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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Soliciting Material Pursuant to (S) 240.14a-11 (c) or (S) 240.14a-12
The Benchmark Funds
4900 Sears Tower
Chicago, Illinois 60606
- --------------------------------------------------------------------------------
(Name of Registrant as specified in its Chapter)
- --------------------------------------------------------------------------------
(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: N/A
2) Aggregate number of securities to which transaction applies: N/A
3) Per Unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 011:* N/A
4) Proposed maximum aggregate value of transaction: N/A
5) Total fee paid: N/A
[ ] 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: N/A
2) Form, schedule or Registration statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
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THE BENCHMARK FUNDS
U.S. Government Securities Portfolio
December 17, 1997
Dear Unitholder:
You are cordially invited to attend a Special Meeting of Unitholders of the
U.S. Government Securities Portfolio (the "Portfolio") of The Benchmark Funds
(the "Trust"), to be held on January 26, 1998 at 10:00 a.m., Chicago time, at
the offices of Goldman, Sachs & Co., 4900 Sears Tower, Chicago, Illinois 60606.
At this important meeting, as described more fully below, you will be asked
to approve a change in the organization of the Trust and an amendment relating
to a fundamental investment policy of the Portfolio (Proposals 1 and 2). These
proposals were approved by the Unitholders of all investment portfolios of the
Trust except the Portfolio at a meeting of Unitholders held on September 2,
1997. Because we believe that these Proposals are important and will allow us to
improve the Portfolio's operations, we are resubmitting these Proposals for
approval by Unitholders of the Portfolio at this time.
In particular, Proposal 1 recommends the tax-free conversion of the
Portfolio into a series of a newly-formed Delaware business trust. As discussed
in the accompanying Proxy Statement, this conversion will not result in any
change to the assets, fees or investment policies of the Portfolio; however, the
Trustees believe that organizing the Portfolio as series of a Delaware business
trust offers certain advantages. These advantages include a clear limitation on
Unitholder liability and potential cost savings. The dollar value and number of
Units of your investment in the Portfolio will not be affected by the
conversion.
Proposal 2 recommends an amendment to the fundamental investment
restriction on issuer diversification for the Portfolio. The purpose of this
change is to make the restriction identical to the "diversification" definition
in the Investment Company Act of 1940.
You should carefully read the Proxy Statement that discusses each Proposal
in detail. The formal Notice of Special Meeting of Unitholders and the Proxy
Statement setting forth in detail the matters to come before the meeting are
attached hereto, and a form of Proxy is enclosed for your use.
The Trustees have unanimously recommended that Unitholders approve each
Proposal to be acted upon at the meeting.
The continuing interest of Unitholders in the affairs of the Portfolio is
gratefully acknowledged. Whether or not you expect to attend the meeting, it is
important that your Units be represented. Therefore, I urge you to vote FOR each
of the proposals contained in the Proxy Statement.
Sincerely,
[LOGO OF FRANK POLEFRONE]
Frank Polefrone
President
ATTENTION INVESTMENT MANAGERS: If you have the authority to vote Units of the
Portfolio, please vote. If you do not have this authority, please forward this
material to your client as soon as possible. The Benchmark Funds offer
institutional investors access to The Northern Trust Company's investment
advisory services. The Northern Trust Company also serves as custodian and
transfer agent to The Benchmark Funds.
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THE BENCHMARK FUNDS
U.S. Government Securities Portfolio
NOTICE OF SPECIAL MEETING OF UNITHOLDERS
TO BE HELD JANUARY 26, 1998
A Special Meeting of Unitholders (the "Meeting") of the U.S. Government
Securities Portfolio (the "Portfolio") of The Benchmark Funds (the "Trust") will
be held on January 26, 1998, at 10:00 a.m. (Chicago time) at the offices of
Goldman, Sachs & Co., 4900 Sears Tower, Chicago, Illinois 60606, for the
following purposes:
(1) To approve an Agreement and Plan of Reorganization pursuant to which the
Portfolio will be reorganized as a series of The Benchmark Funds, a Delaware
business trust;
(2) To amend the Portfolio's fundamental investment restriction concerning
issuer diversification; and
(3) To transact such other business as may properly come before the Meeting and
any adjournment or adjournments thereof.
YOUR TRUSTEES UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR OF EACH PROPOSAL.
Unitholders of record of the Portfolio at the close of business on December 8,
1997 will be entitled to vote at the Meeting or at any adjournment or
adjournments thereof. The proxy statement and proxy card are being mailed to
Unitholders on or about December 17, 1997.
It is important that you return your signed and dated Proxy Card promptly,
regardless of the size of your holdings, so that a quorum may be assured.
By Order of the Board of Trustees of The Benchmark Funds,
[LOGO OF MICHAEL J. RICHMAN]
Michael J. Richman,
Secretary
December 17, 1997
Please complete, date and sign the Proxy Card for the Units held by you and
return the Proxy Card in the envelope provided so that your vote can be
recorded. No postage is required if the envelope is mailed in the United States.
Your prompt return of your proxy or proxies may save the Trust the necessity and
expense of further solicitations. If you attend the Meeting, you may vote your
Units in person.
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THE BENCHMARK FUNDS
U.S. Government Securities Portfolio
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Trustees (collectively, the "Trustees")
of The Benchmark Funds (the "Trust") to be used at a Special Meeting of
Unitholders of the U.S. Government Securities Portfolio (the "Portfolio") to be
held at the offices of Goldman, Sachs & Co., 4900 Sears Tower, Chicago, Illinois
60606, on January 26, 1998, at 10:00 a.m. (Chicago time), for the purposes set
forth in the accompanying Notice of Meeting. Such meeting and any adjournment
thereof is referred to as the "Meeting."
The Trustees have fixed the close of business on December 8, 1997 as the
record date (the "Record Date") for determining the Unitholders of the Portfolio
entitled to notice of and to vote at the Meeting. Unitholders of record of the
Portfolio on the Record Date are entitled to one vote per Unit at the Meeting or
any adjournment of the Meeting.
As of December 8, 1997 the U.S. Government Securities Portfolio had
_______Units of beneficial interest outstanding. Appendix A hereto sets forth
the persons who owned beneficially more than 5% of the Units of the Portfolio as
of December 8, 1997.
Proxies will be solicited by mail and may also be solicited in person or by
telephone, fax or personal interview by officers of The Northern Trust Company
("Northern Trust"), Goldman, Sachs & Co. ("Goldman Sachs") and by the Trustees.
In addition, employees of Northern Trust, its affiliates, correspondent banks,
brokers and similar record holders may solicit proxies by these means, and may
forward proxy materials and printed direction forms to the customers on whose
behalf they hold record ownership of Units of the Portfolio. Northern Trust may
engage an independent proxy solicitation firm to assist it in soliciting
proxies.
This Proxy Statement and the form of Proxy are being first mailed to
Unitholders on or about December 17, 1997.
In connection with each of the matters set forth in the attached Notice of
Meeting, all Units of the Portfolio (regardless of class) will vote together.
The Trust will furnish, without charge, copies of the Portfolio's November
30, 1996 Annual Unitholders Report and May 31, 1997 Semi-Annual Report to any
Unitholder upon request addressed to Goldman, Sachs & Co., 4900 Sears Tower,
Chicago, Illinois 60606 or by telephone at 800-621-2550.
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PROPOSAL 1
APPROVAL OF AN AGREEMENT AND
PLAN OF REORGANIZATION PURSUANT TO WHICH
THE PORTFOLIO WILL BE REORGANIZED INTO A
SERIES OF A DELAWARE BUSINESS TRUST
General
The Trustees have unanimously approved, subject to Unitholder approval, a
proposal for the Trust (which is referred to in this Proposal 1 as the
"Massachusetts Trust") on behalf of the Portfolio to effectuate the transactions
set forth in an Agreement and Plan of Reorganization, Conversion and Termination
(the "Plan of Reorganization") with a newly established Delaware business trust
also named "The Benchmark Funds" (the "Delaware Trust"). The Plan of
Reorganization is attached to this Proxy Statement as Appendix B. The Plan of
Reorganization provides for the conversion (the "Conversion") of each portfolio
of the Massachusetts Trust, including the Portfolio, from a separate series of
the Massachusetts Trust into a corresponding separate series of the Delaware
Trust. The Unitholders of each investment portfolio of the Massachusetts Trust,
with the exception of the Portfolio, approved the Conversion at a special
meeting of Unitholders held on September 2, 1997. If the Conversion is approved
by Unitholders of the Portfolio, the Portfolio will become a Portfolio of the
Delaware Trust, along with all other portfolios of the Massachusetts Trust which
have previously approved the Conversion.
The Trustees believe that a Delaware business trust as a form of
organization offers certain advantages for mutual funds over a Massachusetts
business trust. These advantages include granting the Trustees greater
flexibility to take certain actions without the approval of shareholders of the
Delaware business trust (referred to herein as "Unitholders") and to determine
methods of voting and organization. A Delaware business trust also offers the
advantages of a clearer limitation upon the liability of Unitholders and
Trustees. The Trustees also believe that the Declaration of Trust of the
Delaware Trust (the "Delaware Trust Instrument") is clearer and more modern than
the Massachusetts Trust's organizational documents. While many of these same
improvements (other than the limitations on liability afforded under Delaware
law) could be achieved by amending the Massachusetts Trust's Declaration of
Trust (the "Massachusetts Declaration of Trust"), the Trustees have concluded
that, given the other advantages of a Delaware business trust, it is preferable
to enter into the Plan of Reorganization than to amend the current
organizational documents. For a summary comparison of the Massachusetts
Declaration of Trust and the proposed Delaware Trust Instrument, see
"Description of Certain Provisions of the Delaware Trust Instrument" and
"Certain Comparative Information About Massachusetts Business Trusts and
Delaware Business Trusts" below.
The Conversion will entail organizing the Delaware Trust, which will
initially have 17 series, one corresponding to each investment portfolio of the
Massachusetts Trust, including the Portfolio. For purposes of the following
discussion, the Portfolio of the Massachusetts Trust is referred to as the
"current Portfolio" and the series of the Delaware Trust that corresponds to the
Portfolio is referred to in this Proposal as the "successor Portfolio."
To effect the Conversion, the current Portfolio will transfer all of its
assets and liabilities to the successor Portfolio. As consideration for the
transfer of such assets and liabilities (together, "total assets"), the
successor Portfolio will issue shares of beneficial interest (referred to herein
as "successor Portfolio Units") to the current Portfolio and the current
Portfolio will distribute such successor Portfolio Units pro rata to the current
Portfolio Unitholders in exchange for their Units. Upon completion of the
Conversion, each Unitholder of the successor Portfolio will own full and
fractional successor Portfolio Units equal in number and aggregate net asset
value and of the same class as such Unitholder's Units of the current Portfolio
as of the date of the Conversion, and will have substantially the same
redemption, liquidation and dividend rights as those offered by the current
Portfolio. Like the current Portfolio Units, the successor Portfolio Units will
have no par value and will not have preemptive rights.
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Following the Conversion, the successor Portfolio will carry on the business of
the current Portfolio. The successor Portfolio will have the same investment
adviser, other service providers, fee and expense structure and investment
objectives, policies and restrictions as the current Portfolio. Any change in
the fundamental investment restriction on issuer diversification approved at the
Meeting with respect to the current Portfolio will also apply to the successor
Portfolio. There may be deemed a momentary technical inconsistency with certain
of the policies and restrictions of the Portfolio (such as restrictions on
investments in any one issuer and investments in other investment companies)
during the Conversion. Approval of the Plan of Reorganization will also
constitute approval to terminate the current Portfolio and the Massachusetts
Trust. Each other investment portfolio of the Massachusetts Trust will be
converted into a corresponding series of the Delaware Trust in the same manner.
The Conversion will be accomplished on a tax-free basis, and the dollar
value and number of Units of each investor's investment in the Portfolio will
not change.
Reasons for the Proposed Conversion
The Massachusetts Trust is organized as a Massachusetts business trust. As
discussed above, the Trustees unanimously recommend Conversion of the Portfolio
into a separate series of the Delaware Trust. The Trustees believe that
organizing the Portfolio as a series of the Delaware Trust offers certain
advantages over maintaining it as a series of the Massachusetts Trust.
One advantage of a Delaware business trust is a clearer limitation of
liability of Unitholders and Trustees for the obligations of the trust. The
Delaware Business Trust Act (the "Delaware Act") expressly limits the liability
of Delaware business trust Unitholders for the debts or obligations of the
business trust to the same extent as for stockholders of for-profit Delaware
corporations. Similarly, the Delaware Act provides that a series of a Delaware
business trust will not be liable for the debts or obligations of any other
series of the business trust. Under Massachusetts law, there are no comparable
statutory provisions. Although the possibility of incurring these types of
liability may be remote under Massachusetts law, the above provisions of the
Delaware Act provide greater certainty and protection against Unitholder
liability and the liability of one business trust series for the debts or
obligations of another series. However, it is possible that, under certain
circumstances, courts in some states may not enforce limited liability for
Delaware business trust Unitholders. Similarly, Delaware law clearly protects a
Trustee from liability for the obligations of the business trust, which may help
the Delaware Trust attract and retain qualified Trustees in the future.
Second, the Trustees believe that the Delaware business trust form of
organization will enable the successor Portfolio to adopt new methods of
operation and employ new technologies that are expected to reduce costs of
operation when, and if, implemented. For example, Delaware law authorizes
electronic or telephonic communications between Unitholders and a Delaware
business trust. The Trustees may take advantage of this provision in the future
to improve Unitholder voting procedures and reduce associated costs.
Third, the Conversion offers the potential for future cost savings,
although no immediate cost savings are expected to result from the Conversion.
These cost savings may result from the differences between the Massachusetts
Trust and the Delaware Trust. For example, since the Trustees of a Delaware
business trust can take more actions without Unitholder approval than is
currently permitted under the Massachusetts Declaration of Trust, the Delaware
Trust may be required to hold fewer Unitholder meetings, potentially further
reducing costs. Although neither a Delaware business trust nor a Massachusetts
business trust is required to hold annual Unitholder meetings, Delaware law
affords to the Trustees greater latitude to adapt the Delaware Trust to future
contingencies without the necessity of holding a special Unitholder meeting.
Under the Delaware Trust Instrument, the Trustees have the power to amend the
Delaware Trust Instrument; to dissolve the business trust; to incorporate the
Delaware Trust; to merge or consolidate with another entity; to sell, lease,
exchange, transfer, pledge or otherwise dispose of all or any part of the
Delaware Trust's assets; to cause any series to become a separate trust; and to
change the Delaware Trust's domicile-all without Unitholder vote.
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Any exercise of authority by the Trustees will be subject to applicable
state and federal law. The flexibility of a Delaware business trust as a form of
organization should help to assure that the Delaware Trust always operates under
the most advantageous structure and is able to take advantage of opportunities
to reduce the expense and frequency of future Unitholder meetings.
Finally, Delaware law explicitly provides that separate boards of trustees
may be authorized for each series of a Delaware business trust. Whether separate
boards of trustees can be authorized for series of a Massachusetts business
trust is unclear under Massachusetts law. The establishment of any board of
trustees of a registered investment company must comply with applicable
securities laws, including the provision of the 1940 Act regarding the election
of trustees by Unitholders.
Board of Trustees' Evaluation and Recommendation
The Trustees discussed the proposed Conversion preliminarily at a meeting
held on April 22, 1997 and in more detail at their July 8, 1997 quarterly Board
meeting. At the meeting held on July 8, 1997, after considering the matters
discussed above, the Trustees unanimously approved the adoption of the Plan of
Reorganization and determined that the Conversion: (i) is in the best interest
of the Portfolio and (ii) will not result in dilution of the interests of the
Unitholders of the Portfolio. In addition, the Trustees unanimously voted to
recommend to the Unitholders of the Portfolio that they approve the Plan of
Reorganization and the transactions contemplated thereunder. In taking such
action and making such recommendation, the Trustees took into consideration the
fact that the Conversion may provide operational efficiencies and additional
managerial flexibility to the Trustees. At a meeting held on September 2, 1997
(the "September 1997 Meeting") the proposal to approve the Plan of
Reorganization was approved by the Unitholders of all portfolios of the
Massachusetts Trust except the Portfolio. At a meeting held on October 7, 1997
the Trustees reconsidered the proposed Conversion. In addition to the factors
noted above, the Trustees considered the possibility that the Portfolio might
not be economically viable as the sole portfolio of the Massachusetts Trust in
the event that the other portfolios were converted into series of the Delaware
Trust. The Trustees also considered the possibility of not completing the
Conversion with respect to any of the portfolios. The Trustees continued to
believe, however, that the Conversion would be in the best interest of current
Unitholders of the Portfolio as well as future Unitholders. Accordingly, The
Trustees unanimously voted to resubmit the Plan of Reorganization to a vote of
the Portfolio's Unitholders.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT UNITHOLDERS OF THE PORTFOLIO
APPROVE THE PLAN OF REORGANIZATION PROVIDING FOR THE CONVERSION OF THE PORTFOLIO
FROM A SERIES OF THE MASSACHUSETTS BUSINESS TRUST TO A SERIES OF THE DELAWARE
BUSINESS TRUST.
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Vote Required to Approve Plan of Reorganization
Approval of the Plan of Reorganization requires the affirmative vote of a
majority of the Units of the Portfolio outstanding and entitled to vote. For
this purpose, a majority of the outstanding Units of the Portfolio means the
vote of the lesser of (i) 67% or more of the Units of the Portfolio present at
the Meeting, if the holders of more than 50% of the Units of the Portfolio are
present or represented by proxy, or (ii) more than 50% of the outstanding Units
of the Portfolio (a "1940 Act Majority"). Units of all classes of the Portfolio
will be voted together as one class. If the Plan of Reorganization is not
approved by the Unitholders of the Portfolio, the Portfolio will continue its
operations as a series of the Massachusetts Trust.
A vote FOR the Conversion will authorize the Portfolio, as the sole
Unitholder of its corresponding successor Portfolio (i) to vote in favor of the
election of the current Trustees of the Massachusetts Trust as the Trustees of
the Delaware Trust; (ii) to vote in favor of the ratification of the selection
of Ernst & Young LLP as the Delaware Trust's independent auditors; (iii) to
approve an investment advisory agreement for the successor Portfolio that is
substantially the same as the current Portfolio's investment advisory agreement;
and (iv) to approve fundamental investment restrictions for the successor
Portfolio which, if Proposal 2 is approved, will be the same as the current
investment restrictions in effect for the Portfolio, as amended by such
Proposal. If the Conversion is approved but Proposal 2 is not approved by the
Portfolio's Unitholders, the Portfolio, as sole Unitholder of the successor
Portfolio, will vote to approve only the Portfolio's existing fundamental
restrictions.
Summary of the Plan of Reorganization
The following discussion summarizes certain terms of the Plan of
Reorganization as it relates to the Portfolio (The terms relating to the other
portfolios of the Massachusetts Trust are identical to those discussed below
with respect to the Portfolio). This summary of the Plan of Reorganization is
qualified in its entirety by the provisions of the Plan of Reorganization, which
is attached to this Proxy Statement as Appendix B.
On the closing date of its Conversion (the "Closing Date"), the current
Portfolio will transfer all of its assets to the successor Portfolio in exchange
for the assumption by the successor Portfolio of all the liabilities of the
current Portfolio and the issuance to the current Portfolio of Units of the
successor Portfolio ("successor Portfolio Units") equal to the value (as
determined by using the procedures in the current prospectuses) on the date of
the exchange of the current Portfolio's net assets. Immediately thereafter, the
current Portfolio will liquidate and distribute successor Portfolio Units to the
current Portfolio Unitholder's account pro rata in proportion to the current
Portfolio Unitholder's beneficial interest in the current Portfolio ("current
Portfolio Units") in exchange for the current Portfolio Units. In these
exchanges, the successor Portfolio will issue the appropriate number of
successor Portfolio Units of each class of Units that currently is outstanding,
so that the current Portfolio will distribute, and holders of a particular class
of current Portfolio Units will receive, the same number of successor Portfolio
Units of the same class. As soon as practicable after this distribution of
successor Portfolio Units, the current Portfolio will be wound up and
terminated. Certificates evidencing full or fractional successor Portfolio Units
will not be issued. Upon completion of the Conversion, a current Portfolio
Unitholder will be the owner of full and fractional successor Portfolio Units
equivalent in number, class and aggregate net asset value to the Unitholder's
current Portfolio Units immediately before the Conversion.
Assuming the Plan of Reorganization is approved with respect to the
Portfolio, it is currently contemplated that the Conversion will become
effective during the first quarter of 1998 or as soon thereafter as possible.
If, at any time before the Closing Date of the Conversion, the Trustees
determine that it would not be in the best interest of the Massachusetts Trust
or the Unitholders to proceed with the Conversion, the Conversion will not go
forward, notwithstanding the approval of the Conversion by the Portfolio's
Unitholders at the Meeting. The Massachusetts Trust and the Delaware Trust may
at any time waive compliance with any of the conditions
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contained in, or may amend, the Plan of Reorganization; provided that such
waiver or amendment does not materially adversely affect the interests of
current Portfolio Unitholders.
Expenses of the Conversion
The Portfolio will bear its allocable share of the expenses associated with
the transactions contemplated by the Plan of Reorganization, except that
Northern Trust and correspondent banks, brokers and other entities that have
entered into Unitholder Servicing Agreements with the Trust will bear all
mailing expenses in connection with the solicitation of proxies on behalf of the
Portfolio. See "Additional Information Manner and Cost of Proxy Solicitation"
below. In the event that the Conversion is completed, the expenses will be
assumed by the successor Portfolio. It is currently estimated that the aggregate
expenses of the conversions contemplated by the Plan of Reorganization will be
approximately [$108,300], which will be allocated among all portfolios of the
Massachusetts Trust, including the Portfolio.
Tax Consequences of the Conversion
It is a condition to the consummation of the Conversion that the
Massachusetts Trust and the Delaware Trust receive on or before the Closing Date
an opinion from Drinker Biddle & Reath LLP, counsel to the Massachusetts Trust
and the Delaware Trust, substantially to the effect that, among other things,
for federal income tax purposes, the Conversion will constitute a reorganization
under Section 368(a)(1)(F) of the Internal Revenue Code of 1986, as amended, and
that no gain or loss will be recognized for federal income tax purposes by the
current Portfolio, the successor Portfolio, and the Unitholders of the current
Portfolio upon (1) the transfer of the current Portfolio's assets to the
corresponding successor Portfolio in exchange solely for the successor
Portfolio's Units and the assumption by the successor Portfolio of the current
Portfolio's liabilities or (2) the distribution in liquidation by the current
Portfolio of the successor Portfolio Units to the current Portfolio Unitholders
in exchange for their current Portfolio Units. The opinion will further provide,
among other things, that in counsel's view (i) the tax basis of the successor
Portfolio Units to be received by each current Portfolio Unitholder will be the
same as that of his or her current Portfolio Units surrendered in exchange
therefor and (ii) each current Portfolio Unitholder's tax holding period for his
or her successor Portfolio Units will include such Unitholder's tax holding
period for the current Portfolio Units surrendered in exchange therefor,
provided that the current Portfolio Units were held as capital assets on the
date of the exchange.
Continuation of Unitholder Accounts and Plans
The Delaware Trust's transfer agent will establish accounts for all current
Portfolio Unitholders containing the appropriate number and class of successor
Portfolio Units to be received by that Unitholder under the Plan of
Reorganization. Such accounts will be identical in all material respects to the
accounts currently maintained by the Portfolio for each Unitholder. No action by
a Unitholder will be necessary in order to continue any automatic investment
plans currently maintained by a current Portfolio Unitholder.
Investment Adviser, Transfer Agent and Custodian
The Northern Trust Company, 50 S. LaSalle Street, Chicago, Illinois 60675,
currently serves as investment adviser, transfer agent and custodian for the
Massachusetts Trust and will serve in the same capacity for the Delaware Trust.
The Delaware Trust will adopt investment advisory, transfer agency and custody
agreements with respect to the successor Portfolio that will be identical, in
all material respects, to the agreements in effect for the Portfolio immediately
before the Conversion.
Independent Public Auditors
Ernst & Young LLP, Sears Tower, 233 S. Wacker Drive, Chicago, Illinois
60606-6301, are presently the independent public auditors for the Massachusetts
Trust, and will continue to be the independent public auditors for the
Portfolio.
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Distribution and Administration Agreements
The Delaware Trust will adopt distribution and administration agreements
with respect to the Units of the successor Portfolio. The terms of the
distribution and administration agreements will be identical, in all material
respects, to the Portfolio's existing agreements with Goldman, Sachs & Co.
Unitholder Servicing Plan
The Delaware Trust will adopt a Unitholder servicing plan with respect to
Class B, C and D Units, if any, of the successor Portfolio. The terms of the
plan, including the fees payable thereunder, will be identical, in all material
respects to the Portfolio's existing plan. Pursuant to the new plan, the
Delaware Trust on behalf of each successor Portfolio will assume the
corresponding current Portfolio's obligations under agreements with banks,
corporations, brokers, dealers and other financial institutions that act as
"Servicing Agents."
Description of Certain Provisions of the Delaware Trust Instrument
The following is a summary of certain provisions of the Delaware Trust
Instrument.
Series and Classes. As discussed above, the Delaware Trust Instrument
permits the Delaware Trust to issue series of its shares of beneficial interest
(referred to herein as "Units") which represent interests in separate portfolios
of investments, including the successor Portfolio. The Delaware Trust is also
authorized to issue multiple classes of all series. The Massachusetts
Declaration of Trust permits the issuance of separate series and, except for the
Trust's money market investment portfolios, classes of Units representing
interests in the same portfolio. No series is entitled to share in the assets of
any other series or is liable for the expenses or liabilities of any other
series. The successor Portfolio would initially have the same classes of Units
as the current Portfolio, and these classes would have substantially the same
attributes as the respective classes of the current Portfolio. The Trustees of
the Delaware Trust are able to authorize the issuance of additional series or
classes of Units without prior Unitholder approval.
Limitations on Derivative Actions. In addition to the requirements of
Delaware law, the Delaware Trust Instrument provides that a Unitholder of the
Delaware Trust may bring a derivative action on behalf of the Delaware Trust
only if the following conditions are met: (i) Unitholders eligible to bring such
derivative action under Delaware law who hold at least 10% of the outstanding
Units of the Delaware Trust, or 10% of the outstanding Units of the series or
class to which such action relates, must join in the request for the Trustees to
commence such action; and (ii) the Trustees must be afforded a reasonable amount
of time to consider such Unitholder request and to investigate the basis of such
claim. The Delaware Trust Instrument also provides that no person, other than
the Trustees, who is not a Unitholder of a particular series or class shall be
entitled to bring any derivative action, suit or other proceeding on behalf of
or with respect to such series or class. The Trustees will be entitled to retain
counsel or other advisers in considering the merits of the request and may
require an undertaking by the Unitholders making such request to reimburse the
Delaware Trust for the expense of any such advisers in the event that the
Trustees determine not to bring such action. No similar provisions are
applicable to the Massachusetts Trust.
Unitholder Meetings and Voting Rights. The Delaware Trust is not required
to hold annual meetings of Unitholders and does not intend to hold such
meetings. In the event that a meeting of Unitholders is held, each Unit of the
Delaware Trust will be entitled, as determined by the Trustees without the vote
or consent of Unitholders, either to one vote for each Unit or to one vote for
each dollar of net asset value represented by such Units on all matters
presented to Unitholders, including the election of Trustees (this method of
voting being referred to as "dollar-based voting"). However, to the extent
required by the 1940 Act or otherwise determined by the Trustees, series and
classes of the Delaware Trust will vote separately from each other. Unitholders
of the Delaware Trust do not have cumulative voting rights in the election of
Trustees. Meetings of Unitholders of the Delaware Trust, or any series or class
thereof, may be called by the Trustees, certain officers or upon the written
request of holders of 10% or more of the Units entitled to vote at such meeting.
The Unitholders of the Delaware Trust will have voting rights
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only with respect to the limited number of matters specified in the Delaware
Trust Instrument and such other matters as the Trustees may determine or may be
required by law.
The voting provisions of the Delaware Trust Instrument differ from those of
the Massachusetts Declaration of Trust in several important respects. The
Massachusetts Trust is not authorized to use dollar-based voting. Instead, each
Unitholder has one vote for each Unit held, regardless of its net asset value
per Unit. This can have the effect of providing series with a lower net asset
value per Unit, such as money market funds, with a voting interest that is
disproportionate to their economic interest. Also, a greater number of matters
require approval by Unitholders of the Trust. The Massachusetts Declaration of
Trust, in addition to the matters requiring approval of Unitholders of the
Delaware Trust, requires approval of the reorganization or termination of the
Massachusetts Trust or any of its series, with respect to certain legal
proceedings and with respect to certain amendments to the Massachusetts
Declaration of Trust (with limited exceptions).
Indemnification. The Delaware Trust Instrument provides for indemnification
of Trustees, officers and agents of the Delaware Trust unless the recipient is
liable by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such person's office.
The Delaware Trust Instrument provides that, if a Unitholder or former
Unitholder of a series is held personally liable solely by reason of being or
having been a Unitholder and not because of the Unitholder's acts or omissions
or for some other reason, the Unitholder or former Unitholder (or heirs,
executors, administrators, legal representatives or general successors) will be
entitled, out of the assets belonging to the applicable series, to be held
harmless from and indemnified against all loss and expense arising from such
liability. The Delaware Trust, acting on behalf of any affected series, must,
upon request by such Unitholder, assume the defense of any claim made against
such Unitholder for any act or obligation of the series and satisfy any judgment
thereon from the assets of the series.
Termination. The Delaware Trust Instrument permits the termination of the
Delaware Trust or of a series or class of the Delaware Trust (i) by a majority
of the affected Unitholders at a meeting of Unitholders of the Delaware Trust,
series or class; or (ii) by a majority of the Trustees without Unitholder
approval if the Trustees determine that such action is in the best interest of
the Delaware Trust or its Unitholders. The factors and events that the Trustees
may take into account in making such determination include (i) the inability of
the Delaware Trust or any series or class to maintain its assets at an
appropriate size; (ii) changes in laws or regulations governing the Delaware
Trust, or any series or class thereof, or affecting assets of the type in which
it invests; or (iii) economic developments or trends having a significant
adverse impact on their business or operations. The Massachusetts Declaration of
Trust permits the Trustees to terminate the Massachusetts Trust only with
Unitholder approval.
Merger, Consolidation, Sale of Assets, Etc. The Delaware Trust Instrument
authorizes the Trustees, without Unitholder approval (except as stated in the
next paragraph), to cause the Delaware Trust, or any series thereof, to merge or
consolidate with any corporation, association, trust or other organization or
sell or exchange all or substantially all of the property belonging to the
Delaware Trust, or any series thereof. In addition, the Trustees, without
Unitholder approval, may adopt a master-feeder structure by investing
substantially all of the assets of a series of the Delaware Trust in the
securities of another open-end investment company or pooled portfolio. The
reorganization of the Massachusetts Trust would require Unitholder approval.
The Delaware Trust Instrument also authorizes the Trustees, in connection
with the merger, consolidation, termination or other reorganization of the Trust
or any series or class, to classify the Unitholders of any class into one or
more separate groups and to provide for the different treatment of Units held by
the different groups, provided that such merger, consolidation, termination or
other reorganization is approved by a majority of the outstanding voting
securities (as defined in the 1940 Act) of each group of Unitholders that are so
classified.
Amendments. The Delaware Trust Instrument permits the Trustees to amend the
Delaware Trust Instrument without a Unitholder vote. However, Unitholders of the
Delaware Trust have the right to vote on any amendment (i) that would adversely
affect the voting rights of Unitholders; (ii) that is required by law to be
approved by
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Unitholders; (iii) that would amend the voting provisions of the Delaware Trust
Instrument; or (iv) that the Trustees determine to submit to Unitholders.
Amendments to the Massachusetts Declaration of Trust, with certain limited
exceptions, require approval of Unitholders.
Series of Trustees. The Trustees may appoint separate Trustees with respect
to one or more series or classes of the Delaware Trust's Units (the "Series
Trustees"). To the extent provided by the Trustees in the appointment of Series
Trustees, Series Trustees (i) may, but are not required to, serve as Trustees of
the Trust or any other series or class of the Delaware Trust; (ii) may have, to
the exclusion of any other Trustee of the Delaware Trust, all the powers and
authorities of Trustees under the Delaware Trust Instrument with respect to such
series or class; and/or (iii) may have no power or authority with respect to any
other series or class. The Massachusetts Declaration of Trust does not permit
the election of separate Trustees for a series or class. The Trustees are not
currently considering the appointment of Series Trustees for the Delaware Trust.
Certain Comparative Information About Massachusetts Business Trusts And Delaware
Business Trusts
Unitholder Liability. Generally, Delaware business trust Unitholders are
not personally liable for obligations of the Delaware business trust under
Delaware law. The Delaware Act entitles a Unitholder of a Delaware business
trust to the same limitation of liability as is available to Unitholders of
private for-profit corporations. However, no similar statutory or other
authority limiting business trust Unitholder liability exists in many other
states. As a result, to the extent that a Delaware business trust or a
Unitholder is subject to the jurisdiction of courts in such other states, those
courts may not apply Delaware law and may subject the Delaware Trust Unitholders
to liability. To offset this risk, the Delaware Trust Instrument (i) contains an
express disclaimer of Unitholder liability for acts or obligations of the
Delaware Trust and requires that notice of such disclaimer be given in each
agreement, obligation and instrument entered into or executed by the Delaware
Trust or its Trustees and (ii) provides for indemnification out of the property
of the applicable series of the Delaware Trust of any Unitholder held personally
liable for the obligations of the Delaware Trust solely by reason of being or
having been a Unitholder and not because of the Unitholder's acts or omissions
or for some other reason. Thus, the risk of a Delaware business trust Unitholder
incurring financial loss beyond his or her investment because of Unitholder
liability is limited to circumstances in which all of the following factors are
present: (1) a court refuses to apply Delaware law; (2) the liability arises
under tort law or, if not, no contractual limitation of liability is in effect;
and (3) the applicable series of the Delaware Trust is unable to meet its
obligations. In light of Delaware law, the nature of the Delaware Trust's
business and the nature of its assets, the risk of personal liability to a
Delaware Trust Unitholder is extremely remote.
Unlike Delaware, in Massachusetts there is no statute relating to business
trusts that entitles Unitholders of a Massachusetts business trust to the same
limitation of liability as is extended to Unitholders of a Massachusetts
corporation. Unitholders of a Massachusetts business trust may, therefore, under
certain circumstances, be held personally liable under Massachusetts law for the
obligations of the Massachusetts business trust. The Massachusetts Declaration
of Trust, like the Delaware Trust Instrument, contains an express disclaimer of
Unitholder liability and requires that notice of such disclaimer be given in
each agreement entered into or executed by the Massachusetts business trust or
its Trustees. The Massachusetts Declaration of Trust also provides for
indemnification out of the trust property. Thus, the Trustees believe the risk
of Unitholder liability is also remote for Unitholders of the Massachusetts
Trust.
Liability of Trustees. The Delaware Trust Instrument provides that the
Trustees will not be liable to any person other than the Delaware Trust or a
Unitholder and that a Trustee will not be liable for any act as a Trustee.
However, nothing in the Delaware Trust Instrument protects a Trustee against any
liability to which he or she would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office. The Massachusetts Declaration of
Trust provides that its Trustees will not be liable for errors of judgment or
mistakes of fact or law, subject to substantially the same provisions concerning
bad faith, gross negligence and reckless disregard as those described above.
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PROPOSAL 2
AMENDMENT OF THE PORTFOLIO'S FUNDAMENTAL INVESTMENT RESTRICTION CONCERNING
ISSUER DIVERSIFICATION
To be diversified under the 1940 Act, the Portfolio must not, with respect
to 75% of its total assets, invest more than 5% of its total assets in the
securities of any one issuer or acquire more than 10% of the outstanding voting
securities of any one issuer. These restrictions apply only at the time of
investment. The Portfolio may invest up to 25% of its total assets without
regard to these restrictions. In addition, these restrictions do not apply to
holdings of or investments in cash, cash items, certain repurchase agreements,
U.S. Government securities or securities of other investment companies.
Currently, the fundamental investment restriction concerning issuer
diversification for the Portfolio is narrower than the 1940 Act restrictions in
not listing as exclusions cash, cash items or securities of other investment
companies. The Proposal simplifies the contents of the current restrictions. As
proposed, the restriction would require diversification only to the extent
required under the 1940 Act. Additional diversification requirements are imposed
upon the Portfolio to be treated as a regulated investment company for federal
tax purposes. These requirements are not required to be reflected in the
proposed investment restriction and will not be affected by the Proposal. At the
July 8, 1997 meeting, the Trustees approved, subject to Unitholder approval,
that each portfolio of the Trust adopt the following investment restriction in
lieu of its current fundamental policy:
The Portfolio may not make any investment inconsistent with the Portfolio's
classification as a diversified company under the 1940 Act. This
restriction does not, however, apply to any Portfolio classified as a non-
diversified company under the 1940 Act.
Board of Trustees' Recommendation
The Unitholders of each diversified portfolio of the Trust, with the
exception of the Portfolio, approved the foregoing investment restriction at the
September 1997 meeting. At a meeting held on October 7, 1997 the Trustees
reconsidered the proposed new issuer diversification policy with respect to the
Portfolio. The Trustees continue to believe that the proposed amendment to the
Portfolio's investment restrictions will more clearly reflect current regulatory
practice, will provide a more complete range of investment opportunities and
will clarify and simplify the restrictions.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE UNITHOLDERS OF THE PORTFOLIO
VOTE "FOR" THE ADOPTION OF THE PROPOSED AMENDED INVESTMENT RESTRICTION.
Required Vote
Approval of the proposed amendment to the Portfolio's fundamental
investment restriction concerning issuer diversification requires the
affirmative vote of a 1940 Act Majority of the Portfolio's outstanding Units
(described in Proposal 1). If the proposed amendment is not approved with
respect to the Portfolio, the current investment restriction will continue in
effect unchanged for the Portfolio.
ADDITIONAL INFORMATION
Other Business
As of the date of this Proxy Statement, the Trustees are not aware of any
matters to be presented for action at the Meeting other than those described
above. Should other business properly be brought before the Meeting, it is
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intended that the accompanying Proxy will be voted thereon in accordance with
the judgment of the persons named as proxies.
Proxies and Voting at the Meeting
The enclosed Proxy is revocable by a Unitholder at any time before it is
exercised by written notice to the Trust (addressed to the Secretary at the
Trust's principal executive offices), by executing a superseding proxy or by
attending the Meeting and voting in person. All valid proxies received prior to
the Meeting (including any adjournment thereof) will be voted at the Meeting.
Matters on which a choice has been provided will be voted as indicated on the
proxy and, if no instruction is given, the persons named as proxies will vote
the Units represented thereby in favor of the matters set forth in each Proposal
and will use their best judgment in connection with the transaction of such
other business as may properly come before the Meeting.
In the event that at the time any session of the Meeting is called to order
a quorum is not present in person or by proxy, the persons named as proxies may
vote those proxies which have been received to adjourn the Meeting to a later
date. In the event that a quorum is present but sufficient votes in favor of
either Proposal have not been received, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitation of
proxies with respect to such Proposal. Any such adjournment will require the
affirmative vote of a majority of the Units of the Portfolio present and voting
in person or by proxy at the session of the Meeting to be adjourned. The persons
named as proxies will vote those proxies which they are entitled to vote in
favor of any such Proposal in favor of such an adjournment, and will vote those
proxies required to be voted against any such Proposal against any such
adjournment. A Unitholder vote may be taken on one of the Proposals in this
Proxy Statement Portfolio prior to such adjournment if sufficient votes for
their approval have been received and it is otherwise appropriate.
A majority of the Units entitled to vote with respect to a Proposal shall
be a quorum for the transaction of business with respect to that Proposal at the
Meeting, but any lesser number shall be sufficient for adjournments. Abstentions
will be treated as Units that are present at the Meeting, but will not be
counted as a vote in favor of a Proposal. Accordingly, an abstention from voting
on a Proposal has the same effect as a vote against such Proposal. If a broker
or nominee holding Units in "street name" indicates on the proxy that it does
not have discretionary authority to vote as to a particular Proposal, those
Units will not be considered as present at the Meeting with respect to the
Proposal. Accordingly, a "broker non-vote" has no effect on the voting in
determining whether a proposal has been adopted pursuant to subsection (i) of
the 1940 Act Majority definition. However, in determining whether a proposal has
been adopted pursuant to subsection (ii) of the 1940 Act Majority definition, a
"broker non-vote" will have the same effect as a vote against the Proposal.
Appendix A hereto sets forth the persons who owned beneficially more than
5% of the Units of the Portfolio as of December 8, 1997, the Record Date for the
Meeting. For purposes of the 1940 Act, any person who owns directly or through
one or more controlled companies more than 25 % of the voting securities of a
company is presumed to "control" such company. Northern Trust has advised the
Trust that it intends to vote the Units over which it has voting power "For" the
Proposals listed in this Proxy Statement.
Manner and Cost of Proxy Solicitation
Proxies will be solicited by mail and may also be solicited in person or by
telephone, fax or personal interview by officers of Northern Trust, Goldman
Sachs and by the Trustees. In addition, employees of Northern Trust, its
affiliates, correspondent banks, brokers and similar record holders may solicit
proxies by these means, and may forward proxy materials and printed direction
forms to the customers on whose behalf they hold record ownership of Units of
the Trust. The Northern Trust may engage an independent proxy solicitation firm
to assist it in soliciting proxies.
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The Portfolio will bear the proxy solicitation expenses, including the cost
of preparing and assembling materials used in connection with the solicitation
of proxies. Correspondent banks, brokers and other entities that have entered
into a Unitholder Servicing Agreement with the Trust on behalf of the Portfolio
will bear the mailing expenses associated with the solicitation of proxies from
Unitholders on whose behalf they serve as recordholder. Northern Trust will bear
all other mailing expenses associated with the solicitation of proxies and will
reimburse correspondent banks, brokers and other similar record holders who have
not entered into Unitholder Servicing Agreements for their reasonable expenses
incurred in forwarding proxy materials to beneficial owners.
Unitholder Action at the September 1997 Meeting
Unitholders of all the Trust's portfolios (including the Portfolio) voting
as a single class took the following actions at the September 1997 Meeting: (i)
the election of Richard G. Cline, Edward J. Condon, Jr., John W. English, James
J. Gavin, Jr., Sandra P. Guthman, Frederick T. Kelsey, William H. Springer and
Richard P. Strubel to the Trust's Board of Trustees; (ii) the ratification of
the selection of Ernst & Young LLP as the Trust's independent auditors for the
fiscal year ended November 30, 1997; and (iii) the approval of an amendment to
the Trust's Declaration of Trust allowing each portfolio to invest substantially
all of its assets in a single open-ended investment company with substantially
the same investment objective, policies and restrictions as the portfolio (a
"master fund"). In addition to the votes described above, Unitholders of the
Portfolio approved a new fundamental investment policy which will allow the
Portfolio to invest substantially all of its assets in a master fund and which
otherwise will permit the Portfolio to purchase the securities of other
investment companies to the full extent permitted by the 1940 Act and any
regulation or order of the SEC, notwithstanding the Portfolio's other
fundamental investment restrictions.
Unitholder Proposals
Neither the Massachusetts Trust nor the Delaware Trust is required, nor
does either intend, to hold annual meetings of Unitholders each year for the
election of Trustees and other business. Instead, meetings will be held only
when and if required (for example, whenever less than a majority of the Board of
Trustees holding office has been elected by the Unitholders or when the Trustees
have received a written request to call a meeting for the purpose of voting on
the question of the removal of any Trustee from the holders of record of at
least 10% of the outstanding Units). Any Unitholders desiring to present a
proposal for consideration at the next meeting for Unitholders of the Portfolio
must submit the proposal in writing, so that it is received by the Portfolio
within a reasonable time before any meeting.
Information About the Distributor and Administrator
Goldman, Sachs & Co., the Trust's distributor and administrator, has its
principal offices at 85 Broad Street, New York, New York 10004.
Information About the Trust
The Trust currently has, and the Delaware Trust will have, its principal
offices at 4900 Sears Tower, Chicago, Illinois 60606.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
December 17, 1997
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APPENDIX A
As of December 8, 1997, The Northern Trust Company, 50 South LaSalle
Street, Chicago, IL 60675, possessed sole or shared voting and/or investment
power for its customer accounts with respect to ______ outstanding Units of the
Portfolio representing ________% of the total outstanding Units of the
Portfolio.
In addition, as of December 8, 1997, the following persons or entities
owned beneficially more than 5% of the outstanding Units of the Portfolio:
Amount and Percentage of
Outstanding Units
<TABLE>
<CAPTION>
Unitholder Name and Address Amount of Units Percentage of Units (%)
- --------------------------- --------------- -----------------------
<S> <C> <C>
U.S. Government Securities
Portfolio
Electrical Insurance Trust
221 North LaSalle Street
Chicago, IL 60601-1273
Illinois State Painters
Welfare Fund
303 East Ohio Street
Chicago, IL 60611
Sheet Metal Work H&W Northern
106 North Schmale Road
Carol Stream, IL 60188
</TABLE>
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APPENDIX B
AGREEMENT AND PLAN OF
REORGANIZATION, CONVERSION AND TERMINATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, CONVERSION AND TERMINATION is
made as of the 8th day of July, 1997, by and between The Benchmark Funds, a
Massachusetts business trust (the "Registrant"), on behalf of each of its series
(each a "Portfolio" and collectively the "Portfolios"), and The Benchmark Funds
(the "Trust"), a Delaware business trust.
This Agreement is intended to be and is adopted as a plan of reorganization
within the meaning of Section 368(a)(1)(F) of the U.S. Internal Revenue Code of
1986, as amended (the "Code"), and is intended to effect the reorganization (a
"Reorganization") of each Portfolio as a new series of the Trust (each a
"Successor Portfolio" and collectively the "Successor Portfolio"). Each
Reorganization will include the transfer of all of the assets of a Portfolio to
a corresponding Successor Portfolio of the Trust solely in exchange for (1) the
assumption by the Successor Portfolio of all liabilities of the Portfolio and
(2) the issuance by the Trust to the Portfolio of Shares of beneficial interest
(herein referred to as "Units") of the Successor Portfolio. The aggregate
number of Units of each subseries (hereafter "class") of the Successor
Portfolio (the "Successor Portfolio Units") issued to the Portfolio will be
equal to the number of Units of beneficial interest ("Units") of the
corresponding Portfolio class outstanding immediately before the Reorganization.
These transactions will be promptly followed by a pro rata distribution by each
Portfolio of the Successor Portfolio Units it receives in the exchange described
above to the holders of corresponding Portfolio Units in exchange for those
Portfolio Units, in liquidation of each Portfolio, all upon the terms and
conditions hereinafter set forth in this Agreement.
In consideration of the promises and of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows.
1. Transfer of Assets of the Portfolio in Exchange for Assumption of
Liabilities and Issuance of Successor Portfolio Units
1.1 Subject to the terms and conditions set forth herein and on the basis
of the representations and warranties contained herein, each Portfolio agrees to
transfer all of its assets (as described in paragraph 1.2) and to assign and
transfer all of its liabilities to a corresponding Successor Portfolio organized
solely for the purpose of acquiring all of the assets and assuming all of the
liabilities of that Portfolio. The Trust, on behalf of each Successor Portfolio,
agrees that in exchange for all of the assets of the corresponding Portfolio:
(1) the Successor Portfolio shall assume all of the liabilities of such
Portfolio, whether contingent or otherwise, then existing including, without
limitation, all fees and expenses incurred in connection with the transactions
contemplated hereby and (2) the Trust shall issue Successor Portfolio Units to
the Portfolio. The number of Successor Portfolio Units of each class to be
issued by the Trust on behalf of each Successor Portfolio will be identical to
the number of Units of the corresponding class and Portfolio outstanding on the
Closing Date provided for in paragraph 3.1. Such transactions shall take place
at the Closing provided for in paragraph 3.1.1.2 The assets of each Portfolio to
be acquired by the corresponding Successor Portfolio shall include, without
limitation, all cash, cash equivalents, securities, receivables (including
interest and dividends receivable), any tax operating losses, any claims or
rights of action or rights to register Units under applicable securities laws,
any books or records of the Portfolio and other property owned by the Portfolio
and any deferred or prepaid expenses shown as assets on the books of the
Portfolio on the Closing Date provided for in paragraph 3.1.
1.2 The assets of each Portfolio to be acquired by the corresponding
Successor Portfolio shall include, without limitation, all cash, cash
equivalents, securities, receivables (including interest and dividends
receivable), any tax operating losses, any claims or rights of action or rights
to register Units under applicable securities laws, any books or records of the
Portfolio and other property owned by the Portfolio and any deferred or prepaid
expenses shown as assets on the books of the Portfolio on the Closing Date
provided for in paragraph 3.1.
1.3 Immediately after delivery to each Portfolio of corresponding Successor
Portfolio Units, a duly authorized officer of Registrant shall cause each
Portfolio, as the sole Unitholder of the corresponding Successor Portfolio, to
(i) elect the Trustees of the Trust; (ii) ratify the selection of the Trust's
independent auditors; (iii) approve an investment advisory agreement for the
Successor Portfolio in substantially the same form as the investment advisory
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agreement in effect with respect to the Portfolio immediately prior to the
Closing of the reorganization, including in the case of the International Growth
Portfolio any changes adopted to the Portfolio's investment advisory agreement
at the meeting of Unitholders scheduled for September 2, 1997 (the "Unitholder
Meeting"), and (iv) adopt investment objectives, investment policies and
investment restrictions which are substantially identical to those of the
Portfolio immediately prior to the Closing of the reorganization, including any
changes thereto approved by the Unitholders of the Portfolio at the Unitholder
Meeting.
1.4 On the Closing Date each Portfolio will distribute in liquidation the
Successor Portfolio Units of each class to each Unitholder of record, determined
as of the close of business on the Closing Date, of the corresponding class of
the Portfolio pro rata in proportion to such Unitholder's beneficial interest in
that class and in exchange for that Unitholder's Units. Such distribution will
be accomplished by the transfer of the Successor Portfolio Units then credited
to the account of each Portfolio on the Unit records of the Trust to open
accounts on those records in the names of such Portfolio Unitholders and
representing the respective pro rata number of each class of the Successor
Portfolio Units received from the Successor Portfolios which is due to such
Portfolio Unitholders. Fractional Successor Portfolio Units shall be rounded to
the third place after the decimal point.
1.5 Ownership of the Successor Portfolio Units by each Successor Portfolio
Unitholder shall be recorded separately on the books of The Northern Trust
Company ("Northern Trust"), as the Trust's transfer agent.
1.6 Any transfer taxes payable upon the issuance of Successor Portfolio
Units in a name other than the registered holder of the Portfolio Units on the
books of any Portfolio shall be paid by the person to whom such Successor
Portfolio Units are to be distributed as a condition of such transfer.
1.7 The legal existence of each Portfolio and the Registrant shall be
terminated as promptly as reasonably practicable after the Closing Date. After
the Closing Date, each Portfolio and the Registrant shall not conduct any
business except in connection with its liquidation and termination.
2. Valuation
2.1 The value of each Portfolio's assets to be acquired by the Trust on
behalf of the corresponding Successor Portfolio hereunder shall be the net asset
value computed as of the valuation time provided in the Portfolio's
prospectus(es) on the Closing Date using the valuation procedures set forth in
the Portfolio's current prospectus(es) and statement of additional information.
2.2 The value of full and fractional Successor Portfolio Units of each
class to be issued in exchange for each Portfolio's assets shall be equal to the
value of the net assets of the corresponding class of such Portfolio on the
Closing Date, and the number of such Successor Portfolio Units of each class
shall equal the number of full and fractional Portfolio Units outstanding on the
Closing Date.
2.3 All computations of value shall be made by Northern Trust (the
"Custodian"), as custodian for the Portfolio and the Trust.
3. Closing and Closing Date
3.1 The transfer of each Portfolio's assets in exchange for the assumption
by the corresponding Successor Portfolio of the Portfolio's liabilities and the
issuance of Successor Portfolio Units to the Portfolio, as described above,
together with related acts necessary to consummate such acts (the "Closing"),
shall occur at the offices of Goldman, Sachs & Co., 4900 Sears Tower, Chicago,
Illinois 60606 on March 31, 1998 ("Closing Date"), or at such other place or
date as the parties may agree in writing.
3.2 At the Closing each party shall deliver to the other such bills of
sale, checks, assignments, stock certificates, receipts or other documents as
such other party or its counsel may reasonably request.
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4. Representations and Warranties
4.1 Registrant represents and warrants, on behalf of itself and each Portfolio,
as follows:
4.1.A. At the Closing Date, Registrant, on behalf of the Portfolios, will
have good and marketable title to the assets to be transferred to the Trust, on
behalf of the Successor Portfolios, pursuant to paragraph 1.1, and will have
full right, power and authority to sell, assign, transfer and deliver such
assets hereunder. Upon delivery and in payment for such assets, the Trust on
behalf of the Successor Portfolios will acquire good and marketable title
thereto subject to no restrictions on the full transfer thereof, including such
restrictions as might arise under the Securities Act of 1933, as amended (the
"1933 Act");
4.1.B. The execution, delivery and performance of this Agreement will have
been duly authorized prior to the Closing Date by all necessary action on the
part of Registrant. This Agreement constitutes a valid and binding obligation of
Registrant and each Portfolio enforceable in accordance with its terms, subject
to the approval of each Portfolio's Unitholders;
4.1.C. No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Registrant, on
behalf of the Portfolios, of the transactions contemplated herein, except such
as shall have been obtained prior to the Closing Date; and
4.1.D. The Registrant will file with the Securities and Exchange Commission
("SEC") proxy materials (the "Proxy Statement") complying in all material
respects with the requirements of the Securities Exchange Act of 1934, as
amended, the 1940 Act, and applicable rules and regulations thereunder, relating
to a meeting of its Unitholders to be called to consider and act upon the
transactions contemplated herein.
4.2 The Trust represents and warrants, on behalf of itself and each Successor
Portfolio, as follows:
4.2.A. Successor Portfolio Units issued in connection with the transactions
contemplated herein will be duly and validly issued and outstanding and fully
paid and non-assessable by the Trust;
4.2.B. The execution, delivery and performance of this Agreement has been
duly authorized by all necessary action on the part of the Trust, and this
Agreement constitutes a valid and binding obligation of the Trust and each
Successor Portfolio enforceable against the Trust and each Successor Portfolio
in accordance with its terms;
4.2.C. No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Trust or the
Successor Portfolios of the transactions contemplated herein, except such as
shall have been obtained prior to the Closing Date; and
4.2.D The Trust, on behalf of the Successor Portfolios, shall use all
reasonable efforts to obtain the approvals and authorizations required by the
1933 Act, the 1940 Act and such state securities laws as it may deem appropriate
in order to operate after the Closing Date.
5. Conditions Precedent to Obligations of Registrant, the Portfolios, the Trust
and the Successor Portfolio
The obligations of Registrant, the Portfolios, the Trust and the Successor
Portfolios are each subject to the conditions that on or before the Closing
Date:
5.1 This Agreement and the transactions contemplated herein shall have been
approved by the Trustees of the Registrant and the Trust and by the requisite
vote of the Registrant's Unitholders in accordance with applicable law;
5.2 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the SEC and of state securities authorities) deemed necessary by the Trust or
Registrant to permit consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to obtain any
such consent, order or permit would not involve a risk of a material
19
<PAGE>
adverse effect on the assets or properties of the Trust, Portfolios, Registrant
or Successor Portfolios, provided that either party hereto may waive any of such
conditions for itself or its respective series;
5.3 The Registrant and the Trust shall have received on or before the
Closing Date an opinion of Drinker Biddle & Reath LLP satisfactory to them,
substantially to the effect that for federal income tax purposes:
5.3.A. The acquisition of all of the assets of each Portfolio by its
corresponding Successor Portfolio solely in exchange for the issuance of
Successor Portfolio Units to the Portfolio and the assumption by the Successor
Portfolio of all of the liabilities of the Portfolio, followed by the
distribution in liquidation by the Portfolio of such Successor Portfolio Units
to the Portfolio Unitholders in exchange for their Portfolio Units and the
termination of the Portfolio, will constitute a reorganization within the
meaning of Section 368(a)(1)(F) of the Code, and the Portfolio and the Successor
Portfolio will each be "a party to a reorganization" within the meaning of
Section 368(b) of the Code;
5.3.B. No gain or loss will be recognized by any Portfolio upon (i) the
transfer of all of its assets to its corresponding Successor Portfolio solely in
exchange for the issuance of Successor Portfolio Units to the Portfolio and the
assumption by the Successor Portfolio of the Portfolio's liabilities and (ii)
the distribution by the Portfolio of such Successor Portfolio Units to the
Portfolio Unitholders;
5.3.C. No gain or loss will be recognized by any Successor Portfolio upon
its receipt of all of the corresponding Portfolio's assets solely in exchange
for the issuance of the Successor Portfolio Units to the Portfolio and the
assumption by the Successor Portfolio of all of the liabilities of the
Portfolio;
5.3.D. The tax basis of the assets acquired by a Successor Portfolio from
its corresponding Portfolio will be, in each instance, the same as the tax basis
of those assets in the Portfolio's hands immediately prior to the transfer;
5.3.E. The tax holding period of the assets of each Portfolio in the hands
of its corresponding Successor Portfolio will, in each instance, include the
Portfolio's tax holding period for those assets;
5.3.F. Each Portfolio's Unitholders will not recognize gain or loss upon
the exchange of all of their Units of the Portfolio solely for Successor
Portfolio Units as part of the transaction;
5.3.G. The tax basis of the Successor Portfolio Units received by Portfolio
Unitholders in the transaction will be, for each Unitholder, the same as the tax
basis of the Portfolio Units surrendered in exchange therefor; and
5.3.H. The tax holding period of the Successor Portfolio Units received by
Portfolio Unitholders will include, for each Unitholder, the tax holding period
for the Portfolio Units surrendered in exchange therefor, provided that such
Portfolio Units were held as capital assets on the date of the exchange.
The Registrant and the Trust each agree to make and provide representations
with respect to the Portfolios and the Successor Portfolios, respectively, which
are reasonably necessary to enable Drinker Biddle & Reath LLP to deliver an
opinion substantially as set forth in this paragraph 5.3, which opinion may
address such other federal income tax consequences, if any, that Drinker Biddle
& Reath LLP believes to be material to the Reorganization.
6. Brokerage Fees
The Trust, on behalf of the Successor Portfolios, and Registrant, on behalf
of the Portfolios, each represent and warrant to the other that there are no
broker's or finder's fees payable in connection with the transactions
contemplated hereby.
20
<PAGE>
7. Termination
This Agreement may be terminated by the mutual agreement of the Trust and
Registrant and the parties may abandon the reorganization contemplated hereby,
notwithstanding approval thereof by the Unitholders of the Registrant, at any
time prior to Closing, if circumstances should develop that, in the parties
judgment, make proceeding with the Agreement inadvisable.
8. Amendment
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the parties; provided, however, that
following the approval of this Agreement by any Portfolio's Unitholders, no such
amendment may have the effect of changing the provisions for determining the
number of Successor Portfolio Units to be paid to that Portfolio's Unitholders
under this Agreement to the detriment of such Portfolio Unitholders without
their further approval. Without limiting the foregoing, in the event Unitholder
approval of this Agreement and the transactions contemplated herein is obtained
with respect to one or more Portfolio but not with respect to other Portfolio,
with the result that the transactions contemplated by this Agreement may be
consummated with respect to one or more, but not all, of the Portfolios, the
Board of Trustees of the Registrant may, in the exercise of its sole and
unilateral discretion, determine to either abandon this Agreement with respect
to all of the Portfolios or direct that the transactions described herein be
consummated to the degree the Board deems advisable and to the degree such
transactions may be lawfully effected.
9. Headings; Counterparts; Governing Law; Assignment; Survival; Waiver
9.1 The article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
9.3 This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
9.4 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Nothing herein
expressed or implied is intended or shall be construed to confer upon or give
any person, firm or corporation other than the parties hereto and their
respective successors and assigns any rights or remedies under or by reason of
this Agreement.
9.5 All persons dealing with the Trust, the Portfolios, Registrant or the
Successor Portfolios must look solely to the property of the Trust, the
Portfolios, Registrant or the Successor Portfolios, respectively, for the
enforcement of any claims against the Trust, the Portfolios, Registrant or the
Successor Portfolios, as neither the Trustees, officers, agents nor Unitholders
of the Trust or Registrant assume any personal liability for obligations entered
into on behalf of the Trust or Registrant, respectively. No series of Registrant
or the Trust shall be responsible for any obligations assumed by or on behalf of
any other series of Registrant or the Trust under this Agreement.
9.6 The representations, warranties, covenants and agreements of the
parties contained herein shall not survive the Closing Date, except for the
provisions of Section 1.7.
9.7 The Trust or the Registrant, after consultation with their respective
counsel and by consent of their respective Boards of Trustees, Executive
Committees or an officer authorized by such Boards of Trustees, may waive any
condition to their respective obligations hereunder if, in their or such
officer's judgment, such waiver will not have a material adverse effect on the
interests of the Unitholders of the Trust and the Registrant.
21
<PAGE>
10. Notices
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the Registrant or the Trust,
each at Goldman, Sachs & Co., 4900 Sears Tower, Chicago, Illinois 60606,
Attention: Secretary.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its duly authorized officer.
[SIGNATURE LINES OMITTED]
22
<PAGE>
THE BENCHMARK FUNDS
U.S. GOVERNMENT SECURITIES PORTFOLIO
This proxy is solicited on behalf of the Board of Trustees of The Benchmark
Funds for the Special Meeting of Unitholders (the "Meeting") to be held on
January 26, 1998. The undersigned hereby appoints Nancy Mucker, John Mosior and
Michael Richman, and each of them, attorneys and proxies for the undersigned,
with full power of substitution and revocation to represent the undersigned and
to vote on behalf of the undersigned all Units of the above-named investment
portfolio of The Benchmark Funds which the undersigned holds of record on
December 8, 1997 and is entitled to vote at the Meeting to be held at the
offices of Goldman Sachs & Co. 4900 Sears Tower, Chicago Illinois, 60606 on
January 26, 1998, at 10:00 a.m., Central Standard Time, and at any adjournments
thereof. The undersigned hereby acknowledges receipt of the Notice of the
Special Meeting of Unitholders and accompanying Proxy Statement and hereby
instructs said attorneys and proxies to vote said Units as indicated thereon. In
their discretion, the proxies are authorized to vote upon such other business as
may properly come before the Meeting. A majority of the proxies present and
acting at the Meeting in person or by substitute (or, if only one shall be
present, then that one) shall have and may exercise all of the power and
authority of said proxies hereunder. The undersigned hereby revokes any proxy
previously given.
THE BENCHMARK FUNDS
PROXY SERVICES
[801 SOUTH CANAL STREET-C4S
CHICAGO, IL 60675]
PLEASE SIGN AND DATE THE PROXY CARD, RETURN THE BOTTOM PORTION WITH YOUR VOTE IN
THE ENCLOSED ENVELOPE AND RETAIN THE TOP PORTION. Place the ballot so that the
return address, located on the reverse side of the mail-in stub, appears through
the window of the envelope.
Please indicate your vote by an "X" in the appropriate box below. This proxy, if
properly executed, will be voted in the manner directed by the Unitholder. If no
direction is made, this proxy will be voted FOR both Proposals. Please refer to
the Proxy Statement for a discussion of the Proposals.
TO VOTE, MARK BLOCKS BELOW IN
BLUE OR BLACK INK AS FOLLOWS: [X] KEEP THIS PORTION FOR YOUR RECORDS
- -------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
The Benchmark Funds--U.S. GOVERNMENT SECURITIES PORTFOLIO
Vote on Proposals For Against Abstain
1. Approval of an Agreement and Plan of [_] [_] [_]
Reorganization
2. Approval of amendment to fundamental [_] [_] [_]
investment restriction on issuer
diversification.
Please sign exactly as your name appears on this proxy. If joint owner, EITHER
may sign this proxy. When signing as attorney, executor, administrator, trustee,
guardian or corporate officer, please give your full title.
__________________________________ ____ _______________________ ____
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
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ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 13
<NAME> U.S. GOVERNMENT SECURITIES PORTFOLIO - CLASS A
<S> <C>
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<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> MAY-31-1997
<INVESTMENTS-AT-COST> 95,215
<INVESTMENTS-AT-VALUE> 94,894
<RECEIVABLES> 1,306
<ASSETS-OTHER> 321
<OTHER-ITEMS-ASSETS> 0
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<PAYABLE-FOR-SECURITIES> 0
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<OTHER-ITEMS-LIABILITIES> 12,955
<TOTAL-LIABILITIES> 12,955
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<ACCUMULATED-NII-CURRENT> 122
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (417)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (321)
<NET-ASSETS> 83,566
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,677
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<EXPENSES-NET> (161)
<NET-INVESTMENT-INCOME> 2,516
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<APPREC-INCREASE-CURRENT> (670)
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<EQUALIZATION> 0
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<ACCUMULATED-NII-PRIOR> 75
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<PER-SHARE-NII> .58
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<AVG-DEBT-OUTSTANDING> 0
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
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ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 13
<NAME> U.S. GOVERNMENT SECURITIES PORTFOLIO - CLASS C
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> MAY-31-1997
<INVESTMENTS-AT-COST> 95,215
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<RECEIVABLES> 1,306
<ASSETS-OTHER> 321
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<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (97)
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS SEMI-ANNUAL REPORT DATED MAY 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 13
<NAME> U.S. GOVERNMENT SECURITIES PORTFOLIO - CLASS D
<S> <C>
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<PERIOD-END> MAY-31-1997
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</TABLE>
