As filed with the Commission on June 5, 2000
File Nos.33-73792
811-8270
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 9 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 12 [X]
(Check appropriate box or boxes)
RAINIER INVESTMENT MANAGEMENT MUTUAL FUNDS
(Exact Name of Registrant as Specified in Charter)
601 Union Street, Suite 2801
Seattle, WA 98101
(Address of Principal Executive Offices, including Zip Code)
(206) 464-0400
(Registrant's Telephone Number, including Area Code)
J. Glenn Haber, Managing Director
Rainier Investment Management, Inc.
601 Union St., Ste. 2801
Seattle, WA 98101
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
[X] Immediately upon filing pursuant to Rule 485 (b)
[ ] On _________ pursuant to Rule 485(b)
[ ] 60 days after filing pursuant to Rule 485(a)(1)
[ ] On pursuant to Rule 485(a)(1)
[ ] 75 days after filing pursuant to Rule 485(a)(2)
[ ] On ____________, pursuant to Rule 485(a)(2)
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
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Please send copy of Communications to:
David A. Hearth Steven J. Paggioli
Paul, Hastings, Janofsky & Walker LLP Investment Company Administration, LLC
345 California Street, 29th Floor 915 Broadway
San Francisco, CA 94104 New York, NY 10010
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RAINIER INVESTMENT MANAGEMENT MUTUAL FUNDS
PROSPECTUS
June 5, 2000
Growth Equity Portfolio
RAINIER INVESTMENT MANAGEMENT MUTUAL FUNDS
601 Union Street, Suite 2801
Seattle, Washington 98101
Phone: (800) 248-6314
Internet: www.rainierfunds.com
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TABLE OF CONTENTS
AN OVERVIEW OF THE PORTFOLIO
The Portfolio's Goal
Principal Investment Strategies
Principal Risks
The Portfolio's Past Performance
ADDITIONAL INFORMATION ON PRINCIPAL INVESTMENT STRATEGIES
Growth Investment Philosophy
Short-Term Investments
Portfolio Turnover
ADDITIONAL INFORMATION ON PRINCIPAL RISKS
Market Risk
Small Company Risk
ORGANIZATION AND MANAGEMENT
Investment Advisor and Advisory Fees
Portfolio Managers
Portfolio Expenses
PURCHASING AND SELLING SHARES
Purchasing Shares
Selling Shares (Redemptions)
Pricing of Portfolio Shares
DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends and Distributions
Tax Consequences
Rule 12b-1 Fees
APPENDIX
Index Description
AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION DOES NOT
APPROVE OR DISAPPROVE OF THESE SHARES OR DETERMINE WHETHER THE INFORMATION IN
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. IT IS A CRIMINAL OFFENSE FOR ANYONE TO
INFORM YOU OTHERWISE.
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AN OVERVIEW OF THE PORTFOLIO
THE PORTFOLIO'S GOAL
The Growth Equity Portfolio seeks to MAXIMIZE LONG-TERM CAPITAL APPRECIATION.
PRINCIPAL INVESTMENT STRATEGIES
In pursuing its goal, the Portfolio invests primarily in the common stock of
U.S. growth companies. To the Advisor, the term "growth company" denotes
companies with the prospect of strong earnings, revenue or cash flow growth.
The Advisor describes the investment style of the Portfolio as Large Cap Growth,
with the majority of the companies owned having a market capitalization of over
$5 billion. Smaller companies may be owned when especially attractive. Stock
selection focuses on companies that are likely to demonstrate superior earnings,
revenue or cash flow growth relative to their industry peers. To establish
purchase and sale prices, the Advisor assesses each stock relative to similar
companies within the same industry. The Portfolio normally will hold
approximately 50-75 companies in various stages of growth. (See Additional
Information on Principal Investment Strategies on page ___for further
discussion.)
To help control risk, the Portfolio is diversified across a broad cross section
of economic sectors and industries. The Advisor compares the Portfolio's
economic sector weightings to a growth equity index such as the Russell 1000(R)
Growth Index.. Extreme overweighting and underweighting of the Portfolio as
compared to the major sectors of such a benchmark are avoided.
PRINCIPAL RISKS
Since the Portfolio is invested in equity securities whose prices change daily,
there is the risk that an investor could lose money. The Portfolio's share price
may be affected by sudden declines in the market value of an investment, or by
an overall decline in the stock market. Like all managed funds, there is a risk
that the Advisor's strategy for managing the Portfolio may not achieve the
desired results or may be less effective than other strategies in a particular
market environment. The Portfolio may be appropriate for investors who are
comfortable with above-average risk and can make a long-term investment
commitment. Investments in securities of small and medium-size companies involve
greater risk of loss than investment in larger companies and their prices can
change more frequently and dramatically.
THE PORTFOLIO'S PAST PERFORMANCE
No bar chart of performance is available because the Fund has not been in
operation for a full calendar year.
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FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Portfolio.
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT) None
ANNUAL FUND OPERATING EXPENSES*
(EXPENSES THAT ARE DEDUCTED FROM PORTFOLIO ASSETS)
Management Fees 0.75%
Distribution and Service (12b-1) Fees 0.25%
Other expenses 2.95%
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Total Annual Fund Operating Expenses 3.95%
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Fee Reduction and/or Expense Reimbursement -2.76%
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Net Expenses 1.19%
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* THE ADVISOR HAS CONTRACTUALLY AGREED TO REDUCE ITS FEES AND/OR ABSORB
EXPENSES TO LIMIT THE TOTAL ANNUAL OPERATING EXPENSES OF THE GROWTH EQUITY
PORTFOLIO TO 1.19% (EXCLUDING INTEREST AND TAXES). THIS CONTRACT HAS A
ONE-YEAR TERM, RENEWABLE AT THE END OF EACH FISCAL YEAR.
EXAMPLE: This example is intended to help you compare the cost of investing in
shares of the Growth Equity Portfolio with the cost of investing in other mutual
funds.
The example assumes that you invest $10,000 in the Portfolio for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Portfolio's operating expenses remain the same. Although your
actual cost may be higher or lower, under these assumptions, your cost would be:
1 Year 3 Years
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$121 $950
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ADDITIONAL INFORMATION ON PRINCIPAL INVESTMENT STRATEGIES
GROWTH INVESTMENT PHILOSOPHY
The Advisor may invest in companies categorized by three stages of growth
development: 1) Financially Successful Companies that generate superior
financial returns; 2) Rapid Revenue Growth Companies that may have little or no
earnings, but are likely to generate superior financial returns in the future
and; 3) Emerging Companies that may demonstrate little in the way of financial
results at present, but have extremely promising business prospects. By
investing a portion of the Portfolio in Rapid Revenue Growth and Emerging
Companies, the Advisor hopes to capture the extraordinary capital appreciation
sometimes associated with high-performing companies identified early in their
growth cycles.
In addition to favoring companies with attractive fundamentals such as strong
revenue, earnings or cash flow growth, the Advisor also prefers companies with
sustainable competitive advantages, strong management with a significant
ownership position in the company, potential for positive growth surprises,
balance sheet integrity and financial strength. For emerging companies lacking
demonstrated financial results, the strength of the company's business model,
management team and competitive position will be analyzed.
The Advisor considers the sale of specific equity securities primarily when
fundamental prospects and/or competitive position begin to deteriorate.
SHORT-TERM INVESTMENTS
Cash equivalent securities, which may be held by the Portfolio, are high-quality
debt obligations maturing in one year or less from the date of purchase. These
include U.S. Government securities, certificates of deposit, bankers'
acceptances, repurchase agreements and commercial paper. The Advisor considers
obligations that have been rated at least A-1 by S&P or Prime-1 by Moody's, have
an outstanding issue of debt securities rated at least A by S&P or Moody's, or
are of comparable quality in the opinion of the Advisor, to be "high-quality."
Under normal market conditions, the Portfolio will stay fully invested in stocks
and/or bonds. However, the Portfolio may temporarily depart from its principal
investment strategies by making short-term investments in cash equivalents in
response to adverse market, economic or political conditions. This may result in
the Portfolio not achieving its investment objective.
PORTFOLIO TURNOVER
Due to a sell discipline based in part on price targets, the Portfolio may be
actively traded. This is particularly true in a market environment where
securities prices are rising rapidly. Generally, the rate of portfolio turnover
will not be a deciding factor in determining whether to sell or hold securities.
The Portfolio may have a portfolio turnover rate in excess of 100%. A high
portfolio turnover rate (100% or more) has the potential to result in the
realization and distribution to shareholders of higher capital gains. This may
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mean that you would be likely to have a higher tax liability. A high portfolio
turnover rate also leads to higher transaction costs, which would negatively
affect a Portfolio's performance. Active trading, however, can also be defensive
and actually add to a Portfolio's performance if, for example, a fully valued
investment is sold before a price decline or in favor of an investment with
better appreciation potential.
ADDITIONAL INFORMATION ON PRINCIPAL RISKS
THE PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO THAT MAY ADVERSELY AFFECT THE
VALUE OF A PORTFOLIO'S SHARES OR TOTAL RETURN ARE DISCUSSED IN THE "OVERVIEW OF
THE PORTFOLIO" SECTION. FURTHER ELEMENTS OF RISK ARE DISCUSSED BELOW.
MARKET RISK
An investor in the Portfolio faces the risk that the market value of a security
may move up and down, sometimes rapidly and unpredictably. These fluctuations
may cause a security to be worth less than the price originally paid for it, or
less than it was worth at an earlier time. Market risk may affect a single
issuer, industry, sector of the economy or the market as a whole.
SMALL COMPANY RISK
The Portfolio 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.
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ORGANIZATION AND MANAGEMENT
INVESTMENT ADVISOR AND ADVISORY FEES
Rainier Investment Management, Inc.(R)(RIM), incorporated in 1989, serves as
investment advisor to the Portfolio. RIM's address is:
601 Union Street, Suite 2801
Seattle, Washington 98101
RIM currently manages $___ 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. Subject to the direction and control of the
Trustees, the Advisor formulates and implements an investment program for the
Portfolio, which includes determining which securities should be bought and
sold. The Advisor also provides certain of the officers of the Trust. The
Portfolio pays the Advisor an annual advisory fee, payable monthly, of 0.75% of
the Portfolio's average daily net assets.
PORTFOLIO MANAGERS
The portfolio managers of the Portfolio are: Mark H. Dawson, CFA;. Peter M.
Musser, CFA; Mr. James R. Margard, CFA; and David A. Veterane, CFA. Each
portfolio manager has been associated with the Advisor in the position noted for
more than the past five years except for Mr. Dawson, who was employed by
Badgley, Phelps & Bell Inc. as an Investment Counselor and Research Analyst
until he joined the Advisor in 1996.
PORTFOLIO EXPENSES
The Portfolio is responsible for paying its own operating expenses. The Advisor
has agreed in an Operating Expense Agreement to reduce its advisory fee or
reimburse the expenses of the Portfolio to the extent necessary so that its
ratio of total operating expenses to average net assets will not exceed 1.19%.
That agreement has a one-year term, renewable at the end of each fiscal year.
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 within the following five years, provided the Portfolio is able to
effect such reimbursement and remain in compliance with any applicable expense
limitations.
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PURCHASING & SELLING SHARES
PURCHASING SHARES
MINIMUM INVESTMENT AMOUNT
The minimum initial investment in the Portfolio is $1,000,000. Additional
investments may be made at any time with $1,000 or more. The minimum investment
requirements may be waived from time to time by the Portfolio.
PURCHASING BY MAIL
Shares of the Portfolio may be purchased by mail. If you wish to invest by mail,
simply complete an Account Application and mail it with a check (made payable to
"Rainier Investment Management Mutual Funds") to the Portfolio' Transfer Agent,
ICA Fund Services, Corporation, at the following address:
Rainier Investment Management Mutual Funds
c/o ICA Fund Services Corp.
4455 East Camelback Road, Suite 261-E
Phoenix, AZ 85018
All purchases by check should be in U.S. dollars. Third-party checks and cash
will not be accepted. If your purchase check is returned for insufficient funds,
the Portfolio may charge you a fee of $20.00.
PURCHASING BY WIRE
Shares of the Portfolio may be purchased the same day with a wire transfer of
money. Before sending a wire, please call (800) 576-8229 between 9:00 a.m. and
4:00 p.m. (Eastern time) on a day when the New York Stock Exchange (NYSE) is
open for trading, in order 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. It is
important to call and receive this account number, because if your wire is sent
without it or without the name of the Portfolio, your investment may be delayed.
Please wire payment to:
Firstar Bank Milwaukee N.A.
ABA No. 075000022
For credit to Firstar Mutual Fund Services, LLC
Account No. ___________________
For further credit to Rainier Investment Management Growth Equity Portfolio
Account of [your account number and account name]
Your bank may charge you a fee for sending a wire to the Funds.
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PURCHASING WITH SECURITIES
In certain situations, Portfolio shares may be purchased by tendering payment in
kind in the form of shares of stock, bonds or other securities. Any securities
used to buy Portfolio shares must be readily marketable, their acquisition
consistent with the Portfolio's objective and otherwise acceptable to the
Advisor. Prior to making such a purchase, you should call the Advisor to
determine if the securities you wish to use to make a purchase are appropriate.
RETIREMENT PLANS
Shares of the Portfolio are available for purchase by most retirement plans,
including 401(k) plans, profit sharing plans, and IRAs.
SUBSEQUENT INVESTMENTS
Additional shares of the Portfolio are available for purchase, in amounts of
$1,000 or more, by sending a check together with the remittance form from a
confirmation statement, to the Transfer Agent. Please write your account number
on the check. If you do not have a remittance form, please send the Transfer
Agent a letter giving the name of the Portfolio, your name and account number.
To send additional money for investment by wire, follow the instructions noted
above. It is not necessary, however, to call the Transfer Agent before making
your subsequent wire investment.
PURCHASE ORDER PROCESSING
Any money received for investment in the Portfolio, whether sent by check or
wire, is invested at the net asset value of the Portfolio next calculated after
your order is received in proper form. An order in proper form must include all
correct and complete information, documents and signatures required to process
the order, as well as a check or bank wire payment properly drawn and
collectable. Orders received from dealers are invested at the net asset value
next calculated after the order is received. The net asset value is calculated
at the close of regular trading of the NYSE, normally 4:00 p.m., Eastern time. A
check or wire received after the NYSE closes is invested at the next-calculated
net asset value of the Portfolio, normally the following business day.
OTHER INFORMATION
The Portfolio and its distributor reserve the right to reject any investment, in
whole or in part. Federal tax law requires that you provide a certified taxpayer
identification number and other certifications upon opening an account. This is
necessary to avoid backup withholding of taxes. The Portfolio does not issue
share certificates unless you specifically request them by writing to the
Transfer Agent. All shares are normally held in a non-certificated form on the
books of the Portfolio, for your account. The Advisor may close and reopen the
Portfolio to new accounts or investments from time to time.
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SELLING SHARES (REDEMPTIONS)
Shareholders may sell (redeem) Portfolio shares on any day the Portfolio is open
for business either directly to the Portfolio or through certain brokers (or
agents).
SELLING BY MAIL
You may sell your shares by simply sending a written request to the Transfer
Agent. Specify the number of shares or dollar amount you want redeemed and your
name and account number. The letter should be signed by all of the shareholders
whose names appear on the account registration. In addition, a signature
guarantee is required if a redemption is requested by a corporation,
partnership, trust or fiduciary. Send your redemption request to:
Rainier Investment Management Mutual Funds
c/o ICA Fund Services Corp.
4455 East Camelback Road, Suite 261-E
Phoenix, AZ 85018
SIGNATURE GUARANTEES
Certain redemption requests require that the signature or signatures on the
account be guaranteed. Signature guarantees are required if the proceeds of the
redemption: (1) exceed $100,000; (2) are to be paid to a person other than the
record owner; (3) are to be sent to an address other than the address on the
Transfer Agent's records; or (4) 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." An eligible guarantor includes certain banks, brokers, dealers,
credit unions, securities exchanges, clearing agencies and savings associations.
A notary public is not an eligible guarantor.
SELLING BY TELEPHONE
You may establish telephone redemption privileges by checking the appropriate
box and supplying the necessary information on the Account Application. You may
then redeem shares of a Portfolio by telephoning the Transfer Agent at (800)
576-8229, between the hours of 9:00 a.m. and 4:00 p.m. (Eastern time) on a day
when the NYSE is open for normal trading. Redemptions by telephone must be at
least $1,000. Proceeds will be mailed to the shareholder the following business
day after the sale is executed. Upon request, redemption proceeds will be wired
to the bank account designated on your Account Application. Telephone
redemptions cannot be made if you notify the Transfer Agent of an account change
within 30 days before the redemption request. Telephone redemption is not
available for retirement plan accounts.
When establishing telephone privileges, you are authorizing the Portfolio and
its Transfer Agent to act upon the telephone instructions of the person or
persons you have designated in your account application. Such persons may
request that the shares in your account be either exchanged or redeemed. Before
executing an instruction received by telephone, the Portfolio and the Transfer
Agent will use procedures to confirm that the telephone instructions are
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genuine. These procedures will include recording the telephone call and asking
the caller for a form of personal identification. If the Portfolio and the
Transfer agent follow these procedures, they will not be liable for any loss,
expense or cost arising out of any telephone redemption or exchange request that
is reasonably believed to be genuine. This includes any fraudulent or
unauthorized request.
You may have difficulty making a telephone redemption during periods of abnormal
market activity. If this occurs, please make your redemption request in writing.
AUTOMATIC WITHDRAWAL PLAN
Automatic withdrawals may be made from the Portfolio in an amount of $100 or
more, either monthly or quarterly. Your Portfolio account must have a value of
at least $10,000 to participate in this plan. This plan may be terminated at any
time by the Funds. Please call the Transfer Agent for further information.
REDEMPTION OF SMALL ACCOUNTS
In order to reduce expenses, the Portfolio may redeem shares in any account if
the total value of your account is less than $10,000 as a result of redemptions.
This does not apply to retirement plan or Uniform Gift to Minors Act accounts.
Shareholders will be notified and given 30 days in which to make an additional
investment to bring the value of their account to at least $10,000 before an
involuntary redemption occurs.
ADDITIONAL INFORMATION
If shares are purchased by personal check, the Portfolio may delay payment of
the redemption proceeds for up to 15 days from purchase or until the check has
cleared, whichever occurs first. This delay payment also applies to redemptions
by telephone. . If shares are sold through the Automated Clearing House (ACH),
the Portfolio may delay payment of redemption proceeds for up to 15 days from
purchase or until the payment clears, whichever occurs first.
The Portfolio has the right to pay redemption proceeds in whole or in part with
a distribution by the Portfolio of securities it holds equal in value to the
sales price. It is not expected that the Portfolio would do so except in unusual
circumstances.
PRICING OF PORTFOLIO SHARES
The price of the Portfolio's shares is based on the Portfolio's net asset value.
The net asset value is calculated by dividing the Portfolio's assets, minus its
liabilities, by the number of shares outstanding. The Portfolio's assets are the
market value of securities held in its portfolio, plus any cash and other
assets. The Portfolio's liabilities are fees and expenses owed by the Portfolio.
The number of Portfolio shares outstanding is the amount of shares which have
been issued to shareholders. The price an investor pays to purchase Portfolio
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shares or the amount an investor receives when selling Portfolio shares is based
on the net asset value next calculated after the order is received in proper
form. An order in proper form must include all correct and complete information,
documents and signatures required to process the purchase or redemption, as well
as a check or bank wire payment properly drawn and collectable. The net asset
value of shares of the Portfolio is determined as of the close of regular
trading on the NYSE, normally 4:00 p.m. (Eastern time). Portfolio shares will
not be priced on days that the NYSE is closed for trading (including certain
U.S. holidays).
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The Portfolio intends to pay dividends annually. The 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 or less
frequently.
It is expected that distributions from the Portfolio will primarily consist of
capital gains. 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 you have previously requested in writing
to the Transfer Agent or on the new Account Application that payment be made in
cash.
TAX CONSEQUENCES
The Portfolio intends to make distributions of dividends and capital gains.
Dividends are taxable to shareholders as ordinary income. The rates a
shareholder pays on capital gain distributions will depend on how long the
Portfolio held the securities that generated the gains, not on how long the
shareholder owned the Portfolio shares. Shareholders will be taxed in the same
manner whether they receive dividends and capital gain distributions in cash or
reinvest them in additional Portfolio shares.
Selling or exchanging Portfolio shares is considered a taxable event for
shareholders. Depending on the purchase price and the sale price of the shares
exchanged or sold, a gain or a loss may result on the transaction. Shareholders
are responsible for any tax liabilities generated by their transactions.
RULE 12b-1 FEES
The Portfolio has a distribution plan under Rule 12b-1 that allows the Portfolio
to pay distribution fees for the sale and distribution of its shares and for
services provided to its shareholders. The plan provides for the payment of a
distribution and service fee of up to 0.25% of the Portfolio's average daily net
assets. This fee is payable to the Advisor, as Distribution Coordinator. These
fees may be used to pay certain brokers, transfer agents and financial
intermediaries for providing shareholder services. The Advisor may also retain a
portion of these fees to reimburse itself for marketing and servicing expenses,
including a portion of its overhead and staff devoted to marketing the shares of
the Portfolios. Because these fees are paid out of the Portfolio's assets on an
on-going basis, over time these fees will increase the cost of your investment
in shares of the Portfolio and may cost you more than paying other types of
sales charges.
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APPENDIX
Index Description
The Russell 1000 (R) Growth Index measures the performance of those Russell 1000
companies with higher price-to-book ratios and higher forecasted growth values.
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FOR MORE INFORMATION ABOUT THE PORTFOLIO, THE FOLLOWING DOCUMENTS ARE AVAILABLE
FREE UPON REQUEST:
ANNUAL/SEMI-ANNUAL REPORTS: Additional information about the Portfolio's
investments is available in the Portfolio's Annual and Semi-annual Reports to
Shareholders. In the Annual Reports, you will find a discussion of the market
conditions and investment strategies that significantly affected the Portfolio's
performance during the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Portfolio and is incorporated by reference into this
Prospectus.
You can get free copies of the Portfolio's reports and SAI, request other
information and discuss your questions concerning the Portfolio, please contact
the fund at the address below:
Rainier Investment Management Mutual Funds
601 Union Street, Suite 2801
Seattle, Washington 98101
(800) 248-6314
To review and copy information including the Portfolio's reports and SAI at the
Public Reference Room of the Securities and Exchange Commission in Washington,
D.C. You can obtain information on the operation of the Public Reference Room by
calling the Commission at 1-202-942-8090. Reports and other information about
the Portfolio are available:
Free of charge from the Commission's EDGAR database on the Commission's Internet
website at http://www.sec.gov
For a duplicating fee, by writing to the Public Reference Room of the
Commission, Washington, DC 20549-0102 or by electronic request at the following
e-mail address: [email protected].
(The Trust's SEC Investment Company
Act file number is 811-8270.)
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RAINIER INVESTMENT MANAGEMENT MUTUAL FUNDS
Statement of Additional Information
Growth Equity Portfolio
Dated June 5, 2000
This Statement of Additional Information ("SAI") is not a prospectus, and it
should be read in conjunction with the Prospectus of the Rainier Investment
Management Growth Equity Portfolio (the "Portfolio") dated June 5, 2000. The
Portfolio is a series of Rainier Investment Management Mutual Funds, (the
"Trust"). The Trust has four other series: the Small/Mid Cap Equity Portfolio,
the Core Equity Portfolio, the Balanced Portfolio and the Intermediate Fixed
Income Portfolio have a separate Statement of Additional Information. Rainier
Investment Management, Inc.(R) ("RIM" or the "Advisor") is the Advisor to the
Trust and the Portfolio. A copy of the Prospectus may be obtained from the Trust
at 601 Union St., Ste. 2801, Seattle, WA 98101 or by calling (800) 248-6314.
TABLE OF CONTENTS
THE TRUST................................................................B-
INVESTMENT OBJECTIVES AND POLICIES.......................................B-
INVESTMENT RESTRICTIONS..................................................B-
MANAGEMENT...............................................................B-
PORTFOLIO TRANSACTIONS AND BROKERAGE.....................................B-
PORTFOLIO TURNOVER ......................................................B-
NET ASSET VALUE..........................................................B-
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION...........................B-
TAXATION.................................................................B-
DIVIDENDS AND DISTRIBUTIONS..............................................B-
PERFORMANCE INFORMATION..................................................B-
GENERAL INFORMATION......................................................B-
FINANCIAL STATEMENTS.....................................................B-
APPENDIX.................................................................B-
B-1
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THE TRUST
Rainier Investment Management Mutual Funds (the "Trust") is an open-end
investment company organized as a Delaware business trust on December 15, 1993.
The Trust consists of five separate, diversified portfolios, each of which has
it own objective, assets, liabilities and net assets. This SAI relates only to
the Portfolio. Rainier Investment Management, Inc.(R) serves as investment
advisor to the Trust and the Portfolio.
INVESTMENT OBJECTIVES AND POLICIES
The following information supplements the discussion of the Portfolio'
investment objectives and policies as forth in their Prospectus. There can be no
guarantee that the objective of the Portfolio will be attained.
The PORTFOLIO seeks to maximize long-term capital appreciation. The Portfolio
invests primarily in a diversified portfolio of common stocks of U.S. companies.
REPURCHASE AGREEMENTS
Repurchase agreements are transactions in which a Portfolio purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed-upon date and price reflecting
a market rate of interest unrelated to the coupon rate or maturity of the
purchased security. The majority of these transactions run from day to day and
not more than seven days from the original purchase. The purchaser maintains
custody of the underlying securities prior to their repurchase; thus the
obligation of the bank or dealer to pay the repurchase price on the date agreed
to is, in effect, secured by such underlying securities. If the value of such
securities is less than the repurchase price, the other party to the agreement
will provide additional collateral so that at all times the collateral is at
least equal to the repurchase price.
Although repurchase agreements carry certain risks not associated with direct
investments in securities, the Portfolio intends to enter into repurchase
agreements only with banks and dealers believed by the Advisor to present
minimum credit risks in accordance with guidelines established by the Board of
Trustees. The Advisor will review and monitor the creditworthiness of such
institutions under the Board's general supervision. To the extent that the
proceeds from any sale of collateral upon a default in the obligation to
repurchase were less than the repurchase price, the purchaser would suffer a
loss. If the other party to the repurchase agreement petitions for bankruptcy or
otherwise becomes subject to bankruptcy or other liquidation proceedings, there
might be restrictions on the purchaser's ability to sell the collateral and the
purchaser could suffer a loss. However, with respect to financial institutions
whose bankruptcy or liquidation proceedings are subject to the U.S. Bankruptcy
Code, the Portfolio intends to comply with provisions under such Code that would
allow them immediately to resell the collateral.
WHEN-ISSUED SECURITIES
The Portfolio may from time to time purchase securities on a "when-issued" or
delayed delivery basis, generally in connection with an underwriting or other
offering. The price of such securities, which may be expressed in yield terms,
is fixed at the time the commitment to purchase is made, but delivery and
payment for the when-issued securities take place at a later date. Normally, the
settlement date occurs within one month of the purchase; during the period
between purchase and settlement, no payment is made by the Portfolio to the
issuer and no interest accrues to the Portfolio. To the extent that assets of a
Portfolio are held in cash pending the settlement of a purchase of securities,
the Portfolio would earn no income. While when-issued securities may be sold
prior to the settlement date, the Portfolio intends to purchase such securities
with the purpose of actually acquiring them unless a sale appears desirable for
investment reasons. At the time the Portfolio makes the commitment to purchase a
security on a when-issued basis, it will record the transaction and reflect the
value of the security in determining its net asset value. The market value of
the when-issued securities may be more or less than the purchase price. The
Advisor does not believe that the Portfolio's net asset value or income will be
adversely affected by the purchase of securities on a when-issued basis. The
Portfolio will segregate liquid assets with the Custodian equal in value to
commitments for when-issued securities. Such segregated assets either will
mature or, if necessary, be sold on or before the settlement date.
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ILLIQUID SECURITIES; RULE 144A SECURITIES
There is no present intention for the Portfolio to hold any illiquid securities.
The Portfolio has the right to invest in such securities but not to the extent
of more than 15% of its net assets. Illiquid securities include (a) securities
for which there is no available market, (b) securities that at the time of
purchase have legal or contractual restrictions on resale, (c) repurchase
agreements having more than seven days to maturity and (d) fixed time deposits
subject to withdrawal penalties (other than those with a term of less than seven
days).
Mutual funds do not typically hold a significant amount of restricted or other
illiquid securities because of the potential for delays on resale and
uncertainty in valuation. Limitations on resale may have an adverse effect on
the marketability of portfolio securities, and a Portfolio might not be able to
dispose of such securities promptly or at reasonable prices and might thereby
experience difficulty satisfying redemptions. The Portfolio might also have to
register such restricted securities in order to dispose of them, resulting in
additional expense and delay.
In recent years, however, a large institutional market has developed for certain
securities that are not registered under the Securities Act of 1933, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or
to certain institutions may not be indicative of the liquidity of such
investments. If such securities are subject to purchase by institutional buyers
in accord with Rule 144A promulgated by the Securities and Exchange Commission,
the Trustees may determine that such securities are not illiquid notwithstanding
their legal or contractual restrictions on resale.
U.S. GOVERNMENT OBLIGATIONS
U.S. Government securities include direct obligations issued by the United
States Treasury, such as Treasury bills (maturities of one year or less), U.S.
Treasury notes (maturities of one to ten years) and U.S. Treasury bonds
(generally maturities of greater than ten years). 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 asset a claim
against the United States itself in the event the agency or instrumentality does
not meet its commitment.
SECURITIES LENDING
The Portfolio has the ability to lend securities, but have no present intention
to do so. The Portfolio may lend its securities in an amount not to exceed 30%
of their assets to financial institutions such as banks and brokers if the loan
is collateralized in accordance with applicable regulations. Under the present
regulatory requirements which govern loans of portfolio securities, the loan
collateral must, on each business day, at least equal the value of the loaned
securities and must consist of cash, letters of credit of domestic banks or
domestic branches of foreign banks or securities of the U.S. Government or its
agencies.
B-3
<PAGE>
FOREIGN SECURITIES
The Portfolio may invests 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 U.S. dollar denominated
securities of foreign issuers or American Depositary Receipts ("ADRs"). ADRs are
receipts, usually issued by a U.S. bank or trust company, evidencing ownership
of the underlying securities. Generally, ADRs are issued in registered form,
denominated in U.S. dollars and are designed for use in the U.S. securities
markets. A depositary may issue sponsored and unsponsored ADRs without the
consent of the foreign issuer of securities, in which case the holder of the ADR
may incur higher costs and receive less information about the foreign issuer
than the holder of a sponsored ADR.
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 aversely
affect the value of those investments. The value of foreign securities may be
adversely affected by movements in the exchange rates between foreign currencies
(including the "euro") and the U.S. dollar, as well as other political and
economic developments.
FUTURES
To the extent consistent with their investment objectives and policies, the
Portfolio may purchase and sell futures contracts with respect to interest rates
and securities indices. The Portfolio may use these techniques to hedge against
changes in interest rates or securities prices or as part of their overall
investment strategies.
An interest rate or index futures contract provides for the future sale by one
party and purchase by another party of a specified quantity of a financial
instrument or the cash value of an index at a specified price and time. A
futures contract on an index is an agreement pursuant to which two parties agree
to take or make delivery of an amount of cash equal to the difference between
the value of the index at the close of the last trading day of the contract and
the price at which the index contract was originally written. Although the value
of an index might be a function of the value of certain specified securities, no
physical delivery of these securities is made. A public market exists in futures
contracts covering a number of indices as well as financial instruments,
including: the S&P 500; the S&P 100; the S&P Midcap 400; the NYSE composite;
U.S. Treasury bonds; U.S. Treasury notes; GNMA Certificates; three-month U.S.
Treasury bills; 90-day commercial paper; and bank certificates of deposit.
The Portfolio will use futures contracts in accordance with the applicable rules
of the Commodity Futures Trading Commission under which the Trust and the
Portfolio avoid being deemed a "commodity pool" and the Advisor being deemed a
"commodity pool operator." Accordingly, the Portfolio intends generally to limit
its use of futures contracts as described below.
The Portfolio might use futures contracts to hedge against anticipated changes
in interest rates or securities prices that might adversely affect either the
value of the Portfolio's securities or the price of the securities that the
Portfolio intends to purchase. A Portfolio might also buy futures contracts on
securities indexes with respect to a large cash investment in a Portfolio
pending full investment of that cash in stocks.
A Portfolio will enter into only those futures contracts that are standardized
and traded on a U.S. exchange, board of trade, or similar entity, or quoted on
an automated quotation system.
B-4
<PAGE>
When a purchase or sale of a futures contract is made by a Portfolio, the
Portfolio is required to deposit with its custodian (or broker, if legally
permitted) a specified amount of assets determined to be liquid by the Advisor
in accordance with procedures established by the Board of Trustees ("initial
margin"). The margin required for a futures contract is set by the exchange on
which the contract is traded and may be modified during the term of the
contract. Each day the Portfolio pays or receives cash, called "variation
margin," equal to the daily change in value of the futures contract. This
process is known as "marking to market." Variation margin does not represent a
borrowing or loan by a Portfolio but is instead a settlement between the
Portfolio and the broker of the amount one would owe the other if the futures
contract expired. In computing daily net asset value, each Portfolio will mark
to market its open futures positions.
Although some futures contracts call for making or taking delivery of the
underlying securities, generally these obligations are closed out prior to
delivery by offsetting purchases or sales of matching futures contracts (same
exchange, underlying security or index, and delivery month).
The Portfolio will enter into positions in futures contracts for "bona fide
hedging" purposes and for other investment purposes. With respect to positions
in futures that do not constitute bona fide hedging positions, the Portfolio
will not enter into a futures contract or futures option contract if,
immediately thereafter, the aggregate initial margin deposits relating to such
positions (plus premiums paid by it for open futures positions, less the amount
by which any such futures are "in-the-money") would exceed 5% of the Portfolio's
net assets.
When purchasing a futures contract, the Portfolio will designate (and
mark-to-market on a daily basis) assets determined to be liquid by the Advisor
in accordance with procedures established by the Board of Trustees, that, when
added to the amounts deposited with a futures commission merchant as margin, are
equal to the contract value of the futures contract.
There are several risks associated with the use of futures contracts. A purchase
or sale of a futures contract may result in losses substantially in excess of
the amount invested in the futures contract. There can be no guarantee that
there will be a correlation between price movements in the hedging vehicle and
in the Portfolio securities being hedged. In addition, there are significant
differences between the securities and futures markets that could result in an
imperfect correlation between the markets, causing a given futures transaction
not to achieve its objectives. A decision as to whether, when and how to use
futures involves the exercise of skill and judgment, and even a well-conceived
investment may be unsuccessful to some degree because of market behavior or
unexpected interest rate or securities price trends.
There can be no assurance that a liquid market will exist at a time when a
Portfolio seeks to close out a futures contract, and that Portfolio would remain
obligated to meet margin requirements until the position is closed.
SHORT-TERM INVESTMENTS
The Portfolio may invests in any of the following securities and instruments:
CERTIFICATES OF DEPOSIT, BANKERS' ACCEPTANCES AND TIME DEPOSITS. The Portfolio
may hold certificates of deposit, bankers' acceptances and time deposits.
Certificates of deposit are negotiable certificates issued against funds
deposited in a commercial bank for a definite period of time and earning a
specified return. Bankers' acceptances are negotiable drafts or bills of
exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning in effect that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Certificates of deposit and bankers' acceptances acquired by the Portfolio will
be dollar-denominated obligations of domestic banks, savings and loan
associations or financial institutions which, at the time of purchase, have
capital, surplus and undivided profits in excess of $100 million (including
assets of both domestic and foreign branches), based on latest published
reports, or less than $100 million if the principal amount of such bank
obligations are fully insured by the U.S. Government.
B-5
<PAGE>
In addition to buying certificates of deposit and bankers' acceptances, the
Portfolio also may make interest-bearing time or other interest-bearing deposits
in commercial or savings banks. Time deposits are non-negotiable deposits
maintained at a banking institution for a specified period of time at a
specified interest rate.
COMMERCIAL PAPER AND SHORT-TERM NOTES. The Portfolio may invests a portion of
its assets in commercial paper and short-term notes. Commercial paper consists
of unsecured promissory notes issued by corporations. Commercial paper and
short-term notes will normally have maturities of less than nine months and
fixed rates of return, although such instruments may have maturities of up to
one year.
Commercial paper and short-term notes will consist of issues rated at the time
of purchase "A-2" or higher by Standard & Poor's Ratings Group, "Prime-1" or
"Prime-2" by Moody's Investors Service, Inc., or similarly rated by another
nationally recognized statistical rating organization or, if unrated, will be
determined by the Advisor to be of comparable quality. These rating symbols are
described in the Appendix.
INVESTMENT RESTRICTIONS
The Trust, on behalf of the Portfolio, has adopted the following fundamental
investment policies and restrictions in addition to the policies and
restrictions discussed in the prospectus. The policies and restrictions listed
below cannot be changed without approval by the holders of a "majority of the
outstanding voting securities" of the Portfolio (which is defined in the
Investment Company Act of 1940 (the "1940 Act") to mean the lesser of (i) 67% of
the shares represented at a meeting at which more than 50% of the outstanding
shares are represented or (ii) more than 50% of the outstanding shares. As a
matter of fundamental policy, the Portfolio is diversified; i.e., as to 75% of
the value of a Portfolio's total assets, no more than 5% of the value of its
total assets may be invested in the securities of any one issuer (other than
U.S. Government securities).
In addition, the Portfolio may not:
1. Issue senior securities, borrow money or pledge its assets, except that the
Portfolio may borrow on an unsecured basis from banks for temporary or emergency
purposes or for the clearance of transactions in amounts not exceeding 10% of
its total assets (not including the amount borrowed), provided that it will not
make investments while borrowings in excess of 5% of the value of its total
assets are outstanding;
2. Make short sales of securities or maintain a short position, except for short
sales against the box;
3. Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of transactions;
4. Write put or call options, except that the Portfolio reserve the right to
write put or call options for hedging or other purposes as may subsequently be
described in their Prospectus and permitted under applicable federal and state
laws and regulations;
5. Act as underwriter (except to the extent a Portfolio may be deemed to be an
underwriter in connection with the sale of securities in its investment
portfolio);
6. Invest 25% or more of its total assets, calculated at the time of purchase
and taken at market value, in any one industry, other than U.S. Government
securities, (except that the Portfolio reserve the right to invest all of their
assets in shares of another investment company);
7. Purchase or sell real estate or interests in real estate or real estate
limited partnerships (although any Portfolio may purchase and sell securities
which are secured by real estate and securities of companies which invest or
deal in real estate);
B-6
<PAGE>
8. Purchase or sell commodities or commodity futures contracts, except that the
Portfolio may purchase and sell stock index futures contracts and interest rate
futures contracts to the extent described in their Prospectus or in this
Statement of Additional Information and as permitted under applicable federal
and state laws and regulations;
9. Make loans (except for purchases of debt securities consistent with the
investment policies of the Portfolio and except for repurchase agreements);
10. Make investments for the purpose of exercising control or management; or
11. Invest in oil and gas limited partnerships or oil, gas or mineral leases.
The Portfolio observes the following restrictions as a matter of operating but
not fundamental policy, pursuant to positions taken by federal regulatory
authorities:
The Portfolio may not:
1. Purchase any security if as a result the Portfolio would then hold more than
10% of any class of voting securities of an issuer (taking all common stock
issues as a single class, all preferred stock issues as a single class, and all
debt issues as a single class) except that each Portfolio reserves the right to
invest all of its assets in a class of voting securities of an investment
company;
2. Invest more than 10% of its assets in the securities of other investment
companies or purchase more than 3% of any other investment company's voting
securities or make any other investment in other investment companies except as
permitted by federal law. (Each Portfolio reserves the right to invest all of
its assets in another investment company).
3. Invest, in the aggregate, more than 15% of its net assets in securities with
legal or contractual restrictions on resale, securities which are not readily
marketable and repurchase agreements with more than seven days to maturity.
MANAGEMENT
The overall management of the business and affairs of the Trust is vested with
its Board of Trustees. The Board approves all significant agreements between the
Trust and persons or companies furnishing services to it, including the
agreements with the Advisor, Administrator, Custodian and Transfer Agent. The
day to day operations of the Trust and the Portfolio are delegated to their
officers, subject to their investment objectives and policies and to general
supervision by their Boards of Trustees.
The following table lists the Trustees and officers of the Trust, their ages,
business addresses and principal occupations during the past five years. Unless
otherwise noted, each individual has held the position listed for more than five
years.
B-7
<PAGE>
<TABLE>
<CAPTION>
Position(s)
Held Principal Occupation(s)
Name and Address With Trust During Past Five Years
---------------- ---------- ----------------------
<S> <C> <C>
J. Glenn Haber, 3/15/52 * Trustee, Principal of the Advisor.
601 Union St., Ste. 2801 President,
Seattle, WA 98101 Secretary, and
Treasurer
Patricia L. Frost 11/4/44* Trustee and Principal and Chief Executive Officer of the Advisor
601 Union St., Ste. 2801 Vice President
Seattle, WA 98101
James E. Diamond, Jr., 11/13/46 Trustee President and Chief Financial Officer of Paul O. Giesey
3217 NW Yeon Ave. Adcrafters, Inc. (printing and typography).
Portland, OR 97210
John W. Ferris, 12/12/40 Trustee Partner of Peterson Sullivan & Co. (certified public
Peterson, Sullivan & Co. accountants).
2330 Two Union Square
Seattle, WA 98101
Gary L. Sundem, 11/8/44 Trustee Associate Dean and Professor of Accounting;
University of Washington University of Washington
School of Business Administration
James R. Margard,9/25/52* Vice President Principal of the Advisor
601 Union St., Ste. 2801
Seattle, WA 98101
Michael E. Raney,9/13/48* Vice President Principal of the Advisor
601 Union St. Ste. 2801
Seattle, WA 98101
David A. Veterane,7/22/41* Vice President Principal of the Advisor
601 Union St., Ste. 2801
Seattle, WA 98101
</TABLE>
----------
* Denotes "interested person" as defined in the 1940 Act.
The officers of the Trust, and the Trustees who are considered "interested
persons" of the Trust receive no compensation directly from the Trust for
performing the duties of their offices. However, those officers and Trustees who
are officers or principals of the Advisor may receive remuneration indirectly
because the Advisor receives a management fee from the Portfolio. The Trustees
B-8
<PAGE>
who are not affiliated with the Advisor receive an annual retainer of $6,000
plus $1,500 per meeting. These unaffiliated Trustees also receive a fee of
$1,500 for any committee meetings held on dates other than a scheduled board
meeting date. Such Trustees also are reimbursed for any expenses incurred in
attending meetings. The aggregate compensation paid by each Portfolio of the
Trust to each of the Trustees during the fiscal year ended March 31, 1999 is set
forth below:
Deferred
Aggregate Compensation
Compensation Accrued as Part Total Compensation
Name of Trustee Paid from Trust of Trust Expenses from Trust(1)
--------------- --------------- ----------------- -------------
J. Glenn Haber $ 0 $ 0 $ 0
Patricia L. Frost $ 0 $ 0 $ 0
James E. Diamond, Jr $10,000 $ 0 $10,000
Gary L. Sundem $10,000 $ 0 $10,000
John W. Ferris $ 4,000 $ 6,283 $10,283
----------
1. There are four other separate series in the Trust.
The Portfolio do not maintain pension or retirement plans for Trustees.
PRINCIPAL SHAREHOLDERS
The Advisor and its affiliates own substantially all of the Portfolio's
outstanding shares as a result of their initial investment in the Portfolio. For
a period of several months following commencement of operations of the
Portfolio, a control person of or affiliate of the Portfolio (such as the
Advisor) is expected to own 25 percent or more of its outstanding shares.
THE ADVISOR
Subject to the supervision of the Board of Trustees, investment management and
services are provided to the Portfolio by the Advisor, pursuant to an Investment
Advisory Agreement (the "Advisory Agreement"). Under the Advisory Agreement, the
Advisor provides a continuous investment program for the Portfolio and makes
decisions and places orders to buy, sell or hold particular securities. In
addition to the fees payable to the Advisor and the Administrator, the Portfolio
and the Trust are responsible for their operating expenses, including: (i)
interest and taxes; (ii) brokerage commissions; (iii) insurance premiums; (iv)
compensation and expenses of Trustees other than those affiliated with the
Advisor or the Administrator; (v) legal and audit expenses; (vi) fees and
expenses of the custodian, shareholder service and transfer agents; (vii) fees
and expenses for registration or qualification of the Trust and its shares under
federal or state securities laws; (viii) expenses of preparing, printing and
mailing reports, notices and proxy material to shareholders; (ix) other expenses
incidental to holding any shareholder meetings; (x) dues or assessments of or
contributions to the Investment Company Institute or any successor; and (xi)
such non-recurring expenses as may arise, including litigation affecting the
Trust or the Portfolio and the legal obligations with respect to which the Trust
or the Portfolio may have to indemnify their officers and Trustees.
Under the Advisory Agreement, the Advisor is not liable to the Portfolio for any
error of judgment by the Advisor or any loss sustained by the Trust or Portfolio
except in the case of a breach of fiduciary duty with respect to the receipt of
compensation for services (in which case any award of damages will be limited as
provided in the 1940 Act) or of willful misfeasance, bad faith, gross negligence
or reckless disregard of duty.
The Advisory Agreement continues automatically for successive annual periods,
provided that such continuance is specifically approved at least annually (i) by
a majority vote of the Independent Trustees cast in person at a meeting called
for the purpose of voting on such approval, and (ii) by the Board of Trustees or
by vote of a majority of the outstanding voting securities.
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<PAGE>
The Advisory Agreement is terminable by vote of the Board of Trustees or by the
holders of a majority of the outstanding voting securities of the Portfolio at
any time without penalty, on 60 days written notice to the Advisor. The Advisory
Agreement also may be terminated by the Advisor on 60 days written notice to the
Portfolio. The Advisory Agreement terminates automatically upon its assignment
(as defined in the 1940 Act).
Because the Portfolio is so new, no fees have been paid to the Advisor as of the
date of this Statement of Additional Information.
THE ADMINISTRATOR
The Trust has an Administration Agreement with Investment Company
Administration, LLC (the "Administrator"), a corporation with offices at 4455 E.
Camelback Rd., Ste. 261-E, Phoenix, AZ 85018. The Administration Agreement
provides that the Administrator will prepare and coordinate reports and other
materials supplied to the Trustees; prepare and/or supervise the preparation and
filing of all securities filings, periodic financial reports, prospectuses,
statements of additional information, marketing materials, tax returns,
shareholder reports and other regulatory reports or filings required of the
Portfolio; prepare all required filings necessary to maintain the Portfolio'
qualification and/or registration to sell shares in all states where the
Portfolio currently do, or intends to do business; coordinate the preparation,
printing and mailing of all materials (e.g., annual reports) required to be sent
to shareholders; coordinate the preparation and payment of Portfolio-related
expenses; monitor and oversee the activities of the Portfolio' servicing agents
(i.e., transfer agent, custodian, fund accountants, etc.); review and adjust as
necessary the Portfolio' daily expense accruals; and perform such additional
services as may be agreed upon by the Trust and the Administrator. For its
services, the Administrator receives a monthly fee from each Portfolio at the
annual rate of 0.10% of the first $100 million of average daily net assets,
0.05% of the next $100 million, and 0.03% of assets over $200 million, subject
to an annual minimum of $40, 000
Because the Portfolio is so new, no fees have been paid to the Administrator as
of the date of this Statement of Additional Information
THE DISTRIBUTOR
First Fund Distributors, Inc. (the "Distributor"), an affiliate of the
Administrator, acts as the Portfolio's principal underwriter in a continuous
public offering of each Portfolio's shares. The Distribution Agreement between
the Trust and the Distributor continues in effect from year to year if approved
at least annually by (i) the Board of Trustees or the vote of a majority of the
outstanding shares of the Portfolio (as defined in the 1940 Act) and (ii) a
majority of the Trustees who are not interested persons of any such party, in
each case cast in person at a meeting called for the purpose of voting on such
approval. The Distribution Agreement may be terminated without penalty by the
parties thereto , upon sixty days' written notice, and is automatically
terminated in the event of its assignment as defined in the 1940 Act.
The Portfolio has adopted a Distribution Plan in accordance with Rule 12b-1
under the 1940 Act. Each Plan provides that a Portfolio may pay a fee to the
Advisor, as Distribution Coordinator, at an annual rate of up to 0.25% of the
average daily net assets of each Portfolio. The fee is paid to the Advisor, as
Distribution Coordinator, as reimbursement for or in anticipation of, expenses
incurred for distribution related activities. Expenses permitted to be paid by
each Portfolio under its Plan include: preparation, printing and mailing or
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; the Advisor's
internal distribution and shareholder servicing expenses; 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 pay these expenses and 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.
B-10
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
In all purchases and sales of securities for the Portfolio, the primary
consideration is to obtain the most favorable price and execution available.
Pursuant to the Advisory Agreement, the Advisor determines which securities are
to be purchased and sold by the Portfolio and which broker-dealers are eligible
to execute portfolio transactions, subject to the instructions of and review by
the Trust's Board of Trustees.
Purchases of portfolio securities may be made directly from issuers or from
underwriters. Where possible, purchase and sale transactions will be effected
through dealers (including banks) which specialize in the types of securities
which the Portfolio will be holding, unless better executions are available
elsewhere. Dealers and underwriters usually act as principals for their own
accounts. Purchases from underwriters will include a commission paid by the
issuer to the underwriter and purchases from dealers will include the spread
between the bid and the asked price. If the execution and price offered by more
than one dealer or underwriter are substantially the same, the Advisor will also
consider whether that Broker/Dealer has provided research or other services as
discussed below.
In placing portfolio transactions, the Advisor will use its best efforts to
choose a broker-dealer capable of providing the services necessary to obtain the
most favorable price and execution available. The full range and quality of
services available will be considered in making these determinations, such as
the size of the order, the difficulty of execution, the operational facilities
of the firm involved, the firm's risk in positioning a block of securities, and
other factors.
In those instances where it is reasonably determined that more than one
broker-dealer can offer the services needed to obtain the most favorable price
and execution available and the transaction involves a brokerage commission,
consideration may be given to those broker-dealers which furnish or supply
research and statistical information to the Advisor that it may lawfully and
appropriately use in its investment advisory capacity for the Portfolio and for
other accounts, as well as provide other services in addition to execution
services. The Advisor considers such information, which is in addition to, and
not in lieu of, the services required to be performed by it under the Agreement,
to be useful in varying degrees, but of indeterminable value. The Board of
Trustees reviews all brokerage allocations where services other than best
price/execution capabilities are a factor to ensure that the other services
provided meet the tests outlined above and produce a benefit to the Portfolio.
The placement of portfolio transactions with broker-dealers who sell shares of
the Portfolio is subject to rules adopted by the National Association of
Securities Dealers, Inc. ("NASD"). Provided the Trust's officers are satisfied
that the Portfolio is receiving the most favorable price and execution
available, the Advisor may also consider the sale of the Portfolio' shares as a
factor in the selection of broker-dealers to execute its portfolio transactions.
Investment decisions for the Portfolio are made independently from those of
other client accounts of the Advisor. Nevertheless, it is possible that at times
the same securities will be acceptable for the Portfolio and for one or more of
such client accounts. To the extent any of these client accounts and a Portfolio
seek to acquire the same security at the same time, the Portfolio may not be
able to acquire as large a portion of such security as it desires, or it may
have to pay a higher price to obtain a lower yield for such security. Similarly,
a Portfolio may not be able to obtain as high a price for, or as large an
execution of, an order to sell any particular security at the same time. If one
or more of such client accounts simultaneously purchases or sells the same
security that a Portfolio is purchasing or selling, each day's transactions in
such security will be allocated between the Portfolio and all such client
accounts in a manner deemed equitable by the Advisor, taking into account the
respective sizes of the accounts, the amount being purchased or sold and other
factors deemed relevant by the Advisor. It is recognized that in some cases this
system could have a detrimental effect on the price or value of the security
insofar as the Portfolio is concerned. In other cases, however, it is believed
that the ability of the Portfolio to participate in volume transactions may
produce better executions for the Portfolio.
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Depending on the Advisor's view of market conditions, a Portfolio may or may not
purchase debt securities with the expectation of holding them to maturity,
although its general policy is to hold securities to maturity. A Portfolio may,
however, sell securities prior to maturity to meet redemptions or as a result of
a revised management evaluation of the issuer.
The Portfolio do not effect securities transactions through broker-dealers in
accordance with any formula, nor do they effect securities transactions through
such broker-dealers solely for selling shares of the Portfolio. However, as
stated above, broker-dealers who execute transactions for the Portfolio may from
time to time effect purchase of shares of the Portfolio for their customers.
PORTFOLIO TURNOVER
Although the Portfolio generally will not invest for short-term trading
purposes, portfolio securities may be sold without regard to the length of time
they have been held when, in the opinion of the Advisor, investment
considerations warrant such action. Portfolio turnover rate is calculated by
dividing (1) the lesser of purchases or sales of portfolio securities for the
fiscal year by (2) the monthly average of the value of portfolio securities
owned during the fiscal year. A 100% turnover rate would occur if all the
securities in a Portfolio's portfolio, with the exception of securities whose
maturities at the time of acquisition were one year or less, were sold and
either repurchased or replaced within one year. A high rate of portfolio
turnover (100% or more) generally leads to transaction costs and may result in a
greater number of taxable transactions. See "Portfolio Transactions and
Brokerage."
NET ASSET VALUE
As noted in the Prospectus, the net asset value and offering price of shares of
the Portfolio will be determined once daily as of the close of public trading on
the NYSE (normally 4:00 p.m. Eastern time) on each day that the NYSE is open for
trading. The Portfolio do not expect to determine the net asset value of their
shares on any day when the NYSE is not open for trading even if there is
sufficient trading in its portfolio securities on such days to materially affect
the net asset value per share. However, the net asset value of a Portfolio's
shares may be determined on days the NYSE is closed or at times other than 4:00
p.m. if the Board of Trustees decides it is necessary.
In valuing the Portfolio' assets for calculating net asset value, readily
marketable portfolio securities listed on a national securities exchange or on
NASDAQ are valued at the last sale price on the business day as of which such
value is being determined. If there has been no sale on such exchange or on
NASDAQ on such day, the security is valued at the closing bid price on such day.
Readily marketable securities traded only in the over-the-counter market and not
on NASDAQ are valued at the current or last bid price. If no bid is quoted on
such day, the security is valued by such method as the Board of Trustees of the
Trust shall determine in good faith to reflect the security's fair value. Debt
securities with remaining maturities of 60 days or less are normally valued at
amortized cost, unless the Board of Trustees determined 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. All other assets of the Portfolio are valued in such
manner as the Board of Trustees in good faith deems appropriate to reflect their
fair value.
The net asset value per share of the Portfolio is calculated as follows: all
liabilities incurred or accrued are deducted from the valuation of total assets
which includes accrued but undistributed income; the resulting net assets are
divided by the number of shares of the Portfolio outstanding at the time of the
valuation and the result (adjusted to the nearest cent) is the net asset value
per share.
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<PAGE>
The net asset value of the Portfolio's shares will fluctuate and is determined
as of the close of trading on the New York Stock Exchange ("NYSE"), normally
4:00 p.m. Eastern time, each business day. The NYSE annually announces the days
on which it will not be open for trading. The most recent announcement indicates
that it will not be open on the following days: New Year's Day, Martin Luther
King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. However, the NYSE may close on
days not included in that announcement. The Portfolio do not expect to determine
the net asset value of shares on any day when the NYSE is not open for trading
even if there is sufficient trading in their portfolio securities on such dates
to materially affect the net asset value per share. However, the net asset value
of Portfolio shares may be determined on days the NYSE is closed or at times
other than 4:00 p.m. if the Board of Trustees decides it is necessary.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The information provided below supplements the information contained in the
Portfolio's Prospectus regarding the purchase and redemption of Portfolio
shares.
HOW TO BUY SHARES
You may purchase shares of a Portfolio from the Transfer Agent or from selected
securities brokers, dealers or financial intermediaries. Investors should
contact these agents directly for appropriate instructions, as well as
information pertaining to accounts and any service or transaction fees that may
be charged by those agents. Purchase orders through securities brokers, dealers
and other financial intermediaries are effected at the next-determined net asset
value after receipt of the order by such agent before the Portfolio's daily
cutoff time. Orders received after that time will be purchased at the
next-determined net asset value.
The Trust reserves the right in its sole discretion (i) to suspend the continued
offering of the Portfolio's shares, (ii) to reject purchase orders in whole or
in part when in the judgment of the Advisor or the Distributor such rejection is
in the best interest of a Portfolio, and (iii) to reduce or waive the minimum
for initial and subsequent investments for certain retirement and other employee
benefit plans, for the Advisor's employees, clients or their affiliates, for
advisors or financial institutions offering investors a program of services or
any other person or organization deemed appropriate by the Trust.
The U.S. Postal Service or other independent delivery services are not agents of
the Trust. Therefore, a deposit in the mail or with such services of purchase
applications does not constitute receipt by ICA Fund Services Corporation or the
Trust. The Trust and the Transfer Agent are not responsible for the consequences
of delays resulting from the banking or Federal Reserve Wire system, or from
incomplete wiring instructions.
HOW TO SELL SHARES
Payments to shareholders for Portfolio shares redeemed directly from the
Portfolio will be made as promptly as possible but no later than seven days
after receipt by the 's Transfer Agent of the written request in proper form,
with the appropriate documentation as stated in the Portfolio's Prospectus,
except that a Portfolio may suspend the right of redemption or postpone the date
of payment during any period when (a) trading on the NYSE is restricted as
determined by the SEC or the NYSE is closed for other than weekends and
holidays; (b) an emergency exists as determined by the SEC making disposal of
portfolio securities or valuation of net assets of the Portfolio not reasonably
practicable; or (c) for such other period as the SEC may permit for the
protection of the Portfolio' shareholders. At various times, a Portfolio may be
requested to redeem shares for which it has not yet received confirmation of
good payment. In this circumstance, the Portfolio may delay the redemption until
payment for the purchase of such shares has been collected and confirmed to the
Portfolio.
B-13
<PAGE>
SELLING SHARES DIRECTLY TO THE PORTFOLIO
Send a signed letter of instruction to the Transfer Agent. The price you will
receive is the next net asset value calculated after the Transfer Agent receives
your request in proper form. In order to receive that day's net asset value, the
Transfer Agent must receive your request before the close of regular trading on
the NYSE.
SELLING SHARES THROUGH YOUR INVESTMENT REPRESENTATIVE
Your investment representative must receive your request before the close of
regular trading on the NYSE to receive that day's net asset value. Your
investment representative will be responsible for furnishing all necessary
documentation to the Transfer Agent, and may charge you for its services.
DELIVERY OF PROCEEDS
The Portfolio generally sends you payment for your shares the business day after
your request is received in proper form, assuming the Portfolio has collected
payment of the purchase price of your shares. Under unusual circumstances, a
Portfolio may suspend redemptions, or postpone payment for more than seven days,
but only as authorized by SEC rules.
TELEPHONE REDEMPTIONS
Upon receipt of any instructions or inquiries by telephone from a shareholder
or, if held in a joint account, from either party, or from any person claiming
to be the shareholder, each Portfolio or its agent is authorized, without
notifying the shareholder or joint account parties, to carry out the
instructions or to respond to the inquiries, consistent with the service options
chosen by the shareholder or joint shareholders in his or their latest Account
Application or other written request for services, including purchasing,
exchanging or redeeming shares of a Portfolio and depositing and withdrawing
monies from the bank account specified in the shareholder's latest Account
Application or as otherwise properly specified to the Portfolio in writing.
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.
The Transfer Agent will employ these and other reasonable procedures to confirm
that instructions communicated by telephone are genuine; if it fails to employ
reasonable procedures, the Trust may be liable for any losses due to
unauthorized or fraudulent instructions. An investor agrees, however, that if
such procedures are used, neither the Trust nor any Portfolio or its agents will
be liable for any loss, liability, cost or expense arising out of any redemption
request, including any fraudulent or unauthorized request. For information,
consult the Transfer Agent.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Transfer Agent by telephone. In this event,
you may wish to submit a written redemption request, as described in the
Prospectus, or contact your investment representative. The Telephone Redemption
Privilege is not available if you were issued certificates for shares that
remain outstanding. The Telephone Redemption Privilege may be modified or
terminated without notice.
B-14
<PAGE>
REDEMPTIONS-IN-KIND
Subject to compliance with applicable regulations, the Portfolio have reserved
the right to pay the redemption price of their shares, either totally or
partially, by a distribution in kind of readily marketable portfolio securities
(instead of cash). The securities so distributed would be valued at the same
amount as that assigned to them in calculating the net asset value for the
shares being sold. If a shareholder receives a distribution in kind, the
shareholder could incur brokerage or other charges in converting the securities
to cash. The Trust has filed an election under Rule 18f-1 committing to pay in
cash all redemptions by a shareholder of record up to amounts specified by the
rule (approximately $250,000).
TAXATION
The Portfolio intends to qualify for treatment as a regulated investment company
("RIC") under Subchapter M of the Internal Revenue Code (the "Code"). In each
taxable year that the Portfolio qualifies, the Portfolio (but not their
shareholders) will not be subject to federal income tax on that part of its
investment company taxable income (consisting generally of interest and dividend
income, net short-term capital gain and net realized gains from currency
transactions) and net capital gain that is distributed to shareholders.
In order to qualify for treatment as a RIC, the Portfolio must distribute
annually to shareholders at least 90% of their investment company taxable income
and must meet several additional requirements. Among these requirements are the
following: (1) at least 90% of each Portfolio's gross income each taxable year
must be derived from dividends, interest, payments with respect to securities
loans and gains from the sale or other disposition of securities or foreign
currencies, or other income derived with respect to its business of investing in
securities or currencies; (2) at the close of each quarter of each Portfolio's
taxable year, at least 50% of the value of its total assets must be represented
by cash and cash items, U.S. Government securities, securities of other RICs and
other securities, limited in respect of any one issuer, to an amount that does
not exceed 5% of the value of the Portfolio and that does not represent more
than 10% of the outstanding voting securities of such issuer; and (3) at the
close of each quarter of each Portfolio's taxable year, not more than 25% of the
value of its assets may be invested in securities (other than U.S. Government
securities or the securities of other RICs) of any one issuer.
The Portfolio will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and capital gain net income for the one-year
period ending on October 31 of that year, plus certain other amounts.
Under the Code, the Portfolio will be required to report to the Internal Revenue
Service all distributions of taxable income and capital gains as well as gross
proceeds from the redemption of Portfolio shares, except in the case of exempt
shareholders, which includes most corporations. Pursuant to the backup
withholding provisions of the Code, distributions of any taxable income and
capital gains and proceeds from the redemption of Portfolio shares may be
subject to withholding of federal income tax at the rate of 31 percent in the
case of non-exempt shareholders who fail to furnish the Portfolio with their
taxpayer identification numbers and with required certifications regarding their
status under the federal income tax law. If the withholding provisions are
applicable, any such distributions and proceeds, whether taken in cash or
reinvested in additional shares, will be reduced by the amounts required to be
withheld. Corporate and other exempt shareholders should provide the Portfolio
with their taxpayer identification numbers or certify their exempt status in
order to avoid possible erroneous application of backup withholding. The Trust
reserves the right to refuse to open a Portfolio account for any person failing
to provide a certified taxpayer identification number.
B-15
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
Dividends from the Portfolio's investment company taxable income (whether paid
in cash or invested in additional shares) will be taxable to shareholders as
ordinary income to the extent of the Portfolio's earnings and profits.
Distributions of a Portfolio's net capital gain (whether paid in cash or
invested in additional shares) will be taxable to shareholders as long-term
capital gain, regardless of how long they have held their Portfolio shares.
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 above, even though the
dividend or distribution represents, in substance, a partial return of capital
to the shareholder.
Dividends declared by the Portfolio in October, November or December of any year
and payable to shareholders of record on a date in one of such months will be
deemed to have been paid by the Portfolio and received by the shareholders on
the record date if the dividends are paid by the Portfolio during the following
January. Accordingly, such dividends will be taxed to shareholders for the year
in which the record date falls.
PERFORMANCE INFORMATION
TOTAL RETURN
From time to time, the Portfolio may state their total return in advertisements
and investor communications. Total return may be stated for any relevant period
as specified in the advertisement or communication. Any statements of total
return will be accompanied by information on the Portfolio' average annual
compounded rate of return for the most recent one, five and ten year periods, or
shorter periods from inception, through the most recent calendar quarter. The
Portfolio may also advertise aggregate and average total return information over
different periods of time.
Average annual total return quotations used in the Portfolio's advertising and
promotional materials are calculated according to the following formula:
n
P(1 + T) = ERV
where "P" equals a hypothetical initial payment of $1,000; "T" equals average
annual total return; "n" equals the number of years; and "ERV" equals the ending
redeemable value at the end of the period of a hypothetical $1,000 payment made
at the beginning of the period. Average annual total return, or "T" in the above
formula, is computed by finding the average annual compounded rates of return
over the period that would equate the initial amount invested to the ending
redeemable value. Average annual total return assumes the reinvestment of all
dividends and distributions.
Because the Portfolio is new, no total return data are available as of the date
of this Statement of Additional Information.
YIELD
Annualized yield quotations used in the Portfolio's advertising and promotional
materials are calculated by dividing the Portfolio's interest income for a
specified thirty-day period, net of expenses, by the average number of shares
outstanding during the period, and expressing the result as an annualized
percentage (assuming semi-annual compounding) of the net asset value per share
at the end of the period. Yield quotations are calculated according to the
following formula:
YIELD = 2 [(a-b + 1)6 - 1]
---
cd
B-16
<PAGE>
where "a" equals dividends and interest earned during the period; "b" equals
expenses accrued for the period, net of reimbursements; "c" equals the average
daily number of shares outstanding during the period that are entitled to
receive dividends and "d" equals the maximum offering price per share on the
last day of the period. Except as noted below, in determining net investment
income earned during the period ("a" in the above formula), a Portfolio
calculates interest earned on the debt obligations held by it during the period
by (1) computing the obligation's yield to maturity, based on the market value
of the obligation (including actual accrued interest) on the last business day
of the period or, if the obligation was purchased during the period, the
purchase price plus accrued interest; (2) dividing the yield to maturity by 360
and multiplying the resulting quotient by the market value of the obligation
(including actual accrued interest) and; (3)totaling the interest earned on all
debt obligations and all dividends accrued on all equity securities during the
period.
For purposes of these calculations, the maturity of an obligation with one or
more call provisions is assumed to be the next date on which the obligation
reasonably can be expected to be called or, if none, the maturity date.
OTHER PERFORMANCE INFORMATION
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.
Performance data of the Portfolio quoted in advertising and other promotional
materials represents past performance and is not intended to predict or indicate
future results. The return and principal value of an investment in a Portfolio
will fluctuate, and an investor's redemption proceeds may be more or less than
the original investment amount. In advertising and promotional materials a
Portfolio may compare its performance with data published by Lipper Analytical
Services, Inc. ("Lipper"), Morningstar, Inc. ("Morningstar") or CDA Investment
Technologies, Inc. ("CDA"). A Portfolio also may refer in such materials to
mutual fund performance rankings and other data, such as comparative asset,
expense and fee levels, published by Lipper, CDA or Morningstar. Advertising and
promotional materials also may refer to discussions of a Portfolio and
comparative mutual fund data and ratings reported in independent periodicals
including, but not limited to, THE WALL STREET JOURNAL, MONEY, FORBES, BUSINESS
WEEK, FINANCIAL WORLD and BARRON'S.
GENERAL INFORMATION
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest and to divide or combine the
shares into a greater or lesser number of shares without thereby changing the
proportionate beneficial interest in a Portfolio. Each share represents an
interest in a Portfolio proportionately equal to the interest of each other
share. Upon the Trust's liquidation, all shareholders would share pro rata in
the net assets of the Portfolio in question available for distribution to
shareholders. If they deem it advisable and in the best interest of
shareholders, the Board of Trustees may create additional series of shares which
differ from each other only as to dividends. The Board of Trustees has created
five series of shares, and may create additional series in the future, which
have separate assets and liabilities. Income and operating expenses not
specifically attributable to a particular Portfolio are allocated fairly among
the Portfolio by the Trustees, generally on the basis of the relative net assets
of each Portfolio.
Shareholders are entitled to one vote for each full share (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
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<PAGE>
regular annual meetings of shareholders will be held. 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 less 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.
Rule 18f-2 under the 1940 Act provides that as to any investment company which
has two or more series outstanding and as to any matter required to be submitted
to shareholder vote, such matter is not deemed to have been effectively acted
upon unless approved by the holders of a "majority" (as defined in the Rule) of
the voting securities of each series affected by the matter. Such separate
voting requirements do not apply to the election of Trustees or the ratification
of the selection of accountants. The Rule contains special provisions for cases
in which an advisory contract is approved by one or more, but not all, series. A
change in investment policy may go into effect as to one or more series whose
holders so approve the change even though the required vote is not obtained as
to the holders of other affected series.
Investors will be informed of the Portfolio's progress through periodic reports.
Financial statements certified by independent public accountants will be
submitted to shareholders at least annually.
The Trust's custodian, Firstar Trust Company, is responsible for holding the
Portfolio' assets. ICA Fund Services Corporation acts as the Portfolio's
transfer agent. KPMG Peat Marwick LLP has been selected as the independent
auditor for the Trust. KPMG provides audit services, tax return preparation and
assistance and consultation in connection with review of certain Securities and
Exchange Commission filings.
The Board of the Trust, the Advisor and the Distributor have adopted Codes of
ethics under Rule 17j-1 of the 1940 Act. These Codes permit, subject to certain
conditions, personnel of the Advisor and Distributor to invest in securities
that may be purchased or held by the Portfolio.
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<PAGE>
APPENDIX
DESCRIPTION OF RATINGS
COMMERCIAL PAPER RATINGS
Moody's commercial paper ratings are assessments of the issuer's ability to
repay punctually promissory obligations. Moody's employs the following three
designations, all judged to be investment grade, to indicate the relative
repayment capacity of rated issuers: Prime 1--highest quality; Prime 2--higher
quality; Prime 3--high quality.
A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment. Ratings are graded into four categories, ranging
from "A" for the highest quality obligations to "D" for the lowest.
Issues assigned the highest rating, A, are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with the
numbers "1", "2" and "3" to indicate the relative degree of safety. The
designation A-1 indicates that the degree of safety regarding timely payment is
either overwhelming or very strong. A "+" designation is applied to those issues
rated "A-1" which possess extremely strong safety characteristics. Capacity for
timely payment on issues with the designation "A-2" is strong. However, the
relative degree of safety is not as high as for issues designated A-1. Issues
carrying the designation "A-3" have a satisfactory capacity for timely payment.
They are, however, somewhat more vulnerable to the adverse effect of changes in
circumstances than obligations carrying the higher designations.
B-19
<PAGE>
RAINIER INVESTMENT MANAGEMENT MUTUAL FUNDS
FORM N-1A
PART C
ITEM 23. EXHIBITS.
(1) Declaration of Trust*
(2) By-Laws*
(3) Specimen Share Certificate**
(4) Management Agreement**
(5) Distribution Agreement**
(6) Not applicable
(7) Form of Custodian Agreement**
(8a) Fund Accounting Servicing Agreement**
(8b) Transfer Agent Agreement**
(i) Transfer Agent Agreement with ICA Fund Services - filed herewith
(8c) Administration Agreement**
(8d) Services Agreement**
(9) Consent and Opinion of Counsel - filed herewith
(10) Consent of Auditors - N/A
(11) Not applicable
(12) Letter of Understanding relating to initial capital***
(13) Plan pursuant to Rule 12b-1**
(14) Not applicable
(15) Not applicable
(16) Codes of Ethics
(a) Rainier Investment Management Mutual Funds - filed herewith
(b) Rainier Investment Management - filed herewith
(c) First Fund Distributors, Inc. - filed herewith
----------
* Filed with the Registrant's initial Registration Statement, File No.
33-73792 on January 5, 1994.
** Filed with Pre-Effective Amendment No. 1 to the Registrant's Registration
Statement, File No. 33- 73792 on February 23, 1994.
*** Filed with Pre-Effective Amendment No. 2 to the Registrant's Registration
Statement, File No. 33- 73792 on April 6, 1994.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
As of the date of this amendment to this Registration Statement, there are
no persons controlled or under common control with the Registrant.
ITEM 25. INDEMNIFICATION
Article VII, Section 2 of the Registrant's Declaration of Trust provides as
follows:
"Section 2. Indemnification and Limitation of Liability. The Trustees shall
not be responsible or liable in any event for any neglect or wrong-doing of any
officer, agent, employee, Manager or Principal Underwriter of the Trust, nor
shall any Trustee be responsible for the act or omission of any other Trustee,
and the Trust out of its assets shall indemnify and hold harmless each and every
Trustee from and against any and all claims and demands whatsoever arising out
of or related to each Trustee's performance of his duties as a Trustee of the
Trust; provided that nothing herein contained shall indemnify, hold harmless or
protect any Trustee from or against any liability to the Trust or any
Shareholder to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
<PAGE>
Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever issued, executed or done by or on behalf of
the Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been issued, executed or done only in or with
respect to their or his capacity as Trustees or Trustee, and such Trustees or
Trustee shall not be personally liable thereon."
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 ("Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable. In the event
that a claim for indemnification against such liabilities (other than payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in connection with the successful defense
of any action, suit or proceeding) is asserted against the Registrant by such
director, officer or controlling person in connection with the shares being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
The response to this item is incorporated by reference to its Form ADV as
amended (File No. 801-35638).
ITEM 27. PRINCIPAL UNDERWRITERS.
a. First Fund Distributors, Inc. (the "Distributor") acts as principal
underwriter for the following other investment companies:
Advisors Series Trust
Amivest/NFB Fund Trust
Brandes Investment Trust
Builders Fixed Income Fund, Inc.
Dessauer Global Equity Fund
Fleming Mutual Fund Group
Fremont Mutual Funds
Guinness Flight Investment Funds
Investors Research Fund, Inc.
Jurika & Voyles Fund Group
Kayne Anderson Mutual Funds
Masters Select Investment Trust
O'Shaugnessy Funds, Inc.
PIC Investment Trust
Professionally Managed Portfolios
Purisima Funds
RNC Mutual Fund Group, Inc.
Rochdale Funds
Trust for Investment Management
b. The officers of the Distributor are:
Robert H. Wadsworth President and Treasurer
Eric Banhazl Vice President
Steven J. Paggioli Vice President and Secretary
Each officer's business address with the Distributor is 4455 E. Camelback
Rd., Ste. 261-E, Phoenix, AZ 85018.
c. Not applicable
<PAGE>
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the rules promulgated thereunder are in the possession the Registrant's
custodian and transfer agent, except those records relating to portfolio
transactions and the basic organizational and Trust documents of the Registrant
(see Subsections (2) (iii). (4), (5), (6), (7), (9), (10) and (11) of Rule
31a-1(b)), which are kept by the Trust at 601 Union St., Ste. 2810, Seattle WA
98101.
ITEM 29. MANAGEMENT SERVICES.
There are no management-related service contracts not discussed in Parts A
and B.
ITEM 30. UNDERTAKINGS
Registrant undertakes that if requested to do so by the holders of at least
10% of the registrant's outstanding shares, it will call a meeting of
shareholders for the purpose of voting upon the question of removal of a trustee
or trustees and to assist in communications with other shareholders as required
by Section 16(c) of the Investment Company Act of 1940.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets the
requirements for effectiveness of the Amendment under Rule 485(b) of the
Securities Act of 1933 and that the Registrant has duly caused this
Post-Effective Amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Seattle in the State of Washington on
the 5th day of June, 2000.
RAINIER INVESTMENT MANAGEMENT MUTUAL FUNDS
By: /s/ J. Glenn Haber
------------------------------------
J. Glenn Haber, President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to this Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated.
/s/ J. Glenn Haber President, Treasurer June 5, 2000
------------------------------ Chief Financial Officer
J. Glenn Haber and Trustee
/s/ Patricia Louise Frost Vice President and June 5, 2000
------------------------------ Trustee
Patricia Louise Frost
*Gary L. Sundem Trustee June 5, 2000
------------------------------
Gary L. Sundem
*James E. Diamond, Jr. Trustee June 5, 2000
------------------------------
James E. Diamond, Jr.
*John W. Ferris Trustee June 5, 2000
------------------------------
John W. Ferris
* By: /s/ J. Glenn Haber
------------------------
J. Glenn Haber, Attorney-in-Fact
under powers of attorney as filed
with Post-Effective Amendment No. 1
to the Registration Statement.
<PAGE>
EXHIBITS
Number Description
------ -----------
99B.8(b)(i) Transfer Agent Agreement with ICA Fund Services, Corp.
99B.9 Opinion of Counsel
99B.16(a) Rainier Investment Management Mutual Funds' Code of Ethics
99B.16(b) Rainier Investment Management, Inc.'s Code of Ethics
99B.16(c) First Fund Distributors' Code of Ethics
