissue for such consideration and on such terms as they may
determine, or cancel, at their discretion from time to time, any Shares of any
Sub-Trust or class as reacquired by the Trust.
The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining the holders of
Shares entitled to be treated as such, to the extent provided or referred to in
Section 5.3.
The establishment and designation of any Sub-Trust or class in addition
to the Sub-Trust or classes established and designated in Section 4.2 shall be
effective upon the execution by a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of the Shares of such Sub-Trust or class or as otherwise provided in
such instrument. At any time that there are no Shares outstanding of any
particular Sub-Trust or class previously established and designated, the
Trustees may by an instrument executed by a majority of their number abolish
that Sub-Trust or class and the establishment and designation thereof. Each
instrument referred to in this paragraph shall have the status of an amendment
to this Declaration of Trust.
Any Trustee, officer or other agent of the Trust, and any organization
in which any such person is interested, may acquire, own, hold and dispose of
shares of any Sub-Trust of the Trust or class of a Sub-Trust to the same extent
as if such person were not a Trustee, officer or other agent of the Trust; and
the Trust may issue and sell or cause to be issued and sold and may purchase
shares of any Sub-Trust or class from any such person or any such organization
subject only to the general limitations, restrictions or other provisions
applicable to the sale or purchase of Shares of such Sub-Trust or class
generally.
Section 4.2 Establishment and Designation of Sub-Trusts and Classes.
Without limiting the authority of the Trustees set forth in Section 4.1 to
establish and designate any further Sub-Trusts or classes, the Trustees hereby
establish and designate one Sub-Trust: the "Julius Baer Swiss Stock Fund" with
three classes of shares established and designated as Class A , Class B and
Class I shares. The Trustees may authorize the issuance of additional classes of
shares of any Series, each such class to have such different dividend,
liquidation, voting and conversion and other rights as the Trustees may
determine.
The Fund and any Shares of any further Sub-Trusts or classes that may
from time to time be established and designated by the Trustees shall (unless
the Trustees otherwise determine with respect to some further Sub-Trust or class
at the time of establishing and designating the same) have the following
relative rights and preferences:
(a) Assets Belonging to Sub-Trusts. All consideration received by the
Trust for the issue or sale of Shares of a particular Sub-Trust, together with
all assets in which such consideration is invested or reinvested, all income,
earnings, profits and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be, shall
be held by the Trustees in trust for the benefit of the holders of shares of
that Sub-Trust, shall irrevocably belong to that Sub-Trust for all purpose and
shall be so recorded upon the books of account of the Trust. Such consideration,
assets, income, earnings, profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestments of such proceeds, in whatever form the
same may be, together with any General Items allocated to that Sub-Trust as
provided in the following sentence, are herein referred to as "assets belonging
to" that Sub-Trust. In the event that there are any assets, income, earnings,
profits and proceeds thereof, funds or payments which are not readily
identifiable as belonging to any particular Sub-Trust or class (collectively
"General Items"), the Trustees shall allocate such general Items to and among
any one or more of the Sub-Trusts or classes established and designated from
time to time in such manner and on such basis as they, in their sole discretion,
deem fair and equitable; and any General Items so allocated to a particular
Sub-Trust or class shall belong to that Sub-Trust or class. Each such allocation
by the Trustees shall be conclusive and binding upon the Shareholders of all
Sub-Trusts or classes for all purposes.
(b) Liabilities Belonging to Sub-Trusts. The assets belonging to each
particular Sub-Trust shall be charged with the liabilities in respect of that
Sub-Trust and all expenses, costs, charges and reserves attributable to that
Sub-Trust except that the Trustees in their discretion may allocate liabilities
and expenses solely to a particular class, and any general liabilities,
expenses, costs, charges or reserves of the Trust which are not readily
identifiable as belonging to any particular Sub-Trust or class shall be
allocated and charged by the Trustees to and among any one or more of the
Sub-Trusts or classes established and designated from time to time in such
manner and on such basis as the Trustees in their sole discretion deem fair and
equitable. The liabilities, expenses, costs, charges and reserves allocated and
so charged to a Sub-Trust or class are herein referred to as "liabilities
belonging to" that Sub-Trust or class. Each allocation of liabilities, expenses,
costs, charges and reserves by the Trustees shall be conclusive and binding upon
the Shareholders of all Sub-Trusts and classes for all purposes. Any creditor of
any Sub-Trust may look only to the assets of that Sub-Trust to satisfy such
creditor's debt.
The Trustees shall have full discretion, to the extent not inconsistent
with the 1940 Act, to determine which items shall be treated as income and which
items as capital; and each such determination and allocation shall be conclusive
and binding upon the Shareholders.
(c) Dividends. Dividends and distributions on Shares of a particular
Sub-Trust or class may be paid with such frequency as the Trustees may
determine, which may be daily or otherwise pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine, to the holders of Shares of that Sub-Trust or class, from such of the
income and capital gains, accrued or realized, from the assets belonging to that
Sub-Trust or class, as the Trustees may determine, after providing for actual
and accrued liabilities belonging to that Sub-Trust or class. All dividends and
distributions on shares of a particular Sub-Trust or class shall be distributed
pro rata to the holders of Shares of that Sub-Trust or class in proportion to
the number of Shares of that Sub-Trust or class held by such holders at the date
and time of record established for the payment of such dividends or
distribution, except that in connection with any dividend or distribution
program or procedure the Trustees may determine that no dividend or distribution
shall be payable on Shares as to which the Shareholder's purchase order and/or
payment have not been received by the time or times established by the Trustees
under such program or procedure. Such dividends and distributions may be made in
cash or Shares of that Sub-Trust or class or a combination thereof as determined
by the Trustees or pursuant to any program that the Trustees may have in effect
at the time for the election by each Shareholder of the mode of the making of
such dividend or distribution to that Shareholder. Any such dividend or
distribution paid in Shares will be paid at the net asset value thereof as
determined in accordance with subsection (h) of Section 4.2.
(d) Liquidation. In the event of the liquidation or dissolution of the
Trust, the Shareholders of each Sub-Trust or class that has been established and
designated shall be entitled to receive, when and as declared by the Trustees,
the excess of the assets belonging to that Sub-Trust or class over the
liabilities belonging to that Sub-Trust or class. The assets so distributable to
the Shareholders of any particular Sub-Trust or class shall be distributed among
such Shareholders in proportion to the number of Shares of that Sub-Trust or
class held by them and recorded on the books of the Trust. The liquidation of
any particular Sub-Trust may be authorized by vote of a majority of the Trustees
then in office subject, to the extent required by law, to the approval of a
majority of the outstanding voting Shares of that Sub-Trust, as defined in the
1940 Act.
(e) Voting. On each matter submitted to a vote of the Shareholders,
each holder of a Share of each Sub-Trust shall be entitled to one vote for each
whole share and to a proportionate fractional vote for each fractional Share
standing in his name on the books of the Trust. The Trustees shall cause each
matter required or permitted to be voted upon at a meeting or by written consent
of Shareholders to be submitted to a vote of all classes of outstanding Shares
entitled to vote thereon (irrespective of class), unless the 1940 Act or other
applicable laws or regulations require that the actions of the Shareholders be
taken by a separate vote of one or more classes, or the Trustees determine that
any matter to be submitted to a vote of Shareholders affects only the rights or
interests of one or more (but not all) classes of outstanding Shares, in which
case only the Shareholders of the class or classes so affected shall be entitled
to vote thereon.
(f) Redemption by Shareholder. Each holder of Shares of a particular
Sub-Trust shall have the right at such times as may be permitted by the Trust to
require the Trust to redeem all or any part of his Shares of that Sub-Trust at a
redemption price equal to the net asset value per share of that Sub-Trust next
determined in accordance with subsection (h) of this Section 4.2 after the
Shares are properly tendered for redemption. Payment of the redemption price
shall be in cash; provided, however, that if the Trustees determine, which
determination shall be conclusive, that conditions exist which make payment
wholly in cash unwise or undesirable, the Trust may make payment wholly or
partly in securities or other assets belonging to the Sub-Trust of which the
Shares being redeemed are part at the value of such securities or assets used in
such determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the holders of shares of any
Sub-Trust to require the Trust to redeem Shares of that Sub-Trust during any
period or at any time when and to the extent permissible under the 1940 Act.
(g) Redemption by Trust. Each Share of each Sub-Trust that has been
established and designated is subject to redemption by the Trust at the
redemption price which would be applicable if such Share was then being redeemed
by the Shareholder pursuant to subsection (f) of this Section 4.2: (a) at any
time, if the Trustees determine in their sole discretion that failure to so
redeem may have materially adverse consequences to the holders of the Shares of
the Trust or any Sub-Trust thereof or (b) upon such other conditions as may from
time to time be determined by the Trustees and set forth in the then current
Prospectus of the Trust with respect to maintenance of Shareholder accounts of a
minimum amount. Upon such redemption the holders of the Shares so redeemed shall
have no further right with respect thereto other than to receive payment of such
redemption price.
(h) Net Asset Value. The net asset value per share of any Sub-Trust
shall be the quotient obtained by dividing the value of the net assets of that
Sub-Trust (being the value of the assets belonging to that Sub-Trust less the
liabilities belonging to that Sub-Trust) by the total number of Shares of that
Sub-Trust outstanding, all determined in accordance with the methods and
procedures, including without limitation those with respect to rounding,
established by the Trustees from time to time.
The Trustees may determine to maintain the net asset value per Share of
any Sub-Trust at a designated constant dollar amount and in connection therewith
may adopt procedures not inconsistent with the 1940 Act for the continuing
declarations of income attributable to that Sub-Trust as dividends payable in
additional Shares of that Sub-Trust at the designated constant dollar amount and
for the handling of any losses attributable to that Sub-Trust. Such procedures
may provide that in the event of any loss each Shareholder shall be deemed to
have contributed to the capital of the Trust attributable to that Sub-Trust his
pro rata portion of the total number of Shares required to be cancelled in order
to permit the net asset value per Share of that Sub-Trust to be maintained,
after reflecting such loss, at the designated constant dollar amount. Each
Shareholder of the Trust shall be deemed to have agreed, by his or her
investment in any Sub-Trust with respect to which the Trustees shall have
adopted any such procedure, to make the contribution referred to in the
preceding sentence in the event of any such loss.
(i) Transfer. All Shares of each particular Sub-Trust shall be
transferable, but transfers of Shares of a particular Sub-Trust will be recorded
on the Share transfer records of the Trust applicable to that Sub-Trust only at
such times as Shareholders shall have the right to require the Trust to redeem
Shares of that Sub-Trust and at such other times as may be permitted by the
Trustees.
(j) Equality. All Shares of each particular Sub-Trust shall represent
an equal proportionate interest in the assets belonging to that Sub-Trust
(subject to the liabilities belonging to that Sub-Trust), and each Share of any
particular Sub-Trust shall be equal to each other share of that Sub-Trust; but
the provisions of this sentence shall not restrict any distinctions permissible
under subsection (c) of this Section 4.2 that may exist with respect to
dividends and distributions on shares of the same Sub-Trust. The Trustees may
from time to time divide or combine the Shares of any particular Sub-Trust into
a greater or lesser number of shares of that Sub-Trust without thereby changing
the proportionate beneficial interest in the assets belonging to that Sub-Trust
or in any way affecting the rights of Shares of any other Sub-Trust.
(k) Fractions. Any fractional Share of any Sub-Trust, if any such
fractional Share is outstanding, shall carry proportionately all of the rights
and obligations of a whole Share of that Sub-Trust, including rights and
obligations with respect to voting, receipt of dividends and distributions,
redemption of Shares and liquidation of the Trust.
(l) Conversion Rights. Subject to compliance with the requirements of
the 1940 Act, the Trustees shall have the authority to provide that holders of
Shares of any Sub-Trust shall have the right to convert said shares into Shares
of one or more other Sub-Trusts in accordance with such requirements and
procedures as may be established by the Trustees.
Section 4.3 Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each
Sub-Trust that has been established and designated. No certificates certifying
the ownership of Shares need be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Shares certificates, the use of facsimile
signatures, the transfer of Shares and similar matters. The record books of the
Trust as kept by the Trust or any transfer or similar agent, as the case may be,
shall be conclusive as to who are the Shareholders and as to the number of
Shares of each Sub-Trust held from time to time by each such Shareholder.
Section 4.4 Investments in the Trust. The Trustees may accept
investments in the Trust and each Sub-Trust thereof from such persons and on
such terms and for such consideration, not inconsistent with the provisions of
the 1940 Act, as they from time to time authorize. The Trustees may authorize
any distributor, principal underwriter, custodian, transfer agent or other
person to accept orders for the purchase of Shares that conform to such
authorized terms and to reject any purchase orders for shares whether or not
conforming to such authorized terms.
Section 4.5 No Pre-emptive Rights. Shareholders shall have no
pre-emptive or other right to subscribe to any additional Shares or other
securities issued by the Trust.
Section 4.6 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 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 Trust or any Sub-Trust thereof or
entitle the representative of any deceased Shareholder to an accounting or to
take any action in court or elsewhere against the Trust or the Trustees, but
only to the rights of said decedent under this Trust. Ownership of Shares shall
not entitle the Shareholder to any title in or to the whole or any part of the
Trust property or right to call for a partition or division of the same or for
an accounting, nor shall the ownership of Shares constitute the Shareholders'
partners. Neither the Trust nor the Trustees, nor any officer, employee or agent
of the Trust shall have any power to bind personally any Shareholder, nor except
as specifically provided herein to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay.
<PAGE>
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 Voting Powers. The shareholders shall have power to vote
only (i) for the election or removal of Trustees as provided in Section 3.1,
(ii) with respect to any contract with a Contracting Party as provided in
Section 3.3 as to which Shareholder approval is required by the 1940 Act, (iii)
with respect to any termination or reorganization of the Trust or any Sub-Trust
to the extent and as provided in Section 7.1 and 7.2, (iv) with respect to any
amendment of this Declaration of Trust to the extent and as provided in Section
7.3, (v) to the same extent as the stockholders of a Massachusetts business
corporation as to whether or not a court action, proceeding or claim should or
should not be brought or maintained derivatively or as a class action on behalf
of the Trust or any Sub-Trust thereof or the Shareholders (provided, however,
that a shareholder of a particular Sub-Trust shall not be entitled to a
derivative or class action on behalf of any other Sub-Trust (or shareholder of
any other Sub-Trust) of the Trust) and (vi) with respect to such additional
matters relating to the Trust as may be required by the 1940 Act, 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. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy. A proxy with
respect to Shares held in the name of two or more persons shall be valid if
executed by any one of them unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any one of them. A
proxy purporting to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. Until Shares are issued, the Trustees
may exercise all rights of Shareholders and may take any action required by law,
this Declaration of Trust or the By-Laws to be taken by Shareholders.
Section 5.2 Meetings. Meetings of Shareholders may be called by the
Trustees from time to time for the purpose of taking action upon any matter
requiring the vote or authority of the Shareholders as herein provided or upon
any other matter deemed by the Trustees to be necessary or desirable. Written
notice of any meeting of Shareholders shall be given or caused to be given by
the Trustees by mailing such notice at least seven days before such meeting,
postage prepaid, stating the time, place and purpose of the meeting, to each
Shareholder at the Shareholder's address as it appears on the records of the
Trust.
The Trustees shall promptly call and give notice of a meeting of
Shareholders for the purpose of voting upon removal of any Trustee of the Trust
when requested to do so in writing by Shareholders holding not less than 10% of
the Shares then outstanding. If the Trustees fail to call or give notice of any
meeting of Shareholders for a period of 30 days after written application by
Shareholders holding at least 10% of the Shares then outstanding requesting a
meeting be called for any other purpose requiring action by the Shareholders as
provided herein or in the By-Laws, then Shareholders holding at least 10% of the
Shares then outstanding may call and give notice of such meeting, and thereupon
the meeting shall be held in the manner provided for herein in case of call
thereof by the Trustees.
Section 5.3 Record Dates. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to participate in any dividend or distribution, or
for the purpose of any other action, the Trustees may from time to time close
the transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date and time not more
than 60 days prior to the date of any meeting of Shareholders or other action as
the date and time of record for the determination of Shareholders entitled to
vote at such meeting or any adjournment thereof or to be treated as Shareholders
of record for purposes of such other action, and any shareholder who was a
Shareholder at the date and time so any shareholder who was a Shareholder at the
date and time so fixed shall be entitled to vote at such meeting or any
adjournment thereof or to be treated as a Shareholder of record for purposes of
such other action, even though he has since that date and time disposed of his
Shares, and no Shareholder becoming such after that date and time shall be so
entitled to vote at such meeting or any adjournment thereof or to be treated as
a Shareholder of record for purposes of such other action.
<PAGE>
Section 5.4 Quorum and Required Vote. A majority of the Shares entitled
to vote shall be a quorum for the transaction of business at a Shareholders'
meeting, but any lesser number shall be sufficient for adjournments. Any
adjourned session or sessions may be held within a reasonable time after the
date set for the original meeting without the necessity of further notice. A
majority of the Shares voted, at a meeting at which a quorum is present, shall
decide any questions and a plurality shall elect a Trustee, except when a
different vote is required or permitted by any provision of the 1940 Act or
other applicable law or by this Declaration of Trust or the By-Laws.
Section 5.5 Action by Written Consent. Subject to the provisions of the
1940 Act and other applicable law, any action taken by Shareholders may be taken
without a meeting if a majority of Shareholders entitled to vote on the matter
(or such larger proportion thereof as shall be required by the 1940 Act or by
any express provision of this Declaration of Trust or the By-Laws) consent to
the action in writing and such written consents are filed with the records of
the meetings of Shareholders. Such consent shall be treated for all purposes as
a vote taken at a meeting of Shareholders.
Section 5.6 Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
stockholders of a Massachusetts business corporation under the Massachusetts
Business Corporation Law.
Section 5.7 Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
<PAGE>
ARTICLE VI
LIMITATION OF LIABILITY: INDEMNIFICATION
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable; Notice.
All persons extending credit to, contracting with or having any claim against
the Trust shall look only to the assets of the Sub-Trust with which such person
dealt for payment under such credit, contract or claim; and neither the
Shareholders of any Sub-Trust nor the Trustees nor any of the Trust's officers,
employees or agents, whether past, present or future, nor any other Sub-Trust
shall be personally liable therefor. Every note, bond, contract, instrument,
certificate or undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Trust, any Sub-Trust or the Trustees or any of them
in connection with the Trust shall be conclusively deemed to have been executed
or done only by or for the Trust (or the Sub-Trust) or the Trustees and not
personally. Nothing in this Declaration of Trust shall protect any Trustee or
officer against any liability to the Trust or the Shareholders to which such
Trustee or officer would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee or of such officer.
Every note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or by any officers or officer shall give notice that
this Declaration of Trust is on file with the Secretary of the Commonwealth of
Massachusetts and shall recite to the effect that the same was executed or made
by or on behalf of the Trust or by them as Trustees or Trustee or as officers or
officer and not individually and that the obligations of such instrument are not
binding only upon any of them or the Shareholders individually but are binding
only upon the assets and property of the Trust, or the particular Sub-Trust in
question, as the case may be, but the omission thereof shall not operate to bind
any Trustees or Trustee or officers or officer or Shareholders or Shareholder
individually.
Section 6.2 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 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.
Subject to the foregoing, (i) the Trustees shall not be responsible or liable in
any event for any neglect or wrongdoing of any officer, agent, employee,
consultant, adviser, administrator, distributor or principal underwriter,
custodian or transfer, dividend disbursing, shareholder servicing or accounting
agent of the Trust, nor shall any Trustee be responsible for the act or omission
of any other Trustee; (ii) the Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Declaration of Trust
and their duties as Trustees, and shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice;
and (iii) in discharging their duties, the Trustees, when acting in good faith,
shall be entitled to rely upon the books of account of the Trust and upon
written reports made to the Trustees by any officer appointed by them, any
independent public accountant and (with respect to the subject matter of the
contract involved) any officer, partner or responsible employee of a Contracting
Party appointed by the Trustees pursuant to Section 3.3. The Trustees as such
shall not be required to give any bond or surety or any other security for the
performance of their duties.
Section 6.3 Indemnification of Shareholders. In case any Shareholder
(or former Shareholder) of any Sub-Trust of the Trust shall be charged or held
to be personally liable for any obligation or liability of the Trust solely by
reason of being or having been a Shareholder and not because of such
Shareholder's acts or omissions or for some other reason, said Sub-Trust (upon
proper and timely request by the Shareholder) shall assume the defense against
such charge and satisfy any judgment thereon, and 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 said
Sub-Trust estate to be held harmless from and indemnified against all loss and
expense arising from such liability.
Section 6.4 Indemnification of Trustees, Officers, etc. The Trust shall
indemnify (from the assets of the Sub-Trust or Sub-Trusts in question) 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, including but not limited to
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and expenses, including reasonable accountants' and counsel fees,
incurred by any Covered Person in connection with the defense or disposition of
any action, suit or, other proceeding, whether civil or criminal, before any
court or administrative or legislative body, in which such Covered Person may be
or may have been involved as a party or otherwise or with which such person may
be or may have been threatened, while in office or thereafter, by reason of
being or having been such a Trustee or officer, director or trustee, except with
respect to any matter as to which it has been determined that such Covered
Person (i) did not act in good faith in the reasonable belief that such Covered
Person's action was in or not opposed to the best interests of the Trust or (ii)
had acted with willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office
(either and both of the conduct described in (i) and (ii) being referred to
hereafter as "Disabling Conduct"). A determination that the Covered Person is
entitled to indemnification may be made by (i) a final decision on the merits by
a court or other body before whom the proceeding was brought that the person to
be indemnified was not liable by reason of Disabling Conduct, (ii) dismissal of
a court action or an administrative proceeding against a Covered Person for
insufficiency of evidence of Disabling Conduct or (iii) a reasonable
determination, based upon a review of the facts, that the indemnitee was not
liable by reason of Disabling Conduct by (a) a vote of a majority of a quorum of
Trustees who are neither "interested persons" of the Trust as defined in Section
2(a)(19) of the 1940 Act nor parties to the proceeding or (b) an independent
legal counsel in a written opinion. Expenses, including accountants' and counsel
fees so incurred by any such Covered Person (but excluding amounts paid in
satisfaction of judgments, in compromise or as fines or penalties), may be paid
from time to time by the Sub-Trust in question in advance of the final
disposition of any such action, suit or proceeding, provided that the Covered
Person shall have undertaken to repay the amounts so paid to the Sub-Trust in
question if it is ultimately determined that indemnification of such expenses is
not authorized under this Article VI and (i) the Covered Person shall have
provided security for such undertaking, (ii) the Trust shall be insured against
losses arising by reason of any lawful advances or (iii) a majority of a quorum
of the disinterested Trustees who are not parties to the proceeding, or an
independent legal counsel in a written opinion, shall have determined, based on
a review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the Covered Person ultimately will be found
entitled to indemnification.
Section 6.5 Compromise Payment. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 6.4,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless such
indemnification shall be approved (i) by a majority of the disinterested
Trustees who are not a party to the proceeding or (ii) by an independent legal
counsel in a written opinion. Approval by the Trustees pursuant to clause (i) or
by independent legal counsel pursuant to clause (ii) 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
or not opposed to 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.
Section 6.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article VI, "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 or
threatened, and a "disinterested" person is 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 or threatened.
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.
Section 6.7 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.
<PAGE>
ARTICLE VII
MISCELLANEOUS
Section 7.1 Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time and,
without limiting the generality of the foregoing, no change, alteration or
modification with respect to any Sub-Trust shall operate to terminate the Trust.
Subject to applicable Federal and state law, the Trust or any Sub-Trust or class
thereof may be dissolved and terminated by the affirmative vote of at least a
majority of the Shares outstanding, each Sub-Trust affected or each class
affected, or by the Trustees.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with the
provisions of subsection (d) of Section 4.2.
Section 7.2 Reorganization. The Trust may merge or consolidate with any
other corporation, partnership, association, trust or other organization and the
Trustees may sell, convey, and transfer the assets of the Trust, or the assets
belonging to any one or more Sub-Trusts, to another trust, partnership,
association or corporation organized under the laws of any state of the United
States, or to the Trust to be held as assets belonging to another Sub-Trust, in
exchange for cash, shares or other securities (including, in the case of a
transfer to another Sub-Trust of the Trust, Shares of such other Sub-Trust) with
such transfer being made subject to, or with the assumption by the transferee
of, the liabilities belonging to each Sub-Trust the assets of which are so
transferred; provided, however, that no assets belonging to any particular
Sub-Trust shall be so transferred unless the terms of such transfer shall have
first been approved at a meeting called for the purpose by the affirmative vote
of the holders of a majority of the outstanding voting Shares, as defined in the
1940 Act, of that Sub-Trust. Any such consolidation or merger shall require
approval by the affirmative vote of the holders of a majority of the outstanding
voting Shares, as defined in the 1940 Act, of the Trust (or each Sub-Trust
affected thereby, as the case may be), except that such affirmative vote of the
holders of Shares shall not be required if the Trust (or Sub-Trust affected
thereby, as the case may be) shall be the survivor of such consolidation or
merger.
Section 7.3 Amendments. All rights granted to the shareholders under
this Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or repeal the prohibition of assessment upon the Shareholders without the
express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) may be amended at any time, so long as such
amendment does not adversely affect the rights of any Shareholder with respect
to which such amendment is or purports to be applicable and so long as such
amendment is not in contravention of applicable law, including the 1940 Act, by
an instrument in writing signed by a majority of the then Trustees (or by an
officer of the Trust pursuant to the vote of a majority of such Trustees). Any
amendment to this Declaration of Trust that adversely affects the rights of
Shareholders may be adopted at any time by an instrument in writing signed by a
majority of the then Trustees (or by an officer of the Trust pursuant to a vote
of a majority of such Trustees) when authorized to do so by the vote in
accordance with subsection (e) of Section 4.2 of Shareholders holding a majority
of the shares entitled to vote. Subject to the foregoing, any such amendment
shall be effective as provided in the instrument containing the terms of such
amendment or, if there is no provision therein with respect to effectiveness,
upon the execution of such instrument and of a certificate (which may be a part
of such instrument) executed by a Trustee or officer of the Trust to the effect
that such amendment has been duly adopted.
Section 7.4 Resident Agent. The Trust may appoint and maintain a
resident agent in the Commonwealth of Massachusetts.
Section 7.5 Filing of Copies; References; 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 the Boston City Clerk,
as well as any other governmental office where such filing may from time to time
be required, but the failure to make any such filing shall not impair the
effectiveness of this instrument or any such amendment. 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, as to the identities of the Trustees and
officers, 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 a whole as the same may be amended or
affected by any such amendments. The masculine gender shall include the feminine
and neuter genders. Headings are placed herein for convenience of reference only
and shall not be taken as a part hereof or control or affect the meaning,
construction or effect of this instrument. This instrument may be executed in
any number of counterparts each of which shall be deemed an original.
Section 7.6 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,
including the Massachusetts Business Corporation Law as the same may be amended
from time to time, to which reference is made with the intention that matters
not specifically covered herein or as to which an ambiguity may exist shall be
resolved as if the Trust were a business corporation organized in Massachusetts,
but the reference to said Business Corporation Law is not intended to give the
Trust, the Trustees, the Shareholders or any other person any right, power,
authority or responsibility available only to or in connection with an entity
organised in corporate form. The Trust shall be of the type referred to in
Section 1 of chapter 182 of the Massachusetts General Laws and of the type
commonly called a Massachusetts business trust and, without limiting the
provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals in the City of Boston, Massachusetts for themselves and their assigns, as
of the day and year first above written.
/s/PHILIP W. COOLIDGE
-------------------------------------
Philip W. Coolidge
as Trustee and not individually
/s/LINWOOD C. DOWNS
-------------------------------------
Linwood C. Downs
as Trustee and not individually
/s/LINDA T. GIBSON
-------------------------------------
Linda T. Gibson
as Trustee and not individually
BY-LAWS
OF
JULIUS BAER MULTISTOCK FUNDS
DATED AS OF JANUARY 19, 2000
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 Master Trust Agreement, as from time to time in effect (the "Master Trust
Agreement"), of Julius Baer Multistock Funds, the Massachusetts business trust
established by the Master Trust Agreement (the "Trust").
1.2 Principal Office of the Trust. The principal office of the Trust
shall be located at 21 Milk Street, Boston, Massachusetts 02109.
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 Trust, 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 of the Trustees calling the meeting.
2.3 Notice. It shall be sufficient notice to a Trustee of a special
meeting to send notice by mail at least forty-eight hours or by telegram at
least twenty-four hours before the meeting addressed to the Trustee at his or
her usual or last known business or residence address or to give notice to him
or her in person or by telephone at least twenty-four hours before the meeting.
Notice of a meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her before or after the meeting, is filed with the
records of the meeting, or to any Trustee who attends the meeting without
protesting prior thereto or at its commencement the lack of notice to him or
her. Neither notice of a meeting nor a waiver of a notice need specify the
purpose 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.
2.5 Participation by Telephone. One or more of the Trustees or of any
committee of the Trustees may participate in a meeting thereof by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. 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
Chairman of the Trust, a President, a Treasurer, a Secretary and such other
officers, including Vice Presidents, 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 in their discretion may appoint. The Chairman of the
Trust may but need not be a Trustee or 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. The Chairman of the Trust, the President, the Treasurer
and the Secretary shall be elected annually by the Trustees. Other officers, if
any, may be elected or appointed by the Trustees at any time.
Vacancies in any office may be filled at any time.
3.3 Tenure. The Chairman of the Trust, the President, the Treasurer and
the Secretary shall hold office until their respective successors are chosen and
qualified, or in each case until he or she sooner dies, resigns, is removed or
becomes disqualified. Each other officer shall hold office and each agent shall
retain authority at the pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these By-Laws, each
officer shall have, in addition to the duties and powers herein and in the
Master Trust Agreement set forth, such duties and powers as are commonly
incident to the office occupied by him or her as if the Trust were organized as
a Massachusetts business corporation and such other duties and powers as the
Trustees may from time to time designate.
3.5 Chairman; President. Unless the Trustees otherwise provide, the
Chairman of the Trust, or, if there is none, or in the absence of a chairman,
the President, shall preside at all meetings of the shareholders and of the
Trustees. The President shall be the chief executive officer.
2
<PAGE>
3.6 Treasurer. The Treasurer shall be the chief financial and
accounting officer of the Trust, and shall, subject to the provisions of the
Master Trust Agreement and to any arrangement made by the Trustees with a
custodian, investment adviser or manager, or transfer, shareholder servicing or
similar agent, be in charge of the valuable papers, books of account and account
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.
3.7 Secretary. The Secretary shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which books or a
copy thereof shall be kept at the principal office of the Trust. In the absence
of the Secretary from any meeting of the shareholders or Trustees, an assistant
secretary, or if there be none or if he or she is absent, a temporary secretary
chosen at such meeting shall record the proceedings thereof in the aforesaid
books.
3.8 Resignations and Removals. Any Trustee or officer may resign at any
time by written instrument signed by him or her and delivered to the Chairman,
the President or the Secretary or to a meeting of the Trustees. Such resignation
shall be effective upon receipt unless specified to be effective at some other
time. The Trustees may remove any office elected by them with or without cause.
Except to the extent expressly provided in a written agreement with the Trust;
no Trustee or officer resigning and no officer removed shall have any right to
any compensation for any period following his or her resignation or removal.
ARTICLE 4
Committees
4.1 General. The Trustees, by vote of a majority of the Trustees then
in office, may elect from their number an Executive committee or other
committees and may delegate thereof some or all of their powers except those
which by law, by the Master Trust Agreement, or by these By-Laws may not be
delegated. Except as the trustees may otherwise determine, any such committee
may make rules for the conduct or in such rules, its business shall be conducted
so far as possible in the same manner as is provided by these By-Laws for the
Trustees themselves. All members of such committees shall hold such office at
the pleasure of the Trustees. The Trustees may abolish any such committee at any
time. Any committee to which the Trustees delegate any of their power or duties
shall keep records of its meetings, and shall report its action to the Trustees.
The Trustees shall have power to rescind any action of any committee, but no
such rescission shall have retroactive effect.
3
<PAGE>
ARTICLE 5
Reports
5.1 General. The Trustees and officers shall render reports at the time
and in the manner required by the Master Trust Agreement or any applicable law.
Officers and Committees shall render such additional reports as they may deed
desirable or as may from time to time be required by the Trustees.
ARTICLE 6
Seal
6.1 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 7
Execution of Papers
7.1 General. Except as the Trustees may generally or in particular
cases authorize the execution thereof in some other manner, all deeds, leases,
contracts, notes and other obligations made by the Trustees shall be signed by
the President, any Vice President or the Treasurer and need not bear the seal of
the Trust.
ARTICLE 8
Issuance of Share Certificates
8.1 Share Certificates. In lieu of issuing certificates for shares, the
Trustees or the transfer agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purpose hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
The Trustees may at any time authorize the issuance of share
certificates. In that event, each shareholder shall be entitled to a certificate
stating the number of shares owned by him or her, in such form as shall be
prescribed from time to time by the Trustees. Such certificate shall be signed
by the President or a Vice President and by the Treasurer or Assistant
Treasurer. Such signatures may be facsimiles if the certificate is signed by a
4
<PAGE>
transfer agent, or by a registrar, other than a Trustee, officer or employee of
the Trust. In case any officer who has signed or whose facsimile signature has
been placed on such certificate shall cease to be such officer before such
certificate is issued, it may be issued by the Trust with the same effect as if
he were such officer at the time of its issue.
8.2 Loss of Certificates. In case of the alleged loss or destruction or
the mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe.
8.3 Issuance of New Certificate to Pledgee. A pledgee of shares
transferred as collateral security shall be entitled to a new certificate if the
instrument of transfer substantially describes the debt or duty that is intended
to be secured thereby. Such new certificate shall express on its face that it is
held as collateral security, and the name of the pledgor shall be stated
thereon, who alone shall be liable as a shareholder, and entitled to vote
thereon.
8.4 Discontinuance of Issuance of Certificates. The Trustees may at any
time discontinue the issuance of share certificates and may, by written notice
to each shareholder, require the surrender of shares certificates to the Trust
for cancellation. Such surrender and cancellation shall not affect the ownership
of shares in the Trust.
ARTICLE 9
Custodian
9.1 General. The Trust shall at all times employ a bank or trust
company having a capital, surplus and undivided profits of at least Two Million
Dollars ($2,000,000) as Custodian of the capital assets of the Trust. The
Custodian shall be compensated for its services by the Trust and upon such basis
as shall be agreed upon from time to time between the Trust and the Custodian.
ARTICLE 10
Dealings with Trustees and Officers
Any Trustee, officer or other agent of the Trust may acquire, own and
dispose of shares of the Trust to the same extent as if he or she were not a
trustee, officer or agent; and the Trustees may accept subscriptions to share or
repurchase shares from any firm or company in which he or she is interested.
5
<PAGE>
ARTICLE 11
Shareholders
11.1 Meetings. A meeting of the shareholders of the Trust shall be held
whenever called by the Trustees and whenever election of a Trustee or Trustees
by shareholders is required by the provisions of section 16(a) of the Investment
Company Act of 1940 for that purpose. The Trustees shall promptly call and give
notice of a meeting of shareholders for the purpose of voting upon removal of
any Trustees of the Trust when requested to do so in writing by shareholders
holding not less than 10% of the shares then outstanding. Meetings of
shareholders for any other purpose shall also be called by the Trustees when
requested in writing by shareholders holding at least 10% of the shares then
outstanding, or if the Trustees shall fail to call or give notice of any meeting
of shareholders for a period of 30 days after such application, then
shareholders holding at least 10% of the shares then outstanding may call and
give notice of such meeting.
11.2 Record Dates. For the purpose of determining the shareholders who
are entitled to vote or act at a meeting or any adjournment thereof, or who are
entitled to receive payment of any dividend or of any other distribution, the
Trustees may from time to time fix a time, which shall be not more than 60 days
before the date of any meeting of shareholders or the date for the payment of
any dividend or of any other distribution, as the record date for determining
the shareholders having the right to notice of and to vote at such meeting and
any adjournment thereof or the right to receive such dividend or distribution,
and in such case only shareholders of record on such record date shall have such
right, notwithstanding any transfer of shares on the books of the Trust after
the record date; or without fixing such record date the Trustees may for any
such purposes close the register or transfer books for all or any part of such
period.
ARTICLE 12
Amendments to the By-Laws
12.1 General. These By-laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.
6
<PAGE>
ARTICLE 13
Declaration of a Trust
The Master Trust Agreement Julius Baer Multistock Funds dated January
19, 2000, a copy of which, together with all amendments thereto, is on file in
the office of the Secretary of The Commonwealth of Massachusetts, provides that
the name Julius Baer Multistock Funds refers to the Trustees under the Master
Trust Agreement collectively as Trustees, but not as individuals or personally;
and no Trustee, shareholder, officer, employee or agent of Julius Baer
Multistock Funds shall be held to any personal liability, nor shall resort be
had to their private property, for the satisfaction of any obligation or claim
or otherwise, in connection with the future affairs of Julius Baer Multistock
Funds, but the Trust Estate only shall be liable.
7
