ZWEIG SERIES TRUST
5 HANOVER SQUARE-17TH FLOOR
NEW YORK, NEW YORK 10004
February 16, 1996
DEAR ZWEIG CASH FUND SHAREHOLDER:
We are pleased to invite you to a Special Meeting of Shareholders of Zweig
Series Trust to be held on April 19, 1996.
The purpose of the meeting is to approve a unified modernization program which
will allow the Trust to adapt rapidly to changing market, economic and
regulatory events. As part of this program, the Trust is seeking to change its
domicile from Massachusetts to Delaware.
Most publicly-traded companies are not organized in the state in which their
headquarters are located, but rather are organized in a state which is
conducive to the legal needs of the company. Mutual funds are no different. In
recent years a number of mutual funds have reorganized as Delaware business
trusts to minimize operating expenses and to have various operational
flexibilities which are favorable to mutual funds. Your Fund would like to do
the same and is seeking your vote for approval of a new organizational
structure as a Delaware business trust.
After reviewing each matter carefully, the Board of Trustees unanimously
recommends that you vote FOR each of the proposals.
Your vote is important, regardless of the number of shares you own. Detailed
information about the proposals and the reasons for them are contained in the
proxy statement. Please take the time to review this material, cast your vote
on the enclosed Proxy Card and return the Proxy Card in the enclosed
postage-paid envelope.
The Trust is using Shareholder Communications Corporation, a professional proxy
solicitation firm, to assist shareholders in the voting process. As the date of
the meeting approaches, if we have not already heard from you, you may receive
a telephone call from Shareholder Communications reminding you to exercise your
right to vote.
Thank you very much for your assistance.
Sincerely,
EUGENE J. GLASER
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
1a
ZWEIG SERIES TRUST
5 HANOVER SQUARE-17TH FLOOR
NEW YORK, NEW YORK 10004
TO THE SHAREHOLDERS OF ZWEIG CASH FUND:
Notice is hereby given that a Special Meeting (including any adjournments
thereof, the 'Meeting') of the Shareholders (the 'Shareholders') of Zweig
Series Trust, a Massachusetts business trust (the 'Trust'), will be held at the
offices of the Trust, 5 Hanover Square, 17th Floor, New York, New York, at
10:00 a.m., on April 19, 1996, to consider a program, unanimously recommended
by the Board of Trustees, that would promote the ability of the Trust to adapt
to possible future economic, market and regulatory changes without the expense
and delay of costly additional Shareholders' meetings, while preserving the
basic investment characteristics and management style of the Trust. Separate
proxy documents that include materials relating to additional proposals, which
do not apply to Zweig Cash Fund, are being sent to Shareholders of Zweig
Strategy Fund, Zweig Appreciation Fund, Zweig Managed Assets and Government
Securities Series (together with Zweig Cash Fund, the 'Series').
As part of this program, Shareholders of Zweig Cash Fund will be asked:
A. To consider and act upon proposals:
1. To ratify the selection of Coopers & Lybrand L.L.P. as independent
accountants for the Trust;
2. To approve a plan providing for the conversion of the Trust into a Delaware
business trust; and
3. To authorize the Trustees to adopt a Pooled Fund Structure without
additional authorization from the Shareholders; and
B. To transact such other business as may properly come before the Meeting.
The Board of Trustees has fixed the close of business on February 9, 1996 as
the record date for the determination of shareholders entitled to notice of and
to vote at the meeting.
By Order of the Board of Trustees
EUGENE J. GLASER
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
February 16, 1996
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE SPECIAL MEETING ARE REQUESTED TO
COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE, WHICH
NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES.
1b
ZWEIG SERIES TRUST
5 HANOVER SQUARE, NEW YORK, NEW YORK 10004
PROXY STATEMENT
This Proxy Statement and enclosed form of proxy are being furnished in
connection with the solicitation of proxies on behalf of the Board of Trustees
(the 'Board' or 'Board of Trustees') of Zweig Series Trust, a Massachusetts
business trust (the 'Trust'), for use at the Special Meeting of Shareholders to
be held on April 19, 1996, at 10:00 a.m. on the 17th Floor, 5 Hanover Square,
New York, New York (including any adjournments thereof, the 'Meeting'), for the
purposes set forth in the accompanying Notice of Special Meeting of the
Shareholders. This statement is expected to be mailed on or about February 16,
1996 to Shareholders of record on February 9, 1996.
The Trust is an open-end, diversified management investment company organized
as a Massachusetts business trust, and is authorized to issue its shares of
beneficial interest in separate series, each with its own investment objective
and policies. Each series may issue shares in one or more classes. Currently
there are five series. Each series issues Class A Shares and Class C Shares.
The Zweig Cash Fund also issues Class M Shares. For purposes of this Proxy
Statement, the term 'Series' includes Zweig Cash Fund, Zweig Strategy Fund,
Zweig Appreciation Fund, Zweig Managed Assets and Government Securities Series.
A separate proxy statement which addresses Proposals ONE, TWO and THREE and
certain other proposals is being sent to the Shareholders of Zweig Strategy
Fund, Zweig Appreciation Fund, Zweig Managed Assets and Government Securities
Series.
You can obtain a copy of the most recent Annual Report of the Trust without
charge by calling 1-800-272-2700 or by writing to the Trust at 5 Hanover
Square, 17th Floor, New York, New York 10004.
THE FACT THAT THIS PROXY STATEMENT, FORM OF PROXY OR OTHER SOLICITING MATERIAL
HAS BEEN FILED WITH OR EXAMINED BY THE SEC SHALL NOT BE DEEMED A FINDING BY THE
SEC THAT SUCH MATERIAL IS ACCURATE OR COMPLETE OR NOT FALSE OR MISLEADING, OR
THAT THE SEC HAS PASSED UPON THE MERITS OF OR APPROVED ANY STATEMENT CONTAINED
THEREIN OR ANY MATTER TO BE ACTED UPON BY SHAREHOLDERS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
1c
INTRODUCTION
This Proxy Statement is being furnished to Shareholders in connection with the
Meeting called by the Board of Trustees for the purposes set forth in the
accompanying Notice of Special Meeting of Shareholders. Any proxy given
pursuant to such solicitation and received in time for the Meeting will be
voted as specified in such proxy. If no instructions are given, proxies will be
voted FOR approval of each proposal as to which the shares represented by proxy
are entitled to vote, and in the discretion of the proxies named on the proxy
card with respect to any other matters properly brought before the Meeting or
any adjournment thereof. You can revoke the enclosed proxy at any time prior to
the exercise thereof by submitting a written notice of revocation or
subsequently executed proxy to the Trust at any time prior to the Meeting or at
the Meeting to the Secretary of the Meeting. Signing and mailing the proxy will
not affect your right to give a later proxy or to attend the Meeting and vote
your shares in person.
In addition to the solicitation of proxies by mail, the Trust may utilize the
services of officers and employees of the Trust, Zweig/Glaser Advisers, the
Trust's investment manager ('ZGA'), and Zweig Securities Corp, the Trust's
distributor, none of whom will receive any compensation therefor, to solicit
proxies by telephone, telegraph and personal interview, and may also provide
shareholders with a procedure for recording their votes by telegraph,
facsimile, telephone or other electronic means. In addition, the Trust has
retained Shareholder Communications Corporation (a proxy solicitation firm) to
assist in soliciting proxies. The estimated costs of solicitation of proxies,
including the estimated fee of $17,500 plus out-of-pocket expenses of the proxy
solicitation firm, are expected to be approximately $500,000 in the aggregate
for all Series of the Trust and will be borne by the Trust. The Trust may
request brokers, custodians, nominees and fiduciaries to forward proxy material
to the beneficial owners of shares of record. Persons holding shares as
nominees will, upon request, be reimbursed for their reasonable expenses
incurred in sending soliciting material to their principals.
For purposes of determining the presence of a quorum and counting votes on the
matters presented, shares represented by abstentions and 'broker non-votes'
will be counted as present, but not as votes cast, at the Meeting. Under the
Investment Company Act of 1940, as amended (the '1940 Act'), the affirmative
vote necessary to approve a matter under consideration may be determined with
reference to a percentage of votes present at the Meeting, which would have the
effect of treating abstentions and non-votes as if they were votes against the
proposal.
On February 9, 1996, the date for determination of Shareholders entitled to
receive notice of and to vote at the Meeting, there were 70,858,705 shares
(including 63,327,210 Class M shares) of Zweig Cash Fund, each entitled to one
vote. To the Trust's knowledge, except for Dr. Martin E. Zweig and members of
his immediate family, who own 16.43% of Zweig Cash Fund Class M shares (of
which he has shared voting and investment power as to 1.06%, and disclaims
beneficial ownership as to .11%), Prudential Securities f/b/o Roger Markle, who
owns 5.59% of Zweig Cash Fund Class A shares (sole dispositive and voting
power) and Prudential Securities f/b/o Stanley E. Coleby and Sharon E. Coleby,
who own 7.41% of Zweig Cash Fund Class C shares (sole dispositive and voting
power), no person is the beneficial owner of 5% or more of the outstanding
voting shares of any class of shares of any Series of the Trust. As of December
31, 1995, except for Dr. Zweig, the trustees (the 'Trustees') and officers of
the Trust, as a group, owned less than 1% of any Series of the Trust.
PROPOSALS
At meetings held on December 19, 1995 and January 24, 1996, the Board of
Trustees adopted resolutions proposing and declaring it advisable to, among
other things, move the domicile of the Trust to Delaware from Massachusetts to
take advantage of the favorable business environment provided by Delaware laws
and Delaware courts.
This Proxy Statement contains three proposals (the 'Proposals'). Proposal ONE
requires for its approval the affirmative vote of a majority of votes cast at
the Meeting by Shareholders of the Trust. Proposal TWO requires for its
approval the affirmative 'vote of a majority of the outstanding voting
securities' of the Trust, as defined in the the 1940 Act, as the lesser of (a)
67% of the Trust's voting securities present at a meeting, if the holders of
more than 50% of the Trust's outstanding voting securities are present or
represented by proxy, or (b) more than 50% of the Trust's outstanding voting
securities. Proposal THREE requires for its approval the affirmative 'vote of a
majority of outstanding voting securities,' as defined in the 1940 Act, of
Zweig Cash Fund. If the Shareholders of the Trust do not approve Proposal TWO,
the Trust will continue to operate as a Massachusetts business trust. If the
Shareholders of Zweig Cash Fund do not approve Proposal THREE, the fundamental
policies described in Proposal THREE as being modified in order to facilitate a
master-feeder structure (unless otherwise waived pursuant to Proposal TWO in
this Proxy Statement) with respect to Zweig Cash Fund would not be so waived,
and the amendment to the Massachusetts Trust Instrument to clarify explicitly
the power of the Trustees to establish a master-feeder structure with respect
to Zweig Cash Fund would not be adopted.
2
PROPOSAL ONE:
TO RATIFY THE SELECTION OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT ACCOUNTANTS
FOR THE TRUST
By a vote of the non-interested Trustees, the firm of Coopers & Lybrand L.L.P.,
1301 Avenue of the Americas, New York, New York 10019, has been selected as
independent accountants for the Trust for the next fiscal year to certify any
financial statements of the Trust required by any law or regulation to be
certified by an independent accountant and filed with the SEC or any state. As
required by the 1940 Act, the vote of the Board of Trustees is subject to the
right of the Trust, by vote of a majority of its outstanding voting securities
at any meeting called for the purpose of voting on such action, to terminate
such employment without penalty. Coopers & Lybrand L.L.P. has advised the Trust
that it has no direct or material indirect ownership interest in the Trust.
Coopers & Lybrand L.L.P. served as the independent auditors for the Trust
during the most recent fiscal year. Services performed by Coopers & Lybrand
L.L.P. during such time have included (i) the audit of annual financial
statements and limited review of unaudited semiannual financial statements;
(ii) assistance and consultation in connection with filings with the SEC; and
(iii) the preparation of federal income tax returns filed on behalf of the
Trust. In recommending the selection of the Trust's accountants, the Board of
Trustees reviewed the nature and scope of the services to be provided
(including non-audit services) and whether the performance of such services
would affect the accountant's independence. Representatives of Coopers &
Lybrand L.L.P. are not expected to be present at the Meeting, but have been
given the opportunity to make a statement if they so desire and will be
available should any matter arise requiring their presence.
The ratification of the selection of Coopers & Lybrand L.L.P. as the
independent accountants of the Trust requires the affirmative vote of a
majority of votes cast at the Meeting by Shareholders of the Trust.
CONCLUSION. THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR THE RATIFICATION OF THE SELECTION OF COOPERS & LYBRAND L.L.P. AS
INDEPENDENT ACCOUNTANTS TO THE TRUST.
PROPOSAL TWO:
TO APPROVE A PLAN PROVIDING FOR THE CONVERSION OF THE TRUST INTO A DELAWARE
BUSINESS TRUST
The Board of Trustees has approved an Agreement and Plan of Conversion and
Termination (the 'Plan of Conversion') in substantially the form attached to
this Proxy Statement as Exhibit A. The Plan of Conversion provides for a
conversion (the 'Conversion') of the Trust, a Massachusetts business trust (the
'Massachusetts Trust' or the 'Current Trust'), to a Delaware business trust
(the 'Delaware Trust' or the 'Successor Trust').
The current investment objectives, policies and limitations of the Trust will
not change except as approved by Shareholders pursuant to and as described in
this Proxy Statement. Therefore, the principal risk factors of an investment in
the Successor Trust are the same as those pertaining to an investment in the
Current Trust. The Successor Trust will have the same Trustees, manager,
distributor, custodian, transfer agent, legal counsel and independent
accountants as the Current Trust. The conversion from the Current Trust to the
Successor Trust will not affect the account number of a Shareholder or the
Shareholder's privileges such as reinvestment options, telephone redemption and
exchange privileges, nor will it have any affect on ZGA, which is not changing
its location or domicile. For a discussion of the principal differences between
the Massachusetts and Delaware business trust forms of organization, see
'Comparison of the Current Trust and the Successor Trust' on page 4 and in
Schedule 1.
DESCRIPTION OF THE SUCCESSOR TRUST
ADVANTAGES OF A DELAWARE BUSINESS TRUST. The Trust is presently organized as a
Massachusetts business trust with five series (the 'Current Series'). The
Trustees unanimously recommend conversion of the Massachusetts Trust to a
Delaware Trust that will succeed to the business of the Massachusetts Trust.
The Successor Trust would be established pursuant to a trust instrument under
the laws of Delaware substantially in the form attached as Exhibit B (the
'Delaware Trust Instrument'). As a Delaware business trust, the Successor
Trust's operations will be governed by the Delaware Trust Instrument, the
Successor Trust's Bylaws and applicable Delaware law rather than by the Current
Trust's Declaration of Trust (the 'Massachusetts Trust Instrument'), the
Current Trust's Bylaws and applicable Massachusetts law. Except as described in
this Proposal, the Conversion will not affect the operations of the Trust,
which will continue to have the same investment objectives and policies (except
to the extent they are modified as set forth in this Proxy Statement) and be
subject to the provisions of the 1940 Act, the rules and regulations of the SEC
thereunder, and those of applicable state securities laws.
The Delaware Business Trust Act, adopted in 1988 (the 'Delaware Act'), provides
that a shareholder of a Delaware business trust shall be entitled to the same
limitation of personal liability extended to stockholders of Delaware
corporations. It is believed that no similar statutory or other authority
limiting business trust shareholder liability exists in Massachusetts or in
most other states. (To guard against the risk that a court of another state
would apply that state's law on this point, the Delaware Trust Instrument will
3
continue the provisions of the Massachusetts Trust Instrument that written
obligations of the Trust contain a statement that such obligation may only be
enforced against the assets of the Trust and provides for indemnification out
of the Successor Trust.) Delaware law provides that, upon compliance with
certain statutory requirements with which the Successor Trust intends to
comply, each series shall not be liable for the debts of any other series of a
trust; another potential, although remote, risk in the case of a Massachusetts
business trust.
Delaware has obtained a favorable national reputation for its business laws and
business environment. The Delaware courts, which may be called upon to
interpret the Delaware Act, are among the nation's most highly respected and
have an expertise in corporate matters which in part grew out of the fact that
Delaware corporate legal issues are concentrated in the Court of Chancery where
there are no juries and where judges issue written opinions explaining their
decisions. Thus, there is a well established body of precedent which may be
relevant in deciding issues pertaining to a Delaware business trust.
Under Delaware law, the Successor Trust will have greater flexibility to
respond to future business contingencies. In addition, the Trustees will have
the power to incorporate the Successor Trust, to merge or consolidate it with
another entity, to cause each series to become a separate trust and to change
the Successor Trust's domicile without a shareholder vote. This flexibility
could help to assure that the Successor Trust operates under the most advanced
form of organization and could reduce the expense and frequency of future
shareholder meetings for non-investment related issues.
DESCRIPTION OF THE DELAWARE TRUST INSTRUMENT. The provisions of the Delaware
Trust Instrument are similar to those of the Massachusetts Trust Instrument,
but various ambiguities and deficiencies have been addressed and clarified in
the Delaware Trust Instrument. In addition, the Delaware Trust Instrument
provides more details and additional flexibility as to certain matters that
were not addressed or were treated more restrictively by the Massachusetts
Trust Instrument. For example, the shareholder quorum and voting requirements,
including provisions pertaining to record dates for meetings and adjournments,
have been clarified and liberalized in order to provide increased flexibility.
Ambiguities formerly existing as to voting requirements have been removed.
Schedule 1 to this proxy statement highlights certain similarities and
differences between the provisions of the current Massachusetts Trust
Instrument and the proposed Delaware Trust Instrument. Although this summary is
intended to highlight important differences, it is based upon a summary of the
Delaware Trust Instrument's provisions and is therefore qualified by the
provisions of the complete Delaware Trust Instrument and the Successor Trust's
Bylaws.
Certain of the differences between the Massachusetts Trust Instrument and the
Delaware Trust Instrument are not related to converting from a trust instrument
governed by Massachusetts law to a trust instrument governed by Delaware law
but are instead intended to alter certain terms in the Current Trust. For
example, as further described under 'Comparison of the Current Trust and the
Successor Trust', the Delaware Trust Instrument provides for (i) dollar-based
voting as opposed to voting based upon one-share, one-vote, (ii) elimination of
the need for shareholder votes in certain instances, (iii) voting in the
aggregate as opposed to voting by individual Series in certain instances, (iv)
different mechanics with respect to the termination of the Trust, a Series or a
Class, (v) a broader ability of the Trustees to redeem Shares of a Series or
Class than under the Massachusetts Trust Instrument, and (vi) the increased
flexibility to permit the Trustees to provide for the charging of expenses on a
per account basis.
COMPARISON OF THE CURRENT TRUST AND THE SUCCESSOR TRUST
Although the Conversion would result in certain changes which are described in
this Proxy Statement, most aspects of administering the Successor Trust as a
Delaware business trust will remain unchanged.
DOLLAR-BASED VOTING RIGHTS FOR SHAREHOLDERS OF THE TRUST. The Delaware Trust
Instrument provides voting rights based on a Shareholder's total dollar
interest in a fund or Series (dollar-based voting), rather than on the number
of shares owned as is provided in the Massachusetts Trust Instrument, for all
Shareholder votes. As a result, voting power would be allocated in proportion
to the value of each Shareholder's investment.
The original intent of the one-share, one-vote provision was to provide
equitable voting rights as required by the 1940 Act. In the case where a trust
has several series or funds, such as Zweig Series Trust, voting rights may have
become disproportionate since the net asset value per share ('NAV') of the
separate funds diverge over time. The Staff of the SEC has issued a 'no-action'
letter permitting a trust to seek shareholder approval of a dollar-based voting
system. The proposed voting structure in the Delaware Trust Instrument will
comply with the conditions stated in the no-action letter.
Dollar-based voting will provide a more equitable distribution of voting rights
than the one-share, one-vote system currently in effect for certain votes. The
voting power of shareholders would be commensurate with the value of the
Shareholder's dollar investment rather than with the number of shares held.
4
Under the Current Trust's voting provisions, an investment in a fund with a
lower NAV may have significantly greater voting power than the same dollar
amount invested in a fund with a higher NAV. Accordingly, a one-share, one-vote
system may provide certain Shareholders with a disproportionate ability to
affect the vote relative to Shareholders of other funds in the Trust.
On matters requiring trust-wide votes where all Series are required to vote,
Shareholders who own shares with a lower NAV than other funds in the trust
would be giving other Shareholders in the Trust more voting 'power' than they
currently have. On matters affecting only one Series or Class, only
shareholders of that Series or Class vote on the issue. In this instance, under
both the Current Trust and Successor Trust, all Shareholders of the Series
would have substantially the same voting rights, since the NAV is substantially
the same for all Shares of a particular Series (the NAV of different Classes of
a given Series will also differ over time).
MANAGEMENT BY THE BOARD OF TRUSTEES. The Trust will continue to be managed by
or under the direction of its Trustees, who serve indefinite terms and who
shall have substantially the same responsibilities, powers and fiduciary duties
as the Trustees of the Current Trust. The Trustees of the Successor Trust are
expected to be the Current Trustees of the Trust. The Trustees of the Successor
Trust intend to elect the individuals currently serving as the officers of the
Current Trust to be the officers of the Successor Trust.
ISSUANCE OF SHARES IN SEPARATE SERIES. The Delaware Trust Instrument will
establish separate series of shares (each, a 'Successor Series') and classes of
each Successor Series to correspond to each of the Current Series and Classes
thereof. As is presently the case, the Trustees of the Successor Trust may
establish additional Series, designate the relative rights and preferences of
each Series, and may divide the shares of any Series into Classes. Shares of
each Series shall represent equal proportionate interests in the assets of that
Series only and each share of a particular Series shall be equal to each other
share of that Series (subject to any rights and preferences as may have been
established with respect to classes of shares within such Series). The
liabilities of each Series shall be borne solely by that Series, and no Series
will be responsible for the liabilities of another Series. Each Series may
issue an unlimited number of shares, and all shares issued will be fully paid
and nonassessable. Shares will have no subscription or preemptive rights or
other right to subscribe to any additional shares and only such conversion or
exchange rights as the Trustees may grant in their discretion.
SHAREHOLDER MEETINGS AND VOTING. Under the Delaware Trust Instrument,
Shareholders vote as a single class on all matters except (i) when required by
the 1940 Act, shares shall be voted by individual Series, (ii) when the Board
of Trustees has determined that the matter affects only the interests of one or
more Series, or (iii) when otherwise required by the provisions of the Delaware
Trust Instrument, then only Shareholders of such Series shall be entitled to
vote thereon. Under the Successor Trust there will normally be no meetings of
Shareholders for the purposes of electing Trustees unless and until such time
as less than a majority of the Trustees have been elected by the Shareholders,
at which time, to the extent required by the 1940 Act, the Trustees then in
office will call a Shareholders' meeting for the election of Trustees. Under
the Massachusetts Trust Instrument all Shares are voted by individual Series,
except (i) when required by the 1940 Act, Shares are voted in the aggregate and
not by individual Series; and (ii) when the Trustees have determined that the
matter affects only the interest of one or more Series, then only the
Shareholders of such Series shall be entitled to vote thereon. Under the
Massachusetts Trust Instrument the Shareholders may elect Trustees at any
meeting of the Shareholders called by the Trustees for that purpose. Thus, the
essential difference in voting as between the trusts is that, in the case of
the Current Trust, unless otherwise required by the 1940 Act or so determined
by the Trustees, voting is conducted by individual Series, while in the case of
the Successor Trust, voting is conducted in the aggregate, unless otherwise
required by the 1940 Act or so determined by the Trustees. The Shareholder
voting provisions of the Delaware Trust Instrument and Massachusetts Trust
Instrument are summarized in Schedule 1.
LIABILITY OF TRUSTEES. The Delaware Trust Instrument provides that a Trustee,
when acting in such capacity, shall not be personally liable for any act or
omission as Trustee, but nothing protects a Trustee against liability to the
Successor Trust or to its shareholders to which he or she would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his or her office.
Furthermore, a Trustee is entitled to indemnification against liability and to
all reasonable expenses, under certain conditions, to be paid from the assets
of the Successor Trust; provided that no indemnification shall be provided to
any Trustee who has been found to be liable to the Successor Trust or the
shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office
or not to have acted in good faith in the reasonable belief that his or her
action was in the best interest of the Successor Trust.
The Massachusetts Trust Instrument provides that Trustees shall not be
responsible for or liable in any event for neglect or wrongdoing of any Trustee
or any other officer, agent, employee or investment adviser, principal
underwriter, transfer agent or custodian of the Trust, provided that they have
exercised reasonable care and have acted under the reasonable belief that their
actions are in the best interest of the Trust; but nothing in the Massachusetts
Trust Instrument
5
protects any Trustee against any liability to which he or she would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office.
TERMINATION OF THE TRUST. Under the Current Trust, the vote of a majority of
the outstanding Shares (within the meaning of the 1940 Act) of any affected
Series or, if applicable, a vote of a majority of the outstanding Shares
(within the meaning of the 1940 Act) of the Trust is required (i) to sell or
convey the assets of the Trust or any affected Series to another trust,
partnership, association or corporation organized under the laws of any state
which is a diversified open-end management investment company as defined in the
1940 Act, for adequate consideration which may include the assumption of all
outstanding obligations, taxes and other liabilities, accrued or contingent, of
the Trust or any affected Series, and which may include shares of beneficial
interest or stock of such trust, partnership, association or corporation or
(ii) to sell and convert at any time into money all of the assets of the Trust
or any affected Series.
Under the Successor Trust, the Trust or any Series or Class may be terminated
at any time by vote of a majority of, in the case of a termination of the
Trust, the Shares of each Series entitled to vote voting separately by Series,
or, in the case of a termination of any Series of Shares or Class, the Shares
of such Series or Class entitled to vote. The Trust or any Series or Class may
also be terminated by the Trustees by written notice to the Shareholders of the
Trust or the Shareholders of the affected Series or Class. Upon the requisite
Shareholder vote or action by the Trustees to terminate the Trust or any one or
more Series of Shares or any Class thereof, after paying or otherwise providing
for all charges, taxes, expenses and liabilities, whether due or accrued or
anticipated, of the Trust or of the particular Series or any Class thereof as
may be determined by the Trustees, the Trust shall in accordance with such
procedures as the Trustees consider appropriate reduce the remaining assets of
the Trust or of the affected Series or Class to distributable form in cash or
Shares (if any Series remain) or other securities, or any combination thereof,
and distribute the proceeds to the Shareholders of the Series or Classes
involved, ratably according to the number of Shares of such Series or Class
held by the several Shareholders of such Series or Class on the date of
distribution. Thereupon, the Trust or any affected Series or Class shall
terminate and the Trustees and the Trust shall be discharged of any and all
further liabilities and duties relating thereto or arising therefrom, and the
right, title and interest of all parties with respect to the Trust or such
Series or Class shall be canceled and discharged.
REDEMPTION. Except as permitted by the 1940 Act, both the Massachusetts Trust
Instrument and the Delaware Trust Instrument require the Current Trust and the
Successor Trust, respectively, to purchase such shares as are offered by any
Shareholder for redemption upon the presentation of a proper instrument of
transfer; and the Trust will pay therefor the net asset value thereof, subject
to any applicable sales charges.
Under the Successor Trust, the rights of the Trustees to redeem Shares are
broader than under the Current Trust. The Current Trust, upon 60 days' prior
written notice to the Shareholder, is entitled to liquidate involuntarily any
Shareholder's account if the aggregate Net Asset Value of the Shares held in
the account is less than $100. Under the Delaware Trust Instrument, the Board
of Trustees, subject to the requirements of the 1940 Act, may cause the Trust
to redeem Shares of any Series or Class held by any Person (i) if such Person
is no longer qualified to hold such Shares in accordance with such
qualifications as may be established by the Trustees, (ii) if the net asset
value of such Shares is below the minimum investment amount determined by the
Trustees, or (iii) if otherwise deemed by the Trustees to be in the best
interest of the Trust or that particular Series (or Class) as a whole.
PAYMENT OF EXPENSES BY SHAREHOLDERS. Under the Delaware Trust Instrument the
Trustees shall have the power to cause each Shareholder, or each Shareholder of
any particular Series or Class, to pay directly, in advance or arrears, for
charges of the Trust's custodian or transfer, Shareholder servicing or similar
agent, an amount fixed from time to time by the Trustees, by setting off such
charges due from such Shareholder from declared but unpaid dividends owed such
Shareholder and/or by reducing the number of Shares in the account of such
Shareholder by that number of full and/or fractional Shares which represents
the outstanding amount of such charges due from such Shareholder. Under the
Massachusetts Trust Instrument, expenses of a particular Series are charged
against the assets of that Series. There is no language in the Massachusetts
Trust Instrument regarding whether or not expenses of a Series may be charged
to a Shareholder, or in advance of their incurrence, or that such charges may
be effected through the reduction of the number of Shares in the account of a
Shareholder.
THE PLAN OF CONVERSION
SUMMARY OF THE PLAN OF CONVERSION. The following discussion summarizes the
important terms of the Plan of Conversion. This summary is qualified in its
entirety by reference to the Plan of Conversion itself, which is included as
Exhibit A to this Proxy Statement.
Prior to the Conversion, a Delaware Certificate of Trust will be filed and the
Successor Trust established as a Delaware entity. The Delaware Trust will be
formed as a Delaware business trust pursuant to the Delaware Trust
6
Instrument and such certificate of Trust. Each Successor Series will have only
nominal assets and no liabilities.
On the exchange date of the Conversion (the 'Exchange Date'), the Massachusetts
Trust will assign, transfer and convey the assets of each Current Series (and
relevant class thereof), including all securities and cash held by each Current
Series and liabilities attributable to each such Current Series (and relevant
class thereof) to the corresponding Successor Series (and relevant class
thereof), and each such Successor Series (and relevant class thereof) will
acquire all of the assets of each corresponding Current Series (and relevant
class thereof) and the liabilities attributable to each such Current Series
(and relevant class thereof) in exchange for shares of beneficial interest of
such Successor Series (the 'Delaware Trust Shares') equal in number and class
thereof to the corresponding number and class of the outstanding shares of each
Current Series of the Massachusetts Trust. In lieu of delivering certificates
for the Delaware Trust Shares, the Delaware Trust shall credit the Delaware
Trust Shares to the Massachusetts Trust's account on the share record books of
the Delaware Trust and shall deliver a confirmation thereof to the
Massachusetts Trust. The Massachusetts Trust shall then deliver written
instructions to the Delaware Trust's transfer agent to establish accounts for
the shareholders of the respective Current Series on the share record books
relating to each corresponding Successor Series.
UPON COMPLETION OF THE CONVERSION, EACH OF THE TRUST'S CURRENT SHAREHOLDERS
WILL BE THE OWNER OF FULL AND FRACTIONAL DELAWARE TRUST SHARES OF THE SAME
SERIES AND CLASS EQUAL IN NUMBER, DENOMINATION, AND AGGREGATE NET ASSET VALUE
TO HIS OR HER MASSACHUSETTS TRUST SHARES.
Of course, the value of a Shareholder's investment will fluctuate thereafter,
based on the investment performance of the Successor Trust.
If the Conversion is approved, the Successor Trust will be held of record by
the Current Trust on the Exchange Date (expected to be on or about May 1, 1996)
pending distribution to Shareholders. Approval by Shareholders of this Proposal
TWO will be deemed to authorize the Current Trust (as sole initial shareholder
of the Successor Trust on the Exchange Date) to vote in favor of each of the
Proposals set forth in this Proxy Statement and approved by the Shareholders,
so that the approval of the respective Proposals may be made effective with
respect to the Successor Trust as well as the Current Trust. In addition, an
approval of this Proposal TWO by Shareholders of any Series will be deemed to
authorize the Current Trust (as shareholder on the Exchange Date) to render
approval on such matters as may be necessary, for regulatory purposes, in order
to adopt or enter into any agreements or plans on behalf of the Successor Fund
that had previously been approved by Shareholders of the Current Trust and are
then in effect with respect to the Current Trust. In addition, the Plan of
Conversion contemplates that the Current Trust as the then sole initial
shareholder of the Successor Trust will approve (i) the management agreement
with ZGA for the Successor Trust (the 'New Management Agreement'), (ii) the
Distribution Agreement with Zweig Securities Corp. and Distribution and Service
Plans (the 'New Plans') under Rule 12b-1 with respect to the Successor Trust in
each case identical in duration and all other respects to the contract or plan,
as the case may be, currently in effect with the Current Trust, (iii) the Zweig
Series Trust Rule 18f-3 Multi-Class Plan identical in all respects to the plan
currently in effect with respect to the Current Trust, (iv) the election of
Trustees of the Current Trust as the Trustees of the Successor Trust, (v) such
matters as may be necessary, for regulatory purposes, in order to adopt or
enter into any agreements or plans on behalf of the Delaware Trust that had
previously been approved by shareholders of the Massachusetts Trust and are
then in effect with respect to the Massachusetts Trust, and (vi) all other
contracts and agreements currently in effect with the Current Trust, including,
but not limited to, accounting, custody, transfer agency, service, procedural
and safekeeping and repurchase agreements, and approval of the proposed
conversion of the Current Trust to the Delaware Trust shall constitute approval
of the continuation of each contract and plan, as the case may be, with the
Delaware Trust.
Each Delaware Trust Trustee will hold office without limit in time until such
Trustee resigns, dies, is declared bankrupt or incompetent by a court of
appropriate jurisdiction or is removed by two-thirds of the Trustees, or a vote
of two-thirds of the outstanding shares of the Trust at a meeting, with or
without cause. Whenever there shall be fewer than the designated number of
Trustees, until additional Trustees are elected or appointed as provided in the
Delaware Trust Instrument to bring the total number of Trustees equal to the
designated number, 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 the Delaware Trust Instrument. If, at any time,
less than a majority of the Trustees holding office has been elected by
shareholders, the Trustees then in office shall call a Shareholders' meeting
for the purpose of electing a Board of Trustees. Otherwise, there will normally
be no meeting of Shareholders for the purpose of electing Trustees. The initial
Trustees will be deemed to have been elected by the Shareholders pursuant to
the mechanism described above.
Assuming the Plan of Conversion is approved, it is currently contemplated that
the Conversion will become effective on or about May 1, 1996, unless the
Trustees of the Successor Trust determine that it would not be in the best
interests of the Shareholders to do so at that time or at all.
7
The obligations of the Massachusetts Trust and the Delaware Trust under the
Plan of Conversion are subject to various conditions as stated therein.
Notwithstanding the approval of the Plan of Conversion by the Current Trust's
Shareholders, the Plan of Conversion may be terminated or amended at any time
prior to the transfer of assets on the Exchange Date by action of the Trustees
to provide against unforeseen events, if (i) there is a material breach by the
other party of any representation, warranty or agreement contained in the Plan
of Conversion, (ii) it reasonably appears that a party cannot meet a condition
of the Plan of Conversion, or (iii) circumstances should develop that, in the
opinion of either the Board of Trustees of the Massachusetts Trust or of the
Delaware Trust, make proceeding with the Plan of Conversion in its current form
inadvisable; provided that no amendment may have a material adverse effect upon
the benefits intended under the Plan of Conversion and would be consistent with
the best interests of the Current Trust Shareholders. The Massachusetts Trust
and the Delaware Trust may at any time waive compliance with any of the
covenants and conditions contained in, or may amend, the Plan of Conversion,
provided that such waiver or amendment does not materially adversely affect the
interests of the Current Trust's Shareholders.
NAME CHANGE FOR GOVERNMENT SECURITIES SERIES. The Successor Series to which the
assets of the Government Securities Series will be assigned by the Current
Trust will be named Zweig Government Fund to conform the style of the name to
that of the other Series of the Trust.
CONTINUATION OF FUND SHAREHOLDER ACCOUNTS AND PLANS. The Current Trust's
transfer agent will establish an account for the Successor Trust's Shareholders
containing the appropriate number and denominations of Delaware Trust Shares to
be received by each Shareholder under the Plan of Conversion. Such accounts
will be identical in all material respects to the accounts currently maintained
by the Current Trust's transfer agent for the Current Trust's Shareholders.
Current Trust Shareholders who are receiving payment under a withdrawal plan
with respect to Massachusetts Trust Shares will retain the same rights and
privileges as to Delaware Trust Shares under the Plan of Conversion. Similarly,
no further action will be necessary in order to continue any automatic
investment plan or retirement plan currently maintained by a Current Trust
Shareholder with respect to Massachusetts Trust Shares.
EXPENSES. The Current Trust and the Successor Trust shall each be responsible
for all of their respective expenses of the Conversion, estimated at $20,000 in
the aggregate for all Series of the Trust.
TEMPORARY WAIVER OF FUNDAMENTAL POLICIES. Certain fundamental policies of the
Current Trust (e.g., those which (i) prohibit the Current Trust from making
investments for the purpose of exercising control over or management of an
issuer, (ii) restrict the percentage of a Series' total assets that may be
invested in any one industry, (iii) require diversification of investments,
(iv) restrict investments of certain Series in issuers with limited operating
histories, and (v) restrict investments in other investment companies), might
be construed as restricting the Current Trust's ability to carry out the
Conversion. To the extent that any of the fundamental policies of any of the
Series could be construed as restricting the ability of the Trust to effect the
Conversion, a vote to approve the Plan of Conversion will also constitute a
vote to waive, to the extent necessary to effect the Conversion, any such
fundamental policy.
TAX CONSEQUENCES OF THE CONVERSION. The Massachusetts Trust and the Delaware
Trust have been advised by their counsel, Shearman & Sterling, that no gain or
loss will be recognized for federal income tax purposes by the Current Trust,
the Delaware Trust or the Current Trust's Shareholders upon (i) the transfer of
the Current Trust's assets in exchange solely for the Delaware Trust Shares and
the assumption by the Delaware Trust of the Current Trust's liabilities or,
(ii) the distribution of Delaware Trust Shares to the Current Trust
Shareholders in liquidation of their Massachusetts Trust Shares (IRC ss
368(a)(1); 361(a); 354(a)(1)). The opinion further provides, among other
things, that (i) the basis for federal income tax purposes of the Delaware
Trust Shares to be received by each of the Current Trust's Shareholders will be
the same as that of his or her Massachusetts Trust Shares (IRC s 358(a)(1)),
and (ii) a Current Trust's Shareholder's holding period for his or her Delaware
Trust Shares will include a Current Trust's Shareholder's holding period for
his or her Massachusetts Trust Shares, provided that said Massachusetts Shares
were held as capital assets on the date of the exchange (IRC s 1223(1)).
EVALUATION BY THE CURRENT TRUST'S TRUSTEES
Based on a recommendation by ZGA, the Board reviewed the potential benefits
associated with the proposed Conversion and adoption of the proposed Delaware
Trust Instrument. In this regard, the Trustees considered the following:
(1) the disadvantages described above which apply to operating the Trust as a
Massachusetts business trust, including, for example, the possibility, however
remote, of personal liability of a Shareholder for the liabilities of the
Trust, or a Series or Class thereof;
(2) the advantages described above which apply to managing the Successor Trust
as a Delaware business trust, including, for example, the increased flexibility
afforded to the Trustees to direct the operations of the Trust;
8
(3) the advantages to be gained by restating the Trust's entire trust
instrument and adopting the new Trust Instrument under Delaware law;
(4) that the Conversion itself will not affect the investment advisory
arrangements applicable to the Trust, nor will it affect the identity of the
Trustees, manager, distributor, custodian, transfer agent, legal counsel and
independent accountants of the Current Trust, the investment objectives or
policies of any Series or Class thereof, or otherwise affect in any significant
manner the general characteristics of any Series or Class thereof or a
Shareholder's investment therein, except to the extent the policies of the
Trust are amended pursuant to Shareholder vote at this meeting;
(5) the expected federal tax consequences to the Current Series, the Successor
Series and Shareholders resulting from the proposed Conversion, and the
likelihood that there will be no recognition of income, gain or loss for
federal income tax purposes to the Current Series, the Successor Series or
Shareholders; and
(6) that the interests of the Shareholders of the Current Series will not be
diluted as a result of the proposed Conversion.
CONCLUSION. THE BOARD OF TRUSTEES HAS CONCLUDED THAT THE PROPOSED AGREEMENT AND
PLAN TO CONVERT THE TRUST INTO A DELAWARE BUSINESS TRUST IS IN THE BEST
INTEREST OF THE TRUST'S SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS A VOTE FOR THE
APPROVAL OF THE PLAN OF CONVERSION AS DESCRIBED ABOVE. A vote in favor of the
Plan of Conversion is deemed to be a vote in favor of the conversion of the
Current Trust to a Delaware business trust; temporary waiver of certain
investment limitations of the Current Trust to permit the Conversion (see
'Temporary Waiver of Fundamental Policies' on page 8); authorization of the
Current Trust to approve (i) a management agreement for the Successor Trust
between the Trust and ZGA, (ii) a distribution agreement between the Trust and
Zweig Securities and Distribution and Service Plans under Rule 12b-1 identical
to the current contracts or plans, as the case may be, currently in effect with
the Current Trust, (iii) the Zweig Series Trust Rule 18f-3 Multi-Class Plan
identical in all respects to the plan currently in effect with respect to the
Current Trust, (iv) the election of Trustees of the Current Trust as the
Trustees of the Successor Trust, (v) such matters as may be necessary, for
regulatory purposes, in order to adopt or enter into any agreements or plans on
behalf of the Delaware Trust that had previously been approved by shareholders
of the Massachusetts Trust and are then in effect with respect to the
Massachusetts Trust, and (vi) all other contracts and agreements currently in
effect with the Current Trust, including, but not limited to, accounting,
custody, transfer agency, service, procedural and safekeeping and repurchase
agreements. If approved, the Plan of Conversion will take effect on the
Exchange Date. If the Plan of Conversion is not approved, the Current Trust
will continue to operate as a Massachusetts business trust.
Appraisal rights are not available to Current Trust Shareholders with respect
to the Conversion. However, Shareholders retain the right to redeem their
Shares at net asset value at any time (subject to any applicable sales
charges).
IN VIEW OF THE FOREGOING, THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF ZWEIG CASH FUND VOTE FOR THE ADOPTION OF THE CONVERSION PLAN
AND THE DELAWARE TRUST INSTRUMENT.
PROPOSAL THREE:
TO AUTHORIZE THE TRUSTEES TO ADOPT A POOLED FUND STRUCTURE WITHOUT ADDITIONAL
AUTHORIZATION FROM THE SHAREHOLDERS
The Delaware Trust Instrument would permit the Trust to develop so-called
'master-feeder' fund structures when permitted by the policies for the Series
implementing such a structure. This Proposal THREE would authorize the Trustees
to establish a master-feeder fund structure by modifying certain fundamental
policies of the Trust to permit such a structure. This Proposal THREE would
also authorize an amendment to the Massachusetts Trust Instrument to include a
provision substantially in the form of Article IV, Section 3(s) of the Delaware
Trust Instrument (attached hereto as Exhibit B) to clarify explicitly the power
of the Trustees to establish a master-feeder structure for each Series of the
Trust to invest its assets in another investment company with substantially the
same investment objective and policies.
A number of mutual funds have developed so-called 'master-feeder' fund
structures under which several 'feeder' funds invest all of their assets in a
single pooled 'master' fund (a 'Pooled Fund'). A Pooled Fund Structure (i.e., a
structure where a Series would invest its assets in another investment company
with substantially the same investment objectives and policies) might, for
example, enable an institutional equity fund with a high initial minimum
investment amount for large investors to pool its investments with a retail
equity fund with lower minimum investment requirements. This structure allows
several feeder funds with the same investment objective but different
distribution and servicing features to combine their investments and manage
them as one master pool instead of managing them separately. The feeder funds
combine their investments by investing their assets in one master pooled fund
that would be organized as an open-end management investment company (mutual
fund). (Each feeder fund invested in a single master pooled investment retains
its own characteristics, but is able to achieve operational efficiencies and
economies of scale by
9
investing together with the other feeder funds in the Pooled Fund Structure.)
Such structures can facilitate the international distribution of mutual funds,
which currently is restricted by U.S. tax impediments to direct investment by
non-U.S. shareholders in U.S. funds, and also provide distributional and
operational advantages without disrupting basic investment approaches.
While neither the Board nor the Trust has determined that any Series should
invest in a Pooled Fund, the Trustees believe it could be in the best interests
of each Series to adopt such a structure at a future date. Approval of this
Proposal THREE provides the Trustees with explicit authority to approve a
Pooled Fund Structure. If Shareholders approve this Proposal, certain
fundamental and non-fundamental policies and limitations of each Series that
currently prohibit investment in shares of one investment company would need to
be modified to permit the investment in a Pooled Fund. At present, certain of
each Series' fundamental policies and limitations would prevent each Series
from investing all of its assets in another investment company, and would
require a vote of the Shareholders before such a structure could be adopted.
These policies include, among others, each Series' policy concerning
investments in securities of investment companies, each Series' policy that no
more than 25% of a Series' total assets be invested in any one industry, each
Series' policy concerning diversification among issuers and the policy of each
Series which restricts their participation in underwritings. To the extent that
any of the fundamental policies of any of the Series could be construed as
restricting the ability of the Trust to develop a 'master-feeder' structure, a
vote to approve this Proposal THREE will also constitute a vote to approve the
modification of of each Series' fundamental policies to the extent necessary to
permit investment in a Pooled Fund Structure, provided that the investment
objectives and the fundamental and other investment policies of the related
series of the master fund are substantially the same as the analogous series of
any feeder fund.
ZGA may in the future manage a number of mutual funds with similar investment
objectives, policies, and limitations but with different features and services
(the 'Comparable Funds'). Were these Comparable Funds to pool their assets,
operational efficiencies could be achieved, offering the opportunity to reduce
costs. Similarly, ZGA anticipates that a Pooled Fund Structure could facilitate
the introduction of new Zweig mutual funds, increasing the investment options
available to Shareholders. ZGA may also benefit from the use of a Pooled Fund
if overall assets are increased (since ZGA's fees are based on assets) and
expenses of providing investment and other services to each Series may be lower
than they would otherwise be. Each Series' method of operation and shareholder
services would not be materially affected by its investment in a Pooled Fund,
except that the assets would be managed as part of a larger pool. Were any
Series to invest all of its assets in a Pooled Fund, it would hold only a
single investment security, and the Pooled Fund would directly invest in
individual securities pursuant to its investment objective. The Pooled Fund
would be managed by ZGA or an affiliate. The Trustees would retain the right to
withdraw a Series' investments from a Pooled Fund at any time and would do so
if the Pooled Fund's investment objective and policies were no longer
appropriate for the Series or for any other reason. The Series would then
resume investing directly in individual securities as it does currently.
Whenever a Series is asked to vote at a shareholder meeting of the Pooled Fund,
the Series will hold a meeting of its shareholders if required by applicable
law or the Series' policies to vote on the matters to be considered at the
Pooled Fund's shareholder meeting. The Series will vote all its shares at the
Pooled Fund meeting in the same proportion as the Series' shareholders voting
voted theirs. The Series would otherwise continue its normal operations.
The ability of mutual funds to invest in other investment companies is
restricted by the 1940 Act and some state blue sky laws. If it determines in
the future to invest on a Pooled Fund basis, the Trust intends, to the extent
required, to seek federal and state regulatory approval in order to allow the
Series to invest in Pooled Funds. There is, of course, no assurance that all
necessary regulatory approvals will be obtained, or that cost reductions or
increased efficiencies will be achieved.
The Trustees continually review methods of structuring the Series to take
maximum advantage of potential efficiencies. Although, at present, the Trustees
have not considered any specific proposal to authorize pooling of assets, they
believe it could be in the best interest of each Series. The Trustees will
authorize investing a Series' assets in a Pooled Fund only if they determine
that pooling is in the best interests of the Series and if, upon advice of
counsel, they determine that the investment will not have material adverse tax
consequences to the Series or its Shareholders. In determining whether to
invest in a Pooled Fund, the Trustees will consider, among other things, the
opportunity to reduce costs and to achieve operational efficiencies. Adoption
of a master-feeder structure is not expected to affect the way in which the
Series are managed.
CONCLUSION. THE BOARD OF TRUSTEES, BASED UPON ZGA'S RECOMMENDATION, BELIEVES
THAT THE AUTHORIZATION OF MASTER-FEEDER STRUCTURES IS IN THE BEST INTERESTS OF
THE SERIES AND THEIR SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS A VOTE FOR THE
PROPOSAL. IF THE PROPOSAL IS NOT APPROVED BY A SERIES, THE TRUST WILL NOT HAVE
THE AUTHORITY TO ESTABLISH A MASTER-FEEDER STRUCTURE FOR THAT SERIES.
10
OTHER MATTERS
The Trust does not know of any other matters to be presented at the Special
Meeting of Shareholders. If any other business should come before the Meeting,
the proxies will vote thereon in accordance with their best judgment.
IF YOU CANNOT ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, SIGN AND RETURN
THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED SO THAT THE MEETING MAY BE HELD AND
ACTION TAKEN WITH THE GREATEST POSSIBLE NUMBER OF SHARES PARTICIPATING.
SHAREHOLDER PROPOSALS FOR SUBSEQUENT MEETINGS
Neither the Series nor the Trust holds regular annual meetings of Shareholders.
Any Shareholder who wishes to submit proposals to be considered at a subsequent
meeting of Shareholders should send such proposals to the Trust at 5 Hanover
Square, 17th Floor, New York, New York 10004. It is suggested that proposals be
submitted by certified mail, return receipt requested.
INVESTMENT MANAGER
Zweig/Glaser Advisers, 5 Hanover Square, 17th Floor, New York, New York 10004,
serves as the investment manager for the Trust.
PRINCIPAL DISTRIBUTOR
Zweig Securities Corp., 5 Hanover Square, 17th Floor, New York, New York 10004,
serves as the principal distributor of the Trust.
REVOCATION OF PROXIES
You can revoke the enclosed proxy at any time prior to the exercise thereof by
submitting a written notice of revocation or subsequently executed proxy to the
Trust at any time prior to the Meeting or at the Meeting to the Secretary of
the Meeting. Signing and mailing the proxy will not affect your right to give a
later proxy or to attend the Meeting and vote your shares in person.
VOTING INFORMATION
Proxies are being solicited by the Board of Trustees for the Special Meeting of
Shareholders to be held on April 19, 1996, at the Trust's offices at 5 Hanover
Square, 17th Floor, New York, New York 10004, at 10:00 a.m. A proxy may be
revoked at any time before the Meeting by oral or written notice to the Fund.
Valid proxies will be voted in accordance with the specification thereon or, in
the absence of specification, FOR approval of the Proposals.
In the event that a quorum is not present at the Meeting, the persons named as
proxies intend to propose one or more adjournments of the Meeting to permit
further solicitations of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the adjourned
Meeting in person or by proxy.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETING ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE
PROXY CARD IN THE ENCLOSED ENVELOPE.
11
ZWEIG SERIES TRUST
5 HANOVER SQUARE-17TH FLOOR
NEW YORK, NEW YORK 10004
TABLE OF CONTENTS
Page
Introduction 2
Proposals 2
Other Matters 11
Shareholder Proposals for Subsequent Meetings 11
Investment Manager 11
Principal Distributor 11
Revocation of Proxies 11
Voting Information 11
Exhibit A-Plan of Conversion
Exhibit B-Delaware Trust Instrument
Schedule 1
EXHIBIT A
ZWEIG SERIES TRUST
PLAN OF CONVERSION
FORM OF AGREEMENT AND PLAN OF CONVERSION AND TERMINATION
THIS AGREEMENT AND PLAN OF CONVERSION AND TERMINATION (the "Agreement") is
made and entered into as of , 1996, by and between Zweig Series Trust, a
Massachusetts business trust having an office at 5 Hanover Square, New York,
New York 10004 (the "Massachusetts Trust"), and Zweig Series Trust, a Delaware
business trust having an office at 5 Hanover Square, New York, New York 10004
(the "Delaware Trust").
WHEREAS, the Board of Trustees of the Massachusetts Trust and the Board of
Trustees of the Delaware Trust have determined that it is in the best
interests of the Massachusetts Trust and the Delaware Trust, respectively,
that the assets of the Massachusetts Trust be acquired by the Delaware Trust
pursuant to this Agreement and in accordance with the applicable statutes of
the Commonwealth of Massachusetts and the State of Delaware; and
WHEREAS, the parties desire to enter into a plan of exchange pursuant to
Section 351 of the Internal Revenue Code of 1986, as amended:
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
1. Plan Of Exchange.
(a) Subject to the requisite approval of the shareholders of the
Massachusetts Trust and to the terms and conditions contained herein, on
the Exchange Date (as defined herein), the Massachusetts Trust shall
assign, transfer and convey the assets of each of its series (i.e., Zweig
Strategy Fund, Zweig Appreciation Fund, Zweig Managed Assets, Government
Securities Series, Zweig Cash Fund) (collectively, the "Current Series" and
each individually, a "Current Series") (and relevant class thereof),
including all securities and cash held by each Current Series, and the
liabilities attributable to each such Current Series (and relevant class
thereof), to the corresponding series of the Delaware Trust (i.e., in the
case of Zweig Strategy Fund, Zweig Strategy Fund; in the case of Zweig
Appreciation Fund, Zweig Appreciation Fund; in the case of Zweig Managed
Assets, Zweig Managed Assets; in the case of Government Securities Series,
Zweig Government Fund; in the case of Zweig Cash Fund, Zweig Cash Fund)
(collectively, the "Successor Series" and each individually, a "Successor
Series") (and relevant class thereof), and each such Successor Series (and
relevant class thereof) shall acquire all of the assets of each
corresponding Current Series (and relevant class thereof), and the
liabilities attributable to each such Current Series (and relevant class
thereof), in exchange for shares of beneficial interest of such Successor
Series (the "Delaware Trust Shares") equal in number and class thereof to
the corresponding number and class of the outstanding shares of each
Current Series. In lieu of delivering certificates for the Delaware Trust
Shares, the Delaware Trust shall credit the Delaware Trust Shares to the
Massachusetts Trust's account on the share record books of the Delaware
Trust and shall deliver a confirmation thereof to the Massachusetts Trust.
The Massachusetts Trust shall then deliver written instructions to the
Delaware Trust's transfer agent to establish accounts for the shareholders
of the respective Current Series on the share record books relating to each
corresponding Successor Series.
(b) Delivery of the assets of each of the Current Series to be
transferred shall be made not later than the next business day following
the Exchange Date. Assets transferred shall be delivered to The Bank of New
York, the Delaware Trust's custodian (the "Custodian"). Such delivery shall
be made for the account of the Delaware Trust and the Successor Series,
with all securities not in bearer or book entry form duly
<PAGE>
endorsed, or accompanied by duly executed separate assignments or stock
powers, in proper form for transfer, with signatures guaranteed, and with
all necessary stock transfer stamps, sufficient to transfer good and
marketable title thereto (including all accrued interest and dividends and
rights pertaining thereto) to the Custodian for the account of the Delaware
Trust and the Successor Series free and clear of all liens, encumbrances,
rights, restrictions and claims. All cash delivered shall be in the form of
immediately available funds payable to the order of the Custodian for the
account of the Delaware Trust and the Successor Series. All assets
delivered to the Custodian as provided herein shall be allocated by the
Delaware Trust to each Successor Series corresponding to the Current Series
from which, or on the account of which, the assets were transferred. All of
the liabilities of each Current Series shall, on and as of the Effective
Date, be deemed liabilities of, and shall be deemed assumed by, the
applicable corresponding Successor Series.
(c) The Massachusetts Trust will pay or cause to be paid to the Delaware
Trust any interest received on or after the Exchange Date with respect to
assets transferred from any Current Series to the corresponding Successor
Series hereunder and the Delaware Trust shall allocate any such interest to
the appropriate Successor Series. The Massachusetts Trust will transfer to
the Delaware Trust any distributions, rights or other assets received by
the Massachusetts Trust after the Exchange Date as distributions on or with
respect to the securities transferred from any Current Series to the
corresponding Successor Series hereunder. The Delaware Trust shall allocate
any such distributions, rights or other assets to the appropriate Successor
Series. All such assets shall be deemed included in assets transferred to
the Current Series on the Exchange Date and shall not be separately valued.
(d) If the requisite number of shareholders of the Massachusetts Trust do
not approve this Agreement, the Massachusetts Trust will continue to
operate as a Massachusetts business trust.
(e) The Exchange Date shall be May 1, 1996, or such earlier or later date
as may be mutually agreed upon by the parties.
(f) As soon as practicable after the Exchange Date, and following
distribution by the Massachusetts Trust of the Delaware Trust Shares of
each of the Successor Series received by it among the shareholders of each
corresponding Current Series in proportion to the number of shares each
such shareholder holds in each such Current Series, the Massachusetts Trust
will dissolve and terminate.
2. The Massachusetts Trust's Representations And Warranties. The
Massachusetts Trust represents and warrants to and agrees with the Delaware
Trust as follows:
(a) The Massachusetts Trust is a business trust duly organized and
validly existing under the laws of the Commonwealth of Massachusetts and
has power to own all of its properties and assets and, subject to the
approval of its shareholders as contemplated hereby, to carry out this
Agreement.
(b) The Massachusetts Trust and each Current Series is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end, diversified, management investment company, and such registration
has not been revoked or rescinded and is in full force and effect.
(c) On the Exchange Date, the Massachusetts Trust will have full right,
power and authority to sell, assign, transfer and deliver the assets to be
transferred by it hereunder.
3. The Delaware Trust's Representations And Warranties. The Delaware Trust
represents and warrants to and agrees with the Massachusetts Trust as follows:
(a) The Delaware Trust is a business trust duly organized, validly
existing and in good standing under the laws of the State of Delaware and
has power to carry on its business and to carry out this Agreement.
(b) At the Exchange Date, the Delaware Trust Shares to be issued to the
Massachusetts Trust (the only Series Shares to be issued as of the Exchange
Date) will have been duly authorized and, when issued and
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delivered pursuant to this Agreement, will be legally and validly issued
and will be fully paid and non-assessable by the Delaware Trust. No
Delaware Trust or Successor Series shareholder will have any preemptive
right of subscription or purchase in respect thereof.
4. The Delaware Trust's Conditions Precedent. The obligations of the
Delaware Trust hereunder shall be subject to the following conditions:
(a) The Massachusetts Trust shall have furnished to the Delaware Trust a
statement of the Massachusetts Trust's assets, including a list of
securities owned by the Massachusetts Trust with their respective tax costs
and values.
(b) As of the Exchange Date, all representations and warranties of the
Massachusetts Trust made in this Agreement shall be true and correct as if
made at and as of such date, and the Massachusetts Trust shall have
complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to such date.
(c) A vote approving this Agreement and the transactions and exchange
contemplated hereby shall have been adopted by the affirmative vote of at
least a majority of the outstanding shares (within the meaning of the 1940
Act) of the Massachusetts Trust entitled to vote and the shareholders of
the Massachusetts Trust and each applicable Current Series shall have
voted, by the vote specified in the proxy materials of the Massachusetts
Trust and the Current Series relating to this Agreement, to direct the
Massachusetts Trust to vote, and the Massachusetts Trust shall have voted
by or on the Exchange Date, as sole shareholder of the Delaware Trust, (i)
to vote on each of the Proposals set forth in the Proxy Statements and
approved by the shareholders, so that the approval of the respective
Proposals may be made effective with respect to the Delaware Trust as well
as the Massachusetts Trust; (ii) to elect Clare B. Benenson, Richard E.
Deems, S. Leland Dill, Eugene J. Glaser, and Donald B. Romans as trustees
of the Delaware Trust, (iii) to render approval on such matters as may be
necessary, for regulatory purposes, in order to adopt or enter into any
agreements or plans on behalf of the Delaware Trust that had previously
been approved by shareholders of the Massachusetts Trust and are then in
effect with respect to the Massachusetts Trust, and (iv) to approve all
other contracts and agreements currently in effect with the Current Trust,
including, but not limited to, accounting, custody, transfer agency,
service, procedural and safekeeping and repurchase agreements.
5. The Massachusetts Trust's Conditions Precedent. The obligations of the
Massachusetts Trust hereunder shall be subject to the condition that as of the
Exchange Date all representations and warranties of the Delaware Trust made in
this Agreement shall be true and correct as if made at and as of such date,
and that the Delaware Trust shall have complied with all of the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to such date.
6. The Delaware Trust's And The Massachusetts Trust's Conditions
Precedent. The obligations of both the Delaware Trust and the Massachusetts
Trust hereunder shall be subject to this Agreement and the transactions
contemplated hereby having been approved by the affirmative vote of at least a
majority of the outstanding shares (within the meaning of the 1940 Act) of the
Massachusetts Trust entitled to vote as of the close of business on February
9, 1996, or such earlier or later date as may be mutually agreed upon by the
parties.
7. Amendment Or Termination Of Agreement. This Agreement and the
transactions contemplated hereby may be amended or terminated and abandoned by
resolution of the Board of Trustees of the Massachusetts Trust or the Board of
Trustees of the Delaware Trust, at any time prior to the transfer of assets on
the Exchange Date (and notwithstanding any vote of the shareholders of the
Massachusetts Trust) if (i) there is a material breach by the other party of
any representation, warranty or agreement contained in this Agreement, (ii) it
reasonably appears that a party cannot meet a condition of this Agreement or
(iii) circumstances should develop that, in the opinion of either the Board of
Trustees of the Massachusetts Trust or of the Delaware Trust, make proceeding
with this Agreement in its current form inadvisable.
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In addition, prior to the transfer of assets on the Exchange Date, any
provision of this Agreement may be amended or modified by the Board of
Trustees of the Massachusetts Trust and the Board of Trustees of the Delaware
Trust if such amendment or modification would not have a material adverse
effect upon the benefits intended under this Agreement and would be consistent
with the best interests of the shareholders.
If this Agreement is terminated and the exchange contemplated hereby is
abandoned pursuant to the provisions of this Section 7, this Agreement shall
become void and have no effect, without any liability on the part of any party
hereto or the trustees, officers or shareholders of the Delaware Trust or the
trustees, officers or shareholders of the Massachusetts Trust, in respect of
this Agreement.
8. Waiver. At any time prior to the Exchange Date, any of the foregoing
conditions may be waived by the Board of Trustees of the Massachusetts Trust
or the Board of Trustees of the Delaware Trust, if, in the judgment of the
waiving party, such waiver will not have a material adverse effect on the
benefits intended under this Agreement to the shareholders of the
Massachusetts Trust or the shareholders of the Delaware Trust, as the case may
be.
9. No Survival Of Representations. None of the representations and
warranties included or provided for herein shall survive consummation of the
transactions contemplated hereby.
10. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Delaware; provided,
however, that the due authorization, execution and delivery of this Agreement,
in the case of the Massachusetts Trust, shall be governed and construed in
accordance with the internal laws of the Commonwealth of Massachusetts.
11. Counterparts. This Agreement may be executed in counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
12. Capacity Of Trustees. With respect to the Massachusetts Trust, the name
"Zweig Series Trust" and the term "Trustees of the Massachusetts Trust",
refer, respectively, to the Massachusetts Trust created and the Trustees of
the Massachusetts Trust, as trustees but not individually or personally,
acting from time to time under an Amended and Restated Agreement and
Declaration of Trust dated April 11, 1986, as amended. The obligations of the
Massachusetts Trust entered into in the name and on behalf thereof by any of
the Trustees of the Massachusetts Trust, representatives or other agents, were
not made individually, but in such capacities, and are not binding upon any of
the Massachusetts Trustees, representatives or other agents, or the
shareholders of the Massachusetts Trust, but bind only the property of the
Massachusetts Trust, and all persons dealing with any Series or Class of
shares of the Massachusetts Trust must look solely to the Trust property
belonging to such Series or Class for the enforcement of any claims against
the Massachusetts Trust.
IN WITNESS WHEREOF, the Massachusetts Trust and the Delaware Trust have
caused this Agreement and Plan of Conversion and Termination to be duly
executed as of the day and year first above written.
Zweig Series Trust, Zweig Series Trust,
a Delaware Business Trust a Delaware Business Trust
By: _________________________________ By: _________________________________
Title Title
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EXHIBIT B
ZWEIG SERIES TRUST
DELAWARE TRUST INSTRUMENT
AGREEMENT AND DECLARATION OF TRUST
OF
ZWEIG SERIES TRUST
THIS AGREEMENT AND DECLARATION OF TRUST is made and entered into as of the
date set forth below by the Trustee(s) named hereunder for the purpose of
forming a Delaware business trust in accordance with the provisions hereinaf-
ter set forth,
NOW, THEREFORE, the Trustee(s) hereby direct that the Certificate of Trust
be filed with Office of the Secretary of State of the State of Delaware and do
hereby declare that the Trustee(s) will hold in trust all cash, securities and
other assets that the Trust now possesses or may hereafter acquire from time
to time in any manner and manage and dispose of the same upon the following
terms and conditions for the benefit of the holders of Shares in the Trust.
ARTICLE I
NAME AND DEFINITIONS
Section 1. Name. This Trust shall be known as "Zweig Series Trust" and the
Trustee(s) shall conduct the business of the Trust under that name or any
other name as they may from time to time determine.
Section 2. Definitions. Whenever used herein, unless otherwise required by
the context or specifically provided:
(a) "By-Laws" shall mean the By-Laws of the Trust as amended from time to
time, which By-Laws are expressly herein incorporated by reference as part
of the "governing instrument" within the meaning of the Delaware Act;
(b) "Certificate of Trust" means the certificate of trust, as amended or
restated from time to time, filed by the Trustee(s) in the Office of the
Secretary of State of the State of Delaware in accordance with the Delaware
Act;
(c) "Class" means a class of Shares of a Series of the Trust established
in accordance with the provisions of Article III hereof;
(d) "Commission" and "Principal Underwriter" shall have the meanings
given them in the 1940 Act;
(e) "Declaration of Trust" means this Agreement and Declaration of Trust,
as amended or restated from time to time;
(f) "Delaware Act" means the Delaware Business Trust Act, 12 Del. C.
(S)(S) 3801 et seq., as amended from time to time;
(g) "Manager" means a party furnishing services to the Trust pursuant to
any contract described in Article IV, Section 7(a) hereof;
(h) "1940 Act" means the Investment Company Act of 1940 and the Rules and
Regulations thereunder, all as amended from time to time;
(i) "Person" means and includes individuals, corporations, partnerships,
trusts, associations, joint ventures, estates and other entities, whether
or not legal entities, and governments and agencies and political subdivi-
sions thereof, whether domestic or foreign;
(j) "Series" means each Series of Shares established and designated under
or in accordance with the provisions of Article III;
(k) "Shareholder" means a record owner of outstanding Shares;
(l) "Shares" means the Shares of beneficial interest into which the bene-
ficial interest in the Trust shall be divided from time to time and in-
cludes fractions of Shares as well as whole Shares;
(m) "Trust" means the Delaware business trust established under the Dela-
ware Act by this Declaration of Trust and the filing of the Certificate of
Trust in the Office of the Secretary of State of the State of Delaware;
(n) "Trust Property" means any and all property, real or personal, tangi-
ble or intangible,
<PAGE>
that is from time to time owned or held by or for the account of the Trust;
and
(o) "Trustees" means the person or persons who have signed this Declara-
tion of Trust and all other Persons who may from time to time be duly
elected or appointed to serve as Trustees in accordance with the provisions
hereof, in each case so long as such Person shall continue in office in ac-
cordance with the terms of this Declaration of Trust, and reference herein
to a Trustee or the Trustees shall refer to such Person or Persons in her
or his or their capacity as trustees hereunder.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to conduct, operate and carry on the business of
a management investment company registered under the 1940 Act through one or
more Series investing primarily in securities, and to carry on such other
business as the Trustees may from time to time determine pursuant to their au-
thority under this Declaration of Trust.
ARTICLE III
SHARES
Section 1. Division of Beneficial Interest. The beneficial interest in the
Trust may be divided into one or more Series. Each Series may be divided into
one or more Classes. Subject to the further provisions of this Article III and
any applicable requirements of the 1940 Act, the Trustees shall have full
power and authority, in their sole discretion, and without obtaining any au-
thorization or vote of the Shareholders of any Series or Class thereof, (i) to
divide the beneficial interest in the Trust or in each Series or Class thereof
into Shares, with or without par value as the Trustees shall determine, (ii)
to issue Shares without limitation as to number (including fractional Shares),
to such Persons and for such amount and type of consideration, including cash
or securities, at such time or times and on such terms as the Trustees may
deem appropriate, (iii) to establish and designate and to change in any manner
any Series or Class thereof and to fix such preferences, voting powers,
rights, duties and privileges and business purpose of each Series or Class
thereof as the Trustees may from time to time determine, which preferences,
voting powers, rights, duties and privileges may be senior or subordinate to
(or in the case of business purpose, different from) any existing Series or
Class thereof and may be limited to specified property or obligations of the
Trust or profits and losses associated with specified property or obligations
of the Trust, (iv) to divide or combine the Shares of any Series or Class
thereof into a greater or lesser number, or issue dividends in Shares with re-
spect to Shares of any Series or Class, without thereby materially changing
the proportionate beneficial interest of the Shares of such Series or Class in
the assets held with respect to that Series or Class thereof, (v) to classify
or reclassify any issued Shares of any Series or Class thereof into Shares of
one or more Series or Classes thereof and (vi) to take such other action with
respect to the Shares as the Trustees may deem desirable.
Subject to the distinctions permitted among Classes or otherwise in Shares
of the same Series as established by the Trustees consistent with the require-
ments of the 1940 Act, each Share of a Series of the Trust shall represent an
equal beneficial interest in the net assets of such Series, and each holder of
Shares of a Series shall be entitled to receive such holder's pro rata share
of distributions of income and capital gains, if any, made with respect to
such Series. Upon redemption of the Shares of any Series or Class thereof, the
applicable Shareholder shall be entitled to be paid solely out of, the funds
and property of such Series or Class thereof of the Trust.
All references to Shares in this Declaration of Trust shall be deemed to be
Shares of any or all Series or Classes thereof, as the context may require.
All provisions herein relating to the Trust shall apply equally to each Series
of the Trust and each Class thereof, except as the context otherwise requires.
All Shares issued hereunder, including, without limitation, Shares issued in
connection with a dividend in Shares or a split or reverse split of Shares,
shall be fully paid and non-assessable. Except as otherwise provided by the
Trustees, Shareholders shall have no appraisal, preemptive or other right to
subscribe to any additional Shares or other securities issued by the Trust.
Section 2. Ownership of Shares. The Ownership of Shares shall be recorded on
the books of the Trust or a transfer or similar agent for the Trust,
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<PAGE>
which books shall be maintained separately for the Shares of each Series (or
Class). No certificates certifying the ownership of Shares shall be issued ex-
cept as the Trustees may otherwise determine from time to time. The Trustees
may make such rules as they consider appropriate for the issuance of Share
certificates, the transfer of Shares of each Series (or Class) and similar
matters. The record books of the Trust as kept by the Trust or any transfer or
similar agent, as the case may be, shall be conclusive as to the identity of
the Shareholders of each Series (or Class) and as to the number of Shares of
each Series (or Class) held from time to time by each Shareholder.
Section 3. Transfer of Shares. Except as otherwise provided by the Trustees,
Shares shall be transferable on the books of the Trust only by the record
holder thereof or by his duly authorized agent upon delivery to the Trustees
or the Trust's transfer agent of a duly executed instrument of transfer, to-
gether with a Share certificate if one is outstanding, and such evidence of
the genuineness of the execution and authorization thereof as may be required
by the Trustees and of such other matters as may be required by the Trustees.
Upon such delivery, and subject to any further requirements specified by the
Trustees or contained in the By-Laws, the transfer shall be recorded on the
books of the Trust. Until a transfer is so recorded, the Shareholder of record
of Shares shall be deemed to be the holder of such Shares for all purposes
hereunder and neither the Trustees nor the Trust, nor any transfer agent,
Shareholder servicing agent or similar agent, any officer, employee or agent
of the Trust, shall be affected by any notice of a proposed transfer.
Section 4. Investments in the Trust. Investments may be accepted by the
Trust from such Persons, at such times, on such terms, and for such considera-
tion as the Trustees from time to time may authorize.
Section 5. Status of Shares and Limitation of Personal Liability. Shares
shall be deemed to be personal property giving only the rights provided in
this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof. The
death, incapacity, dissolution, termination or bankruptcy of a Shareholder
during the existence of the Trust shall not operate to terminate the Trust,
nor entitle the representative of any such Shareholder to an accounting or to
take any action in court or elsewhere against the Trust or the Trustees, but
entitles such representative only to the rights of such Shareholder under this
Trust. Ownership of Shares shall not entitle the Shareholder to any title in
or to the whole or any part of the Trust Property or right to call for a par-
tition or division of the same or for an accounting, nor shall the ownership
of Shares constitute the Shareholders as partners. Neither the Trust nor the
Trustees, nor any officer, employee or agent of the Trust shall have any power
to bind personally any Shareholder, nor, except as specifically provided here-
in, to call upon any Shareholder for the payment of any sum of money or as-
sessment whatsoever other than such as the Shareholder may at any time person-
ally agree to pay. Except as specifically provided herein, no Shareholder
shall be personally liable for the debts, liabilities, obligations or expenses
incurred by, contracted for, or otherwise existing with respect to, the Trust
or by or on behalf of any Series or Class. Every note, bond, contract or other
understanding issued by or on behalf of the Trust or Trustees relating to the
Trust or to a Series or Class may include a recitation limiting the obligation
represented thereby to the Trust or to one or more Series or Class and its re-
spective assets (but the omission of such a recitation shall not operate to
bind any Shareholder or Trustee of the Trust).
Section 6. Establishment and Designation of Series (or Class). Without ob-
taining any authorization or vote of the Shareholders of any Series or Class
thereof (except as otherwise required by the 1940 Act), the establishment and
designation of any Series (or Class) of Shares shall be effective upon the
adoption by a majority of the then Trustees of a resolution that sets forth
such establishment and designation and the relative rights and preferences of
such Series (or Class), whether directly in such resolution or by reference to
another document including, without limitation, any registration statement of
the Trust, or as otherwise provided in such resolution.
Shares of each Series (or Class) established pursuant to this Article III,
unless otherwise provided in the resolution establishing such Series, shall
have the following relative rights and preferences:
(a) Assets Held with Respect to a Particular Series (or Class). All con-
sideration received by the Trust for the issue or sale of Shares of a par-
ticular Series or Class thereof, together with all assets in which such
considera-
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<PAGE>
tion is invested or reinvested, all income, earnings, profits, and proceeds
thereof from whatever source derived, including, without limitation, any
proceeds derived from the sale, exchange or liquidation of such assets, and
any funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably be held with respect to
that Series (or Class) for all purposes, subject only to the rights of
creditors of such Series (or Class thereof to the extent provided below),
and shall be so recorded upon the books of account of the Trust. Such con-
sideration, assets, income, earnings, profits and proceeds thereof, from
whatever source derived, including, without limitation, any proceeds de-
rived from the sale, exchange or liquidation of such assets, and any funds
or payments derived from any reinvestment of such proceeds, in whatever
form the same may be, are herein referred to as "assets held with respect
to" that Series (or Class thereof). In the event that there are any assets,
income, earnings, profits and proceeds thereof, funds or payments that are
not readily identifiable as assets held with respect to any particular Se-
ries (and the Classes thereof) (collectively "General Assets"), the Trust-
ees shall allocate such General Assets to, between or among any one or more
of the Series (and the Classes thereof) in such manner and on such basis as
the Trustees, in their sole discretion, deem fair and equitable, and any
General Assets so allocated to a particular Series (and the Classes there-
of) shall be assets held with respect to that Series and such Classes. Each
such allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Series and Classes for all purposes. Separate and dis-
tinct records shall be maintained for each Series (and the Classes thereof)
and the assets held with respect to each Series (and the Classes thereof)
shall be held and accounted for separately from the assets held with re-
spect to all other Series (and the Classes thereof) and the General Assets
of the Trust not allocated to such Series or Classes.
(b) Liabilities Attributable to a Particular Series (or Class). The as-
sets of the Trust held with respect to each particular Series (or Class
thereof) shall be charged exclusively with the liabilities of the Trust at-
tributable to that Series or Class and all expenses, costs, charges and re-
serves attributable to that Series or Class. Any general liabilities of the
Trust that are not readily identifiable as being attributable to any par-
ticular Series (and the Classes thereof) shall be allocated and charged by
the Trustees to and among any one or more of the Series (and the Classes
thereof) in such manner and on such basis as the Trustees in their sole
discretion deem fair and equitable. All liabilities, expenses, costs,
charges, and reserves so charged to a Series (and the Classes thereof) are
herein referred to as "liabilities attributable to" that Series (or Class
thereof). Each allocation of liabilities, expenses, costs, charges and re-
serves by the Trustees shall be conclusive and binding upon the Sharehold-
ers of all Series and Classes for all purposes. All liabilities attribut-
able to a particular Series shall be enforceable against the assets held
with respect to such Series only and not against the assets of the Trust
generally or against the assets held with respect to any other Series. No-
tice of this limitation on the liability of each Series shall be set forth
in the Certificate of Trust or in an amendment thereto prior to the issu-
ance of any Shares of a Series. To the extent that the Trustees, pursuant
to Section 2 of Article VII hereof, include a Class limitation on liability
in any note, bond, contract, instrument, certificate or undertaking made
with respect to any Class, the parties to such note, bond, contract, in-
strument, certificate or undertaking shall look only to the assets of such
Class in satisfaction of the liabilities arising thereunder and not to the
assets of any other Class of the applicable Series.
(c) Dividends, Distributions, Redemptions and Repurchases. Notwithstanding
any other provision of this Declaration of Trust, including, without
limitation, Article VI, no dividend or distribu-tion, including, without
limitation, any distribution paid upon termination of the Trust or of any
Series (or Class) thereof with respect to, nor any redemption or repurchase
of, the Shares of any Series (or Class thereof) shall be effected by the Trust
other than from the assets held with respect to such Series (or Class
thereof), nor shall any Shareholder of any partic-ular Series (or Class
thereof) otherwise have any right or claim against the assets held with
respect to any other Series or Class except to the ex-tent that such
Shareholder has such a right or
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<PAGE>
claim hereunder as a Shareholder of such other Series or Class. The Trust-
ees 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 con-
clusive and binding upon the Shareholders.
(d) Equality. All the Shares of each particular Series (or Class thereof)
shall represent an equal proportionate interest in the assets held with re-
spect to that Series (or Class thereof), and each Share of any particular
Series shall be equal to each other Share of that Series (subject to the
liabilities attributable to that Series and such rights and preferences as
may have been established and designated with respect to Classes, or other-
wise, of Shares within such Series).
(e) Fractions. Any fractional Share of a Series (or Class thereof) shall
carry proportionately all the rights and obligations of a whole Share of
that Series or Class, including rights with respect to voting, receipt of
dividends and distributions, redemption of Shares and termination of the
Trust.
(f) Combination of Series. The Trustees shall have the authority, without
the approval of the Shareholders of any Series (or Class thereof), unless
otherwise required by applicable law, to combine the assets and liabilities
attributable to any two or more Series (or Classes) into assets and liabil-
ities attributable to a single Series or Class.
(g) Elimination of Series. At any time that there are no Shares outstand-
ing of any particular Series (or Class) previously established and desig-
nated, the Trustees may by resolution of a majority of the Trustees abolish
that Series (or Class) and rescind the establishment and designation
thereof and may thereafter establish a new Series (or Class) with such des-
ignation and otherwise as herein provided.
Section 7. Indemnification of Shareholders. If any Shareholder or former
Shareholder shall be exposed to liability by reason of a claim or demand re-
lating to such Person being or having been a Shareholder, and not because of
such Person's acts or omissions, the Shareholder or former Shareholder (or
such Person's heirs, executors, administrators, or other legal representatives
or in the case of a corporation or other entity, its corporate or other gen-
eral successor) shall be entitled to be held harmless from and indemnified out
of the assets of the Trust against all cost and expense reasonably incurred in
connection with such claim or demand, but only out of the assets held with re-
spect to the particular Series (or Class thereof) of Shares of which such Per-
son is or was a Shareholder and from or in relation to which such liability
arose. The Series (or Class thereof) may, at its option and shall, upon re-
quest by the Shareholder, assume the defense of any claim made against the
Shareholder for any act or obligation of the Series and satisfy any judgment
thereon.
ARTICLE IV
TRUSTEES
Section 1. Number, Election and Tenure. The number of Trustees shall ini-
tially be five, who shall be Claire B. Benenson, Richard E. Deems, S. Leland
Dill, Eugene J. Glaser and Donald B. Romans. After the date of this Declara-
tion of Trust, the number of Trustees shall be five or such other number as
shall, from time to time, be determined by the Trustees pursuant to Section 3
of this Article IV. Each Trustee shall serve during the continued term of the
Trust until she or he dies, resigns, is declared bankrupt or incompetent by a
court of appropriate jurisdiction, or is removed, or, if sooner, until the
next meeting of Shareholders called for the purpose of electing Trustees and
until the election and qualification of her or his successor. In the event
that less than the majority of the Trustees holding office have been elected
by the Shareholders, to the extent required by the 1940 Act, the Trustees then
in office shall call a Shareholders' meeting for the election of Trustees. Any
Trustee may resign at any time by written instrument signed by her or him and
delivered to any officer of the Trust or to the Secretary of any meeting of
the Trustees. Such resignation shall be effective upon receipt unless speci-
fied to be effective at some other time. Except to the extent expressly pro-
vided in a written agreement with the Trust, no Trustee resigning and no
Trustee removed shall have any right to any compensation for any period fol-
lowing her or his resignation or removal, or any right to damages on account
of such removal. The Shareholders may elect Trustees at any meeting of Share-
holders called by the Trustees for that purpose. Any Trustee may be removed at
any meeting of Shareholders by a vote of two-thirds of the outstanding Shares
of the Trust.
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<PAGE>
Section 2. Effect of Death, Resignation, etc. of a Trustee. The death, dec-
lination to serve, resignation, retirement, removal, or incapacity of one or
more Trustees, or all of them, shall not operate to annul the Trust or to re-
voke any existing agency created pursuant to the terms of this Declaration of
Trust. Whenever there shall be fewer than the designated number of Trustees,
until additional Trustees are elected or appointed as provided herein to bring
the total number of Trustees equal to the designated number, 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 of Trust. As conclusive evidence of such vacancy, a written in-
strument certifying the existence of such vacancy may be executed by an offi-
cer of the Trust or by a majority of the Trustees then in office. In the event
of the death, declination, resignation, retirement, removal, or incapacity of
all the then Trustees within a short period of time and without the opportu-
nity for at least one Trustee being able to appoint additional Trustees to re-
place those no longer serving, the Trust's Manager(s) are empowered to appoint
new Trustees subject to the applicable provisions of the 1940 Act.
Section 3. Powers. Subject to the provisions of this Declaration of Trust,
the business of the Trust shall be managed by the Trustees; the Trustees shall
have full power and authority to do any and all acts and to make and execute
any and all contracts and instruments that they may consider necessary or ap-
propriate in connection with the management of the Trust, including the power
to engage in securities transactions of all kinds on behalf of the Trust.
Without limiting the foregoing, the Trustees may: adopt By-Laws not inconsis-
tent with this Declaration of Trust providing for the regulation and manage-
ment of the affairs of the Trust and may amend and repeal them to the extent
that such By-Laws do not reserve that right to the Shareholders; enlarge or
reduce their number; remove any Trustee with or without cause at any time by
written instrument signed by at least two-thirds of the number of Trustees
prior to such removal, specifying the date when such removal shall become ef-
fective and fill vacancies caused by enlargement of their number or by the
death, resignation or removal of a Trustee; elect and remove, with or without
cause, such officers and appoint and terminate such agents as they consider
appropriate; appoint from their own number and establish and terminate one or
more committees consisting of two or more Trustees which may exercise the pow-
ers and authority of the Board of Trustees to the extent that the Board of
Trustees determine; deposit all or any part of such assets in a system or sys-
tems for the central handling of securities or with a Federal Reserve Bank;
provide for the issuance and distribution of Shares by the Trust directly or
through one or more Principal Underwriters or otherwise; redeem, repurchase
and transfer Shares pursuant to applicable law; declare and pay dividends and
distributions to Shareholders from the assets available therefor; and in gen-
eral exercise, or delegate to any officer of the Trust, to any committee of
the Trustees and to any agent or employee of the Trust or to any such custodi-
an, transfer or Shareholder servicing agent, or Principal Underwriter, such
authority as they consider desirable. Any determination as to what is in the
interests of the Trust made by the Trustees in good faith shall be conclusive.
In construing the provisions of this Declaration of Trust, the presumption
shall be in favor of a grant of power to the Trustees. Unless otherwise speci-
fied herein or in the By-Laws or required by law, any action by the Trustees
shall be deemed effective if approved or taken by a majority of the Trustees
present at a meeting of Trustees at which a quorum of Trustees is present,
within or without the State of Delaware.
Without limiting the foregoing, the Trustees shall have the power and au-
thority to cause the Trust (or to act on behalf of the Trust):
(a) To operate as and carry out the business of an investment company,
and exercise all the powers necessary or appropriate to the conduct of such
operations;
(b) To invest and reinvest cash, to hold cash uninvested, and to sub-
scribe for, invest in, reinvest in, purchase or otherwise acquire, own,
hold, pledge, sell, assign, transfer, exchange, distribute, purchase or
write options on, lend, enter into contracts for the future acquisition or
delivery of, or otherwise deal in or dispose of, securities, indices, cur-
rencies, commodities or other property of every nature and kind, including,
without limitation, all types of bonds, debentures, stocks, negotiable or
non-negotiable instruments, obligations, evidences of indebtedness, certif-
icates of deposit or indebtedness, commercial paper, repurchase agreements,
bankers' acceptances, and other securities, commodities or contracts of any
kind, issued, created, guaranteed, or sponsored by
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any and all Persons, including, without limitation, states, territories,
and possessions of the United States and the District of Columbia and any
political subdivision, agency, or instrumentality thereof, the U.S. Govern-
ment or any foreign government or any political subdivision of the U.S.
Government or any foreign government, or any domestic or international in-
strumentality, or by any bank or savings institution, or by any corporation
or organization organized under the laws of the United States or of any
state, territory, or possession thereof, or by any corporation or organiza-
tion organized under any foreign law, or in "when issued" contracts for any
such securities; to change the investments of the assets of the Trust; and
to exercise any and all rights, powers, and privileges of ownership or in-
terest in respect of any and all such investments of every kind and de-
scription, including, without limitation, the right to consent and other-
wise act with respect thereto, with power to designate one or more Persons
to exercise any of said rights, powers, and privileges in respect of any of
said instruments;
(c) To sell, exchange, lend, pledge, mortgage, hypothecate, lease, or
write options (including options on futures contracts) with respect to or
otherwise deal in any property rights relating to any or all of the assets
of the Trust or any Series or Class thereof;
(d) To vote or give assent, or exercise any rights of ownership, with re-
spect to stock or other securities or property; and to execute and deliver
proxies or powers of attorney to such Person or Persons as the Trustees
shall deem proper, granting to such Person or Persons such power and dis-
cretion with relation to securities or property as the Trustees shall deem
proper;
(e) To set record dates for the determination of Shareholders with re-
spect to various matters, which, for purposes of determining the Sharehold-
ers of any Series (or Class) who are entitled to receive payment of any
dividend or of any other distribution shall be on or before the date for
the payment of such dividend or such other payment, as the record date for
determining the Shareholders of such Series (or Class) having the right to
receive such dividend or distribution; without fixing a record date, the
Trustees may for distribution purposes close the register or transfer books
for one or more Series (or Classes) at any time prior to the payment of a
distribution; nothing in this subsection shall be construed as precluding
the Trustees from setting different record dates for different Series (or
Classes);
(f) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities or other property;
(g) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form, or in its own
name or in the name of a custodian or a nominee or nominees or otherwise;
(h) To consent to or participate in any plan for the reorganization, con-
solidation or merger of any corporation or issuer of any security or prop-
erty which is held in the Trust; to consent to any contract, lease, mort-
gage, purchase or sale of property by such corporation or issuer; and to
pay calls or subscriptions with respect to any security or property held in
the Trust;
(i) To join with other security or property holders in acting through a
committee, depositary, voting trustee or otherwise, and in that connection
to deposit any security or property with, or transfer any security or prop-
erty to, any such committee, depositary or trustee, and to delegate to them
such power and authority with relation to any security or property (whether
or not so deposited or transferred) as the Trustees shall deem proper, and
to agree to pay, and to pay, such portion of the expenses and compensation
of such committee, depositary or trustee as the Trustees shall deem proper;
(j) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including, but not limited
to, claims for taxes;
(k) To enter into joint ventures, general or limited partnerships and any
other combinations or associations;
(l) To borrow funds or other property in the name of the Trust or any Se-
ries thereof exclusively for Trust or the relevant Series purposes and in
connection therewith issue notes or other evidences of indebtedness; and to
mortgage and pledge the Trust Property or any part thereof to secure any or
all of such indebtedness;
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(m) To endorse or guarantee the payment of any notes or other obligations
of any Person; to make contracts of guaranty or suretyship, or otherwise
assume liability for payment thereof; and to mortgage and pledge the Trust
Property or any part thereof to secure any of or all of such obligations;
(n) To purchase and pay for entirely out of Trust Property such insurance
as the Trustees may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the
assets of the Trust or payment of distributions and principal on its port-
folio investments, and insurance policies insuring the Shareholders, Trust-
ees, officers, employees, agents, investment advisers, principal underwrit-
ers, or independent contractors of the Trust, individually against all
claims and liabilities of every nature arising by reason of holding Shares,
holding, being in or having held any such office or position, or by reason
of any action alleged to have been taken or omitted by any such Person as
Trustee, officer, employee, agent, investment adviser, principal underwrit-
er, or independent contractor, including any action taken or omitted that
may be determined to constitute negligence, whether or not the Trust would
have the power to indemnify such Person against liability;
(o) To adopt, establish and carry out pension, profit-sharing, Share bo-
nus, Share purchase, savings, thrift and other retirement, incentive and
benefit plans and trusts, including the purchasing of life insurance and
annuity contracts as a means of providing such retirement and other bene-
fits, for any or all of the Trustees, officers, employees and agents of the
Trust;
(p) To enter into contracts of any kind and description;
(q) To interpret the investment policies, practices or limitations of any
Series or Class;
(r) To establish a registered office and have a registered agent in the
State of Delaware;
(s) To invest the assets of any Series in a single investment company,
including investment by means of transfer of such assets in exchange for an
interest or interests in such investment company;
(t) Subject to the 1940 Act, to engage in any other lawful act or activ-
ity in which a business trust organized under the Delaware Act may engage;
and
(u) In general to carry on any other business in connection with or inci-
dental to any of the foregoing powers, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of any
object or the furtherance of any power hereinbefore set forth, either alone
or in association with others, and to do every other act or thing inciden-
tal or appurtenant to or growing out of or connected with the aforesaid
business or purposes, objects or powers.
The foregoing clauses shall be construed as objects and powers, and the
foregoing enumeration of specific powers shall not be held to limit or re-
strict in any manner the general power of the Trustees. Any action by one or
more of the Trustees in their capacity as such hereunder shall be deemed an
action on behalf of the Trust or the applicable Series, and not an action in
an individual capacity.
The Trust shall not be limited to investing in obligations maturing before
the possible termination of the Trust or one or more of its Series or Classes
thereof. The Trust shall not in any way be bound or limited by any present or
future law or custom in regard to investment by fiduciaries. The Trust shall
not be required to obtain any court order to deal with any assets of the Trust
or take any other action hereunder.
Section 4. Payment of Expenses by the Trust. The Trustees are authorized to
pay or cause to be paid out of the principal or income of the Trust, or partly
out of the principal and partly out of income, as they deem fair, all ex-
penses, fees, charges, taxes and liabilities incurred or arising in connection
with the Trust, or in connection with the management thereof, including, but
not limited to, the Trustees compensation and such expenses and charges for
the services of the Trust's officers, employees, investment adviser or manag-
er, Principal Underwriter, auditors, counsel, custodian, transfer agent,
Shareholder servicing agent, and such other agents or independent contractors
and such other expenses and charges as the Trustees may deem necessary or
proper to incur, which expenses, fees, charges, taxes and liabilities shall be
allocated in accordance with Article III, Section 6 hereof.
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Section 5. Payment of Expenses by Shareholders. The Trustees shall have the
power to cause each Shareholder, or each Shareholder of any particular Series
or Class, to pay directly, at such intervals as the Trustees may determine, in
advance or arrears, for charges of the Trust's transfer agent, Shareholder
servicing or similar agent, an amount fixed from time to time by the Trustees,
by setting off such charges due from such Shareholder from declared but unpaid
dividends owed such Shareholder and/or by reducing the number of Shares in the
account of such Shareholder by that number of full and/or fractional Shares
which represents the outstanding amount of such charges due from such Share-
holder.
Section 6. Ownership of Assets of the Trust. The assets of the Trust shall
be held separate and apart from any assets now or hereafter held in any capac-
ity other than as Trustee hereunder by the Trustees. Title to all of the as-
sets of the Trust shall at all times be considered as vested in the Trust, ex-
cept that the Trustees shall have 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 as nominee, on such terms as the Trustees may de-
termine. 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 the resignation, removal or death of a Trustee, she or he shall automati-
cally 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. Such vesting and cessation of
title shall be effective whether or not conveyancing documents have been exe-
cuted and delivered.
Section 7. Service Contracts.
(a) Subject to such requirements and restrictions as may be set forth under
federal and/or state law and in the By-Laws, including, without limitation, at
the date hereof the requirements of Section 15 of the 1940 Act, or any succes-
sor provision, the Trustees may, at any time and from time to time, contract
for exclusive or nonexclusive advisory, management and/or administrative serv-
ices for the Trust or for any Series (or Class thereof) with any corporation,
trust, association or other organization; and any such contract may contain
such other terms as the Trustees may determine, including, without limitation,
authority for the Manager or administrator to delegate certain or all of its
duties under such contracts to qualified investment advisers and administra-
tors and to determine from time to time without prior consultation with the
Trustees what investments shall be purchased, held, sold or exchanged and what
portion, if any, of the assets of the Trust shall be held uninvested and to
make changes in the Trust's investments, or such other activities as may spe-
cifically be delegated to such party.
(b) The Trustees may also, at any time and from time to time, contract with
any corporation, trust, association or other organization, appointing it ex-
clusive or nonexclusive distributor or Principal Underwriter for the Shares of
one or more of the Series (or Classes) or other securities to be issued by the
Trust. Every such contract shall comply with such requirements and restric-
tions as may be set forth under federal and/or state law and in the By-Laws,
including, without limitation, at the date hereof the requirements of Section
15 of the 1940 Act, or any successor provision; and any such contract may con-
tain such other terms as the Trustees may determine.
(c) The Trustees are also empowered, at any time and from time to time, to
contract with any corporations, trusts, associations or other organizations,
appointing it or them the custodian, transfer agent and/or Shareholder servic-
ing agent for the Trust or one or more of its Series (or Classes). Every such
contract shall comply with such requirements and restrictions as may be set
forth under federal and/or state law and in the By-Laws or stipulated by reso-
lution of the Trustees. The Trustees are empowered, at any time and from time
to time, to retain subagents (foreign or domestic) in connection with any
service provider to the Trust or one or more of its Series (or Classes).
(d) Subject to applicable law, the Trustees are further empowered, at any
time and from time to time, to contract with any entity to provide such other
services, including without limitation accounting and pricing services, to the
Trust or one or more of the Series (or Classes thereof), as the Trustees de-
termine to be in the best interests of the Trust and the applicable Series (or
Class).
(e) The fact that:
(i) any of the Shareholders, Trustees, or officers of the Trust is a
Shareholder, director, officer, partner, trustee, employee, Manager,
adviser, Principal Underwriter, distributor, or affiliate or agent of or
for any corporation, trust,
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<PAGE>
association, or other organization, or for any parent or affiliate of any
organization, with which an advisory, management or administration con-
tract, or principal underwriter's or distributor's contract, or transfer,
Shareholder servicing or other type of service contract may have been or
may hereafter be made, or that any such organization, or any parent or af-
filiate thereof, is a Shareholder or has an interest in the Trust, or that
(ii) any corporation, trust, association or other organization with which
an advisory, management or administration contract or principal underwrit-
er's or distributor's contract, or transfer, Shareholder servicing or other
type of service contract may have been or may hereafter be made also has an
advisory, management or administration contract, or principal underwriter's
or distributor's contract, or transfer, Shareholder servicing or other
service contract with one or more other corporations, trusts, associations,
or other organizations, or has other business or interests,
shall not affect the validity of any such contract or disqualify any Share-
holder, Trustee or officer of the Trust from voting upon or executing the
same, or create any liability or accountability to the Trust or its Sharehold-
ers, provided approval of each such contract is made pursuant to the require-
ments of the 1940 Act.
Section 8. Trustees and Officers as Shareholders. Any Trustee, officer or
agent of the Trust may acquire, own and dispose of Shares to the same extent
as if he were not a Trustee, officer or agent; and the Trustees may issue and
sell and cause to be issued and sold Shares to, and redeem such Shares from,
any such Person or any firm or company in which such Person is interested,
subject only to the general limitations contained herein or in the By-Laws re-
lating to the sale and redemption of such Shares.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 1. Voting Powers, Meetings, Notice and Record Dates. The Sharehold-
ers shall have power to vote only (i) for the election or removal of Trustees
to the extent and as provided in Article IV, Section 1, and (ii) with respect
to such additional matters relating to the Trust as may be required by appli-
cable law, this Declaration of Trust, the By-Laws or any registration of the
Trust with the Commission (or any successor agency) or any state, or as the
Trustees may consider necessary or desirable. Each Shareholder shall be enti-
tled to one vote for each dollar of net asset value (determined as of the ap-
plicable record date) of each Share owned by such Shareholder (number of
Shares owned times net asset value per Share) on any matter on which such
Shareholder is entitled to vote and each fractional dollar amount shall be en-
titled to a proportionate fractional vote. Notwithstanding any other provision
of this Declaration of Trust, on any matter submitted to a vote of the Share-
holders, all Shares of the Trust then entitled to vote shall be voted in ag-
gregate, except (i) when required by the 1940 Act, Shares shall be voted by
individual Series or Class; and (ii) when the matter involves the termination
of a Series or Class or any other action that the Trustees have determined
will affect only the interests of one or more Series or Classes, then only
Shareholders of such Series or Classes shall be entitled to vote thereon.
There shall be no cumulative voting in the election of Trustees. Shares may be
voted in person or by proxy. A proxy may be given in writing. The By-Laws may
provide that proxies may also, or may instead, be given by any electronic or
telecommunications device or in any other manner. Notwithstanding anything
else contained herein or in the By-Laws, in the event a proposal by anyone
other than the officers or Trustees of the Trust is submitted to a vote of the
Shareholders of one or more Series or Classes thereof or of the Trust, or in
the event of any proxy contest or proxy solicitation or proposal in opposition
to any proposal by the officers or Trustees of the Trust, Shares may be voted
only in person or by written proxy at a meeting. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any action re-
quired by law, this Declaration of Trust or the By-Laws to be taken by the
Shareholders. Meetings of the Shareholders shall be called and notice thereof
and record dates therefor shall be given and set as provided in the By-Laws.
Section 2. Quorum and Required Vote. Except when a larger quorum is required
by applicable law, by the By-Laws or by this Declaration of Trust, (i) thirty-
three and one-third percent (33 1/3%) of the Shares entitled to vote shall
constitute a quorum at a Shareholders' meeting and (ii) when any one or more
Series (or Classes) is to vote as a single class separate from any other
Shares, thirty-three and one-third percent (33 1/3%) of the Shares of each
such Series (or
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<PAGE>
Class) entitled to vote shall constitute a quorum at a Shareholders' meeting
of that Series (or Class). Except when a larger vote is required by any provi-
sion of this Declaration of Trust or the By-Laws or by applicable law, when a
quorum is present at any meeting, a majority of the Shares voted shall decide
any questions and a plurality of the Shares voted shall elect a Trustee, pro-
vided that where any provision of law or of this Declaration of Trust requires
that the holders of any Series shall vote as a Series (or that holders of a
Class shall vote as a Class), then a majority of the Shares of that Series (or
Class) voted on the matter (or a plurality with respect to the election of a
Trustee) shall decide that matter insofar as that Series (or Class) is con-
cerned.
Section 3. Additional Provisions. The By-Laws may include further provisions
for Shareholders' votes and meetings and related matters.
ARTICLE VI
NET ASSET VALUE, DISTRIBUTIONS AND REDEMPTIONS
Section 1. Determination of Net Asset Value, Net Income, and
Distributions. Subject to applicable law and Article III, Section 6 hereof,
the Trustees, in their absolute discretion, may prescribe and shall set forth
in the By-Laws or in a duly adopted resolution of the Trustees such bases and
time or times for determining the net asset value of the Shares of any Series
or Class, the net income attributable to the Shares of any Series or Class, or
the declaration and payment of dividends and distributions on the Shares of
any Series or Class, as they may deem necessary or desirable from time to
time.
Section 2. Redemptions and Repurchases.
(a) The Trust shall purchase such Shares as are offered by any Shareholder
for redemption, upon the presentation of a proper instrument of transfer to-
gether with a request directed to the Trust or a Person designated by the
Trust that the Trust purchase such Shares or in accordance with such other
procedures for redemption as the Trustees may from time to time authorize; and
the Trust will pay therefor the net asset value thereof as determined by the
Trustees (or on their behalf), in accordance with any applicable provisions of
the By-Laws and applicable law. Unless extraordinary circumstances exist, pay-
ment for said Shares shall be made by the Trust to the Shareholder within
seven (7) days after the date on which the request is made in proper form. The
obligation set forth in this Section 2 is subject to the provision that in the
event that any time the New York Stock Exchange (the "Exchange") is closed for
other than weekends or holidays, or if permitted by the rules and regulations
or an order of the Commission during periods when trading on the Exchange is
restricted or during any emergency which makes it impracticable for the Trust
to dispose of the investments of the applicable Series or Class or to deter-
mine fairly the value of the net assets held with respect to such Series or
Class or during any other period permitted by order of the Commission for the
protection of investors, such obligations may be suspended or postponed by the
Trustees. In the case of a suspension of the right of redemption as provided
herein, a Shareholder may either withdraw the request for redemption or re-
ceive payment based on the net asset value per Share next determined after the
termination of such suspension.
(b) The redemption price may in any case or cases be paid wholly or partly
in kind if the Trustees determine that such payment is advisable in the inter-
est of the remaining Shareholders of the Series or Class for which the Shares
are being redeemed. The fair value, selection and quantity of securities or
other property so paid or delivered as all or part of the redemption price may
be determined by or under authority of the Trustees. In no case shall the
Trust be liable for any delay of any corporation or other Person in transfer-
ring securities selected for delivery as all or part of any payment in kind.
(c) If the Trustees shall, at any time and in good faith, determine that di-
rect or indirect ownership of Shares of any Series or Class has or may become
concentrated in any Person to an extent that would disqualify any Series as a
regulated investment company under the Internal Revenue Code of 1986, as
amended (or any successor statute thereto), then the Trustees shall have the
power (but not the obligation) by such means as they deem equitable (i) to in-
voluntarily redeem any number, or principal amount, of Shares of such Person
sufficient to maintain or bring the direct or indirect ownership of Shares
into conformity with the requirements for such qualification, and (ii) to ref-
use to transfer or issue Shares to any Person whose acquisition of the Shares
in question would result in such disqualification. Any such redemption shall
be effected at the redemption price and in the manner provided in this Article
VI.
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<PAGE>
(d) The holders of Shares shall upon demand disclose to the Trustees in
writing such information with respect to direct and indirect ownership of
Shares as the Trustees deem necessary to comply with the provisions of the In-
ternal Revenue Code of 1986, as amended (or any successor statute thereto), or
to comply with the requirements of any other taxing or regulatory authority.
(e) Subject to the requirements of the 1940 Act, the Board of Trustees may
cause the Trust to redeem, at the price and in the manner provided in this Ar-
ticle VI, Shares of any Series or Class held by any Person (i) if such Person
is no longer qualified to hold such Shares in accordance with such qualifica-
tions as may be established by the Trustees, (ii) if the net asset value of
such Shares is below the minimum investment amount which initially shall be
$ or such other amount as determined by the Trustees or (iii) if otherwise
deemed by the Trustees to be in the best interest of the Trust or that partic-
ular Series (or Class) as a whole.
(f) Shares redeemed shall, upon redemption, be deemed to be retired and re-
stored to the status of unissued shares.
ARTICLE VII
COMPENSATION AND LIMITATION OF
LIABILITY OF TRUSTEES
Section 1. Compensation. The Trustees as such shall be entitled to reason-
able compensation from the Trust, and they may fix the amount of such compen-
sation. Nothing herein shall in any way prevent the employment of any Trustee
for advisory, management, legal, accounting, investment banking or other serv-
ices and payment for the same by the Trust.
Section 2. Indemnification and Limitation of Liability. A Trustee, when act-
ing in such capacity, shall not be personally liable to any Person, other than
the Trust or a Shareholder to the extent provided in this Article VII, for any
act, omission or obligation of the Trust, of such Trustee or of any other
Trustee. The Trustees shall not be responsible or liable in any event for any
neglect or wrongdoing of any officer, agent, employee, Manager or Principal
Underwriter of the Trust. The Trust (i) may indemnify an agent of the Trust or
any Person who is serving or has served at the Trust's request as an agent of
another organization in which the Trust has any interest as a shareholder,
creditor or otherwise and (ii) shall indemnify each Person who is, or has
been, a Trustee, officer or employee of the Trust and any Person who is serv-
ing or has served at the Trust's request as a director, officer, trustee, or
employee of another organization in which the Trust has any interest as a
shareholder, creditor or otherwise, in the case of (i) and (ii), to the full-
est extent consistent with the 1940 Act and in the manner provided in the By-
Laws; provided that such indemnification shall not be available to any of the
foregoing Persons in connection with a claim, suit or other proceeding by any
such Person against the Trust or a Series (or Class) thereof.
All persons extending credit to, contracting with or having any claim
against the Trust or the Trustees shall look only to the assets of the appro-
priate Series (or Class thereof if the Trustees have included a Class limita-
tion on liability in the agreement with such person as provided below), or, if
the Trustees have yet to establish Series, of the Trust for payment under such
credit, contract or claim; and neither the Trustees nor the Shareholders, nor
any of the Trust's officers, employees or agents, whether past, present or fu-
ture, shall be personally liable therefor.
Every note, bond, contract, instrument, certificate or undertaking and every
other act or thing whatsoever executed or done by or on behalf of the Trust or
the Trustees by any of them in connection with the Trust shall conclusively be
deemed to have been executed or done only in or with respect to his or their
capacity as Trustee or Trustees, and such Trustee or Trustees shall not be
personally liable thereon. At the Trustees' discretion, any note, bond, con-
tract, instrument, certificate or undertaking made or issued by the Trustees
or by any officer or officers may give notice that the Certificate of Trust is
on file in the Office of the Secretary of State of the State of Delaware and
that a statutory limitation on liability of Series exists and such note, bond,
contract, instrument, certificate or undertaking may, if the Trustees so de-
termine, recite that the same was executed or made on behalf of the Trust by a
Trustee or Trustees in such capacity and not individually or by an officer or
officers in such capacity and not individually and that the obligations of
such instrument are not binding upon any of them or the Shareholders individu-
ally but are binding only on the assets and property of the Trust or a Series
thereof, and may contain such further recital as such Person or Persons may
deem appropriate including, without limitation, a requirement, in any note,
bond, contract, instrument,
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<PAGE>
certificate or undertaking made with respect to one or more Classes of any Se-
ries that the parties thereto look only to the assets of such Class or Classes
in satisfaction of the liabilities arising thereunder. The omission of any
such notice or recital shall in no way operate to bind any Trustees, officers
or Shareholders individually.
Section 3. Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees of their powers and discretions hereunder
shall be binding upon everyone interested. A Trustee shall be liable to the
Trust and to any Shareholder solely for her or his own willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in
the conduct of the office of Trustee, and shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees may take advice of counsel
or other experts with respect to the meaning and operation of this Declaration
of Trust, and shall be under no liability for any act or omission in accor-
dance with such advice nor for failing to follow such advice. The Trustees
shall not be required to give any bond as such, nor any surety if a bond is
required.
Section 4. Insurance. The Trustees shall be entitled and empowered to the
fullest extent permitted by law to purchase with Trust assets insurance for
liability and for all expenses reasonably incurred or paid or expected to be
paid by a Trustee, officer, employee or agent of the Trust in connection with
any claim, action, suit or proceeding in which she or he becomes involved by
virtue of her or his capacity or former capacity with the Trust.
ARTICLE VIII
MISCELLANEOUS
Section 1. Liability of Third Persons Dealing with Trustees. No Person deal-
ing with the Trustees shall be bound to make any inquiry concerning the valid-
ity of any transaction made or to be made by the Trustees or to see to the ap-
plication of any payments made or property transferred to the Trust or upon
its order.
Section 2. Termination of Trust or Series.
(a) Unless terminated as provided herein, the Trust shall continue without
limitation of time. The Trust may be terminated at any time by vote of a ma-
jority of the Shares of each Series entitled to vote, voting separately by Se-
ries, or by the Trustees by written notice to the Shareholders. Any Series of
Shares or Class thereof may be terminated at any time by vote of a majority of
the Shares of such Series or Class entitled to vote or by the Trustees by
written notice to the Shareholders of such Series or Class.
(b) Upon the requisite Shareholder vote or action by the Trustees to termi-
nate the Trust or any one or more Series of Shares or any Class thereof, after
paying or otherwise providing for all charges, taxes, expenses and liabili-
ties, whether due or accrued or anticipated, of the Trust or of the particular
Series or any Class thereof as may be determined by the Trustees, the Trust
shall in accordance with such procedures as the Trustees consider appropriate
reduce the remaining assets of the Trust or of the affected Series or Class to
distributable form in cash or Shares (if any Series remain) or other securi-
ties, or any combination thereof, and distribute the proceeds to the Share-
holders of the Series or Classes involved, ratably according to the number of
Shares of such Series or Class held by the several Shareholders of such Series
or Class on the date of distribution. Thereupon, the Trust or any affected Se-
ries or Class shall terminate and the Trustees and the Trust shall be dis-
charged of any and all further liabilities and duties relating thereto or
arising therefrom, and the right, title and interest of all parties with re-
spect to the Trust or such Series or Class shall be canceled and discharged.
(c) Upon termination of the Trust, following completion of winding up of its
business, the Trustees shall cause a certificate of cancellation of the
Trust's Certificate of Trust to be filed in accordance with the Delaware Act,
which certificate of cancellation may be signed by any one Trustee.
Section 3. Reorganization.
(a) Notwithstanding anything else herein, the Trustees may, without any
Shareholder approval or vote unless such approval or vote is required by ap-
plicable law, in order to change the form or jurisdiction of organization of
the Trust or for any other purpose (i) cause the Trust to merge or consolidate
with or into one or more trusts (or series thereof to the extent permitted by
law), partnerships, associations, corporations or other business entities (in-
cluding trusts, partnerships, associations, corporations or other business en-
tities created by the Trustees to accomplish such merger or consolidation),
(ii) cause the Shares to be exchanged under or pursuant to any state
B-13
<PAGE>
or federal statute to the extent permitted by law or (iii) cause the Trust to
reorganize under the laws of any state or other political subdivision of the
United States, if such action is determined by the Trustees to be in the best
interests of the Trust. Any agreement of merger or consolidation or exchange
or certificate of merger may be signed by a majority of the Trustees and fac-
simile signatures conveyed by electronic or telecommunication means shall be
valid.
(b) Pursuant to and in accordance with the provisions of Section 3815(f) of
the Delaware Act, and notwithstanding anything to the contrary contained in
this Declaration of Trust, an agreement of merger or consolidation approved by
the Trustees in accordance with this Section 3 may effect any amendment to the
governing instrument of the Trust or effect the adoption of a new trust in-
strument of the Trust if the Trust is the surviving or resulting trust in the
merger or consolidation.
(c) The Trustees may, without any Shareholder approval or vote unless such
approval or vote is required by applicable law, create one or more business
trusts to which all or any part of the assets, liabilities, profits or losses
of the Trust or any Series or Class thereof may be transferred and may provide
for the conversion of Shares in the Trust or any Series or Class thereof into
beneficial interests in any such newly created trust or trusts or any series
or classes thereof.
Section 4. Amendments. Except as specifically provided in this section, the
Trustees may, without Shareholder vote, restate, amend or otherwise supplement
this Declaration of Trust. Shareholders shall have the right to vote (i) on
any amendment that would affect their right to vote granted in Article V, Sec-
tion 1 hereof, (ii) on any amendment to this Section 4 of Article VIII, (iii)
on any amendment that may be required to be approved by Shareholders by appli-
cable law or by the Trust's registration statement filed with the Commission,
and (iv) on any amendment submitted to them by the Trustees. Any amendment re-
quired or permitted to be submitted to the Shareholders that, as the Trustees
determine, shall affect the Shareholders of one or more Series (or Classes
thereof) shall be authorized by a vote of the Shareholders of each Series or
Class affected and no vote of Shareholders of a Series or Class not affected
shall be required. Notwithstanding anything else herein, no amendment hereof
shall limit the rights to insurance provided by Article VII, Section 4 with
respect to any acts or omissions of Persons covered thereby prior to such
amendment nor shall any such amendment limit the rights to indemnification
referenced in Article VII, Section 2 hereof as provided in the By-Laws with
respect to any actions or omissions of Persons covered thereby prior to such
amendment. The Trustees may, without Shareholder vote, restate, amend, or oth-
erwise supplement the Certificate of Trust as they deem necessary or desir-
able.
Section 5. Filing of Copies, References, Headings. 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 Shareholder. Any-
one dealing with the Trust may rely on a certificate by an officer of the
Trust as to whether or not any such restatements and/or amendments have been
made and as to any matters in connection with the Trust hereunder; and, with
the same effect as if it were the original, may rely on a copy certified by an
officer of the Trust to be a copy of this instrument or of any such restate-
ments and/or amendments. In this instrument and in any such restatements
and/or amendments, references to this instrument, and all expressions such as
"herein", "hereof" and "hereunder", shall be deemed to refer to this instru-
ment as amended or affected by any such restatements and/or amendments. Head-
ings 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 ef-
fect 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. This instrument may be executed in any num-
ber of counterparts each of which shall be deemed an original.
Section 6. Applicable Law.
(a) The Trust is created under, and this Declaration of Trust is to be gov-
erned by, and construed and enforced in accordance with, the laws of the state
of Delaware. The Trust shall be of the type commonly called a business trust,
and without limiting the provisions hereof, the Trust specifically reserves
the right to exercise any of the powers or privileges afforded to business
trusts or actions that may be engaged in by business trusts under the Delaware
Act, and the absence of a specific reference herein to any such power, privi-
lege or action shall not imply that the Trust may not exercise such power or
privilege or take such actions.
B-14
<PAGE>
(b) Notwithstanding the first sentence of Section 6(a) of this Article VIII,
there shall not be applicable to the Trust, the Trustees or this Declaration
of Trust (x) the provisions of section 3540 of Title 12 of the Delaware Code
or (y) any provisions of the laws (statutory or common) of the state of Dela-
ware (other than the Delaware Act) pertaining to trusts that relate to or reg-
ulate: (i) the filing with any court or governmental body or agency of trustee
accounts or schedules of trustee fees and charges, (ii) affirmative require-
ments to post bonds for trustees, officers, agents or employees of a trust,
(iii) the necessity for obtaining a court or other governmental approval con-
cerning the acquisition, holding or disposition of real or personal property,
(iv) fees or other sums applicable to trustees, officers, agents or employees
of a trust, (v) the allocation of receipts and expenditures to income or prin-
cipal, (vi) restrictions or limitations on the permissible nature, amount or
concentration of trust investments or requirements relating to the titling,
storage or other manner of holding of trust assets, or (vii) the establishment
of fiduciary or other standards or responsibilities or limitations on the acts
or powers of trustees that are inconsistent with the limitations or liabili-
ties or authorities and powers of the Trustees set forth or referenced in this
Declaration of Trust.
Section 7. Provisions in Conflict with Law or Regulations.
(a) The provisions of the Declaration of Trust are severable, and if the
Trustees shall determine, with the advice of counsel, that any of such provi-
sions is in conflict with the 1940 Act, the regulated investment company pro-
visions of the Internal Revenue Code of 1986, as amended (or any successor
statute thereto), and the regulations thereunder, with the Delaware Act or
with other applicable laws and regulations, the conflicting provision shall be
deemed never to have constituted a part of the Declaration of Trust; provided,
however, that such determination shall not affect any of the remaining provi-
sions of the Declaration of Trust or render invalid or improper any action
taken or omitted prior to such determination.
(b) If any provision of the Declaration of Trust 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 the
Declaration of Trust in any jurisdiction.
Section 8. Business Trust Only. It is the intention of the Trustees to cre-
ate a business trust pursuant to the Delaware Act. 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 business trust pursuant to the Delaware Act. Nothing in this Declara-
tion of Trust shall be construed to make the Shareholders, either by them-
selves or with the Trustees, partners or members of a joint stock association.
IN WITNESS WHEREOF, the Trustees named below do hereby make and enter into
this Declaration of Trust as of , 199 .
TRUSTEES
- - ------------------------------------- ------------------------------------
_________________, as Trustee _________________, as Trustee
- - ------------------------------------- ------------------------------------
_________________, as Trustee _________________, as Trustee
- - ------------------------------------- ------------------------------------
_________________, as Trustee _________________, as Trustee
B-15
<PAGE>
SCHEDULE 1
The following is a comparison of the provisions of the existing Declaration
of Trust and By-Laws of the Current Trust and the proposed Delaware Trust
Instrument and By-Laws of the Delaware Trust:
SUMMARY OF THE TRUST INSTRUMENT
<TABLE>
<CAPTION>
CURRENT PROPOSED
------- --------
<S> <C>
The Massachusetts Trust was The Delaware trust will be formed as a Delaware
established on September 24, business trust pursuant to the Delaware Trust
1984 and operates pursuant to Instrument and a certificate of trust. The
an Amended and Restated purpose of the Trust will be to conduct, operate
Agreement and Declaration of and carry on the business of a management
Trust dated April 11, 1986, investment company registered under the 1940 Act
as further amended by several through one or more Series investing primarily
amendments through October 3, in securities, and to carry on such other
1991. The Massachusetts business as the Trustees may from time to time
Trust's fiscal year end is determine pursuant to their authority under the
December 31. The Trustees Delaware Trust Instrument. The investment
may, without Shareholder objective, policies, and limitations of the
approval, change the fiscal successor fund will be the same as those of the
year of the Trust. The current fund, except for modifications approved
Massachusetts Trust's by the Shareholders. The Delaware Trust's fiscal
operations are governed by year end is also December 31, which is that of
the Massachusetts Trust the Massachusetts Trust. The Trustees may change
Instrument, the Bylaws, the fiscal year end of the Delaware Trust at
applicable Massachusetts law their discretion in the future. Prior to the
and the provisions of the Conversion, the Successor Trust will not have
1940 Act, the rules and any assets or liabilities. During the
regulations of the SEC Conversion, the Current Trust will be the sole
thereunder and applicable shareholder of the Successor Trust immediately
state securities laws. prior to the distribution of Delaware Trust
Shares to Current Trust Shareholders. As a
Delaware business trust, the Delaware Trust's
operations will be governed by the Delaware
Trust Instrument, the By-Laws and applicable
Delaware law, including the Delaware Business
Trust Act (the "Delaware Act"). The operations
of the Delaware Trust will continue to be
subject to the provisions of the 1940 Act, the
rules and regulations of the SEC thereunder, and
applicable state securities laws.
</TABLE>
<PAGE>
SERIES OR FUNDS
<TABLE>
<CAPTION>
CURRENT PROPOSED
------- --------
<S> <C>
The Massachusetts Trust The Delaware Trust Instrument provides that the
Instrument permits the beneficial interests in the Trust may be divided
Trustees to create one or into one or more Series. Each Series may be
more series or funds of the divided into one or more Classes. The Trustees
Trust and, with respect to have full power and authority, in their sole
each series or fund, to issue discretion, and without obtaining any
an unlimited number of full authorization or vote of the Shareholders of any
or fractional shares of that Series or Class thereof, to create one or more
series or fund or of one or series or funds of the Trust, and with respect
more of that series' or to each series or fund, to issue an unlimited
fund's classes. Each share of number of full or fractional shares of that
a Series of the Massachusetts series or fund or of one or more of that series'
Trust represents an equal or fund's classes. The Trustees have the
proportionate interest with authority to: (i) divide the beneficial interest
each other share in that in the Trust or in each Series or Class thereof
series, none having priority into Shares, (ii) issue Shares without
or preference over another. limitation as to number (including fractional
Shares), to such Persons and for such amount and
type of consideration, including cash or
securities, at such time or times and on such
terms as the Trustees may deem appropriate,
(iii) establish and designate and to change in
any manner any Series or Class thereof and to
fix such preferences, voting powers, rights,
duties and privileges and business purpose of
each Series or Class thereof as the Trustees may
from time to time determine, which preferences,
voting powers, rights, duties and privileges may
be senior or subordinate to (or in the case of
business purpose, different from) any existing
Series or Class thereof and may be limited to
specified property or obligations of the Trust
or profits and losses associated with specified
property or obligations of the Trust, (iv)
divide or combine the Shares of any Series or
Class thereof into a greater or lesser number,
or issue dividends in Shares with respect to
Shares of any Series or Class, without thereby
materially changing the proportionate beneficial
interest of the Shares of such Series or Class
in the assets held with respect to that Series
or Class thereof, (v) classify or reclassify any
issued Shares of any Series or Class thereof
into Shares of one or more Series or Classes
thereof and (vi) take such other action with
respect to the Shares as the Trustees may deem
desirable.
<CAPTION>
TREATMENT OF ASSETS AND LIABILITIES OF A SERIES
CURRENT PROPOSED
------- --------
<S> <C>
Assets of a series of a fund The Delaware Act expressly provides that the
could potentially be required trust may be organized into separate classes or
to be used to satisfy the series of beneficial interests which may hold
debts of another series. different assets and be governed by different
terms. Further, if certain requirements are met,
the liabilities of one series of a trust are, as
a matter of statute, only enforceable against
the assets held in that series, and not against
the other assets held by the Trust. Delaware law
thus affords greater protection against
subjecting the assets of one series to be used
to satisfy the debts of another series.
</TABLE>
2
<PAGE>
SHAREHOLDER LIABILITY
<TABLE>
<CAPTION>
CURRENT PROPOSED
------- --------
<S> <C>
Shareholders of a Generally, Delaware Trust shareholders are not
Massachusetts business trust personally liable for obligations of the
may, under certain Delaware Trust under Delaware law. The Delaware
circumstances, be held Act provides that a shareholder of a Delaware
personally liable under business trust shall be entitled to the same
Massachusetts law for the limitation of liability extended to shareholders
obligations of the of private corporations for profit organized
Massachusetts Trust. The under the Delaware General Corporation Law.
Trust believes the risk of However, no similar statutory or other authority
Massachusetts Trust limiting business trust shareholder liability
shareholder liability is applies in many other states, including New
remote for shareholders of York, the location of ZGA, the Trust's adviser.
Massachusetts business As a result, to the extent that the Delaware
trusts. The Massachusetts Trust or a shareholder is subject to the
Trust Instrument, like the jurisdiction of courts in those states, the
Delaware Trust Instrument, courts may not apply Delaware law, and may
contains an express thereby subject the Delaware Trust shareholders
disclaimer of shareholder to liability. To guard against this risk, the
liability and requires that Delaware Trust Instrument (i) contains an
notice of such disclaimer be express disclaimer of shareholder liability for
given in each agreement acts or obligations of the Delaware Trust and
entered into or executed by requires that notice of such disclaimer be given
the Massachusetts Trust or in each agreement, obligation, and instrument
the Trustees. The entered into as executed by the Delaware Trust
Massachusetts Trust or its Trustees and (ii) provides for
Instrument also provides for indemnification out of series or fund property
indemnification out of Trust of any shareholder held personally liable for
property. the obligations of the Delaware Trust. Thus, the
risk of a Delaware Trust shareholder incurring
financial loss beyond his or her investment
because of shareholder liability is limited to
circumstances in which (1) a court refused to
apply Delaware law, (2) no contractual
limitation of liability was in effect, and (3)
the series or fund itself would be 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 Trust believes
that the risk of personal liability to a
Delaware Trust shareholder is extremely remote.
<CAPTION>
TRUSTEES AND OFFICERS
CURRENT PROPOSED
------- --------
<S> <C>
The business and affairs of Subject to the provisions of the Delaware Trust
the Trust are managed under Instrument, the business of the Delaware Trust
the direction of the shall be supervised by its Trustees, who serve
Trustees, who serve indefinite terms and who have all powers
indefinite terms and who have necessary or convenient to carry out that
all powers necessary and responsibility, including the power to engage in
desirable to carry out that securities transactions of all kinds on behalf
responsibility. The Trustees, of the Trust. The responsibilities, powers, and
in all instances, act as fiduciary duties of the Trustees of the Delaware
principals, and are free from Trust will be substantially the same as those of
the control of the the Trustees of the Massachusetts Trust. It is
Shareholders. The Trustees expected that the Trustees of the Delaware Trust
have full power and authority will be those persons who currently serve as
to do any and all acts and to Trustees of the Massachusetts Trust.
make and execute any and all
contracts and instruments
that they may consider
necessary or appropriate in
connection with the
management of the Trust. The
Trustees are not in any way
bound or limited by present
or future laws or customs in
regard to trust investments,
but have full authority and
power to make any and all
investments which they, in
their uncontrolled
discretion, deem proper to
accomplish the purpose of
this Trust.
</TABLE>
3
<PAGE>
LIABILITY OF TRUSTEES
<TABLE>
<CAPTION>
CURRENT PROPOSED
------- --------
<S> <C>
The Declaration of Trust Under the Delaware Act and the provisions of the
provides that the Trustees Delaware Trust Instrument, a Trustee, when
and officers of the Trust acting in such capacity, shall not be personally
(together, "Covered Persons") liable to any Person, other than the Delaware
shall not be responsible for Trust or a Delaware Trust Shareholder, for any
or liable in any event for act, omission or obligation of the Trust, of
neglect or wrongdoing of any such Trustee or of any other Trustee. The
Trustee or any other officer, Trustees shall not be responsible or liable in
agent, employee or Investment any event for any neglect or wrongdoing of any
Adviser, Principal officer, agent, employee, Manager or Principal
Underwriter, transfer agent Underwriter of the Trust. The Trust may
or custodian of the Trust, indemnify an agent and shall indemnify each
provided that they have Person who is, or has been, a Trustee, officer
exercised reasonable care and or employee of the Trust and any Person who is
have acted under the serving or has served at the Trust's request as
reasonable belief that their a director, officer, trustee or employee of
actions are in the best another organization in which the Trust has any
interest of the Trust; but interest as a Shareholder, creditor or otherwise
nothing in the Massachusetts to the fullest extent consistent with the 1940
Trust Instrument shall Act and in the manner provided in the By-Laws;
protect any Trustee against provided that such indemnification shall not be
any liability to which he or available to any of the foregoing Persons in
she would otherwise be connection with a claim, suit or other
subject by reason of willful proceeding by any such Person against the Trust
misfeasance, bad faith, gross or a Series (or Class) thereof. A Trustee shall
negligence or reckless be liable to the Trust and to any Shareholder
disregard of the duties solely for his or her own willful misfeasance,
involved in the conduct of bad faith, gross negligence or reckless
his or her office. No disregard of the duties involved in the conduct
indemnification will be of the office of Trustee, and shall not be
provided to any Covered liable for errors of judgment or mistakes of
Person in the event of a fact or law. The Trustees may take advice of
settlement, unless there has counsel or other experts with respect to the
been a determination that meaning and operation of the Delaware Trust
such Trustee or officer did Instrument, and shall be under no liability for
not engage in willful any act or omission in accordance with such
misfeasance, bad faith, gross advice nor for failing to follow such advice.
negligence or reckless
disregard of the duties
involved in the conduct of
his office, (A) by the court
or other body approving the
settlement; (B) by at least a
majority of those Trustees
who are neither Interested
Persons of the Trust nor are
parties to the matter based
upon a review of readily
available facts (as opposed
to a full trial-type
inquiry); or (C) by written
opinion of independent legal
counsel based upon a review
of readily available facts
(as opposed to a full trial-
type inquiry). Any
Shareholder may, by
appropriate legal
proceedings, challenge any
such determination by the
Trustees or by independent
counsel.
</TABLE>
4
<PAGE>
QUORUM AND REQUIRED VOTE
<TABLE>
<CAPTION>
CURRENT PROPOSED
------- --------
<S> <C>
A majority of Shares entitled Except when a larger quorum is required by
to vote in person or by proxy applicable law, by the By-Laws or Delaware Trust
shall be a quorum for the Instrument, (i) thirty-three and one-third
transaction of business at a percent (33 1/3%) of the Shares entitled to vote
Shareholders' meeting, except shall constitute a quorum at a Shareholders'
that where any provision of meeting and (ii) when any one or more Series (or
law or of the Declaration of Classes) is to vote as a single class separate
Trust permits or requires from any other Shares, thirty-three and one-
that holders of any Shares third percent (33 1/3%) of the Shares of each
shall vote as a Series, then such Series (or Class) entitled to vote shall
a majority of the number of constitute a quorum at a Shareholders' meeting
Shares of that Series of that Series (or Class). Except when a larger
entitled to vote shall be vote is required by any provision of the
necessary to constitute a Delaware Trust Instrument, the By-Laws or by
quorum for the transaction of applicable law, when a quorum is present at any
business by that Series. meeting, a majority of the Shares voted shall
Except when a larger vote is decide any questions and a plurality of the
required by law, any Shares voted shall elect a Trustee, provided
provision of the that where any provision of law or of the
Massachusetts Trust Delaware Trust Instrument requires that the
Instrument or the By-Laws, if holders of any Series shall vote as a Series (or
any, a majority of the Shares that holders of a Class shall vote as a Class),
voted in person or by proxy then a majority of the Shares of that Series (or
shall decide any questions Class) voted on the matter (or a plurality with
and a plurality shall elect a respect to the election of a Trustee) shall
Trustee, provided that where decide that matter insofar as that Series (or
any provision of law or of Class) is concerned. Shares may be voted in
the Declaration of Trust person or by proxy. A proxy may be given in
permits or requires that the writing. The By-Laws may provide that proxies
holders of any Shares shall may also, or may instead, be given by any
vote as a Series, then a electronic or telecommunications device or in
majority of the Shares of any other manner. Notwithstanding anything else
that Series voted on the in the Delaware Trust Instrument or in the By-
matter shall decide that Laws, in the event a proposal by anyone other
matter insofar as that Series than the officers or Trustees of the Trust is
is concerned. submitted to a vote of the Shareholders of one
or more Series or Classes thereof or of the
Trust, or in the event of any proxy contest or
proxy solicitation or proposal in opposition to
any proposal by the officers or Trustees of the
Trust, Shares may be voted only in person or by
written proxy at a meeting. Until Shares are
issued, the Trustees may exercise all rights of
Shareholders and may take any action required by
law, the Delaware Trust Instrument or the By-
Laws to be taken by the Shareholders.
</TABLE>
5
<PAGE>
VOTING POWERS
<TABLE>
<CAPTION>
CURRENT PROPOSED
------- --------
<S> <C>
Shareholders shall have power The Shareholders shall have power to vote only
to vote (i) for the election (i) for the election or removal of Trustees to
of Trustees, (ii) with the extent and as provided in the Delaware Trust
respect to any investment Agreement, and (ii) with respect to such
advisory or management additional matters relating to the Trust as may
contract, (iii) with respect be required by applicable law, the Delaware
to the amendment of the Trust Instrument, the By-Laws or any
Declaration of Trust, (iv) to registration of the Trust with the SEC (or any
the same extent as the successor agency) or any state, or as the
shareholders of a Trustees may consider necessary or desirable.
Massachusetts business
corporation, as to whether or
not a court action,
proceeding or claim should be
brought or maintained
derivatively or as a class
action on behalf of the Trust
or the Shareholders,
provided, however, that a
Shareholder of a particular
Series shall not be entitled
to bring any derivative or
class action on behalf of any
other Series of the Trust and
(v) with respect to such
additional matters relating
to the Trust as may be
required or authorized by
law, this Declaration of
Trust or the Bylaws of the
Trust, if any, or any
registration of the Trust
with the SEC or any State, or
as the Trustees may consider
desirable. Any action taken
by Shareholders may be taken
without a meeting if a
majority of Shareholders
entitled to vote on the
matter (or such larger
proportion thereof as shall
be required by any express
provision of law or the
Declaration of Trust or the
Bylaws) consent to the action
in writing and such written
consents are filed with the
records of the meetings of
Shareholders. Such consent
shall be treated for all
purposes as a vote taken at a
meeting of Shareholders.
<CAPTION>
NOTICE
CURRENT PROPOSED
------- --------
<S> <C>
Shareholders shall be The By-Laws provide that all notices of meetings
entitled to at least 15 days' of Shareholders shall be sent or otherwise given
notice of any meeting. not less than ten (10) nor more than ninety (90)
days before the date of the meeting. The notice
shall specify (i) the place, date and hour of
the meeting, and (ii) the general nature of the
business to be transacted. The notice of any
meeting at which Trustees are to be elected also
shall include the name of any nominee or
nominees who at the time of the notice are
intended to be presented for election.
</TABLE>
6
<PAGE>
VOTING IN THE AGGREGATE
<TABLE>
<CAPTION>
CURRENT PROPOSED
------- --------
<S> <C>
On any matter submitted to a The Delaware Trust Instrument provides that all
vote of the Shareholders, all Shares of the Trust then entitled to vote shall
shares shall be voted by be voted in aggregate, except (i) when required
individual Series, except (i) by the 1940 Act, Shares shall be voted by
when required by the 1940 individual Series or Class; and (ii) when the
Act, Shares shall be voted in matter involves the termination of a Series or
the aggregate and not by Class or any other action that the Trustees have
individual Series; and (ii) determined will affect only the interests of one
when the Trustees have or more Series or Classes, then only
determined that the matter Shareholders of such Series or Classes shall be
affects only the interests of entitled to vote thereon. There shall be no
one or more Series, then only cumulative voting in the election of Trustees.
the Shareholders of such The Delaware Trust Instrument provides voting
Series shall be entitled to rights based on a Shareholder's total dollar
vote thereon. Each whole interest in a fund or Series (dollar-based
Share shall be entitled to voting). Each Shareholder shall be entitled to
one vote as to any matter on one vote for each dollar of net asset value
which it is entitled to vote, (determined as of the applicable record date) of
and each fractional Share each Share owned by such Shareholder (number of
shall be entitled to a Shares owned times net asset value per Share) on
proportionate fractional any matter on which such Shareholder is entitled
vote. to vote and each fractional dollar amount shall
be entitled to a proportionate fractional vote.
As a result of dollar-based voting under the
Delaware Trust Instrument, voting power would be
allocated in proportion to the value of each
Shareholder's investment.
<CAPTION>
REDEMPTION AT THE OPTION OF THE TRUST
CURRENT PROPOSED
------- --------
<S> <C>
The Trust reserves the right, Subject to the requirements of the 1940 Act, the
upon 60 days' prior written Trustees may cause the Trust to redeem Shares of
notice to the Shareholder, to any Series or Class held by any Person (i) if
liquidate involuntarily any such Person is no longer qualified to hold such
Shareholder's account if the Shares in accordance with such qualifications as
aggregate Net Asset Value of may be established by the Trustees, (ii) if the
the Shares held in the net asset value of such Shares is below the
account is less than $100. minimum investment amount determined by the
Trustees or (iii) if otherwise deemed by the
Trustees to be in the best interest of the Trust
or that particular Series (or Class) as a whole.
</TABLE>
7
<PAGE>
TERMINATION OF THE TRUST
<TABLE>
<CAPTION>
CURRENT PROPOSED
------- --------
<S> <C>
Requires the vote of a The Trust may be terminated at any time by vote
majority of the outstanding of a majority of the Shares of each Series
shares (within the meaning of entitled to vote, voting separately by Series,
the 1940 Act) of any Series or by the Trustees by written notice to the
of the Trust to: (i) sell or Shareholders. Any Series of Shares or Class
convey the assets of the thereof may be terminated at any time by vote of
Trust or any affected Series a majority of the Shares of such Series or Class
to another trust, entitled to vote or by the Trustees by written
partnership, association or notice to the Shareholders of such Series or
corporation organized under Class. Upon the requisite Shareholder vote or
the laws of any state which action by the Trustees to terminate the Trust or
is a diversified open-end any one or more Series of Shares or any Class
management investment company thereof, after paying or otherwise providing for
as defined in the 1940 Act, all charges, taxes, expenses and liabilities,
for adequate consideration whether due or accrued or anticipated, of the
which may include the Trust or of the particular Series or any Class
assumption of all outstanding thereof as may be determined by the Trustees,
obligations, taxes and other the Trust shall in accordance with such
liabilities, accrued or procedures as the Trustees consider appropriate
contingent, of the Trust or reduce the remaining assets of the Trust or of
any affected Series, and the affected Series or Class to distributable
which may include shares of form in cash or Shares (if any Series remain) or
beneficial interest or stock other securities, or any combination thereof,
of such trust, partnership, and distribute the proceeds to the Shareholders
association or corporation or of the Series or Classes involved, ratably
(ii) sell and convert at any according to the number of Shares of such Series
time into money all of the or Class held by the several Shareholders of
assets of the Trust or any such Series or Class on the date of
affected Series. Upon making distribution. Thereupon, the Trust or any
provision for the payment of affected Series or Class shall terminate and the
all such liabilities in Trustees and the Trust shall be discharged of
either (i) or (ii), by such any and all further liabilities and duties
assumption or otherwise, the relating thereto or arising therefrom, and the
Trustees shall distribute the right, title and interest of all parties with
remaining proceeds or the respect to the Trust or such Series or Class
remaining assets (as the case shall be canceled and discharged. Upon
may be) ratably among the termination of the Trust, following completion
holders of the Shares of the of winding up of its business, the Trustees
Trust or any affected Series shall cause a certificate of cancellation of the
then outstanding. Upon Trust's Certificate of Trust to be filed in
completion of the accordance with the Delaware Act, which
distribution of the remaining certificate of cancellation may be signed by any
proceeds or the remaining one Trustee.
assets as provided above, the
Trust or any affected Series
shall terminate and the
Trustees shall be discharged
of any and all further
liabilities and duties
hereunder and the right,
title and interest of all
parties shall be cancelled
and discharged.
</TABLE>
8
<PAGE>
RECORD DATE
<TABLE>
<CAPTION>
CURRENT PROPOSED
------- --------
<S> <C>
The Trustees may fix in For purposes of determining the Shareholders
advance a date, not exceeding entitled to vote or act at any meeting or
90 days preceding the date of adjournment thereof, the Trustees may fix in
any meeting of Shareholders, advance a record date which shall not be more
or the date for payment of than ninety (90) days nor less than ten (10)
any dividend, or the date for days before the date of any such meeting.
the allotment of rights, or Without fixing a record date for a meeting, the
the date when any change or Trustees may for voting and notice purposes
conversion or exchange of close the register or transfer books for one or
Shares shall go into effect, more Series (or Classes) for all or any part of
as a record date for the the period between the earliest date on which a
determination of the record date for such meeting could be set in
Shareholders entitled to accordance herewith and the date of such
notice of, and to vote at, meeting. If the Trustees do not so fix a record
any such meeting, or entitled date or close the register or transfer books of
to receive payment of any the affected Series (or Classes), the record
such dividend, or to any such date for determining Shareholders entitled to
allotment of rights, or to notice of or to vote at a meeting of
exercise the rights in Shareholders shall be at the close of business
respect of any such change, on the business day next preceding the day on
conversion or exchange of which notice is given or if notice is waived, at
Shares. the close of business on the business day next
preceding the day on which the meeting is held.
The record date for determining Shareholders
entitled to give consent to action in writing
without a meeting, (a) when no prior action of
the Trustees has been taken, shall be the day on
which the first written consent is given, or (b)
when prior action of the Trustees has been
taken, shall be (x) such date as determined for
that purpose by the Trustees, which record date
shall not precede the date upon which the
resolution fixing it is adopted by the Trustees
and shall not be more than 20 days after the
date of such resolution, or (y) if no record
date is fixed by the Trustees, the record date
shall be the close of business on the day on
which the Trustees adopt the resolution relating
to that action. Nothing in this Section shall be
construed as precluding the Trustees from
setting different record dates for different
Series (or Classes). For the purpose of
determining the Shareholders of any Series (or
Class) who are entitled to receive payment of
any dividend or of any other distribution, the
Trustees may from time to time fix a date, which
shall be on or before the date for the payment
of such dividend or such other payment, as the
record date for determining the Shareholders of
such Series (or Class) having the right to
receive such dividend or distribution. Without
fixing a record date, the Trustees may for
distribution purposes close the register or
transfer books for one or more Series (or
Classes) at any time prior to the payment of a
distribution.
</TABLE>
9
<PAGE>
SCHEDULE 2
The table below lists current fundamental policies of the Trust that the
Proxy Statement proposes to modify:
<TABLE>
<CAPTION>
PROPOSAL CURRENT FUNDAMENTAL POLICY PROPOSED POLICY
- - -------- -------------------------- ---------------
<S> <C> <C>
FOUR-- . . . [no Series may] . . . Purchase . . . [no Series may] . . .
This policy is to be securities of any other investment Purchase securities of any
changed from fundamental company, except in connection with a other investment company,
to non-fundamental. merger, consolidation, reorganization except (i) by purchase in
or acquisition of assets except that the open market involving
foreign banks and their agencies or only customary brokers'
subsidiaries are not considered commissions, (ii) in
"investment companies" for purposes of connection with a merger,
this limitation; consolidation,
reorganization or
acquisition of assets or
(iii) as otherwise permitted
by applicable law;
FIVE-- . . . [no Series may] . . . Issue . . . [no Series may] . . .
This policy will remain "senior securities," except insofar as Issue "senior securities,"
fundamental but with the borrowing from banks may be except as permitted under
changed wording. considered senior securities; the Investment Company Act
of 1940;
SIX-- . . . [no Series may] . . . Purchase . . . [no Series may] . . .
This policy will remain the securities of issuers conducting Purchase the securities of
fundamental but with their principal business activities in issuers conducting their
changed wording. the same industry if immediately after principal business
such purchase the value of its activities in the same
investment in such industry would be industry if immediately
25% or more of the value of the total after such purchase the
assets of the Series, provided that value of its investments in
there is no such limitation with such industry would exceed
respect to obligations of the U.S. 25% of the value of the
Government, its agencies and total assets of the Series,
instrumentalities, and, since Zweig (there is no such limitation
Cash Fund invests exclusively in with respect to obligations
short-term securities issued or of the U.S. Government, its
guaranteed as to the payment of agencies and
principal and interest by the U.S. instrumentalities or with
Government, its agencies or respect to investments in
instrumentalities or repurchase other investment companies);
agreements collateralized by such
obligations, there is no such
limitation applicable to Zweig Cash
Fund;
SEVEN-- . . . [no Series may] . . . With . . . [no Series may] . . .
This policy will remain respect to 75% of a Series' assets, With respect to 75% of a
fundamental but with purchase the securities of any one Series' assets, purchase the
changed wording. issuer, if immediately after such securities of any one
purchase (i) more than 5% of the value issuer, if immediately after
of the total assets of any Series such purchase (i) more than
would be invested in such issuer or 5% of the value of the total
(ii) the Series would own more than assets of any Series would
10% of the outstanding voting be invested in such issuer
securities of such issuer, provided or (ii) the Series would own
that such limitations do not apply to more than 10% of the
securities issued by the U.S. outstanding voting
Government, its agencies or securities of such issuer,
instrumentalities (the Limitation set (such limitations do not
forth in clause (ii) does not apply to apply to securities issued
the Zweig Cash Fund); by the U.S. Government, its
agencies or
instrumentalities);
EIGHT-- . . . [no Series may] . . . Make Same as current policy.
This policy is to be investments in securities for the
changed from fundamental purpose of exercising control over or
to non-fundamental. management of the issuer;
NINE-- . . . [no Series may] . . . . . . [no Series may] . . .
This policy is to be Participate on a joint or a joint and Participate on a joint or a
changed from fundamental several basis in any trading account joint and several basis in
to non-fundamental. in securities. The "bunching" of any trading account in
orders of two or more Series, or one securities. (The "bunching"
or more Series and of other accounts of orders of two or more
under the investment management of the Series, or one or more
Manager or its affiliates, for the Series and of other accounts
sale or purchase of portfolio under the investment
securities shall not be considered management of the Manager or
participation in a joint securities its affiliates, for the sale
trading account; or purchase of portfolio
securities shall not be
considered participation in
a joint securities trading
account);
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PROPOSAL CURRENT FUNDAMENTAL POLICY PROPOSED POLICY
- - -------- -------------------------- ---------------
<S> <C> <C>
TEN-- . . . [no Series may] . . . Purchase . . . [no Series may] . . .
This policy is to be securities on margin, except such Purchase securities on
changed from fundamental short-term credits as are necessary margin, except for such
to non-fundamental. for the clearance of transactions and short-term credits as are
provided that a Series may make necessary for the clearance
initial and variation margin payments of transactions and initial
in connection with transactions in and variation margin
futures contracts and options payments in connection with
contracts. For the purposes of this transactions in futures
restriction, the deposit of initial or contracts and options
maintenance margin in connection with contracts.
futures contracts will not be deemed a
purchase of securities on margin by
any Series;
ELEVEN-- . . . [no Series may] . . . Purchase Same as current policy.
This policy is to be the securities of an issuer if, to the
changed from fundamental Manager's knowledge, one or more of
to non-fundamental. the trustees or officers of the Trust
or the officers of the Manager
individually own beneficially more
then 1/2 of 1% of the outstanding
securities of such issuer and together
such trustees and officers owning more
than 1/2 of 1% own beneficially more
than 5% of such securities;
TWELVE-- . . . [no Series may] . . . Invest in Same as current policy.
This policy is to be securities of an issuer which,
changed from fundamental together with any predecessor, has
to non-fundamental. been in continuous operation for less
than three years if, as a result, more
than 5% of the total assets of the
Series would then be invested in such
securities;
THIRTEEN-- . . . [no Series may] . . . Sell Same as current policy.
This policy is to be securities short, except as described
changed from fundamental in the Prospectus and in accordance
to non-fundamental. with the following:
When a Series makes a short sale, the
proceeds it receives will be retained
by the broker until the Series
replaces the borrowed security. The
Series may, but will not necessarily,
receive interest on such proceeds. In
order to deliver the security to the
buyer, the Series must arrange through
a broker to borrow the security and,
in so doing, the Series will become
obligated to replace the security
borrowed at its market price at the
time of replacement, whatever that
price may be. The Series may have to
pay a premium to borrow the security.
The Series must pay to the broker any
dividends or interest payable on the
security until the Series replaces the
security;
A Series' obligation to replace the
security borrowed in connection with a
short sale will be secured by
collateral deposited with the broker,
consisting of cash or U.S. Government
securities or other securities
acceptable to the broker. In addition,
a Series will be required to deposit
cash or U.S. Government securities as
collateral in a segregated account
with a custodian in an amount such
that the value of both collateral
deposits is at all times equal to at
least 100% of the current market value
of the securities sold short. The
Series will receive the interest
accruing on any U.S. Government
securities held as collateral in the
segregated account with the custodian.
The deposits do not necessarily limit
the Series' potential loss on a short
sale, which may exceed the entire
amount of the collateral deposits;
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PROPOSAL CURRENT FUNDAMENTAL POLICY PROPOSED POLICY
- - -------- -------------------------- ---------------
<S> <C> <C>
[THIRTEEN--CONT'D] If the price of the security sold
short increases between the time of
the short sale and the time the Series
replaces the borrowed security, the
Series will incur a loss, and if the
price declines during this period, the
Series will realize a short-term
capital gain. Any realized short-term
capital gain will be decreased, and
any incurred loss increased, by the
amounts of transaction costs and any
premium, dividend or interest which
the Series may have to pay in
connection with such short sale:
FOURTEEN-- . . . [no Series may] . . . Invest Same as current policy.
This policy is to be more than 5% of its net assets in
changed from fundamental warrants valued at the lower of cost
to non-fundamental. or market (other than those that have
been acquired in units or attached to
other securities). Included within
that amount, no more than 2% of a
Series' net assets may be invested in
warrants not traded on the NYSE or
American Stock Exchange. Government
Securities Series and Zweig Cash Fund
may not invest in warrants.
FIFTEEN-- . . . [no Series may] . . . Purchase a . . . [no Series may] . . .
This policy is to be security which is not readily Purchase securities which
changed from fundamental marketable, which is subject to legal are not readily marketable,
to non-fundamental. or contractual restrictions or which such as certain securities
is otherwise illiquid, including "non- which are subject to legal
marketable" securities and repurchase or contractual restrictions
agreements having more than seven days on resale or securities
remaining to maturity, if, as a which are otherwise illiquid
result, more than 15% of the Series' including ""non-marketable''
net assets (5% for Zweig Managed securities and repurchase
Assets and 10% for Zweig Cash Fund) agreements having more than
would consist of such securities; or seven days remaining to
invest more then 15% of the assets in maturity, if, as a result,
over-the-counter options in more than 15% of the Series'
combination with other illiquid assets net assets (10% for Zweig
that are not purchased from government Cash Fund) would consist of
securities dealers; such securities;
SIXTEEN-- Government Securities Series seeks a Government Securities Series
The first paragraph of high current return by investing seeks a high total return
this policy will remain primarily in U.S. Government and from current income and
fundamental but with agency securities, including capital appreciation
changed wording. The Government National Association consistent with preservation
second paragraph of this ("GNMA") mortgage-backed certificates, of capital over the long
policy is to be changed and repurchase agreements term by investing primarily
from fundamental to non- collateralized by such securities. in U.S. Government and
fundamental. agency securities, including
Government National Mortgage
Association ("GNMA")
mortgage-backed
certificates, and repurchase
agreements collateralized by
such securities.
It is the Series' policy that at least It is the Series' policy
65% of its total assets will be that at least 65% of its
invested in U.S. Government securities total assets will be
(including GNMA certificates), except invested in U.S. Government
during times when the Manager believes securities (including GNMA
that adoption of a temporary defensive certificates), except during
position is desirable due to times when the Manager
prevailing market or economic believes that adoption of a
conditions. For temporary defensive temporary defensive position
purposes, the Series may hold cash or is desirable. For temporary
invest in money market instruments . . defensive purposes, the
. Series may hold cash or
invest in money market
instruments . . .
</TABLE>
3
<PAGE>
ZWEIG SERIES TRUST
5 HANOVER SQUARE--17TH FLOOR
NEW YORK, NEW YORK 10004
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Introduction............................................................... 1
Proposals.................................................................. 2
Other Matters.............................................................. 21
Shareholder Proposals for Subsequent Meetings.............................. 22
Investment Manager......................................................... 22
Principal Distributor...................................................... 22
Revocation of Proxies...................................................... 22
Voting Information......................................................... 22
</TABLE>
Exhibit A--Plan of Conversion
Exhibit B--Delaware Trust Instrument
3
Schedule 1
Schedule 2
