RAINIER INVESTMENT MANAGEMENT MUTUAL FUNDS
Supplement to Prospectus dated June 1, 1995
On April 15, 1996, the disclosure under the caption "Minimum Purchase" in the
Prospectus Summary on page 3 and under "Purchasing Shares: Opening an Account"
on page 12 of the Prospectus is revised to indicate that the minimum initial
investment in each Portfolio is $25,000 (twenty-five thousand dollars).
<PAGE>
Rainier Investment Management (RIM)
No-Load Mutual Funds
Rainier Investment Management Mutual Funds (the "Funds" or "Trust") is an
open-end investment company consisting of four separate, diversified portfolios
(the "Portfolios"), each of which has its own objective, assets, liabilities and
net assets. Rainier Investment Management, Inc.(R) ("RIM" or the "Advisor")
serves as investment advisor to the Funds and the Portfolios.
Small/Mid Cap Equity Portfolio
The Small/Mid Cap Equity Portfolio seeks to maximize long-term capital
appreciation. The Portfolio invests primarily in a diversified portfolio of
common stocks of companies with small and medium-size capitalizations.
Core Equity Portfolio
The Core Equity Portfolio seeks to maximize long-term capital appreciation.
The Portfolio invests primarily in a diversified portfolio of common stocks of
U.S. companies.
Balanced Portfolio
The Balanced Portfolio seeks to provide investors with a balance of
long-term capital appreciation and current income. The Portfolio invests
primarily in a diversified portfolio of common stocks of U.S. companies and
investment grade, intermediate-term debt securities and cash equivalent
securities.
Intermediate Fixed Income Portfolio
The Intermediate Fixed Income Portfolio seeks to provide current income. The
Portfolio invests primarily in a diversified portfolio of investment grade,
intermediate-term debt securities issued by corporations and the U.S.
Government.
This Prospectus sets forth the basic information that prospective investors
should know before investing in the Portfolios. Investors should read it
carefully and retain it for future reference. The "Statement of Additional
Information" dated June 1, 1995, as may be amended from time to time, has been
filed with the Securities and Exchange Commission and is incorporated by
reference in its entirety into this Prospectus. You may obtain this "Statement
of Additional Information" without charge by writing to the Funds at the address
noted below or by calling (800) 248-6314.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION; NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
601 Union Street, Suite 2801
Seattle, Washington 98101
(800) 248-6314
Prospectus dated June 1, 1995.
<PAGE>
TABLE OF CONTENTS
SUMMARY OF EXPENSES............................................................2
PROSPECTUS SUMMARY.............................................................3
FINANCIAL HIGHLIGHTS...........................................................4
INVESTMENT OBJECTIVES
AND POLICIES...................................................................5
Small/Mid Cap Equity Portfolio...................................5
Core Equity Portfolio............................................6
Balanced Portfolio...............................................7
Intermediate Fixed Income Portfolio..............................7
RISK CONSIDERATIONS............................................................8
Small Companies..................................................8
Interest Rates...................................................8
Portfolio Leverage...............................................9
Foreign Securities and Other Risks...............................9
Investment Grade Fixed-Income Securities.........................9
OTHER SECURITIES AND
INVESTMENT TECHNIQUES..........................................................9
Short-Term Investments...........................................9
U.S. Government Securities.......................................9
Asset-Backed Securities.........................................10
Foreign Securities..............................................10
When-Issued Securities..........................................10
Portfolio Turnover..............................................10
Illiquid and Restricted Securities..............................10
Investment Restrictions.........................................10
ORGANIZATION AND MANAGEMENT...................................................11
Organization....................................................11
The Advisor.....................................................11
Management Fee..................................................11
Managers of the Portfolios......................................11
Expense Limitation..............................................11
Portfolio Transactions and Brokerage............................11
The Administrator...............................................12
Distribution Plan...............................................12
PURCHASING SHARES.............................................................12
Opening an Account..............................................12
Purchasing by Mail..............................................12
Purchasing by Wire..............................................13
Purchasing by Retirement Plans and IRAs.........................13
Additional Investments..........................................13
SELLING SHARES (REDEMPTIONS)..................................................14
Redemptions by Mail.............................................14
Signature Guarantee.............................................14
Redemptions by Telephone........................................14
Redemptions by Wire.............................................15
Redemption of Small Accounts....................................15
SHAREHOLDER SERVICES..........................................................15
Automatic Reinvestment..........................................15
Exchange Privilege..............................................15
Exchange Privilege Annual Limits................................16
Automatic Withdrawal Plan.......................................16
Shareholder Reports.............................................16
SHARE PRICE DETERMINATION.....................................................16
Share Price ...................................................16
Net Asset Value.................................................16
Share Certificates..............................................16
DIVIDENDS, DISTRIBUTIONS
AND TAX STATUS................................................................17
Dividends and Distributions.....................................17
Tax Status......................................................17
PERFORMANCE INFORMATION.......................................................18
Total Return....................................................18
Yield...........................................................18
GENERAL INFORMATION...........................................................19
Voting Rights...................................................19
<PAGE>
SUMMARY OF EXPENSES
This table is designed to help you understand the costs of investing in the
Portfolios. Although not required to do so, the Advisor has agreed to reimburse
each Portfolio to the extent necessary so that its ratio of total operating
expenses to average net assets will not exceed the following levels: Small/Mid
Cap Equity Portfolio - 1.48%; Core Equity Portfolio - 1.29%; Balanced Portfolio
- - 1.19%; Intermediate Fixed Income Portfolio - 0.95%.
<TABLE>
<CAPTION>
Small/Mid Intermediate
Cap Equity Core Equity Balanced Fixed Income
Portfolio Portfolio Portfolio Portfolio
-----------------------------------------------------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales charge on purchases
(as a percentage of offering price) None None None None
Sales charge on reinvested dividends None None None None
Redemption fee None None None None
Exchange fee None None None None
Total Annual Portfolio Operating Expenses
(as a percentage of average net assets)
Management fees 0.85% 0.75% 0.70% 0.50%
12b-1 expenses* 0.25% 0.25% 0.25% 0.25%
Other expenses after
expense reimbursement 0.38% 0.29% 0.24% 0.20%
------------------------------------------------------
Total operating expenses
after expense reimbursement 1.48%** 1.29%** 1.19%** 0.95%**
</TABLE>
The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor in any of the Portfolios will bear
directly or indirectly.
*12b-1 fees may be paid to financial intermediaries including Charles Schwab &
Company, Incorporated ("Schwab") for services provided by Schwab through
Schwab's OneSource(TM) sales program(s). Long-term shareholders may pay more
than the economic equivalent of the maximum front-end sales charges permitted
by the rules of the National Association of Securities Dealers. For more
information on 12b-1 fees, see "Distribution Plan" on page 12.
**For the fiscal period ended March 31, 1995, ratios of total operating expenses
to average net assets for the Portfolios before the Advisor's waivers or
reimbursements were as follows: Small/Mid Cap Equity-2.93%; Core Equity-1.86%;
Balanced-2.29%; Intermediate Fixed Income-2.44%. In subsequent years, overall
Portfolio operating expenses will not fall below the applicable percentage
limitation until the Advisor has been fully reimbursed for fees foregone and
expenses paid.
For more information regarding costs and expenses, see "Organization and
Management" on page 11.
EXAMPLE
-------
This table illustrates the net transaction and operating expenses that would
be incurred by an investment in the Portfolios over different time periods
assuming a $1,000 investment, a 5% annual return, and redemption at the end of
one, three, five and ten years. The Portfolios charge no redemption fees.
Small/Mid Intermediate
Cap Equity Core Equity Balanced Fixed Income
Portfolio Portfolio Portfolio Portfolio
-----------------------------------------------------
One year ...................$ 15 $ 13 $ 12 $ 10
Three years ................ 47 41 38 30
Five years ................. 81 71 66 53
Ten years .................. 178 156 145 117
The example shown above assumes that the Advisor will limit the annual operating
expenses of each Portfolio to the totals shown. The example should not be
considered to be a representation of past or future expenses and actual expenses
may be greater or less than those shown. In addition, federal regulations
require the example to assume a 5% annual return, but the Portfolios' actual
returns may be higher or lower.
PROSPECTUS SUMMARY
The Funds
The Funds are organized as a series of distinct portfolios within a Delaware
business trust, which is an open-end diversified management investment company.
The Funds consist of four separate, diversified portfolios (the "Portfolios"),
each of which has its own objective, assets, liabilities and net assets.
Investment Objectives and Policies
Each Portfolio has its own investment objectives. See Prospectus for full
discussion of objectives of the Small/Mid Cap Equity Portfolio, Core Equity
Portfolio, Balanced Portfolio and Intermediate Fixed Income Portfolio.
The Investment Advisor
Rainier Investment Management, Inc.(R) ("RIM" or the "Advisor"), Seattle,
Washington, serves as investment advisor to the Funds and the Portfolios. The
Advisor currently manages over $1.2 billion of discretionary assets for various
clients including corporations, public and corporate pension plans, foundations
and charitable endowments, and high net worth individuals.
Management Fee
For its services, the Advisor receives a fee, accrued daily and paid monthly
at the following annual percentages of average net assets: Small/Mid Cap Equity
Portfolio-0.85%; Core Equity Portfolio-0.75%; Balanced Portfolio-0.70%;
Intermediate Fixed Income Portfolio-0.50%.
Minimum Purchase
The minimum initial investment in each Portfolio is $250,000. The Funds may
waive the minimum for certain retirement and other employee benefit plans; for
the Advisor=s employees, clients and their affiliates; for advisors or financial
institutions offering investors a program of services; or for any other person
or organization deemed appropriate by the Funds.
Offering Price/Redemption
Shares are offered at net asset value without a sales charge, and may be
redeemed at their net asset value on any business day. See "Purchasing Shares"
and "Selling Shares" on pages 12-15.
Dividends
The two Equity Portfolios intend to pay dividends annually. The Balanced
Portfolio intends to pay dividends quarterly. The Intermediate Fixed Income
Portfolio intends to pay dividends monthly.
Risk Considerations
Like all investments, an investment in the Portfolios involves certain
risks. The equity and fixed-income securities held by the Portfolios and the
value of the Portfolios' shares will fluctuate with market and other economic
conditions, so that investors' shares, when redeemed, may be worth more or less
than their original cost. See page 8 for a further discussion of risk
considerations.
Transfer Agent, Custodian and Fund Accountant
Firstar Trust Company
Independent Auditors
KPMG Peat Marwick LLP
Distributor
First Fund Distributors, Inc.
Legal Counsel
Heller Ehrman White & McAuliffe
The above is qualified in its entirety by the detailed information appearing
elsewhere in this Prospectus and in the "Statement of Additional Information".
FINANCIAL HIGHLIGHTS
The following information has been audited by KPMG Peat Marwick LLP, independent
certified public accountants, whose unqualified report on the Financial
Statements and Financial Highlights is included in the Funds' Annual Report
which is part of the "Statement of Additional Information". Further information
about the Fund's performance is contained in its Annual Report, which may be
obtained without charge by writing or calling the Fund at the address or
telephone listed on the first page of this Prospectus.
Rainier Investment Management Mutual Funds
For a share outstanding for the period from May 10, 1994
(commencement of operations) to March 31, 1995
<TABLE>
<CAPTION>
Small/Mid Core Intermediate
Cap Equity Equity Balanced Fixed Income
Portfolio Portfolio Portfolio Portfolio
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.00 $ 12.00 $ 12.00 $ 12.00
Income from investment operations
Net investment income 0.10 0.11 0.30 0.57
Net realized and unrealized gains
on investments 2.18 2.00 1.13 --
-------------------------------------------------------------
Total from investment operations 2.28 2.11 1.43 0.57
-------------------------------------------------------------
Distributions
From net investment income (0.07) (0.07) (0.31) (0.57)
From net realized gains (0.32) (0.20) (0.16) --
-------------------------------------------------------------
Total distributions (0.39) (0.27) (0.47) (0.57)
-------------------------------------------------------------
Net asset value, end of period $ 13.89 $ 13.84 $ 12.96 $ 12.00
=============================================================
Total return (not annualized) 19.38% 17.87% 12.23% 4.92%
=============================================================
Net assets at end of period (in 000's) $ 10,120 $ 20,430 $ 13,724 $ 6,370
=============================================================
Ratio of expenses to average net assets
(net of expense reimbursements) 1.48%(1) 1.29%(1) 1.19%(1) 0.95%(1)
=============================================================
Ratio of net investment income to average
net assets (net of expense reimbursement) 1.04%(1) 1.25%(1) 3.04%(1) 5.57%(1)
=============================================================
Portfolio turnover rate 152.21% 133.18% 92.40% 5.21%
=============================================================
</TABLE>
(1)Annualized.
Investment Objectives and Policies
Rainier Investment Management Mutual Funds (the "Funds") is an open-end
management investment company consisting of four separate, diversified
portfolios (the "Portfolios"), each of which has its own objective, assets,
liabilities and net assets. Rainier Investment Management, Inc.(R) ("RIM" or the
"Advisor") serves as investment advisor to the Funds and the Portfolios.
The investment objective and policy of each Portfolio is described below. In
addition, each of the Portfolios may make use of certain types of investments
and investing techniques that are described under "Other Securities and
Investment Techniques" on page 9. The value of the Portfolios' investments will
fluctuate with market and other economic conditions.
Small/Mid Cap Equity Portfolio
The Small/Mid Cap Equity Portfolio seeks to provide investors with maximum
long-term capital appreciation. The Portfolio invests primarily in a diversified
portfolio of common stocks of companies with small and medium-size
capitalizations. The Advisor considers small capitalization companies to be
those with the same capitalization ranges as companies in the Russell 2000
Index(TM) and mid-capitalization companies to be those with the same
capitalization ranges as companies in the Russell Mid-Cap Index.(TM) While not
an investment objective of the Portfolio, capital appreciation that is
consistently greater than that of the Russell Mid-Cap Index(TM) is the goal of
the Advisor. There is no assurance the Portfolio will meet its objective. It is
expected that holdings in securities of small cap companies will range from 15%
to 40% and mid-cap company securities will range from 60% to 85% of the
Portfolio's net assets. The characteristics of equity securities selected by the
Advisor are described on page 6 under "Additional Equity Investment
Considerations."
The securities of small and medium-sized companies may present greater
opportunities for capital appreciation, but may also involve greater risks than
large companies. These securities have the characteristics and risks described
under "Risk Considerations" on page 8.
The Portfolio may invest in stocks of companies which are either included in
the Russell 2000 Index(TM) or the Russell Mid-Cap Index(TM) or have equity
capitalizations within the ranges of these indices at the time of purchase. The
Russell Indices are unmanaged indices of equity securities of companies which,
as of June 30, 1994, range in capitalization from $5 million to $910 million for
the Russell 2000 Index(TM) and from $330 million to $4.9 billion for the Russell
Mid-Cap Index.(TM) Investments in companies whose capitalizations grow above the
maximum capitalization levels of these indices may continue to be held if
particularly attractive. Companies in which the Portfolio invests are
diversified over a broad cross section of industries. As a risk-control measure,
extreme overweighting or underweighting of the Portfolio relative to the Russell
Mid-Cap Index(TM) sector weightings is normally avoided by comparing the
Portfolio to Index weightings and making appropriate adjustments.
Equity securities in which the Portfolio invests include common stocks,
American Depositary Receipts ("ADR"s) and securities having the characteristics
of common stocks, such as convertible preferred stocks, convertible debt
securities [which will be rated Baa or better by Moody's Investors Service, Inc.
("Moody's"), or BBB or better by Standard & Poor's Corporation ("Standard &
Poor's")] and warrants. See "Risk Considerations" on page 9 for a discussion of
the characteristics of securities rated Baa by Moody's or BBB by Standard &
Poor's. Under normal circumstances, the Portfolio will invest at least 65%, and
expects to invest 90% or more of its total assets in equity securities of small
and mid-capitalization issuers.
Core Equity Portfolio
The Core Equity Portfolio seeks to provide investors with maximum long-term
capital appreciation. The Portfolio invests primarily in a diversified portfolio
of common stocks of U.S. companies. Although not an investment objective of the
Portfolio, capital appreciation that is consistently greater than that of the
Standard & Poor's 500 Stock Index is the goal of the Advisor. There is no
assurance the Portfolio will meet its objective.
Among investment managers, the term "Core Equity" denotes companies within
the Standard & Poor=s 500 Stock Index. In order to diversify and enhance safety,
the Portfolio may invest in stocks of companies of all sizes. Companies in which
the Portfolio invests are diversified over a broad cross section of industries.
As a risk-control measure, extreme overweighting or underweighting of the
Portfolio relative to the Standard & Poor's 500 Stock Index's sector weightings
is normally avoided by comparing the Portfolio to Index weightings and making
appropriate adjustments. Other characteristics of equity securities selected by
the Advisor are described below under "Additional Equity Investment
Considerations."
The Core Equity Portfolio may hold equity securities of companies with
smaller market capitalizations. These securities have the characteristics and
risks described under "Risk Considerations" on page 8.
Equity securities in which the Portfolio invests include common stocks,
ADRs, and securities having the characteristics of common stocks, such as
convertible preferred stocks, convertible debt securities (which will be rated
Baa or better by Moody's, or BBB or better by Standard & Poor's) and warrants.
See "Risk Considerations" on page 9 for a discussion of the characteristics of
securities rated Baa by Moody's or BBB by Standard & Poor's. Under normal
circumstances, the Portfolio will invest at least 65% or more of its assets in
equity securities of core equity companies.
Additional Equity
Investment Considerations
The Advisor refers to its investment philosophy with respect to the equity
portion of the Portfolios as the "Growth at a Reasonable Price" ("GARP")
investment philosophy. A primary benefit of the GARP strategy in the view of the
Advisor is the ability to generate competitive investment returns in many
different market environments. For more information on the GARP investment
philosophy, see the "Statement of Additional Information."
In selecting securities for purchase in the Small/Mid Cap Equity Portfolio,
Core Equity Portfolio and the Balanced Portfolios (see below for Balanced
Portfolio objectives), the Advisor emphasizes companies that are likely to
demonstrate superior earnings growth relative to their peers, positive earnings
surprises, and whose equities are selling at attractive valuations. The Advisor
favors companies that exhibit advantageous competitive strategies or operate in
favorable competitive environments. Strong management with a significant
ownership position in the company is desired, as are companies with balance
sheet integrity and financial strength.
The Advisor considers the sale of specific equity securities when they
approach predetermined target prices; when fundamental prospects or earnings are
deteriorating or are expected to deteriorate; or when there are more attractive
equity securities on a risk/reward basis in the same industry, thereby
warranting a swap.
The Advisor supports its selection of individual securities through
intensive research and pursues qualitative and quantitative disciplines to
determine when securities should be purchased and sold. In unusual
circumstances, economic, monetary and other factors may cause the Advisor to
assume a temporary, defensive position during which all or a substantial portion
of the equity assets of each Portfolio may be invested in short-term
instruments. Short-term instruments are described under "Other Securities and
Investment Techniques" on page 9. Under normal market conditions, it is expected
that investments in such short-term instruments may range from zero (fully
invested) to 20% of the Portfolio=s assets. The Portfolios may also lend
securities, and use repurchase agreements. For more information on these
investments, see the "Statement of Additional Information."
Balanced Portfolio
The Balanced Portfolio seeks to provide investors with a balance of
long-term capital appreciation and current income. The Portfolio invests
primarily in a diversified portfolio of common stocks of U.S. companies and
investment grade, intermediate-term debt securities and cash equivalent
securities. The Advisor seeks to provide long-term capital appreciation and
income with less return variability and risk than that of the stock market.
The Advisor views the Standard & Poor's 500 Stock Index as a suitable
measure of the stock market. Based on its analysis of the securities markets,
the Advisor believes that over time, a Portfolio that balances its holdings
among common stocks, investment grade fixed-income securities and cash
equivalents is less likely to incur capital loss than the stock market and is
more likely to produce returns that will fluctuate less than those of the stock
market.
Under normal market conditions, it is expected that the Portfolio=s assets
should be allocated among equity securities, fixed-income securities, and
short-term cash equivalent securities. Equity securities will normally
constitute from 35% to 65% of the Portfolio=s net assets. Fixed-income
securities normally will represent from 30% to 55% of the Portfolio=s net
assets. Cash equivalent securities will normally constitute from 0% to 35% of
the Portfolio=s net assets. The Advisor utilizes an approach of strategic asset
allocation, where short-term trends in expected equity and fixed-income returns
are evaluated against the background of long-term historical returns. When the
Advisor believes that one asset group is clearly more attractive than another in
the short-term trend, a gradual shift to that asset group may be initiated.
Aggressive market timing is avoided. Shifts from one asset class to another are
normally made in 5% or 10% increments.
The equity securities in which the Balanced Portfolio will invest will be of
the type and have the same selection criteria as those described above for the
Core Equity Portfolio. Fixed-income securities held by the Portfolio will be of
the type and have the same selection criteria as those described below for the
Intermediate Fixed Income Portfolio. See "Risk Considerations" on page 9 for a
discussion of the characteristics of securities rated Baa by Moody's or BBB by
Standard & Poor's.
For a description of short-term cash equivalent securities in which the
Portfolio may invest, U.S. Government securities, repurchase agreements,
securities lending and other investments and techniques the Portfolio may use,
see "Other Securities and Investment Techniques" below.
Intermediate Fixed Income Portfolio
The Intermediate Fixed Income Portfolio seeks to provide investors with
current income. The Portfolio invests primarily in a diversified portfolio of
investment grade, intermediate-term debt securities providing current income.
Under normal market conditions, at least 65% of its total assets will be
invested in such fixed-income securities. Investment grade debt securities are
generally considered to be those rated Baa or better by Moody's, or BBB or
better by Standard & Poor's. See "Risk Considerations" on page 9 for a
discussion of the characteristics of securities rated Baa by Moody's or BBB by
Standard & Poor's. The Advisor intends to limit investment in securities rated
Baa by Moody's or BBB by Standard & Poor's to no more than 10% of the
Portfolio's total assets. There is no assurance the Portfolio will meet its
objective.
The Portfolio will have a dollar-weighted average maturity between three and
ten years under normal market and economic conditions. Average maturity may be
less than three years if the Advisor believes a temporary defensive posture is
appropriate. The Advisor plans to manage the Portfolio within a duration range
of +/-25% of the duration of the Lehman Brothers Intermediate
Government/Corporate Bond Index.
The Portfolio may invest in all types of domestic or U.S. dollar denominated
foreign fixed-income securities in any proportion, including bonds, notes,
convertible bonds, mortgage-backed and asset-backed securities, government and
government agency securities, zero coupon bonds, and short-term obligations such
as commercial paper and notes, bank deposits and other financial obligations,
and repurchase agreements. Under normal circumstances, the Advisor intends, but
is not obligated, to construct the Portfolio with a higher proportion of
corporate issues than government or government agency securities.
Bonds, notes and other corporate debt instruments include obligations of
varying maturities within the overall maturity range noted above over a cross
section of industries. The value of a debt security changes as interest rates
fluctuate. The magnitude of the change is dependent upon the maturity of the
security. See "Risk Considerations" below for a discussion of interest rate
risks.
For a description of short-term cash equivalent securities in which the
Portfolio may invest, government and government agency securities, asset-backed
securities, and other investments and techniques the Portfolio may use, see
"Other Securities and Investment Techniques" on page 9.
In determining whether or not to invest in a particular debt security, the
Advisor considers factors such as the price, coupon and yield to maturity, the
credit quality of the issuer, the issuer=s cash flow and related coverage
ratios, the property, if any, securing the obligation and the terms of the debt
instrument, including subordination, default, sinking fund and early redemption
provisions.
The Portfolio will invest in securities consistent with its investment
objective, and which meet the quality and maturity characteristics established
for the Portfolio. In doing so, it will consider the ratings of Moody's and
Standard & Poor's assigned to various obligations.
The Portfolio intends to purchase securities for the portfolio that are
rated investment grade. Subsequent to its purchase, the rating of an issue of
securities may be reduced below the current minimum rating required for its
purchase. This event does not require the sale of such an issue, but the Advisor
will consider such an event in determining whether to continue to hold the
obligation. The "Statement of Additional Information" contains a description of
Moody's and Standard & Poor's ratings.
Risk Considerations
Small Companies
The Small/Mid Cap Equity, Core Equity and Balanced Portfolios may invest in
smaller companies that can benefit from the development of new products and
services. These smaller companies may present greater opportunities for capital
appreciation, but may also involve greater risks than larger companies. Such
smaller companies may have limited product lines, markets or financial
resources, and their securities may trade less frequently and in more limited
volume than the securities of larger, more mature companies. As a result, the
prices of the securities of such smaller companies may fluctuate to a greater
degree than the prices of the securities of other issuers.
Interest Rates
The Balanced and Intermediate Fixed Income Portfolios may invest in debt
securities. The market value of debt securities sensitive to prevailing interest
rates is inversely related to actual changes in interest rates, i.e., a decline
in interest rates produces an increase in market value, while an increase in
interest rates produces a decrease in market value of these debt securities.
Moreover, the longer the remaining maturity of a security, the greater is the
effect of interest rate changes on the market value of the security. In
addition, changes in the ability of an issuer to make payments of interest and
principal and in the market=s perception of an issuer's creditworthiness also
affect the market value of the debt securities of that issuer.
Portfolio Leverage
The Advisor will not invest in any securities with an intent to leverage the
Portfolios.
Foreign Securities and Other Risks
The Portfolios may invest in securities of foreign issuers and may make use
of other investments and investment techniques, including securities lending,
repurchase agreements and illiquid securities. However, the Portfolios have no
present intention to make use of securities lending, repurchase agreements or
illiquid securities. See the "Statement of Additional Information" for a
description of these techniques. Foreign securities are described on page 10
under "Other Securities and Investment Techniques."
Investment Grade Fixed-Income Securities
Investment grade debt securities are generally considered to be those rated
Baa or better by Moody's, or BBB or better by Standard & Poor's. Securities
which are rated Baa by Moody's or BBB by Standard & Poor's, the lowest tier of
investment grade, are generally regarded as having adequate capacity to pay
interest and repay principal, but may have some speculative characteristics.
Changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity to make interest and principal payments than is the case
with higher grade bonds.
Other Securities and Investment Techniques
Short-Term Investments
As noted above, at times the Portfolios may invest in short-term cash
equivalent securities, either for temporary defensive purposes, or as part of
their overall investment strategy. These consist of high-quality debt
obligations maturing in one year or less from the date of purchase, such as U.S.
Government securities, certificates of deposit, bankers= acceptances, repurchase
agreements and commercial paper. High quality means the obligations have been
rated at least A-1 by Standard & Poor's or Prime-1 by Moody's, have an
outstanding issue of debt securities rated at least A by Standard & Poor's or
Moody's, or are of comparable quality in the opinion of the Advisor.
U.S. Government Securities
U.S. Government securities include direct obligations issued by the United
States Treasury, such as Treasury bills, certificates of indebtedness, notes and
bonds. They also include U.S. Government agencies and instrumentalities that
issue or guarantee securities, such as the Federal Home Loan Banks, the Federal
National Mortgage Association and the Student Loan Marketing Association. Except
for U.S. Treasury securities, obligations of U.S. Government agencies and
instrumentalities may or may not be supported by the full faith and credit of
the United States. Some, such as those of the Federal Home Loan Banks, are
backed by the right of the issuer to borrow from the Treasury, others by
discretionary authority of the U.S. Government to purchase the agencies'
obligations, while still others, such as the Student Loan Marketing Association,
are supported only by the credit of the instrumentality. In the case of
securities not backed by the full faith and credit of the United States, the
investor must look principally to the agency issuing or guaranteeing the
obligation for ultimate repayment and may not be able to assert a claim against
the United States itself in the event the agency or instrumentality does not
meet its commitment.
Asset-Backed Securities
Each Portfolio may invest in asset-backed receivables, which represent
undivided fractional interests in a trust with assets consisting of a pool of
domestic loans such as motor vehicle retail installment sales contracts or
credit card receivables. Asset-backed receivables are generally issued by
governmental, government-related and private organizations. Payments are
typically made monthly, consisting of both principal and interest payments.
Asset-backed securities may be prepaid prior to maturity and hence the actual
life of the security cannot be accurately predicted. During periods of falling
interest rates, prepayments may accelerate, which would require a Portfolio to
reinvest the proceeds at a lower interest rate. Although generally rated AAA, it
is possible that the securities could become illiquid or experience losses if
guarantors or insurers default.
Foreign Securities
Each Portfolio may invest up to 20% of its assets in foreign securities.
These include U.S. dollar denominated securities of foreign issuers and
securities of foreign issuers that are listed and traded on a domestic national
securities exchange. Currently, the Advisor intends to invest only in U.S.
dollar denominated securities of foreign issuers or ADRs.
There are risks associated with investing in foreign securities. There may
be less publicly available information about these issuers than is available
about companies in the U.S., and foreign auditing requirements may not be
comparable to those in the U.S. Interest or dividends on foreign securities may
be subject to foreign withholding taxes. Investments in foreign countries may be
subject to the possibility of expropriation or confiscatory taxation, exchange
controls, political or social instability or diplomatic developments that could
adversely affect the value of those investments. In addition, the value of the
foreign securities may be adversely affected by movements in the exchange rates
between foreign currencies and the U.S. dollar, as well as other political and
economic developments.
When-Issued Securities
The Portfolios may purchase securities on a when-issued or delayed-delivery
basis, generally in connection with an underwriting or other offering.
When-issued and delayed-delivery transactions occur when securities are bought
with payment for and delivery of the securities scheduled to take place at a
future time, beyond normal settlement dates, generally from 15 to 45 days after
the transaction. The Portfolios will segregate liquid assets, such as cash, U.S.
Government securities and other liquid, high-quality debt securities in an
amount sufficient to meet their payment obligations with respect to these
transactions.
Portfolio Turnover
Portfolio turnover may exceed 100% for the Small/Mid Cap Equity, Core Equity
and Balanced Portfolios. Higher portfolio turnover involves correspondingly
greater brokerage commissions and other transaction costs, which are borne
directly by the Portfolios, and may increase realized capital gains which are
taxable to shareholders when distributed.
Illiquid and Restricted Securities
None of the Portfolios may invest more than 15% of their net assets in
illiquid securities. For more information, see the "Statement of Additional
Information."
Investment Restrictions
The Funds and the Portfolios have adopted certain investment restrictions,
which are described fully in the "Statement of Additional Information." Like the
Portfolios' investment objectives, certain of these restrictions are fundamental
and may be changed only by a majority vote of the Portfolios'outstanding shares.
Organization and Management
Organization
The Funds are organized as a series of distinct portfolios within a Trust,
commonly known as a Delaware business trust, which is an open-end diversified
management investment company. The Funds consist of four separate diversified
portfolios (the "Portfolios"), each of which has its own objective, assets,
liabilities and net assets. The Trust's Board of Trustees decides on matters of
general policy and reviews the activities of the Advisor, Distributor and
Administrator. The Trust=s officers conduct and supervise the daily business
operations of the Trust.
The Advisor
Rainier Investment Management, Inc.(R) ("RIM"), incorporated in 1989, serves
as investment advisor to the Funds. RIM currently manages over $1.2 billion of
discretionary assets for various clients including corporations, public and
corporate pension plans, foundations and charitable endowments, and high net
worth individuals. The Advisor is owned and operated by its five principals. RIM
is located at:
601 Union Street, Suite 2801
Seattle, Washington 98101
Management Fee
Subject to the direction and control of the Trustees, the Advisor formulates
and implements an investment program for each Portfolio, which includes
determining which securities should be bought and sold. The Advisor also
provides certain of the officers of the Trust. For its services, the Advisor
receives a fee, accrued daily and paid monthly at the following annual
percentages of average net assets: Small/Mid Cap Equity Portfolio-0.85%; Core
Equity Portfolio-0.75%; Balanced Portfolio-0.70%; Intermediate Fixed Income
Portfolio-0.50%.
Managers of the Portfolios
The managers of the Small/Mid Cap Equity and Core Equity Portfolios are
James R. Margard, CFA, and David A. Veterane, CFA. The managers of the
Intermediate Fixed Income Portfolio are Patricia L. Frost and Michael E. Raney,
CFA. The Balanced Portfolio is team managed by the Advisor's Investment
Committee, whose members are firm principals and/or equity and fixed-income
portfolio managers. Current members are: Patricia L. Frost; J. Glenn Haber;
James R. Margard, CFA; Michael E. Raney, CFA; and David A. Veterane, CFA. All
have been associated with the Advisor in management capacities for at least the
past five years.
Expense Limitation
The Portfolios are responsible for paying their own operating expenses.
Although not required to do so, the Advisor has agreed to waive or reimburse the
expenses of each Portfolio to the extent necessary so that its ratio of
operating expenses to average net assets will not exceed the following levels:
Small/Mid Cap Equity Portfolio-1.48%; Core Equity Portfolio-1.29%; Balanced
Portfolio-1.19%; Intermediate Fixed Income Portfolio-0.95%. Any reductions made
by the Advisor in its fees or payments or reimbursement of expenses which are
the Portfolio's obligation are subject to reimbursement by the Portfolio
provided the Portfolio is able to effect such reimbursement and remain in
compliance with applicable expense limitations that may be imposed by regulatory
authorities. The Trustees believe that it is likely that the Portfolios will be
of a sufficient size to permit the reimbursement of any such reductions or
payments. A description of any such reimbursements and the amounts paid will be
set forth in the Financial Statements that are included in the Portfolio's
Annual and Semi-Annual Reports to shareholders.
Portfolio Transactions and Brokerage
The Advisor considers a number of factors in determining which brokers or
dealers to use for the Portfolios' transactions. These factors include, but are
not limited to, the reasonableness of commissions, quality of services and
execution, and the availability of research which the Advisor may lawfully and
appropriately use in its investment management and advisory capacities. Provided
the Portfolio receives prompt execution at competitive prices, the Advisor may
also consider the sale of Portfolio shares as a factor in selecting
broker-dealers for portfolio transactions. For more information, please refer to
the "Statement of Additional Information."
The Administrator
Investment Company Administration Corporation (the "Administrator"),
pursuant to an administration agreement with the Funds, supervises the overall
administration of the Funds and the Portfolios including, among other
responsibilities, the preparation and filing of all documents required for
compliance by the Trust or the Portfolios with applicable laws and regulations,
arranging for the maintenance of books and records of the Trust and the
Portfolios, and supervision of other organizations that provide services to the
Trust and the Portfolios. Certain officers of the Funds and the Portfolios may
be provided by the Administrator. The Trust has agreed to pay the Administrator
an annual fee of 0.10% of the value of the total net assets of the Portfolios.
Distribution Plan
The Small/Mid Cap Equity Portfolio, Core Equity Portfolio, Balanced
Portfolio, and Intermediate Fixed Income Portfolio each have adopted a
Distribution Plan pursuant to Rule 12b-1. Each plan provides that the Portfolio
may pay distribution and related expenses of up to an annual rate of 0.25% of
each Portfolio's average net assets. Expenses permitted to be paid by a
Portfolio under its Distribution Plan include: preparation, printing and mailing
of prospectuses; shareholder reports such as semi-annual and annual reports,
performance reports and newsletters; sales literature and other promotional
material to prospective investors; direct mail solicitation; advertising; public
relations; compensation of sales personnel, advisors or other third parties for
their assistance with respect to the distribution of the Portfolio's shares;
payments to financial intermediaries, including ERISA third-party retirement
plan administrators, for shareholder support, administrative and accounting
services with respect to the shareholders of the Portfolio; and such other
expenses as may be approved from time to time by the Board of Trustees.
The Advisor, out of its own funds, also may compensate broker-dealers who
have signed dealer agreements for the distribution of a Portfolio's shares as
well as other service providers who provide shareholder and administrative
services.
Purchasing Shares
Investors may purchase shares of a Portfolio from the Fund's transfer agent
or from other selected securities brokers or dealers. A broker may charge a
commission or transaction fee.
Opening an Account
Investment Minimums. The minimum initial investment in each Portfolio is
$250,000. The Funds may reduce or waive the minimum for certain retirement and
other employee benefit plans; for the Advisor's employees, clients and their
affiliates; for advisors or financial institutions offering investors a program
of services; or any other person or organization deemed appropriate by the
Funds.
Purchasing by Mail
Firstar Trust Company, of Milwaukee, Wisconsin (the "Transfer Agent") acts
as transfer and shareholder service agent for the Portfolios. An investor may
purchase shares by sending a check payable to Rainier Investment Management
Mutual Funds, together with an Application Form, to the Transfer Agent at the
following address:
Rainier Investment Management
Mutual Funds
P.O. Box 701
Milwaukee, WI 53201-0701
Overnight courier deliveries should be sent to:
Rainier Investment Management
Mutual Funds
615 E. Michigan St., 3rd Floor
Milwaukee, WI 53202
Purchasing by Wire
For an initial purchase of shares of a Portfolio by wire, shareholders
should first telephone the Transfer Agent at (800) 248-6314 between the hours of
9:00 AM and 4:00 PM (Eastern time) on a day when the New York Stock Exchange is
open for normal trading to receive an account number. The following information
will be requested: your name, address, tax identification number, dividend
distribution election, amount being wired and wiring bank. You should then give
instructions to your bank to transfer funds by wire to the Transfer Agent at the
following address: Rainier Investment Management Mutual Funds Firstar National
Bank ABA (MFS) No. 075000022 Firstar Trust Co., Account No. 112-952-137 For
Credit to Rainier Investment Management [Portfolio name] Account of [your
account name]
If you arrange for receipt by the Transfer Agent of federal funds prior to
the close of trading (currently 4:00 PM, Eastern time) of the New York Stock
Exchange on a day the Exchange is open for normal trading, you may purchase
shares of a Portfolio as of that day. Your bank may charge a fee for wiring
money on your behalf.
Purchasing by Retirement Plans and Individual Retirement Accounts (IRAs)
Shares of the Portfolios are available for purchase by any retirement plan,
including 401(k) plans, profit sharing plans, 403(b) and IRAs.
Purchasing with Securities
Shares may be purchased by tendering payment in kind in the form of
marketable securities, including, but not limited to, shares of common stock and
debt securities, provided the acquisition of such securities is consistent with
the Portfolio's investment objective and otherwise acceptable to the Advisor.
Additional Investments
Minimum Subsequent Investment. The minimum "subsequent" investment is
$1,000. The amount of the minimum subsequent investment, like the minimum
"initial" investment, may be reduced or waived by the Funds. See waiver
discussion under "Investment Minimums" above. The Funds reserve the right to
reject any order. Cash investments may be made either by check or by wire.
Additional Investments by Mail. If the purchase is a subsequent investment,
the shareholder should either include the stub from a confirmation form
previously sent by the Transfer Agent or include a letter giving the
shareholder's name and account number.
Additional Investments by Wire. In making a subsequent purchase order by
wire, you should wire funds to the Transfer Agent in the manner described above,
making sure that the wire specifies the name of the Portfolio, your name and the
account number. However, it is not necessary to call the Transfer Agent to make
subsequent purchase orders using federal funds.
Selling Shares (Redemptions)
Redemptions by Mail
Shareholders may redeem shares of any Portfolio by writing to the Transfer
Agent at the following address:
Rainier Investment Management
Mutual Funds
P.O. Box 701
Milwaukee, WI 53201-0701
Overnight courier deliveries should be sent to:
Rainier Investment Management
Mutual Funds
615 E. Michigan St., 3rd Floor
Milwaukee, WI 53202
Please specify the name of the Portfolio, the number of shares or dollar
amount to be redeemed and your name and account number. You should also enclose
any certificated shares that you wish to redeem.
The signature on a redemption request must be exactly as names appear on the
Portfolio's account records, and the request must be signed by the minimum
number of persons designated on the account application that are required to
effect a redemption. Requests by participants of qualified retirement plans must
include all other signatures required by the plan and applicable federal law.
Signature Guarantee
If a redemption is requested by a corporation, partnership, trust or
fiduciary, written evidence of authority acceptable to the Transfer Agent must
be submitted before such request will be accepted. If the proceeds of the
redemption exceed $50,000, and are to be paid to a person other than the record
owner, or are to be sent to an address other than the address on the Transfer
Agent's records, or are to be paid to a corporation, partnership, trust or
fiduciary, the signature(s) on the redemption request and on the certificates,
if any, or stock powers must be guaranteed by an "eligible guarantor" which
includes certain banks, brokers, dealers, credit unions, securities exchanges,
clearing agencies and savings associations. A signature guarantee is not the
same as notarization and an acknowledgment by a notary public is not acceptable
as a substitute for a signature guarantee.
The price you receive for the Portfolio shares redeemed is at the
next-determined net asset value for the shares after a completed redemption
request is received by the Transfer Agent.
Redemptions by Telephone
You may establish telephone redemption privileges if you have checked the
appropriate box and supplied the necessary information on the account
application. You may then redeem shares of a Portfolio by telephoning the
Transfer Agent at (800) 248-6314, between the hours of 9:00 AM and 4:00 PM
(Eastern time) on a day when the New York Stock Exchange is open for normal
trading. Redemptions by telephone must be at least $1,000.
In periods of severe market or economic conditions, telephone exchanges may
be difficult to implement, in which case you should mail or send by overnight
delivery a written exchange request to the Transfer Agent. Overnight deliveries
should be sent to the Transfer Agent at the following address:
Rainier Investment Management
Mutual Funds
615 E. Michigan St., 3rd Floor
Milwaukee, WI 53202
All exchanges will be made on the basis of the relative net asset values of
the Portfolios next determined after a completed request is received. Requests
for telephone exchanges received before 4:00 PM (Eastern time) on a day when the
New York Stock Exchange is open for normal trading will be processed as of the
close of trading on that day. Otherwise, processing will occur on the next
business day.
Special Factors Regarding Telephone Redemptions. In order to protect itself
and shareholders from liability for unauthorized or fraudulent telephone
transactions, the Trust will use reasonable procedures in an attempt to verify
the identity of a person making a telephone redemption request. The Trust
reserves the right to refuse a telephone redemption request if it believes that
the person making the request is neither the record owner of the shares being
redeemed nor otherwise authorized by the shareholder to request the redemption.
Shareholders will be promptly notified of any refused request for a telephone
redemption. As long as these normal identification procedures are followed,
neither the Trust nor any Portfolio or its agents will be liable for any loss,
liability or cost which results from acting upon instructions of a person
believed to be a shareholder with respect to the telephone redemption privilege.
Redemptions by Wire
Redemption proceeds are generally paid to you by check. However, at your
request, redemption proceeds of $1,000 or more may be wired by the Transfer
Agent to your bank account. Requests for redemption by wire should include the
name, location and ABA or bank routing number (if known) of your designated bank
and your account number. Payment will be made within seven days after receipt by
the Transfer Agent of the written or telephone redemption request. Such payment
may be postponed or the right of redemption suspended at times when (a) the New
York Stock Exchange is closed for other than customary weekends and holidays;
(b) trading on such exchange is restricted; (c) an emergency exists, the result
of which disposal of Portfolio securities or determination of the value of the
Portfolio=s net assets are not reasonably practicable; or (d) during any other
period when the Securities and Exchange Commission, by order, so permits.
Payment for redemption of recently purchased shares will be delayed until the
Transfer Agent has been advised that the purchase check has been honored, up to
12 calendar days from the time of receipt of the purchase check by the Transfer
Agent. Such delay may be avoided by purchasing shares by wire or by certified or
official bank checks.
Redemption of Small Accounts
In order to reduce expenses, the Portfolios may redeem shares in any
account, other than retirement plan or Uniform Gift to Minors Act accounts, if
at any time, due to redemptions, the total value of a shareholder's account does
not meet a specified minimum. Shareholders will be given 30 days' prior written
notice in which to purchase sufficient additional shares to avoid such a
redemption.
Shareholder Services
Automatic Reinvestment
Dividends and capital gain distributions are reinvested in additional shares
at no sales charge unless you indicate otherwise on the account applications.
You may elect to have dividends or capital gain distributions paid in cash.
Exchange Privilege
You may exchange shares of any Portfolio for shares of other Portfolios by
mailing or delivering written instructions to the Transfer Agent at the
following address:
Rainier Investment Management
Mutual Funds
P.O. Box 701
Milwaukee, WI 53201-0701
Please specify the name of the applicable Portfolio, the number of shares or
dollar amount to be exchanged and your name and account number. You may also
exchange shares by telephoning the Transfer Agent at (800) 248-6314 between the
hours of 9:00 AM and 4:00 PM (Eastern time) on a day when the New York Stock
Exchange is open for normal trading.
You may also exchange shares of any Portfolio for shares of the Portico
Money Market Fund or Portico U.S. Government Money Market Fund, both money
market mutual funds not affiliated with the Trust or the Advisor, if such shares
are offered in your state of residence. Prior to making such an exchange, you
should obtain and carefully read the prospectus for the Portico Money Market
Fund or Portico U.S. Government Money Market Fund. The exchange privilege does
not constitute an offering or recommendation on the part of the Funds or Advisor
of an investment in the Portico Funds.
Exchange Privilege Annual Limits. The Funds reserve the right to limit the
number of exchanges a shareholder may make in any year to four to avoid
excessive Portfolio expenses.
Automatic Withdrawal Plan
An automatic withdrawal plan may be established by an investor or by a
qualified retirement plan sponsor or administrator for its participants subject
to the requirements of the plan and applicable federal law. Automatic
withdrawals may be made from a Portfolio in an amount of $100 or more on a
monthly or quarterly basis if an investor has an account of $10,000 or more in
the Portfolio. Withdrawal proceeds will normally be received prior to the end of
the month or quarter. See the account application for further information.
Shareholder Reports
To keep shareholders informed, you will receive an audited annual report and a
semi-annual report, both of which present the financial statements of the Funds.
Share Price Determination
Share Price
Shares of a Portfolio are purchased at the net asset value after an order in
proper form is received by the Transfer Agent. An order in proper form must
include all correct and complete information, documents and signatures required
to process your purchase, as well as a check or bank wire payment properly drawn
and collectable. Payment should be made by check drawn on a U.S. bank, savings
and loan, or credit union. The net asset value per share is determined as of the
close of trading of the New York Stock Exchange on each day the Exchange is open
for normal trading. Orders received before 4:00 PM (Eastern time) on a day when
the Exchange is open for normal trading will be processed as of the close of
trading on that day. Otherwise, processing will occur on the next business day.
The Distributor reserves the right to reject any purchase order.
Net Asset Value
The net asset value of each Portfolio is determined as of the close of
trading (currently 4:00 PM, Eastern time) on each day that the New York Stock
Exchange is open for trading. The net asset value per share of each Portfolio is
the value of the Portfolio's assets, less its liabilities, divided by the number
of outstanding shares of the Portfolio. Each Portfolio values its investments on
the basis of the market value of its securities. Securities and other assets for
which market prices are not readily available are valued at fair value as
determined in good faith by the Board of Trustees. Debt securities with
remaining maturities of 60 days or less are normally valued at amortized cost,
unless the Board of Trustees determines that amortized cost does not represent
fair value. Cash and receivables will be valued at their face amounts. Interest
will be recorded as accrued, and dividends will be recorded on their ex-dividend
date.
Share Certificates
Shares are credited to your account and certificates are not issued unless
specifically requested. This eliminates the costly problem of lost or destroyed
certificates. If you would like certificates issued, please request them by
writing to the Transfer Agent. There is usually no charge for issuing
certificates in reasonable denominations, but certificates will be issued only
for full shares.
Dividends, Distributions and Tax Status
Dividends and Distributions
The Small/Mid Cap Equity and Core Equity Portfolios intend to pay dividends
annually. The Balanced Portfolio intends to pay dividends quarterly. The
Intermediate Fixed Income Portfolio intends to pay dividends monthly. Each
Portfolio makes distributions of its net capital gains, if any, at least
annually. The Board of Trustees may determine to declare dividends and make
distributions more frequently.
Dividends and capital gain distributions are automatically reinvested in
additional shares of the Portfolio at the net asset value per share on the
reinvestment date unless the shareholder has previously requested in writing to
the Transfer Agent that payment be made in cash.
Any dividend or distribution paid by the Portfolio has the effect of
reducing the net asset value per share on the reinvestment date by the amount of
the dividend or distribution. Investors should note that a dividend or
distribution paid on shares purchased shortly before such dividend or
distribution was declared will be subject to income taxes as discussed below,
even though the dividend or distribution represents, in substance, a partial
return of capital to the shareholder.
Tax Status
Each Portfolio intends to qualify and elect to be treated as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986 (the
"Code"). As long as the Portfolio continues to qualify, and as long as the
Portfolio distributes all of its income each year to the shareholders, the
Portfolio will not be subject to any federal or excise taxes. The distributions
made by the Portfolio will be taxable to shareholders whether received in shares
(through dividend reinvestment) or in cash. Distributions derived from net
investment income, including net short-term capital gains, are taxable to
shareholders as ordinary income. A portion of these distributions may qualify
for the intercorporate dividends-received deduction. Distributions designated as
capital gains dividends are taxable as long-term capital gains regardless of the
length of time shares of the Portfolio have been held. Although distributions
are generally taxable when received, certain distributions made in January are
taxable as if received the prior December. Shareholders will be informed
annually of the amount and nature of the Portfolio=s distributions.
A Portfolio may be required to impose backup withholding at a rate of 31%
from income dividends and capital gain distributions and upon payment of
redemption proceeds if provisions of the Code relating to the furnishing and
certification of taxpayer identification numbers and reporting of dividends are
not complied with by a shareholder. Any such accounts without a tax
identification number may be liquidated and distributed to a shareholder, net of
withholding, after the sixtieth day of investment.
Additional information about taxes is set forth in the "Statement of
Additional Information." Shareholders should consult their own advisors
concerning federal, state and local taxation of distributions from the
Portfolio.
Performance Information
Total Return
From time to time, the Portfolio may publish its total return in
advertisements and communications to investors. Total return information will
include the Portfolio's average annual compounded rate of return over the four
most recent calendar quarters and over the period from the Portfolio's inception
of operations. The Portfolio may also advertise aggregate and average total
return information over different periods of time. The Portfolio's total return
will be based upon the value of the shares acquired through a hypothetical
$1,000 investment (at the maximum public offering price) at the beginning of the
specified period, and the net asset value of such shares at the end of the
period, assuming reinvestment of all distributions and after giving effect to
the maximum applicable sales charge. Total return figures will reflect all
recurring charges against Portfolio income. Investors should note that the
investment results of the Portfolio will fluctuate over time, and any
presentation of the Portfolio's total return for any prior period should not be
considered as a representation of what an investor's total return may be in any
future period.
Yield
A Portfolio may also refer in its advertising and promotional materials to
its yield. A Portfolio=s yield shows the rate of income that it earns on its
investments, expressed as a percentage of the net asset value of Portfolio
shares. A Portfolio calculates yield by determining the interest income it
earned from its portfolio investments for a specified thirty-day period (net of
expenses), dividing such income by the average number of Portfolio shares
outstanding, and expressing the result as an annualized percentage based on the
net asset value at the end of that thirty-day period. Yield accounting methods
differ from the methods used for other accounting purposes; accordingly, a
Portfolio's yield may not equal the dividend income actually paid to investors
or the income reported in the Portfolio's financial statements.
In addition to standardized return, performance advertisements and sales
literature may also include other total return performance data
("non-standardized return"). Non-standardized return may be quoted for the same
or different periods as those for which standardized return is quoted and may
consist of aggregate or average annual percentage rate of return, actual
year-by-year rates or any combination thereof. All data included in performance
advertisements will reflect past performance and will not necessarily be
indicative of future results. The Portfolios may also advertise their relative
rankings by mutual fund ranking services such as Lipper Analytical Services or
Morningstar, Inc. The investment return and principal value of an investment in
a Portfolio will fluctuate and an investor's proceeds upon redeeming Portfolio
shares may be more or less than the original cost of the shares.
General Information
Each Portfolio is one of a series of shares of the Trust, each having
separate assets and liabilities. The Trust was organized as a Delaware business
trust on December 15, 1993.
Each Portfolio has reserved the right to invest all of its assets in the
securities of a single open-end management investment company with substantially
the same fundamental investment objectives, policies and limitations as the
Portfolios. It is not presently intended that such investment will be made.
Voting Rights
Shareholders are entitled to one vote for each full share held (and
fractional votes for fractional shares) and may vote in the election of Trustees
and on other matters submitted to meetings of shareholders. It is not
contemplated that regular annual meetings of shareholders will be held. Rule
18f-2 under the Act provides that matters submitted to shareholders be approved
by a majority of the outstanding securities of each series, unless it is clear
that the interests of each series in the matter are identical or the matter does
not affect a series. However, the rule exempts the selection of accountants and
the election of Trustees from the separate voting requirements.
The Declaration of Trust provides that the shareholders have the right, upon
the declaration in writing or vote of more than two-thirds of its outstanding
shares, to remove a Trustee. The Trustees will call a meeting of shareholders to
vote on the removal of a Trustee upon the written request of the record holders
of 10% of its shares. In addition, ten shareholders holding the lesser of
$25,000 worth or 1% of the shares may advise the Trustees in writing that they
wish to communicate with other shareholders for the purpose of requesting a
meeting to remove a Trustee.
This Prospectus is not an offering of the securities herein described in any
state in which the offering is unauthorized. No salesman, dealer or other person
is authorized to give any information or make any representation other than
those contained in this Prospectus or in the Statement of Additional
Information.
