As filed, via EDGAR, with the Securities and Exchange Commission on January 13,
2000.
File No.: 33-8982
ICA No.: 811-4852
SCHEDULE 14A (RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement [ ] Confidential, for Use of the
[ ] Definitive proxy statement Commission Only
[ ] Definitive additional materials (as permitted by Rule 14a-6(e)(2))
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
THE VICTORY PORTFOLIOS
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Carl Frischling
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
THE VICTORY PORTFOLIOS
3435 Stelzer Road
Columbus, Ohio 43219-3035
(800) 539-3863
February ___, 2000
Dear Shareholder:
You are invited to attend a Special Meeting of Shareholders of The
Victory Portfolios (the "Trust") to be held at the offices of The Victory
Portfolios, 3435 Stelzer Road, Columbus, Ohio 43219-3035 on March 20, 2000 at
8:30 a.m. Eastern Time.
At this Special Meeting, you are being asked to consider and approve
a series of proposals which include:
o the election of ten Trustees;
o an Amended and Restated Trust Instrument;
o an Amended and Restated Distribution Plan; and
o changes in, or the elimination of, certain fundamental investment
restrictions
We anticipate that approving these proposals will benefit all
shareholders of the investment portfolios within the Trust (the "Funds") by
installing three new Trustees, two of whom will be unaffiliated with either Key
Asset Management, Inc., each Fund's investment adviser ("KAM" or the "Adviser")
or the principal underwriter of the Funds. These proposals will also benefit
shareholders by modernizing the Trust's governance (permitting the Trustees more
flexibility in managing the Funds) and making the fundamental investment
restrictions of each Fund as consistent as possible with the other Funds, thus
minimizing confusion. Finally, the proposal for the Amended and Restated
Distribution Plan will protect the Funds from potential difficulties that might
arise from the ambiguities in legal and regulatory provisions that govern
distribution of shares of the Funds.
The Board of Trustees has given careful consideration to the
proposals and has concluded that they are in the best interests of The Victory
Portfolios and its shareholders. We urge you to approve the proposals.
We welcome your attendance at the Special Meeting. If you are unable
to attend, please sign, date and return the enclosed proxy card promptly in
order to avoid the additional proxy solicitation expense.
Sincerely,
Robert D. Hingston
Secretary
You are not required to attend the Special Meeting; however, be
sure to exercise your right to vote by signing, dating and returning the
enclosed proxy card promptly to avoid the additional expense of further proxy
solicitation. You may also vote by phone, internet or fax.
-1-
<PAGE>
Important Information to Help You Understand the Proposals on Which You Are
Being Asked to Vote.
Please read the full text of this proxy
statement. Below is a brief overview of the
matters to be voted upon. Your vote is important.
If you have questions regarding the proposals
please call your Investment Consultant or the
Victory Portfolios at 1-800-539-3863. We
appreciate the confidence you have placed in the
Victory Portfolios and look forward to helping
you achieve your financial goals through
investment in the Victory Portfolios.
What proposals am I being asked to vote on?
You are being asked to vote on the following proposals:
1. The election of ten Trustees
2. To approve an Amended and Restated Trust Instrument
3. To approve an Amended and Restated Distribution Plan
4. To approve changes in, or the elimination of, certain
fundamental investment restrictions.
Has my fund's Board of Trustees approved the Proposals?
Yes. The Board of the Victory Portfolios
unanimously approved these proposals on December
1, 1999, and recommends that you vote to approve
each proposal.
Why are the Victory Portfolios having a Shareholder Meeting?
Primarily, all of the funds in the Victory
Portfolios need to elect the Board of Trustees of
the Funds. In doing so, the Funds will continue
to maintain the necessary number of Trustees that
have been elected by shareholders as required by
law.
Certain regulations require that a majority of
trustees be elected by shareholders. New trustees
cannot be appointed to fill vacancies or
resignations unless after the appointments,
two-thirds of the trustees have been elected by
shareholders. All members of the current Board of
Trustees, including three Trustees who are
Advisory Trustees of the Victory Portfolios, will
stand for election at this special meeting of
shareholders.
Why am I being asked to approve an Amended and Restated Trust Instrument?
To modernize the Trust's organizational documents
and create greater flexibility in managing the
affairs of the Trust. Creating greater
flexibility may reduce Fund or Trust expenses.
The Amended and Restated Trust Instrument will:
o Allow the Funds' Board of Trustees to
reorganize a Fund into another Fund or
investment company, without holding a special
shareholder meeting (which can be costly), if
it is in the shareholders' best interests.
o Increase the maximum solicitation period from
60 days to 90 days when seeking shareholder
approval.
o Allow the Board of Trustees to restructure one
or more of the Funds into a master/feeder
structure if it is in the Fund's best interest
to invest its assets in another investment
company.
o Permit the Board of Trustees to change
shareholder voting powers to a dollar-based
voting system to ensure that shareholders'
voting rights remain proportionate to their
investment in the Funds.
o Allow the Board of Trustees to amend the Trust
Instrument in the future without shareholder
approval unless required by law.
o Clarify that a Trustee is not an interested
person solely because of his affiliation with
an investment company which is affiliated with
the Trust.
o Permit the Board of Trustees to require
shareholders to redeem their shares when
accounts become too small or where certain
account information has not been made
available by the shareholders.
Why am I being asked to elect Trustees?
Certain regulations require that a majority of
trustees be elected by shareholders. New trustees
cannot be appointed to fill vacancies created by
resignations or an expansion of the Board unless
after the appointments, two-thirds of the
trustees have been elected by shareholders. All
members of the current Board of Trustees,
including three Trustees who are Advisory
Trustees of the Victory Portfolios, will stand
for election at this Special Meeting of
shareholders.
-2-
<PAGE>
Why are shareholders of certain funds being asked to approve an Amended and
Restated Distribution Plan?
This Plan is designed to avoid uncertainties that
may arise from interpretation of certain legal
requirements relating to payment of distribution
expenses by Funds. The Plan does not provide for
the payment of any money by a Fund. It merely
clarifies that certain service providers to the
Funds are allowed to expend their own funds for
services which might be considered primarily
intended to result in sale of Fund shares.
Why are the changes to certain investment restrictions being recommended for
these Funds, and why must such changes be submitted to shareholders?
In some cases the elimination of or a change in a
restriction is in response to changes in
regulatory requirements. Changes are also being
recommended in an effort to modernize prospectus
language or to maintain consistency across the
Funds. The proxy explains each of the proposed
changes to or the elimination of a restriction.
Shareholders are only being asked to approve the
changes that are "fundamental," and are therefore
required to be approved by shareholders.
Will the proposed changes in the fundamental investment restrictions change the
investment objective of my Fund.?
No. Each Fund will continue to be managed
according to its current investment objective.
When will the Shareholder Meeting be held?
A Shareholder Meeting will be held on March 20,
2000.
I have received other proxies from Victory. Is this a duplicate? Do I have to
vote again?
This is NOT a duplicate proxy. You must vote
separately for each account you have with the
Victory Funds.
How do I vote my shares?
You can vote your shares by completing and
signing the enclosed proxy card(s), and mailing
them in the enclosed postage paid envelope. You
may also vote your shares by phone at
800-786-8764, by fax at 800-733-1885, or via the
internet at www.proxyvote.com. If you need
assistance, or have any questions regarding the
proposals or how to vote your shares, please call
your Investment Consultant or the Victory
Portfolios at 1-800-539-3863.
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<PAGE>
PRELIMINARY PROXY MATERIALS FOR THE INFORMATION
OF THE SECURITIES AND EXCHANGE COMMISSION
THE VICTORY PORTFOLIOS
800-539-3863
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 20, 2000
The Victory Portfolios will host a Special Meeting of Shareholders on
March 20, 2000 at 8:30 a.m., Eastern Time. This will be a joint meeting for the
shareholders of each of the investment portfolios (the "Funds") of The Victory
Portfolios. The Special Meeting will be held at the Victory Portfolio's offices,
3435 Stelzer Road, Columbus, Ohio. At the meeting, we will ask shareholders to
vote on:
1. A proposal to elect ten Trustees.
2. A proposal to amend and restate The Victory Portfolios' Trust
Instrument under Delaware law.
3. A proposed "defensive" Rule 12b-1 distribution plan. (The amount
of fees your Fund pays will not change if shareholders approve the
distribution plan).
4. Proposed changes to certain fundamental investment restrictions.
(Your Fund's current investment objective will not change).
5. Any other business properly brought before the meeting.
Any shareholder who owned shares of the Funds on January 21, 2000
(the "Record Date") will receive notice of the meeting and will be entitled to
vote at the meeting or any adjournment or postponement of the meeting. Please
read the full text of the Proxy Statement for a complete understanding of the
proposals.
Dated: February __, 2000
By Order of the Board of Trustees
Robert D. Hingston, Secretary
3435 Stelzer Road
Columbus, Ohio 43219
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE EASILY AND QUICKLY BY TOLL-FREE TELEPHONE CALL, THE
INTERNET, FAX OR MAIL. JUST FOLLOW THE SIMPLE INSTRUCTIONS THAT APPEAR
ON YOUR ENCLOSED PROXY CARD. PLEASE HELP YOUR FUND AVOID THE EXPENSES
OF ADDITIONAL SOLICITATIONS BY VOTING TODAY!
-4-
<PAGE>
PRELIMINARY PROXY MATERIALS
FOR THE INFORMATION OF THE
SECURITIES AND EXCHANGE COMMISSION ONLY
THE VICTORY PORTFOLIOS
SPECIAL MEETING OF SHAREHOLDERS
MARCH 20, 2000
PROXY STATEMENT
INTRODUCTION
------------
This is a Proxy Statement for The Victory Portfolios (the "Trust").
The Trustees of the Trust are soliciting your proxy for a Special Meeting of
Shareholders to approve proposals that have already been approved by the
Trustees. For some proposals, shareholders of each series of the Trust (the
"Funds") will vote together. For other proposals, shareholders of each Fund (or
each class of a Fund) will vote separately. We've divided the Proxy Statement
into six parts:
Part 1-- An Overview begins on page ____
Part 2-- Your Fund's Proposals begins on page _____
Part 3-- More on Proxy Voting and Shareholder Meetings
begins on page ____
Part 4-- Fund Information begins on page ____
Part 5-- Trustee Information begins on page ____
Part 6-- A Copy of the Amended and Restated Trust
Instrument begins on page _____
You should read the entire Proxy Statement before voting. If you have
any questions, please call the Funds at 800-539-FUND (800-539-3863).
We will begin mailing this Proxy Statement, Notice of Special Meeting
and Proxy Card to shareholders on or about February 8, 2000.
The Trust is required by federal law to file reports, proxy
statements and other information with the Securities and Exchange Commission
(the "SEC"). The SEC maintains a Web site that contains information about the
Trust (www.sec.gov). Any such proxy material, reports and other information can
be inspected and copied at the public reference facilities of the SEC, 450 Fifth
Street, N.W., Washington DC 20549 and at the SEC's New York Regional Office,
Seven World Trade Center, New York, NY 10048. Copies of such materials can be
obtained from the Public Reference Branch, Office of Consumer Affairs and
Information Services of the SEC at 450 Fifth Street, N.W., Washington DC 20549,
at prescribed rates.
The Trust's most recent annual and semi-annual reports to
shareholders are available at no cost. To request a report, please call the
Funds toll-free at 800-539-FUND (800-539-3863) or write the Funds at P.O. Box
8527, Boston, MA 02266-8527.
-5-
<PAGE>
PART 1 - AN OVERVIEW
The Board of Trustees of the Trust has sent you this Proxy Statement
to ask for your vote on several proposals affecting your Fund. The Trust will
hold a Special Meeting of Shareholders on March 20, 2000 at 8:30 a.m., Eastern
Time, at its offices located at 3435 Stelzer Road, Columbus, Ohio 43219 in order
to consider the proposals described below. At the Special Meeting, you will be
asked to approve or disapprove these proposals.
The Board of Trustees has fixed the close of business on January 21,
2000 as the Record Date to determine the shareholders who are entitled to notice
of the Special Meeting and to vote their shares. Shareholders are entitled to
cast one vote for each full share and a fractional vote for each fractional
share they own on the Record Date.
The following tables summarize the proposals and how they apply to
the 30 Funds of the Trust for which this Proxy is solicited.
- -------------------------------------------------------------------------------
Proposal 2
Approve Amended and
Proposal 1 Restated Trust
Funds To Elect Ten Trustees Instrument
- -------------------------------------------------------------------------------
All funds, voting together x x
- -------------------------------------------------------------------------------
Funds will vote separately on the following proposals:
Proposal 3 - Approve Amended and Restated Distribution Plan
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Funds Proposal 3 Funds Proposal 3
Approve Amended and Restated Approve Amended and Restated
Distribution Plan Distribution Plan
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balanced Lakefront Fund* x
Class A x LifeChoice Conservative Investor* x
Class B LifeChoice Growth Investor* x
Class G LifeChoice Moderate Investor* x
Convertible Securities Limited Term Income* x
Class A x National Municipal Bond
Class G Class A x
Diversified Stock Class B
Class A x Class G
Class B New York Tax-Free
Class G Class A x
Established Value Class B
Class A x Class G
Class G Ohio Municipal Bond
Federal Money Market Class A x
Investor Shares x Class G
Select Shares x Ohio Municipal Money Market* x
Financial Reserves* x Prime Obligations* x
</TABLE>
- --------------------
* These Funds have only Class A shares, which will vote on each proposal as
indicated.
-6-
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Funds Proposal 3 Funds Proposal 3
Approve Amended and Restated Approve Amended and Restated
Distribution Plan Distribution Plan
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fund for Income Real Estate Investment
Class A x Class A x
Class G Class G
Gradison Government Reserves* Small Company Opportunity
Growth Class A x
Class A x Class G
Class G Special Value
Institutional Money Market Class A x
Investor Shares x Class B
Select Shares x Class G
Intermediate Income Stock Index
Class A x Class A x
Class G Class G x
International Growth Tax-Free Money Market* x
Class A x U.S. Government Obligations
Class B Investor Shares x
Class G Select Shares x
Investment Quality Bond Value
Class A x Class A x
Class G Class G
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Proposal 4 - Approve New Fundamental Investment Restrictions
Key:
<S> <C> <C> <C>
Proposal 4a Diversification of Investments Proposal 4h Underwriting
Proposal 4b Concentration of Investments Proposal 4i Pledging
Proposal 4c Joint Trading Accounts Proposal 4j Investing to Influence Management or Exercise Control
Proposal 4d Borrowing Proposal 4k Purchasing on Margin and Selling Short
Proposal 4e Lending Proposal 4l Illiquid Securities
Proposal 4f Senior Securities Proposal 4m
Proposal 4g Real Estate Proposal 4n
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
4a 4b 4c 4d 4e 4f 4g 4h 4i 4j 4k 4l 4m 4n
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balanced x x x x x x x x
Convertible Securities x x x x x x x x x x
Diversified Stock x x x x x x x x
Established Value x x x x x x x x x x x x x
Federal Money Market x x x x x x x x x x
Financial Reserves x x x x x x x
Fund for Income x x x x x x x
Gradison Government Reserves x x x x x x x
Growth x x x x x x x x
Institutional Money Market x x x x x x x
Intermediate Income x x x x x x x x
International Growth x x x x x x x x
Investment Quality Bond x x x x x x x x
Lakefront x x x x x x x
LifeChoice Conservative Investor x x x x x x
LifeChoice Growth Investor x x x x x x
LifeChoice Moderate Investor x x x x x x
Limited Term Income x x x x x x x x
National Municipal Bond x x x x x x x
New York Tax-Free x x x x x x
Ohio Municipal Bond x x x x x x x x
Ohio Municipal Money Market x x x x x x x
Prime Obligations x x x x x x x x
Real Estate Investment x x x x x x x
Small Company Opportunity x x x x x x x x
Special Value x x x x x x x x
Stock Index x x x x x x x x
Tax-Free Money Market x x x x x x x x
U.S. Government Obligations x x x x x x
Value x x x x x x x x
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-8-
<PAGE>
PART 2 - YOUR FUND'S PROPOSALS
PROPOSAL 1.
ELECTION OF TRUSTEES
The Board of Trustees has nominate the individuals listed below (the
"Nominees") to serve as Trustees of the Trust, each to serve until their
successors have been elected and qualified. The Board of Trustees presently
consists of seven Trustees (five of whom are not "interested persons" as defined
in the Investment Company Act of 1940, as amended (the "1940 Act") ("Independent
Trustees")) and three Advisory Trustees (two of whom are Independent Advisory
Trustees). If authority is granted on the accompanying proxy card to vote in the
election of Trustees, the persons named as proxies will vote for the election of
the Nominees named below, each of whom has consented to serve if elected. If any
of the Nominees is unable to serve for any reason, the persons named as proxies
will vote for such other Nominee or Nominees selected by the Board of Trustees
or the Board may reduce the number of Trustees as provided in the Trust's
bylaws. Any other Nominee or Nominees who would serve as Independent Trustees
will be selected by the Independent Trustees currently serving on the Board of
Trustees. The Trust knows of no reason why any of the Nominees listed below
would be unable to serve if elected.
A. Why should you vote for this proposal?
1940 Act requirements
The Board of Trustees of the Trust presently consists of seven
Trustees, four of whom have been elected by shareholders, and three Advisory
Trustees who have been appointed or elected by the Board to fill vacancies
either after the resignation of elected Trustees or because the Trustees have
voted to increase the size of the Board. The 1940 Act generally provides that at
all times, a majority of trustees must be elected by shareholders, and that new
trustees cannot be appointed to fill vacancies unless, after such appointments,
two-thirds of the trustees have been elected by shareholders. At their regular
meeting on December 11, 1998, the Trustees elected Donald E. Weston and Theodore
Emmerich as Advisory Trustees. At their meeting on December 1, 1999, the
Trustees elected Frankie D. Hughes as an Advisory Trustee. The 1940 Act did not
permit the appointment of Mr. Weston, Mr. Emmerich and Ms. Hughes as Trustees,
because fewer than two-thirds of the Trustees then on the Board would have been
elected by shareholders. Additionally, if any present Trustee were to resign,
under the 1940 Act the Trust would be required to call a special meeting for the
election of trustees within 60 days. Accordingly, you are being asked to elect
all of the current Trustees, plus Mr. Weston, Mr. Emmerich and Ms. Hughes to the
Board of Trustees.
B. Nominees for election to the Board of Trustees
The nominees for election to the Board of Trustees are:
o Theodore H. Emmerich
o Dr. Harry Gazelle
o Frankie D. Hughes
o Eugene J. McDonald
o Dr. Thomas F. Morrissey
o Roger Noall
-9-
<PAGE>
o H. Patrick Swygert
o Frank A. Weil
o Donald E. Weston
o Leigh A. Wilson
The following tables summarize information about the Trustees, their
positions with the Trust, and their principal occupations.
Position(s)
Held With Principal Occupation
Name, Age and Address the Trust During Past 5 Years
- --------------------- --------- ---------------------------
Theodore H. Emmerich, 73 Advisory Trustee Retired; until 1986,
1201 Edgecliff Place managing partner
Apt. 1052 (Cincinnati office) Ernst &
Cincinnati, Ohio 45206 Whinney (now Ernst & Young
LLP); Director of Carillon
Fund, Inc. (investment
company); American
Financial Group (insurance)
and Cincinnati Milacron
Commercial Corporation
(financing); Trustee of
Summit Investment Trust
(investment company).
Dr. Harry Gazelle, 72 Trustee Retired radiologist, Drs.
17822 Lake Road Hill and Thomas
Lakewood, OH 44107 Corporation.
Frankie D. Hughes, 47 Advisory Trustee Since 1993, Principal and
Hughes Capital Management, Inc. Chief Investment Officer of
315 Cameron Street, 2nd Floor Hughes Capital Management,
Alexandria, VA 22314 Inc. (fixed income asset
management firm).
Eugene J. McDonald, 67 Trustee Since 1990, Executive Vice
Duke Management Company President and Chief
2200 West Main Street Investment Officer for
Suite 1000 Asset Management of Duke
Durham, NC 27705 University and President
and CEO of Duke Management
Company; Director of CCB
Financial Corporation, Flag
Group of Mutual Funds, DP
Mann Holdings
(____________________),
Greater Triangle Community
Foundation, and North
Carolina Bar Association
Investment Committee.
Dr. Thomas F. Morrissey, 66 Trustee Since 1970, Professor,
Weatherhead School of Management Weatherhead School of
Case Western Reserve University Management, Case Western
10900 Euclid Avenue Reserve University; from
Cleveland, OH 44106-7235 1989 to 1995, Associate
Dean of Weatherhead School
of Management.
Roger Noall, * 64 Chairman and Since 1996, Executive of
c/o Brighton Apt. 1603 Trustee KeyCorp; from 1995 to 1996,
8231 Bay Colony Drive General Counsel and
Naples, FL 34108 Secretary of KeyCorp; from
1994 to 1996, Senior
Executive Vice President
and Chief Administrative
Officer of KeyCorp.
- ------------------
* Mr. Noall and Mr. Weston are "interested persons" and "affiliated persons"
of the Trust.
-10-
<PAGE>
Position(s)
Held With Principal Occupation
Name, Age and Address the Trust During Past 5 Years
- --------------------- --------- ---------------------------
H. Patrick Swygert, 56 Trustee Since 1995, President,
Howard University Howard University; from
2400 6th Street, N.W. 1990 to 1995, President,
Suite 402 State University of New
Washington, DC 20059 York at Albany; Director of
Hartford Financial Services
Group, Hartford Life
Insurance and Federal
National Mortgage
Association; Chairman,
Community Business
Partnership, Greater
Washington Board of Trade.
Frank A. Weil, 68 Trustee Since 1984, Chairman and
Abacus & Associates Chief Executive Officer of
147 E. 47th Street Abacus & Associates, Inc.
New York, NY 10017 (private investment firm);
Director and President of
the Hickrill Foundation.
Donald E. Weston,* 64 Advisory Trustee Since October 1998,
McDonald Investments Inc. Chairman of Gradison
580 Walnut Street McDonald Investments, a
Cincinnati, Ohio 45202 division of McDonald
Investments Inc.; until
October 1998, Chairman of
the Gradison Division of
McDonald & Company
Securities, Inc. and a
Director of McDonald &
Company Investments Inc.;
Director of Cincinnati
Milacron Commercial
Corporation
(____________________).
Leigh A. Wilson,** 55 President and Since 1989, Chairman and
New Century Care, Inc. Trustee Chief Executive Officer,
53 Sylvan Road North New Century Care, Inc.
Westport, CT 06880 (merchant bank); since
1995, Principal of New
Century Living, Inc.; since
1989, Director of Chimney
Rock Vineyard and Chimney
Rock Winery.
C. Information about the Board of Trustees
The Board currently has an Investment Committee, a Business, Legal
and Audit Committee, and a Board Process and Nominating Committee. The members
of the Investment Committee are Messrs. Weil (Chairman), McDonald, Swygert and
Weston and Dr. Morrissey. The function of the Investment Committee is to review
the existing investment policies of the Trust, including the levels of risk and
types of funds available to shareholders, and make recommendations to the
Trustees regarding the revision of such policies or, if necessary, the
submission of such revisions to the Trust's shareholders for their
consideration. The members of the Business, Legal and Audit Committee are Dr.
Gazelle (Chairman), Ms. Hughes, and Messrs. Emmerich and Wilson. The function of
the Business, Legal and Audit Committee is to recommend independent auditors,
monitor accounting and financial matters, and review compliance and contract
matters. Mr. Swygert is the Chairman of the Board Process and Nominating
Committee (consisting of all the Trustees and Advisory Trustees), which
nominates persons to serve as Independent Trustees and Trustees to serve on
committees of the Board. This Committee also reviews Trustee performance and
compensation issues. The Board Process and Nominating Committee has a Nominating
Subcommittee, composed of Messrs. Swygert, Emmerich, McDonald and Weil and Drs.
Gazelle and Morrissey. This Subcommittee makes recommendations to the Board
Process and Nominating Committee concerning candidates to serve as trustees.
Shareholders may submit to the Trust recommendations for individuals to serve as
Trustees. See Part 3 -- "More on Proxy Voting and Shareholder Meetings
- --Submission of Proposals for the Next Annual Meeting."
- -----------------
** Mr. Wilson is deemed to be an "interested person" of the Trust under the
1940 Act solely by reason of his position as President.
-11-
<PAGE>
Last year, the Board of Trustees held eight meetings, of which four
were regular meetings. Each Committee held four meetings. The Nominating
Subcommittee of the Board Process and Nominating Committee held two meetings.
D. Remuneration of Trustees
Each Trustee (including Advisory Trustees) (other than Mr. Wilson)
receives an annual fee of $31,500 for serving as Trustee of all the Funds of the
Trust, and an additional per meeting fee ($3,500 in person and $1,500 per
telephonic meeting). Mr. Wilson receives an annual fee of $37,500 for serving as
President and Trustee for all of the Funds of the Trust, and an additional per
meeting fee ($4,100 in person and $1,800 per telephonic meeting). The Adviser
pays the expenses of Messrs. Noall and Weston.
The following table indicates the estimated compensation received by
each Trustee from the Victory "Fund Complex"(1) for the fiscal year ended
October 31, 1999.
<TABLE>
<CAPTION>
Aggregate
Pension or Retirement Estimated Annual Compensation
Benefits Accrued as Benefits Upon Aggregate Compensation from Victory
Portfolio Expenses Retirement from Victory Portfolios "Fund Complex"
------------------ ---------- ----------------------- --------------
<S> <C> <C> <C> <C> <C>
Edward P. Campbell*.................. -0- -0- $9,150 $10,275
Theodore H. Emmerich#................ -0- -0- 32,350 35,635
Harry Gazelle........................ -0- -0- 42,900 47,900
Frankie D. Hughes**.................. -0- -0- -0- -0-
Eugene J. McDonald................... -0- -0- 45,900 50,900
Thomas F. Morrissey.................. -0- -0- 45,900 50,900
Roger Noall.......................... -0- -0- -0- -0-
H. Patrick Swygert................... -0- -0- 41,400 46,400
Frank A. Weil........................ -0- -0- 45,900 50,650
Donald Weston#....................... -0- -0- -0- -0-
Leigh A. Wilson...................... -0- -0- 56,500 61,500
</TABLE>
(1) There are currently 38 mutual funds in the Victory "Fund Complex" for which
the above-named Trustees are compensated.
* Mr. Campbell resigned as of December 31, 1998.
# Messrs. Emmerich and Weston commenced service as Advisory Trustees as of
January 1, 1999.
** Ms. Hughes commenced service as an Advisory Trustee as of January 1, 2000.
E. Required vote
Trustees are elected by a plurality of the votes cast at the Special Meeting
in person and by proxy.
F. Does the Board of Trustees recommend the election of these Nominees to the
Board of Trustees of the Trust?
Yes. The Board of Trustees recommends that shareholders vote to elect the
Nominees to the Board of Trustees of the Trust.
-12-
<PAGE>
PROPOSAL 2.
AMENDMENT AND RESTATEMENT OF TRUST INSTRUMENT
The Board of Trustees has approved an Amended and Restated Trust
Instrument for the Trust.
o The primary purpose of this proposal is to modernize the governing
document of the Trust and to allow the Trustees more flexibility in
overseeing the affairs of the Trust.
To adopt the Amended and Restated Trust Instrument, we need
shareholder approval.
The next few pages of this Proxy Statement discuss some of the
details of the Amended and Restated Trust Instrument and how it will affect your
Fund.
A. Why do we want to adopt the Amended and Restated Trust Instrument?
The Trust was originally established as a business trust under the
laws of the Commonwealth of Massachusetts in 1984. In 1996, the Trust
reorganized as a business trust established under Delaware law. The operations
of the Trust are governed by a Trust Instrument dated December 5, 1995, as
amended on October 23, 1997.
The following summarizes some of the material changes that the
Amended and Restated Trust Instrument would contain, and summarizes the reasons
that the Board of Trustees believes that those changes would be in the best
interests of shareholders. This list does not contain certain non-material
changes which are also included in the Amended and Restated Trust Instrument.
Because this is a summary, it does not contain all of the information that may
be important to you. Please refer to the complete form of Amended and Restated
Trust Instrument, which appears as Exhibit A in Part 6 of this Proxy Statement
to review all of the proposed changes before you decide how to vote on this
proposal.
o Reorganizations. The amendments would clarify the ability of the
Board of Trustees to reorganize a Fund with another investment
company or another series of the Trust or to liquidate a Fund, if
the Board determines that it would be in the best interests of
shareholders. The Trustees could take these actions without
shareholder approval, unless such approval is required by law. The
additional flexibility would save shareholders the expense of
costly special meetings. [Section 4.01(x)]. One situation where
the Board of Trustees might choose to reorganize a Fund without
first obtaining shareholder approval is where the acquiring Fund
is a shell created specifically for the reorganization and which
after the reorganization will be identical to the acquired Fund.
o Voting powers. The amendments would allow the Board of Trustees,
in its discretion, to make your voting rights "dollar-based,"
which is a different voting rights system than your Fund uses now.
Currently, all Funds of the Trust provide shareholders with one
vote for each whole share that they own and a fractional vote for
each fractional share that they own. This share-based system
treats shareholders equitably so long as all shares of various
Funds have the same share price. However, the share prices of the
Funds will vary significantly over time due to their different
investment programs. Similarly, the share prices of a Fund's
various share classes will differ over time because of their
different expense structures. As a result, when issues are voted
at the Trust level, shareholders who acquired their shares at
lower prices have
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<PAGE>
relatively greater voting power than shareholders who paid more
for their shares. Giving the Board of Trustees the option to
change to dollar-based voting will ensure that shareholders'
voting rights remain proportionate to their financial interests if
the Board believes it to be in the best interests of shareholders.
[Section 7.01(c)]
o Required redemptions. The amendments would clarify the ability of
the Board of Trustees to allow the Trust to require shareholders
to redeem their shares under certain circumstances. The Board of
Trustees may determine that it is in the best interest of all
shareholders to require redemptions of small accounts, which are
costly to maintain, or where a shareholder fails to provide a
Social Security number or taxpayer identification number as
required by law. This amendment could result in lower expenses to
the Trust or individual Funds. [Section 9.05]
o Record date. The amendments would change the maximum number of
days for a shareholder meeting to be held after the record date to
90 days from the current 60-day requirement. This change would
allow additional time to solicit shareholder votes and avoid
additional costs which can arise when shareholder meetings are
delayed. [Section 11.03]
o Master/Feeder structure. The amendments would allow the Trustees
to restructure one or more Funds into a "master/feeder" structure,
in which one Fund (a "feeder") would invest all of its assets in
another "master" Fund. Sometimes a master/feeder structure can
benefit shareholders because combining the asset bases of funds
with similar investment objectives and strategies may achieve
economies of scale and reduce costs and expenses of portfolio
management while retaining the benefits of having discrete,
targeted investment products. Although there are no current plans
to adopt this structure, the Trustees would have the power to use
the structure in the future if they determined it would be in the
best interests of shareholders. [Section 11.05(e)]
o Derivative actions. Any Trustee who is also a trustee of an
investment company affiliated with the Trust would not be deemed
to be an "interested person" under state law solely because of
such affiliation for purposes of determining whether the Trust
satisfies the notification provisions in the event of a
shareholder derivative action. This amendment is in response to
recent litigation addressing the issue. Whether a trustee is an
"interested person" under state or federal law depends on a number
of factual circumstances. This amendment merely clarifies that the
fact that a trustee is also a trustee of an affiliated investment
company does not make that trustee an "interested person" solely
because of that affiliation. [Section 11.08]
o Future amendments to the Trust Instrument. The amendments would
clarify the ability of the Trustees to amend the Trust Instrument
in the future without shareholder consent unless such consent is
required by law. This change would give the Board of Trustees
greater flexibility in overseeing the operations of the Trust
without incurring the additional expense of holding a special
meeting of shareholders to approve amendments to the Trust
Instrument where shareholder approval is not required by law.
[Section 11.09]
B. Required vote
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<PAGE>
Proposal 2 requires the approval of a majority of the outstanding
shares of the Trust voted in person or by proxy at the Special Meeting. If
shareholders of the Trust do not approve this proposal, the existing Trust
Instrument will remain in effect and the Board of Trustees will consider
possible alternatives.
C. Has the Board of Trustees approved this Amended and Restated Trust
Instrument?
Yes. The Board of Trustees of the Trust carefully considered this
proposal at its meeting on December 1, 1999. After full consideration, the
Board, including all of the Independent Trustees, unanimously approved this
Amended and Restated Trust Instrument and recommended that it be submitted to
shareholders for approval. The Board recommends that shareholders vote "for"
Proposal 2.
PROPOSAL 3
APPROVE "DEFENSIVE" RULE 12b-1 DISTRIBUTION PLAN
This proposal is applicable only to certain classes of certain Funds.
Only shareholders owning, on the Record Date, Class A and Class G Shares of the
Stock Index Fund and Class A Shares, Select Shares or Investor Shares of those
Funds listed below will vote on this proposal:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Balanced International Growth Ohio Municipal Money Market
Convertible Securities Investment Quality Bond Prime Obligations
Diversified Stock Lakefront Real Estate Investment
Established Value LifeChoice Conservative Investor Small Company Opportunity
Federal Money Market LifeChoice Growth Investor Special Value
Financial Reserves LifeChoice Moderate Investor Stock Index
Fund for Income Limited Term Income Tax-Free Money Market
Growth National Municipal Bond U.S. Government Obligations
Institutional Money Market New York Tax-Free Value
Intermediate Income Ohio Municipal Bond
</TABLE>
For the following Funds, this is a new "defensive" Rule 12b-1 Plan:
Balanced Ohio Municipal Bond
Diversified Stock Prime Obligations
Growth Small Company Opportunity
Intermediate Income Special Value
International Growth Stock Index - Class A
Investment Quality Bond Tax-Free Money Market
Limited Term Income Value
For the following Funds, which have already adopted a "defensive"
Rule 12b-1 Plan, this is an amendment and restatement of the prior Plan, which
is desirable to avoid administrative confusion:
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<PAGE>
Convertible Securities LifeChoice Moderate Investor
Federal Money Market National Municipal Bond
Financial Reserves New York Tax-Free
Fund for Income Ohio Municipal Money Market
Institutional Money Market Real Estate Investment
Lakefront Stock Index - Class G
LifeChoice Conservative Investor U.S. Government Obligations
LifeChoice Growth Investor
Adoption of this Plan does not change the Trustees' responsibility to
ensure that Fund assets are used appropriately.
Because this discussion is only a summary, it may not contain all of
the information that may be important to you. Please refer to the complete form
of the Plan, which appears as Exhibit B in Part 6 of this Proxy Statement, to
review the entire Plan before you decide how to vote on this proposal.
A. The Plan
Rule 12b-1 under the 1940 Act provides that a registered investment
company (i.e., a mutual fund), which engages "directly or indirectly in
financing any activity which is primarily intended to result in the sale of
shares issued by such company, including, but not necessarily limited to,
advertising, compensation of underwriters, dealers, and sales personnel, the
printing and mailing of prospectuses to other than current shareholders, and the
printing and mailing of sales literature," may only do so pursuant to a written
plan "describing all material aspects of the proposed financing of
distribution."
The Board of Trustees has adopted a Rule 12b-1 Plan (the "Plan") to
allow the Adviser, any sub-adviser and the distributor to incur certain expenses
that might be considered to constitute indirect payments by the Funds of
distribution expenses. THE PLAN DOES NOT AUTHORIZE PAYMENTS FOR DISTRIBUTION BY
A FUND DIRECTLY OUT OF ITS ASSETS. A plan with these features is called a
"defensive" Rule 12b-1 plan.
The SEC has neither approved nor disapproved the Plan. The Plan
contemplates that all expenses relating to the distribution of Fund shares shall
be paid by KAM, the distributor or principal underwriter out of their past
profits and other resources, including advisory fees paid by a Fund to KAM. The
Plan also recognizes that KAM may make payments from these sources to securities
dealers and to other third parties who engage in the sale of Fund shares or who
render shareholder services. The Plan provides that, to the extent that a Fund's
payment of management fees to KAM or a sub-adviser might be considered to
constitute the "indirect" financing of activities "primarily intended to result
in the sale of shares," such payment is expressly authorized.
The Plan specifically recognizes that the Adviser, any sub-adviser,
administrator or the distributor, directly or through an affiliate, may use its
fee revenue, past profits, or other resources, without limitation, to pay
promotional and administrative expenses in connection with the offer and sale of
shares of the Funds. In addition, the Plan provides that the Adviser, a
sub-adviser and the distributor may use their respective resources, including
fee revenues, to make payments to third parties that provide assistance in
selling the Funds' shares, or to third parties, including banks, that render
shareholder support services.
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<PAGE>
The Funds may execute portfolio transactions with, and purchase
securities issued by, depository institutions that receive payments under the
Plan. No preference for the instruments of such depository institutions will be
shown in the selection of investments. Although the Plan contemplates that KAM
may engage in various distribution activities, it does not require KAM to
perform any specific type of distribution activity or to incur any specific
level of expense for such activities. The Plan also contains provisions relating
to reporting obligations and to its amendment and termination as required by the
Rule.
The Plan is not substantially different than the original plan. Only
technical changes have been made to make the Plan consistent with the current
operation and structure of the Trust and the Funds. the Plan continues to
provide for NO payments out of the assets of the Funds.
If approved by shareholders, the Plan will continue in effect as long
as its continuance is specifically approved at least annually by a majority of
the Board of Trustees, including a majority of the Trustees who are Independent
Trustees and who have no direct or indirect financial interest in the operation
of the Plan or any agreement related to the Plan (the "Non-interested
Trustees"), cast in person at a meeting called for the purpose of voting on the
Plan.
The Plan may be amended at any time by the Trustees, except that it
may not be amended to authorize direct payments by a Fund to finance any
activity primarily intended to result in the sale of shares issued by a Fund or
to increase materially the amount spent by a Fund for distribution without the
approval of a majority of the outstanding voting securities of a Fund and the
Trustees. In addition, any amendment of a Fund's investment advisory agreement
to increase the amount paid by a Fund to KAM shall be effective only upon
approval by vote of a majority of the outstanding voting securities of that
Fund. All material amendments to the Plan also must be approved by a majority of
the Independent Trustees. The Plan, and any agreements related to the Plan, may
be terminated at any time by a vote of the majority of the Independent Trustees
or by a vote of the majority of the outstanding voting securities of the Fund.
As required by the Rule, while the Plan is in effect, the selection
and nomination of all Independent Trustees shall be committed to the discretion
of the Independent Trustees then in office.
B. Why do we want to adopt this Amended and Restated Distribution Plan?
This Plan is designed to avoid legal uncertainties that may arise
from the ambiguity of the phrase "primarily intended to result in sales of
shares," and from the term "indirectly." The Plan does not provide for the
payment of any money by a Fund. The Plan provides that, to the extent that a
Fund's payment of management fees to KAM, or administration fees to BISYS Fund
Services, Inc., each Fund's administrator and distributor ("BISYS"), might be
considered to constitute "indirect" financing of activities primarily intended
to result in the sale of shares, such payment is expressly authorized.
C. Required vote
Proposal 3 requires the approval by a majority of the outstanding
voting securities of each class of each Fund voting separately. A majority of
the outstanding securities means the lesser of one more than half of the number
of shares of the Fund that were issued and outstanding as of the Record Date, or
67% of the voting shares present at the Special Meeting if more than 50% of the
voting shares are present at the Special Meeting in person or by proxy.
-17-
<PAGE>
D. Has the Board of Trustees approved the Plan?
Yes. As required by Rule 12b-1, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan prior to its
approval, and have determined that there is a reasonable likelihood that the
Plan will benefit the Funds and their shareholders. The Trustees believe that
the fees paid by the Funds to KAM under the investment advisory agreement are
fair and reasonable, that the services provided thereunder are necessary and
appropriate for the Funds and their shareholders, and that the Funds do not
indirectly finance the distribution of their shares in contravention of Rule
12b-1. Nonetheless, the Trustees concluded that adoption of the Plan would avoid
legal uncertainties that might arise as a result of what they and KAM believe to
be potentially subjective and ambiguous language contained in Rule 12b-1 and in
public releases issued by the SEC in connection with the proposed adoption of
the Rule. The Trustees believe that the adoption of the Plan is advisable to
minimize such legal uncertainties and to provide other benefits to the Funds and
their shareholders. The Trustees noted that the Plan does not involve any direct
payment by any Fund to finance any activity primarily intended to result in the
sale of its shares, and that any amendment of any Fund's investment advisory
agreement with KAM to increase the amount paid thereunder would require approval
of both the Trustees and the Fund's shareholders.
After full consideration at its meeting on December 1, 1999, the
Board, including the Independent Trustees (who have no direct or indirect
financial interest in the operation of the Plan or in any agreements related to
the Plan), unanimously approved the Plan and recommended that it be submitted to
shareholders for approval. The Board recommends that shareholders vote "for"
Proposal 3.
PROPOSAL 4
CHANGES TO FUNDAMENTAL INVESTMENT RESTRICTIONS
Proposal 4 is a series of proposals to change certain fundamental
investment restrictions presently applicable to the different Funds. We have
described each proposal contained within Proposal 4 separately and listed them
in order below. The table at the front of this Proxy Statement will assist you
in determining which proposals apply to your Funds and what investment policy or
restriction changes are proposed for each Fund.
The 1940 Act requires each Fund to have certain specific investment
policies that can be changed only by vote of a majority of the outstanding
voting securities of a Fund. These policies are often referred to as
"fundamental" investment policies or restrictions. Other policies not enumerated
in the 1940 Act can be designated by a Fund as fundamental. Any policy
designated by a Fund as "fundamental" may only be changed by the vote of a
majority of the outstanding voting securities of that Fund.
Certain fundamental policies have been adopted in the past by the
Funds to reflect regulatory, business or industry conditions that are no longer
in effect. Accordingly, KAM conducted a review of all of the fundamental
policies and restrictions with the following goals: (i) to simplify and
modernize the Funds' policies that are required to be fundamental, (ii) to make
the fundamental policies and restrictions of all the Funds consistent to the
extent possible, and (iii) to reclassify as non-fundamental or to eliminate
those policies previously required to be fundamental that are no longer required
to be so classified or that are no longer necessary. The Board may change
non-fundamental policies without shareholder approval, subject to compliance
with applicable disclosure requirements under rules promulgated by the SEC.
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<PAGE>
These proposals seek shareholder approval of changes that are
intended to accomplish the foregoing goals. By making the fundamental policies
of all Funds consistent where it is possible to do so, monitoring compliance
would be streamlined and more efficient. Clarifying and modernizing investment
restrictions generally would allow the Funds to operate more efficiently within
the limits of the 1940 Act. These revisions should give the Funds greater
flexibility to take advantage of and react to changes in financial markets and
new investment vehicles. In addition, by reducing to a minimum those policies
that can be changed only by shareholder vote, the Funds in the future may be
able to avoid the costs and delay associated with a shareholder meeting, and the
Board of Trustees believes that the Adviser's ability to manage the Funds'
portfolios in a changing regulatory or investment environment will be enhanced.
If shareholders approve these investment policy changes at the
Special Meeting, the Trust will amend or supplement its registration statement
to reflect the elimination, modification and/or reclassification of the
investment policies and restrictions. The Trust will notify shareholders of any
future investment policy changes.
You may vote in favor of, or abstain from voting on, all of the
proposed changes applicable to your Fund or, should you wish to vote against any
particular proposed change, you may so indicate on the proxy card.
Item 4a - Diversification of investments
The Board of Trustees recommends that the investment restrictions
relating to diversification be eliminated for all Funds. This will not change
the diversification policy of any Fund or allow that policy to be changed
without shareholder approval. Section 5(b) of the 1940 Act requires each Fund to
indicate whether it is diversified or non-diversified. All of the Funds are
diversified except:
National Municipal Bond
New York Tax-Free
Ohio Municipal Bond
Real Estate Investment
Reason for the change
Diversified Funds. If a Fund elects to be diversified, it is required
to invest its assets according to specific statutory provisions. Since the 1940
Act dictates the requirements for a diversified Fund, there is no need to have
any specific fundamental investment restriction regarding diversification. In
addition, any diversified Funds wishing to become non-diversified must first
obtain shareholder approval.
Non-Diversified Funds. If a Fund elects to be non-diversified, it is
not subject to the diversification requirements of the 1940 Act. However, all of
the Funds, including the non-diversified Funds, are regulated investment
companies under the Internal Revenue Code of 1986, as amended (the "Code"), and
are subject to specific requirements under the Code. Since each Fund must adhere
to these requirements in order to be treated as a regulated investment company
under the Code, there is no need to state these requirements in a fundamental
restriction.
Operating criteria
Each of the following money market Funds operates in accordance with
Rule 2a-7 under the 1940 Act and, therefore, must invest its assets so that no
more than 5% of its total assets would be invested in any single issuer (other
than securities issued or guaranteed by the U.S. government or any of its
agencies or instrumentalities ("U.S. Government Securities")):
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<PAGE>
Federal Money Market Prime Obligations
Financial Reserves Tax-Free Money Market
Gradison Government Reserves U.S. Government Obligations
Institutional Money Market
In addition, in accordance with Rule 2a-7 under the 1940 Act, each of
these money market Funds may also invest up to 25% of its total assets in the
securities of single issuer for up to three days.
Ohio Municipal Money Market Fund, in accordance with Rule 2a-7 under
the 1940 Act, must invest its assets so that with respect to 75% of its total
assets, no more than 5% of its total assets is invested in the securities of a
single issuer (other than U.S. Government Securities).
Each of the following diversified non-money market funds must invest
its total assets so that with respect to 75% of these assets, no more than 5% is
invested in any one issuer (other than U.S. Government Securities), and no more
than 10% of the outstanding voting securities of any issuer can be held by a
Fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Balanced Intermediate Income LifeChoice Moderate Investor
Convertible Securities International Growth Limited Term Income
Diversified Stock Investment Quality Bond Small Company Opportunity
Established Value Lakefront Special Value
Fund for Income LifeChoice Conservative Investor Stock Index
Growth LifeChoice Growth Investor Value
</TABLE>
To comply with the Code, each of the following non-diversified
non-money market Funds must invest its assets so that no more than 25% of its
total assets is invested in the securities of a single issuer (other than U.S.
Government Securities) and, with regard to 50% of its total assets, no more than
5% is invested in any one issuer (other than U.S. Government Securities) and no
more than 10% of the outstanding voting securities of any issuer can be held by
a Fund:
National Municipal Bond Ohio Municipal Bond
New York Tax-Free Real Estate Investment
The applicable provisions of the Code apply at the end of each
quarter, and contain windows of time in which adjustments may be made in a
Fund's portfolio if a Fund exceeds the Code's percentage limitations.
Who is the "issuer" of tax-exempt securities? In determining who is
considered the issuer of a tax-exempt security, each state and each political
subdivision, agency and instrumentality of each state and each multi-state
agency of which such state is a member is deemed to be a separate issuer. When
securities are backed by the assets and/or revenues of a particular
instrumentality, facility or subdivision, such entity is considered to be the
issuer. Private activity bonds that are backed only by the assets and/or
revenues of a non-governmental issuer are considered to be issued by such
non-governmental issuer.
Item 4b - Concentration of investments
This item does not apply to the LifeChoice or U.S. Government
Obligations Funds.
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<PAGE>
The 1940 Act requires a Fund to state its policies concerning
concentration of investments. These policies, which are stated in the form of
concentration restrictions, cannot be changed without shareholder approval.
Under the 1940 Act, a Fund "concentrates" its investments in an industry if 25%
or more of its total assets are invested in that industry. The Board of Trustees
recommends that every Fund revise and update its policy regarding concentration
to be consistent with current legal interpretations. These changes do not in any
way change how any Fund will concentrate its investments. Rather, these changes
will ensure that where Fund assets are managed the same way with respect to
concentration, the policy will be stated the same way to avoid the possibility
of inconsistent administration. In addition, if the proposed restrictions are
adopted, the Funds would be able to invest substantially all of their assets
into other "master" mutual funds, if desired. The present restrictions do not
permit that type of investment.
Reason for the change
The proposed modifications modernize and clarify the restrictions
concerning concentration by explicitly excluding U.S. Government Securities, as
is permitted by legal interpretation, and by permitting the Funds to invest in
other investment companies that have similar investment objectives and policies
on concentration of investments ("master" funds). These changes would give the
Funds more flexibility to enter into other types of investments at future times
in response to changing financial markets.
For each group of Funds, or each individual Fund, we set forth below
the proposed new restriction followed by the current restrictions.
The Board of Trustees is recommending that the Funds listed below
change their investment restriction on concentration to read as follows:
Proposed Concentration Restriction
The Funds may not:
purchase the securities of any issuer (other than the securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, repurchase agreements secured thereby, or
tax-exempt securities issued by governments or political subdivisions
of governments except tax-exempt securities backed only by the assets
or revenues of non-governmental issuers) if, as a result, 25% or more
of a Fund's total assets would be invested in the securities of
companies whose principal business activities are in the same
industry. This restriction shall not prevent a Fund from investing
all of its assets in a "master" fund that has adopted similar
investment objectives, policies and restrictions.
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<PAGE>
- -------------------------------------------------------------------------------
Current Concentration Restriction
- -------------------------------------------------------------------------------
Balanced The Funds may not:
Diversified Stock
Growth purchase the securities of any issuer other
Intermediate Income than securities issued or guaranteed by the
International Growth U.S. government or any of its agencies or
Investment Quality Bond instrumentalities, or repurchase agreements
Lakefront secured thereby) if, as a result, more than
Limited Term Income 25% of the Fund's total assets would be
Special Value invested in the securities of companies
Stock Index whose principal business activities are in
Value the same industry. In the utilities
category, the industry shall be determined
according to the service provided. For
example, gas, electric, water and telephone
will be considered as separate industries.
Convertible Securities The Fund may not:
purchase securities if such purchase would
cause more than 25% of any of the Funds'
total assets to be invested in the
securities of issuers in any one industry.
Established Value The Established Value Fund will not
concentrate more than 25% of its total
assets in any one industry.
Fund for Income The Fund may not:
Invest more than 25% of the Fund's total
assets in securities whose interest
payments are derived from revenue from
similar projects.
Small Company Opportunity The Fund may not:
purchase the securities of any issuer
(other than securities issued or guaranteed
by the U.S. Government or any of its
agencies or instrumentalities, or
repurchase agreements secured thereby) if,
as a result, more than 25% of the Fund's
total assets would be invested in the
securities of companies whose principal
business activities are in the same
industry.
- --------------------------------------------------------------------------------
Financial Reserves Fund, Institutional Money Market Fund and Prime
Obligations Fund currently retain, and they intend to continue to retain, the
ability to concentrate their investments in securities issued by U.S. banks. The
Trustees propose that these Funds adopt the following concentration restriction:
Proposed Concentration Restriction
With respect to Financial Reserves Fund, Institutional Money Market
Fund and Prime Obligations Fund, the Funds may not:
purchase the securities of any issuer (other than the securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, repurchase agreements secured thereby, or
tax-exempt securities issued by governments or political subdivisions
of governments except tax-exempt securities backed only by the assets
or revenues of non-governmental issuers) if, as a result, 25% or more
of a Fund's total assets would be invested in the securities of
companies whose principal business activities are in the same
industry. This restriction shall not prevent a Fund from investing
all of its assets in a "master" fund that has adopted similar
investment objectives, policies and restrictions.
Consistent with its investment objective and policies, each Fund
reserves the right to concentrate its investment in obligations
issued by domestic banks.
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<PAGE>
- -------------------------------------------------------------------------------
Current Concentration Restriction
- -------------------------------------------------------------------------------
Financial Reserves The Funds may not:
Institutional Money Market
purchase the securities of any issuer
(other than obligations issued or
guaranteed as to principal and interest by
the United States government, its agencies
or instrumentalities) if, as a result
thereof: (i) more than 5% of its total
assets would be invested in the securities
of such issuer, provided, however, that in
the case of certificates of deposit, time
deposits and bankers' acceptances, up to
25% of the Fund's total assets may be
invested without regard to such 5%
limitation, but shall instead be subject to
a 10% limitation; (ii) more than 25% of its
total assets would be invested in the
securities of one or more issuers having
their principal business activities in the
same industry, provided, however, that it
may invest more than 25% of its total
assets in the obligations of domestic
banks. Neither finance companies as a group
nor utility companies as a group are
considered a single industry for purposes
of this policy (i.e., finance companies
will be considered a part of the industry
they finance and utilities will be divided
according to the types of services they
provide).
Prime Obligations The Fund may not:
purchase the securities of any issuer
(other than securities issued or guaranteed
by the U.S. Government or any of its
agencies or instrumentalities, or
repurchase agreements secured thereby) if,
as a result, more than 25% of the Fund's
total assets would be invested in the
securities of companies whose principal
business activities are in the same
industry. Notwithstanding the foregoing,
there is no limitation with respect to
certificates of deposit and banker's
acceptances issued by domestic banks, or
repurchase agreements secured thereby. In
the utilities category, the industry shall
be determined according to the service
provided. For example, gas, electric, water
and telephone will be considered as
separate industries.
- --------------------------------------------------------------------------------
The proposed concentration restriction for the Real Estate Investment
Fund will permit it to retain its policy to concentrate its investments in
securities in the real estate industry. The proposed concentration restriction
for this Fund reads as follows:
Proposed Concentration Restriction - Real Estate Investment Fund
The Fund may not:
purchase the securities of any issuer (other than the securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, repurchase agreements secured thereby, or
tax-exempt securities issued by governments or political subdivisions
of governments except tax-exempt securities backed only by the assets
or revenues of non-governmental issuers) if, as a result, 25% or more
of the Fund's total assets would be invested in the securities of
companies whose principal business activities are in the same
industry. This restriction shall not prevent the Fund from investing
all of its assets in a "master" fund that has adopted similar
investment objectives, policies and restrictions.
Notwithstanding the foregoing, the Fund will concentrate its
investments in securities in the real estate industry.
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<PAGE>
- --------------------------------------------------------------------------------
Current Concentration Restriction
- --------------------------------------------------------------------------------
Real Estate Investment The Fund may not:
purchase the securities of any issuer
(other than securities issued or guaranteed
by the U.S. Government or any of its
agencies or instrumentalities, or
repurchase agreements secured thereby) if,
as a result, more than 25% of the Fund's
total assets would be invested in the
securities of companies whose principal
business activities are in the same
industry. In the utilities category, the
industry shall be determined according to
the service provided. For example, gas,
electric, water and telephone will be
considered as separate industries.
Notwithstanding the foregoing, the Fund
will concentrate its investments in
securities in the real estate industry.
- --------------------------------------------------------------------------------
Finally, the proposed concentration restriction for the National
Municipal Bond Fund, New York Tax-Free Fund, Ohio Municipal Bond Fund, Ohio
Municipal Money Market Fund and Tax-Free Money Market Fund recognizes that the
restriction related to concentration does not apply to investments in municipal
securities because the issuers of these securities are not members of any
industry. The proposed restriction will preserve and restate those Funds'
additional provision with respect to investments in industrial development
bonds. These Funds have no need to retain the ability to concentrate their
investments in securities issued by U.S. banks. The proposed concentration
restriction for these five Funds reads as follows:
Proposed Concentration Restriction
The Funds may not:
purchase the securities of any issuer (other than the securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, repurchase agreements secured thereby, or
tax-exempt securities issued by governments or political subdivisions
of governments except tax-exempt securities backed only by the assets
or revenues of non-governmental issuers) if, as a result, 25% or more
of a Fund's total assets would be invested in the securities of
companies whose principal business activities are in the same
industry. This restriction shall not prevent a Fund from investing
all of its assets in a "master" fund that has adopted similar
investment objectives, policies and restrictions.
When investing in industrial development bonds, a Fund will look to
the source of the underlying payments. A Fund will not invest 25% or
more of its total assets in industrial development bonds with
underlying payments derived from similar projects.
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Current Concentration Restriction
- --------------------------------------------------------------------------------
National Municipal Bond The Fund may not:
purchase securities (other than those
issued or guaranteed by the U.S. government
or any securities of its agencies or
instrumentalities or tax-exempt obligations
issued or guaranteed by a U.S. territory or
possession or a state or local government,
or a political subdivision of the
foregoing) if, as a result, more than 25%
of the Fund's total assets would be
invested in securities of companies whose
principal business activities are in the
same industry; for the purpose of this
restriction, utility companies will be
divided according to their services, for
example, gas, gas transmission, electric
and gas and telephone will each be
considered a separate industry. Industrial
development revenue bonds which are issued
by non-governmental entities within the
same industry shall be subject to this
industry limitation.
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Current Concentration Restriction
- --------------------------------------------------------------------------------
New York Tax-Free The Fund may not:
with respect to non-municipal investments,
purchase securities (other than securities
of the United States government, its
agencies or instrumentalities), if as a
result of such purchase 25% or more of the
Fund's total assets would be invested in
any one industry, or enter into a
repurchase agreement if, as a result
thereof, more than 15% of its net assets
would be subject to repurchase agreements
maturing in more than seven days;
and
invest more than 25% of the Fund's total
assets in securities whose interest
payments are derived from revenue from
similar projects.
Ohio Municipal Bond The Fund may not:
purchase the securities of any issuer
(other than securities issued or guaranteed
by the U.S. government or any of its
agencies or instrumentalities, or
repurchase agreements secured thereby) if,
as a result, more than 25% of the Fund's
total assets would be invested in the
securities of companies whose principal
business activities are in the same
industry; provided that this limitation
shall not apply to Municipal Securities or
governmental guarantees of Municipal
Securities; but for these purposes only,
industrial development bonds that are
backed only by the assets and revenues of a
non-governmental user shall not be deemed
to be Municipal Securities. In the
utilities category, the industry shall be
determined according to the service
provided. For example, gas, electric, water
and telephone will be considered as
separate industries.
Ohio Municipal Money Market The Fund will not:
purchase securities (other than securities
issued or guaranteed by the U.S.
government, its agencies, or
instrumentalities) if, as a result of such
purchase, 25% or more of the value of the
Fund's total assets would be invested in
any one industry. The Fund will not invest
25% or more of its assets in securities,
the interest upon which is paid from
revenues of similar type projects. The Fund
may invest 25% or more of its assets in
industrial development bonds.
Tax-Free Money Market The Fund may not:
purchase the securities of any issuer
(other than securities issued or guaranteed
by the U.S. Government or any of its
agencies or instrumentalities, or
repurchase agreements secured thereby) if,
as a result, more than 25% of the Fund's
total assets would be invested in the
securities of companies whose principal
business activities are in the same
industry; provided that this limitation
shall not apply to Municipal Securities or
governmental guarantees of Municipal
Securities; but for these purposes only,
industrial development bonds that are
backed by the assets and revenues of a
non-governmental user shall not be deemed
to be Municipal Securities.
Notwithstanding the foregoing, there is no
limitation with respect to certificates of
deposit and banker's acceptances issued by
domestic banks, or repurchase agreements
secured thereby. In the utilities category
the industry shall be determined according
to the service provided. For example, gas
electric, water and telephone will be
considered a separate industries.
Proposed Elimination of Concentration Restriction
The Board of Trustees is proposing to eliminate the current
concentration restriction for the Federal Money Market Fund and Gradison
Government Reserves Fund. As a matter of investment
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<PAGE>
policy, these Funds invest only in short term obligations issued or guaranteed
as to principal and interest by the U.S. government, its agencies or
instrumentalities or repurchase agreements secured by these securities. Since
the SEC permits investment companies to exclude from their concentration
policies and restrictions obligations issued or guaranteed as to principal and
interest by the U.S. government, its agencies or instrumentalities, there is no
need for a concentration restriction for these Funds.
- --------------------------------------------------------------------------------
Current Concentration Restriction
- --------------------------------------------------------------------------------
Federal Money Market The Fund may not:
purchase securities if such purchase would
cause more than 25% of any of the Funds'
total assets to be invested in the
securities of issuers in any one industry,
provided however that the Federal Money
Market Fund reserves the right to
concentrate in securities issued or
guaranteed as to principal and interest by
the United States Government, its agencies
or instrumentalities or U.S. bank
obligations. The Federal Money Market Fund,
however, will not exercise its right to
concentrate in U.S. bank obligations.
Gradison Government Reserves The Funds may not:
purchase the securities of any issuer other
than securities issued or guaranteed by the
U.S. government or any of its agencies or
instrumentalities, or repurchase agreements
secured thereby) if, as a result, more than
25% of the Fund's total assets would be
invested in the securities of companies
whose principal business activities are in
the same industry.
Non-Fundamental Investment Policy on Calculating Concentration
For purposes of calculating concentration of investments in the
utility and finance categories, each Fund will operate under the following
non-fundamental investment policy, which will be implemented where appropriate:
Neither finance companies as a group nor utility companies as a group
are considered a single industry for purposes of a Fund's
concentration policy (i.e., finance companies will be considered a
part of the industry they finance and utilities will be divided
according to the types of services they provide).
4c - Joint trading accounts
The Board of Trustees is recommending that the fundamental investment
restriction on joint trading accounts be eliminated for the following Funds:
Balanced Limited Term Income
Diversified Stock Ohio Municipal Bond
Established Value Prime Obligations
Growth Small Company Opportunity
Intermediate Income Special Value
International Growth Stock Index
Investment Quality Bond Tax-Free Money Market
Value
This investment restriction currently reads:
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<PAGE>
The Funds may not:
participate on a joint or joint and several basis in any securities
trading account.
Reason for the change
Under the 1940 Act, the Funds are not specifically prohibited from
participating in joint trading accounts under all circumstances. However,
because participation in a joint trading account would be a joint transaction
with an affiliated person, the Funds would have to apply to the SEC for, and
receive, an exemption from the appropriate provisions of the 1940 Act. The Funds
adopted their fundamental investment restriction on joint trading accounts in
response to certain requirements imposed by state laws and regulations which are
no longer applicable.
The Funds may wish to participate in a joint trading account sometime
in the future, subject to obtaining the necessary relief from the SEC. In
addition, there is no longer any requirement that the Funds have this
restriction. Eliminating this restriction would clarify and modernize the
governing documents of the Funds by removing a clause that is no longer needed.
Item 4d - Borrowing
Currently, the Funds may borrow money for temporary or emergency
purposes only. "Temporary purposes" is not defined under the 1940 Act. However,
it is presumed that any loan repaid within 60 days and not extended is for
temporary purposes. The Funds need the ability to borrow temporarily for a
number of reasons. Sometimes they borrow money to pay redeeming shareholders
when the number or amount of redemptions exceeds available cash and it is not a
good time to sell portfolio securities to meet redemptions. Other times, a Fund
must borrow money to pay redeeming shareholders because the Fund has not yet
received payment for securities it has sold.
The current borrowing restriction also permits the Funds to engage in
certain types of securities transactions, including delayed-delivery,
when-issued and reverse repurchase agreements that might be construed as
borrowing transactions. (These types of transactions are described fully in the
Statement of Additional Information).
The Funds would benefit from the ability to engage in other types of
transactions which might be considered borrowing. In particular, it might be
appropriate and advantageous to enter into a transaction known as a "dollar
roll." A "dollar roll" transaction is a special type of reverse repurchase
agreement where the Fund sells a mortgage-backed U.S. Government Security to a
financial institution with the understanding that the Fund will repurchase the
security at an agreed upon time and price. In a "dollar roll" transaction, the
financial institution must deliver the same type of security at the time of
repurchase, from the same agency with similar characteristics but, unlike in a
reverse repurchase agreement, not necessarily the original security delivered by
the Fund. "Dollar rolls" are considered to be borrowings by the Fund and provide
an economical way for the Fund to obtain cash.
In addition, the Funds would benefit from the flexibility to borrow
money up to the maximum amount permitted by law and not just for the limited
time period covered by a temporary borrowing. The Funds do not intend to borrow
for leveraging purposes, which means that a Fund will not borrow to make
investments with the proceeds of the borrowing.
Finally, it may be appropriate at times for the Funds to borrow from
each other. In order for the Funds to engage in this type of borrowing, they
would first have to apply to the SEC for, and receive, an exemption from certain
provisions of the 1940 Act.
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<PAGE>
Borrowing money may place a Fund at risk and therefore, although some
additional borrowing would be permitted under this restriction, it would be
limited (as required under the 1940 Act) to 33 1/3% of the total assets of a
Fund at the time the loan is made. In addition, the Board of Trustees will add a
non-fundamental borrowing restriction that a Fund will not borrow money for
leveraging purposes.
Reasons for the change
For each Fund, the proposed amendment clarifies, modernizes and
standardizes the restriction on borrowing. This change gives each Fund the
flexibility to engage in certain securities transactions, such as "dollar
rolls," that might be construed as "borrowing" transactions, and permits each
Fund to borrow money up to the limits permitted by the 1940 Act for any purpose
that does not involve leveraging. Changing this restriction will permit greater
flexibility in managing each Fund's portfolio and will allow each Fund to borrow
to the maximum extent permitted by law when such borrowings are necessary for
the efficient management of each Fund's assets.
The proposed changes also would allow a Fund to borrow from another
Fund when permissible. Borrowing from another Fund in the Trust could reduce
certain borrowing and transaction costs.
Proposed Borrowing Restriction
No Fund may:
borrow money, except that a Fund may (a) enter into commitments to
purchase securities and instruments in accordance with its investment
program, including when-issued and delayed-delivery transactions,
reverse repurchase agreements and "dollar roll" transactions,
provided that the total amount of any borrowing does not exceed 33
1/3% of the Fund's total assets at the time of the transaction; (b)
borrow money in an amount not to exceed 33 1/3% of the value of its
total assets at the time the loan is made; and (c) borrow money on a
short-term basis from investment companies that are part of the same
group of investment companies to the extent allowed by applicable
laws, rules or regulatory orders in an amount not to exceed 33 1/3%
of the value of its total assets at the time the loan is made.
Borrowings representing more than 33 1/3% of a Fund's total assets
must be repaid before the Fund may make additional investments.
Non-fundamental investment policy on borrowing for leverage:
The Funds of the Trust do not intend to borrow money for leverage
purposes.
The following table states the current borrowing restriction for each Fund.
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<PAGE>
- --------------------------------------------------------------------------------
Current Borrowing Restriction
- --------------------------------------------------------------------------------
Balanced The Funds may not:
Convertible Securities
Diversified Stock borrow money, except that (a) each Fund may
Growth enter into commitments to purchase
Intermediate Income securities in accordance with its
International Growth investment program, including
Investment Quality Bond delayed-delivery and when-issued securities
Lakefront and reverse repurchase agreements, provided
Limited Term Income that the total amount of any such borrowing
New York Tax-Free does not exceed 33 1/3 % of the Fund's
Ohio Municipal Bond total assets; and (b) each Fund may borrow
Prime Obligations money for temporary or emergency purposes
Real Estate Investment in an amount not exceeding 5% of the value
Small Company Opportunity of its total assets at the time when the
Special Value loan is made. Any borrowings representing
Stock Index more than 5% of a Fund's total assets must
Tax-Free Money Market be repaid before the Fund may make
U.S. Government Obligations additional investments.
Value
Federal Money Market No current restriction.
Established Value The Established Value Fund will not borrow
money, except as a temporary measure for
extraordinary or emergency purposes, and
then only in amounts not exceeding 5% of
the total assets of the Fund, taken at the
lower of acquisition cost or market value.
Financial Reserves The Funds may not:
Institutional Money Market
LifeChoice borrow money, except (a) from a bank for
temporary or emergency purposes (not for
leveraging or investment) or (b) by engaging
in reverse repurchase agreements, provided
that (a) and (b) in combination
("borrowings") do not exceed an amount equal
to one third of the current value of its
total assets (including the amount borrowed)
less liabilities (not including the amount
borrowed) at the time the borrowing is made.
This fundamental limitation is construed in
conformity with the 1940 Act, and if at any
time Fund borrowings exceed an amount equal
to 33 1/3 of the current value of the Fund's
total assets (including the amount borrowed)
less liabilities (other than borrowings) at
the time the borrowing is made due to a
decline in net assets, such borrowings will
be reduced within three days (not including
Sundays and holidays) to the extent
necessary to comply with the 33 1/3%
limitation.
Fund for Income The Fund may not:
borrow money, except for temporary or
emergency purposes and not for investment
purposes, and then only in an amount not
exceeding 5% of the value of its total
assets at the time of the borrowing.
Gradison Government Reserves The Gradison Government Reserves Fund will
not borrow money, except from banks as a
temporary measure or for extraordinary or
emergency purposes such as to enable the
Fund to satisfy redemption requests where
liquidation of portfolio securities is
considered disadvantageous, and not for
leverage purposes, and then only in amounts
not exceeding 15% of the total assets of the
Fund at the time of the borrowing. While any
borrowing of greater than 5% of the assets
is outstanding, the Fund will not purchase
additional portfolio securities.
National Municipal Bond The Fund may not:
borrow money, except that the Fund may
borrow money from banks for temporary or
emergency purposes (not for leveraging or
investment) and engage in reverse repurchase
agreements in an amount not exceeding 33
1/3% of the value of its total assets
(including the amount borrowed) less
liabilities (other than borrowings). Any
borrowings that come to exceed this amount
will be reduced within three days (exclusive
of Sundays and holidays) to the extent
necessary to comply with the 33 1/3%
limitation.
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<PAGE>
- --------------------------------------------------------------------------------
Current Borrowing Restriction
- --------------------------------------------------------------------------------
Ohio Municipal Money Market The Fund may:
(a) borrow money and engage in reverse
repurchase agreements in amounts up to
one-third of the value of the Fund's net
assets including the amounts borrowed, and
(b) purchase securities on a when-issued or
delayed delivery basis. The Fund will not
borrow money or engage in reverse repurchase
agreements for investment leverage, but
rather as a temporary, extraordinary, or
emergency measure or to facilitate
management of the Fund by enabling the Fund
to meet redemption requests when the
liquidation of Fund securities would be
inconvenient or disadvantageous. The Fund
will not purchase any securities while any
such borrowings (including reverse
repurchase agreements) are outstanding.
- --------------------------------------------------------------------------------
Non-fundamental investment restriction - Federal Money Market only
The Federal Money Market Fund will not borrow money.
Item 4e - Lending
The Board of Trustees is proposing that each Fund's lending
restriction be updated to clarify that the Funds may lend their portfolio
securities and engage in certain types of securities transactions that might be
construed as "lending" transactions. The proposed revisions also add language to
allow the Funds to engage in "interfund" lending of cash, when it is permissible
and desirable to do so. The Trust would need to obtain an exemptive order from
the SEC to engage in interfund lending. No application for such an order has
been made, but the Trust may make such an application in the future if this
proposal is approved.
Some Funds are currently lending their portfolio securities as part
of a securities lending program. Funds can generate income from lending
portfolio securities, although there are risks involved. However, the Board of
Trustees requires that there be procedures in place to ensure that borrowers of
securities are creditworthy and that the loans are fully collateralized.
Reason for the change
This change will clarify that the Funds may lend their portfolio
securities to generate income within the limits of the 1940 Act where desirable
and appropriate in accordance with their investment objectives. In addition, the
Funds will be able to engage in transactions which may be considered lending,
but which could be beneficial to the management of the portfolio.
Considered together, items 4d and 4e permit the Funds to engage in
interfund cash lending when desirable and when permitted by the appropriate
regulatory authority. Interfund cash lending is beneficial to shareholders
because it would permit the Funds to match lending and borrowing needs and
reduce costs associated with lending and borrowing, with virtually no increase
in risk. Funds would earn interest on money lent.
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<PAGE>
Proposed Lending Restriction -- All Funds
No Fund may:
Make loans, except as follows: A Fund, consistent with its investment
program, may (a) purchase bonds, debentures, other debt securities
and hybrid instruments, including short-term obligations; (b) enter
into repurchase transactions; (c) lend portfolio securities, provided
that the value of loaned securities does not exceed 33 1/3% of the
Fund's total assets; and (d) make short-term loans to other
investment companies that are part of the same group of investment
companies, as part of an interfund loan program, as allowed by
applicable laws, rules and regulatory orders.
The following table states the current lending restriction for each Fund:
- --------------------------------------------------------------------------------
Current Restriction
- --------------------------------------------------------------------------------
Balanced The Funds may not:
Diversified Stock
Growth lend any security or make any other loan if,
Intermediate Income as a result, more than 33 1/3% of its total
International Growth assets would be lent to other parties, but
Investment Quality Bond this limitation does not apply to purchases
Lakefront of publicly issued debt securities or to
Limited Term Income repurchase agreements.
National Municipal Bond
Ohio Municipal Bond
Prime Obligations
Real Estate Investment
Small Company Opportunity
Special Value
Stock Index
Tax-Free Money Market
U.S. Government Obligations
Value
Established Value The Fund will not:
make loans, except (a) through the purchase
of publicly distributed corporate
securities, U.S. Government obligations,
certificates of deposit, high-grade
commercial paper and other money market
instruments, and (b) loans of portfolio
securities to persons unaffiliated with the
Trust not in excess of 20% of the value of
the Fund's total assets (taken at market
value) made in accordance with the
guidelines of the SEC and with any standards
established from time to time by the Trust's
Board of Trustees, including the maintenance
of collateral from the borrower at all times
in an amount at least equal to the current
market value of the securities loaned.
Financial Reserves The Funds may not:
Institutional Money Market make loans to other persons, except (a) by
the purchase of debt obligations in which
the Fund is authorized to invest in
accordance with its investment objective,
and (b) by engaging in repurchase
agreements. In addition, each Fund may lend
its portfolio securities to broker-dealers
or other institutional investors, provided
that the borrower delivers cash or cash
equivalents as collateral to the Fund and
agrees to maintain such collateral so that
it equals at least 100% of the value of the
securities loaned. Any such securities loan
may not be made if, as a result thereof, the
aggregate value of all securities loaned
exceeds 33 1/3% of the total assets of the
Fund.
Fund for Income The Fund may not:
make loans to other persons except through
the use of repurchase agreements or the
purchase of commercial paper. For these
purposes, the purchase of a portion of an
issue of debt securities which is part of an
issue to the public shall not considered the
making of a loan.
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<PAGE>
- --------------------------------------------------------------------------------
Current Restriction
- --------------------------------------------------------------------------------
Gradison Government Reserves The Fund will not:
make loans, except that the purchase of debt
securities as allowed by the Fund's
investment objective and other investment
restrictions, entering into repurchase
agreements, and the lending of portfolio
securities in an amount not to exceed 30% of
the value of its total assets with the
collateral value of loaned securities
marked-to-market daily and in accordance
with applicable regulations or guidelines
established by the Securities and Exchange
Commission (the "SEC") shall not be
prohibited by this restriction.
New York Tax-Free The Fund may not:
make loans to other persons except through
the use of repurchase agreements, the
purchase of commercial paper or by lending
portfolio securities. For these purposes,
the purchase of a portion of an issue of
debt securities which is part of an issue to
the public shall not be considered the
making of a loan.
Convertible Securities The Funds may not:
Federal Money Market lend any cash except in connection with the
acquisition of a portion of an issue of
publicly distributed bonds, debentures,
notes or other evidences of indebtedness or
in connection with the purchase of
securities subject to repurchase agreements,
except as outlined under "Additional
Information on Fund Investments" and the
sub-section, "Securities Lending." The Funds
will not lend other assets except as a
special investment method. See "Investment
Objectives and Policies" herein and
"Investment Objectives" in the Prospectus.
The Funds may not make a loan of its
portfolio securities if, immediately
thereafter and as a result thereof,
portfolio securities with a market value of
10% or more of the total assets of the Funds
would be subject to such loans.
Ohio Municipal Money Market The Fund will [sic] not:
lend any of its assets, except through the
purchase of a position of publicly
distributed debt instruments or repurchase
agreements and through the lending of its
portfolio securities. The Fund may lend its
securities if collateral values are
continuously maintained at no less than 100%
of the current market value of such
securities by marking to market daily.
LifeChoice Funds The Funds may not:
lend any security or make any other loan if,
as a result, more than 33-1/3% of a Fund's
total assets would be lent to other parties,
except that a Fund may invest in Underlying
Portfolios that lend portfolio securities
consistent with their investment objectives
and policies, but this limitation does not
apply to purchases of publicly issued debt
securities or to repurchase agreements.
- --------------------------------------------------------------------------------
Non-fundamental policy on lending portfolio securities:
The Trustees for the Federal Money Market Fund and Fund for Income
have adopted the following non-fundamental investment restriction:
The Fund will not lend any of its portfolio securities.
Item 4f - Senior securities
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The Board of Trustees recommends that the restriction on issuing
senior securities applicable to all Funds except the Convertible Securities,
Established Value and Federal Money Market Funds be amended to read as follows:
Proposed Senior Securities Restriction
No Fund may:
issue any senior security (as defined in the Investment Company Act
of 1940, as amended (the "1940 Act"), except that (a) a Fund may
engage in transactions that may result in the issuance of senior
securities to the extent permitted under applicable regulations and
interpretations of the 1940 Act, an exemptive order or interpretation
of the staff of the Securities and Exchange Commission (the "SEC");
(b) a Fund may acquire other securities, the acquisition of which may
result in the issuance of a senior security, to the extent permitted
under applicable regulations or interpretations of the 1940 Act; (c)
subject to the restrictions described in the Statement of Additional
Information, a Fund may borrow money as authorized by the 1940 Act;
and (d) a Fund may issue multiple classes of shares in accordance
with regulations of the SEC.
Reason for the change
Under the 1940 Act, an open-end investment company is not permitted
to issue senior securities, except under certain limited conditions. The
restriction makes clear that there are circumstances under which a Fund may
issue a senior security. The proposed amendment clarifies and modernizes the
language concerning senior securities to make it consistent with permitted
activities approved by the SEC, such as a Fund issuing multiple classes of
shares. The amendment ensures that all currently permitted activities are
enumerated so that the Fund has the greatest operating flexibility. This change
will have no immediate impact any Fund's investment strategies.
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<PAGE>
The following table states the current senior securities restriction for each
Fund.
- --------------------------------------------------------------------------------
Current Restriction
- --------------------------------------------------------------------------------
All Funds except Established No Fund may:
Value, Gradison Government
Reserves, Convertible Securities issue any senior security (as defined in the
and Federal Money Market 1940 Act), except that (a) each Fund may
engage in transactions that may result in
the issuance of senior securities to the
extent permitted under applicable
regulations and interpretations of the 1940
Act or an exemptive order; (b) each Fund may
acquire other securities, the acquisition of
which may result in the issuance of a senior
security, to the extent permitted under
applicable regulations or interpretations of
the 1940 Act; (c) subject to the
restrictions set forth below, the Fund may
borrow money as authorized by the 1940 Act.
Gradison Government Reserves The Fund will not:
issue senior securities as defined in the
1940 Act, except to the extent that such
issuance might be involved with respect to
borrowings subject to fundamental
restriction no. 3 below or with respect to
transactions involving futures contracts or
the writing of options and provided that the
Trust may issue shares of additional series
or classes that the Trustees may establish.
Convertible Securities No current restriction.
Established Value
Federal Money Market
- --------------------------------------------------------------------------------
The Board of Trustees also recommends that the amended senior
securities restriction described above be adopted by the Convertible Securities,
Established Value and Federal Money Market Funds.
Reasons for the change
These three Funds currently have no separately stated restriction
regarding senior securities. In order to ensure that the Funds can engage in all
permitted activities consistent with the law, and in order to make clear that
with respect to senior securities, there is no intention to treat these Funds
differently from all the other Funds in the Trust, the restriction related to
issuing senior securities should be added to these Funds.
Item 4g - Real estate
The Board of Trustees recommends that the restriction regarding real
estate be amended to permit all Funds to invest in real estate-related
investments, if appropriate and desirable. The amended restriction reads as
follows:
Proposed Real Estate Restriction
No Fund may:
purchase or sell real estate unless acquired as a result of direct
ownership of securities or other instruments. This restriction shall
not prevent a Fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business, including real estate investment trusts. This
restriction does not preclude a Fund from buying securities backed by
mortgages on real estate or securities of companies engaged in such
activities. This restriction shall not prevent a Fund from investing
in real estate operating companies and shares of companies engaged in
other real estate related businesses.
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<PAGE>
Reasons for the change
The proposed change conforms the restriction on investing in real
estate to current interpretations of the 1940 Act. This change modernizes the
present restriction by allowing a Fund to invest in certain newer financial
instruments that were precluded under the prior restriction, when that type of
investment is consistent with the Fund's investment objectives and policies.
The following table states the current restriction for each Fund.
- --------------------------------------------------------------------------------
Current Restriction
- --------------------------------------------------------------------------------
Balanced The Funds may not:
Diversified Stock
Growth purchase or sell real estate unless acquired
Intermediate Income as a result of ownership of securities or
International Growth other instruments (but this shall not
Investment Quality Bond prevent each Fund from investing in
Lakefront securities or other instruments backed by
LifeChoice real estate or securities of companies
Limited Term Income engaged in the real estate business).
Ohio Municipal Bond Investments by the Funds in securities
Prime Obligations backed by mortgages on real estate or in
Small Company Opportunity marketable securities of companies engaged
Special Value in such activities are not hereby precluded.
Stock Index
Tax-Free Money Market
Value
Convertible Securities The Funds may not:
Federal Money Market purchase or hold any real estate, including
real estate limited partnerships, except
that the Funds may invest in securities
secured by real estate or interests therein
or issued by persons which deal in real
estate or interests therein.
Established Value The Fund will not:
purchase or sell real estate, except that it
is permissible to purchase securities
secured by real estate or real estate
interests or issued by companies that invest
in real estate or real estate interests.
Financial Reserves The Fund may not:
buy or sell real estate, commodities, or
commodity (futures) contracts.
Gradison Government Reserves The Fund will not:
purchase or sell real estate. The purchase
of securities secured by real estate which
are otherwise allowed by the Fund's
investment objective and other investment
restrictions shall not be prohibited by this
restriction.
Institutional Money Market The Fund may not:
buy or sell real estate, commodities, or
commodity (futures) contracts or invest in
oil, gas or other mineral exploration or
development programs.
National Municipal Bond The Fund may not:
purchase or sell real estate unless acquired
as a result of ownership of securities or
other instruments (but this shall not
prevent each Fund from investing in
securities or other instruments backed by
real estate or securities of companies
engaged in the real estate business).
Ohio Municipal Money Market The Fund will not:
-35-
<PAGE>
- --------------------------------------------------------------------------------
Current Restriction
- --------------------------------------------------------------------------------
purchase or sell real estate, although it
may invest in Ohio Municipal Securities
secured by real estate or interests in real
estate.
Real Estate Investment The Fund may not:
purchase or sell real estate, except that
the Fund may purchase securities issued by
companies in the real estate industry and
will, as a matter of fundamental policy,
concentrate its investments in such
securities.
U.S. Government Obligations The Fund may not:
purchase or sell real estate unless acquired
as a result of ownership of securities or
other instruments.
- --------------------------------------------------------------------------------
Commodities and commodity (futures) contracts. Some of the current
restrictions stated above combine real estate with commodities and commodity
contracts. Should shareholders approve the proposed restriction regarding real
estate, the reference to real estate in the current restriction would be
removed, and the remainder of the current restriction relating to commodities
and commodity contract would be stated as a separate restriction.
Real Estate Investment Fund. Although the restriction relating to the
Real Estate Investment Fund would be amended, as a matter of fundamental policy,
the Fund intends to continue to concentrate its investments in the real estate
industry. (See Item 4b above.)
Item 4h - Underwriting
The Board of Trustees proposes that all Funds revise the restriction
relating to underwriting to read as follows:
Proposed Underwriting Restriction
No Fund may:
underwrite securities issued by others, except to the extent that a
Fund may be considered an underwriter within the meaning of the
Securities Act of 1933, as amended (the "Securities Act") when
reselling securities held in its own portfolio.
Reason for the change
The proposed change would modernize and clarify each Fund's
restriction on underwriting by stating it more succinctly. Under the proposed
restriction, a Fund would not be prohibited from selling any security in its
portfolio merely because the selling Fund might technically be deemed to be an
underwriter under the Securities Act. This change would give the Fund more
flexibility in disposing of securities that might not necessarily be considered
restricted securities but where the Fund might still be considered an
underwriter should it sell that security.
The proposed change in this investment restriction would not
substantively alter any Fund's investment strategy.
The following table reflects the current restriction for the each Fund.
- --------------------------------------------------------------------------------
Current Restriction
- --------------------------------------------------------------------------------
All Funds, except Established The Funds may not:
Value and Gradison Government
Reserves underwrite securities issued by others,
except to the extent that a Fund (or, with
respect to the LifeChoice Funds, an
Underlying Portfolio) may be
-36-
<PAGE>
considered an underwriter within the meaning
of the Securities Act of 1933, as amended
(the "Securities Act"), in the disposition
of restricted securities.
Established Value The Fund will not:
underwrite the securities of other issuers,
except insofar as the Trust may technically
be deemed an underwriter under the
Securities Act in connection with the
disposition of portfolio securities.
Gradison Government Reserves The Fund will not
underwrite the securities of other issuers,
except insofar as the Fund may technically
be deemed an underwriter under the
Securities Act of 1933, as amended (the
"Securities Act"), in connection with the
disposition of portfolio securities.
- --------------------------------------------------------------------------------
LifeChoice Funds. The proposed restriction on underwriting for the
LifeChoice Funds will continue to contain the statement: "(or, with respect to
the LifeChoice Funds, an Underlying Portfolio)."
Item 4i - Pledging - Established Value Fund and Fund for Income only
The Board of Trustees proposes to eliminate these Funds' fundamental
investment restrictions on pledging assets for security.
The following table states the current restriction for each Fund.
- --------------------------------------------------------------------------------
Current Restriction - Established Value Current Restriction - Fund for Income
- --------------------------------------------------------------------------------
The Established Value Fund will not: The Fund for Income may not:
mortgage, pledge or hypothecate pledge, mortgage, or hypothecate its
securities, except in connection assets, except that, to secure
with a permissible borrowing as borrowings permitted by its
set forth in fundamental investment fundamental restriction on borrowing,
restriction no. 2 above, and then it of may pledge securities having a
only in amounts not exceeding 10% of market value at the time of pledge
the value the assets of a Fund (taken not exceeding 10% of the value of its
at the lower of acquisition cost or total assets.
market).
Reasons for the change
The restriction on pledging and hypothecating assets was based on
state law requirements that are no longer applicable. Removing this restriction
will give each of these Funds greater flexibility by permitting management to
make changes in investment policy regarding pledging or mortgaging assets
without seeking shareholder approval. In addition, removing this restriction
would afford these Funds greater flexibility in permitted borrowing
transactions, because bank lenders often require a pledge of assets as security
for loans. Eliminating this restriction now would not affect these Funds'
present investment practices.
4j - Investing to influence management or exercise control -- Convertible
Securities, Established Value and Federal Money Market only
The Board of Trustees proposes to eliminate the restriction relating
to investing to influence management or exercise control with respect to the
Convertible Securities, Established Value and Federal Money Market Funds.
The following table states the current restriction for each Fund.
-37-
<PAGE>
- --------------------------------------------------------------------------------
Current Restriction - Convertible Current Restriction -
Securities and Federal Money Market Established Value
- --------------------------------------------------------------------------------
The Funds may not: The Fund will not:
invest in companies for the purpose invest in companies for the purpose
of influencing management or of exercising control or management.
exercising control, and will not
purchase more than 10% of the voting
securities of any one issuer. This
will not preclude the management
of the Funds from voting proxies in
their discretion.
- --------------------------------------------------------------------------------
Reasons for the change
The restriction on investing to influence management or exercise
control was originally adopted to ensure that investment companies not acquire
more than 10% of the outstanding voting securities of a single issuer. Since
both the Convertible Securities Fund and the Federal Money Market Fund invest
most, if not all, of their assets in debt securities, this restriction is
unnecessary. The owners of debt securities have no voting rights. Therefore, it
is impossible for the Funds to carry out their investment strategies and also
invest for the purpose of influencing management and exercising control.
For the Established Value Fund, the restriction came from state law
requirements that are no longer applicable. Because the Established Value Fund
invests primarily in companies that have a minimum market capitalization of $1
billion, and because it is diversified, it is unlikely that the Established
Value Fund could invest for the purpose of influencing management or exercising
control.
4k -Purchasing on margin and selling short - Convertible Securities, Established
Value and Federal Money Market only
The Board of Trustees proposes to eliminate the restriction relating
to purchasing on margin and short selling for the Convertible Securities,
Established Value and Federal Money Market Funds.
The following table states the current restriction for each Fund.
- --------------------------------------------------------------------------------
Current Restriction - Convertible Current Restriction -
Securities and Federal Money Market Established Value
- --------------------------------------------------------------------------------
The Funds may not: The Fund will not:
purchase securities on margin make short sales of securities, or
or sell securities short. purchase securities on margin,
except for short-term credit as is
necessary for the clearance of
transactions.
- --------------------------------------------------------------------------------
Reasons for the change
The practices of purchasing securities on margin and selling
securities short when a Fund does not own the security create the issuance of a
senior security. Open-end investment portfolios such as the Funds are by law not
permitted to issue senior securities except under very limited circumstances.
Therefore, there is no need for the Funds to have a restriction on purchasing on
margin or selling short since these activities are controlled by statutory
requirements and other restrictions adopted by the Funds.
Eliminating this restriction would not affect any Fund's present
investment strategies.
-38-
<PAGE>
4l - Illiquid and restricted securities - Convertible Securities, Established
Value and Federal Money Market only
The Board of Trustees proposes to amend and re-classify from
fundamental to non-fundamental the restrictions relating to illiquid and
restricted securities for the Convertible Securities, Established Value and
Federal Money Market Funds to read as follows:
Proposed non-fundamental illiquid and restricted securities restriction
The Funds may not:
invest more than 15% of any of the Convertible Securities Fund's or
the Established Value Fund's net assets or more than 10% of the
Federal Money Market Fund's net assets in (i) securities restricted
as to disposition under the Federal securities laws, except such
restricted securities determined by the Funds' investment adviser to
be liquid based on the trading markets for the particular security
and other factors, (ii) securities as to which there are no readily
available market quotations, or (iii) repurchase agreements with a
maturity in excess of seven days.
The following table states the current illiquid securities restriction for each
Fund.
- --------------------------------------------------------------------------------
Current Restriction
- --------------------------------------------------------------------------------
Convertible Securities The Funds may not:
Federal Money Market
invest more than 15% of any of the
Convertible Securities Fund's net
assets or more than 10% of the
Federal Money Market Fund's net
assets in (i) securities restricted
as to disposition under the Federal
securities laws, (ii) securities as
to which there are no readily
available market quotations, or
(iii) repurchase agreements with a
maturity in excess of 7 days.
Established Value The Fund will not:
purchase securities subject to
restrictions on disposition under
the Securities Act.
and
purchase securities for which no
readily available market quotation
exists, if at the time of
acquisition more than 5% of the
total assets of the Fund would be
invested in such securities
(repurchase agreements maturing in
more than seven days are included
within this restriction).
- --------------------------------------------------------------------------------
Reasons for the changes
Illiquid securities are securities that cannot be sold by the Funds
within seven days at a price approximately equal to the price used in
determining the Fund's net asset value. Securities that are restricted as to
resale under the Federal securities laws are generally considered illiquid.
However, the staff of the SEC has indicated that where restricted securities can
be determined to be liquid based on criteria established by an investment
company's board of directors, those securities can be treated as liquid for
purposes of the investment company's investment restrictions. There are
currently numerous securities that are restricted as to resale but for which
markets have developed which make them highly liquid. The Board of Trustees is
proposing that the illiquid securities restriction for each Fund be amended to
permit these very liquid, though restricted, securities to be purchased without
including them in the percentage limitation applicable to illiquid securities.
-39-
<PAGE>
In addition, at one time, regulators required investment companies to
state their policy regarding illiquid securities as a fundamental limitation.
That requirement no longer exists, and there is no statutory requirement that
this restriction be fundamental.
Making the restriction on illiquid securities non-fundamental would
give the Board of Trustees more flexibility in responding to changing regulatory
requirements. As an example, a number of years ago, the SEC permitted non-money
market funds to increase the percentage of their assets that could be invested
in illiquid securities from 10% to 15%. Should the SEC change its policy again,
or should market conditions permit a change in this policy, it would be
advantageous to the Funds to have the Board of Trustees make the change without
incurring the cost of a shareholders meeting.
Neither the change in the restriction nor the change in the
classification of the restriction would impact the investment practices or
strategies of either Fund.
4m - Ownership of portfolio securities by Trustees or Officers -- Established
Value only
The Board of Trustees proposes to eliminate the restriction which
prohibits the Fund from owning the securities of an issuer when a Trustee or
Officer of the Fund also owns securities of that issuer.
The current restriction reads as follows:
The Established Value Fund will not purchase or retain the securities
of any issuer if any Trustee or officer of the Trust is or becomes a
director or officer of such issuer and owns beneficially more than
1/2 of 1% of the securities of such issuer, or if those directors,
trustees and officers of the Trust and its investment adviser who are
directors or officers of such issuer together own or acquire more
than 5% of the securities of such issuer.
Reason for the change
This restriction was based on state law requirements that are no
longer applicable. In addition, maintaining the restriction is not necessary,
because the conflict of interest that the restriction was probably meant to
prevent is already adequately covered under the 1940 Act. The restriction
sometimes imposes severe limitations on the operation of the portfolio and is
costly and difficult to administer. Because the restriction is no longer
necessary, the Board of Trustees recommends that it be eliminated. This action
would not change the Fund's investment strategy.
4n - Unseasoned Issuers - Established Value only
The Board of Trustees proposes to eliminate the restriction limiting
investments in the securities of unseasoned issuers to not more than 5% of the
assets of the Fund.
The current restriction reads as follows:
The Established Value Fund will not purchase any securities of
companies which have (with their predecessors) a record of less than three years
of continuous operation, if at the time of acquisition more than 5% of a Fund's
total assets would be invested in such securities.
Reason for the change
This is another restriction that was imposed by state laws which are
no longer applicable. Without these legal requirements, there is no longer any
need to so specifically limit the portfolio. Eliminating this restriction would
increase the flexibility the portfolio manager has over the investment of Fund
assets. However, this increase in flexibility would not change the Fund's
investment strategy.
-40-
<PAGE>
B. Required vote
Each item contained in Proposal 4 requires the approval of a majority
of each Fund's outstanding voting securities. A majority of the outstanding
voting securities means the lesser of one more than half of the number of shares
that are issued and outstanding as of the Record Date or 67% of the voting
shares present at the Special Meeting if more than 50% of the voting shares are
present at the Special Meeting in person or by proxy.
C. Has the Board of Trustees approved these proposed changes?
Yes. The Board of Trustees has considered each of these proposed
changes and has concluded that changing these restrictions now would be in the
best interests of each affected Funds' shareholders. The Board of Trustees
recommends that shareholders vote "for" the items contained in Proposal 4.
PROPOSAL 5
OTHER MATTERS
The Board of Trustees of the Trust does not know of any matters to be
presented at the Special Meeting other than those set forth in this Proxy
Statement. If any other business should come before the Special Meeting, the
persons named on the accompanying proxy card will vote thereon in accordance
with their best judgment.
PART 3: MORE ON PROXY VOTING AND SHAREHOLDER MEETINGS
General information about proxy voting
The Board of Trustees of the Trust is soliciting your proxy to vote
on the matters described in this Proxy Statement. We expect to solicit proxies
primarily by mail, but representatives of Shareholder Communications Corporation
or its affiliates or others may communicate with you by mail or by telephone or
other electronic means to discuss your vote. We will ask broker-dealers and
other institutions that hold shares for the benefit of their customers to send
the proxy materials to the beneficial owners of those shares and to obtain
authorization to vote on their behalf.
Only shareholders of record of the Funds of the Trust at the close of
business on the Record Date, January 21, 2000, may vote at the Special Meeting.
As of the Record Date, each Class of the Funds of the Trust had the number of
shares issued and outstanding listed below, each share being entitled to one
vote:
- --------------------------------------------------------------------------------
Fund Shares entitled to Vote
- --------------------------------------------------------------------------------
Balanced Fund
Class A
Class B
Class G
Convertible Securities Fund
Class A
Class G
Diversified Stock Fund
Class A
Class B
Class G
- --------------------------------------------------------------------------------
-41-
<PAGE>
- --------------------------------------------------------------------------------
Fund Shares entitled to Vote
- --------------------------------------------------------------------------------
Established Value Fund
Class A
Class G
Federal Money Market Fund
Investor Shares
Select Shares
Financial Reserves Fund
Fund for Income
Class A
Class G
Gradison Government Reserves Fund
Growth Fund
Class A
Class G
Institutional Money Market Fund
Investor Shares
Select Shares
Intermediate Income Fund
Class A
Class G
International Growth Fund
Class A
Class B
Class G
Investment Quality Bond Fund
Class A
Class G
Lakefront Fund
LifeChoice Conservative Investor Fund
LifeChoice Growth Investor Fund
LifeChoice Moderate Investor Fund
Limited Term Income Fund
National Municipal Bond Fund
Class A
Class B
Class G
New York Tax-Free Fund
Class A
Class B
Class G
Ohio Municipal Bond Fund
Class A
Class G
Ohio Municipal Money Market Fund
Prime Obligations Fund
Real Estate Investment Fund
Class A
Class G
Small Company Opportunity Fund
Class A
-42-
<PAGE>
- --------------------------------------------------------------------------------
Fund Shares entitled to Vote
- --------------------------------------------------------------------------------
Class G
Special Value Fund
Class A
Class B
Class G
Stock Index Fund
Class A
Class G
Tax-Free Money Market Fund
U.S. Government Obligations Fund
Investor Shares
Select Shares
Value Fund
Class A
Class G
Total Trust Shares:
- --------------------------------------------------------------------------------
As of the Record Date, the Trustees and officers of the Trust, as a
group, owned less than ___% of the outstanding shares of the Funds in the Trust.
To the best of the knowledge of the Trust, the following shareholders
beneficially owned 5% or more of the outstanding shares of the indicated classes
of Funds in the Trust as of January 21, 2000:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Percent Owned Percent Owned
Victory Fund Name and Address of Owner of Record Beneficially
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balanced Fund - Class A SNBOC and Company 96.33%
4900 Tiedeman Road
Cleveland, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
Convertible Securities Fund - Charles Schwab & Co. 26.05%
Class A Special Custody Account #2
FOB Customers
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94104-4122
- -----------------------------------------------------------------------------------------------------------------------
Key Trust 35.88%
Attn: Jim Osborne, OH-01-49-0330
4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
Diversified Stock Fund - Class SNBOC and Company 74.23%
A Attn: Jim Osborne, OH-01-49-0330
4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
Diversified Stock Fund - Class McDonald & Co. Securities 98.39%
G The Exclusive Benefit of Customers
Attn: Jeff Carter
c/o Gradison Division
580 Walnut Street
Cincinnati, Ohio 45202-3110
- -----------------------------------------------------------------------------------------------------------------------
Established Value Fund --
Class G
Federal Money Market Fund - KeyCorp Investment Products 82.92%
Investor Class Attn: Jennifer Ryan
127 Public Square
Cleveland, OH 44114-1216
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
-43-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Percent Owned Percent Owned
Victory Fund Name and Address of Owner of Record Beneficially
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Summit County Treasurer 6.9%
Attn: John Donofrio
175 South Main Street
Akron, OH 44308-1306
- -----------------------------------------------------------------------------------------------------------------------
Federal Money Market Fund - KeyCorp Investment Products 93.47%
Select Class 127 Public Square
Cleveland, OH 44114-1216
- -----------------------------------------------------------------------------------------------------------------------
Financial Reserves Fund - SNBOC and Company 91.00%
Class A Attn: Jim Osborne OH-01-49-0330
4900 Tiedeman Road
Cleveland, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
Fund for Income - Class A Key Trust Cleveland 61.89%
PO Box 93971
4900 Tiedeman Road
Cleveland, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
Fund for Income McDonald & Co. Securities 96.27%
Class G The Exclusive Benefit of Customers
Attn: Jeff Carter
c/o Gradison Division
580 Walnut Street
Cincinnati, Ohio 45202-3110
- -----------------------------------------------------------------------------------------------------------------------
Government Mortgage Fund - SNBOC and Company 95.17%
Class A 4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
Gradison Government Reserves
Fund
- -- Class G
Growth Fund - Class A SNBOC and Company 88.19%
PO Box 93971
4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
Institutional Money Market KeyCorp Investment Products 6.70%
Fund - 127 Public Square
Investor Shares Cleveland, OH 44114-1216
- -----------------------------------------------------------------------------------------------------------------------
Liefke & Co. 74.83%
c/o KeyCorp Trust Services
PO Box 93971
4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
McDonald & Co. Securities 7.57%
The Exclusive Benefit of Customers
Attn: Jeff Carter
c/o Gradison Division
580 Walnut Street
Cincinnati, Ohio 45202-3110
- -----------------------------------------------------------------------------------------------------------------------
Institutional Money Market KeyCorp Investment Products 5.75%
Fund - 127 Public Square
Select Shares Cleveland, OH 44114-1216
- -----------------------------------------------------------------------------------------------------------------------
BISYS Fund Services Ohio Inc. 93.20%
The Benefit of our Customers
Attn: Victory Cash Control Dept.
3435 Stelzer Road
Columbus, OH 43219-6004
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
-44-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Percent Owned Percent Owned
Victory Fund Name and Address of Owner of Record Beneficially
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Intermediate Income Fund - SNBOC and Company 96.84%
Class A PO Box 93971
4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
International Growth Fund - SNBOC and Company 86.50%
Class A PO Box 93971
4900 Tiedeman Road
Cleveland, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
International Growth Fund - Subash C Mahajan Keogh PS 18.62% 18.62%
Class B KeyBank C/FBO
7215 Old Oak Blvd., Suite 3104
Cleveland, Ohio 44130-3340
- -----------------------------------------------------------------------------------------------------------------------
Barbara A Dalesandro IRA 5.39% 5.39%
McDonald Investments Inc. C/FBO
5997 Glenwood Avenue
Youngstown, Ohio 44512-2817
- -----------------------------------------------------------------------------------------------------------------------
Jerry L Ufford IRA 6.56% 6.56%
McDonald Investments Inc. C/FBO
3303 Linden Road Suite 308
Rocky River, Ohio 44116-4105
- -----------------------------------------------------------------------------------------------------------------------
International Growth Fund - McDonald & Co. Securities 95.65%
Class G The Exclusive Benefit of Customers
Attn: Jeff Carter
c/o Gradison Division
580 Walnut Street
Cincinnati, Ohio 45202-3110
- -----------------------------------------------------------------------------------------------------------------------
Investment Quality Bond Fund - SNBOC and Company 81.58%
Class A PO Box 93971
4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
Lakefront Fund - Class A SNBOC and Company 43.60%
PO Box 93971
4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
BISYS Fund Services
Attn: Fund Administration & Reg. Serv. 27.34%
3435 Stelzer Road
Columbus, OH 43219-6004
- -----------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith 18.96%
For Sole Benefit of its Customers
Attn: Fund Admin Team
4800 Deer Lake Drive East 3rd Floor
Jacksonville FL 32246-6484
- -----------------------------------------------------------------------------------------------------------------------
LifeChoice - Conservative SNBOC and Company 94.27%
Investor - Class A 4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
LifeChoice - SNBOC and Company 92.82%
Growth Investor - Class A 4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
CoreLink Financial Inc. 5.40%
PO Box 4054
Concord, CA 94524-4054
- -----------------------------------------------------------------------------------------------------------------------
LifeChoice - SNBOC and Company 93.22%
Moderate Investor - Class A 4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
-45-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Percent Owned Percent Owned
Victory Fund Name and Address of Owner of Record Beneficially
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CoreLink Financial Inc. 6.27%
PO Box 4054
Concord, CA 94524-4054
- -----------------------------------------------------------------------------------------------------------------------
Limited Term SNBOC and Company 96.84%
Income Fund - Class A PO Box 93971
4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
National Muni Bond Fund - Key Trust Cleveland 30.00%
Class A PO Box 93971
4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
Estate of Mr. Salomon 5.73%
Park Square Station
PO BOX 15490
Stamford CT 06901-0490
- -----------------------------------------------------------------------------------------------------------------------
National Muni Bond Fund - For Robert, Geraldine and Janet Sylvester 12.90% 12.90%
Class B And GFS ND Manufacturing Co
115 Cocheco Street
Dover, NH 03820
- -----------------------------------------------------------------------------------------------------------------------
Anne C Quinn 11.55% 11.55%
42 Juniper Court
St. Marys Place
London W8 5UF England 44813
- -----------------------------------------------------------------------------------------------------------------------
Marden Spencer 5.96% 5.96%
958 E. Olympus Park Dr.
Salt Lake City, UT 84117
- -----------------------------------------------------------------------------------------------------------------------
New York Tax-Free Key Trust Cleveland 19.01%
Fund - Class A PO Box 93971
4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
New York Tax-Free Anna Maria Desocio 7.38% 7.38%
Fund - Class B 1624 Caleb Ave.
Syracuse, NY 13206
- -----------------------------------------------------------------------------------------------------------------------
Richard A. Dudley 15.79% 15.79%
Margaret H. Dudley JTTEN
68 Center St.
Geneseo, NY 14454
- -----------------------------------------------------------------------------------------------------------------------
Ohio Muni Bond Fund - Class A SNBOC and Company 83.04%
PO Box 93971
4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
Ohio Municipal McDonald & Co. Securities 31.11%
MMKT Fund - Class A The Exclusive Benefit of Customers
Attn: Jeff Carter
c/o Gradison Division
580 Walnut Street
Cincinnati, OH 45202
- -----------------------------------------------------------------------------------------------------------------------
SNBOC and Company 18.09%
PO Box 93971
4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
-46-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Percent Owned Percent Owned
Victory Fund Name and Address of Owner of Record Beneficially
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Private Banking 43.28%
c/o Society National Bank
Attn: Joe Caroscio
2025 Ontario Street
Cleveland, OH 44115-1022
- -----------------------------------------------------------------------------------------------------------------------
Ohio Regional Stock Fund - SNBOC and Company 84.22%
Class A PO Box 93971
4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
Ohio Regional Stock Fund - Gordon T Laflash IRA 5.24% 5.24%
Class B McDonald Investments Inc. C/FBO
2448 Ragan Woods Drive
Toledo, Ohio 43614-1017
- -----------------------------------------------------------------------------------------------------------------------
Jerry L Ufford IRA 6.38% 6.38%
McDonald Investments Inc. C/FBO
3303 Linden Road, Suite 308
Rocky River, Ohio 44116-4105
- -----------------------------------------------------------------------------------------------------------------------
Stephen A Warth IRA 5.36% 5.36%
McDonald Investments Inc. C/FBO
10064 Hunting Drive
Brecksville, Ohio 44141-3645
- -----------------------------------------------------------------------------------------------------------------------
Ohio Regional Stock Fund - McDonald & Co. Securities 98.88%
Class G The Exclusive Benefit of Customers
Attn: Jeff Carter
c/o Gradison Division
580 Walnut Street
Cincinnati, Ohio 45202-3110
- -----------------------------------------------------------------------------------------------------------------------
Prime Obligations Fund - Class Private Banking 39.92%
A c/o Society National Bank
Attn: Joe Caroscio
2025 Ontario Street
Cleveland, OH 44115-1022
- -----------------------------------------------------------------------------------------------------------------------
McDonald & Co. Securities 22.27%
The Exclusive Benefit of Customers
Attn: Jeff Carter
c/o Gradison Division
580 Walnut Street
Cincinnati, Ohio 45202-3110
- -----------------------------------------------------------------------------------------------------------------------
KeyCorp Investment Products 32.63%
127 Public Square
Cleveland, OH 44114-1216
- -----------------------------------------------------------------------------------------------------------------------
Real Estate Investment Fund - SNBOC and Company 83.50%
Class A PO Box 93971
4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
Special Value Fund - Class A SNBOC and Company 94.50%
PO Box 93971
4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
Stock Index Fund - Class A SNBOC and Company 95.42%
4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
-47-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Percent Owned Percent Owned
Victory Fund Name and Address of Owner of Record Beneficially
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stock Index Fund - McDonald & Co. Securities 99.91%
Class G The Exclusive Benefit of Customers
Attn: Jeff Carter
c/o Gradison Division
580 Walnut Street
Cincinnati, Ohio 45202-3110
- -----------------------------------------------------------------------------------------------------------------------
Tax-Free MMKT Fund - Class A SNBOC and Company 28.79%
PO Box 93971
4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
Private Banking 33.59%
c/o Society National Bank
Attn: Joe Caroscio
2025 Ontario Street
Cleveland, OH 44115-1022
- -----------------------------------------------------------------------------------------------------------------------
McDonald & Co. Securities 32.71%
The Exclusive Benefit of Customers
Attn: Jeff Carter
c/o Gradison Division
580 Walnut Street
Cincinnati, OH 45202
- -----------------------------------------------------------------------------------------------------------------------
US Gov't Obligations Fund - SNBOC and Company 99.34%
Investor PO Box 93971
4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
US Gov't Obligations Fund - SNBOC and Company 15.20%
Select PO Box 93971
4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
Private Banking 33.85
c/o Society National Bank
Attn: Joe Caroscio
2025 Ontario Street
Cleveland, OH 44115-1022
- -----------------------------------------------------------------------------------------------------------------------
KeyCorp Investment Products 35.25%
127 Public Square
Cleveland, OH 44114-1216
- -----------------------------------------------------------------------------------------------------------------------
McDonald & Co. Securities 7.66%
The Exclusive Benefit of Customers
Attn: Jeff Carter
c/o Gradison Division
580 Walnut Street
Cincinnati, Ohio 45202-3110
- -----------------------------------------------------------------------------------------------------------------------
Value Fund - Class A SNBOC and Company 96.16%
PO Box 93971
4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
Small Company Opportunity Fund SNBOC and Company 93.36%
- - Class A PO Box 93971
4900 Tiedeman Road
Brooklyn, OH 44144-2338
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
-48-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Percent Owned Percent Owned
Victory Fund Name and Address of Owner of Record Beneficially
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Small Company Opportunity Fund McDonald & Co. Securities 99.44%
- - Class G The Exclusive Benefit of Customers
Attn: Jeff Carter
c/o Gradison Division
580 Walnut Street
Cincinnati, Ohio 45202-3110
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Revoking your proxy
Even if you sign and return the accompanying proxy card, you may
revoke your proxy by writing to the Secretary of the Trust prior to the Special
Meeting, by delivering a subsequently dated proxy, or by attending and voting at
the Special Meeting in person. In addition to the solicitation of proxies by
mail, the Trust may use the services of officers and employees of the Trust,
KAM, and BISYS Fund Services, the Funds' distributor and administrator (none of
whom receive any compensation for that service), 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 will employ Shareholder
Communications Corporation to solicit proxies, for which it expects to pay proxy
solicitation fees of approximately $320,000.00. Shareholders may also vote by
internet at www.proxyvote.com by following the instructions on the enclosed
proxy card.
This proxy solicitation is made by and on behalf of the Board of
Trustees of the Trust. The Trust will pay the costs of proxy solicitation, which
consists of printing, handling and mailing of the proxies and related materials.
The Trust may request brokers, custodians, nominees and fiduciaries to forward
proxy materials to the beneficial owners of shares. Persons holding shares as
nominees will, upon request, be reimbursed by the Trust for their reasonable
expenses incurred in sending soliciting material to their principals.
One-third of the outstanding shares of the Trust must be present at
the special meeting in person or by proxy in order for the Trust to conduct
business at the meeting. For proposal 3, which is considered by each class
separately, one-third of the outstanding shares of each class must be present in
person or by proxy to constitute a quorum as to that proposal. If a proxy
represents a broker "non-vote" (that is, a proxy from a broker or nominee
indicating that such person has not received instructions from the beneficial
owner or other person entitled to vote shares on a particular matter with
respect to which the broker or nominee does not have discretionary power) or if
a proxy is marked with an abstention, the shares represented thereby will be
considered to be present at the meeting for purposes of determining the
existence of a quorum for the transaction of business. Broker non-votes will
have no effect in the determination of proposals 1 and 2, but will have the
effect of a vote against proposals 3 and 4.
Voting information and discretion of the persons named as proxies
While the Special Meeting is called to act upon any other business
that may properly come before it, as of the date of this Proxy Statement, the
only business which management intends to present or knows that others will
present is the business mentioned in the Notice of Special Meeting. If any other
matters lawfully come before the Special Meeting, and in all procedural matters
at the Special Meeting, the persons named as proxies (or their substitutes) will
to vote in accordance with their best business judgment.
-49-
<PAGE>
At the time any session of the Special Meeting is called to order, if
a quorum is not present, in person or by proxy, the persons named as proxies may
vote those proxies which have been received to adjourn the Special Meeting to a
later date. In the event that a quorum is present but sufficient votes in favor
of the proposal have not been received, the persons named as proxies may propose
one or more adjournments of the Special Meeting to permit further solicitation
of proxies with respect to the proposal. All such adjournments will require the
affirmative vote of a majority of the shares present in person or by proxy at
the session of the Special Meeting to be adjourned. In such event, the persons
named as proxies will vote those proxies which they are entitled to vote in
favor of the proposal, in favor of such an adjournment, and will vote those
proxies required to be voted against the proposal, against any such adjournment.
Any adjourned session or sessions may be held within a reasonable period after
the date set for the original Special Meeting without the necessity of further
notice.
Administrator and Distributor
BISYS Fund Services of Ohio, Inc., 3435 Stelzer Road, Columbus,
Ohio 43219, serves as the Administrator of the Funds. BISYS Fund Services,
Limited Partnership, serves as the Distributor of the Funds' shares.
Investment Adviser and Sub-Administrator
Key Asset Management Inc. ("KAM"), 127 Public Square, Cleveland, Ohio
44114, serves as Investment Adviser and sub-administrator of the Funds.
Submission of proposals for the next annual meeting
Under the Trust's Trust Instrument and By-Laws, annual meetings of
shareholders are not required to be held unless necessary under the 1940 Act.
Therefore, the Trust does not hold shareholder meetings on an annual basis. A
shareholder proposal intended to be presented at any meeting hereafter called
should be sent to the Trust at 3435 Stelzer Road, Columbus, Ohio 43219-3035, and
must be received by the Trust within a reasonable time before the solicitation
relating thereto is made in order to be included in the notice or proxy
statement related to such meeting. The submission by a shareholder of a proposal
for inclusion in a proxy statement does not guarantee that it will be included.
Shareholder proposals are subject to certain regulations under federal
securities law.
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE SIGN YOUR PROXY CARD PROMPTLY
AND RETURN IT IN THE ENCLOSED ENVELOPE TO AVOID UNNECESSARY EXPENSE AND DELAY.
NO POSTAGE IS NECESSARY.
PART 4: FUND INFORMATION
The Trust is an open-end management investment company. The Trust
consists of 38 Funds, including six common trust funds, each issuing units of
beneficial interest ("shares"). The following Funds have non-diversified
portfolios: Ohio Municipal Bond Fund, National Municipal Bond Fund, New York
Tax-Free Fund and Real Estate Investment Fund. All other Funds have diversified
portfolios.
-50-
<PAGE>
The Victory Portfolios, generally
The Trust is a business trust established under Delaware law. The
operations of the Trust are governed by a Trust Instrument dated December 5,
1995, as amended October 2, 1997.
Each Victory Fund is a separate series of the Trust and, as such, has
similar rights under the Trust Instrument and applicable Delaware law. You
should be aware of the following features of the Victory Funds:
o Shares of each class of the Victory Funds participate equally in
dividends and other distributions attributable to that class,
including any distributions in the event of a liquidation.
o Each share of each Victory Fund is entitled to one vote for all
purposes.
o Shares of all series of the Trust vote for the election of
Trustees and on any other matter that affects each Victory Fund in
substantially the same manner, except as otherwise required by
law.
o As to matters that affect each Fund differently, such as approval
of an investment advisory agreement, shares of each series vote as
a separate series.
o On matters that affect the classes of a series differently, shares
of each class vote separately.
o Delaware law does not require registered investment companies,
such as the Trust or its series, to hold annual meetings of
shareholders and it is anticipated that shareholder meetings will
be held only when specifically required by federal or state law.
o Shareholders have available certain procedures for the removal of
Trustees.
o The Trust indemnifies Trustees and officers to the fullest extent
permitted under federal and Delaware law.
Financial Statements. PricewaterhouseCoopers LLP, independent auditors of the
Victory Funds, has audited each Fund's financial statements for the year ended
October 31, 1999, and those financial statements are incorporated by reference
in the Trust's Statement of Additional Information dated December 15, 1999.
PART 5: TRUSTEE INFORMATION
Board of Trustees
Overall responsibility for management of the Trust rests with the
Trustees, who are elected by the shareholders of the Trust. The Trust is managed
by the Trustees in accordance with the laws of the State of Delaware. There are
currently seven Trustees, five of whom are Independent Trustees. The Trustees,
in turn, elect the officers of the Trust to supervise actively its day-to-day
operations. There are also three Advisory Trustees who attend meetings and serve
on committees but do not vote. Two of the Advisory Trustees are Independent
Trustees. Information about the Trustees and Advisory Trustees, including their
-51-
<PAGE>
ages, addresses and principal occupations during the past five years, is set
forth in proposal 2, at pages __ to __ of this Proxy Statement.
Officers
The officers of the Trust, their ages, and principal occupations
during the past five years, are as follows:
Position(s) with Principal Occupation
Name and Age the Trust During Past 5 Years
- ------------ ---------------- --------------------
Roger Noall, 64 Chairman See biographical information
under "Board of Trustees" in
Proposal 1.
Leigh A. Wilson, 54 President and See biographical information
Trustee under "Board of Trustees" in
Proposal 1.
William B. Blundin, 60+ Vice President Senior Vice President of
BISYS; officer of other
investment companies
administered by BISYS.
J. David Huber, 53 Vice President Managing Director, BISYS;
officer of BISYS since June
1987.
Robert D. Hingston, 47 Secretary Since November 1998, Vice
President of BISYS; from
January 1995 to October 1998,
founder and principal of RDH
Associates (mutual fund
management consulting firm);
from June 1980 to January
1995, Vice President of
Investors Bank & Trust
Company.
Joel B. Engle, 34 Treasurer Since September 1998, Vice
President of BISYS; from March
1995 to September 1998, Vice
President, Northern Trust
Company; from July 1994 to
February 1995, General
Accountant, Wanger Asset
Management; from September
1988 to June 1994, Audit
Manager with Ernst & Young
LLP.
Gary Tenkman, 29 Assistant Since April 1998, Financial
Treasurer Services Director for BISYS;
from August 1997 to March
1998, Audit Manager, Ernst &
Young LLP; from August 1994 to
July 1997, Audit Senior, Ernst
& Young LLP; from July 1993 to
July 1994, Audit Staff, Ernst
& Young LLP.
Jay Baris, 45 Assistant Since September 1994, Partner,
Secretary Kramer Levin Naftalis &
Frankel LLP.
Richard Baxt, 46 Assistant Since March 1996, Senior Vice
Secretary President of BISYS; from March
1994 to March 1996, President
of First Fidelity Brokers;
from June 1984 to March 1994,
President of Citicorp
Investment Services.
+ Mr. Blundin was an officer of the Trust during the fiscal year ending October
31, 1999. He resigned from BISYS and as an officer of the Trust effective August
23, 1999.
The mailing address of each officer of the Trust is 3435 Stelzer Road, Columbus,
Ohio 43219-3035.
The officers of the Trust (other than Mr. Wilson) receive no compensation
directly from the Trust for performing the duties of their offices. BISYS
receives fees from the Trust as Administrator.
-52-
<PAGE>
As of December 31, 1999, the Trustees and officers as a group owned beneficially
less than 1% of all classes of the outstanding shares of the Funds.
The LifeChoice Funds -- Conflicts of interest
The Trustees and officers of the Trust are subject to conflicts of
interest in managing both the LifeChoice Funds and some of the mutual funds
advised by KAM in which the LifeChoice Funds invest (the "Proprietary
Portfolios"). This conflict is most evident in the Board's supervision of KAM.
KAM and certain of its affiliates may provide services to, and receive fees
from, not just the Funds, but also the Proprietary Portfolios and mutual funds
not advised by KAM in which the LifeChoice Funds invest ("Other Portfolios").
The selection of investments and allocation of LifeChoice Fund assets will be
continuously and closely scrutinized by the Board in order to avoid even the
appearance of improper practices. It is possible, however, that a situation
might arise where one course of action for a LifeChoice Fund would be
detrimental to a Proprietary Portfolio, or vice versa. In that unlikely event,
the Trustees and officers of the Trust will exercise good business judgment in
upholding their fiduciary duties to each set of Funds, thus minimizing such
conflicts, if any should arise.
PART 6: FORMS OF AMENDED AND RESTATED TRUST INSTRUMENT AND DISTRIBUTION AND
SERVICE PLAN
Attached as Exhibit A is the Form of Amended and Restated Trust
Instrument referred to in proposal 2. Attached as Exhibit B is the Form of
Distribution and Service Plan referred to in proposal 3.
-53-
EXHIBIT A
THE VICTORY PORTFOLIOS
TRUST INSTRUMENT
DATED DECEMBER 6, 1995
AMENDED AND RESTATED AS OF _________ ___, 2000
<PAGE>
THE VICTORY PORTFOLIOS
TABLE OF CONTENTS
Page
ARTICLE I - NAME AND DEFINITIONS................................................
Section 1.01 Name...........................................................
Section 1.02 Definitions....................................................
ARTICLE II - BENEFICIAL INTEREST................................................
Section 2.01 Shares Of Beneficial Interest..................................
Section 2.02 Issuance of Shares.............................................
Section 2.03 Register of Shares and Share Certificates......................
Section 2.04 Transfer of Shares.............................................
Section 2.05 Treasury Shares................................................
Section 2.06 Establishment of Series........................................
Section 2.07 Investment in the Trust........................................
Section 2.08 Assets and Liabilities of Series...............................
Section 2.09 No Preemptive Rights...........................................
Section 2.10 No Personal Liability of Shareholder...........................
ARTICLE III - THE TRUSTEES......................................................
Section 3.01 Management of the Trust.......................................
Section 3.02 Initial Trustees...............................................
Section 3.03 Term of Office.................................................
Section 3.04 Vacancies and Appointments....................................
Section 3.05 Temporary Absence.............................................
Section 3.06 Number of Trustees............................................
<PAGE>
Section 3.07 Effect of Ending of a Trustee's Service.......................
Section 3.08 Ownership of Assets of the Trust...............................
ARTICLE IV - POWERS OF THE TRUSTEES.............................................
Section 4.01 Powers.........................................................
Section 4.02 Issuance and Repurchase of Shares.............................
Section 4.03 Trustees and Officers as Shareholders..........................
Section 4.04 Action by the Trustees........................................
Section 4.05 Chairman of the Trustees.......................................
Section 4.06 Principal Transactions.........................................
ARTICLE V - EXPENSES OF THE TRUST...............................................
ARTICLE VI - INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT................................................
Section 6.01 Investment Adviser.............................................
Section 6.02 Principal Underwriter.........................................
Section 6.03 Administration.................................................
Section 6.04 Transfer Agent.................................................
Section 6.05 Parties to Contract...........................................
Section 6.06 Provisions and Amendments.....................................
ARTICLE VII - SHAREHOLDERS' VOTING POWERS AND MEETINGS..........................
Section 7.01 Voting Powers.................................................
Section 7.02 Meetings......................................................
Section 7.03 Quorum and Required Vote......................................
ARTICLE VIII - CUSTODIAN........................................................
Section 8.01 Appointment and Duties........................................
<PAGE>
Section 8.02 Central Certificate System....................................
ARTICLE IX - DISTRIBUTIONS AND REDEMPTIONS......................................
Section 9.01 Distributions..................................................
Section 9.02 Redemptions...................................................
Section 9.03 Determination of Net
Asset Value and Valuation of Portfolio Assets.................
Section 9.04 Suspension of the Right of Redemption.........................
ARTICLE X - LIMITATION OF LIABILITY AND INDEMNIFICATION.........................
Section 10.01 Limitation of Liability......................................
Section 10.02 Indemnification..............................................
Section 10.03 Shareholders.................................................
ARTICLE XI - MISCELLANEOUS......................................................
Section 11.01 Trust Not a Partnership......................................
Section 11.02 Trustee's Good Faith Action, Expert
Advice, No Bond or Surety....................................
Section 11.03 Establishment of Record Dates................................
Section 11.04 Dissolution and Termination of Trust..........................
Section 11.05 Reorganization and Master/Feeder.............................
Section 11.06 Filing of Copies, References Headings........................
Section 11.07 Applicable Law...............................................
Section 11.08 Derivative Actions...........................................
Section 11.08 Amendments...................................................
Section 11.10 Fiscal Year..................................................
Section 11.11 Name Reservation.............................................
Section 11.12 Provisions in Conflict With Law..............................
<PAGE>
THE VICTORY PORTFOLIOS
December 6, 1995
Amended and Restated as of __________ ___, 2000
TRUST INSTRUMENT of The Victory Portfolios, a Delaware business trust (the
"Trust"), amended and restated by Harry Gazelle, Eugene J. McDonald, Thomas F.
Morrissey, Roger Noall, Frank A. Weil, Leigh A. Wilson, and H. Patrick Swygert
(the "Trustees").
WHEREAS Robert G. Brown, Edward P. Campbell, Harry Gazelle, Stanley I.
Landgraf, Thomas F. Morrissey, Leigh A. Wilson, and H. Patrick Swygert, as the
initial Trustees of the Trust, established the Trust pursuant to a Trust
Instrument dated December 6, 1995 (the "Original Trust Instrument"); and
WHEREAS, the Trustees declare that all money and property contributed to
the Trust hereunder shall be held and managed in trust under this Trust
Instrument as set forth herein; and
WHEREAS, the Trustees consider it necessary and appropriate to amend and
restate the Original Trust Instrument; and
WHEREAS, a majority of the Shareholders of the Trust voted to approve the
amendment and restatement of the Original Trust Instrument at a meeting held on
__________ ___, 2000;
NOW THEREFORE, the Original Trust Instrument is amended and restated as
follows:
ARTICLE I
NAME AND DEFINITIONS
Section 1.01 Name. The name of the trust created under the Original Trust
Instrument and continued hereby is "The Victory Portfolios."
Section 1.02 Definitions. Wherever used herein, unless otherwise required
by the context or specifically provided:
(a) The "1940 Act" means the Investment Company Act of 1940, as
amended from time to time. Whenever reference is made hereunder to the 1940 Act,
such references shall be interpreted as including any applicable order or orders
of the Commission or any rules or regulations adopted by the Commission
thereunder or interpretive releases of the Commission staff;
(b) "Bylaws" means the Bylaws of the Trust as adopted by the Trustees,
as amended from time to time;
(c) "Commission" has the meaning given it in the 1940 Act. In
addition, "Affiliated Person," "Assignment," "Interested Person" and "Principal
Underwriter" shall have the respective meanings given them in the 1940 Act.
"Majority Shareholder Vote" shall have the same meaning as the term "vote of a
majority of the outstanding voting securities" under the 1940 Act;
1
<PAGE>
(d) "Delaware Act" refers to Chapter 38 of Title 12 of the Delaware
Code titled "Treatment of Delaware Business Trusts," as amended from time to
time;
(e) "Net Asset Value" means the net asset value of each Series of the
Trust determined in the manner provided in Article IX, Section 9.03 hereof;
(f) "Outstanding Shares" means those Shares shown from time to time in
the books of the Trust or its transfer agent as then issued and outstanding, but
shall not include Shares which have been redeemed or repurchased by the Trust
and which are at the time held in the treasury of the Trust;
(g) "Series" means a series of Shares of the Trust established in
accordance with the provisions of Article II, Section 2.06 hereof;
(h) "Shareholder" means a record owner of Outstanding Shares of the
Trust;
(i) "Shares" means the equal proportionate transferable units of
beneficial interest into which the beneficial interest of each Series of the
Trust or class thereof shall be divided and may include fractions of Shares as
well as whole Shares;
(j) The "Trust" means The Victory Portfolios, a Delaware business
trust, and reference to the Trust when applicable to one or more Series of the
Trust, shall refer to any such Series;
(k) The "Trustees" means the person or persons who has or have signed
this Trust Instrument so long as he or they shall continue in office in
accordance with the terms hereof and all other persons who may from time to time
be duly qualified and serving as Trustees in accordance with the provisions of
Article III hereof, and reference herein to a Trustee or to the Trustees shall
refer to the individual Trustees in their respective capacity as Trustees
hereunder;
(l) "Trust Instrument" means this Trust Instrument, as amended or
restated from time to time.
(m) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of one or
more of the Trust or any Series, or the Trustees on behalf of the Trust or any
Series.
ARTICLE II
BENEFICIAL INTEREST
Section 2.01 Shares Of Beneficial Interest. The beneficial interest in the
Trust shall be divided into such Shares of one or more separate and distinct
Series or classes of a Series as set forth in Section 2.06 or as the Trustees
shall otherwise from time to time create and establish as provided in Section
2.06. The number of Shares of each Series and class thereof authorized
2
<PAGE>
hereunder is unlimited. Each Share shall have a par value of $0.001. All Shares
issued hereunder, including, without limitation, Shares issued in connection
with a dividend paid in Shares or a split of Shares, shall be fully paid and
non-assessable.
Section 2.02 Issuance of Shares. The Trustees in their discretion may, from
time to time, without a vote of the Shareholders, issue Shares, in addition to
the then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount and type of consideration, subject to
applicable law, including cash or securities, at such time or times and on such
terms as the Trustees may deem appropriate, and may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection with,
the assumption of liabilities) and businesses. In connection with any issuance
of Shares, the Trustees may issue fractional Shares and Shares held in the
treasury. The Trustees may from time to time divide or combine the Shares into a
greater or lesser number without thereby changing the proportionate beneficial
interests in the Trust. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/1000ths of a Share or
integral multiples thereof. The Trustees or any person the Trustees may
authorize for the purpose may, in their discretion, reject any application for
the issuance of shares.
Section 2.03 Register of Shares and Share Certificates. A register shall be
kept at the principal office of the Trust or an office of the Trust's transfer
agent which shall contain the names and addresses of the Shareholders of each
Series, the number of Shares of that Series (or any class or classes thereof)
held by them respectively and a record of all transfers thereof. No share
certificates shall be issued by the Trust except as the Trustees may otherwise
authorize, and the persons indicated as shareholders in such register shall be
entitled to receive dividends or other distributions or otherwise to exercise or
enjoy the rights of Shareholders. No Shareholder shall be entitled to receive
payment of any dividend or other distribution, nor to have notice given to him
as herein or in the Bylaws provided, until he has given his address to the
transfer agent or such officer or other agent of the Trustees as shall keep the
said register for entry thereon.
Section 2.04 Transfer of Shares. Except as otherwise provided by the
Trustees, Shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Trust's transfer agent of a duly executed
instrument of transfer and such evidence of the genuineness of such execution
and authorization and of such other matters as may be required by the Trustees.
Upon such delivery the transfer shall be recorded on the register of the Trust.
Until such record is made, the Shareholder of record 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 or registrar nor any officer, employee or
agent of the Trust shall be affected by any notice of the proposed transfer.
Section 2.05 Treasury Shares. Shares held in the treasury shall, until
reissued pursuant to Section 2.02 hereof, not confer any voting rights on the
Trustees, nor shall such Shares be entitled to any dividends or other
distributions declared with respect to the Shares.
Section 2.06 Establishment of Series. Subject to the provisions of this
Section 2.06, the Trust shall consist of the Series indicated on Schedule A
attached hereto, as such Schedule may be amended from time to time. The initial
Series of the Trust were comprised of twenty-four
3
Series, each of which corresponded to a series of shares of The Victory
Portfolios, a Massachusetts business trust (the "Predecessor Trust"). The
preferences, voting powers, rights and privileges of the Series and any classes
thereof existing as of the date hereof shall be as set forth in the Trust's
registration statement or statements as filed with the Commission, as from time
to time in effect. Distinct records shall be maintained by the Trust for each
Series and the assets associated with each Series shall be held and accounted
for separately from the assets of the Trust or any other Series. The Trustees
shall have full power and authority, in their sole discretion and without
obtaining any prior authorization or vote of the Shareholders of any Series, to
establish and designate and to change in any manner any Series or any classes of
initial or additional Series and to fix such preferences, voting powers, rights
and privileges of such Series or classes thereof as the Trustees may from time
to time determine, to divide or combine the Shares or any Series or classes
thereof into a greater or lesser number, to classify or reclassify any issued
Shares or any Series or classes thereof into one or more Series or classes of
Shares, and to take such other action with respect to the Shares as the Trustees
may deem desirable. The establishment and designation of any Series or any
classes thereof (other than those existing as of the date hereof) shall be
effective upon the adoption of a resolution by a majority of the Trustees
setting forth such establishment and designation and the relative rights and
preferences of the Shares of such Series, whether directly in such resolution or
by reference to, or approval of, another document that sets forth such relative
rights and preferences of such Series (or class) including, without limitation,
any registration statement of the Trust, or as otherwise provided in such
resolution. Upon the establishment of any such Series (or class), Schedule A
shall be amended to reflect the addition of such Series (or class) thereto;
provided that amendment of Schedule A shall not be a condition precedent to the
establishment of any Series (or class) in accordance with this Trust Instrument.
A Series may issue any number of Shares, but need not issue Shares. At any time
that there are no Shares outstanding of any particular Series (or class)
previously established and designated, the Trustees may by a majority vote
abolish that Series (or class) and the establishment and designation thereof,
and, in connection with such abolishment, Schedule A shall be amended to reflect
the removal of such Series (or class) therefrom; provided that amendment of
Schedule A shall not be a condition precedent to the abolishment of any Series
(or class) in accordance with this Trust Instrument.
All references to Shares in this Trust Instrument 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.
Each Share of a Series of the Trust shall represent an equal beneficial
interest in the net assets of such Series. Each holder of Shares of a Series
shall be entitled to receive his proportionate share of all distributions made
with respect to such Series, based upon the number of full and fractional Shares
of the Series held. Upon redemption of his Shares, such Shareholder shall be
paid solely out of the funds and property of such Series of the Trust.
Section 2.07 Investment in the Trust. The Trustees shall accept investments
in any Series from such persons and on such terms as they may from time to time
authorize. At the Trustees' discretion, such investments, subject to applicable
law, may be in the form of cash or securities in which the affected Series is
authorized to invest, valued as provided in Article IX
4
<PAGE>
Section 9.03 hereof. Investments in a Series shall be credited to each
Shareholder's account in the form of full and fractional Shares at the net asset
value per Share next determined after the investment is received or accepted as
may be determined by the Trustees; provided, however, that the Trustees may, in
their sole discretion, (a) fix minimum amounts for initial and subsequent
investments or (b) impose a sales charge upon investments in such manner and at
such time determined by the Trustees.
Section 2.08 Assets and Liabilities of Series. All consideration received
by the Trust for the issue or sale of Shares of a particular Series, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may be,
shall be held and accounted for separately from the other assets of the Trust
and of every other Series and may be referred to herein as "assets belonging to"
that Series. The assets belonging to a particular Series shall belong to that
Series for all purposes, and to no other Series, and shall be subject only to
the rights of creditors of that Series. In addition, any assets, income,
earnings, profits or funds, or payments and proceeds with respect thereto, which
are not readily identifiable as belonging to any particular Series shall be
allocated by the Trustees between and among one or more of the Series in such
manner as the Trustees, in their sole discretion, deem fair and equitable. Each
such allocation shall be conclusive and binding upon the Shareholders of all
Series for all purposes, and such assets, income, earnings, profits or funds, or
payments and proceeds with respect thereto shall be assets belonging to that
Series. The assets belonging to a particular Series shall be so recorded upon
the books of the Trust, and shall be held by the Trustees in trust for the
benefit of the holders of Shares of that Series, and separate and distinct
records shall be maintained for each Series. The assets belonging to each
particular Series shall be charged with the liabilities of that Series and all
expenses, costs, charges and reserves attributable to that Series. Any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular Series shall be allocated
and charged by the Trustees between or among any one or more of the Series in
such manner as the Trustees in their sole discretion deem fair and equitable.
Each such allocation shall be conclusive and binding upon the Shareholders of
all Series for all purposes. Without limitation of the foregoing provisions of
this Section 2.08, but subject to the right of the Trustees in their discretion
to allocate general liabilities, expenses, costs, changes or reserves as herein
provided, the debts, liabilities, obligations and expenses incurred, contracted
for or otherwise existing with respect to a particular Series shall be
enforceable against the assets of such Series only, and not against the assets
of the Trust generally or of any other Series and none of the debts,
liabilities, obligations and expenses incurred, contracted for or otherwise
existing with respect to the Trust generally or any other Series thereof shall
be enforceable against the assets of such Series. Notice of this contractual
limitation on inter-Series liabilities may, in the Trustee's sole discretion, be
set forth in the certificate of trust of the Trust (whether originally or by
amendment) as filed or to be filed in the Office of the Secretary of State of
the State of Delaware pursuant to the Delaware Act, and upon the giving of such
notice in the certificate of trust, the statutory provisions of Section 3804 of
the Delaware Act relating to limitations on inter-Series liabilities (and the
statutory effect under Section 3804 of setting forth such notice in the
certificate of trust) shall become applicable to the Trust and each Series. Any
person extending credit to, contracting with or having any claim
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against any Series may look only to the assets of that Series to satisfy or
enforce any debt, with respect to that Series. No Shareholder or former
Shareholder of any Series shall have a claim on or any right to any assets
allocated or belonging to any other Series.
Section 2.09 No Preemptive Rights. Shareholders shall have no preemptive or
other right to subscribe to any additional Shares or other securities issued by
the Trust or the Trustees, whether of the same or other Series.
Section 2.10 No Personal Liability of Shareholder. No Shareholder shall be
personally liable for the debts, liabilities, obligations and expenses incurred
by, contracted for, or otherwise existing with respect to, the Trust or by or on
behalf of any Series. The Trustees shall have no power to bind any Shareholder
personally or to call upon any Shareholder for the payment of any sum of money
or assessment whatsoever other than such as the Shareholder may at any time
personally agree to pay by way of subscription for any Shares or otherwise.
Every note, bond, contract or other understanding issued by or on behalf of the
Trust or the Trustees relating to the Trust or to a Series shall include a
recitation limiting the obligation represented thereby to the Trust or to one or
more Series and its or their assets (but the omission of such a recitation shall
not operate to bind any Shareholder or Trustee of the Trust).
Section 2.11 Assent to Trust Instrument. Every Shareholder, by virtue of
having purchased a Share or by virtue of having received a Share in connection
with the conversion of the Predecessor Trust, shall become a Shareholder and
shall be held to have expressly assented and agreed to be bound by the terms
hereof.
ARTICLE III
THE TRUSTEES
Section 3.01 Management of the Trust. The Trustees shall have exclusive and
absolute control over the Trust Property and over the business of the Trust to
the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Trust Instrument. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the State of Delaware, in any and
all states of the United States of America, in the District of Columbia, in any
and all commonwealths, territories, dependencies, colonies, or possessions of
the United States of America, and in any foreign jurisdiction and to do all such
other things and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust although such things
are not herein specifically mentioned. Any determination as to what is in the
interests of the Trust made by the Trustees in good faith shall be conclusive.
In construing the provisions of this Trust Instrument, the presumption shall be
in favor of a grant of power to the Trustees.
The enumeration of any specific power in this Trust Instrument shall not be
construed as limiting the aforesaid power. The powers of the Trustees may be
exercised without order of or resort to any court.
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Except for the Trustees named herein or appointed to fill vacancies
pursuant to Section 3.04 of this Article III, the Trustees shall be elected by
the Shareholders owning of record a plurality of the Shares voting at a meeting
of Shareholders. Any Shareholder meeting held for such purpose shall be held on
a date fixed by the Trustees. In the event that less than a majority of the
Trustees holding office have been elected by Shareholders, the Trustees then in
office will call a Shareholders' meeting for the election of Trustees in
accordance with the provisions of the 1940 Act.
Section 3.02 Initial Trustees. The initial Trustees shall be the persons
named in the Original Trust Instrument. The (i) election of initial Trustees and
(ii) an approval of the Plan of Conversion for the transfer of assets from the
Predecessor Trust to the Trust, at the Special Meeting of the Shareholders was
conducted in accordance with the Proxy Statement of the Predecessor Trust dated
October 31, 1995, and is deemed to constitute an election of Trustees for all
purposes hereunder, including for purposes of the last sentence of Section 3.01.
Section 3.03 Term of Office. The Trustees shall hold office during the
lifetime of this Trust, and until its termination as herein provided, except (a)
that any Trustee may resign his trust by written instrument signed by him and
delivered to the other Trustees, which shall take effect upon such delivery or
upon such later date as is specified therein; (b) that any Trustee may be
removed 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 effective; (c) that any Trustee who requests in writing to be
retired or who has died, becomes physically or mentally incapacitated by reason
of illness or otherwise, or is otherwise unable to serve, may be retired by
written instrument signed by a majority of the other Trustees, specifying the
date of his retirement; and (d) that a Trustee may be removed at any meeting of
the Shareholders of the Trust by a vote of Shareholders owning at least
two-thirds of the Outstanding Shares of the Trust.
Section 3.04 Vacancies and Appointments . In case of a Trustee's
declination to serve, death, resignation, retirement, removal, physical or
mental incapacity by reason of illness, disease or otherwise, or if a Trustee is
otherwise unable to serve, or if there is an increase in the number of Trustees,
a vacancy shall occur. Whenever a vacancy in the Board of Trustees shall occur,
until such vacancy is filled, the other Trustees shall have all the powers
hereunder and the certificate of the other Trustees of such vacancy shall be
conclusive. In the case of a vacancy, the remaining Trustees shall fill such
vacancy by appointing such other person as they in their discretion see fit, to
the extent consistent with the limitations provided under the 1940 Act. Such
appointment shall be evidenced by a written instrument signed by a majority of
the Trustees in office or by resolution of the Trustees, duly adopted, which
shall be recorded in the minutes of a meeting of the Trustees, whereupon the
appointment shall take effect.
An appointment of a Trustee may be made by the Trustees then in office in
anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As soon as any person
appointed as a Trustee pursuant to this Section 3.04 shall have accepted this
Trust, the trust estate shall vest in the new Trustee or Trustees, together with
the continuing Trustees, without any further act or conveyance, and such person
shall be deemed a Trustee.
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Section 3.05 Temporary Absence . Any Trustee may, by power of attorney,
delegate his power for a period not exceeding six months at any time to any
other Trustee or Trustees, provided that in no case shall fewer than two
Trustees personally exercise the other powers hereunder except as herein
otherwise expressly provided.
Section 3.06 Number of Trustees . The number of Trustees shall be at least
two (2), and thereafter shall be such number as shall be fixed from time to time
by a majority of the Trustees, provided, however, that the number of Trustees
shall in no event be more than twelve (12).
Section 3.07 Effect of Ending of a Trustee's Service. The declination to
serve, death, resignation, retirement, removal, incapacity, or inability of the
Trustees, or any one of them, shall not operate to terminate the Trust or to
revoke any existing agency created pursuant to the terms of this Trust
Instrument.
Section 3.08 Ownership of Assets of the Trust . The assets of the Trust and
of each Series shall be held separate and apart from any assets now or hereafter
held in any capacity other than as Trustee hereunder by the Trustees or any
successor Trustees. Legal title in all of the assets of the Trust and the right
to conduct any business shall at all times be considered as vested in the
Trustees on behalf of the Trust, except that the Trustees may cause legal title
to any Trust Property to be held by, or in the name of, the Trust or in the name
of any person as nominee. No Shareholder shall be deemed to have a severable
ownership in any individual asset of the Trust or of any Series or any right of
partition or possession thereof but each Shareholder shall have, except as
otherwise provided for herein, a proportionate undivided beneficial interest in
the Trust or Series based upon the number of Shares owned. The Shares shall be
personal property giving only the rights specifically set forth in this Trust
Instrument.
ARTICLE IV
POWERS OF THE TRUSTEES
Section 4.01 Powers. The Trustees in all instances shall act as principals,
and are and shall be free from the control of the Shareholders. 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 appropriate in connection with the management of the Trust. The Trustees
shall not in any way be bound or limited by present or future laws or customs in
regard to trust investments, but shall have full authority and power to make any
and all investments which they, in their sole discretion, shall deem proper to
accomplish the purpose of this Trust without recourse to any court or other
authority. Subject to any applicable limitation in this Trust Instrument or the
Bylaws of the Trust, the Trustees shall have the power and authority:
(a) To invest and reinvest cash and other property (including investment,
notwithstanding any other provision hereof, of all of the assets of any Series
in a single open-end investment company, including investment by means of
transfer of such assets in exchange for an interest or interests in such
investment company), and to hold cash or other property of the Trust uninvested,
without in any event being bound or limited by any present or future law or
custom
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in regard to investments by trustees, and to sell, exchange, lend, pledge,
mortgage, hypothecate, write options on and lease any or all of the assets of
the Trust:
(b) To operate as and carry on the business of an investment company, and
exercise all the powers necessary and appropriate to the conduct of such
operations;
(c) To borrow money and in this connection issue notes or other evidence of
indebtedness; to secure borrowings by mortgaging, pledging or otherwise
subjecting as security the Trust Property; to endorse, guarantee, or undertake
the performance of an obligation or engagement of any other person and to lend
Trust Property;
(d) To provide for the distribution of interests of the Trust either
through a principal underwriter in the manner hereinafter provided for or by the
Trust itself, or both, or otherwise pursuant to a plan of distribution of any
kind;
(e) To adopt Bylaws not inconsistent with this Trust Instrument providing
for the conduct of the business of the Trust and to amend and repeal them to the
extent that they do not reserve that right to the Shareholders; such Bylaws
shall be deemed incorporated and included in this Trust Instrument;
(f) To elect and remove such officers and appoint and terminate such agents
as they consider appropriate;
(g) To employ one or more banks, trust companies or companies that are
members of a national securities exchange or such other entities as the
Commission may permit as custodians of any assets of the Trust subject to any
conditions set forth in this Trust Instrument or in the Bylaws;
(h) To retain one or more transfer agents and shareholder servicing agents,
or both;
(i) To set record dates in the manner provided herein or in the Bylaws;
(j) To delegate such authority as they consider desirable to any officers
of the Trust and to any investment adviser, manager, custodian, underwriter or
other agent or independent contractor;
(k) To sell or exchange any or all of the assets of the Trust, subject to
the provisions of Article XI, subsection 11.04(b) hereof;
(l) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property, and to execute and deliver
powers of attorney to such person or persons as the Trustees shall deem proper,
granting to such person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
(m) To exercise powers and rights of subscription or otherwise which in any
manner arise out of ownership of securities;
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(n) To hold any security or property in a form not indicating any trust,
whether in bearer, book entry, unregistered or other negotiable form; or either
in the name of the Trust or in the name of a custodian or a nominee or nominees,
subject in either case to proper safeguards according to the usual practice of
Delaware business trusts or investment companies;
(o) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article II hereof and to establish classes of
such Series having relative rights, powers and duties as they may provide
consistent with applicable law;
(p) Subject to the provisions of Section 3804 of the Delaware Act, to
allocate assets, liabilities and expenses of the Trust to a particular Series or
to apportion the same between or among two or more Series, provided that any
liabilities or expenses incurred by a particular Series shall be payable solely
out of the assets belonging to that Series as provided for in Article II hereof;
(q) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase, or
sale of property by such corporation or concern, and to pay calls or
subscriptions with respect to any security held in the Trust;
(r) 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;
(s) To make distributions of income and of capital gains to Shareholders in
the manner provided herein;
(t) To establish, from time to time, a minimum investment for Shareholders
in the Trust or in one or more Series or class, and to require the redemption of
the Shares of any Shareholders whose investment is less than such minimum upon
giving notice to such Shareholder;
(u) To establish one or more committees, to delegate any of the powers of
the Trustees to said committees and to adopt a committee charter providing for
such responsibilities, membership (including Trustees, officers or other agents
of the Trust therein) and any other characteristics of said committees as the
Trustees may deem proper. Notwithstanding the provisions of this Article IV, and
in addition to such provisions or any other provision of this Trust Instrument
or of the Bylaws, the Trustees may by resolution appoint a committee consisting
of less than the whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office, with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
action, suit or proceeding which shall be pending or threatened to be brought
before any court, administrative agency or other adjudicatory body;
(v) To interpret the investment policies, practices or limitations of any
Series;
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(w) To establish a registered office and have a registered agent in the
state of Delaware;
(x) To invest part or all of the Trust Property (or part or all of the
assets of any Series), or to dispose of part or all of the Trust Property (or
part or all of the assets of any Series) and invest the proceeds of such
disposition, in securities issued by one or more other investment companies
registered under the 1940 Act (including investment by means of transfer of part
or all of the Trust Property in exchange for an interest or interests in such
one or more investment companies) all without any requirement of approval by
Shareholders unless required by the 1940 Act. Any such other investment company
may (but need not) be a trust (formed under the laws of the State of Delaware or
of any other state) which is classified as a partnership for federal income tax
purposes; and
(y) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed as objects and powers, and the
foregoing enumeration of specific powers shall not be held to limit or restrict
in any manner the general powers of the Trustees. Any action by one or more of
the Trustees in their capacity as such hereunder shall be deemed an action on
behalf of the Trust or the applicable Series, and not an action in an individual
capacity.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust.
No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see the application of
any payments made or property transferred to the Trustees or upon their order.
Section 4.02 Issuance and Repurchase of Shares . The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of and otherwise deal in Shares and, subject to the
provisions set forth in Article II and Article IX, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
funds or property of the Trust, or the particular Series of the Trust, with
respect to which such Shares are issued.
Section 4.03 Trustees and Officers as Shareholders. Any Trustee, officer or
other 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 or cause to be issued and sold Shares to and buy such Shares from any
such person or any firm or company in which he is interested, subject only to
the general limitations herein contained as to the sale and purchase of such
Shares; and all subject to any restrictions which may be contained in the
Bylaws.
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Section 4.04 Action by the Trustees. In any action taken by the Trustees
hereunder, unless otherwise specified, the Trustees shall act by majority vote
at a meeting (including a telephone meeting) duly called, provided a quorum of
Trustees participate, or by written consent of a majority of the Trustees
without a meeting, unless the 1940 Act requires that a particular action be
taken only at a meeting at which the Trustees are present in person. At any
meeting of the Trustees, a majority of the Trustees shall constitute a quorum.
Meetings of the Trustees may be called orally or in writing by the Chairman of
the Board of Trustees or by any two other Trustees. Notice of the time, date and
place of all meetings of the Trustees shall be given by the person calling the
meeting to each Trustee by telephone, facsimile or other electronic mechanism
sent to his home or business address at least twenty-four hours in advance of
the meeting or by written notice mailed to his home or business address at least
seventy-two hours in advance of the meeting. Notice need not be given to any
Trustee who attends the meeting without objecting to the lack of notice or who
executes a written waiver of notice with respect to the meeting. Any meeting
conducted by telephone shall be deemed to take place at the principal office of
the Trust, as determined by the Bylaws or by the Trustees. Subject to the
requirements of the 1940 Act, the Trustees by majority vote may delegate to any
one or more of their number their authority to approve particular matters or
take particular actions on behalf of the Trust. Written consents or waivers of
the Trustees may be executed in one or more counterparts. Execution of a written
consent or waiver and delivery thereof to the Trust may be accomplished by
facsimile or other similar electronic mechanism.
Section 4.05 Chairman of the Board of Trustees. The Trustees shall appoint
one of their number to be Chairman of the Board of Trustees. The Chairman shall
preside at all meetings of the Trustees, shall be responsible for the execution
of policies established by the Trustees and the administration of the Trust, and
may be (but is not required to be) the chief executive, financial and/or
accounting officer of the Trust.
Section 4.06 Principal Transactions. Except to the extent prohibited by
applicable law, the Trustees may, on behalf of the Trust, buy any securities
from or sell any securities to, or lend any assets of the Trust to, any Trustee
or officer of the Trust or any firm of which any such Trustee or officer is a
member acting as principal, or have any such dealings with any investment
adviser, administrator, distributor or transfer agent for the Trust or with any
interested person of such person; and the Trust may employ any such person, or
firm or company in which such person is an interested person, as broker, legal
counsel, registrar, investment adviser, administrator, distributor, transfer
agent, dividend disbursing agent, custodian or in any other capacity upon
customary terms.
ARTICLE V
EXPENSES OF THE TRUST
Subject to the provisions of Article II, Section 2.08 hereof, the Trustees
shall be reimbursed from the Trust estate or the assets belonging to the
appropriate Series for their expenses and disbursements, including, without
limitation, interest charges, taxes, brokerage fees and commissions; expenses of
issue, repurchase and redemption of Shares; certain insurance premiums;
applicable fees, interest charges and expenses of third parties, including the
Trust's investment advisers, managers, administrators, distributors, custodians,
transfer agent and fund
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accountant; fees of pricing, interest, dividend, credit and other reporting
services; costs of membership in trade associations; telecommunications
expenses; funds transmission expenses; auditing, legal and compliance expenses;
costs of forming the Trust and maintaining its existence; costs of preparing and
printing the Trust's prospectuses, statements of additional information and
shareholder reports and delivering them to existing Shareholders; expenses of
meetings of Shareholders and proxy solicitations therefor; costs of maintaining
books and accounts; costs of reproduction, stationery and supplies; fees and
expenses of the Trustees; compensation of the Trust's officers and employees and
costs of other personnel performing services for the Trust; costs of Trustee
meetings; Commission registration fees and related expenses; state or foreign
securities laws registration fees and related expenses and for such
non-recurring items as may arise, including litigation to which the Trust (or a
Trustee acting as such) is a party, and for all losses and liabilities by them
incurred in administering the Trust, and for the payment of such expenses,
disbursements, losses and liabilities, the Trustees shall have a lien on the
assets belonging to the appropriate Series, or in the case of an expense
allocable to more than one Series, on the assets of each such Series, prior to
any rights or interests of the Shareholders thereto. This section shall not
preclude the Trust from directly paying any of the aforementioned fees and
expenses.
ARTICLE VI
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT
Section 6.01 Investment Adviser.
(a) The Trustees may in their discretion, from time to time, enter into an
investment advisory contract or contracts with respect to the Trust or any
Series whereby the other party or parties to such contract or contracts shall
undertake to furnish the Trustees with such investment advisory, statistical and
research facilities and services and such other facilities and services, if any,
all upon such terms and conditions (including any Shareholder vote) that may be
required under the 1940 Act, as may be prescribed in the Bylaws, or as the
Trustees may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws).
Notwithstanding any other provision of this Trust Instrument, the Trustees may
authorize any investment adviser (subject to such general or specific
instructions as the Trustees may from time to time adopt) to effect purchases,
sales or exchanges of portfolio securities, other investment instruments of the
Trust, or other Trust Property on behalf of the Trustees, or may authorize any
officer, agent, or Trustee to effect such purchases, sales or exchanges pursuant
to recommendations of the investment adviser (and all without further action by
the Trustees). Any such purchases, sales and exchanges shall be deemed to have
been authorized by all of the Trustees.
(b) The Trustees may authorize the investment adviser to employ, from time
to time, one or more sub-advisers to perform such of the acts and services of
the investment adviser, and upon such terms and conditions, as may be agreed
upon between the investment adviser and sub-adviser (such terms and conditions
not to be inconsistent with the provisions of this Trust Instrument or of the
Bylaws). Any reference in this Trust Instrument to the investment adviser shall
be deemed to include such sub-advisers, unless the context otherwise requires;
provided
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that no Shareholder approval shall be required with respect to any sub-adviser
unless required under the 1940 Act or other law, contract or order applicable to
the Trust.
Section 6.02 Principal Underwriter. The Trustees may in their discretion
from time to time enter into an exclusive or non-exclusive underwriting contract
or contracts providing for the sale of Shares, whereby the Trust may either
agree to sell Shares to the other party to the contract or appoint such other
party its sales agent for such Shares. In either case, the contract shall be on
such terms and conditions as may be prescribed in the Bylaws and as the Trustees
may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws); and
such contract may also provide for the repurchase or sale of Shares by such
other party as principal or as agent of the Trust.
Section 6.03 Administration. The Trustees may in their discretion from time
to time enter into one or more management or administrative contracts whereby
the other party or parties shall undertake to furnish the Trustees with
management or administrative services. The contract or contracts shall be on
such terms and conditions as may be prescribed in the Bylaws and as the Trustees
may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws).
Section 6.04 Transfer Agent. The Trustees may in their discretion from time
to time enter into one or more transfer agency and shareholder service contracts
whereby the other party or parties shall undertake to furnish the Trustees with
transfer agency and shareholder services. The contract or contracts shall be on
such terms and conditions as may be prescribed in the Bylaws and as the Trustees
may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws).
Section 6.05 Parties to Contract. Any contract of the character described
in Sections 6.01, 6.02, 6.03 and 6.04 of this Article VI or any contract of the
character described in Article VIII hereof may be entered into with any
corporation, firm, partnership, trust or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, or member of such other party to the contract, and no such contract
shall be invalidated or rendered void or voidable by reason of the existence of
any relationship, nor shall any person holding such relationship be disqualified
from voting on or executing the same in his capacity as Shareholder and/or
Trustee, nor shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was not
inconsistent with the provisions of this Article VI or Article VIII hereof or of
the Bylaws. The same person (including a corporation, firm, partnership, trust,
or association) may be the other party to contracts entered into pursuant to
Sections 6.01, 6.02, 6.03 and 6.04 of this Article VI or pursuant to Article
VIII hereof and any individual may be financially interested or otherwise
affiliated with persons who are parties to any or all of the contracts mentioned
in this Section 6.05.
Section 6.06 Provisions and Amendments. Any contract entered into pursuant
to Section 6.01 or 6.02 of this Article VI shall be consistent with and subject
to the requirements of Section 15 of the 1940 Act, if applicable, or other
applicable Act of Congress hereafter enacted
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with respect to its continuance in effect, its termination, and the method of
authorization and approval of such contract or renewal thereof, and no amendment
to any contract entered into pursuant to Section 6.01 or 6.02 of this Article VI
shall be effective unless assented to in a manner consistent with the
requirements of said Section 15, as modified by any applicable rule, regulation
or order of the Commission.
ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 7.01 Voting Powers.
(a) The Shareholders shall have power to vote only (a) for the election of
Trustees to the extent provided in Article III, Section 3.01 hereof, (b) for the
removal of Trustees to the extent provided in Article III, Section 3.03(d)
hereof, (c) with respect to any investment advisory contract to the extent
provided in Article VI, Section 6.01 hereof, (d) with respect to an amendment of
this Trust Instrument, to the extent provided in Article XI, Section 11.08, and
(e) with respect to such additional matters relating to the Trust as may be
required by law, by this Trust Instrument, or any registration of the Trust with
the Commission or any State, or as the Trustees may consider desirable.
(b) Notwithstanding paragraph (a) of this Section 7.01 or any other
provision of this Trust Instrument (including the Bylaws) which would by its
terms provide for or require a vote of Shareholders, the Trustees may take
action without a Shareholder vote if (i) the Trustees shall have obtained an
opinion of counsel that a vote or approval of such action by Shareholders is not
required under (A) the 1940 Act or any other applicable laws, or (B) any
registrations, undertakings or agreements of the Trust known to such counsel,
and if the Trustees determine that the taking of such action without a
Shareholder vote would be consistent with the best interests of the Shareholders
(considered as a group).
(c) On any matter submitted to a vote of the Shareholders, all Shares shall
be voted separately by individual Series, and whenever the Trustees determine
that the matter affects only certain Series, may be submitted for a vote by only
such Series, except (i) when required by the 1940 Act, Shares shall be voted in
the aggregate and not by individual Series; and (ii) when the Trustees have
determined that the matter affects the interests of more than one Series and
that voting by shareholders of all Series would be consistent with the 1940 Act,
then the Shareholders of all such Series shall be entitled to vote thereon
(either by individual Series or by Shares voted in the aggregate, as the
Trustees in their discretion may determine). The Trustees may also determine
that a matter affects only the interests of one or more classes of a Series, in
which case (or if required under the 1940 Act) such matter shall be voted on by
such class or classes. As determined by the Trustees without the vote or consent
of Shareholders (except as required by the 1940 Act), on any matter submitted to
a vote of Shareholders, either (i) each whole Share shall be entitled to one
vote as to any matter on which it is entitled to vote, and each fractional Share
shall be entitled to a proportionate fractional vote or (ii) each dollar of Net
Asset Value (number of Shares owned times Net Asset Value per share of such
Series or class thereof, as applicable) shall be entitled to one vote on any
matter on which such Shares are entitled to vote and each fractional dollar
amount shall be entitled to a proportionate fractional vote. Without limiting
the power of
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the Trustees in any way to designate otherwise in accordance with the preceding
sentence, the Trustees hereby establish that each whole Share shall be entitled
to one vote as to any matter on which it is entitled to vote and each fractional
Share shall be entitled to a proportionate fractional vote. There shall be no
cumulative voting in the election of Trustees. Shares may be voted in person or
by proxy or in any manner provided for in the Bylaws. A proxy may be given in
writing. The Bylaws 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 herein or in the Bylaws, in the event a proposal
by anyone other than the officers or Trustees of the Trust is submitted to a
vote of the Shareholders, 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.
Until Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required or permitted by law, this Trust Instrument or
any of the Bylaws of the Trust to be taken by Shareholders.
Section 7.02 Meetings. Meetings may be held within or without the State of
Delaware. Special meetings of the Shareholders of any Series may be called by
the Trustees and shall be called by the Trustees upon the written request of
Shareholders owning at least one tenth of the Outstanding Shares of the Trust
entitled to vote. Whenever ten or more Shareholders meeting the qualifications
set forth in Section 16(c) of the 1940 Act, as the same may be amended from time
to time, seek the opportunity of furnishing materials to the other Shareholders
with a view to obtaining signatures on such a request for a meeting, the
Trustees shall comply with the provisions of said Section 16(c) with respect to
providing such Shareholders access to the list of the Shareholders of record of
the Trust or the mailing of such materials to such Shareholders of record,
subject to any rights provided to the Trust or any Trustees provided by said
Section 16(c). Notice shall be sent, by First Class Mail or such other means
determined by the Trustees, at least 10 days prior to any such meeting.
Notwithstanding anything to the contrary in this Section 7.02, the Trustees
shall not be required to call a special meeting of the Shareholders of any
Series or to provide Shareholders seeking the opportunity of furnishing the
materials to other Shareholders with a view to obtaining signatures on a request
for a meeting except to the extent required under the 1940 Act.
Section 7.03 Quorum and Required Vote. One-third of Shares outstanding and
entitled to vote in person or by proxy as of the record date for a Shareholders'
meeting shall be a quorum for the transaction of business at such Shareholders'
meeting, except that where any provision of law or of this Trust Instrument
permits or requires that holders of any Series shall vote as a Series (or that
holders of a class shall vote as a class), then one-third of the aggregate
number of Shares of that Series (or that class) entitled to vote shall be
necessary to constitute a quorum for the transaction of business by that Series
(or that class). Any meeting of Shareholders may be adjourned from time to time
by a majority of the votes properly cast upon the question of adjourning a
meeting to another date and time, whether or not a quorum is present. Any
adjourned session or sessions may be held, within a reasonable time after the
date set for the original meeting, without the necessity of further notice.
Except when a larger vote is required by law or by any provision of this Trust
Instrument or the Bylaws, a majority of the Shares voted in person or by proxy
shall decide any questions and a plurality shall elect a Trustee, provided that
where any provision of law or of this Trust Instrument permits or requires that
the holders of any Series shall vote as a Series (or that the holders of any
class shall vote as a class), then a majority
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of the Shares present in person or by proxy of that Series (or class), voted on
the matter in person or by proxy shall decide that matter insofar as that Series
(or class) is concerned. Shareholders may act by unanimous written consent, to
the extent not inconsistent with the 1940 Act, and any such actions taken by a
Series (or class) may be consented to unanimously in writing by Shareholders of
that Series (or class).
ARTICLE VIII
CUSTODIAN
Section 8.01 Appointment and Duties. The Trustees shall employ a bank, a
company that is a member of a national securities exchange, or a trust company,
that in each case shall have capital, surplus and undivided profits of at least
twenty million dollars ($20,000,000) and that is a member of the Depository
Trust Company (or such other person or entity as may be permitted to act as
custodian of the Trust's assets under the 1940 Act) as custodian with authority
as its agent, but subject to such restrictions, limitations and other
requirements, if any, as may be contained in the Bylaws of the Trust: (a) to
hold the securities owned by the Trust and deliver the same upon written order
or oral order confirmed in writing; (b) to receive and receipt for any moneys
due to the Trust and deposit the same in its own banking department or elsewhere
as the Trustees may direct; and (c) to disburse such funds upon orders or
vouchers.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian, and upon such terms and conditions, as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, provided that in
every case such sub-custodian shall be a bank, a company that is a member of a
national securities exchange, or a trust company organized under the laws of the
United States or one of the states thereof and having capital, surplus and
undivided profits of at least twenty million dollars ($20,000,000) and that is a
member of the Depository Trust Company or such other person or entity as may be
permitted by the Commission or is otherwise able to act as custodian of the
Trust's assets in accordance with the 1940 Act.
Section 8.02 Central Certificate System. Subject to the 1940 Act and such
other rules, regulations and orders as the Commission may adopt, the Trustees
may direct the custodian to deposit all or any part of the securities owned by
the Trust in a system for the central handling of securities established by a
national securities exchange or a national securities association registered
with the Commission under the Securities Exchange Act of 1934, as amended, or
such other person as may be permitted by the Commission, or otherwise in
accordance with the 1940 Act, pursuant to which system all securities of any
particular class or series of any issuer deposited within the system are treated
as fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of such securities, provided that all such deposits shall be
subject to withdrawal only upon the order of the Trust or its custodians,
sub-custodians or other agents.
ARTICLE IX
DISTRIBUTIONS AND REDEMPTIONS
Section 9.01 Distributions.
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(a) The Trustees may from time to time declare and pay dividends or other
distributions with respect to any Series and/or class of a Series. The amount of
such dividends or distributions and the payment of them and whether they are in
cash or any other Trust Property shall be wholly in the discretion of the
Trustees.
(b) Dividends and other distributions may be paid or made to the
Shareholders of record at the time of declaring a dividend or other distribution
or among the Shareholders of record at such other date or time or dates or times
as the Trustees shall determine, which dividends or distributions, at the
election of the Trustees, may be paid pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine. The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans or related plans as the Trustees
shall deem appropriate.
(c) Anything in this Trust Instrument to the contrary notwithstanding, the
Trustees may at any time declare and distribute a stock dividend to the
Shareholders of a particular Series, or class thereof, as of the record date of
that Series fixed as provided in Subsection 9.01(b) hereof.
Section 9.02 Redemptions. In case any holder of record of Shares of a
particular Series desires to dispose of his Shares or any portion thereof he may
deposit at the office of the transfer agent or other authorized agent of that
Series a written request or such other form of request as the Trustees may from
time to time authorize, requesting that the Series purchase the Shares in
accordance with this Section 9.02; and, subject to Section 9.04 hereof, the
Shareholder so requesting shall be entitled to require the Series to purchase,
and the Series or the principal underwriter of the Series shall purchase his
said Shares, but only at the Net Asset Value thereof (as described in Section
9.03 of this Article IX). The Series shall make payment for any such Shares to
be redeemed, as aforesaid, in cash or property from the assets of that Series
and, subject to Section 9.04 hereof, payment for such Shares shall be made by
the Series or the principal underwriter of the Series to the Shareholder of
record within seven (7) days after the date upon which the request is effective.
Upon redemption, shares shall become Treasury shares and may be reissued from
time to time.
Section 9.03 Determination of Net Asset Value and Valuation of Portfolio
Assets. The term "Net Asset Value" of any Series shall mean that amount by which
the assets of that Series exceed its liabilities, all as determined by or under
the direction of the Trustees. The Trustees may delegate any of their powers and
duties under this Section 9.03 with respect to valuation of assets and
liabilities. Such value shall be determined separately for each Series and shall
be determined on such days and at such times as the Trustees may determine. Such
determination shall be made with respect to securities for which market
quotations are readily available, at the market value of such securities; and
with respect to other securities and assets, at the fair value as determined in
good faith by the Trustees; provided, however, that the Trustees, without
Shareholder approval, may alter the method of valuing portfolio securities
insofar as permitted under the 1940 Act. The resulting amount, which shall
represent the total Net Asset Value of the particular Series, shall be divided
by the total number of shares of that Series outstanding at the time and the
quotient so obtained shall be the Net Asset Value per Share of that Series. At
any time the Trustees may cause the Net Asset Value per Share last determined to
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be determined again in similar manner and may fix the time when such
redetermined value shall become effective.
The Trustees shall not be required to adopt, but may at any time adopt,
discontinue or amend a practice of seeking to maintain the Net Asset Value per
Share of the Series at a constant amount. If, for any reason, the net income of
any Series, determined at any time, is a negative amount, the Trustees shall
have the power with respect to that Series (a) to offset each Shareholder's pro
rata share of such negative amount from the accrued dividend account of such
Shareholder, (b) to reduce the number of Outstanding Shares of such Series by
reducing the number of Shares in the account of each Shareholder by a pro rata
portion of that number of full and fractional Shares which represents the amount
of such excess negative net income, (c) to cause to be recorded on the books of
such Series an asset account in the amount of such negative net income (provided
that the same shall thereupon become the property of such Series with respect to
such Series and shall not be paid to any Shareholder), which account may be
reduced by the amount of dividends declared thereafter upon the Outstanding
Shares of such Series on the day such negative net income is experienced, until
such asset account is reduced to zero; (d) to combine the methods described in
clauses (a) and (b) and (c) of this sentence; or (e) to take any other action
they deem appropriate, in order to cause (or in order to assist in causing) the
Net Asset Value per Share of such Series to remain at a constant amount per
Outstanding Share immediately after each such determination and declaration. The
Trustees shall also have the power not to declare a dividend out of net income
for the purpose of causing the Net Asset Value per Share to be increased.
In the event that any Series is divided into classes, the provisions of
this Section 9.03, to the extent applicable as determined in the discretion of
the Trustees and consistent with the 1940 Act and other applicable law, may be
equally applied to each such class.
Section 9.04 Suspension of the Right of Redemption. The Trustees may
declare a suspension of the right of redemption or postpone the date of payment
if permitted under the 1940 Act. Such suspension shall take effect at such time
as the Trustees shall specify but not later than the close of business on the
business day next following the declaration of suspension, and thereafter there
shall be no right of redemption or payment until the Trustees shall declare the
suspension at an end. In the case of a suspension of the right of redemption, a
Shareholder may either withdraw his request for redemption or receive payment
based on the Net Asset Value per Share next determined after the termination of
the suspension.
Section 9.05 Required Redemption of Shares. The Trustees may require
Shareholders to redeem Shares for any reason under terms set by the Trustees,
including, but not limited to, (i) the determination of the Trustees that direct
or indirect ownership of Shares of any Series has or may become concentrated in
such Shareholder 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), (ii) the failure of a Shareholder to supply a tax
identification number if required to do so, or to have the minimum investment
required (which may vary by Series), (iii) the failure of a Shareholder to make
payment when due for the purchase of Shares issued to him or (iv) the Shares
owned by such Shareholder being below the minimum investment set by the
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Trustees, from time to time, for investments in the Trust or in such Series or
classes thereof, as applicable.
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 requirements of any taxing authority
or for the Trustees to make any determination contemplated by this Section 9.05.
ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 10.01 Limitation of Liability. Neither a Trustee nor an officer of
the Trust, when acting in such capacity, shall be personally liable to any
person other than the Trust or the Shareholders for any act, omission or
obligation of the Trust, any Trustee or any officer of the Trust. Neither a
Trustee nor an officer of the Trust shall be liable for any act or omission or
any conduct whatsoever in his capacity as Trustee or as an officer of the Trust,
provided that nothing contained herein or in the Delaware Act shall protect any
Trustee or any officer of the Trust against any liability to the Trust or to
Shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee or officer of the Trust
hereunder.
Section 10.02 Indemnification.
(a) Subject to the exceptions and limitations contained in Subsection
10.02(b):
(i) every person who is, or has been, a Trustee or officer
of the Trust (hereinafter referred to as a "Covered Person") shall be
indemnified by the Trust to the fullest extent permitted by law
against liability and against all expenses reasonably incurred or
paid by him in connection with any claim, action, suit or proceeding
in which he becomes involved as a party or otherwise by virtue of his
being or having been a Trustee or officer and against amounts paid or
incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened while in
office or thereafter, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body
before which the proceeding was brought (A) to be liable to the Trust
or its Shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his office or (B) not to have acted in good faith in the
reasonable belief that his action was in the best interest of the
Trust; or
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(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross 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).
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not be exclusive of
or affect any other rights to which any Covered Person may now or hereafter be
entitled, shall continue as to a person who has ceased to be a Covered Person
and shall inure to the benefit of the heirs, executors and administrators of
such a person. Nothing contained herein shall affect any rights to
indemnification to which Trust personnel, other than Covered Persons, and other
persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
Subsection (a) of this Section 10.02 may be paid by the Trust or Series from
time to time prior to final disposition thereof upon receipt of an undertaking
by or on behalf of such Covered Person that such amount will be paid over by him
to the Trust or Series if it is ultimately determined that he is not entitled to
indemnification under this Section 10.02; provided, however, that either (i)
such Covered Person shall have provided appropriate security for such
undertaking, (ii) the Trust is insured against losses arising out of any such
advance payments or (iii) either a majority of the Trustees who are neither
interested persons of the Trust nor parties to the matter, or independent legal
counsel in a written opinion, shall have determined, based upon a review of
readily available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such Covered Person will be
found entitled to indemnification under this Section 10.02.
Section 10.03 Shareholders. In case any Shareholder of any Series shall be
held to be personally liable solely by reason of his being or having been a
Shareholder of such Series and not because of his acts or omissions or for some
other reason, the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives, or, in the case of a corporation
or other entity, its corporate or other general successor) shall be entitled out
of the assets belonging to the applicable Series to be held harmless from and
indemnified against all loss and expense arising from such liability. The Trust,
on behalf of the affected Series, shall, upon request 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 from the assets of the Series.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Trust Not A Partnership. It is hereby expressly declared that
a trust and not a partnership is created hereby. No Trustee hereunder shall have
any power to bind personally either the Trust officers or any Shareholder. All
persons extending credit to,
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contracting with or having any claim against the Trust or the Trustees shall
look only to the assets of the appropriate Series or (if the Trustees shall have
yet to have established Series) of the Trust for payment under such credit,
contract or claim; and neither the Shareholders nor the Trustees, nor any of
their agents, whether past, present or future, shall be personally liable
therefor. Nothing in this Trust Instrument shall protect a Trustee against any
liability to which the Trustee would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee hereunder.
Section 11.02 Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees or the officers of the Trust of their
powers and discretion hereunder in good faith and with reasonable care under the
circumstances then prevailing shall be binding upon everyone interested. Subject
to the provisions of Article X hereof and to Section 11.01 of this Article XI,
the Trustees and the officers of the Trust shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees and the officers of the Trust
may take advice of counsel or other experts with respect to the meaning and
operation of this Trust Instrument, and subject to the provisions of Article X
hereof and Section 11.01 of this Article XI, shall be under no liability for any
act or omission in accordance with such advice or for failing to follow such
advice. The Trustees and the officers of the Trust shall not be required to give
any bond as such, nor any surety if a bond is obtained.
Section 11.03 Establishment of Record Dates. The Trustees may close the
share transfer books of the Trust for a period not exceeding ninety (90) days
preceding the date of any meeting of Shareholders, or the date for the payment
of any dividends or other distributions, or the date for the allotment of
rights, or the date when any change or conversion or exchange of Shares shall go
into effect; or in lieu of closing the stock transfer books as aforesaid, the
Trustees may fix in advance a date, not exceeding ninety (90) days preceding the
date of any meeting of Shareholders, or the date for payment of any dividend or
other distribution, or the date for the allotment of rights, or the date when
any change or conversion or exchange of Shares shall go into effect, as a record
date for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting, or entitled to receive payment of any such dividend
or other distribution, or to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of Shares, and in
such case such Shareholders and only such Shareholders as shall be Shareholders
of record on the date so fixed shall be entitled to such notice of, and to vote
at, such meeting, or to receive payment of such dividend or other distribution,
or to receive such allotment or rights, or to exercise such rights, as the case
may be, notwithstanding any transfer of any Shares on the books of the Trust
after any such record date fixed as aforesaid.
Section 11.04 Dissolution and Termination of Trust.
(a) This Trust shall continue without limitation of time but subject to the
provisions of Subsection 11.04(b).
(b) The Trustees may, subject to any necessary Shareholder, Trustee, and
regulatory approvals:
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(i) sell and convey all or substantially all of the assets
of the Trust or any affected Series to another trust, partnership,
association or corporation, or to a separate series of shares
thereof, organized under the laws of any state which trust,
partnership, association or corporation is an open-end management
investment company as defined in the 1940 Act, or is a series
thereof, 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, stock or other ownership
interests of such trust, partnership, association or corporation or
of a series thereof;
(ii) enter into a plan of liquidation in order to dissolve
and liquidate any Series (or class) of the Trust, or the Trust; or
(iii) at any time sell and convert into money all of the
assets of the Trust or any affected Series.
Upon making reasonable provision, in the determination of the Trustees, for
the payment of all liabilities by assumption or otherwise, the Trustees shall
distribute the remaining proceeds or assets (as the case may be) of each Series
(or class) ratably among the holders of Shares of the affected Series, based
upon the ratio that each Shareholder's Shares bears to the number of Shares of
such Series (or class) then outstanding.
(c) Upon completion of the distribution of the remaining proceeds or the
remaining assets as provided in Subsection 11.04(b), the Trustees and the Trust
or any affected Series shall be discharged of any and all further liabilities
and duties hereunder and the right, title and interest of all parties with
respect to the Trust or Series shall be canceled and discharged and any such
Series shall terminate.
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. Upon filing of the certificate of cancellation for
the Trust, the Trust shall terminate.
Section 11.05 Reorganization and Master/Feeder.
(a) Notwithstanding anything else herein, the Trustees, in order to change
the form or jurisdiction of organization of the Trust, may (i) cause the Trust
to merge or consolidate with or into one or more trusts, partnerships (general
or limited), associations or corporations so long as the surviving or resulting
entity is an open-end management investment company under the 1940 Act, or is a
series thereof, that will succeed to or assume the Trust's registration under
that Act and which is formed, organized or existing under the laws of a state,
commonwealth, possession or colony of the United States or (ii) cause the Trust
to incorporate under the laws of Delaware.
(b) The Trustees may, subject to a vote of a majority of the Trustees and
any shareholder vote required under the 1940 Act, if any, cause the Trust to
merge or consolidate with or into one or more trusts, partnerships (general or
limited), associations, limited liability
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companies or corporations formed, organized or existing under the laws of a
state, commonwealth, possession or colony of the United States.
(c) Any agreement of merger or consolidation or certificate of merger or
consolidation may be signed by a majority of Trustees and facsimile signatures
conveyed by electronic or telecommunication means shall be valid.
(d) 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
Trust Instrument, an agreement of merger or consolidation approved by the
Trustees in accordance with paragraph (a) or (b) of this Section 11.05 may
effect any amendment to the Trust Instrument or effect the adoption of a new
trust instrument of the Trust if it is the surviving or resulting trust in the
merger or consolidation.
(e) Notwithstanding anything else herein, the Trustees may, without
Shareholder approval (unless required by the 1940 Act), invest all or a portion
of the Trust Property of any Series, or dispose of all or a portion of the Trust
Property of any Series, and invest the proceeds of such disposition in interests
issued by one or more other investment companies registered under the 1940 Act.
Any such other investment company may (but need not) be a trust (formed under
the laws of the State of Delaware or any other state or jurisdiction) (or series
thereof) which is classified as a partnership for federal income tax purposes.
Notwithstanding anything else herein, the Trustees may, without Shareholder
approval unless such approval is required by the 1940 Act, cause a Series that
is organized in the master/feeder fund structure to withdraw or redeem its Trust
Property from the master fund and cause such series to invest its Trust Property
directly in securities and other financial instruments or in another master
fund.
Section 11.06 Filing of Copies, References, Headings. The original or a
copy of this Trust Instrument and of each amendment hereof or Trust Instrument
supplemental hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. Anyone dealing with the Trust may rely on a
certificate by an officer or Trustee of the Trust as to whether or not any such
amendments or supplements 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 or Trustee of the Trust to be a copy
of this Trust Instrument or of any such amendment or supplemental Trust
Instrument. In this Trust Instrument or in any such amendment or supplemental
Trust Instrument, references to this Trust Instrument, and all expressions such
as "herein," "hereof" and "hereunder," shall be deemed to refer to this Trust
Instrument as amended or affected by any such supplemental Trust Instrument. All
expressions like "his," "he" and "him," shall be deemed to include the feminine
and neuter, as well as masculine, genders. Headings are placed herein for
convenience of reference only and in case of any conflict, the text of this
Trust Instrument, rather than the headings, shall control. This Trust Instrument
may be executed in any number of counterparts each of which shall be deemed an
original.
Section 11.07 Applicable Law. The trust set forth in this instrument is
made in the State of Delaware, and the Trust and this Trust Instrument, and the
rights and obligations of the Trustees and Shareholders hereunder, are to be
governed by and construed and administered according to the Delaware Act and the
laws of said state; provided, however, that there shall not
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be applicable to the Trust, the Trustees or this Trust Instrument (a) the
provisions of Section 3540 of Title 12 of the Delaware Code or (b) any
provisions of the laws (statutory or common) of the State of Delaware (other
than the Delaware Act) pertaining to trusts which relate to or regulate (i) the
filing with any court or governmental body or agency of trustee accounts or
schedules of trustee fees and charges, (ii) affirmative requirements to post
bonds for trustees, officers, agents or employees of a trust, (iii) the
necessity for obtaining court or other governmental approval concerning the
acquisition, holding or disposition of real or personal property, (iv) fees or
other sums payable to trustees, officers, agents or employees of a trust, (v)
the allocation of receipts and expenditures to income or principal, (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 of responsibilities or limitations on the acts or powers of
trustees, which are inconsistent with the limitations or liabilities or
authorities and powers of the Trustees set forth or referenced in this Trust
Instrument. The Trust shall be of the type commonly called a "business trust,"
and without limiting the provisions hereof, the Trust may exercise all powers
which are ordinarily exercised by such a trust under Delaware law. The Trust
specifically reserves the right to exercise any of the powers or privileges
afforded to trusts or actions that may be engaged in by trusts under the
Delaware Act, and the absence of a specific reference herein to any such power,
privilege or action shall not imply that the Trust may not exercise such power
or privilege or take such actions.
Section 11.08 Derivative Actions. In addition to the requirements set forth
in Section 3816 of the Delaware Act, a Shareholder may bring a derivative action
on behalf of the Trust only if the following conditions are met:
(a) The Shareholder or Shareholders must make a pre-suit demand upon the
Trustees to bring the subject action unless an effort to cause the Trustees to
bring such an action is not likely to succeed. For purposes of this Section
11.08(a), a demand on the Trustees shall only be deemed not likely to succeed
and therefore excused if a majority of the Board of Trustees, or a majority of
any committee established to consider the merits of such action, has a personal
financial interest in the transaction at issue, and a Trustee shall not be
deemed interested in a transaction or otherwise disqualified from ruling on the
merits of a Shareholder demand by virtue of the fact that such Trustee receives
remuneration for his service on the Board of Trustees of the Trust or on the
boards of one or more investment companies that are under common management with
or otherwise affiliated with the Trust.
(b) Unless a demand is not required under paragraph (a) of this Section
11.08, Shareholders eligible to bring such derivative action under the Delaware
Act who hold at least 10% of the Outstanding Shares of the Trust, or 10% of the
Outstanding Shares of the Series or Class to which such action relates, shall
join in the request for the Trustees to commence such action; and
(c) Unless a demand is not required under paragraph (a) of this Section
11.08, the Trustees must be afforded a reasonable amount of time to consider
such Shareholder request and to investigate the basis of such claim. The
Trustees shall be entitled to retain counsel or other advisors in considering
the merits of the request and shall require an undertaking by the
25
<PAGE>
Shareholders making such request to reimburse the Trust for the expense of any
such advisors in the event that the Trustees determine not to bring such action.
For purposes of this Section 11.08, the Board of Trustees may designate a
committee of one Trustee to consider a Shareholder demand if necessary to create
a committee with a majority of Trustees who do not have a personal financial
interest in the transaction at issue.
Section 11.09 Amendments. Except as specifically provided herein, the
Trustees may, without shareholder vote, amend or otherwise supplement this Trust
Instrument by making an amendment, a Trust Instrument supplemental hereto or an
amended and restated trust instrument. Shareholders shall have the right to vote
(a) on any amendment as may be required by law or by the Trust's registration
statement filed with the Commission and (b) on any amendment submitted to them
by the Trustees. Any amendment required or permitted to be submitted to
Shareholders which, as the Trustees determine, shall affect the Shareholders of
one or more Series shall be authorized by vote of the Shareholders of each
Series affected and no vote of shareholders of a Series not affected shall be
required. Notwithstanding any other provision of this Trust Instrument, any
amendment to Article X hereof shall not limit the rights to indemnification or
insurance provided therein with respect to action or omission of Covered Persons
prior to such amendment.
Section 11.10 Fiscal Year. The fiscal year of the Trust shall end on a
specified date as set forth in the Bylaws, provided, however, that the Trustees
may change the fiscal year of the Trust.
Section 11.11 Name Reservation. The Trustees on behalf of the Trust
acknowledge that KeyCorp has licensed to the Trust the non-exclusive right to
use the name "Victory" as part of the name of the Trust, and has reserved the
right to grant the non-exclusive use of the name "Victory" or any derivative
thereof to any other party. In addition, KeyCorp reserves the right to grant the
non-exclusive use of the name "Victory" to, and to withdraw such right from, any
other business or other enterprise. KeyCorp reserves the right to withdraw from
the Trust the right to use said name "Victory" and will withdraw such right if
the Trust ceases to employ, for any reason, KeyCorp, an affiliate or any
successor as adviser of the Trust.
Section 11.12 Provisions in Conflict With Law. The provisions of this Trust
Instrument are severable, and if the Trustees shall determine, with the advice
of counsel, that any of such provision is in conflict with the 1940 Act, the
regulated investment company provisions of the Internal Revenue Code or with
other applicable laws and regulations, the conflicting provision shall be deemed
never to have constituted a part of this Trust Instrument; provided, however,
that such determination shall not affect any of the remaining provisions of this
Trust Instrument or render invalid or improper any action taken or omitted prior
to such determination. If any provision of this Trust Instrument 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 matter affect such provision in any other jurisdiction or any
other provision of this Trust Instrument in any jurisdiction.
26
<PAGE>
IN WITNESS WHEREOF, the undersigned, being all of the current
Trustees of the Trust, have executed this instrument as of date first written
above.
------------------------------ -------------------------------
Harry Gazelle, as Trustee Leigh A. Wilson, as Trustee
and not individually and not individually
------------------------------- -------------------------------
Eugene J. McDonald, as Trustee H. Patrick Swygert, as Trustee
and not individually and not individually
------------------------------- -------------------------------
Thomas F. Morrissey, as Trustee Frank A. Weil, as Trustee
and not individually and not individually
-----------------------------
Roger Noall, as Trustee
and not individually
27
<PAGE>
SCHEDULE A
Fund Classes
Balanced Fund.......................................Class A, Class G and Class G
Convertible Securities Fund.........................Class A and Class G
Diversified Stock Fund..............................Class A, Class B and Class G
Equity Income Fund..................................Class A
Established Value Fund..............................Class A and Class G
Federal Money Market Fund...........................Investor and Select
Financial Reserves Fund.............................Class A
Fund for Income.....................................Class A and Class G
Government Mortgage Fund............................Class A
Gradison Government Reserves Fund...................Class G
Growth Fund.........................................Class A and Class G
Institutional Money Market Fund.....................Investor and Select
Intermediate Income Fund............................Class A and Class G
International Growth Fund...........................Class A, Class B and Class G
Investment Quality Bond Fund........................Class A and Class G
Lakefront Fund......................................Class A
LifeChoice Conservative Investor Fund...............Class A
LifeChoice Moderate Investor Fund...................Class A
LifeChoice Growth Investor Fund.....................Class A
Limited Term Income Fund............................Class A
Maine Municipal Bond Fund (Intermediate)............Class A
Maine Municipal Bond Fund (Long)....................Class A
Michigan Municipal Bond Fund........................Class A
National Municipal Bond Fund........................Class A, Class B and Class G
National Municipal Bond Fund (Short Intermediate)...Class A
National Municipal Bond Fund (Long).................Class A
New York Tax-Free Fund..............................Class A, Class B and Class G
Ohio Municipal Bond Fund............................Class A and Class G
Ohio Municipal Money Market Fund....................Class A
Ohio Regional Stock Fund............................Class A and Class B
Prime Obligations Fund..............................Class A
Real Estate Investment Fund.........................Class A and Class G
Small Company Opportunity Fund......................Class A and Class G
Special Value Fund..................................Class A, Class B and Class G
Stock Index Fund....................................Class A and Class G
Tax-Free Money Market Fund..........................Class A
U.S. Government Obligations Fund....................Investor and Select
Value Fund..........................................Class A and Class G
As of December 1, 1999
Exhibit B
THE VICTORY PORTFOLIOS
FORM OF DISTRIBUTION AND SERVICE PLAN
AMENDED AND RESTATED FROM PLAN ADOPTED JUNE 5, 1995
1. This Distribution and Service Plan (the "Plan"), when
effective in accordance with its terms, shall be the written plan contemplated
by Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act"), of each of the series (individually, a "Fund" and collectively, the
"Funds") and each class set forth on Schedule I as amended from time to time,
each a duly established series of shares of The Victory Portfolios, a Delaware
business trust, registered as an open-end investment company under the 1940 Act
(the "Trust").
2. The Trust has entered into a separate Administration Agreement
and Distribution Agreement with respect to each Fund, under which the
Distributor uses all reasonable efforts, consistent with its other business, to
secure purchasers for each Fund's shares of beneficial interest ("Shares").
Under the Distribution Agreement, the Distributor pays, among other things, the
expenses of printing and distributing any prospectuses, reports and other
literature used by the Distributor, advertising, and other promotional
activities in connection with the offering of Shares of the Funds for sale to
the public. The Trust, on behalf of each of the Funds, has also entered into an
Investment Advisory Aagreement under which the Investment Advisor provides
investment advisory services.
3. The Funds will not make separate payments as a result of this
Plan. To the extent that any payments made by the Funds' Administrator,
Distributor, Investment Adviser or any sub-adviser, directly or through an
affiliate (in each case, from its own resources), should be deemed to be
indirect financing of any activity primarily intended to result in the sale of
Shares within the context of Rule 12b-1 under the 1940 Act, then such payments
shall be deemed to be authorized by this Plan.
4. This Plan shall become effective on the first business day of
the month following approval by a vote of at least a "majority of the
outstanding voting securities" (as defined by the 1940 Act) of each class of
Shares set forth on Schedule I, the Plan having been approved by a vote of a
majority of the Trustees of the Trust, including a majority of the Trustees who
are not interested persons of the Trust (as defined in the 1940 Act) and who
have no direct or indirect financial interest in the operation of the Plan or in
any agreements related to the Plan (the "Independent Trustees"), cast in person
at a meeting called for the purpose of voting on the Plan.
5. This Plan shall, unless terminated as hereinafter provided,
remain in effect for a period of one year from the date specified below, and
from year to year thereafter, provided, however, that such continuance is
subject to approval annually by a vote of a majority of the Independent
Trustees, cast in person at a meeting called for the purpose of voting on this
Plan. This Plan may be amended at any time by the Board of Trustees, provided
that (a) any
<PAGE>
amendment to authorize direct payments by any of the Classes set forth on
Schedule I to finance any activity primarily intended to result in the sale of
shares of the Funds, shall be effective only upon approval by a vote of a
majority of the outstanding voting securities of that Class, and (b) any
material amendments to this Plan shall be effective only upon approval by a
majority of the Trustees, including a majority of the Independent Trustees, and
by a majority of the outstanding voting securities.of each Class set forth on
Schedule I.
6. This Plan may be terminated at any time, without the payment
of any penalty, by the vote of a majority of the Independent Trustees or by the
vote of a majority of the outstanding voting securities of the applicable class
of each Fund.
7. During the existence of the Plan, the Trust may require the
Administrator, Distributor, Investment Advisor or ant sub-adviser to provide to
the Trust, for review by the Board of Trustees, a written report of the amounts
expended in connection with the financing of any activity primarily intended to
result in the sale of Shares.
8. Consistent with the limitations of shareholder and Trustee
liability as set forth in the Trust's Trust Instrument, any obligations assumed
by a Fund pursuant to this Plan, shall be limited in all cases to each Fund
individually, and the assets of each Fund individually, and shall not constitute
obligations of any shareholder or other series or classes of shares of the Trust
or of any Trustee.
9. If any provision of this Plan shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Plan shall
not be affected thereby.
IN WITNESS WHEREOF, the Trust has executed this Plan on behalf of each Fund
listed on Schedule I, individually and not jointly, as of __________,_____.
The Victory Portfolios
By: _____________________
2
<PAGE>
SCHEDULE I
This Distribution Plan shall be adopted with respect to the following series and
classes thereof of the Trust:
Series: Class:
Dated as of ____________, ____
LOGO
- -------------------------------------------------------------------------------
IMPORTANT NOTICE: Please take a moment now to vote your shares. You may vote
directly over the telephone by calling 800-786-8764. Representatives are
available from ______ to ______ Eastern Time. You may also fax your ballot to
800-733-1885 or return it in the enclosed postage paid envelope. Internet voting
is available at www.proxyvote.com.
Your vote is important. Thank you for your prompt action.
- -------------------------------------------------------------------------------
THE VICTORY PORTFOLIOS
BALANCED FUND
SPECIAL MEETING OF SHAREHOLDERS SCHEDULED TO BE HELD ON MARCH 20, 2000
PROXY CARD
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES of The Victory Portfolios, on
behalf of Balanced Fund (the "Fund"), for use at the Special Meeting of
shareholders to be held at the offices of The Victory Portfolios, 3435 Stelzer
Road, Columbus, OH 43219-3035 on March 20, 2000 at 8:30 a.m. Eastern time. The
undersigned hereby appoints Karen Haber and Anne M. Dombrowski and each of them,
with full power of substitution, as proxies of the undersigned to vote at the
above stated Special Meeting, and at all adjournments thereof, all shares of
beneficial interest of the Fund that are held of record by the undersigned on
the record date for the Special Meeting, upon the proposals indicated below:
IF THIS PROXY CARD IS RETURNED, AND NO CHOICE IS INDICATED
FOR ANY ITEM, THIS PROXY WILL BE VOTED AFFIRMATIVELY ON
THE MATTERS PRESENTED. THE BOARD OF TRUSTEES RECOMMENDS
THAT YOU VOTE "FOR" THE FOLLOWING PROPOSALS.
Please sign exactly as your name appears on this card. When account is joint
tenants, all should sign. When signing as executor, administrator, trustee or
guardian, please give title. If a corporation or partnership, sign entity's name
and by authorized person.
<TABLE>
<CAPTION>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X] KEEP THIS PORTION FOR YOUR RECORDS
- -----------------------------------------------------------------------------------------------------------
<S> <C>
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
</TABLE>
<PAGE>
Vote on Proposals:
1. To elect trustees to serve as members of the Board of Trustees of The
Victory Portfolios, the nominees are:
Theodore H. Emmerich Dr. Thomas F. Morrissey
Dr. Harry Gazelle H. Patrick Swygert
Frankie D. Hughes Frank A. Weil
Roger Noall Donald E. Weston
Eugene J. McDonald Leigh A. Wilson
FOR ALL
FOR WITHHOLD EXCEPT
[ ] [ ] [ ]
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR
ALL EXCEPT" BOX, AND STRIKE A LINE THROUGH THE NOMINEE'S NAME.
2. To approve the adoption of an Amended and Restated Trust Instrument for The
Victory Portfolios.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. FOR CLASS A ONLY, to approve the "defensive" Rule 12b-1 distribution plan.
FOR ALL
FOR EXCEPT
[ ] [ ]
4. To approve changes to the Fund's fundamental investment restrictions.
(a) Diversification (h) Underwriting
(b) Concentration
(c) Joint Trading
(d) Borrowing
(e) Lending
(f) Senior Securities
(g) Real Estate
FOR ALL
FOR EXCEPT
[ ] [ ]
AGAINST ABSTAIN
[ ] [ ]
TO WITHHOLD AUTHORITY TO VOTE FOR ANY ITEM IN PROPOSAL 3, NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX, AND STRIKE A LINE THROUGH THE ITEM.
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
X________________________________________ X__________________________________
Signature (Please sign within box) (Date) Signature (if jointly held) (Date)
<PAGE>
LOGO
- --------------------------------------------------------------------------------
IMPORTANT NOTICE: Please take a moment now to vote your shares. You may vote
directly over the telephone by calling 800-786-8764. Representatives are
available from ______ to ______ Eastern Time. You may also fax your ballot to
800-733-1885 or return it in the enclosed postage paid envelope. Internet voting
is available at www.proxyvote.com.
Your vote is important. Thank you for your prompt action.
- --------------------------------------------------------------------------------
THE VICTORY PORTFOLIOS
ESTABLISHED VALUE FUND
SPECIAL MEETING OF SHAREHOLDERS SCHEDULED TO BE HELD ON MARCH 20, 2000
PROXY CARD
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES of The Victory Portfolios, on
behalf of Established Value Fund (the "Fund"), for use at the Special Meeting of
shareholders to be held at the offices of The Victory Portfolios, 3435 Stelzer
Road, Columbus, OH 43219-3035 on March 20, 2000 at 8:30 a.m. Eastern time. The
undersigned hereby appoints Karen Haber and Anne M. Dombrowski and each of them,
with full power of substitution, as proxies of the undersigned to vote at the
above stated Special Meeting, and at all adjournments thereof, all shares of
beneficial interest of the Fund that are held of record by the undersigned on
the record date for the Special Meeting, upon the proposals indicated below:
IF THIS PROXY CARD IS RETURNED, AND NO CHOICE IS INDICATED
FOR ANY ITEM, THIS PROXY WILL BE VOTED AFFIRMATIVELY ON
THE MATTERS PRESENTED. THE BOARD OF TRUSTEES RECOMMENDS
THAT YOU VOTE "FOR" THE FOLLOWING PROPOSALS.
Please sign exactly as your name appears on this card. When account is joint
tenants, all should sign. When signing as executor, administrator, trustee or
guardian, please give title. If a corporation or partnership, sign entity's name
and by authorized person.
<TABLE>
<CAPTION>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X] KEEP THIS PORTION FOR YOUR RECORDS
- -----------------------------------------------------------------------------------------------------------
<S> <C>
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
</TABLE>
<PAGE>
Vote on Proposals:
1. To elect trustees to serve as members of the Board of Trustees of The
Victory Portfolios, the nominees are:
Theodore H. Emmerich Dr. Thomas F. Morrissey
Dr. Harry Gazelle H. Patrick Swygert
Frankie D. Hughes Frank A. Weil
Roger Noall Donald E. Weston
Eugene J. McDonald Leigh A. Wilson
FOR ALL
FOR WITHHOLD EXCEPT
[ ] [ ] [ ]
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR
ALL EXCEPT" BOX, AND STRIKE A LINE THROUGH THE NOMINEE'S NAME.
2. To approve the adoption of an Amended and Restated Trust Instrument for The
Victory Portfolios.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. FOR CLASS A ONLY, to approve the "defensive" Rule 12b-1 distribution plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To approve changes to the Fund's fundamental investment restrictions.
(a) Diversification (h) Underwriting
(i) Pledging
(c) Joint trading (j) Investing to influence
management
(d) Borrowing (k) Purchasing on margin and
selling short
(e) Lending (l) Illiquid securities
(f) Senior securities (m) Ownership by Trustees and
Officers
(g) Real estate (n) Unseasoned issuers
FOR ALL
FOR EXCEPT
[ ] [ ]
AGAINST ABSTAIN
[ ] [ ]
TO WITHHOLD AUTHORITY TO VOTE FOR ANY ITEM IN PROPOSAL 3, NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX, AND STRIKE A LINE THROUGH THE ITEM.
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
X_________________________________________ X__________________________________
Signature (Please sign within box) (Date) Signature (if jointly held) (Date)
<PAGE>
LOGO
- --------------------------------------------------------------------------------
IMPORTANT NOTICE: Please take a moment now to vote your shares. You may vote
directly over the telephone by calling 800-786-8764. Representatives are
available from ______ to ______ Eastern Time. You may also fax your ballot to
800-733-1885 or return it in the enclosed postage paid envelope. Internet voting
is available at www.proxyvote.com.
Your vote is important. Thank you for your prompt action.
- --------------------------------------------------------------------------------
THE VICTORY PORTFOLIOS
INSTITUTIONAL MONEY MARKET FUND
SPECIAL MEETING OF SHAREHOLDERS SCHEDULED TO BE HELD ON MARCH 20, 2000
PROXY CARD
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES of The Victory Portfolios, on
behalf of Institutional Money Market Fund (the "Fund"), for use at the Special
Meeting of shareholders to be held at the offices of The Victory Portfolios,
3435 Stelzer Road, Columbus, OH 43219-3035 on March 20, 2000 at 8:30 a.m.
Eastern time. The undersigned hereby appoints Karen Haber and Anne M. Dombrowski
and each of them, with full power of substitution, as proxies of the undersigned
to vote at the above stated Special Meeting, and at all adjournments thereof,
all shares of beneficial interest of the Fund that are held of record by the
undersigned on the record date for the Special Meeting, upon the proposals
indicated below:
IF THIS PROXY CARD IS RETURNED, AND NO CHOICE IS INDICATED
FOR ANY ITEM, THIS PROXY WILL BE VOTED AFFIRMATIVELY ON
THE MATTERS PRESENTED. THE BOARD OF TRUSTEES RECOMMENDS
THAT YOU VOTE "FOR" THE FOLLOWING PROPOSALS.
Please sign exactly as your name appears on this card. When account is joint
tenants, all should sign. When signing as executor, administrator, trustee or
guardian, please give title. If a corporation or partnership, sign entity's name
and by authorized person.
<TABLE>
<CAPTION>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X] KEEP THIS PORTION FOR YOUR RECORDS
- ----------------------------------------------------------------------------------------------------------
<S> <C>
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
</TABLE>
<PAGE>
Vote on Proposals:
1. To elect trustees to serve as members of the Board of Trustees of The
Victory Portfolios, the nominees are:
Theodore H. Emmerich Dr. Thomas F. Morrissey
Dr. Harry Gazelle H. Patrick Swygert
Frankie D. Hughes Frank A. Weil
Roger Noall Donald E. Weston
Eugene J. McDonald Leigh A. Wilson
FOR ALL
FOR WITHHOLD EXCEPT
[ ] [ ] [ ]
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR
ALL EXCEPT" BOX, AND STRIKE A LINE THROUGH THE NOMINEE'S NAME.
2. To approve the adoption of an Amended and Restated Trust Instrument for The
Victory Portfolios.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To approve the amended and restated "defensive" Rule 12b-1 distribution
plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To approve changes to the Fund's fundamental investment restrictions.
(a) Diversification (h) Underwriting
(b) Concentration
(d) Borrowing
(e) Lending
(f) Senior securities
(g) Real estate
FOR ALL
FOR EXCEPT
[ ] [ ]
AGAINST ABSTAIN
[ ] [ ]
TO WITHHOLD AUTHORITY TO VOTE FOR ANY ITEM IN PROPOSAL 3, NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX, AND STRIKE A LINE THROUGH THE ITEM.
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
X_________________________________________ X__________________________________
Signature (Please sign within box) (Date) Signature (if jointly held) (Date)
