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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. _____)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF
THE COMMISSION ONLY
[ ] Definitive Proxy Statement (AS PERMITTED BY RULE 14A-6(E)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ASSET MANAGEMENT FUND, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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<PAGE> 2
ASSET MANAGEMENT FUND, INC.
IMPORTANT INFORMATION
FOR SHAREHOLDERS ________, 1999
Asset Management Fund, Inc. (the "Fund") will hold a special meeting of
shareholders on ________, 1999. It is important for you to vote on the issues
described in this Proxy Statement. We recommend that you read the Proxy
Statement in its entirety; the explanations it includes will help you decide
upon the issues.
TIME IS OF THE ESSENCE...YOUR PARTICIPATION IN THIS PROCESS IS IMPORTANT!
BE SURE TO COMPLETE AND RETURN YOUR PROXY CARD PROMPTLY TO AVOID ADDITIONAL
EXPENSE TO THE TRUST.
Q: WHY AM I BEING ASKED TO VOTE?
A: Mutual funds are required to obtain shareholders' votes for certain
types of changes, like those included in this Proxy Statement. You have
a right to vote on these changes.
Q: WHAT ISSUES AM I BEING ASKED TO VOTE ON?
A: The proposals include (1) the reorganization of the Fund from a
Maryland corporation into a Delaware business trust and (2) changes to
the Fund's fundamental investment policies of the U.S. Government
Mortgage Securities Portfolio, the Intermediate Mortgage Securities
Portfolio, the Short U.S. Government Portfolio, the Adjustable Rate
Mortgage (ARM) Portfolio and the Money Market Portfolio (individually,
a "Portfolio," or collectively, the "Portfolios").
Q: WHY IS THE FUND BEING REORGANIZED INTO A DELAWARE BUSINESS TRUST?
A: We want to reorganize the Fund into a Delaware business trust.
Currently, the Fund is organized as a Maryland corporation. Under its
current structure, the Fund cannot issue classes of shares. After the
reorganization the Fund will be able to create additional classes of
shares. Also, as a Delaware business trust, the Fund will have a
greater amount of flexibility to conduct its business. The
reorganization would not change your Fund's investment objective or
policies (except for any changes approved by shareholders under
Proposal 2). The Fund also would keep the same Directors, officers,
investment advisers, and auditors, and the Fund's current contracts,
including the Fund's contract with its investment adviser, would remain
unchanged.
Q: WHY ARE THE FUND'S "FUNDAMENTAL POLICIES" BEING CHANGED?
A: Every mutual fund has certain investment policies that can be changed
only with the approval of its shareholders. These are referred to as
"fundamental" investment policies. In the past, these policies were
adopted to reflect regulatory, business, or industry conditions that no
longer exist or no longer are necessary. By reducing the number of
"fundamental policies," the Fund may be able to minimize the costs and
delays associated with future shareholder meetings. Also, the
investment adviser's ability to manage the Portfolios' assets may be
enhanced and investment opportunities increased.
Q: HOW DO I VOTE MY SHARES?
A: You may vote in person at the special meeting of shareholders or simply
sign and return the enclosed Proxy Card. You may also vote by telephone
or [BY THE INTERNET] as described below in the Proxy Statement. If we
do not receive your proxy card, an employee of Shay Financial Services
Co., the Fund's distributor, may contact you to request that you cast
your vote.
Q: WHO DO I CALL IF I HAVE QUESTIONS ABOUT THE PROXY STATEMENT?
A: Call the Fund's toll-free number: 1-800-527-3713.
<PAGE> 3
Q: I'M A SMALL INVESTOR. WHY SHOULD I BOTHER TO VOTE?
A: Your vote makes a difference. If numerous shareholders just like you
fail to vote their proxies, your Fund may not receive enough votes to
go forward with its meeting. If this happens, we'll need to mail
proxies again--a costly proposition for your Fund!
Q: WHO GETS TO VOTE?
A: Any person who owned shares of the Fund on the "record date," which was
________, 1999, gets to vote--even if the investor later sold the
shares. Shareholders are entitled to cast one vote for each Fund share
owned on the record date.
Q: HOW CAN I VOTE?
A: You can vote in any one of four ways:
- Through the Internet at WWW.________.COM (or by going to
WWW.________.COM and clicking on "Proxy Voting"). [CONFIRM]
- By telephone, with a toll-free call to the number listed on your
proxy card.
- By mail, with the enclosed ballot.
- In person at the meeting.
Q: HOW DO THE MEMBERS OF THE BOARD OF DIRECTORS SUGGEST THAT I VOTE?
A: After careful consideration, the Board of Directors has unanimously
approved these proposals. The Board recommends that you read the
enclosed materials carefully and vote FOR all proposals.
<PAGE> 4
PROXY STATEMENT
ASSET MANAGEMENT FUND, INC.
U.S. GOVERNMENT MORTGAGE SECURITIES PORTFOLIO
INTERMEDIATE MORTGAGE SECURITIES PORTFOLIO
SHORT U.S. GOVERNMENT SECURITIES PORTFOLIO
ADJUSTABLE RATE MORTGAGE (ARM) PORTFOLIO
MONEY MARKET PORTFOLIO
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ________, 1999
To the Shareholders: ________, 1999
You are invited to attend a special meeting of the shareholders of Asset
Management Fund, Inc. (the "Fund") to be held at the offices of [THE FUND'S
INVESTMENT ADVISER, SHAY ASSETS MANAGEMENT, INC., 230 WEST MONROE STREET,
CHICAGO, ILLINOIS 60606], at ________ [A.M.] (Central time), on ________, 1999,
for the following purposes and to transact such other business, if any, as may
properly come before the meeting:
(1) To approve a proposal to reorganize the Fund into a Delaware
business trust.
(2) To make changes to the Fund's fundamental investment policies for
each of the U.S. Government Mortgage Securities Portfolio, the
Intermediate Mortgage Securities Portfolio, the Short U.S.
Government Securities Portfolio, the Adjustable Rate Mortgage (ARM)
Portfolio and the Money Market Portfolio, unless otherwise
indicated:
(a) adopting a fundamental policy limiting investments.
(b) amending the fundamental policy on Portfolio lending.
(c) changing the fundamental policy on high quality assets to a
non-fundamental policy.
(d) changing the fundamental policy on illiquid investments to a
non-fundamental policy.
(e) changing the fundamental policy on investments in mortgage
securities to a non-fundamental policy.
(f) eliminating the fundamental policy on OTS qualifying securities.
(g) eliminating the fundamental policy on Money Market instruments.
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed ________, 1999 as the record date for
determination of shareholders entitled to vote at the meeting.
By Order of the Directors
Daniel K. Ellenwood
Secretary
SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY TO AVOID ADDITIONAL EXPENSE.
YOU CAN HELP THE TRUST AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP
LETTERS TO ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU ARE
UNABLE TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED
PROXY SO THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE SPECIAL MEETING.
THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. [TOLL
FREE NUMBER 1-800-527-3713 OR WEB SITE FOR VOTING?]
<PAGE> 5
PROXY STATEMENT
ASSET MANAGEMENT FUND, INC.
230 WEST MONROE STREET
CHICAGO, ILLINOIS 60606
ABOUT THE PROXY SOLICITATION AND THE SPECIAL MEETING
The enclosed proxy is solicited on behalf of the Board of Directors of the
Fund (the "Board" or "Directors"). The proxies will be voted at the special
meeting of shareholders of the Fund to be held on ________, 1999, at [THE
OFFICES OF THE FUND'S INVESTMENT ADVISER, SHAY ASSETS MANAGEMENT, INC., 230 WEST
MONROE STREET, CHICAGO, ILLINOIS 60606 AT ________ [A.M.]] (Central time) (such
special meeting and any adjournment or postponement thereof are referred to as
the "Special Meeting").
The cost of the solicitation, including the printing and mailing of proxy
materials, will be borne by the Fund. In addition to solicitations through the
mails, proxies may be solicited by officers, employees, and agents of the Fund,
Shay Assets Management, Inc., the Fund's investment adviser, and/or Shay
Financial Services, Inc., the Fund's distributer, or, if necessary, a
communications firm retained for this purpose. Such solicitations may be by
telephone, or otherwise. The Fund will reimburse custodians, nominees, and
fiduciaries for the reasonable costs incurred by them in connection with
forwarding solicitation materials to the beneficial owners of shares held of
record by such persons.
Shareholders may vote by filling out and signing the enclosed proxy card
and returning it in the postage paid envelope provided. You may also vote by
telephone [OR BY THE INTERNET]. To vote by telephone, have your proxy card ready
and dial 1-800-[527-3713]. Enter the 12-digit control number found on your proxy
card and follow the instructions you will be given. [TO VOTE USING THE INTERNET,
HAVE YOUR PROXY CARD AVAILABLE, GO TO THE WEBSITE WWW.________.COM, ENTER THE
12-DIGIT CONTROL NUMBER FOUND ON YOUR PROXY CARD AND FOLLOW THE INSTRUCTIONS YOU
WILL BE GIVEN.] Shareholders who communicate proxies by telephone [OR BY THE
INTERNET] have the same power and authority to issue, revoke, or otherwise
change their voting instruction as currently exists for instructions
communicated in written form described below under "Additional Information --
Quorum and Voting Requirements." Any telephonic [OR INTERNET]voting will follow
procedures designed to ensure accuracy and prevent fraud, including requiring
identifying shareholder information, recording the shareholder's instructions,
and confirming to the shareholder after the fact.
At its meeting on July 22, 1999, the Board (i) considered and approved a
plan to reorganize the Fund into a Delaware business trust, subject to
shareholder approval, (ii) reviewed the investment policies of the U.S.
Government Mortgage Securities Portfolio, the Intermediate Mortgage Securities
Portfolio, the Short U.S. Government Securities Portfolio, the Adjustable Rate
Mortgage (ARM) Portfolio and the Money Market Portfolio (individually, a
"Portfolio" or collectively, the "Portfolios") and approved changes to them,
subject to shareholder approval, and (iv) called the Special Meeting for the
purposes set forth in the accompanying Notice. The Directors know of no business
other than that mentioned in the Notice that will be presented for consideration
at the Special Meeting. Should other business properly be brought before the
Special Meeting, proxies will be voted in accordance with the best judgment of
the persons named as proxies. This proxy statement and the enclosed proxy card
are expected to be mailed on or about ________, 1999, to shareholders of record
at the close of business on ________, 1999 (the "Record Date"). On the Record
Date, the Fund had ________ outstanding shares of which ________ were shares of
the U.S. Government Mortgage Securities Portfolio, ________ were shares of the
Intermediate Mortgage Securities Portfolio, ________ were shares of the Short
U.S. Government Securities Portfolio, ________ were shares of the Adjustable
Rate Mortgage (ARM) Portfolio and ________ were shares of the Money Market
Portfolio.
Each share is entitled to one vote on each of the matters submitted to a
vote at the Meeting. The shares of all the Portfolios shall vote together as a
single class on all proposals, except on the proposal to approve the proposed
changes to the Portfolios' fundamental policies, on which each Portfolio will
vote separately.
<PAGE> 6
The Fund's principal executive offices are located at 230 West Monroe
Street, Chicago, Illinois 60606. The Fund's toll-free telephone number is
1-800-527-3713. The Fund's Annual Report, which includes audited financial
statements for the fiscal year ended October 31, 1998, and Semi-annual Report
for the period ended April 30, 1999 were previously mailed to shareholders. ANY
SHAREHOLDER WISHING TO RECEIVE WITHOUT CHARGE ANOTHER COPY OF THE ANNUAL REPORT
AND SEMI-ANNUAL REPORT SHOULD CONTACT THE FUND AT 230 WEST MONROE STREET,
CHICAGO, ILLINOIS 60606 OR CALL OF THE FUND'S TOLL-FREE TELEPHONE NUMBER:
1-800-527-3713.
The Fund has shares of five portfolios outstanding: the U.S. Government
Mortgage Securities Portfolio, the Intermediate Mortgage Securities Portfolio,
the Short U.S. Government Securities Portfolio, the Adjustable Rate Mortgage
(ARM) Portfolio and the Money Market Portfolio. The following table indicates
which shareholders by Portfolio are solicited to vote with respect to each item:
<TABLE>
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
ADJUSTABLE
U.S. GOVERNMENT INTERMEDIATE SHORT U.S. RATE
MORTGAGE MORTGAGE GOVERNMENT MORTGAGE MONEY
SECURITIES SECURITIES SECURITIES (ARM) MARKET
ITEM PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------
1. Reorganization into a
Delaware business trust X X X X X
- ----------------------------------------------------------------------------------------------------------------
2. Fundamental Investment
Policies X X X X X
- ----------------------------------------------------------------------------------------------------------------
(a) to adopt a fundamental
policy limiting
investments X X X X X
- ----------------------------------------------------------------------------------------------------------------
(b) to amend the fundamental
policy on Portfolio
lending X X X X X
- ----------------------------------------------------------------------------------------------------------------
(c) to change the fundamental
policy on high quality
assets to a
non-fundamental policy X X
- ----------------------------------------------------------------------------------------------------------------
(d) to change the fundamental
policy on illiquid
investments to a
non-fundamental policy X X X X X
- ----------------------------------------------------------------------------------------------------------------
(e) to change the fundamental
policy on investments in
mortgage securities to a
non-fundamental policy X X X
- ----------------------------------------------------------------------------------------------------------------
(f) to eliminate the
fundamental policy on OTS
qualifying securities X X X X X
- ----------------------------------------------------------------------------------------------------------------
(g) to eliminate the
fundamental policy on
Money Market instruments X
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 7
ITEM 1
REORGANIZATION INTO A DELAWARE BUSINESS TRUST
The Board of Directors has approved a plan to reorganize the Fund into a
Delaware business trust. THE PURPOSES OF THE REORGANIZATION ARE TO ALLOW THE
FUND TO CREATE ADDITIONAL CLASSES OF SHARES AND TO PROVIDE THE FUND WITH GREATER
FLEXIBILITY TO CONDUCT ITS BUSINESS. To proceed with the reorganization plan, we
need shareholder approval. The next few pages of this proxy statement discuss
important details of the reorganization plan, including the following:
- Why we want to reorganize the Fund.
- How we plan to accomplish the reorganization.
- How the reorganization will affect the Fund.
- How a Delaware business trust compares to the Fund's current legal
structure.
- How many shareholder votes we need to approve the reorganization.
WHY WE WANT TO REORGANIZE THE FUND
DELAWARE LAW IS FAVORABLE TO MUTUAL FUNDS. We have proposed to reorganize
the Fund as a DELAWARE business trust because that state's business trust law
contains provisions that are well suited to mutual funds. The "move" to Delaware
will be largely on paper; your Fund will continue to operate out of Illinois,
just as it does now.
HOW WE PLAN TO ACCOMPLISH THE REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION. The Board of Directors has approved a
written Agreement and Plan of Reorganization for the Fund. This document spells
out the terms and conditions that will apply to the Fund's reorganization into a
Delaware business trust. We have attached the Agreement and Plan of
Reorganization for your information.
THREE STEPS TO REORGANIZE. In essence, the reorganization will be a
three-step process. The first step is already taken: We have established a
Delaware business trust especially for the Fund. Prior to the reorganization,
this trust will issue a single share--to the Fund. Second, if this proposal is
approved, the Fund will transfer all of its assets and liabilities to the trust.
As part of this second step, the trust will open an account for each Fund
shareholder. The trust will then credit these accounts with the exact number of
full and fractional shares that each shareholder owned in the Fund on the
reorganization date. And third, we will dissolve the Fund's Maryland corporate
entity.
EFFECTIVE AS SOON AS PRACTICABLE. If approved by shareholders, the
reorganization will take place as soon as feasible after the Fund receives the
necessary regulatory approvals and legal opinions. We think this could be
accomplished by [OCTOBER] of 1999. However, at any time prior to the
reorganization, the Board of Directors may decide that it is in the best
interest of the Fund and its shareholders not to go forward with this project.
If that happens, the Fund will continue to operate as it is currently organized.
HOW THE REORGANIZATION WILL AFFECT THE FUND
THE FUND'S INVESTMENT OBJECTIVE, POLICIES, INVESTMENT ADVISERS, AND FISCAL
YEAR WILL STAY THE SAME (EXCEPT FOR ANY CHANGES APPROVED BY SHAREHOLDERS UNDER
PROPOSAL 2). The reorganization will not change any of these. That said, we are
asking shareholders to waive temporarily any existing investment restrictions
that would otherwise prohibit the reorganization. (For instance, many mutual
funds are prohibited from acquiring control of any company. As part of the
reorganization, however, the Fund would be acquiring control of the newly formed
trust.) Your vote in favor of the reorganization will operate as a temporary
waiver of any such restrictions.
THE REORGANIZATION WILL HAVE NO IMPACT ON THE FUND'S SHARE PRICE. On the
day of the reorganization, the newly formed trusts's share price will be the
same as that of the Fund. The reorganization will not cause the
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<PAGE> 8
Fund's share price to go up or down, and you will own the same number of shares.
Any declared but undistributed dividends or capital gains for the Fund will
carry over in the reorganization.
THE FUND'S EXISTING DIRECTORS WILL BE REELECTED. Federal securities laws
require that at least one-half of the Fund's Directors be elected by
shareholders. While the Fund more than meets this standard now, that technically
will not be true once it reorganizes as a trust. Rather than call another
shareholder meeting to vote on Trustees after the reorganization, we will treat
shareholder approval of this proposal as authorization to elect the Fund's
current Board members to the same positions with the trust. This approach will
avoid the considerable expense of printing, mailing, and tabulating more proxies
after the reorganization.
THE FUND'S EXISTING INDEPENDENT AUDITORS WILL BE RATIFIED. We will treat
shareholder approval of the reorganization as ratification of the Fund's
existing independent auditors, PricewaterhouseCoopers LLP.
PricewaterhouseCoopers LLP is the independent auditor for all of the Portfolios.
In this role, PricewaterhouseCoopers LLP audits and certifies the Portfolios'
financial statements. PricewaterhouseCoopers LLP reviews the Portfolios' Annual
Reports to Shareholders and their filings with the U.S. Securities and Exchange
Commission. Neither PricewaterhouseCoopers LLP nor any of its partners have any
direct or material indirect financial interest in the Fund. If you wish to
request the attendance of a PricewaterhouseCoopers LLP representative at the
shareholder meeting, you should contact the Fund's Secretary at 230 West Monroe
Street, Chicago, Illinois 60606.
THE FUND'S EXISTING INVESTMENT ADVISORY AGREEMENT WILL BE ASSIGNED TO THE
NEW DELAWARE BUSINESS TRUST. We will treat Shareholder approval of the
reorganization as authorization to assign the Fund's existing Investment
Advisory Agreement with the Fund's investment adviser, Shay Assets Management,
Inc., to the new Delaware business trust.
THE REORGANIZATION IS CONDITIONED ON TAX-FREE TREATMENT AT THE FEDERAL
LEVEL. We fully expect that the reorganization will have no federal income tax
consequences for your or the Fund. We will not proceed with the reorganization
until this point is confirmed by an opinion of counsel. Following the
reorganization, from a tax standpoint, the adjusted basis of your Fund shares
will be the same as before. We do not expect shareholders to incur any personal
state or local taxes as a result of the reorganization, but you should consult
your own tax adviser to be sure.
THE FUND WILL STOP ISSUING SHARE CERTIFICATES AND WILL CONVERT ANY
OUTSTANDING SHARE CERTIFICATES TO RECORD ENTRY FORM. In today's financial world,
very few investors hold share certificates as physical evidence of their mutual
fund investments. Instead, investors' mutual fund holdings are maintained and
accounted for as "record entries" on the fund's computer system. The main
problems with share certificates are that:
- They present opportunities for theft, loss and fraud--and therefore
offer less protection to shareholders, rather than more.
- They're especially inconvenient--you must return your certificates to
the fund before your shares can be redeemed or exchanged.
In light of these downsides and the minimal demand for share certificates,
the Fund will stop issuing them after the reorganization. In addition, the Fund
will convert any outstanding share certificates to record entry form. This will
not happen automatically; we will arrange conversion details separately with the
Fund's certificate holders.
HOW THE PROPOSED DELAWARE BUSINESS TRUST COMPARES TO THE FUND'S CURRENT LEGAL
STRUCTURE
Federal securities laws have much to say about the way that mutual funds
operate, but they do not cover every aspect of a fund's existence. State law and
each fund's governing documents fill in most of the gaps. The following
discussion compares the state law and documents currently governing the Fund
with the state law and documents that will apply if it reorganizes as a Delaware
business trust. This discussion is not a comprehensive review of all technical
distinctions between the different legal structures, but it provides you with a
comparison in certain key areas of a Delaware business trust to a Maryland
corporation--the Fund's present legal structure. We have attached the proposed
Declaration of Trust for your information.
4
<PAGE> 9
Classes of shares. Currently, your Fund's Articles of Incorporation allow
for multiple portfolios, but not various classes within a portfolio. The
proposed structure allows for classes of shares. These classes will be sold to
different groups of investors and will offer differing levels of service with
differing levels of charges.
Shareholder liability. Absent unusual circumstances, shareholders of a Fund
organized as a Maryland corporation have no personal liability for the Fund's
obligations. The same is true for shareholders of a Fund organized as a Delaware
business trust.
Director/Trustee liability and indemnification. With a Maryland
corporation, Directors cannot be held liable for their activities in that role
so long as they perform their duties in good faith, prudently, and in the Fund's
best interests. The same is generally true for Trustees of a Delaware business
trust, if so provided in the Fund's governing documents, which your Fund's
documents will so provide. Under each legal structure, the Fund can indemnify
its Directors/Trustees from claims and expenses arising out of their service to
the Fund--unless, that is, a Director/Trustee has acted improperly in a
particular matter. In addition, any such indemnification shall be subject to the
requirements and limitations of sec.17(h) of the Investment Company Act of 1940,
as amended.
Shareholder voting rights and meetings. Under a Fund organized as a
Maryland corporation, shareholders' voting rights are based on the number of
shares they own. As a Delaware business trust, your Fund will continue to
utilize a share-based voting rights system. As a Maryland corporation, a Fund
generally must call a shareholder meeting if one is requested in writing by
investors entitled to cast 25% or more of the Fund's votes. As a Delaware
business trust, the Fund will adopt a 10% standard.
Share certificates. If requested, Funds organized as Maryland corporations
will issue share certificates to their investors. Your Fund's past practice
generally has been not to issue share certificates. As a Delaware business
trust, a Fund is not required to issue share certificates.
Termination of the Fund. As a Maryland corporation, the Fund can be
terminated by the Trustees upon the affirmation of a majority of all shareholder
votes entitled to be cast. As a Delaware business trust, the Fund can be
terminated by the Trustees at their discretion, with written notice to
shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF THE
REORGANIZATION.
ITEM 2
APPROVAL OR DISAPPROVAL OF CHANGES TO THE FUND'S
FUNDAMENTAL INVESTMENT POLICIES OF THE PORTFOLIOS
The Investment Company Act of 1940 (the "1940 Act") requires investment
companies such as the Fund to adopt certain specific investment policies that
can be changed only by shareholder vote. An investment company may also elect to
designate other policies that may be changed only by shareholder vote. Both
types of policies are often referred to as "fundamental policies." All other
policies are non-fundamental and may be changed with Board approval and without
a shareholder vote. Certain of the fundamental policies of the Portfolios have
been adopted in the past to reflect regulatory, business or industry conditions
that are no longer in effect. Accordingly, the Directors have approved, and have
authorized the submission to the Fund's shareholders of the respective
Portfolios for their approval, the removal, amendment, and/or reclassification
as non-fundamental of certain of each Portfolio's fundamental policies.
The proposed amendments would:
(i) simplify and modernize the policies that are required to be
fundamental by the 1940 Act;
(ii) reclassify those fundamental policies that are not required to be
fundamental by the 1940 Act as non-fundamental policies; and
(iii) eliminate fundamental policies that are no longer required by the
securities laws of individual states.
5
<PAGE> 10
By reducing to a minimum those policies that can be changed only by
shareholder vote, the Directors believe that the Fund would be able to minimize
the costs and delay associated with holding frequent shareholder meetings. The
Directors also believe that the proposals will enhance the flexibility of the
investment adviser to manage the Portfolios in a changing investment environment
and increase the investment management opportunities available to the
Portfolios.
As a general matter, if these proposals are not approved, the policies will
continue as currently stated. The Board of Directors will then consider what
future action should be taken.
ITEM 2(a)
TO ADOPT A FUNDAMENTAL POLICY LIMITING INVESTMENTS
The Board of Directors has approved and recommended that the following
fundamental policy be adopted by each Portfolio:
The Portfolio will limit its investments and investment techniques so as to
qualify for investment by national banks, federal savings associations, and
federal credit unions.
Due to federal regulations, national banks, federal savings associations
and federal credit unions, each of which invests in the Portfolios, may only
invest in the Portfolios so long as each Portfolio satisfies certain investment
restrictions. For this reason, each Portfolio seeks to maintain the appropriate
fundamental investment restrictions as are required by federal regulations so
that these institutions may continue to invest in the Portfolios. However, from
time to time, the federal regulations governing the permitted investments for
these institutions may change. This amendment would allow each Portfolio the
flexibility to appropriately and efficiently adjust its investment restrictions
in order to satisfy the changing regulations governing these investing
institutions. In particular, this amendment would save time and money for the
Portfolio by allowing the Board to make necessary investment adjustments as
needed without the necessity of a shareholders meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF THIS
PROPOSAL.
ITEM 2(b)
TO AMEND THE FUNDAMENTAL POLICY ON PORTFOLIO LENDING
The current fundamental investment policy of the Portfolio with regard to
the lending of portfolio securities is as follows:
Each Portfolio may not make loans except that the Portfolio may purchase or
hold debt obligations, enter into repurchase agreements and loan Federal
funds and other day(s) funds to FDIC Insured Institutions (as defined in
the Prospectus), in each case to the extent permitted by the Fund's
investment objective and management policies.
The Board of Directors has approved and recommended that this policy be
amended to read as follows:
Each Portfolio may not lend any of its assets, except portfolio securities.
This shall not prevent the Portfolio from purchasing or holding debt
obligations, entering into repurchase agreements, and loaning Federal funds
and other day(s) funds to FDIC Insurance Institutions (as defined in the
Prospectus), in each case to the extent permitted by the Portfolio's
investment objective and management policies.
This amendment would permit the Portfolios to loan their portfolio
securities in accordance with such policies as the Board of Directors and the
Investment Adviser of the Portfolios establish from time to time. Of course,
such policies would be in accordance with any applicable guidelines issued by
the Securities and Exchange Commission ("SEC") or any other regulatory body
having jurisdiction over such transactions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF THIS
PROPOSAL.
6
<PAGE> 11
ITEM 2(c)
TO CHANGE THE FUNDAMENTAL POLICY ON HIGH QUALITY
ASSETS TO A NON-FUNDAMENTAL POLICY FOR THE MONEY MARKET
PORTFOLIO AND SHORT U.S. GOVERNMENT SECURITIES PORTFOLIO
The current fundamental investment policy of the Money Market Portfolio and
Short U.S. Government Securities Portfolio is as follows:
The Portfolio invests only in high quality assets (including assets subject
to repurchase agreements) that qualify as "Liquid Assets" for savings
associations under the regulations of the Office of Thrift Supervision of
the Department of the Treasury ("OTS Regulations") and that, if included in
the Portfolio, will qualify its shares as "Liquid Assets."
The Board of Directors has approved and recommended that this policy be
changed from fundamental to non-fundamental.
Due to federal regulations, national banks, federal savings associations
and federal credit unions, each of which invests in the Portfolios, may only
invest in the Portfolios so long as each Portfolio satisfies certain investment
restrictions. For this reason, each Portfolio seeks to maintain the appropriate
fundamental investment restrictions as are required by federal regulations so
that these institutions may continue to invest in the Portfolios. However, from
time to time, the federal regulations governing the permitted investments for
these institutions may change. This amendment would allow each Portfolio the
flexibility to appropriately and efficiently adjust its investment restrictions
in order to satisfy the changing regulations governing these investing
institutions. In particular, this amendment would save time and money for the
Portfolio by allowing the Board to make necessary investment adjustments as
needed without the necessity of a shareholders meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF THIS
PROPOSAL.
ITEM 2(d)
TO CHANGE THE FUNDAMENTAL POLICIES ON ILLIQUID INVESTMENTS
TO NON-FUNDAMENTAL POLICIES
The current fundamental policy of the Money Market Portfolio and the Short
U.S. Government Securities Portfolio is as follows:
Each Portfolio may not enter into repurchase agreements or purchase any
other investments for which market quotations are not readily available, in
each case maturing in more than 7 days if, as a result, more than 10% of
the market value of its total assets would be invested in such repurchase
agreements and such other illiquid investments.
The Board of Directors has approved and recommended that the policy be
changed to the following non-fundamental policy:
Each Portfolio may not invest more than 10% (in the case of the Money
Market Portfolio) or 15% (in the case of the Short U.S. Government
Securities Portfolio) of its net assets in illiquid securities, including
repurchase agreements maturing in more than seven days.
The current fundamental policies of the ARM Portfolio, the Intermediate
Mortgage Securities Portfolio and the U.S. Government Mortgage Securities
Portfolio are as follows:
The Adjustable Rate Mortgage (ARM) Portfolio will not purchase any
securities maturing in more than seven days for which market quotations are
not readily available, or purchase interest rate caps and floors, or enter
into any repurchase agreements maturing in more than seven days if, as a
result, more than 10% of the market value of its total assets would be
invested in such illiquid securities.
7
<PAGE> 12
The Intermediate Mortgage Securities Portfolio will not purchase any
securities maturing in more than seven days for which market quotations are
not readily available and will not enter into any repurchase agreements
maturing in more than seven days if, as a result, more than 15% of the
market value of its total assets would be invested in such illiquid
securities together with repurchase agreements maturing in more than seven
days. To the extent Rule 144A securities are deemed by the Adviser, subject
to the supervision of the Board of Directors, to be illiquid, they will be
subject to the foregoing 15% limitation on illiquid securities.
The U.S. Government Mortgage Securities Portfolio will not purchase any
Mortgage-Related Securities or other securities maturing in more than seven
days for which market quotations are not readily available and will not
enter into any repurchase agreements maturing in more than seven days if,
as a result, more than 10% of the market value of its total assets would be
invested in such illiquid securities together with such repurchase
agreements maturing in more than seven days.
The Board of Directors has approved and recommended that each of these
policies be changed to the following non-fundamental policy:
Each Portfolio may not invest more than 15% of its net assets in illiquid
securities, including repurchase agreements maturing in more than seven
days.
Recently, the SEC has changed its position regarding the amount of total
assets the Portfolios may invest in illiquid securities. As a result of these
changes, the Portfolios will have the opportunity to expand their investments in
certain securities. This amendment will allow the Portfolios greater flexibility
to invest the Portfolios assets in income producing securities without the
necessity of a shareholder meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF THIS
PROPOSAL.
ITEM 2(e)
TO CHANGE THE FUNDAMENTAL POLICY ON INVESTMENTS
IN MORTGAGE SECURITIES TO A NON-FUNDAMENTAL POLICY
The current fundamental policy of the ARM Portfolio, the Intermediate
Mortgage Securities Portfolio and the U.S. Government Mortgage Securities
Portfolio is as follows:
The Adjustable Rate Mortgage (ARM) Portfolio, the Intermediate Mortgage
Securities Portfolio, and the U.S. Government Mortgage Securities Portfolio
(collectively referred to as the "Mortgage Securities Portfolios") invest
primarily in "securities backed by or representing an interest in mortgages
on domestic residential housing or manufactured housing" meeting the
definition of such assets for purposes of the qualified thrift lender
("QTL") test under the current Office of Thrift Supervision ("OTS")
Regulations. Pending any revisions of the current OTS Regulations, each
Mortgage Securities Portfolio expects that, absent extraordinary market
developments, at least 65% of its assets will qualify for QTL purposes for
savings associations, although actual percentages may be higher. In
addition, each Mortgage Securities Portfolio will not purchase any
investments having a risk-based weighting in excess of 20% under the
current risk-based capital regulations established by the OTS. Also, each
Mortgage Securities Portfolio will not purchase any investments having a
risk-based weighting for banks in excess of 50% under current federal
regulations of the appropriate regulatory agencies. Furthermore, each
Mortgage Securities Portfolio will not invest in "high risk" securities
that do not meet the tests contained in the "Supervisory Policy Statement
on Securities Activities" adopted by the Federal Deposit Insurance
Corporation, the Office of the Comptroller of the Currency, the OTS and the
National Credit Union Administration, respectively, and each Mortgage
Securities Portfolio limits its investments to those permissible without
limitation for federal savings associations, national banks and federal
credit unions under current applicable regulations.
The Board of Directors has approved and recommended that this policy be
changed to a non-fundamental policy.
8
<PAGE> 13
Due to federal regulations, national banks, federal savings associations
and federal credit unions, each of which invests in the Portfolios, may only
invest in the Portfolios so long as each Portfolio satisfies certain investment
restrictions. For this reason, each Portfolio seeks to maintain the appropriate
fundamental investment restrictions as are required by federal regulations so
that these institutions may continue to invest in the Portfolios. However, from
time to time, the federal regulations governing the permitted investments of
these institutions may change. This amendment would allow each Portfolio the
flexibility to appropriately and efficiently adjust its investment restrictions
in order to satisfy the changing regulations governing these investing
institutions. In particular, this amendment would save time and money for the
Portfolio by allowing the Board to make necessary investment adjustments as
needed without the necessity of a shareholders meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF THIS
PROPOSAL.
ITEM 2(f)
TO ELIMINATE THE FUNDAMENTAL POLICY ON
OTS QUALIFYING SECURITIES
The current fundamental policy of the Money Market Portfolio and Short U.S.
Government Securities Portfolio is as follows:
Each Portfolio may not purchase securities other than those qualifying
under OTS Regulations. In the event that the OTS Regulations (as defined in
the Prospectus) are amended to remove assets from the list of assets which
qualify as permissible investments, the Fund will dispose of any
nonqualifying assets held by the Portfolio in such time and manner as may
be permitted by relevant OTS Regulations or, if none, in such time and
manner as the Fund's Board of Directors may determine. Conversely, if the
list of qualifying assets is expanded, the Portfolio will be free to make
investments therein.
The Board of Directors has approved and recommended that this fundamental
policy be eliminated.
The current fundamental policy of the ARM Portfolio, the Intermediate
Mortgage Securities Portfolio and the U.S. Government Mortgage Securities
Portfolio is as follows:
Each Portfolio may not purchase securities other than those qualifying
under OTS Regulations. In the event that the OTS Regulations (as defined in
the Prospectus) applicable to Federal savings associations are amended to
remove assets from the list of assets which qualify as permissible
investments, the Fund will dispose of any nonqualifying assets held by the
Portfolio in such time and manner as may be permitted by relevant OTS
Regulations or, if none, in such time and manner as the Fund's Board of
Directors may determine. Conversely, if the list of qualifying assets is
expanded, the Portfolio will be free to make investments therein, to the
extent consistent with the Fund's investment objective and the Portfolio's
management policies.
The Board of Directors has approved and recommended that this fundamental
policy be eliminated.
Due to federal regulations, national banks, federal savings associations
and federal credit unions, each of which invests in the Portfolios, may only
invest in the Portfolios so long as each Portfolio satisfies certain investment
restrictions. For this reason, each Portfolio seeks to maintain the appropriate
fundamental investment restrictions as are required by federal regulations so
that these institutions may continue to invest in the Portfolios. However, from
time to time, the federal regulations governing the permitted investments of
these institutions may change. This amendment would allow each Portfolio the
flexibility to appropriately and efficiently adjust its investment restrictions
in order to satisfy the changing regulations governing these investing
institutions. In particular, this amendment would save time and money for the
Portfolio by allowing the Board to make necessary investment adjustments as
needed without the necessity of a shareholders meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF THIS
PROPOSAL.
9
<PAGE> 14
ITEM 2(g)
TO ELIMINATE THE FUNDAMENTAL POLICY ON
MONEY MARKET INSTRUMENTS
The current fundamental policy of the Money Market Portfolio is as follows:
The Portfolio invests in high quality short-term money market instruments
that are determined to present minimal credit risks and that meet the
quality and diversification requirements of Rule 2a-7 under the Investment
Company Act of 1940. Securities must be rated in the top two rating
categories by the required number of nationally recognized statistical
rating organizations (at least two or, if only one such organization has
rated the security, that one organization) or, if unrated, must be deemed
by the Adviser to be comparable in quality. The diversification
requirements provide generally that the Portfolio may not at the time of
acquisition invest more than 5% of its assets in securities of any one
issuer or invest more than 5% of its assets in securities that have not
been rated in the highest category by the required number of rating
organizations or, if unrated, have not been deemed comparable, except U.S.
Government securities and repurchase agreements collateralized by such
securities. The Portfolio will maintain a dollar-weighted average maturity
of 90 days or less. It is the policy of the Portfolio that it generally
holds its investments to maturity.
The Board of Directors has approved and recommended that this fundamental
policy be eliminated.
Currently, all money market funds must comply with Rule 2a-7 under the
Investment Company Act of 1940. For this reason, the Portfolio's existing policy
is duplicative and unnecessary. Furthermore, in the event that Rule 2a-7 is
changed by SEC action, it may be necessary to call a shareholders meeting to
amend the Portfolio's current policy. Therefore, the elimination of this policy
will allow the Board to make any necessary adjustments under Rule 2a-7 without
the need for a shareholders meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF THIS
PROPOSAL.
INFORMATION REGARDING DIRECTORS AND OFFICERS [UPDATE]
Your approval of the reorganization proposal (see page [___]) will be
treated as a vote to elect each of the Fund's current Directors to the position
of Trustee with the newly organized Delaware business trust. Following the
reorganization, the Trustees will serve until the next election or until their
terms are for some reason terminated. This section provides detailed information
about the individual Directors and Officers of the Fund.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH FUND
- ---------------- ------------------
<S> <C>
RICHARD M. AMIS (AGE 48) Director
360 Clarksville Street
Paris, TX 75460
</TABLE>
PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS AND PRIOR RELEVANT EXPERIENCE:
President, First Federal Savings & Loan Association since 1984; Director,
First Financial Trust Company; formerly Chairman, Texas Savings and Community
Bankers Association.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH FUND
- ---------------- ------------------
<S> <C>
ARTHUR G. DE RUSSO (AGE 78) Director
5397 S.E. Major Way
Stuart, FL 34997
</TABLE>
10
<PAGE> 15
PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS AND PRIOR RELEVANT EXPERIENCE:
Chief Executive Officer, Eastern Financial Federal Credit Union from 1974
to 1992; Chairman and Director, First Credit Union Trust Co., Inc. from 1988 to
1992; President of the Airline Credit Union Conference in 1991; Director, Honor
ATM Network, Florida from 1985 to 1990.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH FUND
- ---------------- ------------------
<S> <C>
DAVID F. HOLLAND (AGE 57) Director
17 New England Executive Park
Burlington, MA 01803
</TABLE>
PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS AND PRIOR RELEVANT EXPERIENCE:
Chairman of the Board since 1989 and Chief Executive Officer since 1986 of
Boston Federal Savings Bank; Director of Fund from 1988 to 1989 and since 1993;
Director of Federal Home Loan Bank of Boston; until December 1997 Chairman of
America's Community Banking Partners, Inc. and Director of ACB Investment
Services, Inc.; Director of M.S.B. Fund, Inc. since 1997; Director and Chairman
since December 1995 of Center for Financial Studies; Director of NYCE
Corporation since 1995; Director from 1990 to 1995 and Chairman 1993-1994 of
America's Community Bankers; member from 1995 to 1997 and President since 1997
of Thrift Institutions Advisory Council.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH FUND
- ---------------- ------------------
<S> <C>
GERALD J. LEVY (AGE 67) Vice Chairman of the Board and Director
4000 W. Brown Deer Road
Milwaukee, WI
</TABLE>
PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS AND PRIOR RELEVANT EXPERIENCE:
Chairman and Chief Executive Officer, Guaranty Bank, S.S.B. since 1984
(from 1959 to 1984, he held a series of officer's positions, including
President). Chairman, 1986, United States League of Savings Institutions;
Director of Fiserv, Inc. since 1986; Director since 1995 of the Republic
Mortgage Insurance Company; Director of the Federal Asset Disposition
Association from 1986 to 1989; and, previously Director and Vice Chairman,
Federal Home Loan Bank of Chicago and member of Advisory Committee of the
Federal Home Loan Mortgage Corporation and Federal National Mortgage
Corporation.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH FUND
- ---------------- ------------------
<S> <C>
RODGER D. SHAY* (AGE 62) Chairman of the Board and Director
1000 Brickell Avenue
Miami, FL 33131
</TABLE>
PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS AND PRIOR RELEVANT EXPERIENCE:
Chairman and Director of Shay Assets Management, Inc. since August 1997
(previously President and Director from 1990 to August 1997); Chairman and
Director of Shay Financial Services, Inc. since August 1997 (previously
President and Director from 1990 to August 1997); President, Chief Executive
Officer and member of the Managing Board of Shay Assets Management Co. from 1990
to December 1997; President, Chief Executive Officer and member of the Managing
Board of Shay Financial Services Co. from 1990 to December 1997; Director from
1986 to 1991 and President from 1986 to 1992, U.S. League Securities, Inc.; Vice
President since 1995 of Institutional Investors Capital Appreciation Fund, Inc.
and M.S.B. Fund, Inc.; Director, First Home Savings Bank, S.L.A. since 1990
previously Director, Asset Management Fund, Inc., from 1985 to 1990; President
of Bolton Shay and Company and Director and officer of its affiliates from 1981
to 1985; previously, employed by certain subsidiaries of Merrill Lynch & Co.
from 1955 to 1981, where he served in various executive positions including
Chairman of the Board of Merrill Lynch Government Securities, Inc., Chairman of
the Board of Merrill Lynch Money Market Securities, Inc. and Managing Director
of the Debt Trading Division of Merrill Lynch, Pierce, Fenner & Smith Inc.
11
<PAGE> 16
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH FUND
- ---------------- ------------------
<S> <C>
EDWARD E. SAMMONS, JR. (AGE 59) President
230 West Monroe Street
Chicago, IL 60606
</TABLE>
PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS AND PRIOR RELEVANT EXPERIENCE:
President of Shay Assets Management, Inc. since August 1997 (previously
Executive Vice President from 1990 to August 1997); Executive Vice President and
member of the Managing Board of Shay Assets Management Co. from 1990 to December
1997; Executive Vice President and member of the Managing Board of Shay
Financial Services Co. from 1990 to December 1997 and Executive Vice President
of the managing partner of the Shay Financial Services, Inc., from 1990 to
December 1997; Vice President and Secretary since 1995 of Institutional
Investors Capital Appreciation Fund, Inc. and M.S.B. Fund, Inc.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH FUND
- ---------------- ------------------
<S> <C>
ROBERT T. PODRAZA (AGE 54) Vice President and Assistant Treasurer
230 West Monroe Street
Chicago, IL 60606
</TABLE>
PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS AND PRIOR RELEVANT EXPERIENCE:
Vice President of Shay Investment Services, Inc. since 1990; Vice President
since 1990 and Chief Compliance Officer since 1997 of Shay Financial Services,
Inc.; Vice President since 1990 and Chief Compliance Officer since 1997 of Shay
Assets Management, Inc.; Chief Compliance Officer of Shay Financial Services Co.
and Shay Assets Management Co. from 1989 to 1997; Director of the National
Society of Compliance Professionals since 1996.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH FUND
- ---------------- ------------------
<S> <C>
DANIEL K. ELLENWOOD (AGE 29) Secretary
230 West Monroe Street
Chicago, IL 60606
</TABLE>
PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS AND PRIOR RELEVANT EXPERIENCE:
Secretary of the Fund since April 1998; Operations Analyst, Shay Assets
Management, Inc. since November 1997; Compliance Analyst, Shay Financial
Services, Inc. since October 1996.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH FUND
- ---------------- ------------------
<S> <C>
STEVE PIERCE Treasurer
</TABLE>
PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS AND PRIOR RELEVANT EXPERIENCE:
The following table sets forth the compensation earned by directors from
the Fund for the fiscal year ended October 31, 1998:
<TABLE>
<CAPTION>
AGGREGATE PENSION OR RETIREMENT ESTIMATED ANNUAL
COMPENSATION BENEFITS ACCRUED AS PART BENEFITS UPON TOTAL
DIRECTOR FROM THE FUND OF FUND EXPENSES RETIREMENT COMPENSATION
- -------- ------------- ------------------------ ---------------- ------------
<S> <C> <C> <C> <C>
Richard M. Amis........... $14,500 0 0 $14,500
Arthur G. DeRusso......... 13,500 0 0 13,500
David F. Holland.......... 14,500 0 0 14,500
Leon T. Kendall(1)........ 3,375 0 0 3,375
Gerald J. Levy............ 13,000 0 0 13,000
Rodger D. Shay............ 0 0 0 0
</TABLE>
- ---------------
(1) Retired December 6, 1997.
12
<PAGE> 17
FUND INFORMATION
This section contains background information about the Fund.
THE FUND (AS OF ________, 1999)
<TABLE>
<CAPTION>
PORTFOLIO NET ASSETS OUTSTANDING 5%
PORTFOLIO INCEPTION ($000) SHARES OWNERS*
- --------- --------- ---------- ----------- --------
<S> <C> <C> <C> <C>
</TABLE>
- ---------------
* SEC rules require each Portfolio to tell you the name and address of any
person known to be beneficial owner of more than 5% of any class of the
Portfolio's outstanding shares. The Portfolio must also tell you how many
shares such persons own and what percentage of the class these shares
represent.
ADDITIONAL INFORMATION
QUORUM AND VOTING REQUIREMENTS
Item 1, Reorganization of the Fund into a Delaware Business Trust, requires
the vote of the holders of a majority of the total number of shares outstanding
and entitled to vote. Item 2, Changes to the Fund's Fundamental Investment
Policies of the Portfolios; requires the favorable vote of: (a) the holders of
67% or more of the outstanding voting securities of the appropriate Portfolio
present at the meeting, if the holders of 50% or more of the outstanding voting
securities of the Portfolio are present or represented by proxy; or (b) the vote
of the holders of more than 50% of the outstanding voting securities of the
appropriate Portfolio, whichever is less, to approve the amendment of the
investment policies which apply to that Portfolio.
Only shareholders of record on the Record Date will be entitled to vote at
the Special Meeting. Each share of the Fund (or portfolio, where appropriate) is
entitled to one vote. Fractional shares are entitled to proportionate shares of
one vote.
Any person giving a proxy has the power to revoke it any time prior to its
exercise by executing a superseding proxy or by submitting a written notice of
revocation to the Secretary of the Fund. In addition, although mere attendance
at the Special Meeting will not revoke a proxy, a shareholder present at the
Special Meeting may withdraw his or her proxy and vote in person. All properly
executed and unrevoked proxies received in time for the Special Meeting will be
voted in accordance with the instructions contained in the proxies. If no
instruction is given on the proxy, the persons named as proxies will vote the
shares represented thereby in favor of the matters set forth in the attached
Notice.
In order to hold the Special Meeting, a "quorum" of shareholders must be
present. Because approval of changes to the Fund's investment restrictions
require approval by the shareholders of each affected Portfolio of the Fund,
holders of one-third (1/3) of the total number of outstanding shares of each
Portfolio of the Fund (i.e., the U.S. Government Mortgage Securities Portfolio,
the Intermediate Mortgage Securities Portfolio, the Short U.S. Government
Securities Portfolio, the Adjustable Rate Mortgage (ARM) Portfolio and the Money
Market Portfolio), present in person or by proxy, shall be required to
constitute a quorum for the purpose of voting on the proposals made.
For purposes of determining a quorum for transacting business at the
Special Meeting, abstentions and broker "non-votes" (that is, proxies from
brokers or nominees indicating that such persons have not received instructions
from the beneficial owner or other persons entitled to vote shares on a
particular matter with respect to which the brokers or nominees do not have
discretionary power) will be treated as shares that are present but which have
not been voted. For this reason, abstentions and broker non-votes will have the
effect of a "no" vote for purposes of obtaining the requisite approval of the
proposals.
If a quorum is not present, the Special Meeting may be adjourned to a later
date by the affirmative vote of a majority of the shares of each Portfolio
present or represented by proxy. If a quorum is not present, the
13
<PAGE> 18
stockholders of a majority of the shares of all Portfolios or an individual
Portfolio or Portfolios, as the case may be, present in person or by proxy and
entitled to vote shall have the power to adjourn the Meeting from time to time
as to all Portfolios or as to such individual Portfolio or Portfolios, as the
case may be, without notice other than announcement at the Meeting, until the
requisite number of shares entitled to vote at such Meeting shall be present. In
the event that a quorum is present at the Meeting but sufficient votes to
approve any of the proposals are not received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies. Any such adjournment will be approved if the votes cast in favor of
such adjournment exceed the votes cast opposing such adjournment. It is
anticipated that the persons named as proxies would vote in favor of
adjournment. In tallying stockholder votes, abstentions and broker non-votes
(i.e., shares held by brokers or nominees as to which (i) instructions have not
been received from the beneficial owners or persons entitled to vote and (ii)
the broker or nominee does not have discretionary voting power on a particular
matter) will be counted for determining whether a quorum is present for purposes
of convening the Meeting and will be considered present at the Meeting.
INVESTMENT ADVISER AND DISTRIBUTOR
Shay Assets Management, Inc., a Florida corporation, is the investment
adviser to the Fund. Shay Assets Management, Inc. is a registered investment
adviser under the Investment Adviser's Act of 1940. Shay Financial Services,
Inc., a Florida corporation, is the Distributor of the Fund's shares. Shay
Financial Services, Inc., a registered broker/dealer, is a wholly-owned
subsidiary of Shay Investment Services, Inc. which is a closely held corporation
controlled by Rodger D. Shay. The principal offices of Shay Assets Management,
Inc. and Shay Financial Services, Inc. are located at 230 West Monroe Street,
Chicago, Illinois 60606.
PROPOSALS OF SHAREHOLDERS
Any shareholder who wishes to submit proposals for consideration at a
meeting of shareholders should send such proposal to the Fund at 230 West Monroe
Street, Chicago, Illinois 60606. To be considered for presentation at a
shareholders meeting, rules promulgated by the SEC require that, among other
things, a shareholder's proposal must be received at the offices of the Fund a
reasonable time before a solicitation is made. Timely submission of a proposal
does not mean that such proposal will be included.
5% SHAREHOLDERS
The following table provides certain information on [DATE], 1999 with
respect to persons known to the Fund to be beneficial (and record) owners
(having sole voting and dispositive power) of five percent (5%) or more of the
shares of the common stock of the ARM Portfolio, the Intermediate Mortgage
Portfolio and the U.S. Government Mortgage Portfolio:
[INSERT TABLE]
14
<PAGE> 19
DISCRETION OF ATTORNEYS NAMED IN THE PROXY
No business other than the matter described above is expected to come
before the Special Meeting, but should any other matter requiring a vote of
shareholders arise, including any question as to an adjournment or postponement
of the Special Meeting, the persons named on the enclosed proxy card will vote
on such matters according to their best judgment in the interests of the Fund.
SHAREHOLDERS ARE REQUESTED TO COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE,
WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES.
By Order of the Directors
Daniel K. Ellenwood
Secretary
____________, 1999
15
<PAGE> 20
ASSET MANAGEMENT FUND, INC.
Investment Adviser
SHAY ASSETS MANAGEMENT, INC.
230 West Monroe Street
Chicago, Illinois 60606
Distributor
Shay Financial Services, Inc.
230 West Monroe Street
Chicago, Illinois 60606
16
<PAGE> 21
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
ASSET MANAGEMENT FUND, INC., a Maryland corporation (the "Company"), for
itself and on behalf of its series of shares designated as Money Market
Portfolio; Short U.S. Government Securities Portfolio; Adjustable Rate Mortgage
(ARM) Portfolio; Intermediate Mortgage Securities Portfolio; and U.S. Government
Mortgage Securities Portfolio (each referred to herein as an "Acquired
Portfolio"), and Asset Management Fund, a Delaware business trust (the "Trust"),
for itself and on behalf of its series of shares designated as the Money Market
Portfolio, the Short U.S. Government Securities Portfolio, the Adjustable Rate
Mortgage (ARM) Portfolio, the Intermediate Mortgage Securities Portfolio and the
U.S. Government Mortgage Securities Portfolio (each an "Acquiring Portfolio"),
agree upon the following plan of reorganization (the "Plan") with regard to each
Company:
1. Prior to the closing provided for in section 4 below, the Company and
the Trust will execute and file articles of transfer with respect to the
transactions contemplated hereby with the Department of Assessments and Taxation
of the State of Maryland. The Company, on behalf of each of the Acquired
Portfolios, shall transfer to the corresponding Acquiring Portfolio all of the
assets of the Acquired Portfolio (including the share of the Acquiring Portfolio
owned by the Acquired Portfolio, which shall immediately thereafter be
cancelled), in exchange for which the Acquiring Portfolio shall simultaneously
assume all of the liabilities of the Acquired Portfolio, and shall issue to the
Company a number of Acquiring Portfolio shares equal in number and net asset
value to the number and net asset value of shares (including fractional shares)
of the Acquired Portfolio then outstanding. The Company then will distribute to
each registered shareholder of the Acquiring Portfolio shares of the Acquiring
Portfolio in a number and net asset value equal to the number and net asset
value of shares (including any fractional share) of the Acquired Portfolio then
owned by the shareholder, in liquidation of the Acquired Portfolio and in
exchange for and cancellation of the shareholder's shares of the Acquired
Portfolio. The Company, on behalf of each Acquired Portfolio, covenants that
each Acquired Portfolio shall not sell or otherwise dispose of any Acquiring
Portfolio Shares to be received in the transactions contemplated herein, except
in distribution to shareholders of the Acquired Portfolio in accordance with the
terms of this Agreement.
2. The distribution to the shareholders of each Acquired Portfolio shall
be accomplished by establishing an account on the share records of the Acquiring
Portfolio in the name of each registered shareholder of the Acquired Portfolio,
and crediting that account with a number of shares of the Acquiring Portfolio
equal to the number of shares (including any fractional share) of the Acquired
Portfolio owned of record by the shareholder at the time of the distribution.
Outstanding certificates representing shares of the Acquired Portfolio shall
thereafter represent an equal number of shares of the same class of the
Acquiring Portfolio.
3. Promptly thereafter, the Company shall be liquidated and dissolved
pursuant to the Maryland General Corporation Law.
4. The transaction in section 1 above shall occur at the close of
business on ________, at the offices of the Trust, or at such other date, time
or place as may be agreed upon by the parties (the "Closing").
5. The obligations of each of the Company and the Trust to effect the
transactions contemplated hereunder shall be subject to the satisfaction of each
of the following conditions:
(a) All necessary filings shall have been made with the Securities and
Exchange Commission and state securities commissions and no order or
directive shall have been received that any other or further action is
required to permit the parties to carry out the transactions
contemplated by this Plan.
(b) The Company and the Trust shall have received an opinion from its
legal counsel substantially to the effect that for federal income tax
purposes: (i) no gain or loss will be recognized by any Acquired
Portfolio upon the transfer of its assets and liabilities to the
corresponding Acquiring Portfolio or upon the distribution to its
shareholders of shares of the Acquiring Portfolio received as
17
<PAGE> 22
a result of such transfer; (ii) the tax basis of the assets of the
Company in the hands of the corresponding Acquiring Portfolio will be
the same as the tax basis of such assets in the hands of the Acquired
Portfolio immediately prior to the transfer; (iii) the holding period
of the assets of the Acquired Portfolio transferred to the
corresponding Acquiring Portfolio will include the period during which
such assets were held by the Acquired Portfolio; (iv) no gain or loss
will be recognized by the Acquiring Portfolio upon the receipt of the
assets of the Acquired Portfolio in exchange for shares of the
Acquiring Portfolio and the assumption by the Acquiring Portfolio of
the liabilities and obligations of the Acquired Portfolio; (v) no gain
or loss will be recognized by the shareholders of the Acquired
Portfolio upon receipt of the shares of the Acquiring Portfolio; (vi)
the basis of the shares of the Acquiring Portfolio received by the
shareholders of the Acquired Portfolio will be the same as the basis
of the shares of the Acquired Portfolio exchanged therefor; and (vii)
the holding period of shares of the Acquiring Portfolio received by
the shareholders of the Acquired Portfolio will include the holding
period of the shares of the Acquired Portfolio exchanged therefor,
provided that at the time of the exchange the shares of the Acquired
Portfolio were held as capital assets; and as to such other matters as
it may reasonably request.
(c) This Plan and the reorganization contemplated hereby shall have been
adopted and approved by the affirmative vote of the holders of the
requisite number of the outstanding shares of the Company and of each
Acquired Portfolio entitled to vote thereon as required by law at the
time such vote is taken.
(d) The Trustees of the Trust shall have authorized, and the Acquiring
Portfolio shall have issued, one share of the Acquiring Portfolio to
the corresponding Acquired Portfolio in consideration of the payment
equal to the net asset value of one share of the Acquired Portfolio on
the day of the Closing for the purpose of enabling the Company to
approve as sole shareholder of the Acquiring Portfolio the investment
management between the Trust and Shay Assets Management, Inc., for the
Acquiring Portfolio; such approval shall have taken place and the
Acquiring Portfolio shall have become subject to said in accordance
with the terms thereof.
At any time prior to the Closing, any of the foregoing conditions may be
waived by the Company and the Trust if such a waiver will not have a material
adverse effect on the interests of the shareholders of the Company or the Trust,
as the case may be.
6. The Trust, on behalf of itself and the Acquiring Portfolios,
represents and warrants to the Company as follows:
(a) The Trust was duly created pursuant to its Agreement and Declaration
of Trust by the Trustees for the purpose of acting as a management
investment company under the 1940 Act and is validly existing under
the laws of the State of Delaware, and the Agreement and Declaration
of Trust directs the Trustees to manage the affairs of the Trust and
grants them all powers necessary or desirable to carry out such
responsibility, including administering Trust business as it is
anticipated to be conducted by the Trust and as described in the
current prospectuses of the Company; upon the closing described in
Section 4, above, the Trust will succeed to the registration of the
Company with the SEC as an open-end management investment company
under the 1940 Act;
(b) All issued and outstanding shares of the Acquiring Portfolios class
will, as of the Closing Date, be duly authorized and validly issued
and outstanding, fully paid and non-assessable by the Trust and the
Acquiring Portfolios do not have outstanding any option, warrants or
other rights to subscribe for or purchase any of their shares nor is
there outstanding any security convertible into any of their shares;
(c) The execution, delivery, and performance of this Agreement on behalf
of the Acquiring Portfolios will have been duly authorized prior to
the Closing Date by all necessary action on the part of the Trust and
the Trustees, and this Agreement constitutes a valid and binding
obligation of the Trust and the Acquiring Portfolios enforceable in
accordance with its terms, subject as to enforcement, to
18
<PAGE> 23
bankruptcy, insolvency, reorganization, arrangement, moratorium and
other similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
(d) The Acquiring Portfolio Shares to be issued and delivered to the
corresponding Acquired Portfolio for the account of the Acquired
Portfolio Investors, pursuant to the terms hereof, will have been duly
authorized as of the Closing Date and, when so issued and delivered,
will be duly and validly issued, fully paid and non-assessable, and
the shares of the class of the Acquiring Portfolio issued and
outstanding prior to the Closing Date were offered and sold in
compliance with the applicable registration requirements, or
exemptions therefrom, of the 1933 Act, and the applicable notice or
filing requirements, or exemptions therefrom, of all applicable state
securities laws, and the regulations thereunder, and no shareholder of
the Acquiring Portfolio shall have any preemptive right of
subscription or purchase in respect thereto;
(e) No governmental consents, approvals, authorizations or filings are
required under the 1933 Act, the Securities Exchange Act of 1934 (the
"1934 Act"), the 1940 Act or Delaware law for the execution of this
Agreement by the Trust, for itself and on behalf of the Acquiring
Portfolios, or the performance of the Agreement by the Trust, for
itself and on behalf of the Acquiring Portfolios, except for such
consents, approvals, authorizations and filings as have been made or
received, and except for such consents, approvals, authorizations and
filings as may be required subsequent to the Closing Date; and
(f) The Trust intends to qualify as a "regulated investment company" under
the Code, and will elect to qualify as a "regulated investment
company" under the Code, as of its first taxable year.
7. This Plan may be amended at any time, and may be terminated at any
time before the completion of the transaction in section 1, regardless of
whether or not this Plan has been approved by the shareholders of the Company or
any Acquired Portfolio, by agreement of the Company and the Trust, provided that
no amendment shall have a material adverse effect upon the interests of
shareholders of the Company. In any case, this Plan may be terminated by either
the Company or the Trust, if the transaction in section 1 has not occurred by
the close of business on ________.
8. A copy of the Trust's Certificate of Trust is on file with the
Secretary of the State of Delaware, and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Trust as the Trustees of
the Trust and not individually and that the obligations under this instrument
are not binding upon any of the Trustees, officers or shareholders of the Trust
individually, but binding only upon the assets and property of the Acquiring
Portfolio.
9. At any time after the completion of the transaction in section 1, the
Company acting through its officers, or if then dissolved through its last
officers, shall execute and deliver to the Trust, such additional instruments of
transfer or other written assurances as the Trust may reasonably request in
order to vest in the Trust, acting for the Acquiring Portfolio, title to the
assets transferred by the Acquired Portfolios under this Plan.
10. This Plan shall be construed in accordance with applicable federal
law and the laws of the State of Illinois, except as to the provisions of
section 8 hereof, which shall be construed in accordance with the laws of the
State of Delaware.
11. This Plan may be executed in any number of counterparts, each of
which shall be deemed an original.
19
<PAGE> 24
12. No Acquired Portfolio shall have any liability for the obligations
of any other Acquired Portfolio hereunder, and no Acquired Portfolio shall have
any liability for the obligation of any other Acquiring Portfolio.
Dated: --------------------------------
Asset Management Fund, Inc.
By:
-----------------------------------
President
Asset Management Fund
By:
-----------------------------------
President
20
<PAGE> 25
EXHIBIT B
DECLARATION OF TRUST
OF
ASSET MANAGEMENT FUND
A DELAWARE BUSINESS TRUST
JULY 22, 1999
<PAGE> 26
DECLARATION OF TRUST
OF
ASSET MANAGEMENT FUND
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
The Trust............................................................. 1
1.1 Name........................................................ 1
1.2 Trust Purpose............................................... 1
1.3 Definitions................................................. 1
ARTICLE II
Trustees.............................................................. 2
2.1 Number and Qualification.................................... 2
2.2 Term and Election........................................... 3
2.3 Resignation and Removal..................................... 3
2.4 Vacancies................................................... 3
2.5 Meetings.................................................... 3
2.6 Officers; Chairperson of the Board.......................... 4
2.7 By-Laws..................................................... 4
ARTICLE III
Powers of Trustees.................................................... 4
3.1 General..................................................... 4
3.2 Investments................................................. 5
3.3 Legal Title................................................. 5
3.4 Sale of Interests........................................... 5
3.5 Borrow Money................................................ 5
3.6 Delegation; Committee....................................... 5
3.7 Collection and Payment...................................... 6
3.8 Expenses.................................................... 6
3.9 Miscellaneous Powers........................................ 6
3.10 Further Powers.............................................. 6
ARTICLE IV
Investment Advisory, Administrative, and Placement Agent Services..... 6
4.1 Investment Advisory and Other Services...................... 6
4.2 Parties to Contract......................................... 7
ARTICLE V
Limitations of Liability.............................................. 7
5.1 No Personal Liability of Trustees, Officers, Employees or 7
Agents......................................................
5.2 Indemnification of Trustees, Officers, Employees and 7
Agents......................................................
5.3 Liability of Holders; Indemnification....................... 8
5.4 No Bond Required of Trustees................................ 8
5.5 No Duty of Investigation; Notice in Trust Instruments, 8
Etc.........................................................
5.6 Reliance on Experts, Etc.................................... 8
5.7 Assent to Declaration....................................... 8
</TABLE>
i
<PAGE> 27
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE VI
Interests in the Trust................................................ 9
6.1 General Characteristics..................................... 9
6.2 Establishment of Series of Interests........................ 9
6.3 Establishment of Classes.................................... 10
6.4 Assets of Series............................................ 10
6.5 Liabilities of Series....................................... 10
6.6 Dividends and Distributions................................. 11
6.7 Voting Rights............................................... 11
6.8 Record Dates................................................ 11
6.9 Transfer.................................................... 12
6.10 Equality.................................................... 12
6.11 Fractions................................................... 12
6.12 Class Differences........................................... 12
6.13 Conversion of Interests..................................... 12
6.14 Investments in the Trust.................................... 12
6.15 Trustees and Officers as Holders............................ 12
6.16 No Preemptive Rights; Derivative Suits...................... 12
6.17 No Appraisal Rights......................................... 12
6.18 Status of Interests and Limitation of Personal Liability.... 13
6.19 Elimination of Series....................................... 13
ARTICLE VII
Purchases and Redemptions............................................. 13
7.1 Purchases................................................... 13
7.2 Redemption by Holder........................................ 13
7.3 Redemption by Trust......................................... 13
7.4 Net Asset Value............................................. 14
ARTICLE VIII
Holders............................................................... 14
8.1 Rights of Holders........................................... 14
8.2 Register of Interests....................................... 14
8.3 Notices..................................................... 14
8.4 Meetings of Holders......................................... 14
8.5 Notice of Meetings.......................................... 15
8.6 Record Date................................................. 15
8.7 Proxies, Etc................................................ 15
8.8 Reports..................................................... 15
8.9 Inspection of Records....................................... 16
8.10 Voting Powers............................................... 16
8.11 Holder Action by Written Consent............................ 16
8.12 Holder Communications....................................... 16
ARTICLE IX
Duration; Termination of Trust; Amendment; Mergers; Etc............... 17
9.1 Duration.................................................... 17
9.2 Termination of Trust........................................ 17
9.3 Amendment Procedure......................................... 17
9.4 Merger, Consolidation and Sale of Assets.................... 18
9.5 Incorporation............................................... 18
</TABLE>
ii
<PAGE> 28
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE X
Miscellaneous......................................................... 18
10.1 Certificate of Designation; Agent for Service of Process.... 18
10.2 Governing Law............................................... 18
10.3 Counterparts................................................ 19
10.4 Reliance by Third Parties................................... 19
10.5 Provisions in Conflict With Law or Regulations.............. 19
10.6 Trust Only.................................................. 19
10.7 Withholding................................................. 19
10.8 Headings and Construction................................... 19
</TABLE>
iii
<PAGE> 29
DECLARATION OF TRUST
OF
ASSET MANAGEMENT FUND
This DECLARATION OF TRUST OF ASSET MANAGEMENT FUND is made on the __ day of
________, 1999 by the parties signatory hereto, as Trustees.
WHEREAS, the Trustees desire to form a business trust under the law of
Delaware for the investment and reinvestment of its assets; and
WHEREAS, it is proposed that the Trust assets be composed of cash,
securities and other assets contributed to the Trust by the Holders of Interests
in the Trust entitled to ownership rights in the Trust;
NOW, THEREFORE, the Trustees hereby declare that the Trustees will hold in
trust all cash, securities and other assets which they may from time to time
acquire in any manner as Trustees hereunder, and manage and dispose of the same
for the benefit of the Holders of Interests in the Trust, and subject to the
following terms and conditions.
ARTICLE I
THE TRUST
1.1 NAME. The name of the Trust created hereby (the "Trust") shall be
"Asset Management Fund," and so far as may be practicable the Trustees shall
conduct the Trust's activities, execute all documents and sue or be sued under
that name, which name (and the word "Trust" wherever hereinafter used) shall not
refer to the Trustees in their individual capacities or to the officers, agents,
employees or Holders of Interest in the Trust. However, should the Trustees
determine that the use of the name of the Trust is not advisable, they may
select such other name for the Trust as they deem proper and the Trust may hold
its property and conduct its activities under such other name. Any name change
shall become effective upon the execution by a majority of the then Trustees of
an instrument setting forth the new name and the filing of a certificate of
amendment pursuant to Section 3810(b) of the DBTA. Any such instrument shall not
require the approval of the Holders of Interests in the Trust, but shall have
the status of an amendment to this Declaration.
1.2 TRUST PURPOSE. The purpose of the Trust is to conduct, operate and
carry on the business of an open-end management investment company registered
under the 1940 Act. In furtherance of the foregoing, it shall be the purpose of
the Trust to do everything necessary, suitable, convenient or proper for the
conduct, promotion and attainment of any businesses and purposes which at any
time may be incidental or may appear conducive or expedient for the
accomplishment of the business of an open-end management investment company
registered under the 1940 Act and which may be engaged in or carried on by a
trust organized under the DBTA, and in connection therewith, the Trust shall
have and may exercise all of the powers conferred by the laws of the State of
Delaware upon a Delaware business trust.
1.3 DEFINITIONS. As used in this Declaration, the following terms shall
have the following meanings:
(a) "1940 Act" shall mean the Investment Company Act of 1940, as amended
from time to time, and the rules and regulations thereunder, as
adopted or amended from time to time.
(b) "Affiliated Person," "Assignment" and "Interested Person" shall have
the meanings given such terms in the 1940 Act.
(c) "administrator" shall mean any party furnishing services to the Trust
pursuant to any administrative services contract described in Section
4.1.
(d) "By-Laws" shall mean the By-Laws of the Trust as amended from time to
time.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations thereunder, as adopted or
amended from time to time.
<PAGE> 30
(f) "Commission" shall mean the Securities and Exchange Commission.
(g) "Declaration" shall mean this Declaration of Trust, as amended from
time to time. References in this Declaration to "Declaration,"
"hereof," "herein" and "hereunder" shall be deemed to refer to the
Declaration rather than the article or section in which such words
appear. This Declaration shall, together with the By-Laws, constitute
the governing instrument of the Trust under the DBTA.
(h) "DBTA" shall mean the Delaware Business Trust Act, Delaware Code
Annotated Title 12, Sections 3801, et seq., as amended from time to
time.
(i) "Fiscal Year" shall mean an annual period as determined by the
Trustees unless otherwise provided by the Code or applicable
regulations.
(j) "Holders" shall mean as of any particular time any or all holders of
record of Interests in the Trust or in Trust Property, as the case
may be, at such time.
(k) "Interest" shall mean a Holder's units of interest into which the
beneficial interest in the Trust and each series and class of the
Trust shall be divided from time to time.
(l) "Investment Adviser" shall mean any party furnishing services to the
Trust pursuant to any investment advisory contract described in
Section 4.1 hereof.
(m) "Majority Interests Vote" shall mean the vote, at a meeting of the
Holders of Interests, of the lesser of (i) 67% or more of the
Interests present or represented at such meeting, provided the Holders
of more than 50% of the Interests are present or represented by proxy
or (ii) more than 50% of the Interests.
(n) "Person" shall mean and include an individual, corporation,
partnership, trust, foundation, plan, association, joint venture,
estate and other entity, whether or not a legal entity, and a
government and agencies and political subdivisions thereof, whether
domestic or foreign.
(o) "Registration Statement" as of any particular time shall mean the
Registration Statement of the Trust which is effective at such time
under the 1940 Act.
(p) "Trust Property" shall mean as of any particular time any and all
property, real or personal, tangible or intangible, which at such time
is owned or held by or for the account of the Trust or the Trustees or
any series of the Trust established in accordance with Section 6.2.
(q) "Trustees" shall mean such persons who have signed this Declaration,
so long as they shall continue in office in accordance with the terms
of this Declaration, and all other persons who at the time in question
have been duly elected or appointed as trustees in accordance with the
provisions of this Declaration and are then in office, in their
capacity as trustees hereunder.
ARTICLE II
TRUSTEES
2.1 NUMBER AND QUALIFICATION. The number of Trustees shall initially be
five and shall thereafter be fixed from time to time by written instrument
signed, or by resolution approved at a duly constituted meeting, by a majority
of the Trustees so fixed, then in office, provided, however, that the number of
Trustees shall in no event be less than one. A Trustee shall be an individual at
least 21 years of age who is not under a legal disability.
(a) Any vacancy created by an increase in Trustees shall be filled by the
appointment or election of an individual having the qualifications
described in this Article as provided in Section 2.4. Any such
appointment shall not become effective, however, until the individual
appointed or elected shall have accepted in writing such appointment
or election and agreed in writing to be bound by the
2
<PAGE> 31
terms of the Declaration. No reduction in the number of Trustees shall
have the effect of removing any Trustee from office.
(b) Whenever a vacancy in the number of Trustees shall occur, until such
vacancy is filled as provided in Section 2.4 hereof, the Trustees in
office, regardless of their number, shall have all the powers granted
to the Trustees and shall discharge all the duties imposed upon the
Trustees by this Declaration.
2.2 TERM AND ELECTION. Each Trustee named herein, or elected or appointed
prior to the first meeting of the Holders, shall (except in the event of
resignations or removals or vacancies pursuant to Section 2.3 or 2.4 hereof)
hold office until his or her successor has been elected at such meeting and has
qualified to serve as Trustee. Beginning with the Trustees elected at the first
meeting of Holders, each Trustee shall hold office during the lifetime of this
Trust and until its termination as hereinafter provided unless such Trustee
resigns or is removed as provided in Section 2.3 below or his term expires
pursuant to Section 2.4 hereof.
2.3 RESIGNATION AND REMOVAL. Any Trustee may resign (without need for
prior or subsequent accounting) by an instrument in writing signed by him or her
and delivered or mailed to the Chairperson, if any, the President or the
Secretary and such resignation shall be effective upon such delivery, or at a
later date according to the terms of the instrument.
(a) Any of the Trustees may be removed with or without cause by the
affirmative vote of the Holders of two-thirds (2/3) of the Interests
or (provided the aggregate number of Trustees, after such removal and
after giving effect to any appointment made to fill the vacancy
created by such removal, shall not be less than the number required by
Section 2.1 hereof) with cause, by the action of two-thirds (2/3) of
the remaining Trustees, or without cause, by the action of eighty
percent (80%) of the remaining Trustees. Removal with cause shall
include, but not be limited to, the removal of a Trustee due to
physical or mental incapacity.
(b) Upon the resignation or removal of a Trustee, or his or her otherwise
ceasing to be a Trustee, he or she shall execute and deliver such
documents as the remaining Trustees shall require for the purpose of
conveying to the Trust or the remaining Trustees any Trust Property
held in the name of the resigning or removed Trustee. Upon the death
of any Trustee or upon removal or resignation due to any Trustee's
incapacity to serve as trustee, his or her legal representative shall
execute and deliver on his or her behalf such documents as the
remaining Trustees shall require as provided in the preceding
sentence.
2.4 VACANCIES. The term of office of a Trustee shall terminate and a
vacancy shall occur in the event of the earliest to occur of the following: the
Trustee's death, resignation, adjudicated incompetence or other incapacity to
perform the duties of the office, or the removal of the Trustee. a vacancy shall
also occur in the event of an increase in the number of Trustees as provided in
Section 2.1. No such vacancy shall operate to annul this Declaration or to
revoke any existing trust created pursuant to the terms of this Declaration. In
the case of a vacancy, the Holders of a plurality of the Interests entitled to
vote, acting at any meeting of the Holders held in accordance with Article VIII
hereof, or, to the extent permitted by the 1940 Act, a majority vote of the
Trustees continuing in office acting by written instrument or instruments, may
fill such vacancy, and any Trustee so elected by the Trustees or the Holders
shall hold office as provided in this Declaration. There shall be no cumulative
voting by the Holders in the election of Trustees.
2.5 MEETINGS. Meetings of the Trustees shall be held from time to time
within or without the State of Delaware upon the call of the Chairperson, if
any, the President, the Chief Operating Officer, the Secretary, an Assistant
Secretary or any two Trustees.
(a) Regular meetings of the Trustees may be held without call or notice at
a time and place fixed by the By-Laws or by resolution of the
Trustees. Notice of any other meeting shall be given not later than 72
hours preceding the meeting by United States mail or by electronic
transmission to each Trustee at his or her business address as set
forth in the records of the Trust or otherwise given personally not
less than 24 hours before the meeting but may be waived in writing by
any Trustee either before or after such meeting. The attendance of a
Trustee at a meeting shall constitute a waiver of notice
3
<PAGE> 32
of such meeting except where a Trustee attends a meeting for the
express purpose of objecting to the transaction of any business on the
ground that the meeting has not been lawfully called or convened.
(b) A quorum for all meetings of the Trustees shall be one-third of the
total number of Trustees, but (except at such time as there is only
one Trustee) no less than two Trustees. Unless provided otherwise in
this Declaration, any action of the Trustees may be taken at a meeting
by vote of a majority of the Trustees present (a quorum being present)
or without a meeting by written consent of a majority of the Trustees,
which written consent shall be filed with the minutes of proceedings
of the Trustees or any such committee. If there be less than a quorum
present at any meeting of the Trustees, a majority of those present
may adjourn the meeting until a quorum shall have been obtained.
(c) Any committee of the Trustees, including an executive committee, if
any, may act with or without a meeting. A quorum for all meetings of
any such committee shall be two or more of the members thereof, unless
the Board shall provide otherwise. Unless provided otherwise in this
Declaration, any action of any such committee may be taken at a
meeting by vote of a majority of the members present (a quorum being
present) or without a meeting by written consent of a majority of the
members, which written consent shall be filed with the minutes of
proceedings of the Trustees or any such committee.
(d) With respect to actions of the Trustees and any committee of the
Trustees, Trustees who are Interested Persons of the Trust or are
otherwise interested in any action to be taken may be counted for
quorum purposes under this Section 2.5 and shall be entitled to vote
to the extent permitted by the 1940 Act.
(e) All or any one or more Trustees may participate in a meeting of the
Trustees or any committee thereof by means of a conference telephone
or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in
a meeting pursuant to such communications system shall constitute
presence in person at such meeting, unless the 1940 Act specifically
requires the Trustees to act "in person," in which case such term
shall be construed consistent with Commission or staff releases or
interpretations.
2.6 OFFICERS; CHAIRPERSON OF THE BOARD. The Trustees shall, from time to
time, elect officers of the Trust, including a President, a Secretary and a
Treasurer. The Trustees shall elect or appoint, from time to time, a Trustee to
act as Chairperson of the Board who shall preside at all meetings of the
Trustees and carry out such other duties as the Trustees shall designate. The
Trustees may elect or appoint or authorize the President to appoint such other
officers or agents with such powers as the Trustees may deem to be advisable.
The President, Secretary and Treasurer may, but need not, be a Trustee. The
Chairperson of the Board and such officers of the Trust shall serve in such
capacity for such time and with such authority as the Trustees may, in their
discretion, so designate or as provided for in the By-Laws.
2.7 BY-LAWS. The Trustees may adopt and, from time to time, amend or
repeal the By-Laws for the conduct of the business of the Trust not inconsistent
with this Declaration, and such By-Laws are hereby incorporated in this
Declaration by reference thereto.
ARTICLE III
POWERS OF TRUSTEES
3.1 GENERAL. The Trustees shall have exclusive and absolute control over
management of the business and affairs of the Trust, but with such powers of
delegation as may be permitted by this Declaration and the DBTA. The Trustees
may perform such acts as in their sole discretion are proper for conducting the
business and affairs of the Trust. The enumeration of any specific power herein
shall not be construed as limiting the aforesaid power. Such powers of the
Trustee may be exercised without order of, or recourse to, any court.
4
<PAGE> 33
3.2 INVESTMENTS. The Trustees shall have power to:
(a) conduct, operate and carry on the business of an investment company;
and
(b) subscribe for, invest in, reinvest in, purchase or otherwise acquire,
hold, pledge, sell, assign, lend, transfer, exchange, distribute,
write or otherwise deal in or dispose of United States and foreign
currencies and related instruments including forward contracts, and
securities, including common and preferred stock, warrants, bonds,
debentures, time notes, bankers acceptances and all other evidences of
indebtedness, negotiable or non-negotiable instruments, obligations,
certificates of deposit or indebtedness, commercial paper, repurchase
agreements, reverse repurchase agreements, convertible securities,
forward contracts, options, futures contracts, and other securities,
including, without limitation, those issued, guaranteed or sponsored
by any state, territory or possession of the United States and the
District of Columbia and their political subdivisions, agencies and
instrumentalities, or by the United States Government, any foreign
government, or any agency, instrumentality or political subdivision of
the United States Government or any foreign government, or
international instrumentalities, or by any bank, savings institution,
corporation or other business entity organized under the laws of the
United States or under foreign laws or in "when-issued" contracts for
such securities; and to exercise any and all rights, powers and
privileges of ownership or interest in respect of any and all such
investments of every kind and description, including, without
limitation, the right to consent and otherwise act with respect
thereto, with power to designate one or more persons, firms,
associations, or corporations to exercise any of said rights, powers
and privileges in respect of any of said instruments; and the Trustees
shall be deemed to have the foregoing powers with respect to any
additional securities in which the Trustees may determine to invest.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
3.3 LEGAL TITLE. Legal title to all the Trust Property shall be vested in
the Trust as a separate legal entity under the DBTA, except that the Trustees
shall have the power to cause legal title to any Trust Property to be held by or
in the name of one or more of the Trustees or in the name of any other Person on
behalf of the Trust on such terms as the Trustees may determine.
In the event that title to any part of the Trust Property is vested in one
or more Trustees, the right, title and interest of the Trustees in the Trust
Property shall vest automatically in each person who may hereafter become a
Trustee upon his or her due election and qualification. Upon the resignation,
removal or death of a Trustee he or she shall automatically cease to have any
right, title or interest in any of the Trust Property, and the right, title and
interest of such Trustee in the Trust Property shall vest automatically in the
remaining Trustees. To the extent permitted by law, such vesting and cessation
of title shall be effective whether or not conveyancing documents have been
executed and delivered.
3.4 SALE OF INTERESTS. Subject to the more detailed provisions set forth
in Article VII, the Trustees shall have the power to permit persons to purchase
Interests and to add or reduce, in whole or in part, their Interest in the
Trust.
3.5 BORROW MONEY. The Trustees shall have power to borrow money or
otherwise obtain credit and to secure the same by mortgaging, pledging or
otherwise subjecting as security the assets of the Trust, including the lending
of portfolio securities, and to endorse, guarantee or undertake the performance
of any obligation, contract or engagement of any other person, firm, association
or corporation.
3.6 DELEGATION; COMMITTEE. The Trustees shall have the power, consistent
with their continuing exclusive authority over the management of the Trust and
the Trust Property, to delegate from time to time to such of their number or to
officers, employees or agents of the Trust the doing of such things and the
execution of such instruments, either in the name of the Trust or the names of
the Trustees or otherwise, as the Trustees may deem expedient.
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3.7 COLLECTION AND PAYMENT. The Trustees shall have the power to collect
all property due to the Trust; to pay all claims, including taxes, against the
Trust Property; to prosecute, defend, compromise or abandon any claims relating
to the Trust Property; to foreclose any security interest securing any
obligations, by virtue of which any property is owed to the Trust; and to enter
into releases, agreements and other instruments.
3.8 EXPENSES. The Trustees shall have the power to incur and pay any
expenses which in the opinion of the Trustees are necessary or incidental to
carry out any of the purposes of this Declaration, and to pay reasonable
compensation from the funds of the Trust to themselves as Trustees. The Trustees
shall fix the compensation of all officers, employees and Trustees. The Trustees
may pay themselves such compensation for special services, including legal and
brokerage services, as they in good faith may deem reasonable (subject to any
limitations in the 1940 Act), and reimbursement for expenses reasonably incurred
by themselves on behalf of the Trust. There shall be no retirement compensation
plan for the Trustees; provided, however, that the Trustees may adopt a deferred
compensation plan consistent with industry and regulatory standards.
3.9 MISCELLANEOUS POWERS. The Trustees shall have the power to: (a)
employ or contract with such Persons as the Trustees may deem desirable for the
transaction of the business of the Trust and terminate such employees or
contractual relationships as they consider appropriate; (b) enter into joint
ventures, partnerships and any other combinations or associations; (c) purchase,
and pay for out of Trust Property, insurance policies (including, but not
limited to, fidelity bonding and errors and omission policies) insuring the
Investment Adviser, Administrator, distributor, Holders, Trustees, officers,
employees, agents, or independent contractors of the Trust against all claims
arising by reason of holding any such position or by reason of any action taken
or omitted by any such Person in such capacity, whether or not the Trust would
have the power to indemnify such Person against liability; (d) establish
pension, profit-sharing and other retirement, incentive and benefit plans for
any officers, employees and agents of the Trust; (e) to the extent permitted by
law, indemnify any Person with whom the Trust has dealings, including the
Investment Adviser, Administrator, distributor, Holders, Trustees, officers,
employees, agents or independent contractors of the Trust, to such extent as the
Trustees shall determine; (f) guarantee indebtedness or contractual obligations
of others; (g) determine and change the Fiscal Year of the Trust and the method
by which its accounts shall be kept; and (h) adopt a seal for the Trust, but the
absence of such seal shall not impair the validity of any instrument executed on
behalf of the Trust.
3.10 FURTHER POWERS. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices, whether within or without the State of Delaware, in any
and all states of the United States of America, in the District of Columbia, in
any foreign countries, and in any and all commonwealths, territories,
dependencies, colonies, possessions, agencies or instrumentalities of the United
States of America and of foreign countries, and to do all such other things and
execute all such instruments as they deem necessary, proper or desirable in
order to promote the interests of the Trust although such things are not herein
specifically mentioned. Any determination as to what is in the interests of the
Trust made by the Trustees in good faith shall be conclusive and shall be
binding upon the Trust and the Holders, past, present and future. In construing
the provisions of this Declaration, the presumption shall be in favor of a grant
of power to the Trustees. The Trustees shall not be required to obtain any court
order to deal with Trust Property.
ARTICLE IV
INVESTMENT ADVISORY, ADMINISTRATIVE, AND PLACEMENT AGENT SERVICES
4.1 INVESTMENT ADVISORY AND OTHER SERVICES. The Trustees may in their
discretion, from time to time, enter into contracts or agreements for investment
advisory services, administrative services (including management, transfer and
dividend disbursing agency services), distribution services, fiduciary
(including custodian, subcustodian and depository) services, placement agent
services, Holder servicing and distribution services, or other services, whereby
the other party to such contract or agreement shall undertake to furnish the
Trustees such services as the Trustees shall, from time to time, consider
desirable and all upon such terms and conditions as the Trustees may in their
discretion determine. Notwithstanding any other provisions of this
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Declaration to the contrary, the Trustees may authorize any Investment Adviser
(subject to such general or specific instructions as the Trustees may, from time
to time, adopt) to effect purchases, sales, loans or exchanges of Trust Property
on behalf of the Trustees or may authorize any officer, employee or Trustee to
effect such purchases, sales, loans or exchanges pursuant to recommendations of
any such Investment Adviser (all without further action by the Trustees). Any
such purchases, sales, loans or exchanges shall be binding upon the Trust.
4.2 PARTIES TO CONTRACT. Any contract or agreement of the character
described in Section 4.1 of this Article IV or in the By-Laws of the Trust may
be entered into with any Person, although one or more of the Trustees or
officers of the Trust or any Holder may be an officer, director, trustee,
shareholder, or member of such other party to the contract or agreement, and no
such contract or agreement shall be invalidated or rendered voidable by reason
of the existence of any such relationship, nor shall any person holding such
relationship be liable merely by reason of such relationship for any loss or
expense to the Trust under or by reason of such contract or agreement or held
accountable for any profit realized directly or indirectly therefrom, provided
that the contract or agreement when entered into was reasonable and fair and not
inconsistent with the provisions of this Article IV or the By-Laws. Any Trustee
or officer of the Trust or any Holder may be the other party to contracts or
agreements entered into pursuant to Section 4.1 hereof or the By-Laws of the
Trust, and any Trustee or officer of the Trust or any Holder may be financially
interested or otherwise affiliated with Persons who are parties to any or all of
the contracts or agreements mentioned in this Section 4.2.
ARTICLE V
LIMITATIONS OF LIABILITY
5.1 NO PERSONAL LIABILITY OF TRUSTEES, OFFICERS, EMPLOYEES OR AGENTS. No
Trustee, officer, employee or agent of the Trust when acting in such capacity
shall be subject to any personal liability whatsoever, in his or her individual
capacity, to any Person, other than the Trust or its Holders, in connection with
Trust Property or the affairs of the Trust; and all such Persons shall look
solely to the Trust Property for satisfaction of claims of any nature against a
Trustee, officer, employee or agent of the Trust arising in connection with the
affairs of the Trust. No Trustee, officer, employee or agent of the Trust shall
be liable to the Trust, Holders of Interests therein, or to any Trustee,
officer, employee, or agent thereof for any action or failure to act (including,
without limitation, the failure to compel in any way any former or acting
Trustee to redress any breach of trust), except for his or her own bad faith,
willful misfeasance, gross negligence or reckless disregard of his or her
duties.
5.2 INDEMNIFICATION OF TRUSTEES, OFFICERS, EMPLOYEES AND AGENTS. The
Trust shall indemnify each of its Trustees, officers, employees, and agents
(including Persons who serve at its request as directors, officers or trustees
of another organization in which it has any interest, as a shareholder, creditor
or otherwise) against all liabilities and expenses (including amounts paid in
satisfaction of judgments, in compromise, as fines and penalties, and as counsel
fees) reasonably incurred by him or her in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
in which he or she may be involved or with which he or she may be threatened,
while in office or thereafter, by reason of his or her being or having been such
a Trustee, officer, employee or agent, except with respect to any matter as to
which he or she shall have been adjudicated to have acted in bad faith, willful
misfeasance, gross negligence or reckless disregard of his or her duties;
provided, however, that as to any matter disposed of by a compromise payment by
such Person, pursuant to a consent decree or otherwise, no indemnification
either for said payment or for any other expenses shall be provided unless there
has been a determination that such Person did not engage in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office by the court or other body approving the settlement
or other disposition or by a reasonable determination, based upon review of
readily available facts (as opposed to a full trial-type inquiry), that he or
she did not engage in such conduct or by a reasonable determination, based upon
a review of the facts, that such Person was not liable by reason of such
conduct, by (a) the 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
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(b) a written opinion from independent legal counsel approved by the Trustees.
The rights accruing to any Person under these provisions shall not exclude any
other right to which he or she may be lawfully entitled; provided that no Person
may satisfy any right of indemnity or reimbursement granted herein or in Section
5.1 or to which he or she may be otherwise entitled except out of the Trust
Property. The Trustees may make advance payments in connection with
indemnification under this Section 5.2, provided that the indemnified Person
shall have given a written undertaking to reimburse the Trust in the event it is
subsequently determined that he or she is not entitled to such indemnification.
All payments shall be made in compliance with Section 17(h) of the 1940 Act.
5.3 LIABILITY OF HOLDERS; INDEMNIFICATION. The Trust shall indemnify and
hold each Holder harmless from and against any claim or liability to which such
Holder may become subject solely by reason of his or her being or having been a
Holder and not because of such Holder's acts or omissions or for some other
reason, and shall reimburse such Holder for all legal and other expenses
reasonably incurred by him or her in connection with any such claim or liability
(upon proper and timely request by the Holder); provided, however, that no
Holder shall be entitled to indemnification by any series established in
accordance with Section 8.8 unless such Holder is a Holder of Interests of such
series. The rights accruing to a Holder under this Section 5.3 shall not exclude
any other right to which such Holder may be lawfully entitled, nor shall
anything herein contained restrict the right of the Trust to indemnify or
reimburse a Holder in any appropriate situation even though not specifically
provided herein.
5.4 NO BOND REQUIRED OF TRUSTEES. No Trustee shall, as such, be obligated
to give any bond or surety or other security for the performance of any of his
or her duties hereunder.
5.5 NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS, ETC. No
purchaser, lender, or other Person dealing with the Trustees or any officer,
employee or agent of the Trust shall be bound to make any inquiry concerning the
validity of any transaction purporting to be made by the Trustees or by said
officer, employee or agent or be liable for the application of money or property
paid, loaned, or delivered to or on the order of the Trustees or of said
officer, employee or agent. Every obligation, contract, instrument, certificate
or other interest or undertaking of the Trust, and every other act or thing
whatsoever executed in connection with the Trust, shall be conclusively relied
upon as having been executed or done by the executors thereof only in their
capacities as Trustees, officers, employees or agents of the Trust. Every
written obligation, contract, instrument, certificate or other interest or
undertaking of the Trust made by the Trustees or by any officer, employee or
agent of the Trust, in his or her capacity as such, shall contain an appropriate
recital to the effect that the Trustee, officer, employee or agent of the Trust
shall not personally be bound by or liable thereunder, nor shall resort be had
to their private property or the private property of the Holders for the
satisfaction of any obligation or claim thereunder, and appropriate references
shall be made therein to the Declaration, and may contain any further recital
which they may deem appropriate, but the omission of such recital shall not
operate to impose personal liability on any of the Trustees, officers, employees
or agents of the Trust. The Trustees may maintain insurance for the protection
of the Trust Property, Holders, Trustees, officers, employees and agents in such
amount as the Trustees shall deem advisable.
5.6 RELIANCE ON EXPERTS, ETC. Each Trustee and officer or employee of the
Trust shall, in the performance of his or her duties, be fully and completely
justified and protected with regard to any act or any failure to act resulting
from reliance in good faith upon the books of account or other records of the
Trust, upon an opinion of counsel, or upon reports made to the Trust by any of
its officers or employees or by any Investment Adviser, Administrator,
accountant, appraiser or other experts or consultants selected with reasonable
care by the Trustees, officers or employees of the Trust, regardless of whether
such counsel or expert may also be a Trustee.
5.7 ASSENT TO DECLARATION. Every Holder, by virtue of having become a
Holder in accordance with the terms of this Declaration, shall be held to have
expressly assented and agreed to the terms hereof and to have become a party
hereto.
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ARTICLE VI
INTERESTS IN THE TRUST
6.1 GENERAL CHARACTERISTICS. (a) The Trustees shall have the power and
authority, without Holder approval, to issue Interests in one or more series
from time to time as they deem necessary or desirable. Each series shall be
separate from all other series in respect to the assets and liabilities
allocated to that series and shall represent a separate investment portfolio of
the Trust. The Trustees shall have exclusive power, without Holder approval, to
establish and designate such separate and distinct series, as set forth in
Section 6.2, and to fix and determine the relative rights and preferences as
between the Interests of the separate series as to right of redemption, special
and relative rights as to dividends and other distributions and on liquidation,
conversion rights, and conditions under which the series shall have separate
voting rights or no voting rights.
(b) The Trustees may, without Holder approval, divide Interests of any
series into two or more classes, Interests of each such class having
such preferences and special or relative rights and privileges
(including conversion rights, if any) as the Trustees may determine as
provided in Section 6.3. The fact that a series shall have been
initially established and designated without any specific
establishment or designation of classes, shall not limit the authority
of the Trustees to divide a series and establish and designate
separate classes thereof.
(c) The number of Interests authorized shall be unlimited, and the
Interests so authorized may be represented in part by fractional
Interests. From time to time, the Trustees may divide or combine the
Interests of any series or class into a greater or lesser number
without thereby changing the proportionate beneficial interests in the
series or class. The Trustees may issue Interests of any series or
class thereof for such consideration and on such terms as they may
determine (or for no consideration if pursuant to an Interest dividend
or split-up), all without action or approval of the Holders. All
Interests when so issued on the terms determined by the Trustees shall
be fully paid and non-assessable. The Trustees may classify or
reclassify any unissued Interests or any Interests previously issued
and reacquired of any series or class thereof into one or more series
or classes thereof that may be established and designated from time to
time. The Trustees may hold as treasury Interests, reissue for such
consideration and on such terms as they may determine, or cancel, at
their discretion from time to time, any Interests of any series or
class thereof reacquired by the Trust.
6.2 ESTABLISHMENT OF SERIES OF INTERESTS. (a) Without limiting the
authority of the Trustees set forth in Section 6.2(b) to establish and designate
any further series, the Trustees hereby establish and designate five series, as
follows:
Money Market Portfolio
Short U.S. Government Securities Portfolio
Adjustable Rate Mortgage (ARM) Portfolio
Intermediate Mortgage Securities Portfolio
U.S. Government Mortgage Securities Portfolio
The provisions of this Article VI shall be applicable to the above
designated series and any further series that may from time to time be
established and designated by the Trustees as provided in Section 6.2(b).
(b) The establishment and designation of any series of Interests other
than the one set forth above shall be effective upon the execution, by
a majority of the Trustees, of an instrument setting forth such
establishment and designation and the relative rights and preferences
of such series, or as otherwise provided in such instrument. At any
time that there are no Interests outstanding of any particular series
previously established and designated, the Trustees may by an
instrument executed by a majority of their number abolish that series
and the establishment and designation thereof. Each instrument
referred to in this paragraph shall have the status of an amendment of
this Declaration.
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(c) Section 9.2 of this Declaration of Trust shall apply also with respect
to each such series as if such series were a separate trust.
6.3 ESTABLISHMENT OF CLASSES. (a) Without limiting the authority of the
Trustees set forth in Section 6.3(b) to establish and designate any further
series, the Trustee hereby establish two classes of Money Market Portfolio as
follows:
I Shares Class
D Shares Class
The provision of this Article VI shall be applicable to the above
designated classes and any further classes that may from time to time be
established and designated by the Trustees as provided in Section 6.3(b).
(b) The division of any series into two or more classes and the
establishment and designation of such classes shall be effective upon
the execution by a majority of the Trustees of an instrument setting
forth such division, and the establishment, designation, and relative
rights and preferences of such classes, or as otherwise provided in
such instrument. The relative rights and preferences of the classes of
any series may differ in such respects as the Trustees may determine
to be appropriate, provided that such differences are set forth in the
aforementioned instrument. At any time that there are no Interests
outstanding of any particular class previously established and
designated, the Trustees may by an instrument executed by a majority
of their number abolish that class and the establishment and
designation thereof. Each instrument referred to in this paragraph
shall have the status of an amendment to this Declaration.
(c) Section 9.2 of this Declaration of Trust shall apply also with respect
to each such class as if such class were a separate trust.
6.4 ASSETS OF SERIES. All consideration received by the Trust for the
issue or sale of Interests of a particular series together with all Trust
Property in which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that series for all purposes, subject only to the rights
of creditors of such series and except as may otherwise be required by
applicable tax laws, and shall be so recorded upon the books of account of the
Trust. Separate and distinct records shall be maintained for each series and the
assets associated with a series shall be held and accounted for separately from
the other assets of the Trust, or any other series. In the event that there is
any Trust Property, or any income, earnings, profits, and proceeds thereof,
funds, or payments which are not readily identifiable as belonging to any
particular series, the Trustees shall allocate them among any one or more of the
series established and designated from time to time in such manner and on such
basis as they, in their sole discretion, deem fair and equitable. Each such
allocation by the Trustees shall be conclusive and binding upon the Holders of
all Interests for all purposes.
6.5 LIABILITIES OF SERIES. (a) The Trust Property belonging to each
particular series shall be charged with the liabilities of the Trust in respect
to that series and all expenses, costs, charges and reserves attributable to
that series, and any general liabilities, expenses, costs, charges or reserves
of the Trust which are not readily identifiable as belonging to any particular
series shall be allocated and charged by the Trustees to and among any one or
more of the series established and designated from time to time in such manner
and on such basis as the Trustees in their sole discretion deem fair and
equitable. Each allocation of liabilities, expenses, costs, charges and reserves
by the Trustees shall be conclusive and binding upon the Holders of all
Interests for all purposes. The Trustees shall have full discretion, to the
extent not inconsistent with the 1940 Act, to determine which items shall be
treated as income and which items as capital, and each such determination and
allocation shall be conclusive and binding upon the Holders.
(b) Without limitation of the foregoing provisions of this Section, but
subject to the right of the Trustees in their discretion to allocate
general liabilities, expenses, costs, charges or reserves as herein
provided, the debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to a particular
series shall be enforceable against the assets of such series only,
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and not against the assets of any other series. Notice of this
limitation on interseries liabilities shall be set forth in the
certificate of trust of the Trust (whether originally or by amendment)
as filed or to be filed in the Office of the Secretary of State of the
State of Delaware pursuant to the DBTA, and upon the giving of such
notice in the certificate of trust, the statutory provisions of
Section 3804 of the DBTA relating to limitations on interseries
liabilities (and the statutory effect under Section 3804 of setting
forth such notice in the certificate of trust) shall become applicable
to the Trust and each series. Every note, bond, contract or other
undertaking issued by or on behalf of a particular series shall
include a recitation limiting the obligation represented thereby to
that series and its assets.
6.6 DIVIDENDS AND DISTRIBUTIONS. (a) Dividends and distributions on
Interests of a particular series or any class thereof may be paid with such
frequency as the Trustees may determine, which may be daily or otherwise,
pursuant to a standing resolution or a resolution adopted only once or with such
frequency as the Trustees may determine, to the Holders of Interests in that
series or class, from such of the income and capital gains, accrued or realized,
from the Trust Property belonging to that series, or in the case of a class,
belonging to that series and allocable to that class, as the Trustees may
determine, after providing for actual and accrued liabilities belonging to that
series. All dividends and distributions on Interests in a particular series or
class thereof shall be distributed pro rata to the Holders of Interests in that
series or class in proportion to the total outstanding Interests in that series
or class held by such Holders at the date and time of record established for the
payment of such dividends or distribution, except to the extent otherwise
required or permitted by the preferences and special or relative rights and
privileges of any series or class. Such dividends and distributions may be made
in cash or Interests of that series 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 Holder of the mode of the paying
of such dividend or distribution to that Holder. Any such dividend or
distribution paid in Interests will be paid at the net asset value thereof as
determined in accordance with Section 7.4.
(b) The Interests in a series or a class of the Trust shall represent
beneficial interests in the Trust Property belonging to such series or
in the case of a class, belonging to such series and allocable to such
class. Each Holder of Interests in a series or a class shall be
entitled to receive its pro rata share of distributions of income and
capital gains made with respect to such series or such class. Upon
reduction or withdrawal of its Interests or indemnification for
liabilities incurred by reason of being or having been a Holder of
Interests in a series or a class, such Holder shall be paid solely out
of the funds and property of such series or in the case of a class,
the funds and property of such series and allocable to such class of
the Trust. Upon liquidation or termination of a series or class of the
Trust, Holders of Interests in such series or class shall be entitled
to receive a pro rata share of the Trust Property belonging to such
series or in the case of a class, belonging to such series and
allocable to such class.
6.7 VOTING RIGHTS. Notwithstanding any other provision hereof, on each
matter submitted to a vote of the Holders, each Holder shall be entitled to one
vote for each whole Interest standing in his name on the books of the Trust, and
each fractional Interest shall be entitled to a proportionate fractional vote,
irrespective of the series thereof or class thereof, and all Interests of all
series and classes thereof shall vote together as a single class; provided,
however, that (a) as to any matter with respect to which a separate vote of one
or more series or classes thereof is permitted or required by the 1940 Act or
the provisions of the instrument establishing and designating the series or
class, such requirements as to a separate vote by such series or class thereof
shall apply in lieu of all Interests of all series and classes thereof voting
together; and (b) as to any matter which affects only the interests of one or
more particular series or classes thereof, only the Holders of the one or more
affected series or classes shall be entitled to vote, and each such series or
class shall vote as a separate series or class.
6.8 RECORD DATES. The Trustees may from time to time close the transfer
books or establish record dates and times for the purposes of determining the
Holders entitled to be treated as such, to the extent provided or referred to in
Section 8.6.
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6.9 TRANSFER. All Interests of each particular series or class thereof
shall be transferable, but transfers of Interests of a particular series or
class thereof will be recorded on the Interest transfer records of the Trust
applicable to that series or class only at such times as Holders shall have the
right to require the Trust to redeem Interests of that series or class and at
such other times as may be permitted by the Trustees.
6.10 EQUALITY. Except as provided herein or in the instrument designating
and establishing any class or series, all Interests of each particular series or
class thereof shall represent an equal proportionate interest in the assets
belonging to that series, or in the case of a class, belonging to that series
and allocable to that class, subject to the liabilities belonging to that
series, and each Interest of any particular series or class shall be equal to
each other Interest of that series or class; but the provisions of this sentence
shall not restrict any distinctions permissible under Section 6.6 that may exist
with respect to dividends and distributions on Interests of the same series or
class. The Trustees may from time to time divide or combine the Interests of any
particular series or class into a greater or lesser number of Interests of that
series or class without thereby changing the proportionate beneficial interest
in the assets belonging to that series or class or in any way affecting the
rights or Interests of any other series or class.
6.11 FRACTIONS. Any fractional Interest of any series or class, if any such
fractional Interest is outstanding, shall carry proportionately all the rights
and obligations of a whole Interest of that series or class, including rights
and obligations with respect to voting, receipt of dividends and distributions,
redemption of Interests, and liquidation of the Trust.
6.12 CLASS DIFFERENCES. Subject to Section 6.3, the relative rights and
preferences of the classes of any series may differ in such other respects as
the Trustees may determine to be appropriate in their sole discretion, provided
that such differences are set forth in the instrument establishing and
designating such classes and executed by a majority of the Trustees.
6.13 CONVERSION OF INTERESTS. Subject to compliance with the requirements
of the 1940 Act, the Trustees shall have the authority to provide that Holders
of Interests of any series shall have the right to convert said Interests into
one or more other series in accordance with such requirements and procedures as
may be established by the Trustees. The Trustees shall also have the authority
to provide that Holders of Interests of any class of a particular series shall
have the right to convert said Interests into one or more other classes of that
particular series or any other series in accordance with such requirements and
procedures as may be established by the Trustees.
6.14 INVESTMENTS IN THE TRUST. The Trustees may accept investments in the
Trust 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
Interests that conform to such authorized terms and to reject any purchase
orders for Interests whether or not conforming to such authorized terms.
6.15 TRUSTEES AND OFFICERS AS HOLDERS. 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 Interests of the 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
Interests 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 Interests generally.
6.16 NO PREEMPTIVE RIGHTS; DERIVATIVE SUITS. Holders shall have no
preemptive or other right to subscribe to any additional Interests or other
securities issued by the Trust. No action may be brought by a Holder on behalf
of the Trust unless Holders owning no less than 10% of the then outstanding
Interests, or series or class thereof, join in the bringing of such action. A
Holder of Interests in a particular series or a particular class of the Trust
shall not be entitled to participate in a derivative or class action lawsuit on
behalf of any other series or any other class or on behalf of the Holders of
Interests in any other series or any other class of the Trust.
6.17 NO APPRAISAL RIGHTS. Holders shall have no right to demand payment for
their Interests or to any other rights of dissenting Holders in the event the
Trust participates in any transaction which would give rise
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to appraisal or dissenters' rights by a stockholder of a corporation organized
under the General Corporation Law of Delaware, or otherwise.
6.18 STATUS OF INTERESTS AND LIMITATION OF PERSONAL LIABILITY. Interests
shall be deemed to be personal property giving only the rights provided in this
Declaration of Trust. Every Holder by virtue of acquiring Interests shall be
held to have expressly assented and agreed to the terms hereof and to be bound
hereby. The death, incapacity, dissolution, termination or bankruptcy of a
Holder during the continuance of the Trust shall not operate to dissolve or
terminate the Trust or any series thereof nor entitle the representative of such
Holder to an accounting or to take any action in court or elsewhere against the
Trust or the Trustees, but shall entitle the representative of such Holder only
to the rights of such Holder under this Trust. Ownership of Interests shall not
entitle the Holder 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 Interests constitute the Holders as
partners or joint venturers. Neither the Trust nor the Trustees, nor any
officer, employee or agent of the Trust, shall have any power to bind personally
any Holder, nor except as specifically provided herein to call upon any Holder
for the payment of any sum of money or assessment whatsoever other than such as
the Holder may at any time personally agree to pay.
6.19 ELIMINATION OF SERIES. Without limiting the authority of the
Trustees set forth in Section 9.2 of this Declaration of Trust, at any time that
there are no Interests outstanding of a series (or class), the Trustees may
abolish such series (or class).
ARTICLE VII
PURCHASES AND REDEMPTIONS
7.1 PURCHASES. The Trustees, in their discretion, may, from time to time,
without a vote of the Holders, permit the purchase of Interests by such party or
parties (or increase in the Interests of a Holder), for such type of
consideration, including, without limitation, cash or property, at such time or
times (including, without limitation, each business day), and on such terms as
the Trustees may deem best, and may in such manner acquire other assets
(including, without limitation, the acquisition of assets subject to, and in
connection with the assumption of, liabilities) and businesses.
7.2 REDEMPTION BY HOLDER. Each Holder of Interests of the Trust or any
series or class thereof 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 or her
Interests of the Trust, or series or class thereof, at a redemption price equal
to the net asset value per Interest of the Trust or series or class thereof,
next determined in accordance with Section 7.4 hereof after the Interests are
properly tendered for redemption, subject to any contingent deferred sales
charge or redemption charge in effect at the time of 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, subject to the
requirements of the 1940 Act, make payment wholly or partly in securities or
other assets belonging to the Trust or series or class thereof of which the
Interests being redeemed are part of the value of such securities or assets used
in such determination of the net asset value.
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the Holders of Interests of the
Trust, or series or class thereof, to require the Trust to redeem Interests of
the Trust, or of any series or class thereof, during any period or at any time
when and to the extent permissible under the 1940 Act.
7.3 REDEMPTION BY TRUST. Each Interest of the Trust, or series or class
thereof that has been established and designated is subject to redemption by the
Trust at the redemption price which would be applicable if such Interest was
then being redeemed by the Holder pursuant to Section 7.2 hereof: (a) at any
time, if the Trustees determine in their sole discretion and by majority vote
that it is in the best interest of the Trust, or any series or class thereof, to
so redeem, 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 Holder accounts of a minimum or maximum
amount or percentage. Upon such redemption
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the Holders of the Interests so redeemed shall have no further right with
respect thereto other than to receive payment of such redemption price.
7.4 NET ASSET VALUE. The net asset value per Interest of any series shall
be (a) in the case of a series whose Interests are not divided into classes, the
quotient obtained by dividing the value of the net assets of that series (being
the value of the assets belonging to that series less the liabilities belonging
to that series) by the total number of Interests of that series outstanding, and
(b) in the case of a class of Interests of a series whose Interests are divided
into classes, the quotient obtained by dividing the value of the net assets of
that series allocable to such class (being the value of the assets belonging to
that series allocable to such class less the liabilities belonging to such
class) by the total number of Interests of such class 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 Interest of
any series or any class at a designated constant dollar amount and in connection
therewith may adopt procedures consistent with the 1940 Act for continuing
declarations of income attributable to that series or that class as dividends
payable in additional Interests of that series at the designated constant dollar
amount and for the handling of any losses attributable to that series or that
class. Such procedures may provide that in the event of any loss each Holder
shall be deemed to have contributed to the capital of the Trust attributable to
that series his or her pro rata portion of the total number of Interests
required to be canceled in order to permit the net asset value per Interest of
that series or class to be maintained, after reflecting such loss, at the
designated constant dollar amount. Each Holder of the Trust shall be deemed to
have agreed, by his or her investment in any series or class 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.
ARTICLE VIII
HOLDERS
8.1 RIGHTS OF HOLDERS. The right to conduct any business hereinbefore
described is vested exclusively in the Trustees, and the Holders shall have no
rights under this Declaration or with respect to the Trust Property other than
the beneficial interest conferred by their Interests and the voting rights
accorded to them under this Declaration.
8.2 REGISTER OF INTERESTS. A register shall be kept by the Trust under
the direction of the Trustees which shall contain the names and addresses of the
Holders and the number of Interests held by each Holder. Each such register
shall be conclusive as to the identity of the Holders of the Trust and the
Persons who shall be entitled to payments of distributions or otherwise to
exercise or enjoy the rights of Holders. No Holder shall be entitled to receive
payment of any distribution, nor to have notice given to it as herein provided,
until it has given its address to such officer or agent of the Trustees as shall
keep the said register for entry thereon. No certificates certifying the
ownership of interests need be issued except as the Trustees may otherwise
determine from time to time.
8.3 NOTICES. Any and all notices to which any Holder hereunder may be
entitled and any and all communications shall be deemed duly served or given if
presented personally to a Holder, left at his or her residence or usual place of
business, or sent via United States mail or by electronic transmission to a
Holder at his or her address as it is registered with the Trust, as provided in
Section 8.2. If mailed, such notice shall be deemed to be given when deposited
in the United States mail addressed to the Holder at his or her address as it is
registered with the Trust, as provided in Section 8.2, with postage thereon
prepaid.
8.4 MEETINGS OF HOLDERS. Meetings of the Holders may be called at any
time by a majority of the Trustees and shall be called by any Trustee upon
written request of Holders holding, in the aggregate, not less than 10% of the
Interests (or series or class thereof), such request specifying the purpose or
purposes for which such meeting is to be called. Any such meeting shall be held
within or without the State of Delaware on such day and at such time as the
Trustees shall designate. Holders of one-third of the Interests in the Trust,
present in person or by proxy, shall constitute a quorum for the transaction of
any business, except as may
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otherwise be required by the 1940 Act or other applicable law or by this
Declaration or the By-Laws of the Trust. If a quorum is present at a meeting, an
affirmative vote by the Holders present, in person or by proxy, holding more
than 50% of the total Interests (or series or class thereof) of the Holders
present, either in person or by proxy, at such meeting constitutes the action of
the Holders, unless the 1940 Act, other applicable law, this Declaration or the
By-Laws of the Trust require a greater number of affirmative votes.
Notwithstanding the foregoing, the affirmative vote by the Holders present, in
person or by proxy, holding less than 50% of the Interests (or class or series
thereof) of the Holders present, in person or by proxy, at such meeting shall be
sufficient for adjournments. Any meeting of Holders, whether or not a quorum is
present, may be adjourned for any lawful purpose provided that no meeting shall
be adjourned for more than six months beyond the originally scheduled meeting
date. 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.
8.5 NOTICE OF MEETINGS. Written or printed notice of all meetings of the
Holders, stating the time, place and purposes of the meeting, shall be given as
provided in Section 8.3. At any such meeting, any business properly before the
meeting may be considered, whether or not stated in the notice of the meeting.
Any adjourned meeting held as provided in Section 8.4 shall not require the
giving of additional notice.
8.6 RECORD DATE. For the purpose of determining the Holders who are
entitled to notice of any meeting, to vote at any meeting, to participate in any
distribution, or for the purpose of any other action, the Trustees may from time
to time fix a date, not more than 90 calendar days prior to the date of any
meeting of the Holders or payment of distributions or other action, as the case
may be, as a record date for the determination of the persons to be treated as
Holders of record for such purposes, and any Holder who was a Holder at the date
and time so fixed shall be entitled to vote at such meeting or to be treated as
a Holder of record for purposes of such other action, even though he or she has
since that date and time disposed of his or her Interests, and no Holder
becoming such after that date and time shall be so entitled to vote at such
meeting or to be treated as a Holder of record for purposes of such other
action. If the Trustees shall divide the Interests into two or more series in
accordance with Section 6.2 herein, nothing in this Section shall be construed
as precluding the Trustees from setting different record dates for different
series and if the Trustees shall divide any series into two or more classes in
accordance with Section 6.3 herein, nothing in this Section 8.6 shall be
construed as precluding the Trustees from setting different record dates for
different classes.
8.7 PROXIES, ETC. At any meeting of Holders, any Holder entitled to vote
thereat may vote by proxy, provided that no proxy shall be voted at any meeting
unless it shall have been placed on file with the Secretary, or with such other
officer or agent of the Trust as the Secretary may direct, for verification
prior to the time at which such vote shall be taken.
(a) Pursuant to a resolution of a majority of the Trustees, proxies may be
solicited in the name of one or more Trustees or one or more of the
officers of the Trust. Only Holders of record shall be entitled to
vote. Each Holder shall be entitled to a vote proportionate to its
Interest in the Trust.
(b) When Interests are held jointly by several persons, any one of them
may vote at any meeting in person or by proxy in respect to such
Interest, but if more than one of them shall be present at such
meeting in person or by proxy, and such joint owners or their proxies
so present disagree as to any vote to be cast, such vote shall not be
received in respect to such Interest.
(c) A proxy purporting to be executed by or on behalf of a Holder shall be
deemed valid unless challenged at or prior to its exercise, and the
burden of proving invalidity shall rest on the challenger. If the
Holder is a minor or a person of unsound mind, and subject to
guardianship or to the legal control of any other person regarding the
charge or management of his or her Interest, he or she may vote by his
or her guardian or such other person appointed or having such control,
and such vote may be given in person or by proxy.
8.8 REPORTS. The Trustees shall cause to be prepared, at least annually,
a report of operations containing a balance sheet and statement of income and
undistributed income of the Trust prepared in conformity with generally accepted
accounting principles and an opinion of an independent public accountant
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on such financial statements. The Trustees shall, in addition, furnish to the
Holders at least semi-annually an interim report containing an unaudited balance
sheet as of the end of such period and an unaudited statement of income and
surplus for the period from the beginning of the current Fiscal Year to the end
of such period.
8.9 INSPECTION OF RECORDS. The records of the Trust shall be open to
inspection by Holders during normal business hours and for any purpose not
harmful to the Trust.
8.10 VOTING POWERS. (a) The Holders shall have power to vote only (i) for
the election or removal of Trustees as contemplated by Section 2.2 and 2.3
hereof, (ii) with respect to any investment advisory contract as contemplated by
Section 4.1 hereof, (iii) with respect to termination of the Trust as provided
in Section 9.2 hereof, (iv) with respect to amendments to the Declaration of
Trust as provided in Section 9.3 hereof, (v) with respect to any merger,
consolidation or sale of assets as provided in Section 9.4 hereof, (vi) with
respect to incorporation of the Trust to the extent and as provided in Section
9.5 hereof, and (vii) with respect to such additional matters relating to the
Trust as may be required by the 1940 Act, DBTA, or any other applicable law, the
Declaration, the By-Laws or any registration of the Trust with the Commission
(or any successor agency) or any state, or as and when the Trustees may consider
necessary or desirable.
(b) Each Holder shall be entitled to vote based on the ratio his or her
Interest bears to the Interests of all Holders entitled to vote. Until
Interests are issued, the Trustees may exercise all rights of Holders
and may take any action required by law, the Declaration or the
By-Laws to be taken by Holders. The By-Laws may include further
provisions for Holders' votes and meetings and related matters not
inconsistent with this Declaration.
8.11 HOLDER ACTION BY WRITTEN CONSENT. Any action which may be taken by
the Holders may be taken without notice and without a meeting if Holders holding
more than 50% of the total Interests entitled to vote (or such larger proportion
thereof as shall be required by any express provision of this Declaration) shall
consent to the action in writing and the written consents shall be filed with
the records of the meetings of Holders. Such consents shall be treated for all
purposes as votes taken at a meeting of the Holders.
8.12. HOLDER COMMUNICATIONS. (a) Whenever ten or more Holders who have
been such for at least six months preceding the date of application, and who
hold in the aggregate at least 1% of the total Interests, shall apply to the
Trustees in writing, stating that they wish to communicate with other Holders
with a view to obtaining signatures for a request for a meeting of Holders and
accompanied by a form of communication and request which they wish to transmit,
the Trustees shall within five business days after receipt of such application
either (i) afford to such applicants access to a list of the names and addresses
of all Holders as recorded on the books of the Trust; or (ii) inform such
applicants as to the approximate number of Holders, and the approximate cost of
transmitting to them the proposed communication and form of request.
(b) If the Trustees elect to follow the course specified in clause (ii)
above, the Trustees, upon the written request of such applicants,
accompanied by a tender of the material to be transmitted and of the
reasonable expenses of transmission, shall, with reasonable
promptness, transmit, by United States mail or by electronic
transmission, such material to all Holders at their addresses as
recorded on the books, unless within five business days after such
tender the Trustees shall transmit, by United States mail or by
electronic transmission, to such applicants and file with the
Commission, together with a copy of the material to be transmitted, a
written statement signed by at least a majority of the Trustees to the
effect that in their opinion either such material contains untrue
statements of fact or omits to state facts necessary to make the
statements contained therein not misleading, or would be in violation
of applicable law, and specifying the basis of such opinion. The
Trustees shall thereafter comply with any order entered by the
Commission and the requirements of the 1940 Act and the Securities
Exchange Act of 1934.
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ARTICLE IX
DURATION; TERMINATION OF TRUST; AMENDMENT; MERGERS; ETC.
9.1 DURATION. Subject to possible termination in accordance with the
provisions of Section 9.2, the Trust created hereby shall continue perpetually
pursuant to Section 3808 of DBTA.
9.2 TERMINATION OF TRUST. (a) The Trust may be terminated (i) by the
affirmative vote of the Holders of not less than two-thirds of the Interests in
the Trust at any meeting of the Holders, or (ii) by an instrument in writing,
without a meeting, signed by a majority of the Trustees and consented to by the
Holders of not less than two-thirds of such Interests, or (iii) by the Trustees
by written notice to the Holders. Upon any such termination,
(i) The Trust shall carry on no business except for the purpose of
winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust and
all of the powers of the Trustees under this Declaration shall
continue until the affairs of the Trust shall have been wound up,
including the power to fulfill or discharge the contracts of the
Trust, collect its assets, sell, convey, assign, exchange, or
otherwise dispose of all or any part of the remaining Trust
Property to one or more Persons at public or private sale for
consideration which may consist in whole or in part of cash,
securities or other property of any kind, discharge or pay its
liabilities, and do all other acts appropriate to liquidate its
business; provided that any sale, conveyance, assignment,
exchange, or other disposition of all or substantially all of the
Trust Property shall require approval of the principal terms of
the transaction and the nature and amount of the consideration by
the Holders with a Majority Interests Vote.
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and
refunding agreements, as they deem necessary for their protection,
the Trustees may distribute the remaining Trust Property, in cash
or in kind or partly each, among the Holders according to their
respective rights.
(b) Upon termination of the Trust and distribution to the Holders as
herein provided, a majority of the Trustees shall execute and lodge
among the records of the Trust an instrument in writing setting forth
the fact of such termination and file a certificate of cancellation in
accordance with Section 3810 of the DBTA. Upon termination of the
Trust, the Trustees shall thereon be discharged from all further
liabilities and duties hereunder, and the rights and interests of all
Holders shall thereupon cease.
9.3 AMENDMENT PROCEDURE.
(a) All rights granted to the Holders under this Declaration of Trust are
granted subject to the reservation of the right of the Trustees to
amend this Declaration of Trust as herein provided, except as set
forth herein to the contrary. Subject to the foregoing, the provisions
of this Declaration of Trust (whether or not related to the rights of
Holders) may be amended at any time, 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 Trustees (or by an
officer of the Trust pursuant to the vote of a majority of such
Trustees). 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.
(b) No amendment may be made, under Section 9.3(a) above, which would
change any rights with respect to any Interest in the Trust by
reducing the amount payable thereon upon liquidation of the Trust, by
repealing the limitations on personal liability of any Holder or
Trustee, or by diminishing or eliminating any voting rights pertaining
thereto, except with a Majority Interests Vote.
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(c) A certification signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Holders or by
the Trustees as aforesaid or a copy of the Declaration, as amended,
and executed by a majority of the Trustees, shall be conclusive
evidence of such amendment when lodged among the records of the Trust.
(d) Notwithstanding any other provision hereof, until such time as
Interests are first sold, this Declaration may be terminated or
amended in any respect by the affirmative vote of a majority of the
Trustees or by an instrument signed by a majority of the Trustees.
9.4 MERGER, CONSOLIDATION AND SALE OF ASSETS. The Trust may merge or
consolidate with any other corporation, association, trust or other organization
or may sell, lease or exchange all or substantially all of its property,
including its good will, upon such terms and conditions and for such
consideration when and as authorized by no less than a majority of the Trustees
and by a Majority Interests Vote of the Trust or by an instrument or instruments
in writing without a meeting, consented to by the Holders of not less than 50%
of the total Interests of the Trust or such series, as the case may be, and any
such merger, consolidation, sale, lease or exchange shall be deemed for all
purposes to have been accomplished under and pursuant to the statutes of the
State of Delaware. In accordance with Section 3815(f) of DBTA, an agreement of
merger or consolidation may effect any amendment to the Declaration or By-Laws
or effect the adoption of a new declaration of trust or by-laws of the Trust if
the Trust is the surviving or resulting business trust. A certificate of merger
or consolidation of the Trust shall be signed by a majority of the Trustees.
9.5 INCORPORATION. Upon a Majority Interests Vote, the Trustees may cause
to be organized or assist in organizing a corporation or corporations under the
laws of any jurisdiction or any other trust, partnership, association or other
organization to take over all of the Trust Property or to carry on any business
in which the Trust shall directly or indirectly have any interest, and to sell,
convey and transfer the Trust Property to any such corporation, trust,
association or organization in exchange for the equity interests thereof or
otherwise, and to lend money to, subscribe for the equity interests of, and
enter into any contracts with any such corporation, trust, partnership,
association or organization, or any corporation, partnership, trust, association
or organization in which the Trust holds or is about to acquire equity
interests. The Trustees may also cause a merger or consolidation between the
Trust or any successor thereto and any such corporation, trust, partnership,
association or other organization if and to the extent permitted by law, as
provided under the law then in effect. Nothing contained herein shall be
construed as requiring approval of the Holders for the Trustees to organize or
assist in organizing one or more corporations, trusts, partnerships,
associations or other organizations and selling, conveying or transferring a
portion of the Trust Property to such organizations or entities.
ARTICLE X
MISCELLANEOUS
10.1 CERTIFICATE OF DESIGNATION; AGENT FOR SERVICE OF PROCESS. The Trust
shall file, in accordance with Section 3812 of DBTA, in the office of the
Secretary of State of Delaware, a certificate of trust, in the form and with
such information required by Section 3810 of DBTA and executed in the manner
specified in Section 3811 of DBTA. In the event the Trust does not have at least
one Trustee qualified under Section 3807(a) of DBTA, then the Trust shall comply
with Section 3807(b) of DBTA by having and maintaining a registered office in
Delaware and by designating a registered agent for service of process on the
Trust, which agent shall have the same business office as the Trust's registered
office. The failure to file any such certificate, to maintain a registered
office, to designate a registered agent for service of process, or to include
such other information shall not affect the validity of the establishment of the
Trust, the Declaration, the By-Laws or any action taken by the Trustees, the
Trust officers or any other Person with respect to the Trust except insofar as a
provision of the DBTA would have governed, in which case the Delaware common law
governs.
10.2 GOVERNING LAW. This Declaration is executed by all of the Trustees and
delivered with reference to DBTA and the laws of the State of Delaware, and the
rights of all parties and the validity and construction of
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every provision hereof shall be subject to and construed according to DBTA and
the laws of the State of Delaware (unless and to the extent otherwise provided
for and/or preempted by the 1940 Act or other applicable federal securities
laws); provided, however, that there shall not be applicable to the Trust, the
Trustees or this Declaration (a) the provisions of Section 3540 of Title 12 of
the Delaware Code, or (b) any provisions of the laws (statutory or common) of
the State of Delaware (other than the DBTA) pertaining to trusts which are
inconsistent with the rights, duties, powers, limitations or liabilities of the
Trustees set forth or referenced in this Declaration.
10.3 COUNTERPARTS. This Declaration may be simultaneously executed in
several counterparts, each of which shall be deemed to be an original, and such
counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such original counterpart.
10.4 RELIANCE BY THIRD PARTIES. The original or a copy of this instrument
and of each restatement and/or amendment hereto shall be kept at the office of
the Trust where it may be inspected by any Holder. Any certificate executed by
an individual who, according to the records of the Trust or of any recording
office in which this Declaration may be recorded, appears to be a Trustee
hereunder, certifying to (a) the number or identity of Trustees or Holders, (b)
the due authorization of the execution of any instrument or writing, (c) the
form of any vote passed at a meeting of Trustees or Holders, (d) the fact that
the number of Trustees or Holders present at any meeting or executing any
written instrument satisfies the requirements of this Declaration, (e) the form
of any By-Laws adopted by or the identity of any officers elected by the
Trustees, or (f) the existence of any fact or facts which in any manner relate
to the affairs of the Trust, shall be conclusive evidence as to the matters so
certified in favor of any person dealing with the Trustees and their successors.
10.5 PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS. (a) The provisions
of this Declaration are severable, and if the Trustees shall determine, with the
advice of counsel, that any of such provisions is in conflict with the 1940 Act,
the DBTA, or with other applicable laws and regulations, the conflicting
provisions shall be deemed never to have constituted a part of this Declaration;
provided, however, that such determination shall not affect any of the remaining
provisions of this Declaration or render invalid or improper any action taken or
omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability
shall attach only to such provision in such jurisdiction and shall not
in any manner affect such provision in any other jurisdiction or any
other provision of this Declaration in any jurisdiction.
10.6 TRUST ONLY. It is the intention of the Trustees to create only a
business trust under DBTA with the relationship of trustee and beneficiary
between the Trustees and each Holder from time to time. It is not the intention
of the Trustees to create a general partnership, limited partnership, joint
stock association, corporation, bailment, or any form of legal relationship
other than a Delaware business trust except to the extent such trust is deemed
to constitute a corporation under the Code and applicable state tax laws.
Nothing in this Declaration of Trust shall be construed to make the Holders,
either by themselves or with the Trustees, partners or members of a joint stock
association.
10.7 WITHHOLDING. Should any Holder be subject to withholding pursuant to
the Code or any other provision of law, the Trust shall withhold all amounts
otherwise distributable to such Holder as shall be required by law and any
amounts so withheld shall be deemed to have been distributed to such Holder
under this Declaration of Trust. If any sums are withheld pursuant to this
provision, the Trust shall remit the sums so withheld to and file the required
forms with the Internal Revenue Service, or other applicable government agency.
10.8 HEADINGS AND CONSTRUCTION. 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. Whenever the
singular number is used herein, the same shall include the plural; and the
neuter, masculine and feminine genders shall include each other, as applicable.
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IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
___________________________________________ _____________________ , 1999
Richard M. Amis, Trustee
___________________________________________ _____________________ , 1999
Arthur G. De Russo, Trustee
___________________________________________ _____________________ , 1999
David F. Holland, Trustee
___________________________________________ _____________________ , 1999
Gerald J. Levy, Trustee
___________________________________________ _____________________ , 1999
Rodger D. Shay, Trustee
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CERTIFICATE OF TRUST
OF
ASSET MANAGEMENT FUND
The undersigned, constituting the members of the Board of Trustees of Asset
Management Fund (the "Trust"), in order to form a Delaware business trust
pursuant to Section 3810 of the Delaware Business Trust Act, hereby certify the
following:
1. The name of the Delaware business trust is Asset Management Fund.
2. Prior to the issuance of beneficial interests, the Trust will become
a registered investment company under the Investment Company Act of 1940, as
amended.
3. Notice is hereby given that pursuant to Section 3804 of the Delaware
Business Trust Act, the debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to a particular series of the
Trust shall be enforceable against the assets of such series only and not
against the assets of the Trust generally.
4. The registered office of the Trust in Delaware is c/o The Corporation
Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.
5. The registered agent for service of process on the Trust is The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.
6. This Certificate of Trust shall be effective on the date it is filed
with the Office of the Delaware Secretary of State.
IN WITNESS WHEREOF, the undersigned Trustees of Asset Management Fund have
executed this Certificate as of the 22nd day of July, 1999.
--------------------------------------
Richard M. Amis, Trustee
--------------------------------------
Arthur G. De Russo, Trustee
--------------------------------------
David F. Holland, Trustee
--------------------------------------
Gerald J. Levy, Trustee
--------------------------------------
Rodger D. Shay, Trustee
<PAGE> 50
SPECIAL MEETING OF SHAREHOLDERS OF THE
ASSET MANAGEMENT FUND, INC. TO BE HELD
ON __________, 1999
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of
Asset Management Fund, Inc. hereby appoint ____________ or ____________, or
either of them, true and lawful attorneys, with the power of substitution of
each, to vote all shares of Asset Management Fund, Inc., 230 West Monroe Street,
Chicago, Illinois 60606, which the undersigned is entitled to vote at the
Special Meeting of Shareholders to be held on _________, 1999, at 230 West
Monroe Street, Chicago, Illinois 60606, at ______ a.m. Central Standard time,
and at any adjournments thereof.
The attorneys named will vote the shares represented by this proxy in
accordance with the choices made on this ballot. If no choice is indicated as
to the item, this proxy will be voted affirmatively on the matters.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Special Meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ASSET
MANAGEMENT FUND, INC. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED "FOR" THE PROPOSALS.
Proposal 1 To approve or disapprove the Plan of Reorganization which will
reorganize the Fund into a Delaware business trust.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Proposal 2 To approve or disapprove of changes to the Fund's fundamental
investment policies of the Portfolios.
FOR ALL EXCEPT AS MARKED BELOW [ ] AGAINST ALL [ ]
ABSTAIN ALL [ ]
Proposal 2(a) To adopt a fundamental policy limiting investments.
Proposal 2(b) To amend the fundamental policy on Portfolio lending.
Proposal 2(c) To change the fundamental policy on high quality assets to
a non-fundamental policy.
Proposal 2(d) To change the fundamental policy on illiquid investments to
a non-fundamental policy.
Proposal 2(e) To change the fundamental policy on investments in mortgage
securities to a non-fundamental policy.
Proposal 2(f) To eliminate the fundamental policy on OTS qualifying securities.
Proposal 2(g) To eliminate the fundamental policy on Money Market instruments.
Proposal 3 To approve or disapprove the authorization to conduct such other
business as may come before the Special Meeting.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Mark with an X in the box.
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YOUR VOTE IS IMPORTANT. Please complete, sign and return this card as soon as
possible.
Date
___________________________________________
Signature
___________________________________________
Signature (Joint Owners)
Please sign this proxy exactly as your name appears on the books of the
Fund. Joint owners should each sign personally. Trustees and other fiduciaries
should indicate the capacity in which they sign, and where more than one name
appears, a majority must sign. If a corporation, this signature should be that
of an authorized officer who should state his or her title.
