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SSgA Funds
Two International Place
Boston, Massachusetts 02110
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To the Shareholders of the SSgA S&P 500 Index Fund:
We are pleased to submit to you the enclosed proxy, which we believe
provides the SSgA S&P 500 Index Fund and you, its Shareholders, a beneficial
opportunity. The proxy outlines three proposals, two of which correspond to an
intended conversion to a Feeder Fund. The proposed conversion potentially will
enable the Fund and, as a result its Shareholders, to realize financial savings
and other benefits. The third proposal is designed to modernize the Fund's
fundamental investment restrictions, several of which are unnecessary or more
restrictive than necessary since Congress passed the National Securities Market
Improvement Act of 1996.
Although we have attempted to draft the proxy in a user-friendly format,
please bear in mind that the proxy is a legal document and we are therefore
required to follow certain guidelines in its structure and content. In an effort
to explain some of the issues associated with the proposals, we have drafted the
attached brief overview. In addition, if you have questions regarding the proxy
or any of the proposals, please call (___) ___ - ____ to speak with
representatives of the Fund.
It is important that your shares are represented at the meeting.
Therefore, whether or not you expect to be present at the meeting, please review
the attached documents, complete and sign the enclosed proxy card, and return it
promptly. We look forward to receiving your input in these important matters.
For the Board of Trustees,
Lynn L. Anderson
Chairman
__________, 2000
<PAGE>
Although we recommend that you read the complete Proxy Statement, for your
convenience, we have provided this brief overview of the proposals.
Q: WHY AM I RECEIVING THIS PROXY STATEMENT?
A: On behalf of your Fund, we are seeking shareholder approval of two proposals
to allow your Fund to participate in a master-feeder arrangement, as well as a
third proposal to modernize your Fund's investment restrictions. The first
proposal is the addition of a fundamental investment policy that modifies your
Fund's existing investment policies in the following way: it allows your Fund to
invest all of its investable assets in another fund with substantially the same
investment objective, policies and restrictions as your Fund. The second
proposal is the addition of a rider to your Fund's investment advisory agreement
that modifies the duties and fees of State Street Global Advisors, your Fund's
current investment adviser (the "Adviser"), as long as your Fund's assets are
invested in a Master Fund. We are also seeking shareholder approval of
modernized investment restrictions by eliminating or modifying certain
restrictions that are no longer required by applicable law. This action will
increase your Fund's investment flexibility. Similar action already has been
taken by many funds in the industry. Please refer to the proxy statement for a
detailed explanation of these proposals.
Q: WHAT IS A MASTER-FEEDER ARRANGEMENT?
A: A master-feeder arrangement is an investment strategy in which one or more
investment vehicles (the "Feeder Funds"), "feed" all of their investable assets
into another fund (the "Master Fund"). The Feeder Funds may be, among others,
mutual funds, commingled institutional funds, and offshore funds. The Master
Fund in such an arrangement has the same investment objective, policies and
restrictions as its Feeder Funds, and all of the invested assets in such an
arrangement are managed jointly by the Master Fund's investment adviser. This
arrangement allows different types of investment vehicles to pool their assets
in pursuit of a common investment objective, potentially enhancing their
performance and lowering expenses through economies of scale.
Q: WHY IS MY FUND SEEKING THIS APPROVAL?
A: As your Fund's Board of Trustees we have determined that seeking this
approval is in the best interest of the Fund and its shareholders for two
related reasons. The first reason is that upon the Fund's agreement to
participate in a master-feeder arrangement, the Adviser has agreed to
contractually limit the Fund's total expense ratio, rather than just voluntarily
waiving its advisory fee, as it is currently doing, in order to keep expenses at
0.18% of net assets. The second reason is that participating in a master-feeder
arrangement is expected to result in a total expense ratio lower than 0.18% of
the Fund's net assets, which your Fund is not able to accomplish in its current
structural arrangement.
Since the inception of your Fund, the Adviser has voluntarily waived all or most
of its advisory fee in order to maintain a total expense ratio of 0.18% for the
Fund. However, because this waiver is voluntary, there is a possibility that the
Adviser will at some point discontinue the waiver, in which case the total
expense ratio would increase. Participation in the proposed master-feeder
arrangement will enable your Fund to contractually (rather than voluntarily)
limit its total expense ratio to 0.18%, for at least two years.
Under your Fund's current structural arrangement, it will not be possible for
total expenses to be less than 0.18% unless the Fund's assets grow to over $6
billion, which is double their current level. However, if the Fund converts to a
Feeder Fund, an immediate savings is expected, and the Fund's total expenses are
expected to continue to decrease as assets grow. There can be no guarantee that
this savings will be realized. However, we believe that the anticipated savings,
in addition to the contractual limit on total expenses, is in the best interest
of both the Fund and its shareholders.
<PAGE>
Q: HOW WILL THE PROPOSED CONVERSION AFFECT MY ACCOUNT?
A: As your Fund's Board of Trustees we do not expect or intend to authorize a
conversion that would result in an increase in expenses, directly or indirectly,
for your Fund or its shareholders. Instead, as mentioned above, the proposed
conversion will contractually limit, and is expected to decrease, your Fund's
total expenses.
The proposed conversion will not affect the value of your account. In addition,
you will not need to take any action to enjoy the benefits of the proposed
conversion. You can expect the same level of management expertise and
high-quality shareholder service to which you've grown accustomed. We will not
approve conversion to a Feeder Fund unless a Master Fund with an identical
investment objective, substantially similar investment restrictions and the same
level of service as your Fund can be found. In addition, your Fund's current
Administrator, Frank Russell Investment Management Company, will continue to
supervise your Fund's operation and, in conjunction with us as your Fund's Board
of Trustees, monitor whether the Master Fund is adequately managing your Fund's
assets.
Q: WHY IS MY FUND SEEKING TO ADD A RIDER TO ITS INVESTMENT ADVISORY AGREEMENT?
A: In a master-feeder arrangement, all of the assets of the Feeder Funds are
managed jointly by the investment adviser of the Master Fund. Therefore, if your
Fund converts to a Feeder Fund it will not require the same services as
currently performed by its investment adviser. In order to maximize your Fund's
flexibility, we have negotiated a rider to the Fund's investment advisory
agreement that modifies the duties and fees of your Fund's current investment
adviser during any time in which your Fund has all of its investable assets
invested in a Master Fund. If your Fund does not become a Feeder Fund, or at any
time withdraws from the master-feeder arrangement, the rider dictates that the
duties and fees of your Fund's investment adviser will revert to their current
level.
Q: WILL MY VOTE MAKE A DIFFERENCE?
A: Your vote is needed to ensure that the proposals can be acted upon. Your
immediate response on the enclosed proxy card(s) will help save on the costs of
any further solicitations for a shareholder vote. We encourage all shareholders
to participate in the governance of their Fund.
Q: HOW DO THE TRUSTEES OF MY FUND SUGGEST THAT I VOTE?
A: After careful consideration, we unanimously recommend that you vote "FOR"
each of the items proposed on the enclosed proxy card(s).
Q: WHO IS PAYING FOR EXPENSES RELATED TO THE SHAREHOLDERS MEETING?
A: State Street Bank and Trust Company will pay for expenses relating to the
shareholder meeting.
Q: WHOM SHOULD I CALL IF I HAVE QUESTIONS?
A: Representatives of the Fund will be happy to answer your questions about the
proxy solicitation. Please call them at ________ (TDD users call _________)
between _:00 a.m. and _:00 p.m. Eastern time, Monday through Friday.
<PAGE>
Q: WHERE SHOULD I MAIL MY PROXY CARD(S)?
A: You may use the enclosed postage-paid envelope or mail your proxy card(s) to:
Proxy Tabulator
P.O. Box ______
_______________
<PAGE>
Schedule 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities and 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 Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
- --------------------------------------------------------------------------------
SSgA FUNDS
- --------------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box:)
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transactions 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 Rules 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(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:
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<PAGE>
SSgA FUNDS
Two International Place
Boston, Massachusetts 02110
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF THE SSgA S&P 500 INDEX FUND
To be held on April 4, 2000
------------------------------------------------------
To the Shareholders of the SSgA S&P 500 Index Fund:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of the SSgA S&P 500 Index Fund (the "Fund"), a series of SSgA Funds,
will be held at the offices of Frank Russell Investment Management Company, 909
A Street, Tacoma, Washington, on April 4, 2000, at 11:00 a.m. local time, to
consider the following proposals:
Conversion to a Feeder Fund
1. To approve adding a new fundamental investment policy modifying existing
fundamental investment policies and restrictions to allow the Fund to
convert to a Feeder Fund in the future.
2. To approve a rider to the investment advisory agreement with State Street
Bank and Trust Company applicable to the SSgA S&P 500 Index Fund.
Modernized Investment Restrictions
3. To approve the adoption of modernized fundamental investment restrictions
by amending or eliminating certain of the current fundamental investment
restrictions of the Fund.
Shareholders may also consider and act upon such other matters as may
properly come before the Meeting or any adjournments thereof. The proposals are
discussed in greater detail in the accompanying proxy statement.
The Board of Trustees has fixed the close of business on February 10, 2000
as the record date for the determination of the Shareholders of the Fund
entitled to notice of, and to vote at, such Meeting and any adjournment thereof.
By order of the Board of Trustees,
J. David Griswold
Vice President and Secretary
February 24, 2000
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It is important that your shares be represented at the meeting! Whether or not
you expect to be present at the meeting, please complete and sign the enclosed
proxy card and return it promptly in the enclosed envelope, which needs no
postage if mailed in the United States. If you desire to vote in person you may
revoke your proxy prior to the Meeting.
- --------------------------------------------------------------------------------
2
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- YOUR VOTE IS IMPORTANT -
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY SHAREHOLDER WHO
DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO INDICATE VOTING INSTRUCTIONS
ON THE ENCLOSED PROXY CARD, DATE AND SIGN IT, AND RETURN IT IN THE ENVELOPE
PROVIDED, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IN ORDER TO
AVOID UNNECESSARY EXPENSE, WE ASK YOUR COOPERATION IN MAILING YOUR PROXY CARD
PROMPTLY, NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
INSTRUCTIONS FOR EXECUTING THE PROXY CARD
The following general rules for executing proxy cards may be of assistance
to you and help avoid the time and expense involved in validating your vote if
you fail to execute your card properly.
1. Individual Accounts: Your name should be signed exactly as it
appears on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to one of the names shown on the
proxy card.
3. All other accounts: When signing as an attorney, executor,
administrator, trustee or guardian, please give your full title as
such.
3
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SSgA FUNDS
Two International Place
Boston, Massachusetts 02110
PROXY STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS OF
THE SSgA S&P 500 INDEX FUND
To Be Held on April 4, 2000
VOTING, REVOCATION AND SOLICITATION OF PROXIES
Special Meeting
This proxy statement is being furnished to the Shareholders of the SSgA S&P 500
Index Fund (the "Fund"), a series of SSgA Funds, a Massachusetts business trust
(the "Trust"), in connection with the solicitation of proxies by and on behalf
of the Trust's Board of Trustees for use at a Special Meeting of Shareholders of
the Fund (the "Meeting") to be held at the office of Frank Russell Investment
Management Company, 909 A Street, Tacoma, Washington 98402, on April 4, 2000, at
11:00 a.m., local time, and any adjournments thereof. This proxy statement is
first being mailed to Shareholders on or about February 24, 2000.
The Fund's annual report is not being provided with this proxy statement.
However, the Fund will furnish, without charge, a copy of the annual report and
the most recent semi-annual report to you upon request by calling Russell Fund
Distributors, Inc., the Fund's Distributor, at (800) 647-7327.
Record Date
The Board of Trustees of the Trust has fixed the close of business on February
10, 2000 as the record date (the "Record Date") for the determination of
Shareholders of the Fund entitled to notice of and to vote at the Meeting and
any adjournments thereof. Only holders of record of shares of the Fund at the
close of business on the Record Date are entitled to notice of, and to vote at,
the Meeting and at any adjournments thereof. At the close of business on the
Record Date, there were ____________ shares of the Fund issued and outstanding
and entitled to vote at the Meeting.
The holder of each full share of beneficial interest of the Fund outstanding as
of the close of business on the Record Date is entitled to one vote for each
share held of record upon each matter properly submitted to the Meeting or any
adjournments thereof for vote by Shareholders of the Fund, with a proportionate
vote for each fractional share.
Proxies
Shareholders of the Fund are requested to complete, date, sign and promptly
return in the enclosed envelope the accompanying form of proxy. If the enclosed
proxy is properly executed and returned in time to be voted at the Meeting, the
shares represented thereby will be voted in accordance with the instructions
marked on the proxy unless such proxy has previously been revoked. Unless
instructions to the contrary are marked on the proxy, the proxy will be voted
FOR the proposal described in this proxy statement and in the discretion of the
persons named as proxies in connection with any other matter that
4
<PAGE>
may properly come before the Meeting or any adjournments thereof. The Board of
Trustees does not know of any matter to be considered at the Meeting other than
the matters referred to in the Notice of Special Meeting accompanying this proxy
statement.
Any shareholder who has given a proxy has the right to revoke it at any time
prior to its exercise by attending the Meeting and voting his or her shares in
person or by submitting, prior to the date of the Meeting, a written notice of
revocation or a subsequently dated proxy to the following: SSgA S&P 500 Index
Fund, 909 A Street, Tacoma, Washington 98402, Attention: Legal Department.
In the event a quorum is not present at the Meeting or sufficient votes to
approve the proposal are not received, the persons named as proxies may propose
one or more adjournments of such Meeting to permit further solicitation of
proxies. A shareholder vote may be taken on any other matter to properly come
before the Meeting prior to such adjournment if sufficient votes to approve such
matters have been received and such vote is otherwise appropriate. Any
adjournment of the Meeting will require the affirmative vote of a majority of
those shares present at the Meeting or represented by proxy and voting.
Abstentions and broker "non-votes" (i.e., proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other person entitled to vote shares on a particular matter with
respect to which the brokers or nominees do not have discretionary power) will
be counted as shares that are present for purposes of determining the presence
of a quorum and will have the effect of a vote against the proposal set forth in
this proxy statement.
Solicitation of Proxies
In addition to the solicitation of proxies by mail, officers of the Trust,
officers and regular employees of State Street Bank and Trust Company ("State
Street" or the "Adviser"), the Fund's investment adviser, Frank Russell
Investment Management Company, the Fund's administrator, and Russell Fund
Distributors, Inc., the Fund's distributor, may also solicit proxies by
telephone or telegraph or in person. The Trust may also retain a proxy
solicitation firm to assist in the solicitation of proxies. The cost of
retaining such a firm would depend upon the amount and types of services
rendered. The costs of solicitation and expenses incurred in connection with
preparing this proxy statement and its enclosures, including any cost of
retaining a proxy solicitation firm, will be borne by State Street Bank and
Trust Company.
The following table summarizes the proposals to be considered at the
Meeting.
Proposal # Proposal Description
- ---------- --------------------
1. To approve adding a new fundamental investment policy modifying
existing fundamental investment policies and restrictions to allow
the Fund to convert to a Feeder Fund in the future.
2. To approve a rider to the investment advisory agreement with State
Street Bank and Trust Company applicable to the SSgA S&P 500 Fund.
3. To approve the adoption of modernized fundamental investment
restrictions by amending or eliminating certain of the current
fundamental investment restrictions of the Fund.
5
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PROPOSAL ONE
TO APPROVE ADDING A NEW FUNDAMENTAL INVESTMENT POLICY MODIFYING EXISTING
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS TO ALLOW THE FUND TO CONVERT TO
A FEEDER FUND IN THE FUTURE.
Your Fund's Trustees are asking Shareholders to approve an amendment to
the Fund's fundamental investment policies and restrictions in order to give the
Fund flexibility to pursue its investment objective through an investment
structure commonly known as a "master-feeder" arrangement (the "Master-Feeder
Arrangement"). In a Master-Feeder Arrangement, one or more funds or other
investment vehicles, each having substantially similar investment objectives,
policies and restrictions, invest all of their investable assets in another fund
also having substantially similar investment objectives, policies and
restrictions (the "Master Fund"). By "feeding" all of their investable assets
into the Master Fund, such funds become "Feeder Funds". If your Fund
participates in a Master-Feeder Arrangement, Shareholders in your Fund will
continue to hold their shares of the Fund, and the Fund will become a Feeder
Fund. The process by which your Fund would become a Feeder Fund is referred to
in this proposal as a "Conversion". The value of a shareholder's Shares in your
Fund would be the same immediately after Conversion as the value immediately
before Conversion.
The Master Fund in a Master-Feeder Arrangement pools the assets of all of
its Feeder Funds and invests these assets in pursuit of the investment
objective(s) common to the Master Fund and its Feeder Funds. Participation in a
Master-Feeder Arrangement therefore may result in a greater asset pool than your
Fund currently has, because of potential investment in the Master Fund by
collective investment vehicles with different distribution arrangements and with
Shareholders that may not have invested in your Fund. In this event, the
additional assets invested by such other collective investment vehicles may
allow operating expenses to be spread over a larger asset base, potentially
achieving economies of scale.
Approval of this proposal will constitute authorization of your Fund's
Trustees to effect a Conversion in the future and authorization of your Fund to
invest all of its investable assets (including the Fund's portfolio of
securities and loan interests and other assets) in a Master Fund pursuant to the
Conversion. Your Fund's Board of Trustees does not intend to effect any
Conversion in which (i) the Master Fund does not have substantially the same
investment management team, investment objective, investment policies and
restrictions as your Fund just prior to Conversion, (ii) the value of a
shareholder's investment in your Fund would not be the same immediately after
Conversion as it was immediately before Conversion or (iii) an increase in your
Fund's total expense ratio is expected as a result of Conversion.
There can be no assurance that Conversion to a Feeder Fund will be
effected or that use of a Master-Feeder Arrangement will attract additional
investors or achieve operating efficiencies.
MODIFICATION OF FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Certain of your Fund's existing fundamental investment restrictions, such
as those limiting investments by the Fund in a single issuer or in another
investment company, presently prevent your Fund from participating in a
Master-Feeder Arrangement. In order to provide your Fund with the flexibility to
participate in a Master-Feeder Arrangement, the Board of Trustees proposes to
modify your Fund's fundamental investment policies and restrictions by adding
the following new investment policy to the fundamental investment restrictions
of your Fund:
6
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"Notwithstanding the investment policies and restrictions of the Fund, the Fund
may invest all or part of its investable assets in a management investment
company with substantially the same investment objective, policies and
restrictions as the Fund."
This additional investment policy would also apply to any conflicting
non-fundamental investment policies or restrictions of your Fund.
THE MASTER-FEEDER ARRANGEMENT
Set forth below is a discussion of certain of the important matters that
would be applicable in the event of Conversion to a Feeder Fund.
The Master Fund is expected to be a no-load, open-end management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"). Interests in the Master Fund ("Interests") will be
offered privately on a continuous or periodic basis to different types of
collective investment entities such as mutual funds, commingled institutional
funds and, potentially, offshore investment funds. Interests in the Master Fund
are not expected to be available for purchase directly by members of the public.
The Master Fund will have substantially the same investment objective,
policies and restrictions as your Fund immediately prior to Conversion. The
Master Fund, like your Fund, will seek to replicate the total return of the
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500 Index"). There
can be no guarantee that the Master Fund will be able to attain this objective.
In a Master-Feeder Arrangement, all of the assets of the Feeder Funds are
managed jointly by the Master Fund's investment adviser. Therefore, if your Fund
becomes a Feeder Fund it will not require the services of a separate investment
adviser. In Proposal 2 of this Proxy, your Fund's Board of Trustees is asking
Shareholders of your Fund to approve a rider to the Fund's investment advisory
agreement that will eliminate the duties and fees of your Fund's current
investment adviser as long as your Fund remains a Feeder Fund. Similarly, many
of the services provided to your Fund by its current administrator would become
unnecessary in the event of Conversion, and it is likely that your Fund's
Trustees would negotiate a similar rider to the Fund's administration agreement
that will eliminate the requirement to provide services that have become
unnecessary and any fees corresponding to such services. Your Fund's Trustees do
not anticipate, nor do they intend to approve, any increase in the schedule of
advisory and administration fee rates directly or indirectly applicable to your
Fund as a result of Conversion to a Feeder Fund. Other entities that currently
perform services for your Fund likely will perform substantially the same
services after the Conversion for either your Fund or its Master Fund.
The Master Fund will have its own board of trustees (the "Master
Trustees"). Your Fund will continue to have its own Trustees, who will monitor
the Master Fund's performance and service to your Fund.
The Master Fund will value its assets at the same time, on the same days
and pursuant to the same method as your Fund values its assets at the time of
Conversion. After the Conversion, your Fund's net asset value will be determined
at the same time and on the same days that the net asset value of the Master
Fund is calculated.
It is expected that the Master Fund, like your Fund, normally will not
hold meetings of holders of Interests (the "Interest Holders") except as
required under the 1940 Act or its organizational documents.
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The approval of Interest Holders will be required in the event that the Master
Fund seeks to change any of its fundamental investment restrictions; however,
any change in non-fundamental investment policies will not require such
approval. The Master Trustees will continue to hold office until their
successors are elected and have qualified. Interest Holders entitled to vote on
the removal of a Master Trustee and holding at least a specified percentage
interest in the Master Fund will be entitled to call a meeting of Interest
Holders for the purpose of removing any Master Trustee. It is expected that a
Master Trustee may be removed upon a vote of Interest Holders representing
two-thirds of the Interests in the Master Fund qualified to vote in the
election. The 1940 Act requires the Master Fund to assist its Interest Holders
in calling such a meeting.
Each Interest Holder in the Master Fund will be entitled to a vote in
proportion to its share of the total Interests in the Master Fund. Except as
described below, whenever your Fund is asked to vote on matters pertaining to
the Master Fund, your Fund will hold a meeting of its Shareholders and cast its
votes as an Interest Holder proportionately as instructed by Fund Shareholders.
If there are other investors in the Master Fund, there can be no assurance that
any issue that receives a majority of the votes cast by your Fund's Shareholders
would receive a majority of votes cast by all the Interest Holders in the Master
Fund.
Subject to applicable statutory and regulatory requirements, your Fund
will not request a vote of its Shareholders with respect to (a) any proposal
relating to the Master Fund, which proposal, if made with respect to your Fund,
would not require the vote of the Shareholders of your Fund, or (b) any proposal
with respect to the Master Fund that is identical, in all material respects, to
a proposal that has previously been approved by Shareholders of your Fund. Any
proposal submitted to Interest Holders in the Master Fund that is not required
to be voted on by Shareholders of your Fund will be voted pursuant to the
discretion of the Trustees of your Fund.
Your Fund may withdraw its investment in a Master Fund at any time if your
Fund's Board of Trustees determines that it is in the best interest of the
Shareholders of your Fund to do so or if the investment policies or restrictions
of the Master Fund are changed so that they are inconsistent with the policies
and restrictions of your Fund. Upon any such withdrawal, your Fund would be
advised under the existing Advisory Agreement. The Trustees of your Fund could
elect to consider what action might be taken, including investing all of your
Fund's assets in another pooled investment entity that has substantially the
same investment objective as the Fund or retaining an investment adviser to
directly invest your Fund's assets in accordance with its investment objective
and policies.
Depending on the organizational structure adopted by the Master Fund, each
Interest Holder of the Master Fund, including your Fund, may be liable for all
obligations of the Master Fund. However, the risk of an Interest Holder in the
Master Fund incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance exists and the Master Fund
itself is unable to meet its obligations. In addition, your Fund's Board of
Trustees does not intend to effect a conversion unless Shareholders of your Fund
are protected from such liability by agreement with the Master Fund. Thus, the
risk that Shareholders of your Fund would experience losses on account of such
liability is very remote.
Following Conversion, the Master Fund and your Fund, as the case may be,
will each be responsible for all of its respective costs and expenses not
expressly stated to be payable by the Master Fund's investment adviser under the
Master Fund investment advisory agreement, by the administrator
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<PAGE>
under the Master Fund's or your Fund's administration agreement or by your
Fund's distributor under an offering agreement with your Fund. Such costs and
expenses to be borne by the Master Fund and your Fund, as the case may be, would
include, without limitation: direct charges relating to the purchase and sale of
financial instruments, interest charges, fees and expenses of legal counsel and
independent auditors, taxes and governmental fees, costs of Fund Share
certificates and Master Fund Interest certificates, expenses (including clerical
expenses) of issuance, sale or repurchase of any investment holdings, expenses
in connection with dividend reinvestment plans, membership fees in trade
associations, expenses of registering the Shares of your Fund for sale under
federal and state securities laws, expenses of printing and distributing
reports, notices and proxy materials to Shareholders and Interest Holders,
expenses of filing reports and other documents filed with governmental agencies,
expenses of annual and special meetings of Shareholders and Interest Holders,
fees and disbursements of the transfer agents, custodians and sub-custodians,
expenses of disbursing dividends and distributions, fees, expenses and
out-of-pocket costs of your Fund's Trustees and Master Trustees who are not
affiliated with your Fund's or Master Fund's investment adviser, insurance
premiums, indemnification expenses and any extraordinary expenses of a
non-recurring nature.
In the event of liquidation of the Master Fund, Interest Holders in the
Master Fund would be entitled to share pro rata in the net assets of the Master
Fund available for distribution to Interest Holders.
FEDERAL INCOME TAX CONSIDERATIONS
Your Fund or the Master Fund will receive a ruling from the Internal
Revenue Service and/or an opinion from an independent accounting firm, on or
prior to the date of the Conversion, generally to the effect that (i) your
Fund's contribution of its assets to the Master Fund in exchange for 100% of the
equity interests of the Master Fund will be disregarded for federal income tax
purposes and thus will not result in the recognition of gain or loss by either
your Fund or the Master Fund for federal income tax purposes and (ii) at the
time a second fund contributes cash or a diversified (within the meaning of
applicable tax rules) portfolio of assets to the Master Fund (the "Second
Conversion") in exchange for an equity interest in the Master Fund (i.e., the
Master Fund ceases to be wholly owned by your Fund), your Fund will be treated,
for federal income tax purposes, as if it made a contribution to the Master Fund
of the assets held by the Master Fund immediately prior to the Second Conversion
in exchange for an equity interest in the Master Fund, which will not result in
the recognition of gain or loss by your Fund or the Master Fund pursuant to
Section 721 of the Internal Revenue Code of 1986, as amended (the "Code"), and
related authorities. A legal opinion is not binding on the Internal Revenue
Service or any court. If it were determined that the transaction described above
was taxable, your Fund would recognize gain in an amount equal to the
appreciation in the transferred assets (undiminished by losses) as of the date
of the deemed transfer. In such event, your Fund would be required to make a
distribution in order to avoid federal income and excise taxes or to preserve
its qualification as a regulated investment company under the Code.
Your Fund's status as a regulated investment company under the Code would
not be affected by its participation in a Master-Feeder Arrangement. As a
regulated investment company under the Code, your Fund does not pay federal
income or excise taxes to the extent that it distributes to Shareholders its net
investment income and net capital gains in accordance with the timing
requirements imposed by the Code. The Master Fund is expected not to be required
to pay any federal income or excise taxes in respect of its income or gains.
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DELIBERATIONS OF THE BOARD OF TRUSTEES
At its regular meeting held on November 3, 1999, your Fund's Board of
Trustees considered a proposal from the Adviser to seek to obtain from
Shareholders of the Fund approval for your Fund to convert in the future to a
Feeder Fund. The Board requested further information and considered the matter
in several subsequent telephonic meetings. The Board approved the proposal at
its regular meeting held on January 18, 2000. Management of the Adviser stated
that it believes a Master-Feeder Arrangement would be beneficial to the Fund for
several reasons. Specifically, the Adviser indicated that a Master-Feeder
Arrangement could potentially attract more assets than your Fund is able to
attract, by permitting collective investment vehicles having different
distribution arrangements and investors to invest in the Master Fund together
with your Fund. The Board of Trustees considered the possibility that such
additional assets may, over time, permit your Fund to achieve a variety of
operating economies that may benefit the Fund and the Fund's current and future
Shareholders. In general, to the extent that certain operating costs are
relatively fixed and currently are borne by your Fund alone, these expenses
would instead be borne in whole or in part by the Master Fund and shared by your
Fund's Shareholders with the shareholders of any other Feeder Funds of such
Master Fund. There can be no assurance that such expense savings and other
benefits would be realized in the event of Conversion.
In addition, the Board considered the immediate and long-term potential
savings to your Fund and its Shareholders that could be realized in the event of
Conversion to a Feeder Fund. Since inception of the Fund, the Adviser has
voluntarily waived all or most of its advisory fee in order to maintain a total
expense ratio of 0.18% for the Fund. Because the waiver is voluntary, however,
there can be no guarantee that the Adviser will continue to do so. Under its
current structure, your Fund will not be able to achieve a total expense ratio
of less than 0.18% unless the Fund's assets grow to more than $6 billion, which
is double their current level. If the Adviser discontinues the voluntary waiver,
therefore, there is a possibility that the total expense ratio of your Fund will
increase. On the other hand, if your Fund converts to a Feeder Fund, it is
expected that the Master Fund will utilize a fee structure that establishes
0.18% as the total allowable expense ratio for a period of at least three years,
and it also is expected that some of the expenses your Fund bears as a Feeder
Fund will be lower than the expenses the Fund currently bears. Thus, in a
Master-Feeder Arrangement, your Fund's total expense ratio is expected to
decrease immediately to 0.179% without requiring a fee waiver. As assets in your
Fund grow, the total expense ratio for the Fund is expected to continue
decreasing, so that an asset level of $6 billion in the Fund as a Feeder could
result in total expenses as low as 0.167%. (In your Fund's current structure,
total expenses borne by the Fund at an asset level of $6 billion likely would be
0.18%.) The Board therefore considered the possibility that if your Fund
converts to a Feeder Fund, the Fund's total expense ratio would be expected to
decrease immediately and continue to decrease as assets in the Fund grow, and in
any event the total expenses would be contractually limited to 0.18% for a
period of at least three years. Although there can be no guarantee that your
Fund's total expenses would decrease, Conversion to a Feeder Fund would make
such a decrease more likely and it would eliminate the possibility that your
Fund's expenses will increase in the near future.
The Board of Trustees also considered corporate governance issues
associated with Conversion to a Feeder Fund. The Adviser stated its belief that
your Fund will retain its current Board of Trustees after Conversion to a Feeder
Fund. Your Fund's Board of Trustees does not intend to effect any Conversion
unless (i) the Master Fund has substantially the same investment management
team, investment objective, investment policies and restrictions as your Fund
just prior to Conversion, (ii) the value of a shareholder's investment in your
Fund will be the same immediately after the Conversion as it is immediately
before Conversion and (iii) no increase in your Fund's expense ratio is expected
as a result of Conversion.
The Board of Trustees considered the expenses associated with Conversion
to a Feeder Fund, which expenses would include, among other things, solicitation
expenses associated with seeking
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Shareholder approval of the Conversion. The Board of Trustees concluded that it
would be in the best interests of the Fund and the Fund's Shareholders to seek
Shareholder approval of the Conversion at this time in order to minimize the
costs associated with the Conversion. The costs of solicitation and expenses
incurred in connection with preparing this proxy statement and its enclosures,
including any cost of retaining a proxy solicitation firm, will be borne by
State Street Bank and Trust Company.
Based on their consideration, analysis and evaluation of the above factors
and other information deemed by them to be relevant to this proposal, your
Fund's Board of Trustees has unanimously concluded that it would be in the best
interests of your Fund and its Shareholders to approve a new fundamental
investment policy modifying the Fund's existing fundamental investment policies
and restrictions to provide the Fund with the flexibility to convert to a Feeder
Fund in the future.
In the event that Shareholders of your Fund do not approve this Proposal
1, the Fund will continue to operate as a separate entity and to manage the
Fund's assets in accordance with the Fund's existing fundamental investment
policies and restrictions.
SHAREHOLDER APPROVAL
To become effective, the Fund's new fundamental investment policy
modifying its existing fundamental investment policies and restrictions must be
approved by the "vote of a majority of the outstanding voting securities", which
is defined under the 1940 Act as the lesser of the vote of (i) 67% or more of
the Shares of the Fund entitled to vote thereon present at the Meeting if the
holders of more than 50% of such outstanding shares of the Fund are present in
person or represented by proxy; or (ii) more than 50% of the outstanding Shares
of the Fund entitled to vote thereon. The Board of Trustees unanimously
determined to submit the Fund's new fundamental investment policy and any
corresponding Conversion to a Feeder Fund in the future for consideration by the
Shareholders of the Fund. THE BOARD OF TRUSTEES OF THE FUND RECOMMENDS A VOTE
"FOR" APPROVAL OF A NEW FUNDAMENTAL INVESTMENT POLICY MODIFYING THE FUND'S
EXISTING FUNDAMENTAL INVESTMENT POLICIES TO ALLOW YOUR FUND TO CONVERT TO A
FEEDER FUND IN THE FUTURE.
PROPOSAL TWO
TO APPROVE A RIDER TO THE INVESTMENT ADVISORY AGREEMENT WITH STATE STREET BANK
AND TRUST COMPANY APPLICABLE TO THE SSgA S&P 500 INDEX FUND.
This Proposal 2 would approve a rider to the investment advisory agreement
for the Fund (the "Rider") in the event that Shareholders approve a Conversion
to a Feeder Fund. The Rider changes the responsibilities and fees of your Fund's
Adviser as long as your Fund participates in a Master-Feeder Arrangement, while
providing that the responsibilities and corresponding fees of the Adviser will
revert to those in effect at the time of Conversion in the event that your Fund
no longer participates in a Master-Feeder Arrangement.
The current investment advisory agreement and the proposed Rider are
attached as Exhibits A and B, respectively, to this Proxy.
THE CURRENT INVESTMENT ADVISORY AGREEMENT
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The current investment advisory agreement was approved by the Board of
Trustees and the sole shareholder at the organizational meeting of the SSgA
Funds on March 3, 1988, and was executed and became effective on April 12, 1988.
The Agreement remained in effect by its own terms for two years thereafter and
now requires annual approval for its continuance. Since the beginning of the
last fiscal year, the only Board action taken with respect to the investment
advisory agreement aside from its annual approval is the addition of a new Fund
of the Trust to the terms of the agreement.
Under the current investment advisory agreement, State Street Bank and
Trust Company ("State Street") acts as the Adviser to the funds of the Trust,
including your Fund. State Street's duties as Adviser include the following:
providing supervision of investments; furnishing a continuous investment program
for the funds of the Trust; determining from time to time what investments or
securities will be purchased, retained or sold by the funds of the Trust, and
what portion of the assets will be invested or held uninvested as cash; and
maintaining the books and records with respect to the securities transactions of
the funds of the Trust.
For its services as Adviser to the funds of the Trust, State Street
receives an annual advisory fee, accrued daily and payable monthly on the first
day of each month by each such fund, at the rate of 1/365th of a percentage of
the relevant fund's average daily net assets. The advisory fee rate with respect
to your Fund is currently 0.03%. The advisory fee rate from the date of your
Fund's inception through December 15, 1999, was 0.10%. For the twelve months
ended August 31, 1999, this advisory fee totaled $2,371,531.47. Since 1994,
however, the Adviser has voluntarily agreed to waive up to the full amount of
its advisory fee for your Fund to the extent that total expenses exceed 0.18% of
average daily net assets. Therefore, of the $2,371,531.47 advisory fee, a total
of $14,070.38 was paid by your Fund to the Adviser during the twelve months
ended August 31, 1999.
If the proposed rider had been in effect during the last fiscal year, the
Adviser would have received the same advisory fee, because the Fund did not
participate in a Master-Feeder Arrangement during the last fiscal year. If the
proposed rider had been in effect during the last fiscal year and the Fund had
participated in a Master-Feeder Arrangement for the entire twelve months, the
advisory fee would have been $0.00.
THE RIDER
The Board of Trustees approved the Rider, subject to Shareholder approval,
on January 18, 2000. The Rider has not been executed and is not currently in
effect. The Rider amends the terms of the current investment advisory agreement
in the following limited ways:
o If the Fund converts to a Feeder Fund, then as long as the
Master-Feeder Arrangement is maintained, the Rider provides that the
Adviser shall have the duty to monitor the services of the Master
Fund to determine if an investment in the Master Fund remains
appropriate, and the Adviser will receive no advisory fee.
o In the event that the Fund no longer participates in a Master-Feeder
Arrangement, the Adviser will be obligated to perform advisory
duties under the investment advisory agreement, and the Adviser will
therefore receive an advisory fee at its current rate of 0.03% of
average net assets of the Fund.
The advisory fee the Adviser will receive under the Rider if the Fund does not
participate in a Master-Feeder Arrangement is identical to the advisory fee the
Adviser currently receives.
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THE ADVISER
State Street Bank and Trust Company ("State Street"), through its State
Street Global Advisors division, serves as Adviser to your Fund and is
responsible for the investment management of the Fund. As of June 30, 1999, the
Adviser managed approximately $574 billion in assets.
State Street Bank and Trust Company is a wholly owned subsidiary of State
Street Boston Corporation, a publicly held bank holding company.
The following is a list of the directors and principal officers of State
Street Boston Corporation, and each director or officer's principal occupation.
Marshall N. Carter is Chairman of the Board and Chief Executive Officer of State
Street Corporation; his principal occupation is serving as a senior executive
officer of State Street Corporation. David A. Spina is President, Chief
Operating Officer and Director of State Street Corporation; his principal
occupation is serving as a senior executive officer of State Street Corporation.
Alfred Poe is a director of State Street Corporation; his principal occupation
is serving as Chief Executive Officer of MenuDirect Corporation. Tenley E.
Albright, M.D. is a director of State Street Corporation; his principal
occupation is serving as a physician and surgeon. Nader F. Darehshori is a
director of State Street Corporation; his principal occupation is serving as
Chairman of the Board, President and Chief Executive Officer of Houghton Mifflin
Company. Charles R. LaMantia is a director of State Street Corporation; his
principal occupation is serving as Chairman and Chief Executive Officer of
Arthur D. Little, Inc. I. MacAllister Booth is a director of State Street
Corporation; his principal occupation is serving as a director of State Street
Corporation. James I. Cash is a director of State Street Corporation; his
principal occupation is serving as the James E. Robison Professor of Business
Administration at Harvard University. Arthur L. Goldstein is a director of State
Street Corporation; his principal occupation is serving as Chairman and Chief
Executive Officer of Ionics, Incorporated. Dennis J. Picard is a director of
State Street Corporation; his principal occupation is serving as Chairman of
Raytheon Company. Bernard W. Reznicek is a director of State Street Corporation;
his principal occupation is serving as President, Premier Group, a construction
company, and National Director, Utility Marketing of Central States Indemnity
Co. of Omaha. David B. Perini is a director of State Street Corporation; his
principal occupation is serving as Chairman and Director of Perini Corporation.
Robert E. Weissman is a director of State Street Corporation; his principal
occupation is serving as Chairman, Chief Executive Officer and Director of IMS
Health Incorporated. Truman S. Casner is a director of State Street Corporation;
his principal occupation is serving as a partner in the law firm of Ropes &
Gray. John M. Kucharski is a director of State Street Corporation; his principal
occupation is serving as Chairman of the Board of EG&G, Inc. David P. Gruber is
a director of State Street Corporation; his principal occupation is serving as
Chairman, Chief Executive Officer and Director of Wyman-Gordon Company. Diana
Chapman Walsh is a director of State Street Corporation; her principal
occupation is serving as President of Wellesley College. Nicholas A. Lopardo is
Chairman and Chief Executive Officer of State Street Global Advisors and Vice
Chairman of State Street Bank and Trust Company; his principal occupation is
serving as a senior executive officer of State Street Global Advisors. Timothy
B. Harbert is President of State Street Global Advisors; his principal
occupation is serving as a senior executive officer of State Street Global
Advisors. The address for each of the above officers and directors of is c/o
State Street Boston Corporation, 225 Franklin Street, Boston, Massachusetts
02110.
DELIBERATIONS OF THE BOARD OF TRUSTEES
At its regular meeting held on January 18, 2000, the Board of Trustees
considered a proposal from the Adviser to seek to obtain from Shareholders of
the Fund approval to convert in the future to a
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Feeder Fund, as described in Proposal 1 of this Proxy. Management of the Adviser
explained that in a Master-Feeder Arrangement assets of all Feeder Funds of a
given Master Fund are managed jointly by the Master Fund's investment adviser.
Therefore, the Board of Trustees determined that during any time in which your
Fund participates in a Master-Feeder Arrangement, the Fund would not require the
services of a separate investment adviser.
The Board of Trustees considered the elimination of the Fund's current
investment advisory agreement in the event of conversion to a Feeder Fund.
However, the Trustees expressed a desire for the Fund to retain the ability to
revert to its current arrangement at any time without substantial delay.
Therefore, the Trustees determined that a rider to the investment advisory
agreement should be drafted to eliminate the responsibilities and fees of the
Adviser as long as the Fund retains a Master-Feeder Arrangement, while retaining
the current responsibilities and fees in the event of a reversion to the Fund's
current arrangement. Under the proposed rider, there will be no increase in the
schedule of advisory fees directly or indirectly applicable to your Fund.
Instead, the fees charged by the Adviser to your Fund would be 0.00% as long as
the Fund remains a Feeder Fund. In the case of reversion to its current
arrangement, your Fund's Adviser would receive its current rate of 0.03% of
assets under management.
In the event that Shareholders of your Fund do not approve this Proposal
2, the Fund will retain its current investment advisory agreement, whether or
not the Fund converts to a Feeder Fund.
SHAREHOLDER APPROVAL
To become effective, the rider to the Fund's investment advisory agreement
must be approved by the "vote of a majority of the outstanding voting
securities," which is defined under the 1940 Act as the lesser of the vote of
(i) 67% or more of the Shares of the Fund entitled to vote thereon present at
the Meeting if the holders of more than 50% of such outstanding shares of the
Fund are present in person or represented by proxy; or (ii) more than 50% of the
outstanding Shares of the Fund entitled to vote thereon. The Board of Trustees
unanimously determined to submit the rider to the Fund's investment advisory
agreement for consideration by the Shareholders of the Fund. THE BOARD OF
TRUSTEES OF THE FUND RECOMMENDS A VOTE "FOR" APPROVAL OF A RIDER TO THE
INVESTMENT ADVISORY AGREEMENT APPLICABLE TO THE SSgA S&P 500 INDEX FUND.
PROPOSAL THREE
TO APPROVE THE ADOPTION OF MODERNIZED FUNDAMENTAL INVESTMENT RESTRICTIONS BY
AMENDING OR ELIMINATING CERTAIN OF THE CURRENT FUNDAMENTAL INVESTMENT
RESTRICTIONS OF THE FUND.
The Fund's Trustees are asking Shareholders to adopt modernized
fundamental investment restrictions by amending or eliminating certain current
fundamental investment restrictions of the Fund. The proposed changes to the
Fund's fundamental investment restrictions are based on recommendations prepared
by the Adviser, which were reviewed and approved by the Board of Trustees,
subject to Shareholder approval, at a meeting of the Board held on January 18,
2000.
In October 1996, Congress enacted the National Securities Markets
Improvement Act of 1996 ("NSMIA") to promote efficiency and capital formation in
the financial markets. Among its provisions, NSMIA preempted states from
regulating the offering of securities and registered investment companies, such
as the Fund. In practical effect, NSMIA nullified a body of differing state
securities laws applicable
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to the operational and investment requirements that had historically been
imposed on investment companies by some states.
As a result of the enactment of NSMIA, certain of the fundamental and
non-fundamental investment policies and restrictions adopted in the past by the
Fund to comply with state qualification requirements were rendered no longer
necessary. At the Board meeting held on January 18, 2000, the Adviser
recommended that the Trustees approve, subject to Shareholder approval, the
amendment or elimination of certain of the Fund's fundamental investment
policies and restrictions, which appear in the Fund's Statement of Additional
Information and are attached as Exhibit C to this Proxy. (The Trustees were also
asked to approve the amendment or elimination of certain of the Fund's
non-fundamental investment policies and restrictions, for the same reason.
Changes to a fund's non-fundamental policies and restrictions typically are not
subject to Shareholder approval and are therefore not included in this
Proposal.) The existing fundamental restrictions of the Fund that are proposed
to be amended or eliminated are substantially as follows:
o The Fund will not borrow money (including reverse repurchase
agreements), except as a temporary measure for extraordinary or
emergency purposes or to facilitate redemptions (not for leveraging
or investment), provided that borrowings do not exceed an amount
equal to 33-1/3% of the current value of the Fund's assets taken at
market value, less liabilities other than borrowings. If at any time
a Fund's borrowings exceed this limitation due to a decline in net
assets, such borrowings will within three days be reduced to the
extent necessary to comply with this limitation. A Fund will not
purchase investments once borrowed funds (including reverse
repurchase agreements) exceed 5% of its total assets.
o The Fund will not pledge, mortgage or hypothecate its assets.
However, a Fund may pledge securities having a market value at the
time of the pledge not exceeding 33-1/3% of the value of the Fund's
total assets to secure borrowings permitted by paragraph (2) above.
o With respect to 75% of its total assets, the Fund will not invest in
securities of any one issuer (other than securities issued by the US
Government, its agencies, and instrumentalities), if immediately
after and as a result of such investment the current market value of
the Fund's holdings in the securities of such issuer exceeds 5% of
the value of the Fund's assets.
o The Fund will not purchase or sell puts, calls or invest in
straddles, spreads or any combination thereof, if as a result of
such purchase the value of the Fund's aggregate investment in such
securities would exceed 5% of the Fund's total assets.
o The Fund will not make short sales of securities or purchase any
securities on margin, except for such short-term credits as are
necessary for the clearance of transactions. The Fund may make
initial margin deposits and variation margin payments in connection
with transactions in futures contracts and related options.
The Trustees of your Fund believe that the fundamental restrictions
identified above limit the Fund's Adviser without a commensurate reduction in
the risk for the Fund, and hence, benefit neither the Fund nor its Shareholders.
The Trustees therefore believe that the ability of the Fund's Adviser to manage
the Fund in a changing regulatory or investment environment will be enhanced by
approval of the proposed standardization of these restrictions. In addition, the
Trustees believe that approval of the proposed standardization of these
restrictions at this time will reduce the need for future Shareholder meetings,
thereby reducing the Fund's ongoing costs of operation.
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It is not anticipated that any of the changes to these fundamental
restrictions will substantially affect the way the Fund is currently managed.
These proposals are being presented to Shareholders for approval because it is
believed that modernization will help to promote operational efficiencies and
facilitate monitoring of compliance with the restrictions by making it easier to
monitor the Fund's investments. Because the proposed modernized fundamental
restrictions in general are phrased relatively more broadly than the Fund's
current fundamental restrictions, the Fund and the investment adviser are
expected to be able to respond more expeditiously to market, industry or
regulatory developments. Set forth below, as sub-sections of this Proposal, are
general descriptions of each of the proposed changes. You will be given the
option to approve all, some, or none of the proposed changes on the proxy card
enclosed with this Proxy Statement.
Each proposed amendment and/or elimination is listed below as a sub-part
of this Proposal 3. In addition, a list of the proposed investment restrictions
of the Fund, marked to show changes from the current investment restrictions of
the Fund, is set forth in Exhibit D.
If approved by Shareholders, the revised fundamental investment
restrictions described in Proposals 3A through 3E will remain fundamental and,
as such, cannot be changed without a further Shareholder vote. If the proposed
modernized fundamental investment restrictions are not approved by Shareholders,
the current restrictions will remain in place and Shareholder approval (and its
attendant costs and delays) will still be required prior to any future changes
in the restrictions.
PROPOSAL 3A: TO AMEND THE FUNDAMENTAL RESTRICTION CONCERNING BORROWING
The Fund's current fundamental restriction concerning borrowing prohibits
the Fund from borrowing money or securities, except that the Fund may borrow up
to 33-1/3% of the Fund's total assets in an emergency.
In general, under the 1940 Act, a fund may (i) borrow from banks (as
defined in the 1940 Act) or enter into reverse repurchase agreements, in amounts
up to 33-1/3% of its total assets (including the amount borrowed), (ii) borrow
up to an additional 5% of its total assets for temporary purposes, and (iii)
obtain such short-term credit as may be necessary for the clearance of purchases
and sales of portfolio securities.
It is proposed that shareholders approve replacing the Fund's current
fundamental investment restriction regarding borrowing with the following
restriction:
[The Fund may not] Borrow more than 33 1/3% of the value of its total
assets less all liabilities and indebtedness (other than such borrowings).
The primary purpose of the proposed change to the fundamental investment
restriction concerning borrowing is to modernize the restriction.
Adoption of the proposed restriction is not currently expected to
materially affect the operations of the Fund. The Fund's current restriction
restricts borrowing to emergency purposes, while borrowing up to a certain
percentage in ordinary circumstances is permitted under the 1940 Act. The
proposed restriction therefore would allow the Fund to purchase a security while
borrowings representing up to 33-1/3% of total assets are outstanding. While the
Fund has no current intention to use this strategy, the flexibility to do so may
be beneficial to the Fund at a future date.
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PROPOSAL 3B: TO ELIMINATE THE FUNDAMENTAL RESTRICTION CONCERNING
PLEDGING, MORTGAGING OR HYPOTHECATING ASSETS
The Fund's current fundamental investment restriction concerning pledging,
mortgaging or hypothecating assets prohibits the Fund from pledging, mortgaging
or hypothecating its assets, except that the Fund may pledge securities having a
market value at the time of the pledge up to 33-1/3% of the Fund's total assets
in order to secure allowable borrowings.
In general, under the 1940 Act, a fund may pledge, mortgage or hypothecate
its assets. Therefore, it is proposed that shareholders approve the elimination
of this fundamental investment restriction.
Elimination of this restriction is not currently expected to materially
affect the operations of the Fund. The Fund's current restriction restricts
pledging, mortgaging or hypothecating assets to securing borrowings in limited
amounts, while pledging, mortgaging and hypothecating assets ordinarily is
permitted under the 1940 Act. Eliminating the restriction therefore would allow
the Fund to pledge, mortgage or hypothecate its assets in circumstances other
than securing borrowings. While the Fund has no current intention to use such
strategies, the flexibility to do so may be beneficial to the Fund at a future
date.
PROPOSAL 3C: TO AMEND THE FUNDAMENTAL RESTRICTION CONCERNING DIVERSIFICATION
The Fund's current fundamental investment restriction concerning
diversification states that with respect to 75% of its total assets, the Fund
will not invest in securities of any one issuer if as a result of such
investment the Fund's holdings in the securities of such issuer exceeds 5% of
the value of the Fund's assets.
In general, under the 1940 Act, with respect to 75% of its total assets, a
fund may not invest in the securities of any one issuer, if immediately after
and as a result of such investment the value of the Fund's holdings in the
securities of such issuer exceeds 5% of the value of the Fund's assets or the
Fund holds more than 10% of the voting securities of the issuer.
It is proposed that shareholders approve replacing the Fund's current
fundamental investment restriction regarding diversification with the following
restriction:
[The Fund may not] With respect to 75% of its total assets, invest in
securities of any one issuer (other than securities issued by the U.S.
Government, its agencies and other instrumentalities), if immediately after
and as a result of such investment (i) the current market value of the
Fund's holdings in the securities of such issuer exceeds 5% of the value of
the Fund's assets or (ii) the Fund holds more than 10% of the voting
securities of the issuer.
The primary purpose of the proposed change to the fundamental investment
restriction concerning diversification is to modernize the restriction.
Adoption of the proposed restriction is not currently expected to
materially affect the operations of the Fund. The Fund's current restriction
restricts investment in securities of any one issuer when the investment would
result in the Fund's holdings of that issuer exceeding 5% of the Fund's assets.
The proposed restriction would additionally restrict investment in securities of
any one issuer when the investment would result in the Fund's holdings of that
issuer exceeding 10% of the issuer's voting securities. While the Fund has no
current intention to invest in any issuer so that the Fund's holdings
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exceed 10% of the voting securities of the issuer, the proposed restriction
brings the Fund into conformity with the 1940 Act requirements.
PROPOSAL 3D: TO ELIMINATE THE FUNDAMENTAL INVESTMENT RESTRICTION
CONCERNING PUTS, CALLS, STRADDLES AND SPREADS
The Fund's current fundamental investment restriction concerning puts,
calls, straddles and spreads prohibits the Fund from engaging in such strategies
if as a result of such transaction the value of the Fund's aggregate investment
in such securities exceeds 5% of the Fund's total assets.
In general, under the 1940 Act, a fund may purchase and sell puts, calls,
straddles and spreads. Therefore, it is proposed that shareholders approve the
elimination of the Fund's current fundamental investment restriction regarding
puts, calls, straddles and spreads.
The primary purpose of the proposed change to the fundamental investment
restriction concerning borrowing is to modernize the restriction.
Adoption of the proposed restriction is not currently expected to
materially affect the operations of the Fund. The Fund's current restriction
restricts the purchase and sale of puts, calls, straddles and spreads to 5% of
the Fund's total assets, while puts, calls, straddles and spreads are permitted
in ordinary circumstances under the 1940 Act. The elimination of the restriction
therefore would allow the Fund to purchase and sell puts, calls, straddles and
spreads at a higher percentage. While the Fund has no current intention to use
such strategies, the flexibility to do so may be beneficial to the Fund at a
future date.
PROPOSAL 3E: TO ELIMINATE THE FUNDAMENTAL INVESTMENT RESTRICTION
CONCERNING SHORT SALES
The Fund's current fundamental restriction concerning short sales
prohibits the Fund from making short sales or purchase any securities on margin
except for such short-term credits as are necessary for the clearance of
transactions.
In general, under the 1940 Act, a fund may make short sales or purchase
securities on margin. Therefore, it is proposed that shareholders approve the
elimination of the Fund's current fundamental restriction regarding short sales.
The primary purpose of the proposed change to the fundamental restriction
concerning borrowing is to modernize the restriction.
Elimination of the current restriction is not currently expected to
materially affect the operations of the Fund. The Fund's current restriction
restricts the use of short sales to short-term credits that are necessary for
the clearance of transactions, while the use of short sales is permitted in
ordinary circumstances under the 1940 Act. The elimination of the restriction
therefore would allow the Fund to make short sales and purchase on margin if
necessary. While the Fund has no current intention to use such strategies, the
flexibility to do so may be beneficial to the Fund at a future date.
DELIBERATIONS OF THE BOARD OF TRUSTEES
At its regular meeting held on January 18, 2000, the Board of Trustees
considered a proposal from the Adviser to seek to obtain from Shareholders of
the Fund approval to modernize the Fund's fundamental
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investment restrictions by amending or eliminating certain of the current
fundamental investment restrictions of the Fund. Management of the Adviser
stated that some of the Fund's fundamental investment restrictions were adopted
in the past as a result of now-rescinded regulatory requirements and are no
longer necessary to comply with current regulations. The Trustees concluded that
such restrictions are unnecessary because the provisions of the 1940 Act or
federal tax law, together with the disclosure requirements of the federal
securities laws, provide adequate safeguards for the Fund and its Shareholders.
The Trustees considered the Adviser's statement that certain of the Fund's
current fundamental investment restrictions were adopted in the past as a result
of now-rescinded regulatory requirements in light of the National Securities
Market Improvement Act of 1996 ("NSMIA"), which created a national system for
the regulation of mutual funds by pre-empting state blue sky laws. Under the
terms of NSMIA, states are now prohibited from substantively regulating the
investment restrictions and policies of mutual funds. (However, the states
retain authority to require notice filings, collect fees and enforce laws
relating to fraudulent and deceptive acts and practices.)
The Trustees noted that since the passage of NSMIA, it has become very
common for mutual funds conducting a Shareholder vote to include a proposal to
modernize their fundamental investment restrictions to eliminate requirements
that originated in state blue-sky laws. Currently, the Fund is subject to
several such restrictions. Since the Fund is no longer required to comply with
restrictions and policies imposed by state regulators, the Trustees determined
that it would be in the best interest of the Fund and the Fund's Shareholders to
propose the modernization of the Fund's fundamental investment restrictions.
Management of the Adviser also stated that it is common for funds that
wish to remove such unnecessary restrictions to include a proposal for their
removal at such time as the Shareholders already have a vote before them. This
practice minimizes the costs associated with the preparation and solicitation of
a separate proxy, by adding the proposals to a proxy that is already being
submitted to Shareholders. Therefore, the Trustees concluded that it would be in
the best interests of the Fund and the Fund's Shareholders to seek Shareholder
approval of the modernized investment restrictions at this time.
The Trustees believe that the ability of the Fund's Adviser to manage the
Fund in a changing regulatory or investment environment will be enhanced by
approval of these proposals. In addition, the Trustees believe that approval of
these proposals will reduce the need for future Shareholder meetings, thereby
reducing the Fund's ongoing costs of operation. Furthermore, it is anticipated
that increased standardization will help to promote operational efficiencies and
facilitate monitoring of compliance with fundamental and non-fundamental
investment restrictions.
In the event that Shareholders of the Fund do not approve any of these
proposals 3A through 3E, the corresponding fundamental investment restriction(s)
will remain in effect.
SHAREHOLDER APPROVAL
To become effective, the Fund's modernized fundamental investment
restrictions must be approved by the "vote of a majority of the outstanding
voting securities," which is defined under the 1940 Act as the lesser of the
vote of (i) 67% or more of the Shares of the Fund entitled to vote thereon
present at the Meeting if the holders of more than 50% of such outstanding
shares of the Fund are present in person or represented by proxy; or (ii) more
than 50% of the outstanding Shares of the Fund entitled to vote thereon. The
Board of Trustees unanimously determined to submit the Fund's modernized
fundamental investment restrictions for consideration by the Shareholders of the
Fund. THE BOARD OF TRUSTEES OF THE FUND RECOMMENDS A VOTE "FOR" THE ADOPTION OF
MODERNIZED
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<PAGE>
FUNDAMENTAL INVESTMENT RESTRICTIONS BY AMENDING OR ELIMINATING CERTAIN OF THE
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUND.
OTHER INFORMATION
As of February 10, 2000, the officers and Trustees of the Trust as a group
beneficially owned less than 1% of the shares of the Fund outstanding on such
date. As of February 10, 2000, the following shareholders were known to the
Trust to be the beneficial owners of more than five percent of the issued and
outstanding shares of the Fund:
Name and Address Number of Percent of
---------------- --------- ----------
of Beneficial Owner Shares Fund
------------------- ------ ----
To the knowledge of the Trust, no other shareholder owned of record or
beneficially more than 5% of the outstanding shares of the Fund on February 10,
2000.
Frank Russell Investment Management Company, located at 909 A Street,
Tacoma, Washington 98402, acts as the Fund's Administrator. Russell Fund
Distributors, Inc., located at One International Place, 27th Floor, Boston,
Massachusetts 02110, acts as the Fund's Distributor.
NO ANNUAL MEETINGS OF SHAREHOLDERS
Under the Trust's First Amended and Restated Master Trust Agreement, as
amended (the "Trust Agreement"), no annual or special meetings of Shareholders
are required. Therefore, there will ordinarily be no meetings of Shareholders of
the Fund unless required by the 1940 Act. Shareholders wishing to submit
proposals for inclusion in a proxy statement for a subsequent shareholder
meeting should send their written proposals to the Secretary of the Trust, 909 A
Street, Tacoma, Washington 98402. Shareholder proposals should be received in a
reasonable time before the solicitation is made.
Under the Trust Agreement, any Trustee may be removed with or without
cause at any time: (i) by written instrument signed by at least two-thirds of
the number of Trustees in office immediately prior to such removal, specifying
the date upon which such removal shall become effective; (ii) by vote of
Shareholders holding not less than two-thirds of the shares then outstanding,
cast in person or by proxy at any meeting called for the purpose; or (iii) by a
written declaration signed by Shareholders holding not less than two-thirds of
the shares then outstanding, filed with the Trust's custodian. Holders of 10% or
more of the outstanding shares of the Trust can require Trustees to call a
meeting of Shareholders for purposes of voting on the removal of one or more
Trustees.
In addition, if 10 or more Shareholders who have been Shareholders for at
least six months and who hold in the aggregate either shares with a net asset
value of at least $25,000 or at least 1% of the outstanding shares of the Trust,
whichever is less, inform the Trustees in writing that they wish to communicate
with other Shareholders of the Trust, the Trustees will either give such
Shareholders access to the shareholder list or offer to forward materials to
Shareholders on their behalf at a stated cost. If the Trustees object to mailing
such materials, they must inform the Securities and Exchange Commission and
thereafter comply with any order entered by the Commission and the requirements
of the 1940 Act and the Securities Exchange Act of 1934.
20
<PAGE>
OTHER MATTERS TO COME BEFORE THE MEETING
The Board knows of no other business to be brought before the Meeting.
However, if any other matters properly come before the Meeting, it is the
intention that proxies that do not contain specific instructions to the contrary
will be voted on such matters in accordance with the judgment of the persons
therein designated.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS WHO
DO NOT EXPECT TO ATTEND THE MEETING ARE URGED TO COMPLETE, DATE, SIGN AND RETURN
THE PROXY CARD IN THE ENCLOSED ENVELOPE AS SOON AS POSSIBLE.
By Order of the Board of Trustees,
J. David Griswold
Vice President and Secretary
Date: February 24, 2000
21
<PAGE>
SSgA S&P 500 INDEX FUND
A SERIES OF SSgA FUNDS
Two International Place
Boston, Massachusetts 02110
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints J. David Griswold and Mark E. Swanson, and each
and either one of them, proxies with full power of substitution, and authorizes
each of them to represent and vote all shares of the SSgA S&P 500 Index Fund
(the "Fund"), a series of SSgA Funds, which the undersigned would be entitled to
vote if personally present at the Special Meeting of Shareholders of the Fund to
be held at the office of Frank Russell Investment Management Company, 909 A
Street, Tacoma, Washington 98402 on April 4, 2000, at 11:00 a.m. local time, and
at any adjournments thereof.
The Board of Trustees recommends a vote FOR the following proposals:
PROPOSALS
1. To approve adding a new fundamental investment policy modifying
existing fundamental investment policies and restrictions to allow
the Fund to convert to a Feeder Fund in the future.
2. To approve a rider to the investment advisory agreement with State
Street Bank and Trust Company applicable to the SSgA S&P 500 Index
Fund.
3. To approve the adoption of modernized fundamental investment
restrictions by amending or eliminating certain of the current
fundamental investment restrictions of the Fund.
When properly executed, this proxy will be voted in the manner directed herein
by the undersigned shareholder(s). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE ABOVE PROPOSALS. This proxy will be voted in the discretion of the
persons named as proxies above as to any other matters that may properly come
before the meeting or any adjournments thereof. A shareholder wishing to vote in
accordance with the Board of Trustees' recommendations need only sign and date
this proxy and return it in the enclosed envelope.
PLEASE RETURN BOTTOM PORTION WITH YOUR VOTE IN THE ENCLOSED ENVELOPE AND RETAIN
THE TOP PORTION. Please separate and place the bottom portion of the proxy in
the enclosed return envelope. Place the proxy so that the return address,
located on the reverse side of the proxy, appears through the window of the
envelope.
SSgA S&P 500 INDEX FUND
Record Date Shares
PROXY VOTING MAIL-IN STUB
PROPOSAL 1
|_| FOR |_| AGAINST |_| ABSTAIN
22
<PAGE>
PROPOSAL 2
|_| FOR |_| AGAINST |_| ABSTAIN
PROPOSAL 3
|_| FOR |_| AGAINST ALL |_| ABSTAIN ALL
|_| To vote against, or to abstain from voting on one or
more of the proposed changes to the specific fundamental
investment restrictions, but to approve all others,
check the box on the left and indicate the number(s) of
the investment restrictions you do not want to change in
the appropriate boxes below.
3A - Borrowing
3B - Pledging, Mortgaging or Hypothecating
3C - Diversification
3D - Puts, Calls, Straddles and Spreads
3E - Short Sales
To vote against a particular change, write the
number(s) in the box below.
-------------------------------------------------
-------------------------------------------------
To abstain from voting on a particular change,
write the number(s) in the box below.
-------------------------------------------------
-------------------------------------------------
Dated: _____________, 2000
___________________________________
___________________________________
Signature(s) of Shareholder(s)
23
<PAGE>
APPENDIX A - THE FUND'S CURRENT INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT
BETWEEN
STATE STREET BANK AND TRUST COMPANY
AND
THE SEVEN SEAS SERIES FUND
This Agreement is made as of this 12th day of April, 1988, between The Seven
Seas Series Fund, a Massachusetts business trust (the "Investment Company"), and
State Street Bank and Trust Company, a Massachusetts bank (the "Adviser").
WHEREAS, the Investment Company is an open-end, diversified management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), currently consisting of one portfolio series, having
its own investment policies; and
WHEREAS, State Street Bank and Trust Company ("State Street") is a Massachusetts
bank, and is in the business of providing, among other things, fiduciary and
investment advisory services; and
WHEREAS, the Investment Company desires to retain the Adviser to render
investment advisory services to the Investment Company with respect to the
existing Fund and possibly such other funds as the Investment Company and the
Adviser may agree upon ("Fund"), and the Adviser is willing to render such
services;
NOW, THEREFORE, in consideration of the mutual agreements contained herein, the
Investment Company and Adviser agree as follows:
1. Appointment of Adviser.
(a) Initial Fund: The Investment Company hereby appoints the Adviser to
act as investment adviser to the Fund for the period and on the terms set forth
in this Agreement. The Adviser accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided. The Investment
Company warrants that the Adviser has been duly appointed to act hereunder.
(b) Additional Funds: In the event that the Investment Company establishes
one or more Funds other than the Initial Fund with respect to which it desires
to retain the Adviser to render investment advisory services hereunder, it shall
so notify the Adviser in writing, indicating the advisory fee to be payable with
respect to the additional Fund. If the Adviser is willing to render such
services, it shall so notify the Investment Company in writing, whereupon such
Fund shall become a Fund hereunder. In such event a writing signed by both the
Investment Company and the Adviser shall be annexed hereto as a part hereof
indicating that such additional Fund has become a Fund hereunder and reflecting
the agreed-upon fee schedule for such Fund.
2. Advisory Duties. Subject to the supervision of the Board of Trustees of the
Investment Company, the Adviser shall manage the investment operations and the
composition of the Fund, including the purchase, retention and disposition
thereof, in accordance with the Fund's investment objective and policies as
stated in the Investment Company's Registration Statement. The Adviser is
authorized to engage one or more sub-advisers in connection with the Adviser's
duties under this
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<PAGE>
Agreement, which sub-advisers may be affiliates of the Manager. The Adviser's
duties hereunder are subject to the following understandings:
(a) The Adviser shall provide supervision of investments, furnish a
continuous investment program for the Fund, determine from time to time what
investments or securities will be purchased, retained or sold by the Fund, and
what portion of the assets will be invested or held uninvested as cash;
(b) The Adviser, in the performance of its duties and obligations under
this Agreement, shall act in conformity with the Master Trust Agreement, By-Laws
and Registration Statement of the Investment Company and with the instructions
and directions of the Board of Trustees of the Investment Company, provided,
however, the Adviser shall not be responsible for acting contrary to any of the
foregoing that are changed without notice of such change to the Adviser; and the
Adviser shall conform to and comply with the applicable requirements of the 1940
Act and all other applicable federal or state laws and regulations;
(c) The Adviser shall promptly communicate to the officers and Trustees of
the Investment Company such information relating to Fund transactions as they
may reasonably request. On occasions when the Adviser deems the purchase or sale
of a security to be in the best interest of a Fund as well as other clients, the
Adviser, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be sold or purchased, provided that in the opinion
of the Adviser, all accounts are treated equitably and fairly. In such event,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transactions, shall be made by the Adviser in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to the Investment Company and to such other clients;
(d) The Adviser shall maintain books and records with respect to the
Investment Company's securities transactions and shall render to the Investment
Company's Board of Trustees such periodic and special reports as the Board may
reasonably request;
(e) The Adviser shall provide the Investment Company with a list of all
securities transactions as reasonably requested by the Investment Company;
(f) the investment advisory services of the Adviser to the Investment
Company under this Agreement are not to be deemed exclusive, and the Adviser
shall be free to render similar services to others.
3. Execution and Allocation of Portfolio Brokerage Commission. The Adviser,
subject to and in accordance with any directions which the Investment Company's
Board of Trustees may issue from time to time, shall place, in the name of the
Investment Company, orders for the execution of the securities transactions in
which any Fund is authorized to invest. When placing such orders, the primary
objective of the Adviser shall be to obtain the best net price and execution for
the Investment Company but this requirement shall not be deemed to obligate the
Adviser to place any order solely on the basis of obtaining the lowest
commission rate if the other standards set forth in this section have been
satisfied. The Investment Company recognizes that there are likely to be many
cases in which different brokers are equally able to provide such best price and
execution and that, in selection among such brokers with respect to particular
trades, it is desirable to choose those brokers who furnish "brokerage and
research services" (as defined in Section 29(e)(3) of the Securities and
Exchange Act of 1934) or statistical quotations and other information to the
Investment Company and/or the Adviser in accordance with the standards set forth
below. Moreover, to the extent that it continues to be lawful to do so and so
long as the Board determines as a matter of general policy that the Investment
Company will benefit, directly or
A-2
<PAGE>
indirectly, by doing so, the Adviser may place orders with a broker who charges
a commission that another broker would have charged for effecting that
transaction, provided that the excess commission is reasonable in relation to
the value of brokerage and research services provided by that broker.
Accordingly, the Investment Company and the Adviser agree that the Adviser shall
select brokers for the execution of any Fund's securities transactions from
among:
a. Those brokers and dealers who provide brokerage and research services,
or statistical quotations and other information to the Investment Company,
specifically including the quotations necessary to determine the Investment
Company's net assets, in such amount of total brokerage as may reasonably be
required in light of such services.
b. Those brokers and dealers who provide brokerage and research services
to the Adviser and/or its affiliated corporations which relate directly to
portfolio securities, actual or potential, of the Investment Company, or which
place the Adviser in a better position to make decisions in connection with the
management of the Investment Company's assets, whether or not such data may also
be useful to the Adviser and its affiliates in managing other portfolios or
advising other clients, in such amount of total brokerage as may reasonably be
required.
c. Frank Russell Securities, Inc., the Investment Company's distributor,
when the Adviser has determined that the Fund will receive competitive
execution, price and commissions. The Adviser shall render regular reports to
the Investment Company, not more frequently than quarterly, of how much total
brokerage business has been placed with Frank Russell Securities, Inc., and the
manner in which the allocation has been accomplished.
The Adviser agrees that no investment decision will be made or influenced by a
desire to provide brokerage for allocation in accordance with the foregoing, and
that the right to make such allocation of brokerage shall not interfere with the
Adviser's primary duty to obtain the best net price and execution for the
Investment Company.
4. Books and Records. The Adviser shall keep the Investment Company's books and
records required to be maintained by it pursuant to paragraph 2(d) hereof. The
Adviser agrees that all records which it maintains for the Investment Company
are the property of the Investment Company and it shall surrender promptly to
the Investment Company any of such records upon the Investment Company's
request. The Adviser further agrees to preserve for the periods prescribed by
Rule 31a-2 of the Commission under the 1940 Act any such records as are required
to be maintained by Rule 31a-1(f) of the Commission under the 1940 Act. Nothing
herein shall prevent the Adviser from maintaining its own records as required by
law, which may be a duplication of the Investment Company's records.
5. Reports to Adviser. The Investment Company agrees to furnish the Adviser at
its principal office all prospectuses, proxy statements, reports to
stockholders, sales literature or other material prepared for distribution to
shareholders of the Investment Company or the public, which refer in any way to
the Adviser, ten (10) days prior to use thereof and not to use such material if
the Adviser should object thereto in writing within seven (7) days after receipt
of such material; provided, however, that the Adviser hereby approves all uses
of its name which merely refer in accurate terms to its appointment as
investment adviser hereunder, which merely identifies the Investment Company, or
which are required by the Securities and Exchange Commission or a state
securities commission. In the event of termination of this Agreement, the
Investment Company shall, on written request of the Adviser, forthwith delete
any reference to the Adviser from any materials described in the preceding
sentence. The Investment Company shall furnish or otherwise make available to
the Adviser such other information relating to the
A-3
<PAGE>
business affairs of the Investment Company as the Adviser at any time, or from
time to time, reasonably requests in order to discharge its obligations
hereunder.
6. Proxies. Unless the Investment Company gives written instructions to the
contrary, the Adviser shall vote or not vote all proxies solicited by or with
respect to the issuers of securities in which assets of any Fund may be
invested. The Adviser shall use its best good faith judgment to vote or not vote
such proxies in a manner which best serves the interests of the Investment
Company's shareholders.
7. Expenses. During the term of this Agreement, the Adviser shall pay all of its
own expenses incurred by it in connection with its activities under this
Agreement and the Fund of the Investment Company shall bear all expenses that
are incurred in its operations not specifically assumed by the Adviser.
Expenses borne by the Fund will include but not be limited to the following (or
the Fund's proportionate share of the following): (a) brokerage commissions
relating to securities purchased or sold by the Fund or any losses incurred in
connection therewith; (b) fees payable to and expenses incurred on behalf of the
Fund by the Investment Company's administrator; (c) expenses of organizing the
Investment Company and the Fund; (d) filing fees and expenses relating to the
registration and qualification of the Fund's shares and the Investment Company
under federal or state securities laws and maintaining such registrations and
qualifications; (e) fees and salaries payable to the Investment Company's
Trustees and officers who are not officers or employees of the Investment
Company's administrator, any investment adviser or underwriter of the Investment
Company; (f) taxes (including any income or franchise taxes) and governmental
fees; (g) costs of any liability, uncollectible items of deposit and other
insurance or fidelity bonds; (h) any costs, expenses or losses arising out of
any liability of or claim for damage or other relief asserted against the
Investment Company or the Fund for violation of any law; (i) legal, accounting
and auditing expenses, including legal fees of special counsel for the
independent Trustees; (j) charges of custodians, transfer agents and other
agents; (k) costs of preparing share certificates (if any); (l) expenses of
setting in type and printing Prospectuses and Statements of Additional
Information and supplements thereto for existing shareholders, reports and
statements to shareholders and proxy material; (m) any extraordinary expenses
(including fees and disbursements of counsel) incurred by the Investment Company
or the Fund; and (n) fees and other expenses incurred in connection with
membership in investment company organizations.
8. Compensation of the Adviser. For the services to be rendered by the Adviser
as provided in this Agreement, the Investment Company shall pay to the Adviser
such compensation as is designated in Exhibit A to this Agreement, so long as
the Adviser has not waived all or a portion of such compensation.
9. Limitation of Adviser's Liability. In the absence of (a) willful misfeasance,
bad faith or gross negligence on the part of the Adviser in performance of its
obligations and duties hereunder, (b) reckless disregard by the Adviser of its
obligations and duties hereunder, or (c) a loss resulting from a beach of
fiduciary duty with respect to the receipt of compensation for services (in
which case, any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the 1940 Act), the Adviser shall not be subject
to any liability whatsoever to the Investment Company, or to any shareholder of
the Investment Company, for any error of judgment, mistake of law or any other
act or omission in the course of, or connected with, rendering services
hereunder including, without limitation, for any losses that may be sustained in
connection with the purchase, holding, redemption or sale of any security on
behalf of the Investment Company.
10. Duration and Termination.
A-4
<PAGE>
(a) This Agreement shall become effective with respect to each Fund on the
date on which the Fund commences offering its shares to the public, so long as,
with respect to any additional Funds, the provisions of Section 1(b) have been
complied with. This Agreement, unless sooner terminated as provided herein,
shall continue for each Fund for two years following the effective date of this
Agreement with respect to the Fund, or the date of the first annual or special
meeting of the shareholders of the Fund following such effective date, if
approved by a majority of the outstanding voting securities of the Fund (as
defined in the 1940 Act), and thereafter shall continue automatically for
periods of one year so long as such continuance is specifically approved at
least annually (a) by the vote of a majority of those members of the Board of
Trustees of the Investment Company who are not parties to this Agreement or
"interested persons" (as defined in the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting such approval, and (b) by
the Board of Trustees of the Investment Company or by vote of a majority of the
outstanding voting securities of the Fund.
(b) This Agreement may be terminated by the Investment Company at any
time, without the payment of any penalty, vote of a majority of those members of
the Board of Trustees who are not "interested persons" (as defined in the 1940
Act) of the Adviser or the Investment Company or by the majority vote of either
the entire Board of Trustees of the Investment Company or by vote of a majority
of the outstanding voting securities of the Fund on 60 days' written notice to
the Adviser. This Agreement may also be terminated by the Adviser on 90 days'
written notice to the Investment Company. This Agreement will automatically and
immediately terminate in the event of its assignment (as defined in the 1940
Act).
11. Choice of Law. This Agreement shall be construed in accordance with the laws
of the State of Washington and any applicable federal law.
12. Limitation of Liability. The Master Trust Agreement dated October 3, 1987,
as amended from time to time, establishing the Investment Company, which is
hereby referred to and a copy of which is on file with the Secretary of The
Commonwealth of Massachusetts, provides that the name The Seven Seas Series Fund
means the Trustees from time to time serving (as Trustees but not personally)
under said Master Trust Agreement. It is expressly acknowledged and agreed that
the obligations of the Investment Company hereunder shall not be binding upon
any of the Shareholders, Trustees, officers, employees or agents of the
Investment Company, personally, but shall bind only the trust property of the
Investment Company, as provided in its Master Trust Agreement. The execution and
delivery of this Agreement have been authorized by the Trustees of the
Investment Company and signed by an officer of the Investment Company, acting as
such, and neither such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Investment Company as provided in its Master
Trust Agreement.
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<PAGE>
IN WITNESS WHEREOF, the due execution hereof as of the date first above written.
Attest: THE SEVEN SEAS SERIES FUND
By: /s/ Michael S. Caccese By: /s/ George W. Weber
--------------------------- ---------------------------
Attest: STATE STREET BANK AND TRUST
COMPANY
By: /s/ Timothy B. Harbert By: /s/ Nicholas A. Lopardo
--------------------------- ---------------------------
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<PAGE>
EXHIBIT "A"
As consideration for the Adviser's services to the following Fund(s), the
Adviser shall receive from the Fund(s) an annual advisory fee, accrued daily at
the rate of 1/365th of the applicable fee rate and payable monthly on the first
business day of each month, of the following annual percentages of the Fund's
average daily net assets during the month:
The Seven Seas Series Money Market 0.25%
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<PAGE>
AMENDED
EXHIBIT "A"
January 9, 1991
As consideration for the Adviser's services to the following Funds, the Adviser
shall receive from each of these Funds an annual advisory fee, accrued daily at
the rate of 1/365th of the applicable advisory fee rate and payable monthly on
the first business day of each month, of the following annual percentages of
each Fund's average daily net assets during the month:
The Seven Seas Series Money Market Fund 0.25%
The Seven Seas Series US Government Money Market Fund 0.25%
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<PAGE>
LETTER AGREEMENT
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Dear Sirs:
Pursuant to Paragraph 1(b) of the Investment Advisory Agreement between The
Seven Seas Series Fund and State Street Bank and Trust Company, dated April 12,
1988, The Seven Seas Series Fund advises you that it is creating a new series to
be named The Seven Seas Series US Government Money Market Fund (the "Fund") and
that The Seven Seas Series Fund desires State Street Bank and Trust Company to
serve as investment adviser with respect to the Fund pursuant to the terms and
conditions of the Investment Advisory Agreement. The fees to be charged by
adviser to the Fund in return for its investment advisory services will be as
set forth in the attached Schedule A.
Notwithstanding anything to the contrary in Paragraph 10(a), the initial term of
the Investment Advisory Agreement with respect to the Fund shall be until April
12, 1992.
Please acknowledge your acceptance of acting as adviser to the Fund by executing
this letter agreement in the space provided below and then returning it to the
undersigned.
Sincerely,
THE SEVEN SEAS SERIES FUND
By: /s/ George W. Weber
---------------------------
Its: Senior Vice President - Operations
ACKNOWLEDGED AND ACCEPTED
State Street Bank and Trust Company
By: /s/ Nicholas A. Lopardo
---------------------------
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<PAGE>
LETTER AGREEMENT
January 8, 1992
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Dear Sirs:
Pursuant to Paragraph 1(b) of the Investment Advisory Agreement between The
Seven Seas Series Fund and State Street Bank and Trust Company, dated April 12,
1988, The Seven Seas Series Fund advises you that it is creating six new series
to be named The Seven Seas Series Short Term Government Bond Fund, The Seven
Seas Series S&P 500 Index Fund, The Seven Seas Series S&P Midcap Index Fund, The
Seven Seas Series Matrix Synthesis Fund, The Seven Seas Series International
European Index Fund, and The Seven Seas Series International Pacific Index Fund
(the "Portfolios") and that The Seven Seas Series Fund desires State Street Bank
and Trust Company to serve as investment adviser with respect to the Portfolios
pursuant to the terms and conditions of the Investment Advisory Agreement. The
fees to be charged by adviser to the Portfolios in return for its investment
advisory services will be as set forth in the attached Schedule A.
Notwithstanding anything to the contrary in Paragraph 10(a), the initial term of
the Investment Advisory Agreement with respect to the Fund shall be until April
12, 1993.
Please acknowledge your acceptance of acting as adviser to the Fund by executing
this letter agreement in the space provided below and then returning it to the
undersigned.
Sincerely,
THE SEVEN SEAS SERIES FUND
By: /s/ George W. Weber
---------------------------
Its: Senior Vice President - Operations
ACKNOWLEDGED AND ACCEPTED
State Street Bank and Trust Company
By: /s/ Nicholas A. Lopardo
---------------------------
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<PAGE>
AMENDED
EXHIBIT "A"
January 8, 1992
As consideration for the Adviser's services to the following Portfolios, the
Adviser shall receive from each of these Portfolios an annual advisory fee,
accrued daily at the rate of 1/365th of the applicable advisory fee rate and
payable monthly on the first business day of each month, of the following annual
percentages of each Portfolio's average daily net assets during the month:
The Seven Seas Series Money Market Fund 0.25%
The Seven Seas Series US Government Money Market Fund 0.25%
The Seven Seas Series Short Term Government Bond Fund 0.50%
The Seven Seas Series S&P 500 Index Fund 0.10%
The Seven Seas Series S&P Midcap Index Fund 0.20%
The Seven Seas Series Matrix Synthesis Fund 0.75%
The Seven Seas Series International European Index Fund 0.50%
The Seven Seas Series International Pacific Index Fund 0.50%
A-11
<PAGE>
LETTER AGREEMENT
July 8, 1992
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Dear Sirs:
Pursuant to Paragraph 1(b) of the Investment Advisory Agreement between The
Seven Seas Series Fund and State Street Bank and Trust Company, dated April 12,
1988, The Seven Seas Series Fund advises you that it is creating two new series
to be named The Seven Seas Series Bond Market Fund and The Seven Seas Series
Yield Plus Fund (the "Portfolios") and that The Seven Seas Series Fund desires
State Street Bank and Trust Company to serve as investment adviser with respect
to the Portfolios pursuant to the terms and conditions of the Investment
Advisory Agreement. The fees to be charged by adviser to the Portfolios in
return for its investment advisory services will be as set forth in the attached
Schedule A.
Notwithstanding anything to the contrary in Paragraph 10(a), the initial term of
the Investment Advisory Agreement with respect to the Fund shall be until April
12, 1994.
Please acknowledge your acceptance of acting as adviser to the Fund by executing
this letter agreement in the space provided below and then returning it to the
undersigned.
Sincerely,
THE SEVEN SEAS SERIES FUND
By: /s/ George W. Weber
---------------------------
Its: Senior Vice President - Operations
ACKNOWLEDGED AND ACCEPTED
State Street Bank and Trust Company
By: /s/ Gustaff V. Fish, Jr.
---------------------------
A-12
<PAGE>
AMENDED
EXHIBIT "A"
July 8, 1992
As consideration for the Adviser's services to the following Portfolios, the
Adviser shall receive from each of these Portfolios an annual advisory fee,
accrued daily at the rate of 1/365th of the applicable advisory fee rate and
payable monthly on the first business day of each month, of the following annual
percentages of each Portfolio's average daily net assets during the month:
The Seven Seas Series Money Market Fund 0.25%
The Seven Seas Series US Government Money Market Fund 0.25%
The Seven Seas Series Short Term Government Bond Fund 0.50%
The Seven Seas Series S&P 500 Index Fund 0.10%
The Seven Seas Series S&P Midcap Index Fund 0.20%
The Seven Seas Series Matrix Synthesis Fund 0.75%
The Seven Seas Series International European Index Fund 0.50%
The Seven Seas Series International Pacific Index Fund 0.50%
The Seven Seas Series Bond Market Fund 0.30%
The Seven Seas Series Yield Plus Fund 0.25%
A-13
<PAGE>
LETTER AGREEMENT
The Seven Seas Series US Treasury Money Market Fund
The Seven Seas Series US Treasury Obligations Fund
Investment Advisory Agreement
January 6, 1993
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Dear Sirs:
Pursuant to Paragraph 1(b) of the Investment Advisory Agreement between The
Seven Seas Series Fund and State Street Bank and Trust Company, dated April 12,
1988, The Seven Seas Series Fund advises you that it is creating two new series
to be named The Seven Seas Series US Treasury Money Market Fund and The Seven
Seas Series US Treasury Obligations Fund (the "New Funds") and that The Seven
Seas Series Fund desires State Street Bank and Trust Company to serve as
investment adviser with respect to the New Funds pursuant to the terms and
conditions of the Investment Advisory Agreement. The fees to be charged by
adviser to the Portfolios in return for its investment advisory services will be
as set forth in the attached Exhibit A.
Notwithstanding anything to the contrary in Paragraph 10(a), the initial term of
the Investment Advisory Agreement with respect to the New Funds shall be until
April 12, 1993.
Please acknowledge your acceptance of acting as adviser to the Fund by executing
this letter agreement in the space provided below and then returning it to the
undersigned.
Sincerely,
THE SEVEN SEAS SERIES FUND
By: /s/ George W. Weber
---------------------------
Its: Senior Vice President - Operations
ACKNOWLEDGED AND ACCEPTED
State Street Bank and Trust Company
By: /s/ Gustaff V. Fish, Jr.
---------------------------
Senior Vice President
A-14
<PAGE>
AMENDED
EXHIBIT "A"
January 6, 1993
As consideration for the Adviser's services to the following Portfolios, the
Adviser shall receive from each of these Portfolios an annual advisory fee,
accrued daily at the rate of 1/365th of the applicable advisory fee rate and
payable monthly on the first business day of each month, of the following annual
percentages of each Portfolio's average daily net assets during the month:
The Seven Seas Series Money Market Fund 0.25%
The Seven Seas Series US Government Money Market Fund 0.25%
The Seven Seas Series Short Term Government Bond Fund 0.50%
The Seven Seas Series S&P 500 Index Fund 0.10%
The Seven Seas Series S&P Midcap Index Fund 0.20%
The Seven Seas Series Matrix Synthesis Fund 0.75%
The Seven Seas Series International European Index Fund 0.50%
The Seven Seas Series International Pacific Index Fund 0.50%
The Seven Seas Series Bond Market Fund 0.30%
The Seven Seas Series Yield Plus Fund 0.25%
The Seven Seas Series US Treasury Money Market Fund 0.25%
The Seven Seas Series US Treasury Obligations Fund 0.25%
A-15
<PAGE>
LETTER AGREEMENT
The Seven Seas Series Growth and Income Fund
The Seven Seas Series Intermediate Fund
Investment Advisory Agreement
April 7, 1993
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Dear Sirs:
Pursuant to Paragraph 1(b) of the Investment Advisory Agreement between The
Seven Seas Series Fund and State Street Bank and Trust Company, dated April 12,
1988, The Seven Seas Series Fund advises you that it is creating two new series
to be named The Seven Seas Series Growth and Income Fund and The Seven Seas
Series Intermediate Fund (the "New Funds") and that The Seven Seas Series Fund
desires State Street Bank and Trust Company to serve as investment adviser with
respect to the New Funds pursuant to the terms and conditions of the Investment
Advisory Agreement. The fees to be charged by adviser to the New Funds in return
for its investment advisory services will be as set forth in the attached
Exhibit A.
Notwithstanding anything to the contrary in Paragraph 10(a), the initial term of
the Investment Advisory Agreement with respect to the New Funds shall be until
April 12, 1994.
Please acknowledge your acceptance of acting as adviser to the Fund by executing
this letter agreement in the space provided below and then returning it to the
undersigned.
Sincerely,
THE SEVEN SEAS SERIES FUND
By: /s/ Lynn L. Anderson
---------------------------
Its: President
ACKNOWLEDGED AND ACCEPTED
State Street Bank and Trust Company
By: /s/ Timothy B. Harbert
---------------------------
Senior Vice President
A-16
<PAGE>
AMENDED
EXHIBIT "A"
January 6, 1993
As consideration for the Adviser's services to the following Portfolios, the
Adviser shall receive from each of these Portfolios an annual advisory fee,
accrued daily at the rate of 1/365th of the applicable advisory fee rate and
payable monthly on the first business day of each month, of the following annual
percentages of each Portfolio's average daily net assets during the month:
The Seven Seas Series Money Market Fund 0.25%
The Seven Seas Series US Government Money Market Fund 0.25%
The Seven Seas Series Short Term Government Bond Fund 0.50%
The Seven Seas Series S&P 500 Index Fund 0.10%
The Seven Seas Series S&P Midcap Index Fund 0.20%
The Seven Seas Series Matrix Synthesis Fund 0.75%
The Seven Seas Series International European Index Fund 0.50%
The Seven Seas Series International Pacific Index Fund 0.50%
The Seven Seas Series Bond Market Fund 0.30%
The Seven Seas Series Yield Plus Fund 0.25%
The Seven Seas Series US Treasury Money Market Fund 0.25%
The Seven Seas Series US Treasury Obligations Fund 0.25%
The Seven Seas Series Growth and Income Fund 0.85%
The Seven Seas Series Intermediate Fund 0.80%
A-17
<PAGE>
LETTER AGREEMENT
The Seven Seas Series Prime Money Market Portfolio
The Seven Seas Series Emerging Markets Fund
Investment Advisory Agreement
January 19, 1994
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Dear Sirs:
Pursuant to Paragraph 1(b) of the Investment Advisory Agreement between The
Seven Seas Series Fund and State Street Bank and Trust Company, dated April 12,
1988, The Seven Seas Series Fund advises you that it is creating two new series
to be named The Seven Seas Series Prime Money Market Portfolio and The Seven
Seas Series Emerging Markets Fund (the "Portfolios") and that The Seven Seas
Series Fund desires State Street Bank and Trust Company to serve as investment
adviser with respect to the Portfolios pursuant to the terms and conditions of
the Investment Advisory Agreement. The fees to be charged by adviser to the
Portfolios in return for its investment advisory services will be as set forth
in the attached Exhibit A.
Notwithstanding anything to the contrary in Paragraph 10(a), the initial term of
the Investment Advisory Agreement with respect to the New Funds shall be until
April 12, 1994.
Please acknowledge your acceptance of acting as adviser to the Portfolios by
executing this letter agreement in the space provided below and then returning
it to the undersigned.
Sincerely,
THE SEVEN SEAS SERIES FUND
By: /s/ Lynn L. Anderson
---------------------------
Its: President
ACKNOWLEDGED AND ACCEPTED
State Street Bank and Trust Company
By: /s/ Gustaff V. Fish, Jr., Sr. Vice President
A-18
<PAGE>
AMENDED
EXHIBIT "A"
January 19, 1994
As consideration for the Adviser's services to the following Portfolios, the
Adviser shall receive from each of these Portfolios an annual advisory fee,
accrued daily at the rate of 1/365th of the applicable advisory fee rate and
payable monthly on the first business day of each month, of the following annual
percentages of each Portfolio's average daily net assets during the month:
The Seven Seas Series Money Market Fund 0.25%
The Seven Seas Series US Government Money Market Fund 0.25%
The Seven Seas Series Short Term Government Bond Fund 0.50%
The Seven Seas Series S&P 500 Index Fund 0.10%
The Seven Seas Series S&P Midcap Index Fund 0.20%
The Seven Seas Series Matrix Synthesis Fund 0.75%
The Seven Seas Series International European Index Fund 0.50%
The Seven Seas Series International Pacific Index Fund 0.50%
The Seven Seas Series Bond Market Fund 0.30%
The Seven Seas Series Yield Plus Fund 0.25%
The Seven Seas Series US Treasury Money Market Fund 0.25%
The Seven Seas Series US Treasury Obligations Fund 0.25%
The Seven Seas Series Growth and Income Fund 0.85%
The Seven Seas Series Intermediate Fund 0.80%
The Seven Seas Series Prime Money Market Portfolio 0.15%
The Seven Seas Series Emerging Markets Fund 0.75%
A-19
<PAGE>
LETTER AGREEMENT
The Seven Seas Series Tax Free Money Market Fund
Investment Advisory Agreement
July 13, 1994
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Dear Sirs:
Pursuant to Paragraph 1(b) of the Investment Advisory Agreement between The
Seven Seas Series Fund and State Street Bank and Trust Company, dated April 12,
1988, The Seven Seas Series Fund advises you that it is creating a new series to
be named The Seven Seas Series Tax Free Money Market Fund, Class A, Class B and
Class C ("Tax Free Fund") and that The Seven Seas Series Fund desires State
Street Bank and Trust Company to serve as investment adviser with respect to the
Tax Free Fund pursuant to the terms and conditions of the Investment Advisory
Agreement. The fees to be charged by adviser to the Tax Free Fund in return for
its investment advisory services will be as set forth in the attached Exhibit A.
Notwithstanding anything to the contrary in Paragraph 10(a), the initial term of
the Investment Advisory Agreement with respect to the Tax Free Fund shall be
until April 12, 1995.
Please acknowledge your acceptance of acting as adviser to the Funds by
executing this letter agreement in the space provided below and then returning
it to the undersigned.
Sincerely,
THE SEVEN SEAS SERIES FUND
By: /s/ Lynn L. Anderson
---------------------------
Its: President
---------------------------
ACKNOWLEDGED AND ACCEPTED
State Street Bank and Trust Company
By: /s/ Nicholas A. Lopardo
---------------------------
Executive Vice President
---------------------------
A-20
<PAGE>
AMENDED
EXHIBIT "A"
July 13, 1994
As consideration for the Adviser's services to the following Portfolios, the
Adviser shall receive from each of these Portfolios an annual advisory fee,
accrued daily at the rate of 1/365th of the applicable advisory fee rate and
payable monthly on the first business day of each month, of the following annual
percentages of each Portfolio's average daily net assets during the month:
The Seven Seas Series Money Market Fund 0.25%
The Seven Seas Series US Government Money Market Fund 0.25%
The Seven Seas Series Short Term Government Bond Fund 0.50%
The Seven Seas Series S&P 500 Index Fund 0.10%
The Seven Seas Series S&P Midcap Index Fund 0.20%
The Seven Seas Series Matrix Synthesis Fund 0.75%
The Seven Seas Series International European Index Fund 0.50%
The Seven Seas Series International Pacific Index Fund 0.50%
The Seven Seas Series Bond Market Fund 0.30%
The Seven Seas Series Yield Plus Fund 0.25%
The Seven Seas Series US Treasury Money Market Fund 0.25%
The Seven Seas Series US Treasury Obligations Fund 0.25%
The Seven Seas Series Growth and Income Fund 0.85%
The Seven Seas Series Intermediate Fund 0.80%
The Seven Seas Series Prime Money Market Portfolio 0.15%
The Seven Seas Series Emerging Markets Fund 0.75%
The Seven Seas Series Tax Free Money Market Fund 0.25%
A-21
<PAGE>
LETTER AGREEMENT
The Seven Seas Series Real Estate Fund
The Seven Seas Series Small Cap Fund
The Seven Seas Series Active International Fund
Investment Advisory Agreement
October 25, 1994
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Dear Sirs:
Pursuant to Paragraph 1(b) of the Investment Advisory Agreement between The
Seven Seas Series Fund and State Street Bank and Trust Company, dated April 12,
1988, The Seven Seas Series Fund advises you that (1) it is creating a new
series to be named The Seven Seas Series Real Estate Equity Fund, (2) it has
changed the investment objective and policies of The Seven Seas Series Midcap
Index Fund and renamed it The Seven Seas Series Small Cap Fund, and (3) it has
changed the investment objective and policies of The Seven Seas Series
International European Index Fund and renamed it The Seven Seas Series Active
International Fund (collectively, the "Funds"), and that The Seven Seas Series
Fund desires State Street Bank and Trust Company to serve as investment adviser
with respect to the Funds pursuant to the terms and conditions of the Investment
Advisory Agreement. The fees to be charged by adviser to the Funds in return for
its investment advisory services will be as set forth in the attached Exhibit A.
Notwithstanding anything to the contrary in Paragraph 10(a), the initial term of
the Investment Advisory Agreement with respect to the Tax Free Fund shall be
until April 12, 1995.
Please acknowledge your acceptance of acting as adviser to the Funds by
executing this letter agreement in the space provided below and then returning
it to the undersigned.
Sincerely,
THE SEVEN SEAS SERIES FUND
By: /s/ Lynn L. Anderson
---------------------------
Its: President
ACKNOWLEDGED AND ACCEPTED
State Street Bank and Trust Company
By: /s/ Nicholas A. Lopardo, Executive Vice President
-------------------------------------------------
A-22
<PAGE>
AMENDED
EXHIBIT "A"
October 25, 1994
As consideration for the Adviser's services to the following Portfolios, the
Adviser shall receive from each of these Portfolios an annual advisory fee,
accrued daily at the rate of 1/365th of the applicable advisory fee rate and
payable monthly on the first business day of each month, of the following annual
percentages of each Portfolio's average daily net assets during the month:
The Seven Seas Series Money Market Fund 0.25%
The Seven Seas Series US Government Money Market Fund 0.25%
The Seven Seas Series Short Term Government Securities Fund 0.50%
The Seven Seas Series S&P 500 Index Fund 0.10%
The Seven Seas Series Matrix Equity Fund 0.75%
The Seven Seas Series International Pacific Index Fund 0.50%
The Seven Seas Series Bond Market Fund 0.30%
The Seven Seas Series Yield Plus Fund 0.25%
The Seven Seas Series US Treasury Money Market Fund 0.25%
The Seven Seas Series US Treasury Obligations Fund 0.25%
The Seven Seas Series Growth and Income Fund 0.85%
The Seven Seas Series Intermediate Fund 0.80%
The Seven Seas Series Prime Money Market Portfolio 0.15%
The Seven Seas Series Emerging Markets Fund 0.75%
The Seven Seas Series Tax Free Money Market Fund 0.25%
The Seven Seas Series Real Estate Equity Fund 0.65%
The Seven Seas Series Small Cap Fund 0.75%
The Seven Seas Series Active International Fund 0.75%
A-23
<PAGE>
LETTER AGREEMENT
SSgA Life Solutions Income and Growth Fund
SSgA Life Solutions Balanced Fund
SSgA Life Solutions Growth Fund
Investment Advisory Agreement
April 10, 1997
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Ladies and Gentlemen:
Pursuant to Paragraph 1(b) of the Investment Advisory Agreement between the SSgA
Funds and State Street Bank and Trust Company, dated April 12, 1988, the SSgA
Funds advise you that it is creating three new series to be named SSgA Life
Solutions Income and Growth Fund, SSgA Life Solutions Balanced Fund, and SSgA
Life Solutions Growth Fund (collectively, the "Funds"), and that the SSgA Funds
desire State Street Bank and Trust Company to serve as investment advisor with
respect to the Funds pursuant to the terms and conditions of the Investment
Advisory Agreement. The Funds will not be charged a fee by the Advisor for its
investment advisory services, as reflected in the attached Exhibit A.
Notwithstanding anything to the contrary in Paragraph 10(a), the initial term of
the Investment Advisory Agreement with respect to the Funds shall be until April
12, 1998.
Please acknowledge your acceptance of acting as advisor to the Funds by
executing this letter agreement in the space provided below and then returning
it to the undersigned.
Sincerely,
SSgA FUNDS
By: /s/Lynn L. Anderson
---------------------------
Lynn L. Anderson
President
ACKNOWLEDGED AND ACCEPTED
State Street Bank and Trust Company
By: /s/Timothy B. Harbert
----------------------------
Timothy B. Harbert
Its: Executive Vice President
---------------------------
A-24
<PAGE>
AMENDED
EXHIBIT "A"
April 10, 1997
As consideration for the Advisor's services to the following Funds, the Advisor
shall receive from each of these Funds an annual advisory fee, accrued daily at
the rate of 1/365th of the applicable advisory fee rate and payable monthly on
the first business day of each month, of the following annual percentages of
each Portfolio's average daily net assets during the month:
SSgA Money Market Fund 0.25%
SSgA US Government Money Market Fund 0.25%
SSgA S&P 500 Index Fund 0.10%
SSgA Matrix Equity Fund 0.75%
SSgA International Pacific Index Fund 0.50%
SSgA Bond Market Fund 0.30%
SSgA Yield Plus Fund 0.25%
SSgA US Treasury Money Market Fund 0.25%
SSgA US Treasury Obligations Fund 0.25%
SSgA Growth and Income Fund 0.85%
SSgA Intermediate Fund 0.80%
SSgA Prime Money Market Portfolio 0.15%
SSgA Emerging Markets Fund 0.75%
SSgA Tax Free Money Market Fund 0.25%
SSgA Real Estate Equity Fund 0.65%
SSgA Small Cap Fund 0.75%
SSgA Active International Fund 0.75%
SSgA Life Solutions Income and Growth Fund 0.00%
SSgA Life Solutions Balanced Fund 0.00%
SSgA Life Solutions Growth Fund 0.00%
A-25
<PAGE>
November 4, 1997
SSgA Emerging Markets Fund
SSgA Active International Fund
One International Place
Boston, Massachusetts 02110
Re: Letter of Understanding on Foreign Investments
Dear Ladies and Gentlemen:
State Street Bank and Trust Company ("State Street"), through its
division, State Street Global Advisors ("SSgA"), acts as investment advisor to,
among others, the SSgA Emerging Markets Fund and the SSgA Active International
Fund (the "Funds") pursuant to an Investment Advisory Agreement (the
"Agreement") between the Funds and State Street dated as of April 12, 1988, as
amended through the date hereof.
Pursuant to the terms of the Agreement, subject to the supervision of the
Board of Trustees of the Funds, SSgA manages the investment operations and the
composition of the Funds' portfolios, including the purchase, retention and
disposition of securities therein, in accordance with the Funds' respective
investment objective and policies as stated in the Funds' registration
statements. The investment objective and policies of each of the Funds requires
that a large portion of each Fund's assets be invested in foreign securities.
SSgA affirms to the Funds that, as a part of its duties under the
Agreement, and pursuant to the terms of that Agreement, SSgA shall consider and
monitor at regular intervals the Country Risk (as defined below) relating to
each country in which the Funds' assets are invested. The Funds acknowledge that
SSgA's responsibilities under this letter and the Agreement do not require SSgA
to refrain from purchasing securities for the Funds where negative Country Risks
(including the use of any Mandatory Securities Depository) exist provided that
the Country Risk is consistent with the Funds' respective investment objective
and policies as stated in the Funds' registration statement. Rather, SSgA shall
consider such Country Risks as a factor in determining the overall
attractiveness of a security for purchase on behalf of the Funds.
The Funds acknowledge that, in reviewing Country Risk, SSgA will analyze
materials received from the Funds' custodian, as well as materials SSgA has
gathered independently. The Funds agree to provide SSgA with any information
obtained by the Funds which SSgA reasonably requests to assist in this review.
SSgA acknowledges that its decision to invest the assets of a Fund in a
particular country shall be deemed to be conclusive evidence (1) of SSgA's
willingness to act as the Fund's Foreign Custody Manager (as defined below) with
respect to any Mandatory Securities Depository in which the Funds' assets are
held in such country; (2) of SSgA's agreement to exercise reasonable care,
prudence and diligence in the exercise of its duties hereunder such as a person
having responsibility for the safekeeping of the Fund's assets would exercise;
and (3) that SSgA has determined, after considering, among other things, the
factors specified in Rule 17f-5 under the Investment Company Act of 1940, that
the Fund's assets will be subject to reasonable care if maintained with the
Mandatory Securities Depository, based on the standards applicable to securities
depositories in the relevant market.
Definitions
A-26
<PAGE>
"Country Risk" means all factors reasonably related to the systemic risk
of investing and holding a Fund's assets in a particular country including, but
not limited to, such country's political environment; economic and financial
infrastructure (including any Mandatory Securities Depositories (as defined
below) operating in the country); prevailing custody and settlement practices;
and laws and regulations applicable to the safekeeping and recovery of Foreign
Assets held in custody in that country.
"Mandatory Securities Depository" means a foreign securities depository or
clearing agency that, either as a legal or practical matter, must be used upon
the determination to place a Fund's assets in a country outside of the United
States because (i) it is required by law or regulation; (ii) securities cannot
be withdrawn from such foreign securities depository or clearing agency; or
(iii) maintaining or effecting trades in securities outside the foreign
securities depository or clearing agency is not consistent with prevailing
custodial or market practices of U.S. investment companies in securities of the
type held by the securities depository.
"Foreign Custody Manager" means the person to whom the Board has delegated
responsibility for selecting and monitoring the Funds' use of a Mandatory
Securities Depository under Rule 17f-5.
"Rule 17f-5" means Rule 17f-5 under the Investment Company Act of 1940, as
amended.
* * *
A-27
<PAGE>
Both parties agree that the terms and conditions of the Agreement remain
in full force and effect and shall apply to all services provided hereunder.
Please acknowledge your mutual agreement to the terms hereof by signing in
the space below and returning a copy to us.
STATE STREET BANK AND TRUST COMPANY
through its division, State Street Global Advisors
By: /s/ Timothy Harbert
-------------------
Name: Timothy B. Harbert
Title: Executive Vice President
AGREED TO AND ACCEPTED
SSgA EMERGING MARKETS FUND
SSgA ACTIVE INTERNATIONAL FUND
By: /s/ David Griswold
------------------
Name: David Griswold
Title: Vice President and Secretary
A-28
<PAGE>
LETTER AGREEMENT
SSgA Special Fund
SSgA International Growth Opportunities Fund
SSgA High Yield Bond Fund
Investment Advisory Agreement
April 28, 1998
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Ladies and Gentlemen:
Pursuant to Paragraph 1(b) of the Investment Advisory Agreement between the SSgA
Funds and State Street Bank and Trust Company, dated April 12, 1988, the SSgA
Funds advise you that it is creating three new series to be named SSgA Special
Fund, SSgA International Growth Opportunities Fund, and SSgA High Yield Bond
Fund (collectively, the "Funds"), and that the SSgA Funds desire State Street
Bank and Trust Company to serve as investment advisor with respect to the Funds
pursuant to the terms and conditions of the Investment Advisory Agreement. The
Funds will be charged a fee by the Advisor for its investment advisory services,
as reflected in the attached Exhibit A.
Notwithstanding anything to the contrary in Paragraph 10(a), the initial term of
the Investment Advisory Agreement with respect to the Funds shall be until April
12, 1999.
Please acknowledge your acceptance of acting as advisor to the Funds by
executing this letter agreement in the space provided below and then returning
it to the undersigned.
Sincerely,
SSgA Funds
By: /s/Lynn L. Anderson
---------------------------
Lynn L. Anderson
President
ACKNOWLEDGED AND ACCEPTED
State Street Bank and Trust Company
By: /s/Timothy B. Harbert
---------------------------
Timothy B. Harbert
Its: Executive Vice President
--------------------------
A-29
<PAGE>
AMENDED
EXHIBIT "A"
April 28, 1998
As consideration for the Advisor's services to the following Funds, the Advisor
shall receive from each of these Funds an annual advisory fee, accrued daily at
the rate of 1/365th of the applicable advisory fee rate and payable monthly on
the first business day of each month, of the following annual percentages of
each Portfolio's average daily net assets during the month:
SSgA Money Market Fund 0.25%
SSgA US Government Money Market Fund 0.25%
SSgA S&P 500 Index Fund 0.10%
SSgA Matrix Equity Fund 0.75%
SSgA International Pacific Index Fund 0.50%
SSgA Bond Market Fund 0.30%
SSgA Yield Plus Fund 0.25%
SSgA US Treasury Money Market Fund 0.25%
SSgA US Treasury Obligations Fund 0.25%
SSgA Growth and Income Fund 0.85%
SSgA Intermediate Fund 0.80%
SSgA Prime Money Market Portfolio 0.15%
SSgA Emerging Markets Fund 0.75%
SSgA Tax Free Money Market Fund 0.25%
SSgA Real Estate Equity Fund 0.65%
SSgA Small Cap Fund 0.75%
SSgA Active International Fund 0.75%
SSgA Life Solutions Income and Growth Fund 0.00%
SSgA Life Solutions Balanced Fund 0.00%
SSgA Life Solutions Growth Fund 0.00%
SSgA Special Fund 0.75%
SSgA International Growth Opportunities Fund 0.75%
SSgA High Yield Bond Fund 0.30%
A-30
<PAGE>
LETTER AGREEMENT
SSgA Aggressive Equity Fund
Investment Advisory Agreement
September 1, 1998
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Ladies and Gentlemen:
Pursuant to Paragraph 1(b) of the Investment Advisory Agreement between the SSgA
Funds and State Street Bank and Trust Company, dated April 12, 1988, the SSgA
Funds advise you that it is creating a new series to be named SSgA Aggressive
Equity (the "Fund"), and that the SSgA Funds desire State Street Bank and Trust
Company to serve as investment advisor with respect to the Fund pursuant to the
terms and conditions of the Investment Advisory Agreement. The Fund will be
charged a fee by the Advisor for its investment advisory services, as reflected
in the attached Exhibit A.
Notwithstanding anything to the contrary in Paragraph 10(a), the initial term of
the Investment Advisory Agreement with respect to the Fund shall be until April
12, 1999.
Please acknowledge your acceptance of acting as advisor to the Fund by executing
this letter agreement in the space provided below and then returning it to the
undersigned.
Sincerely,
SSgA Funds
By: /s/Lynn L. Anderson
-----------------------------
Lynn L. Anderson
President
ACKNOWLEDGED AND ACCEPTED
State Street Bank and Trust Company
By: /s/Timothy B. Harbert
------------------------------
Timothy B. Harbert
Its: Executive Vice President
------------------------------
A-31
<PAGE>
AMENDED
EXHIBIT "A"
September 1, 1998
As consideration for the Advisor's services to the following Funds, the Advisor
shall receive from each of these Funds an annual advisory fee, accrued daily at
the rate of 1/365th of the applicable advisory fee rate and payable monthly on
the first business day of each month, of the following annual percentages of
each Portfolio's average daily net assets during the month:
SSgA Money Market Fund 0.25%
SSgA US Government Money Market Fund 0.25%
SSgA S&P 500 Index Fund 0.10%
SSgA Matrix Equity Fund 0.75%
SSgA International Pacific Index Fund 0.50%
SSgA Bond Market Fund 0.30%
SSgA Yield Plus Fund 0.25%
SSgA US Treasury Money Market Fund 0.25%
SSgA US Treasury Obligations Fund 0.25%
SSgA Growth and Income Fund 0.85%
SSgA Intermediate Fund 0.80%
SSgA Prime Money Market Portfolio 0.15%
SSgA Emerging Markets Fund 0.75%
SSgA Tax Free Money Market Fund 0.25%
SSgA Real Estate Equity Fund 0.65%
SSgA Small Cap Fund 0.75%
SSgA Active International Fund 0.75%
SSgA Life Solutions Income and Growth Fund 0.00%
SSgA Life Solutions Balanced Fund 0.00%
SSgA Life Solutions Growth Fund 0.00%
SSgA Special Small Cap Fund 0.75%
SSgA International Growth Opportunities Fund 0.75%
SSgA High Yield Bond Fund 0.30%
SSgA Aggressive Equity Fund 0.75%
A-32
<PAGE>
LETTER AGREEMENT
SSgA IAM SHARES Fund
Investment Advisory Agreement
May 28, 1999
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Ladies and Gentlemen:
Pursuant to Paragraph 1(b) of the Investment Advisory Agreement between the SSgA
Funds and State Street Bank and Trust Company, dated April 12, 1988, the SSgA
Funds advise you that it is creating a new series to be named SSgA IAM SHARES
Fund (the "Fund"), and that the SSgA Funds desire State Street Bank and Trust
Company to serve as investment advisor with respect to the Fund pursuant to the
terms and conditions of the Investment Advisory Agreement. The Fund will be
charged a fee by the Advisor for its investment advisory services, as reflected
in the attached Exhibit A.
Notwithstanding anything to the contrary in Paragraph 10(a), the initial term of
the Investment Advisory Agreement with respect to the Fund shall be until April
12, 1999.
Please acknowledge your acceptance of acting as advisor to the Fund by executing
this letter agreement in the space provided below and then returning it to the
undersigned.
Sincerely,
SSgA Funds
By: /s/Lynn L. Anderson
--------------------------------
Lynn L. Anderson
President
ACKNOWLEDGED AND ACCEPTED
State Street Bank and Trust Company
By: /s/Timothy B. Harbert
--------------------------------
Timothy B. Harbert
Its: Executive Vice President
--------------------------------
A-33
<PAGE>
AMENDED
EXHIBIT "A"
May 28, 1999
As consideration for the Advisor's services to the following Funds, the Advisor
shall receive from each of these Funds an annual advisory fee, accrued daily at
the rate of 1/365th of the applicable advisory fee rate and payable monthly on
the first business day of each month, of the following annual percentages of
each Portfolio's average daily net assets during the month:
SSgA Money Market Fund 0.25%
SSgA US Government Money Market Fund 0.25%
SSgA S&P 500 Index Fund 0.10%
SSgA Matrix Equity Fund 0.75%
SSgA International Pacific Index Fund 0.50%
SSgA Bond Market Fund 0.30%
SSgA Yield Plus Fund 0.25%
SSgA US Treasury Money Market Fund 0.25%
SSgA US Treasury Obligations Fund 0.25%
SSgA Growth and Income Fund 0.85%
SSgA Intermediate Fund 0.80%
SSgA Prime Money Market Portfolio 0.15%
SSgA Emerging Markets Fund 0.75%
SSgA Tax Free Money Market Fund 0.25%
SSgA Real Estate Equity Fund 0.65%
SSgA Small Cap Fund 0.75%
SSgA Active International Fund 0.75%
SSgA Life Solutions Income and Growth Fund 0.00%
SSgA Life Solutions Balanced Fund 0.00%
SSgA Life Solutions Growth Fund 0.00%
SSgA Special Small Cap Fund 0.75%
SSgA International Growth Opportunities Fund 0.75%
SSgA High Yield Bond Fund 0.30%
SSgA Aggressive Equity Fund 0.75%
SSgA IAM SHARES Fund 0.25%
A-34
<PAGE>
APPENDIX B - THE PROPOSED RIDER TO THE INVESTMENT ADVISORY AGREEMENT
RIDER TO THE
INVESTMENT ADVISORY AGREEMENT
BETWEEN
STATE STREET BANK AND TRUST COMPANY
AND
THE SEVEN SEAS SERIES FUND
FOR THE
SSgA S&P 500 INDEX FUND
1. Add a paragraph 2(g) to read as follows:
"2(g) With respect to the SSgA S&P 500 Index Fund, for so long as all
investable assets of the Fund are invested in another investment company
with substantially the same investment objectives and policies ("Master
Fund"), the Adviser's duties shall be to monitor the services of the
Master Fund to determine if an investment in the Master Fund remains
appropriate. In the event assets are no longer invested in the Master
Fund, the Adviser's duties shall revert to those contained in this Section
2."
2. Paragraph 8 of the Investment Advisory Agreement is hereby amended with
respect to the SSgA S&P 500 Index Fund as follows:
"8. Compensation of the Adviser. For the services to be rendered by the
Adviser to the SSgA S&P 500 Index Fund as provided in this Agreement, the
Investment Company shall pay to the Adviser no compensation, provided that
assets remain invested in the Master Fund as described in paragraph 1 of
the rider. In the event assets of the S&P 500 Index Fund are no longer
invested in the Master Fund, the Investment Company shall pay to the
Adviser compensation as designated below."
SSgA S&P 500 Index Fund 0.03%
B-1
<PAGE>
AMENDED
EXHIBIT "A"
To the Investment Advisory Agreement
______________, 2000
As consideration for the Adviser's services to the following Funds, the Adviser
shall receive from each of these Funds an annual advisory fee, accrued daily at
the rate of 1/365th of the applicable advisory fee rate and payable monthly on
the first business day of each month, of the following annual percentages of
each Portfolio's average daily net assets under the month:
SSgA Money Market Fund 0.25%
SSgA US Government Money Market Fund 0.25%
SSgA S&P 500 Index Fund 0.00%*
SSgA Matrix Equity Fund 0.75%
SSgA International Pacific Index Fund 0.50%
SSgA Bond Market Fund 0.30%
SSgA Yield Plus Fund 0.25%
SSgA US Treasury Money Market Fund 0.10%**
SSgA US Treasury Obligations Fund 0.25%
SSgA Growth and Income Fund 0.85%
SSgA Intermediate Fund 0.30%***
SSgA Prime Money Market Portfolio 0.10%**
SSgA Emerging Markets Fund 0.75%
SSgA Tax Free Money Market Fund 0.25%
SSgA Real Estate Equity Fund 0.65%
SSgA Small Cap Fund 0.75%
SSgA Active International Fund 0.75%
SSgA Life Solutions Income and Growth Fund 0.00%
SSgA Life Solutions Balanced Fund 0.00%
SSgA Life Solutions Growth Fund 0.00%
SSgA Special Small Cap Fund 0.75%
SSgA International Growth Opportunities Fund 0.75%
SSgA High Yield Bond Fund 0.30%
SSgA Aggressive Equity Fund 0.75%
SSgA IAM SHARES Fund 0.25%
- ----------
* Provided the terms of the SSgA S&P 500 Index Fund Rider to the Investment
Advisory Agreement are satisfied.
** Pursuant to a contractual waiver until 12/31/10.
*** Pursuant to a contractual waiver until 12/31/02.
B-2
<PAGE>
APPENDIX C - THE FUND'S CURRENT INVESTMENT RESTRICTIONS
The Fund is subject to the following investment restrictions. Restrictions 1
through 11 are fundamental and restrictions 12 through 15 are non-fundamental.
Unless otherwise noted, these restrictions apply at the time an investment is
made. The Fund will not:
(1) Invest 25% or more of the value of its total assets in securities of
companies primarily engaged in any one industry (other than the US Government,
its agencies and instrumentalities). Concentration may occur as a result of
changes in the market value of portfolio securities, but may not result from
investment. Notwithstanding the foregoing general restrictions, the Fund will
concentrate in particular industries to the extent its underlying index
concentrates in those industries.
(2) Borrow money (including reverse repurchase agreements), except as a
temporary measure for extraordinary or emergency purposes or to facilitate
redemptions (not for leveraging or investment), provided that borrowings do not
exceed an amount equal to 33-1/3% of the current value of the Fund's assets
taken at market value, less liabilities other than borrowings. If at any time a
Fund's borrowings exceed this limitation due to a decline in net assets, such
borrowings will within three days be reduced to the extent necessary to comply
with this limitation. A Fund will not purchase investments once borrowed funds
(including reverse repurchase agreements) exceed 5% of its total assets.
(3) Pledge, mortgage or hypothecate its assets. However, a Fund may pledge
securities having a market value at the time of the pledge not exceeding 33-1/3%
of the value of the Fund's total assets to secure borrowings permitted by
paragraph (2) above.
(4) With respect to 75% of its total assets, invest in securities of any
one issuer (other than securities issued by the US Government, its agencies, and
instrumentalities), if immediately after and as a result of such investment the
current market value of the Fund's holdings in the securities of such issuer
exceeds 5% of the value of the Fund's assets.
(5) Make loans to any person or firm; provided, however, that the making
of a loan shall not include (i) the acquisition for investment of bonds,
debentures, notes or other evidences of indebtedness of any corporation or
government which are publicly distributed or of a type customarily purchased by
institutional investors, or (ii) the entry into repurchase agreements or reverse
repurchase agreements. A Fund may lend its portfolio securities to
broker-dealers or other institutional investors if the aggregate value of all
securities loaned does not exceed 33-1/3% of the value of the Fund's total
assets.
(6) Purchase or sell commodities or commodity futures contracts except
that the Fund may enter into futures contracts and options thereon to the extent
provided in their respective Prospectuses.
(7) Purchase or sell real estate or real estate mortgage loans; provided,
however, that the Fund may invest in securities secured by real estate or
interests therein or issued by companies which invest in real estate or
interests therein.
(8) Engage in the business of underwriting securities issued by others,
except that a Fund will not be deemed to be an underwriter or to be underwriting
on account of the purchase of securities subject to legal or contractual
restrictions on disposition.
(9) Issue senior securities, except as permitted by its investment
objective, policies and restrictions, and except as permitted by the 1940 Act.
C-1
<PAGE>
(10) Purchase or sell puts, calls or invest in straddles, spreads or any
combination thereof, if as a result of such purchase the value of the Fund's
aggregate investment in such securities would exceed 5% of the Fund's total
assets.
(11) Make short sales of securities or purchase any securities on margin,
except for such short-term credits as are necessary for the clearance of
transactions. The Fund may make initial margin deposits and variation margin
payments in connection with transactions in futures contracts and related
options.
(12) Purchase from or sell portfolio securities to its officers or
directors or other interested persons (as defined in the 1940 Act) of the Fund,
including their investment advisers and affiliates, except as permitted by the
1940 Act and exemptive rules or orders thereunder.
(13) Invest in securities issued by other investment companies except in
connection with a merger, consolidation, acquisition of assets, or other
reorganization approved by the Fund's shareholders, except that the Fund may
invest in such securities to the extent permitted by the 1940 Act.
(14) Invest more than 15% of its net assets in the aggregate in illiquid
securities or securities that are not readily marketable, including repurchase
agreements and time deposits of more than seven days' duration.
(15) Make investments for the purpose of gaining control of an issuer's
management.
C-2
<PAGE>
APPENDIX D - THE FUND'S PROPOSED INVESTMENT RESTRICTIONS
[The following are the Fund's investment restrictions as proposed, marked
to show changes from the Fund's current investment restrictions. The provisions
that contain strikeouts ([strikeout]example[/strikeout]) are those that are in
the current investment restrictions and are proposed to be eliminated. The
provisions that are double underlined ([double underlined]example[/double
underlined]) are proposed additions.]
The Fund is subject to the following investment restrictions. Restrictions 1
through 10 are fundamental and restrictions 11 through 13 are non-fundamental.
Unless otherwise noted, these restrictions apply at the time an investment is
made. The Fund will not:
(1) Invest 25% or more of the value of its total assets in securities of
companies primarily engaged in any one industry (other than the US Government,
its agencies and instrumentalities). Concentration may occur as a result of
changes in the market value of portfolio securities, but may not result from
investment. Notwithstanding the foregoing general restrictions, the Fund will
concentrate in particular industries to the extent its underlying index
concentrates in those industries.
(2) Borrow [strikeout]money (including reverse repurchase agreements),
except as a temporary measure for extraordinary or emergency purposes or to
facilitate redemptions (not for leveraging or investment), provided that
borrowings do not exceed an amount equal to[/strikeout] more than 33-1/3% of the
[strikeout]current[/strikeout] value of [strikeout]the Fund's[/strikeout] its
total assets [strikeout]taken at market value,[/strikeout] less [double
underlined]all[/double underlined] liabilities [double underlined]and
indebtedness[/double underlined] (other than [double underlined]such[/double
underlined] borrowings[double underlined])[/double underlined]. [strikeout]If at
any time a Fund's borrowings exceed this limitation due to a decline in net
assets, such borrowings will within three days be reduced to the extent
necessary to comply with this limitation. A Fund will not purchase investments
once borrowed funds (including reverse repurchase agreements) exceed 5% of its
total assets.[/strikeout]
[strikeout](3) Pledge, mortgage or hypothecate its assets. However, a Fund
may pledge securities having a market value at the time of the pledge not
exceeding 33-1/3% of the value of the Fund's total assets to secure borrowings
permitted by paragraph (2) above.[/strikeout]
[double underlined](3)[/double underlined][strikeout](4)[/strikeout] With
respect to 75% of its total assets, invest in securities of any one issuer
(other than securities issued by the US Government, its agencies, and
instrumentalities), if immediately after and as a result of such investment (i)
the current market value of the Fund's holdings in the securities of such issuer
exceeds 5% of the value of the Fund's assets [double underlined]or (ii) the Fund
holds more than 10% of the voting securities of the issuer.[/double underlined]
[double underlined](4)[/double underlined][strikeout](5)[/strikeout] Make
loans to any person or firm; provided, however, that the making of a loan shall
not include (i) the acquisition for investment of bonds, debentures, notes or
other evidences of indebtedness of any corporation or government which are
publicly distributed or of a type customarily purchased by institutional
investors, or (ii) the entry into repurchase agreements or reverse repurchase
agreements. A Fund may lend its portfolio securities to broker-dealers or other
institutional investors if the aggregate value of all securities loaned does not
exceed 33-1/3% of the value of the Fund's total assets.
[double underlined](5)[/double underlined][strikeout](6)[/strikeout]
Purchase or sell commodities or commodity futures contracts except that the Fund
may enter into futures contracts and options thereon to the extent provided in
their respective Prospectuses.
[double underlined](6)[/double underlined][strikeout](7)[/strikeout]
Purchase or sell real estate or real estate mortgage loans; provided, however,
that the Fund may invest in securities secured by real estate or interests
therein or issued by companies which invest in real estate or interests therein.
D-1
<PAGE>
[double underlined](7)[/double underlined][strikeout](8)[/strikeout]
Engage in the business of underwriting securities issued by others, except that
a Fund will not be deemed to be an underwriter or to be underwriting on account
of the purchase of securities subject to legal or contractual restrictions on
disposition.
[double underlined](8)[/double underlined][strikeout](9)[/strikeout] Issue
senior securities, except as permitted by its investment objective, policies and
restrictions, and except as permitted by the 1940 Act.
[strikeout](10) Purchase or sell puts, calls or invest in straddles,
spreads or any combination thereof, if as a result of such purchase the value of
the Fund's aggregate investment in such securities would exceed 5% of the Fund's
total assets.[/strikeout]
[strikeout](11) Make short sales of securities or purchase any securities
on margin, except for such short-term credits as are necessary for the clearance
of transactions. The Fund may make initial margin deposits and variation margin
payments in connection with transactions in futures contracts and related
options.[/strikeout]
[double underlined](9)[/double underlined][strikeout](12)[/strikeout]
Purchase from or sell portfolio securities to its officers or directors or other
interested persons (as defined in the 1940 Act) of the Fund, including their
investment advisers and affiliates, except as permitted by the 1940 Act and
exemptive rules or orders thereunder.
[double underlined](10) Notwithstanding the investment policies and
restrictions of the Fund, the Fund may invest all or part of its investable
assets in a management investment company with substantially the same investment
objective, policies and restrictions as the Fund.[/double underlined]
[double underlined](11)[/double underlined][strikeout](13)[/strikeout]
Invest in securities issued by other investment companies except in connection
with a merger, consolidation, acquisition of assets, or other reorganization
approved by the Fund's shareholders, except that the Fund may invest in such
securities to the extent permitted by the 1940 Act.
[double underlined](12)[/double underlined][strikeout](14)[/strikeout]
Invest more than 15% of its net assets in the aggregate in illiquid securities
or securities that are not readily marketable, including repurchase agreements
and time deposits of more than seven days' duration.
[double underlined](13)[/double underlined][strikeout](15)[/strikeout]
Make investments for the purpose of gaining control of an issuer's management.
D-2
