File Nos. 33-89754 and 811-8992
As filed with the Securities and Exchange Commission on January 29, 1996
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 2
AND
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 3
FUNDMANAGER TRUST
(Exact Name of Registrant as Specified in Charter)
ONE BEACON STREET, BOSTON MASSACHUSETTS 02108
(Address of Principal Executive Offices)
Registrant's Telephone Number: (617) 725-2152
Edward T. O'Dell, P.C. John J. Danello
Goodwin, Procter & Hoar Freedom Capital Management Corporation
Exchange Place One Beacon Street
Boston, Massachusetts 02109 Boston, Massachusetts 02108
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box):
[X] immediately upon filing pursuant to paragraph (b)
[ ] on _________________ pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i) or on such earlier
date as the
[ ] Commission may determine pursuant to Section 8(c) of the Securities
Act of 1933
[ ] on _________________ pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on _________________ pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
[ ] Post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has registered an indefinite number or amount of securities under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940. A Rule 24f-2 Notice for the fiscal year ending September 30, 1995 was
filed by FundManager Trust on November 29, 1995.
<PAGE>
CROSS REFERENCE SHEET
REQUIRED BY RULE 495
UNDER THE SECURITIES ACT OF 1933
The enclosed Prospectuses and combined Statement of Additional
Information relates to the Financial Adviser Class of shares and the No-Load
Class of shares, as applicable, of Aggressive Growth Fund, Growth Fund, Growth &
Income Fund, Bond Fund and Managed Total Return Fund (each, a "Fund"), each a
separate series of FundManager Trust (the "Trust"), an open-end management
investment company.
ITEM NUMBER PROSPECTUS CAPTION
Item 1. Cover Page Cover Page
Item 2. Synopsis Highlights; Fee Table
Item 3. Condensed Financial Financial Highlights
Information
Item 4. General Description of Investment Objectives; Investment
Registrant Policies and Restrictions; Risks
and Other Considerations
Item 5. Management of the Trust Management of the Trust
Item 5A. Management's Discussion Not Applicable
of Fund Performance
Item 6. Capital Stock and Other Dividends, Distributions and Taxes
Securities
Item 7. Purchase of Securities Purchase of Shares; Determination
Being Offered of Net Asset Value
Item 8. Redemption or Repurchase Redemption of Shares
Item 9. Legal Proceedings Not Applicable
<PAGE>
PART B
INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
Statement of Additional
ITEM NUMBER INFORMATION CAPTION
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and Not Applicable
History
Item 13. Investment Objectives and Investment Policies;
Policies Investment Restrictions
Item 14. Management of the Registrant Management
Item 15. Control Persons and Other Information
Principal Holders of
Securities
Item 16. Investment Advisory and Management
Other Services
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Other Other Information
Securities
Item 19. Purchase, Redemption and Prospectus - Purchase of
Pricing of Securities Shares; Prospectus -
Being Offered Redemption of Shares;
Prospectus - Determination of
Net Asset Value
Item 20. Tax Status Prospectus - Dividends,
Distributions and Taxes
Item 21. Underwriters Management - Administrator,
Distributors
Item 22. Calculation of Performance Other Information -
Data Performance Information
Item 23. Financial Statements Financial Statements
<PAGE>
FUNDMANAGER FUNDS -- FINANCIAL ADVISER CLASS
ONE BEACON STREET, BOSTON, MASSACHUSETTS 02108
- ------------------------------------------------------------------------------
GENERAL INFORMATION: (800) 344-9033 (TOLL FREE)
FundManager Trust (the "Trust" or "FundManager Funds") is an open-end,
management investment company consisting of five separate diversified series
with different investment objectives (the "Funds"). Each Fund (except for
Managed Total Return Fund) offers two classes of shares. The shares offered by
this Prospectus are the Financial Adviser Class (the "Class") of shares
("Shares"). The Funds seek to achieve their objectives by investing in shares
of other open-end investment companies commonly called mutual funds. This
policy involves certain expenses in addition to those applicable to direct
investment in mutual funds. See "Risks and Other Considerations -- Expenses".
The M.D. Hirsch Division of Freedom Capital Management Corporation ("Freedom
Capital Management" or the "Adviser") continuously manages each Fund's
investment portfolio. Prior to May 8, 1995, the Funds were diversified series
of the Republic Funds (the "Predecessor Funds"), also an open-end, management
investment company.
AGGRESSIVE GROWTH FUND SEEKS CAPITAL APPRECIATION WITHOUT REGARD TO CURRENT
INCOME.
GROWTH FUND PRIMARILY SEEKS LONG-TERM CAPITAL APPRECIATION. CURRENT INCOME IS
A SECONDARY CONSIDERATION.
GROWTH & INCOME FUND SEEKS A COMBINATION OF CAPITAL APPRECIATION AND CURRENT
INCOME.
BOND FUND (FORMERLY, THE INCOME FUND) SEEKS A HIGH LEVEL OF CURRENT INCOME.
MANAGED TOTAL RETURN FUND SEEKS HIGH TOTAL RETURN (CAPITAL APPRECIATION AND
CURRENT INCOME).
Shares of the Funds are offered for sale at net asset value by Signature
Broker-Dealer Services, Inc. ("Signature"), Tucker Anthony Incorporated
("Tucker Anthony") and Sutro & Co. Incorporated ("Sutro")(collectively, the
"Distributors") as an investment vehicle for individuals, institutions,
corporations and fiduciaries. The Funds pay expenses related to the
distribution of their Shares. See "Management of the Trust -- The
Distributors". In addition, the Funds may invest in shares of mutual funds
which charge sales loads and/or pay their own distribution expenses.
INVESTMENTS IN THE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR
ANY OTHER AGENCY. AN INVESTMENT IN THE FUNDS IS SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION A PROSPECTIVE
INVESTOR SHOULD KNOW BEFORE INVESTING IN THE FUNDS. A STATEMENT OF ADDITIONAL
INFORMATION (THE "SAI") DATED JANUARY 29, 1996 AND AS SUPPLEMENTED FROM TIME
TO TIME CONTAINING ADDITIONAL AND MORE DETAILED INFORMATION ABOUT THE FUNDS
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ("SEC") AND IS
HEREBY INCORPORATED BY REFERENCE INTO THIS PROSPECTUS. IT IS AVAILABLE WITHOUT
CHARGE AND CAN BE OBTAINED BY WRITING OR CALLING THE TRUST AT THE ADDRESS AND
INFORMATION NUMBERS PRINTED ABOVE.
--------------------
This Prospectus should be read and retained for information about the Funds.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS JANUARY 29, 1996.
<PAGE>
HIGHLIGHTS
FUNDMANAGER FUNDS PAGE 10
The Trust is a Delaware business trust which consists of five separate
series Aggressive Growth Fund, Growth Fund, Growth & Income Fund, Bond Fund
and Managed Total Return Fund. Each Fund seeks to achieve its investment
objective by investing in mutual funds registered with the SEC.
INVESTMENT OBJECTIVES PAGE 10
Each Fund has distinct investment objectives. Aggressive Growth Fund seeks
capital appreciation without regard to current income. Growth Fund primarily
seeks capital appreciation with current income a secondary consideration.
Growth & Income Fund seeks a combination of capital appreciation and current
income. Bond Fund seeks a high level of current income. Managed Total Return
Fund seeks high total return (capital appreciation and current income). The
mutual funds in which the Funds invest may invest in securities which entail
certain risks. These risks are described in "Investments of and Investment
Techniques employed by Mutual Funds in Which the Fund May Invest".
RISKS AND OTHER CONSIDERATIONS PAGE 21
Investing through a Fund in an underlying portfolio of mutual funds
involves certain additional expenses and certain tax results which would not
be present in a direct investment in mutual funds. See "Expenses" and
"Dividends, Distributions and Taxes". In addition, Federal law imposes certain
limits on the purchases of mutual fund shares by the Funds.
MANAGEMENT OF FUNDMANAGER FUNDS PAGE 23
The Trust has retained Freedom Capital Management to act as its investment
adviser. For its services, the Adviser receives from each Fund a fee at the
annual rate of 0.50% of the Fund's average daily net assets up to $500 million
and 0.40% of its average daily net assets in excess of $500 million. See "The
Adviser".
The Trust has retained Signature to provide certain management and
administrative services to the Funds. For these services, each Fund pays
Signature a fee at the annual rate of 0.25% of the first $50 million of that
Fund's average daily net assets, 0.20% of the next $50 million of such assets,
and 0.15% of such assets in excess of $100 million. See "The Administrator".
With respect to the Class, the Trust has adopted a Distribution Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended
(the "1940 Act"), under which each Fund will reimburse the Distributors (in
amounts up to 0.50% of that Fund's average daily net assets attributable to
the Class) for marketing costs and payments to other organizations for
services rendered in distributing the Funds' Shares. In addition, Signature
receives dealer reallowances on the Funds' purchases of mutual funds sold with
a sales load. See "The Distributors" and "Portfolio Transactions".
The Trust also contracts with various organizations to provide
administrative services for the Class, such as maintaining shareholder
accounts and records. Each Fund pays fees to these organizations in amounts up
to an annual rate of 0.25% of the daily net asset value of that Fund's Shares
owned by shareholders with whom the organization has a servicing relationship.
PURCHASE OF SHARES PAGE 26
Shares of the Funds are offered at net asset value by the Distributors as
an investment vehicle for individuals, institutions, corporations and
fiduciaries. The minimum initial investment for each Fund is $1,000, and the
minimum subsequent investment is $100 except that the minimum initial
investment for an Individual Retirement Account ("IRA") is $250. The Trust may
issue shares of one or more of the Funds in exchange for mutual fund shares
meeting that Fund's investment objective as determined by the Adviser.
REDEMPTION OF SHARES PAGE 29
Shares may be redeemed at their next determined net asset value. See
"Determination of Net Asset Value". Redemptions may be made by letter or wire.
The Trust reserves the right to redeem upon not less than 30 days' notice all
shares of a Fund in an account (other than an IRA) which has a value below
$50.
DIVIDENDS, DISTRIBUTIONS AND TAXES PAGE 31
Aggressive Growth Fund will distribute net investment income annually;
Growth Fund will distribute net investment income semiannually; Growth &
Income Fund and Managed Total Return Fund will distribute net investment
income quarterly; and Bond Fund will distribute its net investment income
monthly. Each Fund will distribute any net realized capital gains at least
annually unless otherwise instructed. All dividends and distributions will be
reinvested automatically at net asset value in additional shares of the Fund
making the distribution.
<TABLE>
<CAPTION>
FUND EXPENSES<F1>
The following table illustrates the expenses and fees that a shareholder of each Fund will incur.
GROWTH MANAGED
AGGRESSIVE & TOTAL
GROWTH GROWTH INCOME BOND RETURN
------------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Advisory and Administrative Fees ............................ .75% .75% .75% .73% .75%
Distribution Fees (including shareholder
servicing and 12b-1 fees<F2>)............................ .47 .45 .45 .46 .49
Other Expenses .............................................. .43 .57 .39 .26 .85
---- ---- ---- ---- ----
Total Fund Operating Expenses ............................... 1.65% 1.71% 1.59% 1.45% 2.09%
==== ==== ==== ==== ====
- ----------
<FN>
<F1> The Fund Expenses are based on the expenses of the Funds for the fiscal year ended September 30, 1995.
<F2> Under rules of the National Association of Securities Dealers, Inc. (the "NASD"), a 12b-1 fee may be treated as a sales charge
for certain purposes under those rules. Because the 12b-1 fee is an annual fee charged against the assets of a Fund, long-term
shareholders may indirectly pay more in total sales charges than the economic equivalent of the maximum front-end sales
charge permitted by rules of the NASD. See "Management of the Trust -- The Distributors" on p. 24.
</FN>
</TABLE>
The purpose of this table is to assist the shareholder in understanding the
various costs and expenses that an investor in the Fund will bear.
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period.
<TABLE>
<CAPTION>
GROWTH MANAGED
AGGRESSIVE & TOTAL
GROWTH GROWTH INCOME BOND RETURN
------------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1 year ........................................... $ 17 $ 17 $ 16 $ 15 $ 21
3 years .......................................... 52 54 50 46 65
5 years .......................................... 90 93 87 79 112
10 years .......................................... 195 202 189 174 242
</TABLE>
This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return is
hypothetical and should not be considered a representation of past or future
annual return; actual return may be greater or less than the assumed amount.
Currently, the Funds have issued two classes of shares. The Funds offer by
separate prospectus another class of shares which are offered for sale at net
asset value by Tucker Anthony and Sutro and do not pay expenses related to the
distribution of such shares. Because the expenses vary between the classes,
performance will vary with respect to each class. Additional information
concerning the Funds' other class of shares may be obtained by calling toll-
free (800) 344-9033.
FINANCIAL HIGHLIGHTS
The Funds' financial data through September 30, 1995 shown below is to
assist investors in evaluating the performance of each Fund. The Predecessor
Funds' financial data is for the period from commencement of operations
through September 30, 1994. The information for the years ended September 30,
1995, 1994, 1993 and 1992 in the following schedules has been examined by
Ernst & Young LLP, independent auditors, whose 1995 report, dated November 10,
1995, appears in the SAI. The information for the fiscal year ended September
30, 1991 and for prior fiscal year ends has been examined by other auditors
who have expressed an unqualified opinion on the schedules.
Freedom Capital Management is the Trust's investment adviser. From
September 1, 1993 to February 21, 1995, the M.D. Hirsch Division of Republic
Asset Management Corporation ("Republic Asset Management"), an affiliate of
Republic National Bank of New York ("Republic"), served as investment adviser
to the Predecessor Funds. Prior to September 1, 1993, M.D. Hirsch Investment
Management, Inc. ("Hirsch"), also an affiliate of Republic, served as the
investment adviser to the Predecessor Funds. Prior to February 1, 1991,
Republic was the investment adviser to the Predecessor Funds.
<PAGE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH FUND
FINANCIAL HIGHLIGHTS -- FINANCIAL ADVISER CLASS
YEARS ENDED SEPTEMBER 30,
-----------------------------------------------------------------------------------------------------------
1995<F2> 1994 1993 1992 1991 1990 1989 1988 1987 1986
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year .. $15.57 $16.70 $14.71 $14.73 $11.84 $14.67 $12.01 $16.62 $13.13 $11.08
Income from investment
operations:
Net investment
income (loss)<F3>. (0.13) (0.08) (0.04) (0.04) 0.06 0.08 0.03 0.03 0.06 --
Net realized and
unrealized gain
(loss) on
investments ...... 3.70 0.62 2.87 0.99 3.81 (2.23) 3.03 (2.46) 3.82 2.39
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from
investment
operations ..... 3.57 0.54 2.83 0.95 3.87 (2.15) 3.06 (2.43) 3.88 2.39
Less distributions:
Dividends to
shareholders from
net investment
income ........... -- -- -- -- (0.03) (0.07) -- (0.06) (0.02) (0.25)
Dividends to
shareholders in
excess of net
investment income -- -- -- -- -- -- -- (0.13) -- --
Dividends to
shareholders from
realized capital
gains<F1>......... (0.83) (1.67) (0.84) (0.97) (0.95) (0.61) (0.40) (1.99) (0.37) (0.09)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions (0.83) (1.67) (0.84) (0.97) (0.98) (0.68) (0.40) (2.18) (0.39) (0.34)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end
of year ........... $18.31 $15.57 $16.70 $14.71 $14.73 $11.84 $14.67 $12.01 $16.62 $13.13
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total return<F4>...... 24.30% 3.30% 19.90% 6.30% 34.90% (15.20%) 26.30% (12.70%) 30.30% 21.90%
Ratios/supplemental
data:
Net assets, end of
year (in 000's) .... $33,668 $37,766 $31,201 $29,096 $22,644 $16,820 $20,929 $26,364 $49,645 $44,389
Ratio of expenses to
average net
assets<F3>........ 1.65% 1.70% 1.52% 1.61% 1.86% 1.96% 1.83% 1.94% 1.48% 1.48%
Ratio of net
investment income
(loss) to average
net assets ...... (0.68%) (0.57%) (0.24%) (0.17%) 0.36% 0.49% 0.43% 0.23% 0.43% 0.04%
Portfolio turnover
rate ............. 50% 43% 35% 24% 45% 31% 15% 26% 64% 133%
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> Paid from realized
net short-term
gain $ 0.04 $0.253 $ -- $0.027 $0.360 $0.146 $0.140 $0.180 $ -- $0.010
<F2> Freedom Capital Management became the investment adviser on February 21, 1995.
<F3> During the years ended September 30, 1991 and 1990, affiliated parties voluntarily waived a portion of their fees.
Additionally, during the years ended September 30, 1990 and 1989, expenses were limited to a percentage of average net
assets in accordance with a state expense limitation. If neither the voluntary waiver nor state expense limitation had
been in effect, the ratios of expenses to average net assets for the years ended September 30, 1991, 1990 and 1989 would
have been 1.95%, 2.10% and 1.92%, respectively. Expenses borne by the Fund's Investment Adviser and Distributor for the
years ended September 30, 1991, 1990 and 1989 amounted to $0.01, $0.02 and $0.01 per share, respectively.
<F4> Total return data does not reflect the sales load payable on purchases of shares. Effective May 8, 1995, the Fund no
longer imposes a one-time sales charge.
</FN>
<PAGE>
<CAPTION>
GROWTH FUND
FINANCIAL HIGHLIGHTS -- FINANCIAL ADVISER CLASS
YEARS ENDED SEPTEMBER 30,
-----------------------------------------------------------------------------------------------------------
1995(a) 1994 1993 1992 1991 1990 1989 1988 1987 1986
------- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year .. $14.09 $14.62 $14.40 $13.96 $11.68 $15.32 $12.73 $15.71 $12.82 $11.04
Income from investment
operations:
Net investment
income (loss)(b). (0.02) (0.05) 0.02 0.07 0.14 0.24 0.26 0.23 0.22 0.20
Net realized and
unrealized gain
(loss) on
investments ..... 2.99 0.69 2.10 1.23 3.01 (2.23) 2.66 (1.63) 3.05 2.08
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from
investment
operations ..... 2.97 0.64 2.12 1.30 3.15 (1.99) 2.92 (1.40) 3.27 2.28
Less distributions:
Dividends to
shareholders from
net investment
income ........... -- -- -- (0.09) (0.37) (0.19) (0.19) (0.36) (0.14) (0.39)
Dividends to
shareholders from
realized capital
gains+......... (0.92) (1.17) (1.90) (0.77) (0.50) (1.46) (0.14) (1.22) (0.24) (0.11)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions (0.92) (1.17) (1.90) (0.86) (0.87) (1.65) (0.33) (1.58) (0.38) (0.50)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end
of year .......... $16.14 $14.09 $14.62 $14.40 $13.96 $11.68 $15.32 $12.73 $15.71 $12.82
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total return(c)...... 22.6% 4.50% 16.00% 9.40% 28.50% (14.30%) 23.30% (7.40%) 26.10% 21.10%
Ratios/supplemental
data:
Net assets, end of
year (in 000's) .... $26,022 $34,205 $21,919 $21,420 $26,336 $21,232 $26,160 $40,466 $48,556 $32,851
Ratio of expenses to
average net
assets(b)........ 1.71% 1.71% 1.70% 1.60% 1.90% 1.92% 1.78% 1.80% 1.53% 1.56%
Ratio of net
investment income
to average net
assets ........... (0.11%) (0.52%) 0.15% 0.59% 1.21% 1.64% 1.87% 1.89% 1.50% 1.55%
Portfolio turnover
rate .............. 68% 44% 40% 44% 54% 70% 23% 51% 65% 107%
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
+ Paid from realized
net short-term
gain............. $ 0.10 $0.224 $0.160 $0.025 $0.060 $0.015 $0.140 $0.150 $ -- $0.042
(a) Freedom Capital Management became the investment adviser on February 21, 1995.
(b) During the years ended September 30, 1991 and 1990, affiliated parties voluntarily waived a portion of their fees.
Additionally, during the years ended September 30, 1990 and 1989, expenses were limited to a percentage of average net
assets in accordance with a state expense limitation. If neither the voluntary waiver nor state expense limitation had
been in effect, the ratios of expenses to average net assets for the years ended September 30, 1991, 1990 and 1989 would
have been 1.92%, 2.00% and 1.84%, respectively. Expenses borne by the Fund's Investment Adviser and Distributor amounted
to less than $0.01 per share each for the years ended September 30, 1991, 1990 and 1989.
(c) total return data does not reflect the sales load payable on purchases of shares. Effective May 8, 1995, the Fund no
longer imposes a one-time sales charge.
</FN>
<PAGE>
<CAPTION>
GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS -- FINANCIAL ADVISER CLASS
YEARS ENDED SEPTEMBER 30,
-----------------------------------------------------------------------------------------------------------
1995(a) 1994 1993 1992 1991 1990 1989 1988 1987 1986
------- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year .. $15.99 $16.50 $15.11 $14.39 $12.30 $14.96 $12.47 $14.52 $12.86 $11.10
Income from investment
operations:
Net investment
income(b)............ 0.27 0.35 0.28 0.31 0.49 0.46 0.47 0.43 0.45 0.45
Net realized and
unrealized gain
(loss) on
investments .......... 3.19 0.18 1.97 1.07 2.59 (2.61) 2.32 (1.14) 2.00 1.86
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from
investment
operations ..... 3.46 0.53 2.25 1.38 3.08 (2.15) 2.79 (0.71) 2.45 2.31
Less distributions:
Dividends to
shareholders from
net investment
income ........... (0.33) (0.30) (0.33) (0.29) (0.68) (0.51) (0.30) (0.61) (0.43) (0.40)
Dividends to
shareholders from
realized capital
gains+ ......... (0.84) (0.74) (0.53) (0.37) (0.31) -- -- (0.61) (0.36) (0.15)
Dividends to
shareholders in
excess of realized
capital gains -- -- -- -- -- -- -- (0.12) -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions (1.17) (1.04) (0.86) (0.66) (0.99) (0.51) (0.30) (1.34) (0.79) (0.55)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end
of year ........... $18.28 $15.99 $16.50 $15.11 $14.39 $12.30 $14.96 $12.47 $14.52 $12.86
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total return(c)...... 23.30% 3.30% 15.50% 9.80% 26.20% (14.80%) 22.70% (3.40%) 19.70% 21.60%
Ratios/supplemental
data:
Net assets, end of
year (in 000's) .. $35,643 $52,595 $40,269 $36,603 $35,018 $30,063 $38,852 $53,588 $91,620 $50,816
Ratio of expenses to
average net
assets(b)........ 1.59% 1.55% 1.49% 1.50% 1.85% 1.87% 1.65% 1.67% 1.39% 1.49%
Ratio of net
investment income
to average net
assets ........... 1.72% 1.88% 1.77% 2.10% 3.67% 3.31% 3.43% 3.55% 3.20% 3.44%
Portfolio turnover
rate .............. 12% 35% 24% 26% 48% 37% 15% 29% 20% 87%
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
+Paid from realized
net short-term gain $ -- $0.143 $0.090 $ -- $0.046 $ -- $ -- $0.140 $0.040 $0.035
(a) freedom Capital Management became the investment adviser on February 21, 1995.
(b) During the years ended September 30, 1991 and 1990, affiliated parties voluntarily waived a portion of their fees.
Additionally, during the years ended September 30, 1990 and 1989, expenses were limited to a percentage of average net
assets in accordance with a state expense limitation. If neither the voluntary waiver nor state expense limitation had
been in effect, the ratios of expenses to average net assets for the years ended September 30, 1991, 1990 and 1989 would
have been 1.87%, 1.90% and 1.73%, respectively. Expenses borne by the Fund's Investment Adviser and Distributor amounted
to less than $0.01 per share each for the years ended September 30, 1991, 1990 and $0.01 for the year ended September
30, 1989.
(c) Total return data does not reflect the sales load payable on purchases of shares. Effective May 8, 1995, the Fund no
longer imposes a one-time sales charge.
</FN>
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
BOND FUND
FINANCIAL HIGHLIGHTS -- FINANCIAL ADVISER CLASS
YEARS ENDED SEPTEMBER 30,
-----------------------------------------------------------------------------------------------------------
1995(a) 1994 1993 1992 1991 1990 1989 1988 1987 1986
------- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year .. $ 9.66 $10.67 $10.28 $ 9.75 $ 9.17 $ 9.60 $ 9.77 $ 9.90 $10.68 $10.66
Income from investment
operations:
Net investment
income ........ 0.52 2.19 0.60 0.64 0.70 0.67 0.77 0.83 0.90 0.93
Net realized and
unrealized gain
(loss) on
investments ...... 0.49 (2.55) 0.43 0.49 0.59 (0.43) (0.13) (0.07) (0.71) 0.27
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from
investment
operations ..... 1.01 (0.36) 1.03 1.13 1.29 0.24 0.64 0.76 0.19 1.20
Less distributions:
Dividends to
shareholders from
net investment
income (0.46) (0.53) (0.54) (0.60) (0.71) (0.67) (0.78) (0.89) (0.92) (1.17)
Dividends to
shareholders from
realized capital
gains+......... -- (.12) (1.10) -- -- -- -- -- (0.05) (0.01)
Dividends to
shareholders in
excess of realized
capital gains -- -- -- -- -- -- (0.03) -- (0.01) --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total
distributions .... (0.46) (0.65) (0.64) (0.60) (0.71) (0.67) (0.81) (0.89) (0.98) (1.18)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end
of year .......... $10.21 $ 9.66 $10.67 $10.28 $ 9.75 $ 9.17 $ 9.60 $ 9.77 $ 9.90 $10.68
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total return(c) ..... 10.80% (3.60%) 10.40% 12.10% 14.70% 2.50% 6.90% 8.00% 1.70% 11.70%
Ratios/supplemental
data:
Net assets, end of
year (in 000's) .. $77,419 $76,769 $54,057 $70,066 $57,632 $40,855 $52,094 $50,631 $53,444 $34,188
Ratio of expenses to
average net
assets(b)........ 1.45% 1.43% 1.29% 1.28% 1.57% 1.75% 1.58% 1.81% 1.61% 1.74%
Ratio of net
investment income
to average net
assets ........... 5.38% 4.67% 5.70% 6.42% 7.00% 7.22% 7.89% 8.51% 8.63% 8.75%
Portfolio turnover
rate ............. 53% 41% 53% 21% 46% 48% 109% 52% 27% 125%
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
+ Paid from realized
net short-term
gain ............ $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $0.040 $ --
(a) Freedom Capital Management became the investment adviser on February 21, 1995.
(b) During the years ended September 30, 1991 and 1990, affiliated parties voluntarily waived a portion of their fees.
Additionally, during the years ended September 30, 1990 and 1989, expenses were limited to a percentage of average net
assets in accordance with a state expense limitation. If neither the voluntary waiver nor state expense limitation had
been in effect, the ratios of expenses to average net assets for the years ended September 30, 1991, 1990 and 1989 would
have been 1.64%, 1.78% and 1.62%, respectively. Expenses borne by the Fund's Investment Adviser and Distributor amounted
to less than $0.01 per share for each of the years ended September 30, 1991, 1990 and 1989.
(c) Total return data does not reflect the sales load payable on purchases of shares. Effective May 8, 1995, the Fund no
longer imposes a one-time sales charge.
</FN>
</TABLE>
<PAGE>
MANAGED TOTAL RETURN FUND
FINANCIAL HIGHLIGHTS -- FINANCIAL ADVISER CLASS
<TABLE>
<CAPTION>
AUGUST 4, 1984
(COMMENCEMENT
OF OPERATIONS)
YEARS ENDED SEPTEMBER 30, THROUGH
---------------------------------------------------------------------------------- SEPTEMBER 30,
1995(a) 1994 1993 1992 1991 1990 1989 1988
------- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning
of year .................. $11.24 $12.03 $11.48 $11.07 $ 9.60 $11.45 $10.14 $10.00
Income from investment
operations:
Net investment income (b) 0.28 0.18 0.29 0.34 0.44 0.51 0.54 0.04
Net realized and
unrealized gain (loss)
on investments ....... 1.18 (0.16) 0.90 0.57 1.42 (0.94) 0.96 0.10
------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations .......... 1.46 0.02 1.19 0.91 1.86 (0.43) 1.50 0.14
------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends to
shareholders from net (0.30) (0.31) (0.26) (0.41) (0.39) (0.63) (0.16) --
Dividends to
shareholders from
realized capital
gains + ............ (0.75) (0.50) (0.38) (0.09) -- (0.79) (0.03) --
------ ------ ------ ------ ------ ------ ------ ------
Total distributions .. (1.05) (0.81) (0.64) (0.50) (0.39) (1.42) (0.19) --
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of
year .................. $11.65 $11.24 $12.03 $11.48 $11.07 $ 9.60 $11.45 $10.14
====== ====== ====== ====== ====== ====== ====== ======
Total return(c).......... 14.30% 0.10% 10.80% 8.40% 20.10% (4.40%) 15.10% 1.40%
Ratios/supplemental data:
Net assets, end of year
(in 000's) ........... $14,749 $17,515 $25,519 $20,894 $14,678 $17,041 $17,031 $10,275
Ratio of expenses to
average net assets (b) 2.09% 1.94% 1.80% 1.90% 2.00% 1.93% 1.62% 2.90%(d)
Ratio of net investment
income to average net
assets .............. 2.29% 1.60% 2.54% 3.09% 4.41% 4.89% 5.24% 2.49%(d)
Portfolio turnover rate 50% 50% 40% 37% 15% 47% 71% 0%
- -----------------------------------------------------------------------------------------------------------------------------------
+ Paid from realized
net short-term gain $ -- $0.132 $0.080 $0.015 $ -- $0.313 $0.014 $ --
<FN>
(a) Freedom Capital Management became the investment adviser on February 21, 1995.
(b) During the years ended September 30, 1992, 1991 and 1990, affiliated parties voluntarily waived a portion of their fees.
Additionally, during the years ended September 30, 1992, 1991, 1990 and 1989, expenses were limited to a percentage of
average net assets in accordance with a state expense limitation. If neither the voluntary waiver nor state expense
limitation had been in effect, the ratios of expenses to average net assets for the years ended September 30, 1992,
1991, 1990 and 1989 would have been 2.01%, 2.26%, 2.07% and 1.74%, respectively. Expenses borne by the Fund's Investment
Adviser and Distributor for the years ended September 30, 1992, 1991, 1990 and 1989 amounted to $0.01, $0.03, $0.01 and
$0.01 per share, respectively.
(c) Total return does not reflect the sales load payable on purchase of shares. Effective May 8, 1995, the Fund no longer
imposes a one-time sales charge.
(d) Annualized.
</FN>
</TABLE>
<PAGE>
FUNDMANAGER FUNDS
The Trust was organized as a Delaware business trust on February 7, 1995
and is an open-end management investment company registered under the 1940 Act
consisting of five separate series -- Aggressive Growth Fund, Growth Fund,
Growth & Income Fund, Income Fund and Managed Total Return Fund. Prior to May
8, 1995, the Funds were series of the Republic Funds, also an open-end
management investment company. Investment in shares of one or more of the
Funds involves risks and there can be no assurance that the Funds' investment
objectives will be achieved.
INVESTMENT OBJECTIVES
Each Fund seeks to achieve its investment objective by investing in a
portfolio of approximately ten to fifteen mutual funds (the "underlying
funds") although it may invest up to 25% of its total assets in any one
underlying fund. At times, for temporary defensive purposes when warranted by
general economic and financial conditions, a Fund may invest in money market
mutual funds or invest directly in (or enter into repurchase agreements
(maturing in seven days or less) with banks and broker-dealers with respect
to) short-term debt securities, including U.S. Treasury bills and other short-
term U.S. Government securities, commercial paper, certificates of deposit and
bankers' acceptances. However, except when a Fund is in a temporary defensive
investment position or as may be considered necessary to accumulate cash in
order to satisfy minimum purchase requirements of the underlying funds or to
meet anticipated redemptions, a Fund normally will maintain its assets
invested in underlying funds. Although all of the Funds may invest in shares
of the same underlying fund, the percentage of each Fund's assets so invested
may vary and the Adviser will determine that such investments are consistent
with the investment objectives and policies of each particular Fund. A Fund
may not purchase shares of any closed-end investment company or of any
investment company which is not registered with the SEC. Each Fund's
investment objectives and certain of its related policies and activities are
fundamental and may not be changed by the Trustees of the Trust, on behalf of
a particular Fund, without approval of the shareholders of that Fund.
AGGRESSIVE GROWTH FUND
The investment objective of Aggressive Growth Fund is capital appreciation
without regard to current income. The underlying funds in which it invests
will consist of funds which seek capital growth or appreciation by investing
primarily in common stock or securities convertible into or exchangeable for
common stock (such as convertible preferred stock, convertible debentures or
warrants). For temporary defensive purposes, these funds also may invest in
(or enter into repurchase agreements with banks and broker-dealers with
respect to) corporate bonds, U.S. Government securities, commercial paper,
certificates of deposit or other money market securities.
The Fund also may invest in funds which invest primarily in long- or
short-term bonds and other fixed income securities (such as securities issued
or guaranteed or insured by the U.S. Government, its agencies or
instrumentalities, commercial paper, preferred stock, convertible preferred
stock or convertible debentures) whenever the Adviser believes that these
funds offer a potential for capital appreciation. These underlying funds may
invest in investment grade bonds or in bonds which are not considered
investment grade (commonly referred to as "junk bonds"). The Fund will limit
its direct and indirect investment in junk bonds to less than 5% of its
assets. See "Bond Fund" and "Description of Bond Ratings".
The underlying funds in which Aggressive Growth Fund invests may incur
more risk than those in which Growth Fund and Growth & Income Fund invest. For
example, they may trade their portfolios more actively (which results in
higher brokerage commissions and increased realization of taxable capital
gains) and/or invest in companies whose securities are subject to more erratic
market movements. The underlying funds also may invest up to 100% of their
assets in securities of foreign issuers and engage in foreign currency
transactions with respect to these investments; invest up to 10% of their
assets in restricted or illiquid securities (excluding Rule 144A securities
which are deemed liquid by the Trustees) ("Restricted Securities"); invest up
to 5% of their assets in warrants; lend their portfolio securities; sell
securities short; borrow money in amounts up to 25% of their assets for
investment purposes (i.e., leverage their portfolios); write (sell) or
purchase call or put options on securities or on stock indexes; concentrate
more than 25% of their assets in one industry; invest up to 100% of their
assets in master demand notes; and enter into futures contracts and options on
futures contracts. The risks associated with these investments are described
in the "Investments of and Investment Techniques Employed by Mutual Funds in
Which the Funds May Invest".
As a result, an investment in Aggressive Growth Fund can be expected to
involve greater risk than an investment in any of the other Funds.
GROWTH FUND
The primary investment objective of Growth Fund is long-term capital
appreciation. Current income is of secondary importance. The underlying funds
in which it invests will consist of funds which invest primarily in common
stock or securities convertible into or exchangeable for common stock (such as
convertible preferred stock, convertible debentures or warrants) and which
seek long-term capital growth or appreciation with current income typically of
secondary importance. For temporary defensive purposes, these funds also may
invest in (or enter into repurchase agreements with banks and broker-dealers
with respect to) corporate bonds, U.S. Government securities, commercial
paper, certificates of deposit or other money market instruments.
The Fund also may invest in funds which invest primarily in long- or
short-term bonds and other fixed income securities (such as securities issued
or guaranteed or insured by the U.S. Government, its agencies or
instrumentalities, commercial paper, preferred stock, convertible preferred
stock or convertible debentures) whenever the Adviser believes that these
funds offer a potential for capital appreciation. These underlying funds may
invest in investment grade bonds or in bonds which are not considered
investment grade (commonly referred to as "junk bonds"). The Fund will limit
its direct and indirect investment in junk bonds to less than 5% of its
assets. See "Bond Fund" and "Description of Bond Ratings".
The underlying funds in which Growth Fund invests may be authorized to
invest up to 100% of their assets in the securities of foreign issuers and
engage in foreign currency transactions with respect to these investments;
invest up to 10% of their assets in Restricted Securities; invest up to 5% of
their assets in warrants; lend their portfolio securities; sell securities
short; borrow money in amounts up to 25% of their assets for investment
purposes; write or purchase call or put options on securities or stock
indexes; concentrate more than 25% of their assets in one industry; invest up
to 100% of their assets in master demand notes; and enter into futures
contracts and options on futures contracts. The risks associated with these
investments are described in "Investments of and Investment Techniques
Employed by Mutual Funds in Which the Funds May Invest".
GROWTH & INCOME FUND
The investment objective of Growth & Income Fund is realization of a
combination of capital appreciation and current income. The underlying funds
in which it invests will consist of funds which seek long-term capital
appreciation and/or funds which seek: (i) income from dividends; (ii) income
from interest; or (iii) growth of income (or any combination of (i)-(iii)).
These underlying funds invest in common stocks, preferred stocks, bonds and
other fixed-income securities (including convertible preferred stock and
convertible debentures). The underlying funds also may, for temporary
defensive purposes, invest in (or enter into repurchase agreements with banks
and broker-dealers with respect to) U.S. Government securities, commercial
paper, certificates of deposit or other money market securities.
The Fund also may invest in funds which invest primarily in long- or
short-term bonds and other fixed income securities (such as securities issued
or guaranteed or insured by the U.S. Government, its agencies or
instrumentalities, commercial paper, preferred stock, convertible preferred
stock or convertible debentures) whenever the Adviser believes that these
funds offer a potential for capital appreciation. These underlying funds may
invest in investment grade bonds or in bonds which are not considered
investment grade (commonly referred to as "junk bonds"). The Fund will limit
its direct and indirect investment in junk bonds to less than 5% of its
assets. See "Bond Fund" and "Description of Bond Ratings".
These underlying funds may invest up to 100% of their assets in the
securities of foreign issuers and engage in foreign currency transactions with
respect to these investments; invest up to 10% of their assets in Restricted
Securities; invest up to 5% of their assets in warrants; lend their portfolio
securities; sell securities short; borrow money in amounts up to 25% of their
assets for investment purposes; write or purchase call or put options on
securities or on stock indexes; concentrate more than 25% of their assets in
any one industry; invest up to 100% of their assets in master demand notes;
invest in long- or short-term corporate bonds (see "Income Fund") and other
fixed income securities (such as U.S. Government securities, commercial paper,
preferred stock, convertible preferred stock and convertible debentures); and
enter into futures contracts and options on futures contracts. The risks
associated with these investments are described below.
BOND FUND
The investment objective of Bond Fund is a high level of current income.
The underlying funds in which it invests will include funds which seek high
current income by investing in long- or short-term bonds and other fixed
income securities (such as securities issued or guaranteed or insured by the
U.S. Government, its agencies or instrumentalities, commercial paper,
preferred stock, convertible preferred stock or convertible debentures). The
underlying funds also may lend their portfolio securities; sell securities
short; borrow money in amounts up to 25% of their assets for investment
purposes; write or purchase call or put options on securities or on stock
indexes; invest up to 100% of their assets in master demand notes; and enter
into futures contracts and options on futures contracts.
The Fund will invest in underlying funds which limit their corporate bond
investments to investment grade bonds which generally are considered to be
bonds rated within one of the four highest quality grades assigned by Standard
& Poor's Corporation ("S&P") or Moody's Investor Services, Inc. ("Moody's") or
which are unrated but are deemed by an underlying fund's investment adviser to
be of comparable quality. These include bonds rated AAA, AA, A and BBB by S&P
and bonds rated Aaa, Aa, A and Baa by Moody's. Bonds rated BBB by S&P or Baa
by Moody's normally indicate a greater degree of investment risk than bonds
with higher ratings.
The Fund also will invest (without limitation) in underlying funds which
themselves may invest in corporate bonds which are not considered investment
grade bonds (commonly referred to as "junk bonds") by Moody's or S&P, or which
are unrated, and thus may carry a greater degree of risk than bonds considered
investment grade. These include bonds rated BB, B, CCC and CC by S&P, and Ba,
B, Caa, Ca and C by Moody's. These ratings may indicate that the bonds are
predominantly speculative with respect to the issuer's ability to pay interest
and repay principal and may indicate that the issuer soon may be or currently
is in default. The risks associated with these investments are described in
"Description of Bond Ratings". The Fund will limit its direct and indirect
investment in junk bonds to less than 35% of its net assets.
As a general matter, the current value of bonds varies inversely with
changes in prevailing interest rates. If interest rates increase after a bond
is purchased, the value of that security will normally decline. Conversely,
should prevailing interest rates decrease after a bond is purchased, its
market price will normally rise.
MANAGED TOTAL RETURN FUND
The investment objective of Managed Total Return Fund is to realize high
total return (capital appreciation and current income). Managed Total Return
Fund seeks to achieve its objective by investing in a broad range of
underlying funds. It will allocate its assets among one or more of five
general types of mutual funds: aggressive growth funds, growth funds, growth
and income funds, fixed income (bond) funds and money market funds. The Fund
is unlikely at any particular moment to have all its assets invested in only
one of these general types of funds. The Adviser will vary the proportion of
each type of underlying fund based on the mix of such funds that may, in the
Adviser's view, be most likely to achieve Managed Total Return Fund's
investment objective.
In allocating assets among the five general types of underlying funds, the
Adviser will follow a multi-step investment analysis. First, the Adviser will
consider general political and economic trends and current financial and
market conditions in order to determine the current phase of the business and
investment cycle and to assess the risks and opportunities in the financial
markets. The Adviser will seek the most likely combination of fund types which
will provide the best opportunity for maximizing total return consistent with
prudent investment risk. The Adviser will not rely on a model in reaching
asset allocation decisions, but will make its own assessment of the relative
risk-reward levels of various asset types based on its past experience and
analysis of current conditions.
If the Adviser determines that the values of equity securities are likely
to rise, it may emphasize aggressive and conservative growth funds. In periods
of rising interest rates, it may emphasize holdings of money market funds or
in periods of falling interest rates it may emphasize fixed income funds,
depending upon conditions in the equity markets.
Second, after determining the relative proportion of assets to be
allocated to particular types of funds, the Adviser will identify whether
certain specific categories of funds offer greater potential for positive
returns. For example, the Adviser may choose to emphasize international equity
funds or funds that concentrate in a particular industry sector; or the
Adviser may select fixed income funds based on whether they invest primarily
in long- or short-term debt securities.
Finally, the Adviser will select those funds within the general or more
specific categories, as discussed, that offer the greatest potential for
positive returns in the Adviser's judgment.
Within the framework of the foregoing guidelines, the underlying funds in
which Managed Total Return Fund will invest will consist of funds which seek
capital growth and appreciation by investing primarily in common stock or
securities convertible into or exchangeable for common stock (such as
convertible preferred stock, convertible debentures or warrants); funds which
seek a combination of capital appreciation and current income (including
income from dividends, income from interest, growth of income or any
combination thereof) by investing primarily in common stocks, preferred
stocks, bonds and other fixed income securities (including convertible
preferred stock and convertible debentures); funds which seek high current
income by investing primarily in long- or short-term bonds and other fixed
income securities (such as securities issued, guaranteed or insured by the
U.S. Government, its agencies or instrumentalities, commercial paper,
preferred stock, convertible preferred stock or convertible debentures); and
funds which seek as high a level of current income as is consistent with
preservation of capital and liquidity by investing in a broad range of high
quality, short-term money market instruments which have remaining maturities
not exceeding one year (including U.S. Government securities, bank
obligations, commercial paper, corporate debt securities and repurchase
agreements).
Some of the underlying funds in which Managed Total Return Fund invests
may incur more risk than others. For example, they may trade their portfolios
more actively (which results in higher brokerage commissions and increased
realization of taxable capital gains) and/or invest in companies whose
securities are subject to more erratic market movements. The underlying funds
also may invest up to 100% of their assets in securities of foreign issuers
and engage in foreign currency transactions with respect to these investments;
invest up to 10% of their assets in Restricted Securities; invest up to 5% of
their assets in warrants; lend their portfolio securities; sell securities
short; borrow money in amounts of up to 25% of their assets for investment
purposes (i.e., leverage their portfolios); write (sell) or purchase call or
put options on securities or on stock indexes; concentrate more than 25% of
their assets in one industry; invest up to 100% of their assets in master
demand notes; and enter into futures contracts and options on futures
contracts. The risks associated with these investments are described below.
Managed Total Return Fund may invest in underlying funds which limit their
corporate bond investments to investment grade bonds which generally are
considered to be bonds rated within one of the four highest quality grades
assigned by S&P or Moody's or underlying funds which invest in corporate bond
investments which are unrated but are deemed by an underlying fund's
investment adviser to be of comparable quality. It may also invest in
underlying funds which invest in corporate bonds which are not considered
investment grade bonds (commonly referred to as "junk bonds") by Moody's or
S&P, or which are unrated, and thus may carry a greater degree of risk than
bonds considered investment grade. These ratings may indicate that the bonds
are predominantly speculative with respect to the issuer's ability to pay
interest and repay principal and may indicate that the issuer soon may be or
currently is in default. The risks associated with these investments are
described below. The Fund will limit its direct and indirect investment in
junk bonds to less than 35% of its assets.
At times, for temporary defensive purposes when warranted by general
economic and financial conditions, Managed Total Return Fund may invest in a
variety of short-term debt securities, including U.S. Treasury bills and other
U.S. Government securities, commercial paper, certificates of deposit,
bankers' acceptances and repurchase agreements with respect to such
securities. However, except when Managed Total Return Fund is in a temporary
defensive investment position or as may be considered necessary to accumulate
cash in order to satisfy minimum purchase requirements of the underlying funds
or to meet anticipated redemptions, it normally will maintain its assets
invested in underlying funds.
INVESTMENTS OF AND INVESTMENT TECHNIQUES
EMPLOYED BY MUTUAL FUNDS IN WHICH THE FUNDS MAY INVEST
ILLIQUID AND RESTRICTED SECURITIES. An underlying fund may invest not more
than 10% of its total assets in securities for which there is no readily
available market ("illiquid securities") which would include Restricted
Securities the disposition of which would be subject to legal restrictions and
repurchase agreements having more than seven days to maturity. A considerable
period of time may elapse between an underlying fund's decision to dispose of
such securities and the time when the fund is able to dispose of them, during
which time the value of the securities (and therefore the value of the
underlying fund's shares held by a Fund) could decline.
FOREIGN SECURITIES. An underlying fund may invest up to 100% of its assets in
securities of foreign issuers. 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.
In addition, the value of the fund's foreign securities may be adversely
affected by fluctuations in the exchange rates between foreign currencies and
the U.S. dollar, as well as other political and economic developments,
including the possibility of expropriation, confiscatory taxation, exchange
controls or other foreign governmental restrictions. In addition, income
received by an underlying fund from sources within foreign countries, such as
dividends and interest payable on foreign securities, may be subject to
foreign taxes, including taxes withheld from payments on those securities.
Moreover, the underlying funds will generally calculate their net asset values
and complete orders to purchase, exchange or redeem shares only on a Monday-
Friday basis (excluding holidays on which the NYSE is closed). Foreign
securities in which the underlying funds may invest may be listed primarily on
foreign stock exchanges which may trade on other days (such as Saturday). As a
result, the net asset value of an underlying fund's portfolio may be
significantly affected by such trading on days when the Adviser does not have
access to the underlying funds and shareholders of the Trust do not have
access to their respective Funds. Under the 1940 Act an underlying fund may
maintain its foreign securities in custody of non-U.S. banks and securities
depositories.
INDUSTRY CONCENTRATION. An underlying fund may concentrate its investments
within one industry. Because the scope of investment alternatives within an
industry is limited, the value of the shares of such an underlying fund may be
subject to greater market fluctuation than an investment in a fund which
invests in a broader range of securities.
MASTER DEMAND NOTES. Although the Funds themselves will not do so, underlying
funds (particularly money market mutual funds) may invest up to 100% of their
assets in master demand notes. Master demand notes are unsecured obligations
of U.S. corporations redeemable upon notice that permit investment by a fund
of fluctuating amounts at varying rates of interest pursuant to direct
arrangements between the fund and the issuing corporation. Because they are
direct arrangements between the fund and the issuing corporation, there is no
secondary market for the notes. However, they are redeemable at face value,
plus accrued interest, at any time.
REPURCHASE AGREEMENTS. Underlying funds, particularly money market funds, may
enter into repurchase agreements with banks and broker-dealers under which
they acquire securities subject to an agreement with the seller to repurchase
the securities at an agreed upon time and price. The Funds also may enter into
repurchase agreements. These agreements are considered under the 1940 Act to
be loans by the purchaser collateralized by the underlying securities. If the
seller should default on its obligation to repurchase the securities, the
underlying fund may experience delay or difficulties in exercising its rights
to dispose of the securities held as collateral and might incur a loss if the
value of the securities should decline. For a more complete discussion of
repurchase agreements, see "Investment Policies" in the SAI.
LOANS OF PORTFOLIO SECURITIES. An underlying fund may lend its portfolio
securities provided: (i) the loan is secured continuously by collateral
consisting of U.S. Government securities or cash or cash equivalents
maintained on a daily mark-to-market basis in an amount at least equal to the
current market value of the securities loaned; (ii) the fund may at any time
call the loan and obtain the return of the securities loaned; (iii) the fund
will receive any interest or dividends paid on the loaned securities; and (iv)
the aggregate market value of securities loaned will not at any time exceed
one-third of the total assets of the fund. Loans of securities involve a risk
that the borrower may fail to return the securities or may fail to provide
additional collateral.
SHORT SALES. An underlying fund may sell securities short. In a short sale,
the fund sells stock which it does not own, making delivery with securities
"borrowed" from a broker. The fund is then obligated to replace the security
borrowed by purchasing it at the market price at the time of replacement. This
price may or may not be less than the price at which the security was sold by
the fund. Until the security is replaced, the fund is required to pay to the
lender any dividends or interest which accrue during the period of the loan.
In order to borrow the security, the fund may also have to pay a premium which
would increase the cost of the security sold. The proceeds of the short sale
will be retained by the broker, to the extent necessary to meet margin
requirements, until the short position is closed out.
The fund also must deposit in a segregated account an amount of cash or
U.S. Government securities equal to the difference between (a) the market
value of the securities sold short at the time they were sold short and (b)
the value of the collateral deposited with the broker in connection with the
short sale (not including the proceeds from the short sale). While the short
position is open, the fund must maintain daily the segregated account at such
a level that (i) the amount deposited in it plus the amount deposited with the
broker as collateral equals the current market value of the securities sold
short and (ii) the amount deposited in it plus the amount deposited with the
broker as collateral is not less than the market value of the securities at
the time they were sold short. Depending upon market conditions, up to 80% of
the value of a fund's net assets may be deposited as collateral for the
obligation to replace securities borrowed to effect short sales and allocated
to a segregated account in connection with short sales.
The fund will incur a loss as a result of the short sale if the price of
the security increases between the date of the short sale and the date on
which the fund replaces the borrowed security. The fund will realize a gain if
the security declines in price between those dates. The amount of any gain
will be decreased and the amount of any loss increased by the amount of any
premium, dividends or interest the fund may be required to pay in connection
with a short sale.
A short sale is "against the box" if at all times when the short position
is open the fund owns an equal amount of the securities or securities
convertible into, or exchangeable without further consideration for,
securities of the same issue as the securities sold short. Such a transaction
serves to defer a gain or loss for Federal income tax purposes.
FOREIGN CURRENCY TRANSACTIONS. In connection with its portfolio transactions
in securities traded in a foreign currency, an underlying fund may enter into
forward contracts to purchase or sell an agreed upon amount of a specific
currency at a future date which may be any fixed number of days from the date
of the contract agreed upon by the parties at a price set at the time of the
contract. Under such an arrangement, concurrently with the entry into a
contract to acquire a foreign security for a specified amount of currency, the
fund would purchase with U.S. dollars the required amount of foreign currency
for delivery at the settlement date of the purchase; the fund would enter into
similar forward currency transactions in connection with the sale of foreign
securities. The effect of such transactions would be to fix a U.S. dollar
price for the security to protect against a possible loss resulting from an
adverse change in the relationship between the U.S. dollar and the subject
foreign currency during the period between the date the security is purchased
or sold and the date on which payment is made or received, the normal range of
which is three to 14 days. These contracts are traded in the interbank market
conducted directly between currency traders (usually large commercial banks)
and their customers. A forward contract generally has no deposit requirement
and no commissions are charged at any stage for trades. Although such
contracts tend to minimize the risk of loss due to a decline in the value of
the subject currency, they tend to limit commensurately any potential gain
which might result should the value of such currency increase during the
contract period.
LEVERAGE THROUGH BORROWING. An underlying fund may borrow up to 25% of the
value of its net assets on an unsecured basis from banks to increase its
holdings of portfolio securities. Under the 1940 Act, the fund is required to
maintain continuous asset coverage of 300% with respect to such borrowings and
to sell (within three days) sufficient portfolio holdings to restore such
coverage if it should decline to less than 300% due to market fluctuations or
otherwise, even if disadvantageous from an investment standpoint. Leveraging
will exaggerate the effect of any increase or decrease in the value of
portfolio securities on the fund's net asset value, and money borrowed will be
subject to interest costs (which may include commitment fees and/or the cost
of maintaining minimum average balances) which may or may not exceed the
interest and option premiums received from the securities purchased with
borrowed funds.
WARRANTS. An underlying fund may invest in warrants, which are options to
purchase equity securities at specific prices valid for a specific period of
time. The prices do not necessarily move parallel to the prices of the
underlying securities. Warrants have no voting rights, receive no dividends
and have no rights with respect to the assets of the issuer. If a warrant is
not exercised within the specified time period, it will become worthless and
the fund will lose the purchase price and the right to purchase the underlying
security.
HIGH YIELD SECURITIES. Investing in high yield, high risk securities involves
special risks in addition to the risks associated with investments in higher
rated debt securities. High yield, high risk securities may be regarded as
predominantly speculative with respect to the issuer's continuing ability to
meet principal and interest payments.
High yield, high risk securities may be more susceptible to real or
perceived adverse economic and competitive industry conditions than higher
grade securities. The prices of high yield, high risk securities have been
found to be less sensitive to interest rate changes than more highly rated
investments, but more sensitive to adverse economic downturns or individual
corporate developments. A projection of an economic downturn or of a period of
rising interest rates, for example, could cause a decline in high yield, high
risk security prices because the advent of a recession could lessen the
ability of a highly leveraged company to make principal and interest payments
on its debt securities. If the issuer of high yield, high risk securities
defaults, a fund may incur additional expenses to seek recovery. In the case
of high yield securities structured as zero coupon or payment-in-kind
securities, the market prices of such securities are affected to a greater
extent by interest rate changes, and therefore tend to be more volatile than
securities which pay interest periodically and in cash.
The secondary markets on which high yield, high risk securities are traded
may be less liquid than the market for higher grade securities. Less liquidity
in the secondary trading markets could adversely affect and cause large
fluctuations in the daily net asset value of a fund's shares. Adverse
publicity and investor perceptions, whether or not based on fundamental
analysis, may decrease the values and liquidity of high yield, high risk
securities, especially in a thinly traded market.
There may be special tax considerations associated with investing in high
yield, high risk securities structured as zero coupon or payment-in-kind
securities. A fund records the interest on these securities as income even
though it receives no cash interest until the security's maturity or payment
date. A fund will be required to distribute all or substantially all such
amounts annually and may have to obtain the cash to do so by selling
securities which otherwise would continue to be held. Shareholders will be
taxed on these distributions.
The use of credit ratings as the sole method of evaluating high yield,
high risk securities can involve certain risks. For example, credit ratings
evaluate the safety of principal and interest payments, not the market value
risk of high yield, high risk securities. Also, credit rating agencies may
fail to change credit ratings in a timely fashion to reflect events since the
security was last rated.
DERIVATIVES
An underlying fund may invest in the following instruments that are
commonly known as derivatives. Generally, a derivative is a financial
arrangement, the value of which is based on, or "derived" from, a traditional
security, asset, or market index.
OPTIONS ACTIVITIES. An underlying fund may write (i.e., sell) listed call
options ("calls") if the calls are "covered" throughout the life of the
option. A call is "covered" if the fund owns the optioned securities. When a
fund writes a call, it receives a premium and gives the purchaser the right to
buy the underlying security at any time during the call period (usually not
more than nine months in the case of common stock) at a fixed exercise price
regardless of market price changes during the call period. If the call is
exercised, the fund will forgo any gain from an increase in the market price
of the underlying security over the exercise price.
A fund may purchase a call on securities only to effect a "closing
purchase transaction" which is the purchase of a call covering the same
underlying security and having the same exercise price and expiration date as
a call previously written by the fund on which it wishes to terminate its
obligation. If the fund is unable to effect a closing purchase transaction, it
will not be able to sell the underlying security until the call previously
written by the fund expires (or until the call is exercised and the fund
delivers the underlying security).
An underlying fund also may write and purchase put options ("puts"). When
a fund writes a put, it receives a premium and gives the purchaser of the put
the right to sell the underlying security to the fund at the exercise price at
any time during the option period. When a fund purchases a put, it pays a
premium in return for the right to sell the underlying security at the
exercise price at any time during the option period. An underlying fund also
may purchase stock index puts which differ from puts on individual securities
in that they are settled in cash based on the values of the securities in the
underlying index rather than by delivery of the underlying securities.
Purchase of a stock index put is designed to protect against a decline in the
value of the portfolio generally rather than an individual security in the
portfolio. If any put is not exercised or sold, it will become worthless on
its expiration date.
A fund's option positions may be closed out only on an exchange which
provides a secondary market for options of the same series, but there can be
no assurance that a liquid secondary market will exist at a given time for any
particular option. In this regard, trading in options on certain securities
(such as U.S. Government securities) is relatively new so that it is
impossible to predict to what extent liquid markets will develop or continue.
The underlying fund's custodian, or a securities depository acting for it,
generally acts as escrow agent as to the securities on which the fund has
written puts or calls, or as to other securities acceptable for such escrow so
that no margin deposit is required of the fund. Until the underlying
securities are released from escrow, they cannot be sold by the fund.
In the event of a shortage of the underlying securities deliverable on
exercise of an option, the Options Clearing Corporation has the authority to
permit other, generally comparable securities to be delivered in fulfillment
of option exercise obligations. If the Options Clearing Corporation exercises
its discretionary authority to allow such other securities to be delivered, it
may also adjust the exercise prices of the affected options by setting
different prices at which otherwise ineligible securities may be delivered. As
an alternative to permitting such substitute deliveries, the Options Clearing
Corporation may impose special exercise settlement procedures.
FUTURES CONTRACTS. An underlying fund may enter into futures contracts for the
purchase or sale of debt securities and stock indexes. A futures contract is
an agreement between two parties to buy and sell a security or an index for a
set price on a future date. Futures contracts are traded on designated
"contract markets" which, through their clearing corporations, guarantee
performance of the contracts.
Generally, if market interest rates increase, the value of outstanding
debt securities declines (and vice versa). Entering into a futures contract
for the sale of securities has an effect similar to the actual sale of
securities, although sale of the futures contract might be accomplished more
easily and quickly. For example, if a fund holds long-term U.S. Government
securities and it anticipates a rise in long-term interest rates, it could, in
lieu of disposing of its portfolio securities, enter into futures contracts
for the sale of similar long-term securities. If rates increased and the value
of the fund's portfolio securities declined, the value of the fund's futures
contracts would increase, thereby protecting the fund by preventing the net
asset value from declining as much as it otherwise would have. Similarly,
entering into futures contracts for the purchase of securities has an effect
similar to the actual purchase of the underlying securities, but permits the
continued holding of securities other than the underlying securities. For
example, if the fund expects long-term interest rates to decline, it might
enter into futures contracts for the purchase of long-term securities so that
it could gain rapid market exposure that may offset anticipated increases in
the cost of securities it intends to purchase while continuing to hold higher-
yield short-term securities or waiting for the long-term market to stabilize.
A stock index futures contract may be used to hedge an underlying fund's
portfolio with regard to market risk as distinguished from risk relating to a
specific security. A stock index futures contract does not require the
physical delivery of securities, but merely provides for profits and losses
resulting from changes in the market value of the contract to be credited or
debited at the close of each trading day to the respective accounts of the
parties to the contract. On the contract's expiration date, a final cash
settlement occurs. Changes in the market value of a particular stock index
futures contract reflect changes in the specified index of equity securities
on which the future is based.
There are several risks in connection with the use of futures contracts.
In the event of an imperfect correlation between the futures contract and the
portfolio position which is intended to be protected, the desired protection
may not be obtained and the fund may be exposed to risk of loss. Further,
unanticipated changes in interest rates or stock price movements may result in
a poorer overall performance for the fund than if it had not entered into
futures contracts on debt securities or stock indexes.
In addition, the market prices of futures contracts may be affected by
certain factors. First, all participants in the futures market are subject to
margin deposit and maintenance requirements. Rather than meeting additional
margin deposit requirements, investors may close futures contracts through
offsetting transactions which could distort the normal relationship between
the securities and futures markets. Second, from the point of view of
speculators, the deposit requirements in the futures market are less onerous
than margin requirements in the securities market. Therefore, increased
participation by speculators in the futures market may also cause temporary
price distortions.
Finally, positions in futures contracts may be closed out only on an
exchange or board of trade which provides a secondary market for such futures.
There is no assurance that a liquid secondary market on an exchange or board
of trade will exist for any particular contract or at any particular time.
OPTIONS ON FUTURES CONTRACTS. A fund also may purchase and sell listed put and
call options on futures contracts. An option on a futures contract gives the
purchaser the right, in return for the premium paid, to assume a position in a
futures contract (a long position if the option is a call and a short position
if the option is a put), at a specified exercise price at any time during the
option period. When an option on a futures contract is exercised, delivery of
the futures position is accompanied by cash representing the difference
between the current market price of the futures contract and the exercise
price of the option. The fund may purchase put options on futures contracts in
lieu of, and for the same purpose as, a sale of a futures contract. It also
may purchase such put options in order to hedge a long position in the
underlying futures contract in the same manner as it purchases "protective
puts" on securities.
As with options on securities, the holder of an option may terminate his
position by selling an option of the same series. There is no guarantee that
such closing transactions can be effected. The fund is required to deposit
initial margin and maintenance margin with respect to put and call options on
futures contracts written by it pursuant to brokers' requirements similar to
those applicable to futures contracts described above and, in addition, net
option premiums received will be included as initial margin deposits.
In addition to the risks which apply to all options transactions, there
are several special risks relating to options on futures contracts. The
ability to establish and close out positions on such options will be subject
to the development and maintenance of a liquid secondary market. It is not
certain that this market will develop. Compared to the use of futures
contracts, the purchase of options on futures contracts involves less
potential risk to the fund because the maximum amount at risk is the premium
paid for the options (plus transaction costs). However, there may be
circumstances when the use of an option on a futures contract would result in
a loss to the fund when the use of futures contract would not, such as when
there is no movement in the prices of the underlying securities. Writing an
option on a futures contract involves risks similar to those arising in the
sale of futures contracts, as described above.
HEDGING. An underlying fund may employ many of the investment techniques
described in this Appendix not only for investment purposes which may be
considered speculative, but also for hedging purposes. For example, an
underlying fund may purchase or sell put and call options on common stocks to
hedge against movements in individual common stock prices, or purchase and
sell stock index futures and related options to hedge against marketwide
movements in common stock prices. Although such hedging techniques generally
tend to minimize the risk of loss that is hedged against, they also may limit
commensurately the potential gain that might have resulted had the hedging
transaction not occurred. Also, the desired protection generally resulting
from hedging transactions may not always be achieved.
INVESTMENT POLICIES AND RESTRICTIONS
The Funds have adopted certain fundamental investment policies (i.e.,
policies which may not be changed as to a Fund without the vote of a majority
of that Fund's outstanding shares, as defined under "Other Information --
Voting") as well as certain investment policies which are not fundamental and
therefore may be changed by the Board of Trustees without shareholder
approval. These policies reflect self-imposed standards or the requirements of
state or Federal law.
The Trust may, in the future, seek to achieve each Fund's investment
objective by investing all of the Fund's assets in a no-load, diversified,
open-end management investment company having substantially the same
investment objective as the Fund. Each Fund's investment policies permit such
an investment. Shareholders will receive 30 days prior written notice with
respect to any such investment.
Under each Fund's fundamental investment policies, no Fund may invest more
than 25% of its total assets in the securities of underlying funds which
themselves concentrate (i.e., invest more than 25% of their assets) in any one
industry. Nevertheless, through its investment in underlying funds, a Fund
indirectly may invest more than 25% of its assets in one industry. The Fund
also may not borrow money, except that a Fund may, as a temporary measure for
extraordinary or emergency purposes, borrow from a bank in an amount not in
excess of 5% of the Fund's total assets, or pledge or hypothecate its assets,
except that the Fund may pledge not more than 5% of its total assets to secure
such borrowings. A Fund will not make additional investments at any time
during which it has outstanding borrowings.
Under each Fund's policies which are not fundamental, no Fund may (i)
invest more than 25% of its assets in the shares of any one open-end
investment company; (ii) purchase or otherwise acquire the securities of any
open-end investment company (except in connection with a merger,
consolidation, acquisition of substantially all of the assets or
reorganization of another investment company) if, as a result, a Fund and all
of its affiliates including the other Funds would own more than 3% of the
total outstanding stock of that company, or (iii) purchase a security which is
not readily marketable if, as a result, more than 10% of that Fund's assets
would consist of such securities. For this purpose, securities which are not
readily marketable include repurchase agreements having more than seven days
to maturity (see "Investments of and Investment Techniques Employed by Mutual
Funds in Which the Funds May Invest") and shares of an open-end investment
company owned by the Fund in an amount exceeding 1% of the issuer's total
outstanding securities. See "Risks and Other Considerations".
In addition, no Fund will invest more than 5% of its total assets in the
securities of an underlying fund which itself invests more than 5% of its
total assets in (i) the securities of any one issuer (excluding U.S.
Government securities), (ii) securities of issuers which have been in
operation for less than three years and equity securities of issuers which are
not readily marketable or (iii) puts, calls, straddles, spreads, and
combinations thereof, and futures contracts.
Each Fund may invest up to 5% of its net assets in repurchase agreements
with banks and broker-dealers. This and other investment policies and
restrictions are discussed in the SAI under the heading "Investment Policies".
The underlying funds in which a Fund invests may, but need not, have the
same investment policies as the Fund. For example, although Aggressive Growth
Fund will not borrow money for investment purposes, it may invest up to 25% of
its total assets in an underlying fund which borrows money for investment
purposes (i.e., engages in leveraging). The investments which may be made by
underlying funds in which the Funds invest and the risks associated with those
investments are described under "Investment Objectives," "Investment Policies
and Restrictions" and "Investments of and Investment Techniques Employed by
Mutual Funds in Which the Funds May Invest".
RISKS AND OTHER CONSIDERATIONS
Any investment in a mutual fund involves risk and, although the Funds
invest in a number of underlying funds, this practice does not eliminate
investment risk. Moreover, investing through the Funds in an underlying
portfolio of mutual funds involves certain additional expenses and certain tax
results which would not be present in a direct investment in the underlying
funds. See "Expenses" and "Dividends, Distributions and Taxes".
A Fund, together with the other Funds and any "affiliated persons" (as
defined in the 1940 Act) may purchase only up to 3% of the total outstanding
securities of any underlying fund. For this purpose, shares of underlying
funds held by private discretionary investment advisory accounts managed by
the Adviser will be aggregated with those held by the Funds. Accordingly, when
affiliated persons and other accounts managed by the Adviser hold shares of
any of the underlying funds, each Fund's ability to invest fully in shares of
those funds is restricted, and the Adviser must then, in some instances,
select alternative investments that would not have been its first preference.
The 1940 Act also provides that an underlying fund whose shares are
purchased by a Fund will be obligated to redeem shares held by the Fund only
in an amount up to 1% of the underlying fund's outstanding securities during
any period of less than 30 days. Shares held by a Fund in excess of 1% of an
underlying fund's outstanding securities therefore, will be considered not
readily marketable securities which together with other such securities may
not exceed 10% of that Fund's assets. See "Investment Policies and
Restrictions". These limitations are not fundamental investment policies and
may be changed by the Board of Trustees without shareholder approval.
Under certain circumstances an underlying fund may determine to make
payment of a redemption by a Fund wholly or partly by a distribution in kind
of securities from its portfolio, in lieu of cash, in conformity with the
rules of the SEC. In such cases, the Funds may hold securities distributed by
an underlying fund until the Adviser determines that it is appropriate to
dispose of such securities.
Investment decisions by the investment advisers of the underlying funds
are made independently of the Trust and its Adviser. Therefore, the investment
adviser of one underlying fund may be purchasing shares of the same issuer
whose shares are being sold by the investment adviser of another such fund.
The result of this would be an indirect expense to a Fund without
accomplishing any investment purpose.
Each Fund will purchase shares of both load and no-load underlying funds.
However, the Funds will not invest in shares of underlying funds which are
sold with a contingent deferred sales charge.
Under the 1940 Act a mutual fund must sell its shares at the price
(including sales load, if any) described in its prospectus, and current rules
under the 1940 Act do not permit negotiation of sales charges. Therefore, a
Fund currently is not able to negotiate the level of the sales charges at
which it will purchase shares of load funds which may be as great as 8.5% of
the public offering price (or 9.29% of the net amount invested). Nevertheless,
when appropriate, a Fund will purchase such shares pursuant to (i) letters of
intent, permitting it to obtain reduced sales charges by aggregating its
intended purchases over time (generally 13 months from the initial purchase
under the letter); (ii) rights of accumulation, permitting it to obtain
reduced sales charges as it purchases additional shares of an underlying fund;
and (iii) the right to obtain reduced sales charges by aggregating its
purchases of several funds within a family of mutual funds. Based upon these
privileges, it is expected that, in the majority of cases, the sales charges
paid by a Fund on a load fund purchase will not exceed 1% of the public
offering price (1.01% of the net amount invested).
Under certain circumstances, a sales charge incurred by a Fund in
acquiring shares of an underlying fund may not be taken into account in
determining the gain or loss for federal income tax purposes on the
disposition of the shares acquired. If shares are disposed of within 90 days
from the date they were purchased and if shares of a new underlying fund are
subsequently acquired without imposition of a sales charge or imposition of a
reduced sales charge pursuant to a right granted to the Fund to acquire shares
without payment of a sales charge or with the payment of a reduced charge,
then the sales charge paid upon the purchase of the initial shares will be
treated as paid in connection with the acquisition of the new underlying
fund's shares rather than the initial shares.
Sales charges generally consist of two parts, the dealer reallowance
(which typically comprises at least 80% of the amount of the charge) and the
underwriter's retention. Signature generally will be designated as the dealer
entitled to receive the dealer reallowance portion of the sales charge on
purchases of load fund shares by the Funds. However, Signature will not retain
any dealer reallowance in excess of 1% of the public offering price on any
transaction nor will it be designated as the dealer entitled to receive the
dealer reallowance portion of the sales charge where such reallowance would
exceed 1% of the public offering price. See "Management of the Trust -- The
Distributors" and "Management of the Trust -- Portfolio Transactions".
EXPENSES
An investor in the Funds should recognize that he may invest directly in
mutual funds and that, by investing in mutual funds indirectly through the
Funds, he will bear not only his proportionate share of the expenses of the
Funds (including operating costs and investment advisory and administrative
fees) but also, indirectly, similar expenses of the underlying funds. An
investor in the Funds through a managed account program who pays an advisory
fee for asset allocation should recognize that the combined expenses of the
program and of the Funds (including their indirect expenses) may involve
greater fees and expenses than present in other types of investments without
the benefit of professional asset allocation recommendations. In addition, a
Fund shareholder will bear his proportionate share of expenses related to the
distribution of the Fund's Shares, see "Management of the Trust -- The
Distributors", and also may indirectly bear expenses paid by an underlying
fund related to the distribution of its shares. A Fund shareholder also will
bear his proportionate share of any sales charges incurred by the Fund related
to the purchase of shares of the underlying funds. Finally, an investor should
recognize that, as a result of the Funds' policies of investing in other
mutual funds, he may receive taxable capital gains distributions to a greater
extent than would be the case if he invested directly in the underlying funds.
See "Dividends, Distributions and Taxes". For the fiscal year ending September
30, 1995 the Funds' total expenses, after waivers and expense reimbursements,
as a percentage of average net assets were as follows: Aggressive Growth Fund
1.65%, Growth Fund 1.71%, Growth & Income Fund 1.59%, Bond Fund 1.45% and
Managed Total Return Fund 2.09%.
MANAGEMENT OF FUNDMANAGER FUNDS
The business and affairs of the Trust are managed under the direction of
the Board of Trustees. Additional information about the Trustees, as well as
the Trust's executive officers, may be found in the SAI under the heading
"Management Trustees and Officers".
THE ADVISER
Freedom Capital Management has its principal office at One Beacon Street,
Boston, Massachusetts. The Adviser advises the Trust through the M.D. Hirsch
Division of Freedom Capital Management. Michael D. Hirsch, Chairman of the
M.D. Hirsch Division of Freedom Capital Management, has provided discretionary
investment advisory services relating to investments in mutual funds to
individual accounts since 1975.
Freedom Capital Management is an indirect, wholly-owned subsidiary of John
Hancock Mutual Life Insurance Company ("John Hancock"). John Hancock is a
major mutual life insurance company with subsidiaries which offer property and
casualty insurance and another subsidiary which manages investment companies.
John Hancock's head offices are at John Hancock Place, Boston, Massachusetts.
Pursuant to an Investment Advisory Contract, the Adviser is responsible
for the investment management of each Fund's assets, including the
responsibility for making investment decisions and placing orders for the
purchase and sale of the Funds' investments directly with the issuers or with
brokers or dealers, selected by it in its discretion, including Signature. See
"Portfolio Transactions". The Adviser also furnishes to the Board of Trustees,
which has overall responsibility for the business and affairs of the Trust,
periodic reports on the investment performance of the Trust. For these
services, the Adviser receives from each Fund a fee, payable monthly, at the
annual rate of 0.50% of that Fund's average daily net assets up to $500
million and 0.40% of its average daily net assets in excess of $500 million.
For the fiscal year ended September 30, 1995 the Funds paid the Adviser the
following fees as a percentage of net assets: Aggressive Growth Fund 0.50%,
Growth Fund 0.50%, Growth & Income Fund 0.50%, Bond Fund 0.50% and Managed
Total Return Fund 0.50%.
Michael Hirsch and Michelle P. Graham-Lyons are the Portfolio Managers of
the Funds and are responsible for the day to day management of the Funds.
Currently, Mr. Hirsch is Chairman of the M.D. Hirsch Division of Freedom
Capital Management. Prior to February 21, 1995, Mr. Hirsch was the Vice
Chairman and Managing Director of the M.D. Hirsch Division of Republic Asset
Management. Mr. Hirsch served as President of Hirsch from February, 1991 until
June, 1993 and Chief Investment Officer of Republic from 1981 until February,
1991. Mr. Hirsch pioneered the concept of investing his clients' assets in a
portfolio of mutual funds in 1975. Mr. Hirsch is now a noted authority on
mutual funds and has authored two books, "Multifund Investing" in 1987 and
"The Mutual Fund Wealth Builder" in 1991. Michelle P. Graham-Lyons manages the
mutual fund research functions of the Adviser. Ms. Graham-Lyons is a Senior
Vice President of the M.D. Hirsch Division of Freedom Capital Management.
Prior to February 21, 1995, Ms. Graham-Lyons was First Vice President of the
M.D. Hirsch Division of Republic Asset Management. Ms. Graham-Lyons held a
similar position at Hirsch since February, 1991, and was, prior to that, a
Senior Investment Analyst for Republic.
THE ADMINISTRATOR
The Board of Trustees of the Trust has approved an Administrative Services
Contract (the "Administration Contract") between the Trust and Signature
pursuant to which Signature will serve as Administrator of the Trust and of
each of the Funds. In this capacity, Signature provides certain management and
administrative services to the Trust.
For its services as Administrator, Signature receives from each Fund a fee
computed and paid monthly at an annual rate equal to 0.25% of the first $50
million of that Fund's average daily net assets attributable to the Class,
0.20% of the next $50 million of such assets, and 0.15% of such assets in
excess of $100 million.
THE DISTRIBUTORS
The Board of Trustees of the Trust has approved a Distribution Contract
(the "Distribution Contract") between the Trust and each of Signature, Tucker
Anthony and Sutro pursuant to which each will serve as a Distributor of the
Trust and of the Shares of each of the Funds. Signature may receive dealer
reallowances (up to a maximum of 1% of the public offering price) and/or
distribution payments on purchases by the Funds of mutual funds which are sold
with a sales load and/or which have a distribution plan.
Pursuant to a Distribution Plan adopted by the Funds with respect to the
Class (the "Plan"), each Fund will reimburse the Distributors monthly (subject
to a limit of 0.50% per annum of the Fund's average daily net assets
attributable to the Class) for costs and expenses incurred by the Distributors
in connection with the distribution of Fund Shares and for the provision of
certain shareholder services with respect to Fund Shares. Payments to the
Distributors will be for various types of activities, including: (i) payments
to broker-dealers who advise shareholders regarding the purchase, sale, or
retention of Fund Shares and who provide shareholders with personal services
and account maintenance services ("service fee"), (ii) payments to employees
of the Distributors, and (iii) printing and advertising expenses. Such
payments by the Distributors to broker-dealers may be in amounts up to 0.50%
per annum of each Fund's average daily net assets attributable to the Class,
provided, however, that the service fee will be limited to 0.25% of each
Fund's average daily net assets attributable to the Class. The fees and
reimbursements paid by the Funds to the Distributors for distribution services
and to Signature for administration and shareholder servicing services
therefore may equal up to 0.75% of each Fund's average daily net assets
attributable to the Class. Salary expense of salesmen who are responsible for
marketing Shares of the Funds and related travel expenses may be allocated to
various Funds on the basis of average net assets attributable to the Class.
Any payment by a Distributor or reimbursement of a Distributor by the Fund
made pursuant to the Plan is contingent upon the Board of Trustees' approval.
Each Fund will not be liable for distribution and shareholder servicing
expenditures in any given year in excess of the maximum amount (0.50% per
annum of each Fund's average daily net assets attributable to the Class)
payable under the Plan in that year. The Plan also permits the Distributors to
receive and retain brokerage commissions with respect to portfolio
transactions for underlying funds, including funds which have a policy of
considering sales of their shares in selecting broker-dealers for the
execution of their portfolio transactions. For the fiscal year ended September
30, 1995 the Funds paid Signature, as sole Distributor and Administrator the
following fees as a percentage of average net assets: Aggressive Growth Fund
0.72%, Growth Fund 0.70%, Growth & Income Fund 0.70%, Bond Fund 0.69% and
Managed Total Return Fund 0.74%.
The Distributors may provide promotional incentives to investment
executives who support the sale of shares of the Funds. In some instances,
these incentives may be offered only to certain investment executives which
provide services in connection with the sale or expected sale of significant
amounts of shares.
Signature is a wholly-owned subsidiary of Signature Financial Group, Inc.
("SFG"). SFG and its affiliates currently provide administration and
distribution services for other registered investment companies. The principal
business address of SFG and Signature is 6 St. James Avenue, Boston,
Massachusetts 02116. Tucker Anthony, a brokerage firm which is a member of the
New York Stock Exchange, is an indirect subsidiary of John Hancock, continuing
an investment banking and brokerage business established in 1892. The
principal business address of Tucker Anthony is One Beacon Street, Boston,
Massachusetts 02108. Sutro is an indirect wholly-owned subsidiary of John
Hancock. The principal business address of Sutro is 201 California Street, San
Francisco, California 94111.
CUSTODIAN AND TRANSFER AGENT
The Board of Trustees of the Trust has also approved a Custodian Agreement
and a Transfer Agency and Service Agreement (the "IBT Contracts") between the
Trust and Investors Bank & Trust Company ("IBT") pursuant to which IBT
provides custodial, fund accounting, transfer agency, dividend disbursing and
shareholder servicing services to the Trust and each of the Funds. The
principal business address of IBT is 89 South Street, Boston, Massachusetts
02111.
SERVICE ORGANIZATIONS
The Trust also contracts with various banks, trust companies, broker-
dealers (other than the Distributors) or other financial organizations
(collectively, "Service Organizations") to provide administrative services for
the Class such as maintaining shareholder accounts and records. Each Fund pays
fees to Service Organizations (which vary depending upon the services
provided) in amounts up to an annual rate of 0.25% of the daily net asset
value of a Fund's Shares owned by shareholders with whom the Service
Organization has a servicing relationship.
Some Service Organizations may impose additional or different conditions
on their clients such as requiring their clients to invest more than the
minimum initial or subsequent investments specified by the Trust or charging a
direct fee for servicing. If imposed, these fees would be in addition to any
amounts which might be paid to the Service Organization by the Trust. Each
Service Organization has agreed to transmit to its clients a schedule of any
such fees. Shareholders using Service Organizations are urged to consult them
regarding any such fees or conditions.
OTHER EXPENSES
The Trust bears all costs of its operations other than expenses
specifically assumed by the Administrator, Distributors or the Adviser. See
"Management" in the SAI. Expenses directly attributable to a Fund or Class are
charged to that Fund or Class; other expenses are allocated proportionately
among the Funds or Class, as the case may be, in relation to the net assets of
each Fund or Class. The Trust has contracted with IBT to provide fund
accounting services at a rate not intended to exceed the cost of such
services.
PORTFOLIO TRANSACTIONS
Pursuant to the Investment Advisory Contract, the Adviser places orders
for the purchase and sale of portfolio investments for a Fund's accounts with
brokers or dealers, selected by it in its discretion, including the
Distributors. With respect to purchases of certain money market instruments,
purchase orders are placed directly with the issuer or its agent. With respect
to purchases of load fund shares, the Adviser directs substantially all of the
Funds' orders to Signature, which may, in its discretion, direct the order to
other broker-dealers in consideration of sales of that fund's shares, except
where the direction to another broker-dealer would increase the dealer
reallowance paid by a fund above 1% of the public offering price. Where
Signature acts as the dealer with respect to purchases of load fund shares, it
retains dealer reallowances on such purchases up to a maximum of 1% of the
public offering price of the shares. A Distributor may not be designated as
the dealer on any sale where such reallowance would exceed 1% of the public
offering price.
A Distributor may also assist in the execution of Fund portfolio
transactions to purchase underlying fund shares for which it may receive
distribution payments from the underlying funds or their underwriters in
accordance with the distribution plans of those funds. The Distributor will
refund to the underlying fund any payment which alone or when added to other
payments received from that fund is in excess of 1% of the public offering
price of the fund at the time the payment is made. In providing execution
assistance, the Distributor receives orders from the Adviser, places them with
the underlying fund's distributor, transfer agent or other person, as
appropriate, confirms the trade, price and number of shares purchased, assures
prompt payment by the Fund and proper completion of the order.
Each Fund is actively managed and has no restrictions upon portfolio
turnover, although its annual turnover rate is not expected to exceed 100%. A
100% annual portfolio turnover rate would be achieved if each security in each
Fund's portfolio (other than securities with less than one year remaining to
maturity) were replaced once during the year. To the extent each Fund is
purchasing shares of load funds, a higher turnover rate would result in
correspondingly higher sales loads paid by that Fund. Trading also may result
in realization of net short-term capital gains which would not otherwise be
realized, and shareholders are taxed on such gains when distributed from that
Fund at ordinary income tax rates. See "Dividends, Distributions and Taxes".
There is no limit on the portfolio turnover rates of the underlying funds in
which the Fund may invest.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of each Fund is calculated at 4:00 p.m.
(Eastern Time), Monday through Friday, on each day that the New York Stock
Exchange (the "NYSE") is open for trading (which excludes the following
national business holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day). Net asset value per Share is calculated by dividing the aggregate value
of a Fund's assets allocable to the Class less all liabilities by the number
of that Fund's outstanding Shares.
The assets of each Fund consist primarily of the underlying funds, which
are valued at their respective net asset values under the 1940 Act. The
underlying funds value securities in their portfolios for which market
quotations are readily available at their current market value (generally the
last reported sale price) and all other securities and assets at fair value
pursuant to methods established in good faith by the board of directors of the
underlying fund. Money market funds with portfolio securities that mature in
one year or less may use the amortized cost or penny-rounding methods to value
their securities. Securities having 60 days or less remaining to maturity
generally are valued at their amortized cost which approximates market value.
Other assets of each Fund are valued at their current market value if
market quotations are readily available and, if market quotations are not
available, they are valued at fair value pursuant to methods established in
good faith by the Board of Trustees. Debt instruments having 60 days or less
remaining to maturity are valued at their amortized cost.
PURCHASE OF SHARES
Shares of the Funds are offered by the Distributors as an investment
vehicle for individuals, institutions, corporations and fiduciaries. Shares of
the Funds may also be offered to participants in certain managed account
programs who receive, for a fee at a maximum annual rate based upon a
percentage of assets invested, certain services, including asset allocation
recommendations with respect to the Funds based on an evaluation of their
investment objectives and risk tolerances. Each Fund pays expenses related to
the distribution of its Shares. See "Management of the Trust -- The
Distributors". Each Fund may invest in underlying funds which are sold with a
sales charge. Prospectuses, sales material and applications can be obtained
from the Distributors.
The minimum initial investment is $1,000, except that the minimum initial
investment for an Individual Retirement Account is $250. The minimum subsequent
investment is $100. There are no minimum investment requirements for FundManager
prototype defined contribution plans. The minimum initial investment is waived
for purchases by Trustees, officers and employees of the Trust, the Adviser or a
Distributor, including their immediate families and certain accounts. Each Fund
also reserves the right to vary the initial and subsequent investment minimums.
All purchase payments are invested in full and fractional shares. The Trust and
each Distributor are authorized to reject any purchase order.
For each shareholder of record, the Trust, as the shareholder's agent,
establishes an open account to which all shares purchased are credited
together with any dividends and capital gains distributions which are paid in
additional shares. See "Dividends, Distributions and Taxes".
PURCHASES BY CLIENTS OF THE DISTRIBUTORS OR AUTHORIZED SECURITIES DEALERS
If you have a brokerage account or Program account with a Distributor or
an authorized securities dealer, you may purchase any Fund's Shares through
your investment executive. Your investment executive has the responsibility of
submitting your purchase order to IBT on such day in order to obtain that
day's applicable purchase price. Purchase orders received by IBT after 4:00
p.m., New York time, are priced according to the net asset value per Share of
the Fund next determined on the following business day. Payment for purchase
orders must be made to such Distributor or dealer within four business days of
the purchase order.
Your Distributor or dealer will receive statements and dividends directly
from the Funds and will in turn provide you with account statements reflecting
the Funds' purchases, redemptions and dividend payments. If you wish
additional information concerning your investment, please call your investment
executive.
CERTAIN SERVICE ORGANIZATIONS AND OTHER INVESTORS -- PURCHASE BY CHECK OR WIRE
PURCHASE BY MAIL. If you do not have a brokerage account with a Distributor,
you may purchase Shares of the Funds directly by completing the Purchase
Application included in this Prospectus and mailing it, together with a check
written on a U.S. bank in a minimum amount of $1,000 payable to [Name of
Fund], to Investors Bank and Trust Company, P.O. Box 1537 MFD23, Boston, MA
02205-1537. Investors wishing to purchase Shares through their account at a
Service Organization should contact the organization directly for appropriate
instructions.
Subsequent purchases of $100 or more may also be made through IBT by
forwarding payment, together with the detachable stub from your account
statement or a letter containing your account number.
PURCHASE BY WIRE. Service Organizations (on behalf of customers) may transmit
purchase payments by wire directly to the Funds' Custodian at the following
address:
Investors Bank and Trust Company
Boston, Massachusetts
Attn: Transfer Agent
ABA# 011001438
Acct. #796543460
For further credit to FundManager Trust -- Financial Adviser Class
(name of Fund, account name, account #)
The wire order must specify the name of the Fund in which the investment
is being made, the account name, number, confirmation number, address, social
security or tax identification number (where applicable), amount to be wired,
name of the wiring bank and name and telephone number of the person to be
contacted in connection with the order. Where the initial purchase is by wire
an account number will be assigned and a Purchase Application must be
completed and mailed to the Trust.
Investors making purchases through a Service Organization should be aware
that it is the responsibility of the Service Organization to transmit orders
for purchases of Shares by its customers to the Transfer Agent and to deliver
required funds on a timely basis, in accordance with the procedures stated
above.
AUTOMATIC INVESTMENT PLAN
The Trust offers a plan for regularly investing specified dollar amounts
($25.00 minimum in monthly, quarterly, semiannual or annual intervals) in
Shares of the Funds. If an Automatic Investment Plan is selected, subsequent
investments will be automatic and will continue until such time as the Fund
and the investor's bank are notified to discontinue further investments. Due
to the varying procedures to prepare, process and forward the bank withdrawal
information to a Fund, there may be a delay between the time of the bank
withdrawal and the time the money reaches the Fund. The investment in the Fund
will be made at the public offering price per Share determined on the day that
both the check and bank withdrawal data are received in required form by the
Distributor. Further information about the plan may be obtained from IBT at
the telephone number listed on the back cover of the Prospectus.
RETIREMENT PLANS
The Trust offers Shares of each Fund in connection with tax-deferred
retirement plans. Application forms and further information about these plans,
including applicable fees, are available from the Trust or a Distributor upon
request. The Federal income tax treatment of contributions to retirement
plans, such as those listed, has been substantially affected by recently
enacted Federal tax legislation. Before investing in Shares of a Fund through
one or more such plans, an investor should consult a tax adviser.
INDIVIDUAL RETIREMENT ACCOUNTS ("IRAS")
Shares of the Funds may be used as a funding medium for an IRA. An
Internal Revenue Service-approved IRA plan is available from each Distributor
naming IBT as custodian. The minimum initial investment for an IRA is $250;
the minimum subsequent investment is $100. IRAs are available to individuals
who receive compensation or earned income and their spouses whether or not
they are active participants in a tax-qualified or Government-approved
retirement plan. An IRA contribution by an individual who participates, or
whose spouse participates, in a tax-qualified or Government-approved
retirement plan may not be deductible depending upon the individual's income.
Individuals also may establish an IRA to receive a "rollover" contribution of
distributions from another IRA or a qualified plan. Tax advice should be
obtained before planning a rollover.
DEFINED CONTRIBUTION PLAN
Investors who are self-employed may purchase Shares of the Funds for
retirement plans for self-employed persons which are known as Defined
Contribution Plans (formerly Keogh or H.R. 10 Plans). The Class offers a
prototype Defined Contribution Plan for Money Purchase or Profit Sharing
Plans, 401(k) Plans, Simplified Employee Pension Plans (SEPs) and SAR (SEPs).
Section 401(k) Plan
Shares of the Funds may be used as a vehicle for a cash or deferred
arrangement designed to qualify under Section 401(k) of the Internal Revenue
Code of 1986, as amended (the "Code").
Section 403(b) Plan
Shares of the Funds may be used as vehicle for certain deferred
compensation plans designed to qualify under Section 403(b) of the Code for
use by employees of certain educational, non-profit hospital and charitable
organizations.
Section 457 Plan
Shares of the Funds may be used as a vehicle for certain deferred
compensation plans provided for by Section 457 of the Code with respect to
service for state governments, local governments, rural electric cooperatives
and political subdivisions, agencies, instrumentalities and certain affiliates
of such entities which enjoy special treatment.
EXCHANGE PRIVILEGE
By contacting their brokerage account executive, service organization or
transfer agent, shareholders may exchange some or all of their Fund Shares for
Shares of one or more other Funds or the Freedom Cash Management Fund at net
asset value. An exchange may result in a change in the number of Shares held,
but not in the value of such Shares, immediately after the exchange. Each
exchange involves the redemption of the Fund Shares to be exchanged and the
purchase of the Shares of the other Fund. As a result, any gain or loss on the
redemption of the Fund Shares exchanged is reportable on the shareholder's
Federal income tax return. The exchange privilege (or any aspect of it) may be
changed or discontinued upon 60 days' written notice to shareholders and is
available only to shareholders in states where such exchanges may be legally
made. A shareholder considering an exchange should obtain and read the
prospectus of the Funds and consider the differences in investment objectives
and policies before making any exchange.
For further information as to how to purchase or exchange shares of the
Funds, an investor should contact their Service Organization or Transfer
Agent.
REDEMPTION OF SHARES
Upon receipt by the Trust of a redemption request in proper form, Shares
of a Fund will be redeemed at the next determined net asset value. See
"Determination of Net Asset Value". For the shareholder's convenience, the
Trust has established several different direct redemption procedures.
REDEMPTION OF SHARES PURCHASED THROUGH A DISTRIBUTOR OR AUTHORIZED SECURITIES
DEALER
In order to redeem your Shares purchased through a brokerage account, you
should advise your investment executive, by telephone or mail, to execute the
redemption. Redemption requests received by 4:00 p.m., New York time, are
effective that day. Your investment executive has the responsibility of
submitting your redemption request to IBT on such day in order to obtain that
day's applicable redemption price. There is no redemption charge. Redemption
proceeds will be held in your brokerage account unless you give instructions
to your investment executive to remit the proceeds to you.
DIRECT REDEMPTION
Direct redemptions are not available for Shares purchased through a
Distributor's brokerage account. Any such redemption requests received will be
forwarded to your investment executive who will process them as described
above.
Redemptions may be made by letter to the Trust specifying the dollar
amount or number of Shares to be redeemed, account number and the applicable
Fund. The letter must be signed in exactly the same way the account is
registered (if there is more than one owner of the shares all must sign) and
all signatures must be guaranteed by an Eligible Guarantor Institution, which
includes a domestic bank, broker, dealer, credit union, national securities
exchange, registered securities association, clearing agency or savings
association. The Funds' transfer agent, however, may reject redemption
instructions if the guarantor is neither a member of nor a participant in a
signature guarantee program (currently known as "STAMP", "SEMP", or "NYSE
MSP"). Corporations, partnerships, trusts or other legal entities may be
required to submit additional documentation.
An investor may redeem Shares in any amount by written request mailed to
the Trust at the following address:
FundManager Trust
c/o Investors Bank & Trust Company
P.O. Box 1537 MFD23
Boston, Massachusetts 02205-1537
If Shares to be redeemed are held in certificate form, the certificates
must be enclosed with the letter. Do not sign the certificates and for
protection use registered mail.
Checks for redemption proceeds normally will be mailed within four days,
but will not be mailed until all checks in payment for the purchase of the
shares to be redeemed have been cleared, which may take up to 15 days. Unless
other instructions are given in proper form, a check for the proceeds of a
redemption will be sent to the shareholder's address of record.
REDEMPTION BY WIRE OR TELEPHONE
An investor may redeem Fund Shares by wire or by telephone if they have
checked the appropriate box on the Purchase Application or has filed a
Telephone Authorization Form with the Funds. These redemptions may be paid by
the Funds by wire or by check. The Trust reserves the right to refuse
telephone wire redemptions and may limit the amount involved or the number of
telephone redemptions. The telephone redemption procedure may be modified or
ended at any time by the Trust. Instructions for wire redemptions are set
forth in the Purchase Application. The Trust employs reasonable procedures to
confirm that instructions communicated by telephone are genuine. For instance,
the following information must be verified by the shareholder or broker at the
time a request for a telephone redemption is effected: (i) shareholder's
account number; (ii) shareholder's social security number; and (iii) name and
account number of shareholder's designated securities dealer or bank. If the
Trust fails to follow these or other established procedures, it may be liable
for any losses due to unauthorized or fraudulent instructions.
A Service Organization may request a wire redemption provided a Wire
Authorization Form is on file with the Trust. There is no charge to the
Service Organization for wire redemptions. The proceeds of a wire redemption
will be sent to an account with a Service Organization designated on the
appropriate form. The Trust reserves the right to restrict or terminate wire
redemption privileges. Proceeds of wire redemptions generally will be
transferred within four days after receipt of the request.
The Trust may suspend the right of redemption during any period when (i)
trading on the NYSE is restricted or the NYSE is closed, other than customary
weekend and holiday closings, (ii) the SEC has by order permitted such
suspension or (iii) an emergency, as defined by rules of the SEC, exists
making disposal of portfolio investments or determination of the value of the
net assets of the Funds not reasonably practicable.
If the Board of Trustees should determine that it would be detrimental to
the best interests of the remaining shareholders of a Fund to make payment
wholly or partly in cash, that Fund may pay the redemption price in whole or
in part by a distribution in kind of readily marketable securities (mutual
fund shares or money market instruments) from the portfolio of that Fund, in
lieu of cash, in conformity with applicable rules of the SEC. The Trust will,
however, redeem shares solely in cash up to the lesser of $250,000 or 1% of
its net assets during any 90-day period for any one shareholder.
The proceeds of redemption may be more or less than the amount invested
and, therefore, a redemption may result in a gain or loss for Federal income
tax purposes.
Because the Funds incur fixed costs in maintaining shareholder accounts,
the Funds reserve the right to redeem your account if its total value falls
below $500 at the end of any month, unless the decrease is solely the result
of a reduction in net asset value per share. If a Fund elects to redeem your
account, it will notify you of its intention to do so and will provide you
with an opportunity to increase your account by investing a sufficient amount
to bring the account up to $500 or more within 30 days of the notice.
SYSTEMATIC WITHDRAWAL PLAN
Any shareholder who owns shares of a Fund with an aggregate value of
$10,000 or more may establish a Systematic Withdrawal Plan under which they
redeem at net asset value the number of full and fractional shares which will
produce the monthly, quarterly, semi-annual or annual payments specified
(minimum $50.00 per payment). Depending on the amounts withdrawn, systematic
withdrawals may deplete the investor's principal. Investors contemplating
participation in this Plan should consult their tax advisers. No additional
charge to the shareholder is made for this service.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund intends to continue to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). In any year in which a Fund qualifies as a regulated investment
company and distributes substantially all of its investment company taxable
income (which includes, among other items, the excess of net short-term
capital gains over net long-term capital losses) and its net capital gains
(the excess of net long-term capital gains over net short-term capital losses)
the Fund will not be subject to Federal income tax to the extent it
distributes to shareholders such income and capital gains in the manner
required under the Code. Amounts not distributed on a timely basis in
accordance with a calendar year distribution requirement are subject to a
nondeductible 4% excise tax. To prevent imposition of the excise tax each Fund
must distribute for each calendar year an amount equal to the sum of (i) at
least 98% of its net ordinary income (excluding any capital gains or losses)
for the calendar year, (ii) at least 98% of the excess of its capital gains
over capital losses (adjusted for certain ordinary losses) realized during the
one-year period ending October 31 of such year, and (iii) all ordinary income
and capital gains for previous years that were not distributed during such
years. If a distribution is declared by the Fund in December to shareholders
of record as of a specified date in December and paid by the Fund during
January of the following calendar year, the distribution will be treated as a
dividend paid during the calendar year. Such distributions will be taxable to
shareholders in the calendar year in which the distributions are declared,
rather than the calendar year in which the distributions are received. The
Fund intends to distribute its income in accordance with this requirement to
prevent application of the excise tax.
Each year the Trust will notify shareholders of the tax status of
dividends and distributions.
Income received by a Fund from a mutual fund in that Fund's portfolio
(including dividends and distributions of short-term capital gains), as well
as interest received on money market instruments and net short-term capital
gains received by the Fund on the sale of mutual fund shares, will be
distributed by the Fund (after deductions for expenses) and will be taxable to
shareholders as ordinary income. Because the Funds are actively managed and
can realize taxable net short-term capital gains by selling shares of an
underlying fund with unrealized portfolio appreciation, investing in the Fund
rather than directly in the underlying funds may result in increased tax
liability to the shareholder, since the Fund must distribute its gain in
accordance with the rules in the Code. The Fund's ability to dispose of shares
of mutual funds held less than three months may be limited by requirements
relating to a Fund's qualification as a regulated investment company for
federal income tax purposes.
Distributions of net capital gains (the excess of net long-term capital
gains over net short-term capital losses) received by a Fund from mutual
funds, as well as net long-term capital gains realized by a Fund from the
purchase and sale (or redemption) of mutual fund shares or other securities
held (generally) by a Fund for more than one year, will be distributed by the
Fund and will be taxable to shareholders as long-term capital gains (even if
the shareholder has held the Shares for less than one year). However, if a
shareholder who has received a capital gains distribution suffers a loss on
the sale of his shares not more than six months after purchase, the loss will
be treated as a long-term capital loss to the extent of the capital gains
distribution received. The long-term capital gains, including distributions of
net capital gains are currently subject to a maximum federal tax rate of 28%
which is less than the maximum rate imposed on other types of taxable income.
Furthermore, capital gains may be advantageous because, unlike ordinary
income, they may be offset by capital losses.
For purposes of determining the character of income received by the Fund
when an underlying fund distributes net capital gains to the Fund, the Fund
will treat the distribution as a long-term capital gain, even if it has held
shares of the mutual fund for less than one year. However, any loss incurred
by the Fund on the sale of that underlying fund's shares held for six months
or less will be treated as a long-term capital loss to the extent of the gain
distribution.
The tax treatment of distributions from a Fund is the same whether the
distributions are received in additional shares or in cash. Shareholders
receiving distributions in the form of additional Shares will have a cost
basis for Federal income tax purposes in each Share received equal to the net
asset value of a Share of the Fund on the reinvestment date.
A Fund may invest in underlying funds with capital loss carry-forwards. If
such an underlying fund realizes capital gains, it will be able to offset the
gains to the extent of its loss carry-forwards in determining the amount of
capital gains which must be distributed to its shareholders. To the extent
that gains are offset in this manner, the Fund will not realize gains on the
related Fund until such time as the underlying fund is sold.
Depending on the residence of the shareholder for tax purposes,
distributions also may be subject to state and local taxes, including
withholding taxes. Shareholders should consult their own tax advisers as to
the tax consequences of ownership of Shares of the Funds in their particular
circumstances.
The Funds generally will be required to withhold Federal income tax at a
rate of 31% ("backup withholding") from dividends paid to shareholders if (a)
the payee fails to furnish the Trust with and to certify the payee's correct
taxpayer identification number or social security number, (b) the Internal
Revenue Service (the "IRS") notifies the Trust that the payee has failed to
report properly certain interest and dividend income to the IRS and to respond
to notices to that effect or (c) the payee fails to certify that he is not
subject to backup withholding.
Aggressive Growth Fund will distribute investment company taxable income
annually; Growth Fund will distribute investment company taxable income semi-
annually; Growth & Income Fund and Managed Total Return will distribute
investment company taxable income quarterly; and Bond Fund will distribute its
investment company taxable income monthly. Each Fund will distribute any net
realized capital gains at least annually. All dividends and distributions will
be reinvested automatically at net asset value in additional Shares of the
Fund making the distribution, unless the shareholder has notified the Fund in
writing of his election to receive distributions in cash.
OTHER INFORMATION
CAPITALIZATION
The Trust was organized as a Delaware business trust on February 7, 1995
as a successor, with respect to the Funds, to Republic Funds (formerly
FundTrust) a Massachusetts business trust (organized on April 22, 1987).
Republic Funds succeeded two previously existing Massachusetts business
trusts, FundTrust Tax-Free Trust (organized on July 30, 1986) and FundVest
(organized on July 17, 1984 and since renamed Fund Source). The Trust
currently consists of five separately-managed portfolios each offering two
classes of shares (except for Managed Total Return, which only offers
Financial Adviser Class) of beneficial interest, the Financial Adviser Class
and the No-Load Class. The Board of Trustees may establish additional
portfolios and divide shares in each portfolio into additional classes in the
future. The capitalization of the Trust consists solely of an unlimited number
of shares of beneficial interest with a par value of $0.001 each. When issued,
shares of the Funds are fully paid, non-assessable and freely transferable.
VOTING
Shareholders have the right to vote in the election of Trustees and on any
and all matters on which by law or the provisions of the Master Trust
Agreement they may be entitled to vote. When matters are submitted for
shareholder vote, shareholders will have one vote for each full share held and
proportionate, fractional votes for fractional shares held. A separate vote of
a Fund or Class is required on any matter affecting that Fund or Class on
which shareholders are entitled to vote. Shareholders of a Fund or Class are
not entitled to vote on Trust matters that do not affect the Fund or Class and
do not require a separate vote of the Fund or Class. The Trust is not required
to hold regular annual meetings of its shareholders and does not intend to do
so. See "Other Information -- Voting Rights" in the SAI.
The Master Trust Agreement provides that the holders of not less than
three-fourths of the outstanding shares of the Trust may remove a person
serving as Trustee either by declaration in writing or at a meeting called for
such purpose. The Trustees are required to call a meeting for the purpose of
considering the removal of a person serving as Trustee if requested in writing
to do so by the holders of not less than 10% of the outstanding shares of the
Trust.
Shares entitle their holders to one vote per share (with proportionate
voting for fractional shares). As used in this Prospectus, the phrase "vote of
a majority of the outstanding shares" of the Fund (or of the Trust) means the
vote of the lesser of: (i) 67% of the shares of the Fund (or the Trust)
present at a meeting if the holders of more than 50% of the outstanding shares
are present in person or by proxy or (ii) more than 50% of the outstanding
shares of the Fund (or the Trust).
In compliance with applicable provisions of the 1940 Act, shares of the
underlying funds owned by the Trust will be voted in the same proportion as
the vote of all other holders of those shares.
PERFORMANCE INFORMATION
The Trust may, from time to time, include quotations of the Funds' yield
and total return in advertisements or reports to shareholders or prospective
investors. Quotations of yield will be based on the investment income per
share earned during a particular 30-day period (including dividends and
interest), less expenses accrued during the period ("net investment income"),
and will be computed by dividing net investment income by the maximum public
offering price per share on the last day of the period. Quotations of total
return will be expressed in terms of the average annual compounded rate of
return of a hypothetical investment in the Fund over periods of 1, 5 and 10
years (up to the life of such Fund). All total return figures will reflect a
proportional share of Fund expenses on an annual basis, and will assume that
all dividends and distributions are reinvested when paid. Quotations of yield
or total return reflect only the performance of a hypothetical investment in
the Fund during the particular time period on which the calculations are
based. Yield and total return for a Fund will vary based on changes in market
conditions and the level of such Fund's expenses, and no reported performance
figure should be considered an indication of performance which may be expected
in the future.
For the period prior to its establishment, the Class has adopted the
performance of the Predecessor Funds. The performance for this period will
reflect the deduction of expenses set forth in the Fund Expense Table. See
"Fund Expenses".
In connection with communicating the Funds' yield and total return to
current or prospective shareholders, the Trust also may compare these figures
to the performance of other mutual funds tracked by mutual fund rating
services or to other unmanaged indexes which may assume reinvestment of
dividends but generally do not reflect deductions for administrative and
management costs and expenses.
For a more detailed description of the methods used to calculate each
Fund's yield and total return, see the SAI.
SHAREHOLDER INQUIRIES
All shareholder inquiries should be directed to your account executive or
financial adviser or call (800) 344-9033 (Toll Free).
DESCRIPTION OF BOND RATINGS
Excerpts from Moody's description of its bond ratings: Aaa -- judged to be
the best quality. They carry the smallest degree of investment risk; Aa --
judged to be of high quality by all standards. Together with the Aaa group
they comprise what are generally known as high grade bonds; A -- possess many
favorable investment attributes and are to be considered as "upper medium
grade obligations"; Baa -- considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time; Ba -- judged to have speculative elements, their future cannot
be considered as well assured; B -- generally lack characteristics of the
desirable investment; Caa -- are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest; Ca -- speculative in a high degree; often in default; C -- lowest
rated class of bonds; regarded as having extremely poor prospects.
Moody's also supplies numerical indicators 1, 2 and 3 to rating
categories. The modifier 1 indicates that the security is in the higher end of
its rating category; the modifier 2 indicates a mid-range ranking; and 3
indicates a ranking toward the lower end of the category.
Excerpts from S&P's description of its bond ratings: AAA -- highest grade
obligations. Capacity to pay interest and repay principal is extremely strong;
AA -- also qualify as high grade obligations. A very strong capacity to pay
interest and repay principal and differs from AAA issues only in a small
degree; A -- regarded as upper medium grade. They have a strong capacity to
pay interest and repay principal although it is somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions than
debt in higher rated categories; BBB -- regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest
and repay principal for debt in this category than in higher rated categories.
This group is the lowest which qualifies for commercial bank investment. BB,
B, CCC, CC -- predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with terms of the obligations; BB
indicates the lowest degree of speculation and CC the highest.
S&P applies indicators "+", no character, and "-" to its rating
categories. The indicators show relative standing within the major rating
categories.
<PAGE>
FUNDMANAGER Funds
- ---------------------------------------
The First Family in Multifund Investing
Investment Advisor
Freedom Capital Management
Corporation
M.D. Hirsch Division
One World Financial Center
New York, NY 10281
Distributors
Tucker Anthony, Incorporated
200 World Financial Center
New York, NY 10281
Sutro & Co., Inc.
201 California Street
San Francisco, CA 94111
For General Information Call:
(800) 344-9033
FUNDMANAGER Funds
- ---------------------------------------
The First Family in Multifund Investing
Prospectus
JANUARY 29, 1996
o Aggressive Growth Fund
o Growth Fund
o Growth & Income Fund
o Bond Fund
o Managed Total Return Fund
<PAGE>
FM003K
FUNDMANAGER TRUST
One Beacon Street
Boston, Massachusetts 02108
Information: (800) 344-9033 (Toll Free)
STATEMENT OF ADDITIONAL INFORMATION
No-Load Class of Shares
Financial Adviser Class of Shares
FundManager Trust (the "Trust") is an open-end management investment
company consisting of five separate series (the "Funds"). The Funds seek to
achieve their objectives by investing in shares of other open-end investment
companies -- commonly called mutual funds.
AGGRESSIVE GROWTH FUND seeks capital appreciation without
regard to current income.
GROWTH FUND primarily seeks long-term capital appreciation;
current income is a secondary consideration.
GROWTH & INCOME FUND seeks a combination of capital
appreciation and current income.
BOND FUND seeks a high level of current income.
MANAGED TOTAL RETURN FUND seeks high total return (capital
appreciation and current income).
Two classes of shares, the No-Load Class and the Financial Adviser
Class (each a "Class" and collectively the "Classes"), of the Aggressive Growth
Fund, Growth Fund, Growth and Income Fund and Bond Fund are offered for sale.
The Managed Total Return Fund offers only one Class of shares, the Financial
Adviser Class. The No-Load Class is offered for sale at net asset value by
Tucker Anthony Incorporated ("Tucker Anthony") and Sutro & Co. Incorporated
("Sutro") (collectively, the "Distributors") to participants in the FundManager
Advisory Program and the Financial Adviser Class is offered for sale at net
asset value by Signature Broker-Dealer Services, Inc. ("Signature"), Tucker
Anthony and Sutro as an investment vehicle for individuals, institutions,
corporations and fiduciaries. The Financial Adviser Class pays a distribution
fee in connection with the distribution of its shares pursuant to a Distribution
Plan. Prior to May 8, 1995, the Funds were diversified series of the Republic
Funds (the "Predecessor Funds"), also an open-end, management investment
company.
This Statement of Additional Information is not a prospectus and is
only authorized for distribution when preceded or accompanied by the No-Load
Class' Prospectus dated October 1, 1995 and the Financial Adviser Class'
Prospectus dated January 29, 1996 (each a "Prospectus"). This Statement of
<PAGE>
Additional Information contains additional and more detailed information than
that set forth in the Prospectus and should be read in conjunction with the
Prospectus, additional copies of which may be obtained without charge by writing
or calling the Trust at the address and information number printed above.
This Statement of Additional Information is dated January 29, 1996
-2 -
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Investment Policies ............. 3 Custodian and Transfer Agent ....15
U.S. Government Securities .... 3 Fees and Expenses ...............15
Bank Obligations .............. 3 Portfolio Transactions ............16
Commercial Paper .............. 3 Other Information .................18
Repurchase Agreements ......... 4 Capitalization ..................18
Investment Restrictions ......... 4 Voting Rights ...................19
Management ...................... 6 Performance Information .........19
Trustees and Officers ......... 6 Independent Auditors ............22
Investment Adviser ............10 Counsel .........................22
Administrator .................11 Registration Statement ............23
Distributors ..................12 Financial Statements ..............23
Service Organizations..........15
</TABLE>
-3 -
<PAGE>
INVESTMENT POLICIES
Although the Funds invest primarily in the shares of other mutual
funds, they also are authorized to invest for temporary defensive purposes or as
may be considered necessary to accumulate cash for investments or to meet
anticipated redemptions in a variety of short-term debt securities, including
U.S. Treasury bills and other U.S. Government securities, commercial paper,
certificates of deposit, bankers' acceptances and repurchase agreements with
respect to such securities. The following information supplements the discussion
of the investment objectives and policies of the Funds found under "Investment
Objectives" in the Prospectus.
U.S. GOVERNMENT SECURITIES
The Funds may invest in obligations issued or guaranteed by the United
States Government or its agencies or instrumentalities which have remaining
maturities not exceeding one year. Agencies and instrumentalities which issue or
guarantee debt securities and which have been established or sponsored by the
United States Government include the Bank for Cooperatives, the Export-Import
Bank, the Federal Farm Credit System, the Federal Home Loan Banks, the Federal
Home Loan Mortgage Corporation, the Federal Intermediate Credit Banks, the
Federal Land Banks, the Federal National Mortgage Association and the Student
Loan Marketing Association.
BANK OBLIGATIONS
The Funds may invest in obligations of U.S. banks (including
certificates of deposit and bankers' acceptances) having total assets at the
time of purchase in excess of $1 billion. Such banks shall be members of the
Federal Deposit Insurance Corporation.
A certificate of deposit is an interest-bearing negotiable certificate
issued by a bank against funds deposited in the bank.
A bankers' acceptance is a short-term draft drawn on a commercial bank by a
borrower, usually in connection with an international commercial transaction.
Although the borrower is liable for payment of the draft, the bank
unconditionally guarantees to pay the draft at its face value on the maturity
date.
COMMERCIAL PAPER
Commercial paper represents short-term unsecured promissory notes
issued in bearer form by bank holding companies, corporations and finance
companies. The commercial paper purchased by the Funds consists of direct
obligations of domestic issuers which, at the time of investment, are: (i) rated
"P-1" by Moody's Investors Service, Inc. ("Moody's") or "A-1" or better by
Standard & Poor's Corporation ("Standard & Poor's"); (ii) issued
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<PAGE>
or guaranteed as to principal and interest by issuers or guarantors having an
existing debt security rating of "Aa" or better by Moody's or "AA" or better by
Standard & Poor's; or (iii) securities which, if not rated, are, in the opinion
of Freedom Capital Management Corporation, the Funds' investment adviser
("Freedom Capital" or the "Adviser"), of an investment quality comparable to
rated commercial paper in which the Funds may invest.
The rating "P-1" is the highest commercial paper rating assigned by
Moody's and the ratings "A-1" and "A-1+" are the highest commercial paper
ratings assigned by Standard & Poor's. Debts rated "Aa" or better by Moody's or
"AA" or better by Standard & Poor's are generally regarded as high-grade
obligations and such ratings indicate that the ability to pay principal and
interest is very strong.
REPURCHASE AGREEMENTS
The Funds may invest in securities subject to repurchase agreements
with banks or broker-dealers. A repurchase agreement is a transaction in which
the seller of a security commits itself at the time of the sale to repurchase
that security from the buyer at a mutually agreed upon time and price. The
repurchase price exceeds the sale price, reflecting an agreed upon interest rate
effective for the period the buyer owns the security subject to repurchase. The
agreed upon rate is unrelated to the interest rate on that security. The Funds'
investment adviser will monitor the value of the underlying security at the time
the transaction is entered into and at all times during the term of the
repurchase agreement to insure that the value of the security always equals or
exceeds the repurchase price. In the event of default by the seller under the
repurchase agreement, a Fund may have problems in exercising its rights to the
underlying securities and may incur costs and experience time delays in
connection with the disposition of such securities. Repurchase agreements are
considered to be loans under the Investment Company Act of 1940, as amended (the
"1940 Act"), collateralized by the underlying securities.
INVESTMENT RESTRICTIONS
The following investment restrictions are in addition to those
described under "Investment Objectives" and "Investment Policies and
Restrictions" in the Prospectus. The following restrictions may not be changed
with respect to a Fund without the approval of the holders of a majority of that
Fund's outstanding securities. Except that a Fund may invest all of its
investable assets in an open-end investment company with substantially the same
investment policies and restrictions as the Fund, the Fund will not:
1. Purchase or otherwise acquire interests in real
estate, real estate mortgage loans or interests in
oil, gas or other mineral leases, as well as
-5 -
<PAGE>
exploration or development programs, except that a
Fund may purchase securities issued by companies,
including real estate investment trusts, which invest
in real estate or interests therein.
2. Make loans, except that a Fund may purchase and
hold publicly distributed debt securities and it
may enter into repurchase agreements.
3. Invest in securities of any issuer which, together
with any predecessor, has been in operation for less
than three years if, as a result, more than 5% of the
total assets of the Fund would then be invested in
such securities.
4. Purchase the securities of an issuer if, to a Fund's
knowledge, one or more of the Trustees or Officers of
the Trust individually owns more than one half of 1%
of the outstanding securities of such issuer and
together beneficially own more than 5% of such
securities.
5. Sell securities short or invest in puts, calls,
straddles, spreads or combinations thereof.
6. Purchase securities on margin, except such
short-term credits as are necessary for the
clearance of transactions.
7. Purchase or acquire commodities or commodity
contracts.
8. Act as an underwriter of securities.
9. Issue senior securities, except insofar as a Fund may
be deemed to have issued a senior security in
connection with any repurchase agreement or any
permitted borrowing.
10. Purchase warrants, valued at the lower of cost or
market, in excess of 10% of the value of a Fund's
net assets. Included within that amount, but not
to exceed 2% of the value of the Fund's net
assets, may be warrants that are not listed on the
New York or American Stock Exchanges or an
exchange with comparable listing requirements.
Warrants attached to securities are not subject to
this limitation.
In addition, as non-fundamental policies, a Fund will not: (i) invest
in securities for the purpose of exercising control over or management of the
issuer; (ii) purchase or otherwise acquire interests in real estate limited
partnerships; (iii) participate in a joint or a joint-and-several basis in any
-6 -
<PAGE>
trading account in securities; (iv) purchase securities of any closed-end
investment company or any investment company which is not registered in the
United States; (v) invest in commodity futures contracts; (vi) invest more than
10% of the Funds' total assets (taken at the greater of cost or market value) in
securities (excluding 144A securities) that are restricted as to resale under
the Securities Act of 1933, as amended ("1933 Act"); (vi) purchase warrants
valued at the lower of cost or market, in excess of 5% of the value of a Fund's
net assets; (vii) purchase the securities of an issuer if one or more of the
Trustees or Officers of the Trust individually owns more than one half of 1% of
the outstanding securities of such issuer and together beneficially own more
than 5% of such securities; (viii) with respect to 75% of the Fund's total
assets, purchase securities of any issuer if such purchase at the time thereof
would cause the Fund to hold more than 10% of any class of securities of such
issuer, for which purposes all indebtedness of an issuer shall be deemed a
single class and all preferred stock of an issuer shall be deemed a single
class, except that futures or option contracts shall not be subject to this
restriction; (ix) purchase securities issued by any investment company except by
purchase in the open market where no commission or profit to a sponsor or dealer
results from such purchase other than the customary broker's commission, or
except when such purchase, though not made in the open market, is part of a plan
of merger or consolidation; (x) invest more than 15% of the Fund's total assets
(taken at the greater of cost or market value) in (a) securities (including Rule
144A securities) that are restricted as to resale under the 1933 Act, and (b)
securities that are issued by issuers which (including predecessors) have been
in operation less than three years (other than U.S. Government securities),
provided, however, that no more than 5% of the Portfolio's (Fund's) total assets
are invested in securities issued by issuers which (including predecessors) have
been in operation less than three years. These additional policies may be
changed as to a Fund by the Board of Trustees without shareholder approval.
The underlying funds in which a Fund invests may, but need not, have
the same investment policies as a Fund. Although all of the Funds may, from time
to time, invest in shares of the same underlying fund, the percentage of each
Fund's assets so invested may vary, and the investment adviser will determine
that such investments are consistent with the investment objectives and policies
of each particular Fund. A Fund is not limited in its investment in underlying
funds affiliated with the Adviser or the Distributors. The Funds may only invest
in underlying funds that have qualified for sale in California or have submitted
an undertaking to adhere to California laws. The investments which may be made
by underlying funds in which the Funds invest, and the risks associated with
those investments, are described in the Prospectus under "Investment Objectives"
and in the Appendix.
MANAGEMENT
-7 -
<PAGE>
TRUSTEES AND OFFICERS
The principal occupations of the Trustees and executive officers of the
Trust for the past five years are listed below. The address of each, unless
otherwise indicated, is 6 St. James Avenue, Boston, Massachusetts 02116.
DEXTER A. DODGE*, TRUSTEE, One Beacon Street, Boston, Massachusetts 02108.
President and Managing Director of the Adviser since 1992. Vice President of
Freedom Distributors Corporation since 1989. Chairman of the Boards and Chief
Executive Officer of Freedom Mutual Fund and Freedom Group of Tax Exempt Funds
since July 1992.
ERNEST T. KENDALL, TRUSTEE, 230 Beacon Street, Boston, Massachusetts 02116.
President, Commonwealth Research Group, Inc., Boston, Massachusetts, a
consulting firm specializing in microeconomics, regulatory economics and labor
economics, since 1978. Trustee of Freedom Mutual Fund and Freedom Group of Tax
Exempt Funds since September 1993.
RICHARD B. OSTERBERG, TRUSTEE, 84 State Street, Boston, Massachusetts 02109.
Member of the law firm of Weston, Patrick, Willard & Redding, Boston,
Massachusetts. Trustee of Freedom Mutual Fund and Freedom Group of Tax Exempt
Funds since September 1993.
CHARLES B. LIPSON, PRESIDENT AND PRINCIPAL EXECUTIVE OFFICER, 200 Liberty
Street, New York, New York 10281. President and
founding partner of the M.D. Hirsch Division of Freedom Capital since January
1995. President and Chief Operating Officer of the M.D. Hirsch Division of
Republic Asset Management Corporation from February 1991 to December 1994.
Senior Vice President and Chief Operating Officer of Home Capital Services, Inc.
prior to February 1991.
JOHN J. DANELLO, EXECUTIVE VICE PRESIDENT, One Beacon Street, Boston,
Massachusetts 02108. Vice President-Managing Director, Clerk and General Counsel
of the Adviser since November 1986. President and Director since February 1989
and Clerk since February 1987 of Freedom Distributors Corporation. President and
Secretary of Freedom Mutual Fund and Freedom Group of Tax Exempt Funds since
July 1992.
PHILIP W. COOLIDGE, EXECUTIVE VICE PRESIDENT, Chairman and Chief
-8 -
<PAGE>
Executive Officer, Signature Financial Group, Inc. ("SFG") since December 1988.
Chairman and Chief Executive Officer, Signature since April 1989.
MICHAEL D. HIRSCH, EXECUTIVE VICE PRESIDENT AND PORTFOLIO MANAGER, 200 Liberty
Street, New York, New York 10281. Chairman, M.D. Hirsch Division of the Adviser
since February 1995. Vice Chairman and Managing Director, M.D. Hirsch Division
of Republic Asset Management Corporation from June 1993 to February 1994.
President M.D. Hirsch Investment Management, Inc. from February 1991 to June
1993. Chief Investment Officer, Republic National Bank of New York prior to
February 1991.
MICHELLE GRAHAM-LYONS, VICE PRESIDENT AND PORTFOLIO MANAGER, 200 Liberty Street,
New York, New York 10281. Senior Vice President of the Adviser since February
1995. First Vice President, M.D. Hirsch Division of Republic Asset Management
Corporation from June 1993 to February 1994. First Vice President, M.D. Hirsch
Investment Management, Inc. from February 1991 to June 1993. Senior Investment
Analyst, Republic National Bank of New York prior to February 1991.
THOMAS M. LENZ, SECRETARY, Vice President and Associate General Counsel, SFG
since November, 1989; Assistant Secretary, Signature since February, 1991;
Attorney, Ropes & Gray prior to November, 1989.
JOHN R. ELDER, TREASURER, Vice President, SFG since April, 1995; Treasurer,
Phoenix Family of Mutual Funds prior to April, 1995; Audit Manager, Price
Waterhouse prior to 1983.
*Trustee may be deemed to be an "interested person" of the Trust as defined by
the 1940 Act.
Messrs. Coolidge, Lenz and Elder are also officers of certain other
investment companies for which Signature or an affiliate is the administrator or
distributor. Mr. Danello is also an officer of certain other investment
companies for which the Adviser or an affiliate is the investment adviser.
The following table reflects fees paid to the Trustees of the Trust for
the year ended September 30, 1995.
COMPENSATION TABLE
-9 -
<PAGE>
<TABLE>
<CAPTION>
Total Compensation
Aggregate Pension or Retirement From Trust and
Compensation Benefits Accrued as Part Estimated Annual Freedom Complex*
Name of TRUSTEE FROM TRUST OF FUND EXPENSES BENEFITS UPON RETIREMENT PAID TO TRUSTEES
- --------------- ------------- ------------------------ ------------------------ ----------------
<S> <C> <C> <C> <C>
Dexter A. Dodge none none none none
Ernest T. Kendall $3,600 none none $3,600
Richard B. Osterberg $3,600 none none $[]
<FN>
*Freedom Complex refers to both Freedom Mutual Fund and Freedom Group of Tax
Exempt Funds.
</FN>
</TABLE>
Trustees who are not interested persons of the Trust receive an annual
retainer of $3,600 and a fee of $600 for each meeting of the Board of Trustees
or committee thereof attended. The chairperson of each of the Audit and
Contracts Committee receives and additional fee per annum of $600. Mr. Kendall
serves as chairperson of the Audit Committee and Mr. Osterberg serves as
chairperson of the Contracts Committee. The amounts in the above table are based
on the assumption that the Trustees of the Trust will meet four times a year.
Interested persons of the Trust who serve as Trustee receive no fees from the
Trust. All Trustees of the Trust are reimbursed for expenses for attendance at
meetings.
The Trust has no bonus, profit sharing, pension or retirement plans. For the
fiscal year ended September 30, 1995, the Trust paid $20,234 in Trustee fees and
expenses.
The Board of Trustees of the Trust has two committees, an Audit
Committee and a Contracts Committee. The Audit Committee assists the Board in
fulfilling its duties relating to accounting and financial reporting practices
and serves as a direct line of communication between the Board and the
independent auditors. The Audit Committee is responsible for recommending the
engagement or retention of the independent accountants, reviewing with the
independent accountants the plan and the results of the auditing engagement,
approving professional services provided by the independent accountants prior to
the performance of such services, considering the range of audit and non-audit
fees, reviewing the independence of the independent auditors, reviewing the
scope and results of procedures for internal auditing, and reviewing the system
of internal accounting control.
The function of the Contracts Committee is to assist the Board in
fulfilling its duties with respect to the review and approval of contracts
between the Trust, on behalf of the Funds, and other entities, including
entering into new contracts and the renewal of existing contracts. The Contracts
Committee considers investment advisory, distribution, transfer agency,
-10 -
<PAGE>
administrative service and custodial contracts and such other contracts as the
Board deems necessary or appropriate for the continuation of operations of the
Funds or the Trust. The Contracts Committee will also be responsible for the
selection and nomination of Trustees who are not "interested persons" within the
meaning of the 1940 Act of the Trust.
All of the Trustees who are not "interested persons" within the meaning
of the 1940 Act of the Trust currently serve on the Audit and Contracts
Committees.
As of January 26, 1996, the Trustees and Officers of the Trust, as a
group, owned less than 1% of the outstanding shares of each Fund. As of the same
date, the following persons owned of record or beneficially 5% or more of a the
outstanding shares of the predecessor shares to the Financial Adviser Class of
shares (percentage is percentage of outstanding shares of a Fund owned by the
shareholder):
AGGRESSIVE GROWTH FUND
Tod & Co., At 150-R CWA, Attn: Operations Dept., P.O. Box 1250, Boston,
MA 02104, 15.6%; Charles Schwab & Co. Inc., 101 Montgomery St., Attn: Reinvest
Acct., San Francisco, CA 94104, 14.5%; Tod & Co., At 150-R, Attn: Operations
Dept., P.O. Box 1250, Boston, MA 02104, 12.0%; Kinco & Co., c/o RNB Securities
Services, One Hanson Place - Lower Level, Brooklyn, NY 11243, 5.5%.
GROWTH FUND
Tod & Co., At 150-R CWA, Attn: Operations Dept., P.O. Box 1250, Boston,
MA 02104, 23.8%; Tod & Co., At 150-R, Attn: Operations Dept., P.O. Box 1250,
Boston, MA 02104, 16.8%; Charles Schwab & Co. Inc., 101 Montgomery Street, San
Francisco, CA 94104, 13.0; Kinco & Co., c/o Securities Services, One Hanson
Place - Lower Level, Brooklyn, NY 11243, 7.7%.
GROWTH & INCOME FUND
Tod & Co., At 150-R CWA, Attn: Operations Dept., P.O. Box 1250, Boston,
MA 02104, 25.0%; Tod & Co., At 150-R, Attn: Operations Dept., P.O. Box 1250,
Boston, MA 02104, 20.1%; Kinco & Co., c/o Securities Services, One Hanson Place
- - Lower Level, Brooklyn, NY 11243, 9.4%; Charles Schwab & Co. Inc., 101
Montgomery Street, San Francisco, CA 94104, 6.4.
BOND FUND
Tod & Co., At 150-R CWA, Attn: Operations Dept., P.O. Box 1250, Boston,
MA 02104, 37.5%; Tod & Co., At 150-R, Attn: Operations Dept., P.O. Box 1250,
Boston, MA 02104, 31.1%; Charles Schwab & Co. Inc., 101 Montgomery Street, San
Francisco, CA 94104, 12.0' Kinco & Co., c/o Securities Services, One Hanson
Place - Lower Level, Brooklyn, NY 11243, 6.4%.
As of September 30, 1995, the Funds' shares have not been divided into
separate classes.
The Trust's Master Trust Agreement provides that it will
-11 -
<PAGE>
indemnify its Trustees and officers against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Trust, unless, as to liability to the Trust or its
shareholders, it is finally adjudicated that they engaged in wilful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in
their offices, or unless with respect to any other matter it is finally
adjudicated that they did not act in good faith in the reasonable belief that
their actions were in the best interests of the Trust. In the case of
settlement, such indemnification will not be provided unless it has been
determined by a court or other body approving the settlement or other
disposition, or by a reasonable determination, based upon a review of readily
available facts, by vote of a majority of disinterested Trustees or in a written
opinion of independent counsel, that such officers or Trustees have not engaged
in wilful misfeasance, bad faith, gross negligence or reckless disregard of
their duties.
INVESTMENT ADVISER
Pursuant to an Investment Advisory Contract, Freedom Capital Management
is responsible for the investment management of each Fund's assets, including
the responsibility for making investment decisions and placing orders for the
purchase and sale of each Fund's investments directly with the issuers or with
brokers or dealers selected by it in its discretion, including the Distributor.
See "Portfolio Transactions". Freedom Capital Management also furnishes to the
Board of Trustees, which has overall responsibility for the business and affairs
of the Trust, periodic reports on the investment performance of the Funds.
Freedom Capital is a registered investment advisory firm which maintains a large
securities research department, the efforts of which will be made available to
the Funds.
The Adviser is an indirect, wholly-owned subsidiary of John Hancock
Mutual Life Insurance Company ("John Hancock"). John Hancock is a major mutual
life insurance company with subsidiaries which offer property and casualty
insurance and another subsidiary which manages investment companies. John
Hancock's head offices are at John Hancock Place, Boston, Massachusetts.
The investment advisory services of the Adviser to the Funds are not
exclusive under the terms of the Investment Advisory Contract. Freedom Capital
Management is free to render investment advisory services to others.
For its services as investment adviser, Freedom Capital Management
receives from each Fund a fee, payable monthly, at the annual rate of 0.50% of
each Fund's average daily net assets up to $500 million and 0.40% of its average
daily net assets in excess of $500 million. M.D. Hirsch Investment Management,
Inc. ("Hirsch")
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<PAGE>
served as investment adviser to the Predecessor Funds from the period October 1,
1992 through August 30, 1993 at which time Republic Asset Management Corporation
became investment adviser to the Predecessor Funds. For the period from October
1, 1992 through September 30, 1993, the Predecessor Funds of Aggressive Growth
Fund, Growth Fund, Growth & Income Fund, Bond Fund and Managed Total Return Fund
paid advisory fees before reimbursements of $158,714, $109,908, $192,112,
$353,201 and $119,602, respectively.
For the period from October 1, 1993 through September 30, 1994,
Republic Asset Management Corporation received advisory fees equal to $185,146,
$151,169, $255,691, $367,423 and $111,391, respectively, from the Predecessor
Funds of Aggressive Growth Fund, Growth Fund, Growth & Income Fund,
Bond Fund and Managed Total Return Fund.
Republic Asset Management Corporation served as investment adviser to
the Predecessor Funds until February 20, 1995 at which time Freedom Capital
Management became investment adviser to the Predecessor Funds. For the period
from October 1, 1994 through February 20, 1995, Aggressive Growth Fund, Growth
Fund, Growth & Income Fund, Bond Fund and Managed Total Return Fund paid
advisory fees before reimbursements of $74,692, $66,712, $99,675, $151,276 and
$32,185, respectively to Republic Asset Management Corporation. For the period
from February 21, 1995 through September 30, 1995, Aggressive Growth Fund,
Growth Fund, Growth & Income Fund, Bond Fund and Managed Total Return Fund paid
advisory fees before reimbursements of $109,055, $89,497, $130,491, $216,909 and
$44,931, respectively to Freedom Capital Management.
The Investment Advisory Contract will continue in effect from year to
year provided such continuance is approved annually (i) by the holders of a
majority of the outstanding voting securities of a Fund or by the Board of
Trustees and (ii) by a majority of the Trustees who are not parties to such
Contract or "interested persons" (as defined in the 1940 Act) of any such party.
The Contract may be terminated with respect to a Fund on 60 days' written notice
by either party to the Contract and will terminate automatically if assigned.
Mr. Osterberg, a Trustee of the Trust, is a member of the law firm of
Weston, Patrick, Willard & Redding, which has retained the Adviser from time to
time to provide investment advisory consulting services for clients of such
firm.
ADMINISTRATOR
The Board of Trustees of the Trust has approved an Administrative
Services Contract between the Trust and Signature
- -13 -
<PAGE>
pursuant to which Signature will serve as Administrator of the Trust and each
Class of shares of each of the Funds. In this capacity, Signature will provide
certain management and administrative services to the Funds.
The management and administrative services necessary for the operation
of the Trust provided by the Administrator include among other things: (i)
preparation of shareholder reports and communications; (ii) regulatory
compliance, such as reports to and filings with the Securities and Exchange
Commission ("SEC") and state securities commissions; and (iii) general
supervision of the operation of the Trust, including coordination of the
services performed by the Trust's investment adviser, transfer agent, custodian,
independent auditors, legal counsel and others.
In addition, the Administrator furnishes office space and facilities required
for conducting the business of the Trust and pays the compensation of the
Trust's officers, employees and Trustees affiliated with the Administrator. For
these services, the Administrator receives from each Class of each Fund a fee,
payable monthly, at the annual rate of 0.25% of the first $50 million of that
Fund's average daily net assets attributable to the Class, 0.20% of the next $50
million of such assets, and 0.15% of such assets in excess of $100 million.
For the period from October 1, 1992 through September 30, 1993,
Signature received $79,357, $54,954, $96,056, $166,280 and $59,801,
respectively, from the Predecessor Funds of Aggressive Growth Fund, Growth Fund,
Growth & Income Fund, Bond Fund and Managed Total Return Fund. For the period
from October 1, 1993 through September 30, 1994, Signature received $92,971,
$74,730, $125,890, $175,110 and $55,845, respectively, from the Predecessor
Funds of Aggressive Growth Fund, Growth Fund, Growth & Income Fund, Bond Fund
and Managed Total Return Fund. For the period from October 1, 1994 through
September 30, 1995, Signature received $91,873, $78,104, $115,086, $172,206 and
$38,540, respectively, from Aggressive Growth Fund, Growth Fund, Growth & Income
Fund, Bond Fund and Managed Total Return Fund. As of September 30, 1995, the
Funds' shares had not been divided into classes.
The Administrative Services Contract between the Trust and Signature
has been approved, and is subject to annual approval, by the Board of Trustees
and by the Trustees who are neither "interested persons" nor have any direct or
indirect financial interest in the operation of the Administrative Services
Contract, by vote cast in person at a meeting called for the purpose of voting
on the Administrative Services Contract. The Board of Trustees and the Trustees
who are not "interested persons" and who have no direct or indirect financial
interest in
-14 -
<PAGE>
the operation of the Administrative Services Contract last voted to approve the
Administrative Services Contract at a meeting held on June 13, 1995. The
Administrative Services Contract is terminable with respect to a Class or Fund
without penalty, at any time, by vote of a majority of the Trustees who are not
"interested persons" of the Trust and who have no direct or indirect financial
interest in the operation of the Administrative Services Contract, upon not more
than 60 days' written notice to the Administrator or by vote of the holders of a
majority of the shares of that Class or Fund or upon 15 days' notice by the
Administrator. The Administrative Services Contract will terminate automatically
in the event of its assignment.
DISTRIBUTORS
The Board of Trustees of the Trust has approved a Distribution Contract
between the Trust and each of Signature, Tucker Anthony and Sutro pursuant to
which such distributors provide shareholder servicing services and distribute
the Financial Adviser Class of shares of each of the Funds. The Board of
Trustees of the Trust has also approved a Distribution Contract between the
Trust and each of Tucker Anthony and Sutro pursuant to which such distributors
provide shareholder servicing services and distribute the No-Load Class of
shares of each of the Aggressive Growth Fund, Growth Fund, Growth & Income Fund
and Bond Fund.
The distributors are not obligated to sell any specific amount of
shares. Under a Distribution Plan (the "Plan") adopted by the Financial Adviser
Class of the Aggressive Growth Fund, Growth Fund, Growth & Income Fund , Bond
Fund and Managed Total Return Fund, each such Fund may reimburse the
distributors monthly (subject to a limit of 0.50% per annum of the Fund's
average daily net assets attributable to the Financial Adviser Class) for the
sum of (a) direct costs and expenses incurred by the distributors in connection
with advertising and marketing of the Financial Adviser Class of shares and (b)
payment of fees to one or more broker-dealers or other organizations (other than
banks) for services rendered in the distribution of the Financial Adviser Class
of shares and for the provision of personal services and account maintenance
services with respect to Fund shareholders, including payments in amounts based
on the average daily value of Fund shares owned by shareholders in respect of
which the broker-dealer or organization has a relationship. The fees and
reimbursements paid by a Fund to the distributors and the administrator may
equal up to 0.75% of the Fund's average daily net assets attributable to the
Financial Adviser Class of shares, of which up to 0.25% of a Fund's average
daily net assets attributable to the Financial Adviser Class may be paid for the
provision of services. For the fiscal years ending September 30, 1993 , 1994 and
1995 all payments made to broker-dealers or other organizations under the
Predecessor Funds' Distribution Plan were
-15 -
<PAGE>
for services rendered in the distribution of shares of the Predecessor Funds or
the provision of personal services and account maintenance services with respect
to Fund Shareholders. Any payment by a distributor or reimbursement of a
distributor by a Fund made pursuant to the Plan is contingent upon Board of
Trustees approval. A report of the amounts expended pursuant to the Plan, and
the purposes for which such expenditures were incurred, must be made to the
Board of Trustees for its review at least quarterly.
The Plan permits, among other things, payment by the Funds of the costs
of preparing, printing and distributing prospectuses and of implementing and
operating the Plan. The Plan also permits the distributors to receive and retain
brokerage commissions with respect to portfolio transactions for mutual funds in
the Funds' portfolios, including funds which have a policy of considering sales
of their shares in selecting broker-dealers for the execution of their portfolio
transactions. In addition, Signature may receive dealer reallowances (up to a
maximum of 1% of the public offering price) and/or distribution payments on
purchases by the Funds of mutual funds which are sold with a sales load and/or
which have a distribution plan.
The Plan provides that it may not be amended to increase materially the
costs which a Fund may bear pursuant to the Plan without shareholder approval
and that other material amendments of the Plan must be approved by the Board of
Trustees, and by the Trustees who are neither "interested persons" (as defined
in the 1940 Act) of the Trust nor have any direct or indirect financial interest
in the operation of the Plan or in any related agreement, by vote cast in person
at a meeting called for the purpose of considering such amendments. While the
Plan is in effect, the selection and nomination of the Trustees of the Trust has
been committed to the discretion of the Trustees who are not "interested
persons" of the Trust. The Plan has been approved, and is subject to annual
approval, by the Board of Trustees and by the Trustees who are neither
"interested persons" nor have any direct or indirect financial interest in the
operation of the Plan, by vote cast in person at a meeting called for the
purpose of voting on the Plan. The Board of Trustees and the Trustees who are
not "interested persons" and who have no direct or indirect financial interest
in the operation of the Plan last voted to approve the Plan at a meeting held on
June 13, 1995. The Trustees considered alternative methods to distribute the
Financial Adviser Class of shares of the Funds and to reduce the Financial
Adviser Class' per share expense ratios and concluded that there was a
reasonable likelihood that the Plan will benefit the Class and its shareholders.
The Plan was approved by the sole shareholder of the Financial Adviser Class of
each Fund on May 5, 1995. The Plan is terminable with respect to the Financial
Adviser Class or a Fund at any time by a vote of a majority of the Trustees who
are not "interested persons" of the Trust and who have no direct or indirect
financial interest in the operation of the Plan or by vote of the holders of a
majority of the shares of that Fund or Class.
-16 -
<PAGE>
During the fiscal year ended September 30, 1995, the Funds spent,
pursuant to their 12b-1 plans, the following amounts on:
<TABLE>
<CAPTION>
Managed
Aggressive Growth & Total
Growth Growth Income Bond Return
Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
Advertising $1,512 $1,561 $1,797 $3,051 $641
Printing and mailing
of prospectuses to
other than current shareholders 8,585 7,786 10,206 16,383 3,511
Compensation to underwriters
-- -- -- -- --
Compensation to broker-dealers
78,639 48,153 65,082 96,646 37,061
Compensation to sales personnel 60,747 49,330 71,948 127,151 25,755
Interest, carrying or other
financing charges
-- -- -- -- --
Other marketing
expenses 23,282 34,081 60,334 96,326 8,164
Total $172,765 140,911 $209,367 $339,557 $75,132
Total as a percentage of average
daily net assets during period
0.47% 0.45% 0.45% 0.46% 0.49%
</TABLE>
-17-
As of September 30, 1995, the funds' shares have not been divided into
classes.
Signature is a wholly-owned subsidiary of SFG. The principal business
address of SFG is 6 St. James Avenue, Boston, Massachusetts 02116. Tucker
Anthony is an indirect subsidiary of JOhn Hancock. Sutro is an indirect
wholly-owned subsidiary of John Hancock. SFG, John Hancock and their affiliates
currently provide administration and distribution services for other registered
investment companies. The Funds will not invest in these funds or in any other
fund which may in the future be affiliated with SFG, John Hancock or any of
their affiliates.
-18-
<PAGE>
Service Organizations
Pursuant to the Plan, the Trust also contracts with banks, trust
companies, broker-dealers (other than the Distributors) or other financial
organizations ("Service Organizations") to provide certain administrative
services for each Fund's financial adviser class of shares. Services provided by
Service Organizations may include, among other things, providing necessary
personnel and facilities to establish and maintain certain shareholder accounts
and records; assisting in processing purchase and redemption transactions;
arranging for the wiring of funds; transmitting and receiving funds in
connection with client orders to purchase or redeem shares; verifying and
guaranteeing client signatures in connection with redemption orders, transfers
among and changes in client-designated accounts; providing periodic statements
showing a client's account balances and, to the extent practicable, integrating
such information with other client transactions; furnishing periodic and annual
statements and confirmations of all purchases and redemptions of shares in a
client's account; transmitting proxy statements, annual reports, and updating
prospectuses and other communications from the trust to clients; and such other
services as the Trust or a client reasonably may request, to the extent
permitted by applicable statute, rule or regulation. the distributors and the
adviser will not be service organizations or receive fees for servicing.
FundManager Advisory Program
Shares of the no-load class of shares will be offered to participants
in the FundManager advisory program who receive, for an advisory fee at a
maximum annual rate based upon a percentage of assets invested, certain
services, including asset allocation recommendations with respect to the funds
based on an evaluation of their investment objectives and risk tolerances.
Custodian and Transfer Agent
Pursuant to a custodian agreement and a transfer agency and service
agreement between the Trust and the Investors Bank & Trust Company ("IBT"), IBT
provides custodial, fund accounting, transfer agency, dividend disbursing and
shareholder servicing services to the Trust and each of the Funds. The principal
business address of IBT is 24 Federal Street, Boston, Massachusetts 02110.
Fees and Expenses
Certain of the states in which the shares of the Funds are qualified
for sale impose limitations on the expenses of the Funds. If, in any fiscal
year, the total expenses of a Fund or Class (excluding taxes, interest, expenses
under the plan, if applicable) brokerage commissions and other portfolio
transaction expenses, other expenditures which are capitalized in accordance
with generally accepted accounting principles and extraordinary expenses, but
including the advisory and administrative fees)
-19-
<PAGE>
exceed the expense limitations applicable to the Fund or Class imposed by the
securities regulations of any state, the Administrator and the Adviser each will
reimburse that Fund for 50% of the excess. Pursuant to an undertaking with a
state securities commission, the effective limitation on an annual basis with
respect to a Fund or Class is expected to be 2.5% on the first $30 million of
the Fund's or Class's net assets, 2.0% on the next $70 million of such assets
and 1.5% on any excess above $100 million.
Except for the expenses paid by the Adviser, the Administrator and the
Distributors, the Funds bear all costs of their operations.
Portfolio Transactions
As part of its obligations under the investment advisory contract, the
adviser places all orders for the purchase and sale of portfolio investments for
the funds' accounts with brokers or dealers selected by it in its discretion,
including the distributors. In selecting a broker, the adviser considers a
number of factors including the research and other investment information
provided by the broker. With respect to purchase of certain money market
instruments, purchase orders are placed directly with the issuer or its agent.
with respect to purchases of load fund shares, the adviser directs substantially
all of the funds' orders to a distributor, which may, in its discretion, direct
the order to other broker-dealers in consideration of sales of the funds'
shares, except where the direction to another broker-dealer would increase the
dealer reallowance paid by a fund above 1% of the public offering price. where a
distributor acts as the dealer with respect to purchases of load fund shares, it
retains dealer reallowances on those purchases up to a maximum of 1% of the
public offering price of the shares. A distributor is not designated as the
dealer on any sales where such reallowance exceeds 1% of the public offering
price.
When appropriate, the funds may arrange to be included within a class
of investors entitled to a reduced sales charge and they purchase load fund
shares under letters of intent, rights of accumulation and cumulative purchase
privileges, which permit them to obtain reduced sales charges for larger
purchases of shares. therefore, in a majority of cases, the sales charges paid
by a fund on a load fund purchase do not exceed 1% of the public offering price.
The distributors may also assist in the execution of fund portfolio
transactions to purchase underlying fund shares for which they may receive
distribution payments from the underlying funds or their underwriters in
accordance with the distribution plans of those funds. The distributors will
refund to an underlying fund any payment which alone or when added to other
payments received from that fund is in excess of 1% of the public offering price
of the fund at the time the payment is made. In providing execution assistance,
a distributor receives orders from the adviser; places them with the underlying
fund's distributor, transfer agent or other
-20 -
<PAGE>
person, as appropriate; confirms the trade, price and number of shares
purchased; and assures prompt payment by the fund and proper completion of the
order.
The distributors may retain brokerage commissions on portfolio
transactions of mutual funds held in the funds' portfolios, including funds
which have a policy of considering sales of their shares in selecting
broker-dealers for the execution of their portfolio transactions. payment of
brokerage commissions to the distributors is not a factor considered by the
adviser in selecting an underlying fund for investment.
Under the 1940 Act, a mutual fund must sell its shares at the price
(including sales load, if any) described in its prospectus, and current rules
under the 1940 Act do not permit negotiations of sales charges. Therefore, the
Funds currently are not able to negotiate the level of the sales charges at
which they purchase shares of load funds, which may be as great as 8.5% of the
public offering price (or 9.29% of the net amount invested). Nevertheless,
certain factors tend to keep the funds' portfolio transaction costs as low as
possible, including (1) the funds, to the extent feasible, purchase shares of
"no-load" funds which can be acquired without incurring a sales charge or
utilizing a broker to effect the transaction; (2) the funds, to the extent
feasible, take advantage of exchange or conversion privileges offered by many
"families" of mutual funds; and (3) insofar as the funds invest in u.s.
government and other money market securities, the transaction costs should be
Minimal.
Under certain circumstances, a sales charge incurred by a Fund in
acquiring shares of an underlying fund may not be taken into account in
determining the gain or loss on the disposition of the shares acquired. If
shares are disposed of within 90 days from the date they were purchased and if
shares of a new underlying fund are subsequently acquired without imposition of
a sales charge or imposition of a reduced sales charge pursuant to a right
granted to the fund to acquire shares without payment of a sales charge or with
the payment of a reduced charge, then the sales charge paid upon the purchase of
the initial shares will be treated as paid in connection with the acquisition of
the new underlying fund's shares rather than the initial shares.
-21-
<PAGE>
SALES CHARGES PAID BY PREDECESSOR FUNDS
FOR FISCAL YEAR ENDED SEPTEMBER 30, 1993
<TABLE>
<CAPTION>
Sales Charges
Paid
Gross Sales to Percent of
CHARGES DISTRIBUTOR TOTAL
<S> <C> <C> <C>
Aggressive Growth Fund $10,975 $8,759 79.81%
Growth Fund 2,500 1,800 72.00%
Growth & Income Fund 0 0 N/A
Bond Fund 0 0 N/A
Managed Total Return Fund 1,000 600 60.00%
</TABLE>
Total sales charges and total dollar amount of transactions on which
sales charges were paid during the fiscal year ended September 30, 1993 were
$14,475 and $1,647,500, respectively, of which the distributor received 77.09%.
SALES CHARGES PAID BY PREDECESSOR FUNDS
FOR FISCAL YEAR ENDED SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Sales Charges
Paid
Gross Sales to Percent of
CHARGES DISTRIBUTOR TOTAL
<S> <C> <C> <C>
Aggressive Growth Fund $22,625 $17,403 76.92%
Growth Fund 0 0 N/A
Growth & Income Fund 0 0 N/A
Bond Fund 0 0 N/A
Managed Total Return Fund 300 225 75.00%
</TABLE>
-22-
<PAGE>
Total sales charges and total dollar amount of transactions on which
sales charges were paid during the fiscal year ended September 30, 1994 were
$22,925 and $2,635,000, respectively, of which the distributor received 76.89%.
SALES CHARGES PAID BY FUNDS
FOR FISCAL YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Sales Charges
Paid
Gross Sales to Percent of
CHARGES DISTRIBUTOR TOTAL
<S> <C> <C> <C>
Aggressive Growth Fund $2,000 $1,500 75.00%
Growth Fund 150 135 90.00%
Growth & Income Fund 0 0 N/A
Bond Fund 0 0 N/A
Managed Total Return Fund 0 0 N/A
</TABLE>
Total sales charges and total dollar amount of transactions on which
sales charges were paid during the fiscal year ended
-23 -
<PAGE>
September 30, 1995 were $2,150 and $230,000, respectively, of which the
distributor received 76.05%. As of September 30, 1995, the Funds' shares have
not been divided into classes.
OTHER INFORMATION
CAPITALIZATION
FundManager Trust is a Delaware business trust established under a
Master Trust Agreement dated February 7, 1995. Prior to May 8, 1995, the Funds
were series of the Republic Funds (formerly FundTrust), a Massachusetts business
trust (organized April 22, 1987). Republic Funds was a successor to two
previously-existing Massachusetts business trusts, FundTrust Tax-Free Trust
(organized on July 30, 1986) and FundVest (organized on July 17, 1984, and since
renamed Fund Source). The Trust currently consists of five separately managed
portfolios each offering two classes of shares of beneficial interest (except
Managed Total Return Fund, which only offers a Financial Advisers Class). The
capitalization of the Trust consists solely of an unlimited number of shares of
beneficial interest with a par value of $0.001 each. The Board of Trustees may
establish additional series (with different investment objectives and
fundamental policies) and additional classes of shares at any time in the
future. Establishment and offering of additional series and classes will not
alter the rights of the Trust's shareholders. When issued, shares are fully
paid, nonassessable, redeemable and freely transferable. Shares do not have
preemptive rights or subscription rights. In liquidation of a Fund, each
shareholder is entitled to receive his pro rata share of the net assets of that
Fund.
VOTING RIGHTS
Under the Master Trust Agreement, the Trust is not required to hold
annual meetings to elect Trustees or for other purposes. It is not anticipated
that the Trust will hold shareholders' meetings unless required by law or the
Master Trust Agreement provides that the holders of not less than two thirds of
the outstanding shares of the Trust may remove persons serving as Trustee either
by declaration in writing or at a meeting called for such purpose. The Trustees
are required to call a meeting for the purpose of considering the removal of
persons serving as Trustee if requested in writing to do so by the holders of
not less than 10% of the outstanding shares of the Trust.
PERFORMANCE INFORMATION
The Trust may, from time to time, include quotations of the Funds'
yield and average annual total return in advertisements or reports to
shareholders or prospective investors.
Quotations of yield will be based on a Fund's investment income per
share earned during a particular 30-day period, less expenses accrued during the
period ("net investment income") and
-24 -
<PAGE>
will be computed by dividing net investment income by the maximum offering price
per share on the last day of the period, according to the following formula:
YIELD = 2[(A cdB + 1)6-1]
(where a = dividends and interest earned during the period, b = expenses accrued
for the period (net of any reimbursements), c = the average daily number of
shares outstanding during the period that were entitled to receive dividends and
d = the maximum offering price per share on the last day of the period).
For the 30-day period ending September 30, 1995, the yield of the Bond
Fund was 5.16%. As of September 30, 1995, the shares of the Fund were not
divided into Classes.
Quotations of a Fund's average annual total return will be expressed in
terms of the average annual compounded rate of return of a hypothetical
investment in such Fund over periods of 1, 5 and 10 years (up to the life of the
Fund), calculated pursuant to the following formula:
P (1 + T)n = ERV
(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n = the number of years and ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the period). All total
return figures will reflect the deduction of Fund expenses on an annual basis
and will assume that all dividends and distributions are reinvested when paid.
For the period prior to its establishment, each Class of shares of each
Fund will adopt the performance of the Funds and their predecessors. The
performance for this period will reflect the deduction of the Class's charges
and expenses. The total return for the Funds for the periods ended September 30,
1995 were as follows:
-25 -
<PAGE>
<TABLE>
<CAPTION>
1-Year 5-Year Total 10-Year
Total Return Total Return
Return (Average Annual) (Average Annual)
<S> <C> <C> <C>
Aggressive Growth Fund 24.3 17.1 12.6
Growth Fund 22.6 15.9 12.0
Growth & Income Fund 23.3 15.3 11.6
Bond Fund 10.4 8.6 7.3*
Managed Total Return Fund 14.3 10.6 8.9
</TABLE>
*TOTAL RETURN FROM COMMENCEMENT OF OPERATIONS AUGUST 4, 1998.
AS OF SEPTEMBER 30, 1995, THE SHARES OF THE FUND WERE NOT DIVIDED INTO
CLASSES.
QUOTATIONS OF YIELD AND TOTAL RETURN WILL REFLECT ONLY THE PERFORMANCE
OF A HYPOTHETICAL INVESTMENT IN A FUND DURING THE PARTICULAR TIME PERIOD SHOWN.
YIELD AND TOTAL RETURN FOR A FUND WILL VARY BASED ON CHANGES IN MARKET
CONDITIONS AND THE LEVEL OF SUCH FUND'S EXPENSES, AND NO REPORTED PERFORMANCE
FIGURE SHOULD BE CONSIDERED AN INDICATION OF PERFORMANCE WHICH MAY BE EXPECTED
IN THE FUTURE.
IN CONNECTION WITH COMMUNICATING ITS PERFORMANCE TO CURRENT OR
PROSPECTIVE SHAREHOLDERS, THE FUNDS ALSO MAY COMPARE THESE FIGURES TO THE
PERFORMANCE OF OTHER MUTUAL FUNDS TRACKED BY MUTUAL FUND RATING SERVICES OR TO
UNMANAGED INDICES WHICH MAY ASSUME REINVESTMENT OF DIVIDENDS BUT GENERALLY DO
NOT REFLECT DEDUCTIONS FOR ADMINISTRATIVE AND MANAGEMENT COSTS. EVALUATIONS OF
THE FUNDS' PERFORMANCE MADE BY INDEPENDENT SOURCES MAY ALSO BE USED IN
ADVERTISEMENTS CONCERNING THE FUNDS. SOURCES FOR THE FUNDS' PERFORMANCE
INFORMATION COULD INCLUDE THE FOLLOWING:
BARRON'S, A DOW JONES AND COMPANY, INC. BUSINESS AND FINANCIAL WEEKLY THAT
PERIODICALLY REVIEWS MUTUAL FUND PERFORMANCE DATA.
BOTTOM LINE, A BI-WEEKLY NEWSLETTER WHICH PERIODICALLY REVIEWS MUTUAL FUNDS AND
INTERVIEWS THEIR PORTFOLIO MANAGERS.
BUSINESS WEEK, A NATIONAL BUSINESS WEEKLY THAT PERIODICALLY REPORTS THE
PERFORMANCE RANKINGS AND RATINGS OF A VARIETY OF MUTUAL FUNDS INVESTING ABROAD.
CHANGING TIMES, THE KIPLINGER MAGAZINE, A MONTHLY INVESTMENT ADVISORY
PUBLICATION THAT PERIODICALLY FEATURES THE PERFORMANCE OF A VARIETY OF
SECURITIES.
CNBC, A CABLE FINANCIAL NEWS TELEVISION STATION WHICH PERIODICALLY REVIEWS
MUTUAL FUNDS AND INTERVIEWS PORTFOLIO MANAGERS.
CONSUMER DIGEST, A MONTHLY BUSINESS/FINANCIAL MAGAZINE THAT INCLUDES A "MONEY
WATCH" SECTION FEATURING FINANCIAL NEWS.
-26 -
<PAGE>
FORBES, A NATIONAL BUSINESS PUBLICATION THAT FROM TIME TO TIME REPORTS THE
PERFORMANCE OF SPECIFIC INVESTMENT COMPANIES IN THE MUTUAL FUND INDUSTRY.
FORTUNE, A NATIONAL BUSINESS PUBLICATION THAT PERIODICALLY RATES THE PERFORMANCE
OF A VARIETY OF MUTUAL FUNDS.
LIPPER ANALYTICAL SERVICES, INC.'S MUTUAL FUND PERFORMANCE
ANALYSIS, A WEEKLY PUBLICATION OF INDUSTRY-WIDE MUTUAL FUND AVERAGES BY TYPE OF
FUND.
MONEY, A MONTHLY MAGAZINE THAT FROM TIME TO TIME FEATURES BOTH SPECIFIC FUNDS
AND THE MUTUAL FUND INDUSTRY AS A WHOLE.
MORNINGSTAR, INC., A PUBLISHER OF FINANCIAL INFORMATION AND MUTUAL FUND
RESEARCH.
MUTUAL FUNDS MAGAZINE, A MAGAZINE FOR THE MUTUAL FUND INVESTOR WHICH FREQUENTLY
REVIEWS AND RANKS MUTUAL FUNDS AND INTERVIEWS
THEIR PORTFOLIO MANAGERS.
NEW YORK TIMES, A NATIONALLY DISTRIBUTED NEWSPAPER WHICH REGULARLY COVERS
FINANCIAL NEWS.
PERSONAL INVESTING NEWS, A MONTHLY NEWS PUBLICATION THAT OFTEN REPORTS ON
INVESTMENT OPPORTUNITIES AND MARKET CONDITIONS.
PERSONAL INVESTOR, A MONTHLY INVESTMENT ADVISORY PUBLICATION THAT INCLUDES A
"MUTUAL FUNDS OUTLOOK" SECTION REPORTING ON MUTUAL FUND PERFORMANCE MEASURES,
YIELDS, INDICES AND PORTFOLIO
HOLDINGS.
SUCCESS, A MONTHLY MAGAZINE TARGETED TO THE WORLD OF ENTREPRENEURS AND GROWING
BUSINESS, OFTEN FEATURING MUTUAL FUND PERFORMANCE DATA.
U.S. NEWS AND WORLD REPORT, A NATIONAL BUSINESS WEEKLY THAT PERIODICALLY REPORTS
MUTUAL FUND PERFORMANCE DATA.
VALUE LINE, A BI-WEEKLY PUBLICATION THAT REPORTS ON THE LARGEST 15,000 MUTUAL
FUNDS.
WALL STREET JOURNAL, A DOW JONES AND COMPANY, INC. NEWSPAPER WHICH REGULARLY
COVERS FINANCIAL NEWS.
WEISENBERGER INVESTMENT COMPANIES SERVICES, AN ANNUAL COMPENDIUM OF INFORMATION
ABOUT MUTUAL FUNDS AND OTHER INVESTMENT COMPANIES, INCLUDING COMPARATIVE DATA ON
FUNDS' BACKGROUNDS, MANAGEMENT POLICIES, SALIENT FEATURES, MANAGEMENT RESULTS,
INCOME AND DIVIDEND RECORDS, AND PRICE RANGES.
WORTH MAGAZINE, A MONTHLY MAGAZINE FOR THE INDIVIDUAL INVESTOR WHICH FREQUENTLY
REVIEWS AND RANKS MUTUAL FUNDS AND INTERVIEWS THEIR PORTFOLIO MANAGERS.
-27 -
<PAGE>
IN ADDITION, THE TRUST MAY ALSO PROVIDE IN ITS COMMUNICATIONS TO
CURRENT OR PROSPECTIVE SHAREHOLDERS A LISTING OF THOSE OPEN-END INVESTMENT
COMPANIES AND MUTUAL FUND COMPLEXES OR THE RESPECTIVE FUNDS INCLUDED IN THE
FUNDS' PORTFOLIO HOLDINGS. THESE SHALL INCLUDE THE FOLLOWING:
FUND COMPLEXES - THE AIM FAMILY OF FUNDS; THE AMERICAN FUNDS GROUP; DODGE & COX
INVESTMENT MANAGERS; FIDELITY INVESTMENT; FIRST PACIFIC ADVISORS, INC.; FRANKLIN
CUSTODIAN FUNDS, INC.; FRANKLIN TEMPLETON GROUP; FRIESS ASSOCIATES, INC.; THE
GABELLI FUNDS; GUARDIAN INVESTOR SERVICES CORPORATION; HARBOR CAPITAL ADVISORS,
INC.; HARRIS ASSOCIATES, L.P.; HOTCHKIS & WILEY FUNDS; IDS MANAGEMENT; LORD
ABBETT FAMILY OF FUNDS; MASSACHUSETTS FINANCIAL SERVICES COMPANY; MILLER
ANDERSON & SHERRERD, LLP; MJ WHITMAN, INC.; MUTUAL SERIES FUND, INC.; NEUBERGER
& BERMAN MANAGEMENT INC.; PACIFIC FINANCIAL RESEARCH; PACIFIC INVESTMENT
MANAGEMENT COMPANY; PIONEER FUNDS DISTRIBUTOR; PUTNAM FUNDS; THE ROYCE FUNDS;
SANFORD C. BERNSTEIN & CO., INC.; SOCIE'TE GE'NE'RALE ASSET MANAGEMENT CORP.; T.
ROWE PRICE ASSOCIATES, INC.; THE VANGUARD FAMILY OF FUNDS; VENTURE ADVISORS,
L.P.; WADDELL & REED ASSET MANAGEMENT COMPANY; YACKTMAN ASSET MANAGEMENT.
FUNDS - AIM CHARTER FUND; BOND FUND OF AMERICA; NEW PERSPECTIVE FUND; WASHINGTON
MUTUAL FUND; DODGE & COX STOCK; FIDELITY ADVISOR EQUITY INCOME; FIDELITY FUND;
FPA CAPITAL; FPA PARAMOUNT; FRANKLIN U.S. GOVERNMENT FUND; TEMPLETON GROWTH
FUND; BRANDYWINE; GABELLI ASSET; GUARDIAN PARK AVENUE FUND; HARBOR CAPITAL
APPRECIATION; OAKMARK FUND; HOTCHKIS & WILEY EQUITY INCOME; IDS SELECTIVE;
AFFILIATED FUND; MASSACHUSETTS FINANCIAL FUND; MAS EQUITY; THIRD AVENUE VALUE
FUND; MUTUAL BEACON FUND; NEUBERGER GUARDIAN; CLIPPER FUND; PIMCO LOW DURATION;
PIMCO TOTAL RETURN; PIONEER THREE; PUTNAM INCOME FUND; ROYCE PREMIER; BERNSTEIN
SHORT DURATION; BERNSTEIN INTERMEDIATE DURATION SOGEN INTERNATIONAL; T. ROWE
PRICE EQUITY INCOME; VANGUARD EQUITY INCOME; VANGUARD FIXED-INCOME TREASURY;
VANGUARD WELLINGTON FUND;DAVIS NEW YORK VENTURE; UNITED BOND FUND; YACKTMAN FUND
INVESTORS WHO PURCHASE AND REDEEM FINANCIAL ADVISER CLASS SHARES OF THE
FUNDS THROUGH A CUSTOMER ACCOUNT MAINTAINED AT A SERVICE ORGANIZATION MAY BE
CHARGED ONE OR MORE OF THE FOLLOWING TYPES OF FEES AS AGREED UPON BY THE SERVICE
ORGANIZATION AND THE INVESTOR, WITH RESPECT TO THE CUSTOMER SERVICES PROVIDED BY
THE SERVICE ORGANIZATION: ACCOUNT FEES (A FIXED AMOUNT PER MONTH OR PER YEAR);
TRANSACTION FEES (A FIXED AMOUNT PER TRANSACTION PROCESSED); COMPENSATING
BALANCE REQUIREMENTS (A MINIMUM DOLLAR AMOUNT A CUSTOMER MUST MAINTAIN IN ORDER
TO OBTAIN THE SERVICES OFFERED); OR ACCOUNT MAINTENANCE FEES (A PERIODIC CHARGE
BASED UPON A PERCENTAGE OF THE ASSETS IN THE ACCOUNT OR OF THE DIVIDENDS PAID ON
THOSE ASSETS). SUCH FEES WILL HAVE THE EFFECT OF REDUCING THE YIELD AND
EFFECTIVE YIELD OF THE FUND FOR THOSE INVESTORS. INVESTORS WHO MAINTAIN ACCOUNTS
WITH THE TRUST AS TRANSFER AGENT WILL NOT PAY THESE FEES.
INDEPENDENT AUDITORS
-28 -
<PAGE>
ERNST & YOUNG LLP SERVES AS THE INDEPENDENT AUDITORS FOR THE TRUST AND
SERVED AS THE INDEPENDENT AUDITORS FOR THE PREDECESSOR FUNDS SINCE OCTOBER 1,
1991. ERNST & YOUNG LLP AUDITS THE FUNDS' FINANCIAL STATEMENTS, PREPARES THE
FUNDS' TAX RETURN AND ASSISTS IN FILINGS WITH THE SEC. ERNST & YOUNG LLP'S
ADDRESS IS 200 CLARENDON STREET, BOSTON, MA 02116. THE FINANCIAL STATEMENTS FOR
THE FUNDS FOR EACH OF THE FOUR YEARS IN THE PERIOD ENDED SEPTEMBER 30, 1995,
WERE AUDITED BY ERNST & YOUNG LLP WHO HAVE EXPRESSED AN UNQUALIFIED OPINION ON
THOSE FINANCIAL STATEMENTS.
COUNSEL
GOODWIN, PROCTER & HOAR, EXCHANGE PLACE, BOSTON, MASSACHUSETTS 02109,
PASSES UPON CERTAIN LEGAL MATTERS IN CONNECTION WITH THE SHARES OFFERED BY THE
TRUST AND ALSO ACTS AS
COUNSEL TO THE TRUST.
REGISTRATION STATEMENT
THE PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION DO NOT CONTAIN
ALL THE INFORMATION INCLUDED IN THE TRUST'S REGISTRATION STATEMENT FILED WITH
THE SEC UNDER THE 1933 ACT WITH RESPECT TO THE SECURITIES OFFERED HEREBY,
CERTAIN PORTIONS OF WHICH HAVE BEEN OMITTED PURSUANT TO THE RULES AND
REGULATIONS OF THE SEC. THE REGISTRATION STATEMENT, INCLUDING THE EXHIBITS FILED
THEREWITH, MAY BE EXAMINED AT THE OFFICE OF THE SEC IN WASHINGTON, D.C.
STATEMENTS CONTAINED IN THE PROSPECTUS AND STATEMENT OF ADDITIONAL
INFORMATION AS TO THE CONTENTS OF ANY CONTRACT OR OTHER DOCUMENTS REFERRED TO
ARE NOT NECESSARILY COMPLETE, AND, IN EACH INSTANCE, REFERENCE IS MADE TO THE
COPY OF SUCH CONTRACT OR OTHER DOCUMENTS FILED AS AN EXHIBIT TO THE REGISTRATION
STATEMENT, EACH SUCH STATEMENT BEING QUALIFIED IN ALL RESPECTS BY SUCH
REFERENCE.
FINANCIAL STATEMENTS
THE FUNDS' CURRENT REPORTS TO SHAREHOLDERS AS FILED WITH THE SEC
PURSUANT TO SECTION 30(B) OF THE 1940 ACT AND RULE 30B2-1 THEREUNDER ARE HEREBY
INCORPORATED HEREIN BY REFERENCE. A COPY OF EACH SUCH REPORT WILL BE PROVIDED
WITHOUT CHARGE TO EACH PERSON RECEIVING THIS STATEMENT OF ADDITIONAL
INFORMATION.
FM003K
-29 -
<PAGE>
PART C
ITEM 24. FINANCIAL STATEMENTS
(A) INCLUDED IN PART A:
AGGRESSIVE GROWTH FUND, GROWTH FUND, GROWTH & INCOME FUND, BOND FUND,
MANAGED TOTAL RETURN FUND
Financial Highlights - Selected Data for a Share Outstanding
Throughout Each Period
INCLUDED IN PART B: AGGRESSIVE GROWTH FUND, GROWTH FUND, GROWTH &
INCOME FUND, BOND FUND, MANAGED TOTAL RETURN FUND
Statement of Net Assets as of September 30, 1995
Statement of Operations for the Year Ended September 30, 1995
Statement of Changes in Net Assets For the Year Ended September
30, 1995 and September 30, 1994
Financial Highlights
Notes to Financial
Statements Report of Independent Auditors
(B) EXHIBITS
1. Master Trust Agreement of the Registrant4
1(a). Amendment No. 1 to Master Trust Agreement4
2. By-Laws of the Registrant4
3. Not Applicable
4. Not Applicable
5. Master Investment Advisory Contract and Investment Advisory
Contract Supplement for Aggressive Growth Fund, Growth Fund,
Growth & Income Fund, Bond Fund, Managed Total Return Fund4
6. Amended and Restated Master Distribution Contract and Supplements
for the Financial Adviser Class of shares and the No-Load Class of
shares3
7. Not Applicable
8. Custodian Agreement and Transfer Agency and Service Agreement2
8(b). Amendment No. 1 to the Transfer Agency and Service Agreement3
9. Amended and Restated Master Administrative Services Contract and
Supplements for the Financial Adviser Class of shares and the No-
Load Class of shares3
10. Opinion and Consent of Counsel2
11. Consent of Ernst & Young LLP, Independent Auditors4
12. Not Applicable
13. Not Applicable
<PAGE>
14. Not Applicable
15. Amended and Restated Master Distribution Plan and Supplements for
the Financial Adviser Class of shares3
16. Performance Data Calculations: Aggressive Growth Fund, Growth
Fund, Growth & Income Fund, Bond Fund, Managed Total Return Fund2
18. Multiple Class Expense Allocation Plan3
25. Powers of Attorney of Trustees and Officers of Registrant2
1 Filed with the Registrant's initial Registration Statement on February 24,
1995.
2 Filed with the Pre-Effective No. 1 to the Registrant's Registration
Statement on May 3, 1995.
3 Filed with Registrant's Post-Effective Amendment No.1 on July 28, 1995.
4 Filed herein.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
No person is controlled by or under common control with the Registrant.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of January 24, 1996, the number of shareholders of each Fund was as
follows:
Aggressive Growth Fund 679
Growth Fund 495
Growth & Income Fund 509
Bond Fund 154
Managed Total Return Fund 514
ITEM 27. INDEMNIFICATION
Reference is hereby made to Article V of the Registrant's Master Trust
Agreement. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees or officers of the
Registrant by the Registrant pursuant to the Master Trust Agreement of
otherwise, the Registrant is aware that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Investment Company Act of 1940, as amended (the "1940 Act") and,
therefore, is unenforceable.
A claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by trustees or officers
of the Registrant in connection with the successful defense of any act, suit or
proceeding) is asserted by such trustees or officers 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 Act and will be governed by the final
adjudication of such issues.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
(i) The names and principal occupations of each director and executive
officer of Freedom Capital Management Corporation are set forth below:
<PAGE>
NAME BUSINESS AND OTHER CONNECTIONS
John H. Goldsmith Chairman and Chief Executive Officer, John Hancock
Freedom Securities, Inc.; Chairman and Chief
Executive Officer of Tucker Anthony Incorporated;
Chairman of the Board of Freedom Capital
Dexter A. Dodge President and Managing Director of Freedom Capital;
Vice President of Freedom Distributors Corporation
Lawrence G. Kirshbaum Chief Financial Officer of John Hancock Freedom
Securities, Inc.; Director of Tucker Anthony
Incorporated, Sutro & Co. Incorporated and John
Hancock Clearing Corporation; Managing Director of
Freedom Capital; Registered Principal of
Tucker Anthony Incorporated; Former Chief
Executive Officer of Kirshbaum & Co. and of
Prescott, Ball & Turben
John J. Danello Chief Operating Officer, Managing Director and Clerk
of Freedom Capital; President and Director of
Freedom Distributors Corporation
Thomas H. Urmston, Jr. Managing Director and Vice President of Freedom
Capital
David L. Richardson, Jr. Managing Director of Freedom Capital
Edward W. Weld Managing Director of Freedom Capital; Registered
Representative of Tucker Anthony Incorporated
Richard V. Howe Managing Director of Freedom Capital
Michael G. Ferry Vice President and Chief Financial Officer of
Freedom Capital
Arthur E. McCarthy Managing Director of Tucker Anthony Incorporated
ITEM 29. PRINCIPAL UNDERWRITER
(a) Signature Broker-Dealer Services, Inc., Tucker Anthony Incorporated and
Sutro & Co. Incorporated (collectively the "Distributors" and each a
"Distributor") and their affiliates serve as distributor for other registered
investment companies. Signature Broker-Dealer Services, Inc. and its affiliates
also serve as administrator for other registered investment companies.
(b) The information required by this Item 29 with respect to each director
or officer of the Distributors is incorporated by reference to Schedule A of
Form BD filed by each Distributor pursuant to the Securities Exchange Act of
1934 (File No. 8-41134).
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The account books and other documents required to be maintained by the
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the Rules thereunder will be maintained at the offices of Freedom Capital
Management Corporation, One Beacon Street, Boston Massachusetts 02108, Signature
Broker-Dealer Services, Inc., 6 St. James Avenue, Boston, Massachusetts 02116,
Tucker Anthony Incorporated, One Beacon Street, Boston, Massachusetts 02108,
Sutro & Co. Incorporated, 201 California Street, San
<PAGE>
Francisco, California, and Investors Bank & Trust Company, N.A., 24 Federal
Street, Boston, Massachusetts 02110.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
(a) The Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest annual report to
shareholders upon request and without charge.
(b) The Registrant undertakes to comply with Section 16(c) of the 1940 Act
as though such provisions of the Act were applicable to the Registrant except
that the request referred to in the third full paragraph thereof may only be
made by shareholders who hold in the aggregate at least 10% of the outstanding
shares of the Registrant, regardless of the net asset value or values of shares
held by such requesting shareholders.
<PAGE>
FM006F
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the 1933 Act and that it has duly caused this
Registration Statement on Form N-1A to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Boston and the Commonwealth
of Massachusetts on the 29th day of January, 1996.
FUNDMANAGER TRUST
By /s/ CHARLES B. LIPSON
Charles B.Lipson
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
has been signed by the following persons in the capacities indicated on January
29, 1996.
SIGNATURE TITLE
DEXTER A. DODGE* Trustee
Dexter A. Dodge
ERNEST T. KENDALL* Trustee
Ernest T. Kendall
RICHARD B. OSTERBERG* Trustee
Richard B. Osterberg
/s/JOHN R. ELDER Treasurer (Principal Financial Officer
John R. Elder and Principal Accounting Officer)
*By /s/ THOMAS M. LENZ
Thomas M. Lenz
As attorney-in-fact pursuant to
a power of attorney filed herewith.
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
1. Master Trust Agreement of the Registrant
1(a). Amendment No. 1 to Master Trust Agreement
2. By-Laws of the Registrant
5. Master Investment Advisory Contract and Investment Advisory
Contract Supplement for Aggressive Growth Fund, Growth Fund,
Growth & Income Fund, Bond Fund, Managed Total Return Fund
11. Consent of Ernst & Young LLP, Independent Auditors
FUNDMANAGER TRUST
MASTER TRUST AGREEMENT
FEBRUARY 7, 1995
(C)1995 GOODWIN, PROCTER & HOAR
ALL RIGHTS RESERVED
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I - NAME AND DEFINITIONS................................. 1
Section 1.1 Name and Principal Office.............................. 1
Section 1.2 Definitions............................................ 1
(a) "Act"..................................................... 1
(b) "By-Laws"................................................. 1
(c) "class"................................................... 2
(d) "Commission".............................................. 2
(e) "Declaration of Trust".................................... 2
(f) "Majority of the Outstanding Voting Shares"............... 2
(g) "1940 Act"................................................ 2
(h) "person".................................................. 2
(i) "Shareholder"............................................. 2
(j) "Shares".................................................. 2
(k) "Sub-Trust" or "Series"................................... 2
(l) "Trust"................................................... 2
(m) "Trustees"................................................ 2
ARTICLE II - PURPOSE OF TRUST.................................... 2
ARTICLE III - THE TRUSTEES....................................... 3
Section 3.1 Number, Designation, Election, Term, etc.............. 3
(a) Trustees.................................................. 3
(b) Number.................................................... 3
(c) Election and Term......................................... 3
(d) Resignation and Retirement................................ 3
(e) Removal................................................... 3
(f) Vacancies................................................. 3
(g) Effect of Death, Resignation, etc......................... 4
(h) No Accounting............................................. 4
Section 3.2 Powers of Trustees..................................... 4
(a) Investments............................................... 5
(b) Disposition of Assets..................................... 5
(c) Ownership Powers.......................................... 5
(d) Subscription.............................................. 6
(e) Form of Holding........................................... 6
(f) Reorganization, etc....................................... 6
(g) Voting Trusts, etc........................................ 6
(h) Compromise................................................ 6
(i) Partnerships, etc......................................... 6
(j) Borrowing and Security.................................... 6
(k) Guarantees, etc........................................... 6
(l) Insurance................................................. 6
(m) Pensions, etc............................................. 7
(n) Distribution Plans........................................ 7
Section 3.3 Certain Contracts...................................... 7
(a) Advisory.................................................. 7
(b) Administration............................................ 7
(c) Distribution.............................................. 8
(d) Custodian and Depository.................................. 8
(e) Transfer and Dividend Disbursing Agency................... 8
(f) Shareholder Servicing..................................... 8
(g) Accounting................................................ 8
Section 3.4 Payment of Trust Expenses and Compensation of Trustees.. 9
Section 3.5 Ownership of Assets of the Trust....................... 9
Section 3.6 Action by Trustees..................................... 9
ARTICLE IV - SHARES.............................................. 10
Section 4.1 Description of Shares.................................. 10
Section 4.2 Establishment and Designation of Sub-Trusts and Classes.11
(a) Assets Belonging to Sub-Trusts............................ 11
(b) Liabilities Belonging to Sub-Trusts....................... 12
(c) Dividends................................................. 13
(d) Liquidation............................................... 13
(e) Voting.................................................... 13
(f) Redemption by Shareholder................................. 14
(g) Redemption by Trust....................................... 14
(h) Net Asset Value........................................... 14
(i) Transfer.................................................. 15
(j) Equality.................................................. 15
(k) Fractions................................................. 15
(l) Conversion Rights......................................... 15
(m) Class Differences......................................... 15
Section 4.3 Ownership of Shares.................................... 16
Section 4.4 Investments in the Trust............................... 16
Section 4.5 No Pre-emptive Rights.................................. 16
Section 4.6 Status of Shares and Limitation of Personal Liability.. 16
Section 4.7 No Appraisal Rights.................................... 17
ARTICLE V - SHAREHOLDERS' VOTING POWERS AND MEETINGS............. 17
Section 5.1 Voting Powers.......................................... 17
Section 5.2 Meetings............................................... 17
Section 5.3 Record Dates........................................... 18
Section 5.4 Quorum and Required Vote............................... 18
Section 5.5 Action by Written Consent.............................. 18
Section 5.6 Inspection of Records.................................. 18
Section 5.7 Additional Provisions.................................. 19
ARTICLE VI - LIMITATION OF LIABILITY; INDEMNIFICATION............ 19
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable; Notice. 19
Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond or Surety. 19
Section 6.3 Indemnification of Shareholders....................... 20
Section 6.4 Indemnification of Trustees, Officers, etc............ 20
Section 6.5 Compromise Payment.................................... 21
Section 6.6 Indemnification Not Exclusive, etc.................... 21
Section 6.7 Liability of Third Persons Dealing with Trustees...... 21
Section 6.8 Discretion............................................ 22
ARTICLE VII - MISCELLANEOUS...................................... 22
Section 7.1 Duration and Termination of Trust...................... 22
Section 7.2 Reorganization......................................... 22
Section 7.3 Amendments............................................. 23
Section 7.4 Filing of Copies; References; Headings................. 23
Section 7.5 Applicable Law......................................... 24
Section 7.6 Registered Agent....................................... 24
Section 7.7 Integration............................................ 24
<PAGE>
MASTER TRUST AGREEMENT
AGREEMENT AND DECLARATION OF TRUST made as of this 7th day of February,
1995, by the Trustees hereunder, and by the holders of shares of beneficial
interest to be issued hereunder as hereinafter provided. This Delcaration of
Trust shall be effective upon the filing of the Certificate of Trust in the
office of the Secretary of State of the State of Delaware.
W I T N E S S E T H:
WHEREAS this Trust has been formed to carry on the business of an
investment company; and
WHEREAS this Trust is authorized to issue its shares of beneficial
interest in separate series, each separate series to be a Sub-Trust hereunder,
and to issue classes of Shares of any Sub-Trust or divide Shares of any
Sub-Trust into two or more classes, all in accordance with the provisions
hereinafter set forth; and
WHEREAS the Trustees have agreed to manage all property coming into
their hands as trustees of a Delaware business trust in accordance with the
provisions of the Delaware Business Trust Act (12 Del. C. ss.3801, et seq.), as
from time to time amended and including any successor statute of similar import
(the "Act"), and the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets which they may from time to time acquire in
any manner as Trustees hereunder IN TRUST to manage and dispose of the same upon
the following terms and conditions for the benefit of the holders from time to
time of shares of beneficial interest in this Trust and the Sub-Trusts created
hereunder as hereinafter set forth.
ARTICLE I - NAME AND DEFINITIONS
Section 1.1 NAME AND PRINCIPAL OFFICE. This Trust shall be known as
"FundManager Trust" and the Trustees shall conduct the business of the Trust
under that name or any other name or names as they may from time to time
determine. The principal office of the Trust shall be located at One Beacon
Street, Boston, Massachusetts or such location as the Trustees may from time to
time determine.
Section 1.2 DEFINITIONS. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) "Act" shall have the meaning given to it in the recitals of this Declaration
of Trust.
(b) "By-Laws" shall mean the By-Laws of the Trust as amended from time to time;
<PAGE>
(c) "class" refers to any class of Shares of any Series or Sub-Trust established
and designated under or in accordance with the provisions of Article IV;
(d) "Commission" shall have the meaning given it in the 1940 Act;
(e) "Declaration of Trust" shall mean this Agreement and Declaration of Trust as
amended or restated from time to time;
(f) "Majority of the Outstanding Voting Shares" of the Trust or
Sub-Trust or of a class of a Sub-Trust shall mean the vote, at the annual or a
special meeting of Shareholders duly called, (A) of 67 per centum or more of the
Shares of the Trust or Sub-Trust present at such meeting, (or of a class of a
Sub-Trust, as the case may be) if holders of more than 50 per centum of the
outstanding Shares of the Trust or Sub-Trust (or of a class of a Sub-Trust, as
the case may be) are present or represented by proxy; or (B) of more than 50 per
centum of the outstanding voting Shares of the Trust or Sub-Trust or of a class
of a Sub-Trust, as the case may be, whichever is the less.
(g) "1940 Act" refers to the Investment Company Act of 1940 and the Rules and
Regulations thereunder, all as amended from time to time;
(h) "person" means a natural person, corporation, limited liability
company, trust, association, partnership (whether general, limited or
otherwise), joint venture or any other entity.
(i) "Shareholder" means a beneficial owner of record of Shares;
(j) "Shares" refers to the transferable units of interest into which
the beneficial interest in the Trust and each Sub-Trust of the Trust and/or any
class of any Sub-Trust (as the context may require) shall be divided from time
to time;
(k)"Sub-Trust" or "Series" refers to a series of Shares established and
designated under or in accordance with the provisions of Article IV;
(l)"Trust" refers to the Delaware business trust established by this Declaration
of Trust, inclusive of each and every Sub-Trust established hereunder; and
(m) "Trustees" refers to the trustees of the Trust and of each
Sub-Trust hereunder named herein or elected in accordance with Article III.
ARTICLE II - PURPOSE OF TRUST
The purposes of the Trust are (i) to operate as an investment company
and to offer Shareholders of the Trust and each Sub-Trust of the Trust one or
more investment programs
rimarily in securities and debt instruments, and (ii) to engage in such
activities that are necessary, suitable, incidental or convenient to the
accomplishment of the foregoing.
ARTICLE III - THE TRUSTEES
Section 3.1 NUMBER, DESIGNATION, ELECTION, TERM, ETC.
(a) TRUSTEES. The initial Trustees hereof and of each Sub-Trust hereunder shall
be Dexter A. Dodge and John J. Danello.
(b) NUMBER. The Trustees serving as such, whether named above or
hereafter becoming Trustees, may increase or decrease the number of Trustees to
a number other than the number theretofore determined. No decrease in the number
of Trustees shall have the effect of removing any Trustee from office prior to
the expiration of such Trustee's term, but the number of Trustees may be
decreased in conjunction with the removal of a Trustee pursuant to subsection
(e) of this Section 3.1.
(c) ELECTION AND TERM. Trustees, in addition to those named above, may
become such by election by Shareholders or the Trustees in office pursuant to
Section 3.1(f). Each Trustee, whether named above or hereafter becoming a
Trustee, shall serve as a Trustee of the Trust and of each Sub-Trust hereunder
during the lifetime of this Trust and until its termination as hereinafter
provided except as such Trustee sooner dies, resigns, retires or is removed.
Subject to Section 16(a) of the 1940 Act, the Trustees may elect successors and
may, pursuant to Section 3.1(f) hereof, appoint Trustees to fill vacancies.
(d) RESIGNATION AND RETIREMENT. Any Trustee may resign or retire as a
trustee of the Trust, by written instrument signed by such Trustee and delivered
to the other Trustees or to any officer of the Trust, and such resignation or
retirement shall take effect upon such delivery or upon such later date as is
specified in such instrument and shall be effective as to the Trust and each
Sub-Trust hereunder.
(e) REMOVAL. Any Trustee may be removed with or without cause at any
time: (i) by written instrument, signed by at least three-fourths of the number
of Trustees in office immediately prior to such removal, specifying the date
upon which such removal shall become effective; or (ii) by vote of Shareholders
holding not less than two-thirds of the Shares then outstanding, cast in person
or by proxy at any meeting called for the purpose; or (iii) by a written
declaration signed by Shareholders holding not less than two-thirds of the
Shares then outstanding and filed with the minutes of the Trust. Any such
removal shall be effective as to the Trust and each Sub-Trust hereunder.
(f) VACANCIES. Any vacancy or anticipated vacancy resulting from any reason,
including without limitation the death, resignation, retirement, removal or
incapacity of any of the Trustees, or resulting from an increase in the number
of Trustees by the other Trustees may (but so long as there are at least two
remaining Trustees, need not unless required by the 1940 Act) be filled by a
majority of the remaining Trustees, subject to the provisions of Section 16(a)
of the 1940 Act, through the appointment in writing of such other person as such
remaining Trustees in their discretion shall determine and such appointment
shall be effective upon the written acceptance of the person named therein to
serve as a trustee of the Trust and agreement by such person to be bound by the
provisions of this Declaration of Trust, except that any such appointment in
anticipation of a vacancy to occur by reason of voluntary or mandatory
retirement, resignation or increase in number of Trustees to be effective at a
later date shall be deemed effective upon the effective date of said retirement,
resignation or increase in number of Trustees. As soon as any Trustee so
appointed shall have accepted such appointment and shall have agreed in writing
to be bound by this Declaration of Trust and the appointment is effective, the
Trust estate shall vest in the new Trustee, together with the continuing
Trustees, without any further act or conveyance.
(g) EFFECT OF DEATH, RESIGNATION, ETC. The death, resignation,
voluntary or mandatory retirement, removal or incapacity of the Trustees, or any
one of them, shall cause a Trustee to cease to be a trustee of the Trust but
shall not operate to annul or terminate the Trust or any Sub-Trust hereunder or
to revoke or terminate any existing agency or contract created or entered into
pursuant to the terms of this Declaration of Trust.
(h) NO ACCOUNTING. Except to the extent required by the 1940 Act or
under circumstances which would justify removal for cause, no person ceasing to
be a trustee of the Trust as a result of death, resignation, voluntary or
mandatory retirement, removal or incapacity (nor the estate of any such person)
shall be required to make an accounting to the Shareholders or remaining
Trustees upon such cessation.
Section 3.2 POWERS OF TRUSTEES. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purpose of the Trust. The Trustees in all instances
shall act as principals, and are and shall be free from the control of the
Shareholders. The Trustees shall have full power and authority to do any and all
acts and to make and execute any and all contracts and instruments that they may
consider necessary or appropriate in connection with the management of the
Trust. The Trustees shall not be bound or limited by present or future laws or
customs with regard to investment by trustees or fiduciaries, but shall have
full authority and absolute power and control over the assets of the Trust and
the business of the Trust to the same extent as if the Trustees were the sole
owners of the assets of the Trust and the business in their own right, including
such authority, power and control to do all acts and things as they, in their
sole discretion, shall deem proper to accomplish the purposes of this Trust.
Without limiting the foregoing, the Trustees may adopt By-Laws not inconsistent
with this Declaration of Trust providing for the conduct of the business and
affairs of the Trust and may amend and repeal them to the extent that such
By-Laws do not reserve that right to the Shareholders; they may from time to
time in accordance with the provisions of Section 4.1 hereof establish
Sub-Trusts, each such Sub-Trust to operate as a separate and distinct investment
medium and with separately defined investment objectives and policies and
distinct investment purposes; they may from time to time in accordance with the
provisions of Section 4.1 hereof establish Series or establish classes of Shares
of any Series or Sub-Trust or divide the Shares of any Series or Sub-Trust into
classes; they may as they consider appropriate designate employees and agents
who may be denominated as officers with titles, including, but not limited to,
"president," "vice-president," "treasurer," "secretary," "assistant secretary,"
"assistant treasurer," "managing director," "chairman of the board" and "vice
chairman of the board" and who in such capacity may act for and on behalf of the
Trust, as and to the extent authorized by the Trustees, and appoint and
terminate agents and consultants and hire and terminate employees, any one or
more of the foregoing of whom may be a Trustee, and may provide for the
compensation of all of the foregoing; they may appoint from their own number,
and terminate, any one or more committees consisting of two or more Trustees,
including without implied limitation an executive committee, which may, when the
Trustees are not in session and subject to the 1940 Act, exercise some or all of
the power and authority of the Trustees as the Trustees may determine; in
accordance with Section 3.3 they may employ one or more advisers,
administrators, depositories and custodians and may authorize any depository or
custodian to employ subcustodians or agents and to deposit all or any part of
such assets in a system or systems for the central handling of securities and
debt instruments, retain transfer, dividend, accounting or Shareholder servicing
agents or any of the foregoing, provide for the distribution of Shares by the
Trust through one or more distributors, principal underwriters or otherwise, and
subject to Section 5.3, set record dates or times for the determination of
Shareholders or various of them with respect to various matters; they may
compensate or provide for the compensation of the Trustees, officers, advisers,
administrators, custodians, other agents, consultants and employees of the Trust
or the Trustees on such terms as they deem appropriate; and in general they may
delegate to any officer of the Trust, to any committee of the Trustees and to
any employee, adviser, administrator, distributor, depository, custodian,
transfer and dividend disbursing agent, or any other agent or consultant of the
Trust such authority, powers, functions and duties as they consider desirable or
appropriate for the conduct of the business and affairs of the Trust, including
without implied limitation, the power and authority to act in the name of the
Trust and any Sub-Trust and of the Trustees, to sign documents and to act as
attorney-in-fact for the Trustees.
Without limiting the foregoing and to the extent not inconsistent with
the 1940 Act or other applicable law, the Trustees shall have power and
authority for and on behalf of the Trust and each separate Sub-Trust established
hereunder:
(a) INVESTMENTS. To invest and reinvest cash and other property,
including, without implied limitation, to invest any and all of the assets of
the Trust in the securities of one or more open-end management investment
companies, and to hold cash or other property uninvested without in any event
being bound or limited by any present or future law or custom in regard to
investments by trustees;
(b)DISPOSITION OF ASSETS. To sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the assets of the Trust;
(c) OWNERSHIP POWERS. To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities, debt instruments or
property; and to execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting to such person or
persons such power and discretion with relation to securities, debt instruments
or property as the Trustees shall deem proper;
(d)SUBSCRIPTION. To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities or debt instruments;
(e) FORM OF HOLDING. To hold any security, debt instrument or property
in a form not indicating any trust, whether in bearer, unregistered or other
negotiable form, or in the name of the Trustees or of the Trust or of any
Sub-Trust or in the name of a custodian, subcustodian or other depository or a
nominee or nominees or otherwise;
(f) REORGANIZATION, ETC. To consent to or participate in any plan for
the reorganization, consolidation or merger of any corporation or issuer, any
security or debt instrument of which is or was held in the Trust; to consent to
any contract, lease, mortgage, purchase or sale of property by such corporation
or issuer, and to pay calls or subscriptions with respect to any security or
debt instrument held in the Trust;
(g) VOTING TRUSTS, ETC. To join with other holders of any securities or
debt instruments in acting through a committee, depositary, voting trustee or
otherwise, and in that connection to deposit any security or debt instrument
with, or transfer any security or debt instrument to, any such committee,
depositary or trustee, and to delegate to them such power and authority with
relation to any security or debt instrument (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay, and to pay,
such portion of the expenses and compensation of such committee, depositary or
trustee as the Trustees shall deem proper;
(h) COMPROMISE. To compromise, arbitrate or otherwise adjust claims in favor of
or against the Trust or any Sub-Trust or any matter in controversy, including
but not limited to claims for taxes;
(i)PARTNERSHIPS, ETC. To enter into joint ventures, general or limited
partnerships, limited liability companies and any other combinations or
associations;
(j) BORROWING AND SECURITY. To borrow funds and to mortgage and pledge the
assets of the Trust or any part thereof to secure obligations arising in
connection with such borrowing;
(k) GUARANTEES, ETC. To endorse or guarantee the payment of any notes
or other obligations of any person; to make contracts of guaranty or suretyship,
or otherwise assume liability for payment thereof; and to mortgage and pledge
the Trust property or any part thereof to secure any of or all such obligations;
(l) INSURANCE. To purchase and pay for entirely out of Trust property
such insurance and/or bonding as they may deem necessary or appropriate for the
conduct of the business, including, without limitation, insurance policies
insuring the assets of the Trust and payment of distributions and principal on
its portfolio investments, and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, consultants, investment advisers,
managers, administrators, distributors, principal underwriters, or independent
contractors, or any thereof (or any person connected therewith), of the Trust
individually against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such person in
any such capacity, including any action taken or omitted that may be determined
to constitute negligence, whether or not the Trust would have the power to
indemnify such person against such liability;
(m) PENSIONS, ETC. To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry out pension,
profit-sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and provisions, including the
purchasing of life insurance and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the Trustees, officers,
employees and agents of the Trust; and
(n) DISTRIBUTION PLANS. To adopt on behalf of the Trust or any
Sub-Trust, including with respect to any class thereof, a plan of distribution
and related agreements thereto pursuant to the terms of Rule 12b-1 of the 1940
Act and to make payments from the assets of the Trust or the relevant Sub-Trust
or Sub-Trusts pursuant to said Rule 12b-1 Plan.
Section 3.3 CERTAIN CONTRACTS. Subject to compliance with the provisions of
the 1940 Act, but notwithstanding any limitations of present and future law or
custom in regard to delegation of powers by trustees generally, the Trustees
may, at any time and from time to time and without limiting the generality of
their powers and authority otherwise set forth herein, enter into one or more
contracts with any one or more corporations, trusts, associations, partnerships,
limited partnerships, limited liability companies, other type of organizations,
or individuals (a "Contracting Party"), to provide for the performance and
assumption of some or all of the following services, duties and responsibilities
to, for or on behalf of the Trust and/or any Sub-Trust, and/or the Trustees, and
to provide for the performance and assumption of such other services, duties and
responsibilities in addition to those set forth below as the Trustees may
determine appropriate:
(a) ADVISORY. Subject to the general supervision of the Trustees and in
conformity with the stated policy of the Trustees with respect to the
investments of the Trust or of the assets belonging to any Sub-Trust of the
Trust (as that phrase is defined in subsection (a) of Section 4.2), to manage
such investments and assets, make investment decisions with respect thereto, and
to place purchase and sale orders for portfolio transactions relating to such
investments and assets;
(b) ADMINISTRATION. Subject to the general supervision of the Trustees
and in conformity with any policies of the Trustees with respect to the
operations of the Trust and each Sub-Trust (including each class thereof), to
supervise all or any part of the operations of the Trust and each Sub-Trust, and
to provide all or any part of the administrative and clerical personnel, office
space and office equipment and services appropriate for the efficient
administration and operations of the Trust and each Sub-Trust;
(c) DISTRIBUTION. To distribute the Shares of the Trust and each
Sub-Trust (including any classes thereof), to be principal underwriter of such
Shares, and/or to act as agent of the Trust and each Sub-Trust in the sale of
Shares and the acceptance or rejection of orders for the purchase of Shares;
(d) CUSTODIAN AND DEPOSITORY. To act as depository for and to maintain custody
of the property of the Trust and each Sub-Trust and accounting records in
connection therewith;
(e)TRANSFER AND DIVIDEND DISBURSING AGENCY. To maintain records of the ownership
of outstanding Shares, the issuance and redemption and the transfer thereof, and
to disburse any dividends declared by the Trustees and in accordance with the
policies of the Trustees and/or the instructions of any particular Shareholder
to reinvest any such dividends;
(f)SHAREHOLDER SERVICING. To provide service with respect to the relationship of
the Trust and its Shareholders, records with respect to Shareholders and their
Shares, and similar matters; and
(g) ACCOUNTING. To handle all or any part of the accounting responsibilities,
whether with respect to the Trust's properties, Shareholders or otherwise.
The same person may be the Contracting Party for some or all of the services,
duties and responsibilities to, for and of the Trust and/or the Trustees, and
the contracts with respect thereto may contain such terms interpretive of or in
addition to the delineation of the services, duties and responsibilities
provided for, including provisions that are not inconsistent with the 1940 Act
relating to the standard of duty of and the rights to indemnification of the
Contracting Party and others, as the Trustees may determine. Nothing herein
shall preclude, prevent or limit the Trust or a Contracting Party from entering
into sub-contractual arrangements relating to any of the matters referred to in
Sections 3.3(a) through (g) hereof.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a shareholder,
director, officer, partner, trustee, employee, manager, adviser, principal
underwriter or distributor or agent of or for any Contracting Party, or of or
for any parent or affiliate of ny Contracting Party or that the Contracting
Party or any parent or affiliate thereof is a Shareholder or has an interest in
the Trust or any Sub-Trust, or that
(ii) any Contracting Party may have a contract providing for the rendering of
any similar services to one or more other corporations, trusts, associations,
partnerships, limited partnerships, limited liability companies or other
organizations, or have other business or interests, shall not affect the
validity of any contract for the performance and assumption of services, duties
and responsibilities to, for or of the Trust or any Sub-Trust and/or the
Trustees or disqualify any Shareholder, Trustee or officer of the Trust from
voting upon or executing the same or create any liability or accountability to
the Trust, any Sub-Trust or its Shareholders, provided that in the case of any
relationship or interest referred to in the preceding clause (i) on the part of
any Trustee or officer of the Trust either (x) the material facts as to such
relationship or interest have been disclosed to or are known by the Trustees not
having any such relationship or interest and the contract involved is approved
in good faith by a majority of such Trustees not having any such relationship or
interest (even though such unrelated or disinterested Trustees are less than a
quorum of all of the Trustees), (y) the material facts as to such relationship
or interest and as to the contract have been disclosed to or are known by the
Shareholders entitled to vote thereon and the contract involved is specifically
approved in good faith by vote of the Shareholders, or (z) the specific contract
involved is fair to the Trust as of the time it is authorized, approved or
ratified by the Trustees or by the Shareholders.
Section 3.4 PAYMENT OF TRUST EXPENSES AND COMPENSATION OF TRUSTEES. The
Trustees are authorized to pay or to cause to be paid out of the principal or
income of the Trust or any Sub-Trust, or partly out of principal and partly out
of income, and to charge or allocate the same to, between or among such one or
more of the Sub-Trusts and/or one or more classes of Shares thereof that may be
established and designated pursuant to Article IV, as the Trustees deem fair,
all expenses, fees, charges, taxes and liabilities incurred or arising in
connection with the Trust, any Sub-Trust and/or any class of Shares thereof, or
in connection with the management thereof, including, but not limited to, the
Trustees' compensation and such expenses and charges for the services of the
Trust's officers, employees, investment adviser, administrator, distributor,
principal underwriter, auditor, counsel, depository, custodian, transfer agent,
dividend disbursing agent, accounting agent, Shareholder servicing agent, and
such other agents, consultants, and independent contractors and such other
expenses and charges as the Trustees may deem necessary or proper to incur.
Without limiting the generality of any other provision hereof, the Trustees
shall be entitled to reasonable compensation from the Trust for their services
as trustees of the Trust and may fix the amount of such compensation.
Section 3.5 OWNERSHIP OF ASSETS OF THE TRUST. Title to all of the
assets of the Trust and of each Sub-Trust shall at all times be considered as
vested in the Trust.
Section 3.6 ACTION BY TRUSTEES. Except as otherwise provided by the
l940 Act or other applicable law, this Declaration of Trust or the By-Laws, any
action to be taken by the Trustees on behalf of or with respect to the Trust or
any Sub-Trust or class thereof may be taken by a majority of the Trustees
present at a meeting of Trustees (a quorum, consisting of at least one-half of
the Trustees then in office, being present), within or without Delaware,
including any meeting held by means of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time, and participation by such means
shall constitute presence in person at a meeting, or by written consents of a
majority of the Trustees then in office (or such larger or different number as
may be required by the 1940 Act or other applicable law).
ARTICLE IV - SHARES
Section 4.1 DESCRIPTION OF SHARES. The beneficial interest in the Trust shall be
divided into Shares, all with $.001 par value, but the Trustees shall have the
authority from time to time to issue Shares in one or more Series (each of which
Series of Shares shall represent the beneficial interest in a separate and
distinct Sub-Trust of the Trust, including without limitation each Sub-Trust
specifically established and designated in Section 4.2), as they deem necessary
or desirable. For all purposes under this Declaration of Trust or otherwise,
including, without implied limitation, (i) with respect to the rights of
creditors and (ii) for purposes of interpreting the relevant rights of each
Sub-Trust and the Shareholders of each Sub-Trust, each Sub-Trust established
hereunder shall be deemed to be a separate trust. Notice of the limitation of
liabilities of a Sub-Trust shall be set forth in the certificate of trust of the
Trust, and debts, liabilities, obligations and expenses incurred, contracted for
or otherwise existing with respect to a particular Sub-Trust shall be
enforceable against the assets of such Sub-Trust only, and not against the
assets of the Trust generally or any other Sub-Trust. The Trustees shall have
exclusive power without the requirement of Shareholder approval to establish and
designate such separate and distinct Sub-Trusts, and to fix and determine the
relative rights and preferences as between the shares of the separate Sub-Trusts
as to right of redemption and the price, terms and manner of redemption, special
and relative rights as to dividends and other distributions and on liquidation,
sinking or purchase fund provisions, conversion rights, and conditions under
which the several Sub-Trusts shall have separate voting rights or no voting
rights.
In addition, the Trustees shall have exclusive power, without the
requirement of Shareholder approval, to issue classes of Shares of any Sub-Trust
or divide the Shares of any Sub-Trust into classes, each class having such
different dividend, liquidation, voting and other rights as the Trustees may
determine in their sole discretion, and may establish and designate the specific
classes of Shares of each Sub-Trust. The fact that a Sub-Trust shall have
initially been established and designated without any specific establishment or
designation of classes (i.e., that all Shares of such Sub-Trust are initially of
a single class), or that a Sub-Trust shall have more than one established and
designated class, shall not limit the authority of the Trustees to establish and
designate separate classes, or one or more further classes, of said Sub-Trust
without approval of the holders of the initial class thereof, or previously
established and designated class or classes thereof.
The number of authorized Shares and the number of Shares of each
Sub-Trust or class thereof that may be issued is unlimited, and the Trustees may
issue Shares of any Sub-Trust or class thereof for such consideration and on
such terms as they may determine (or for no consideration if pursuant to a Share
dividend or split-up), all without action or approval of the Shareholders. All
Shares when so issued on the terms determined by the Trustees shall be fully
paid and non-assessable (but may be subject to mandatory contribution back to
the Trust as provided in subsection (h) of Section 4.2). The Trustees may
classify or reclassify any unissued Shares or any Shares previously issued and
reacquired of any Sub-Trust or class thereof into one or more Sub-Trusts or
classes thereof that may be established and designated from time to time. The
Trustees may hold as treasury Shares, reissue for such consideration and on such
terms as they may determine, or cancel, at their discretion from time to time,
any Shares of any Sub-Trust or class thereof reacquired by the Trust.
The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining the holders of
Shares entitled to be treated as such, to the extent provided or referred to in
Section 5.3.
The establishment and designation of any Sub-Trust or of any class of
Shares of any Sub-Trust in addition to those established and designated in
Section 4.2 shall be effective (i) upon the execution by a majority of the then
Trustees of an instrument setting forth such establishment and designation of
the relative rights and preferences of the Shares of such Sub-Trust or class,
(ii) upon the execution of an instrument in writing by an officer of the Trust
pursuant to the vote of a majority of the Trustees, or (iii) as otherwise
provided in either such instrument. At any time that there are no Shares
outstanding of any particular Sub-Trust or class previously established and
designated, the Trustees may by an instrument executed by a majority of their
number (or by an instrument executed by an officer of the Trust pursuant to the
vote of a majority of the Trustees) abolish that Sub-Trust or class and the
establishment and designation thereof. Each instrument establishing and
designating any Sub-Trust shall have the status of an amendment to this
Declaration of Trust.
Any Trustee, officer or other agent of the Trust, and any organization
in which any such person is interested may acquire, own, hold and dispose of
Shares of any Sub-Trust (including any classes thereof) of the Trust to the same
extent as if such person were not a Trustee, officer or other agent of the
Trust; and the Trust may issue and sell or cause to be issued and sold and may
purchase Shares of any Sub-Trust (including any classes thereof) from any such
person or any such organization subject only to the general limitations,
restrictions or other provisions applicable to the sale or purchase of Shares of
such Sub-Trust (including any classes thereof) generally.
Section 4.2 ESTABLISHMENT AND DESIGNATION OF SUB-TRUSTS AND CLASSES.
Without limiting the authority of the Trustees set forth in Section 4.1 to
establish and designate any further Sub-Trusts, the Trustees hereby establish
and designate five Sub-Trusts: "Aggressive Growth Fund", "Growth Fund", "Growth
& Income Fund", "Income Fund", and "Managed Total Return Fund", each of which
shall initially consist of a single class of Shares. The Shares of such
Sub-Trusts and any Shares of any further Sub-Trust or class thereof that may
from time to time be established and designated by the Trustees shall (unless
the Trustees otherwise determine with respect to some further Sub-Trust at the
time of establishing and designating the same) have the following relative
rights and preferences:
(a) ASSETS BELONGING TO SUB-TRUSTS. All consideration received by the
Trust for the issue or sale of Shares of a particular Sub-Trust or any classes
thereof, together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits, and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds in whatever
form the same may be, shall be held by the Trustees in trust for the benefit of
the holders of Shares of that Sub-Trust or class thereof and shall irrevocably
belong to that Sub-Trust (and be allocable to any classes thereof) for all
purposes, and shall be so recorded upon the books of account of the Trust.
Separate and distinct records shall be maintained for each Sub-Trust and the
assets associated with a Sub-Trust shall be held and accounted for separately
from the other assets of the Trust, or any other Sub-Trust. Such consideration,
assets, income, earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds, in whatever form the
same may be, together with any General Items (as hereinafter defined) allocated
to that Sub-Trust as provided in the following sentence, are herein referred to
as "assets belonging to" that Sub-Trust (and allocable to any classes thereof).
In the event that there are any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable as belonging to
any particular Sub-Trust (collectively "General Items"), the Trustees shall
allocate such General Items to and among any one or more of the Sub-Trusts
established and designated from time to time in such manner and on such basis as
they, in their sole discretion, deem fair and equitable; and any General Items
so allocated to a particular Sub-Trust shall belong to that Sub-Trust (and be
allocable to any classes thereof). Each such allocation by the Trustees shall be
conclusive and binding upon the holders of all Shares of all Sub-Trusts
(including any classes thereof) for all purposes.
(b) LIABILITIES BELONGING TO SUB-TRUSTS. The assets belonging to each
particular Sub-Trust shall be charged with the liabilities in respect of that
Sub-Trust and all expenses, costs, charges and reserves belonging to that
Sub-Trust, and any general liabilities, expenses, costs, charges or reserves of
the Trust which are not readily identifiable as belonging to any particular
Sub-Trust shall be allocated and charged by the Trustees to and among any one or
more of the Sub-Trusts established and designated from time to time in such
manner and on such basis as the Trustees in their sole discretion shall
determine. In addition, the liabilities in respect of a particular class of
Shares of a particular Sub-Trust and all expenses, costs, charges and reserves
belonging to that class of Shares, and any general liabilities, expenses, costs,
charges or reserves of that particular Sub-Trust which are not readily
identifiable as belonging to any particular class of Shares of that Sub-Trust
shall be allocated and charged by the Trustees to and among any one or more of
the classes of Shares of that Sub-Trust established and designated from time to
time in such manner and on such basis as the Trustees in their sole discretion
shall determine. The liabilities, expenses, costs, charges and reserves
allocated and so charged to a Sub-Trust or class thereof are herein referred to
as "liabilities belonging to" that Sub-Trust or class thereof. Each allocation
of liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders, creditors and any other persons
dealing with the Trust or any Sub-Trust (including any classes thereof) for all
purposes. Any creditor of any Sub-Trust may look only to the assets of that
Sub-Trust to satisfy such creditor's debt.
The Trustees shall have full discretion, to the extent not inconsistent
with the 1940 Act, to determine which items shall be treated as income and which
items as capital; and each such determination and allocation shall be conclusive
and binding upon the Shareholders.
(c) DIVIDENDS. Dividends and distributions on Shares of a particular
Sub-Trust or any class thereof may be paid with such frequency as the Trustees
in their sole discretion may determine, which may be daily or otherwise pursuant
to a standing resolution or resolutions adopted only once or with such frequency
as the Trustees in their sole discretion may determine, to the holders of Shares
of that Sub-Trust or class, from such of the income and capital gains, accrued
or realized, from the assets belonging to that Sub-Trust, or in the case of a
class, belonging to that Sub-Trust and allocable to that class, as the Trustees
in their sole discretion may determine, after providing for actual and accrued
liabilities belonging to that Sub-Trust or class. All dividends and
distributions on Shares of a particular Sub-Trust or class thereof shall be
distributed pro rata to the holders of Shares of that Sub-Trust or class in
proportion to the number of Shares of that Sub-Trust or class held by such
holders at the date and time of record established for the payment of such
dividends or distributions, except that in connection with any dividend or
distribution program or procedure the Trustees in their sole discretion may
determine that no dividend or distribution shall be payable on Shares as to
which the Shareholder's purchase order and/or payment have not been received by
the time or times established by the Trustees under such program or procedure.
Such dividends and distributions may be made in cash or Shares of that Sub-Trust
or class or a combination thereof as determined by the Trustees in their sole
discretion or pursuant to any program that the Trustees may have in effect at
the time for the election by each Shareholder of the mode of the making of such
dividend or distribution to that Shareholder. Any such dividend or distribution
paid in Shares will be paid at the net asset value thereof as determined in
accordance with subsection (h) of this Section 4.2.
The Trustees shall have full discretion to the extent not inconsistent
with the 1940 Act to determine which items shall be treated as income and which
items as capital; and each such determination and allocation shall be conclusive
and binding upon the Shareholders.
(d) LIQUIDATION. In the event of the liquidation or dissolution of the
Trust, subject to Section 7.1 hereof, the holders of Shares of each Sub-Trust or
any class thereof that has been established and designated shall be entitled to
receive, when and as declared by the Trustees, the excess of the assets
belonging to that Sub-Trust, or in the case of a class, belonging to that
Sub-Trust and allocable to that class, over the liabilities belonging to that
Sub-Trust or class. The assets so distributable to the holders of Shares of any
particular Sub-Trust or class thereof shall be distributed among such holders in
proportion to the number of Shares of that Sub-Trust or class thereof held by
them and recorded on the books of the Trust. The liquidation of any particular
Sub-Trust or class thereof may be authorized at any time by vote of a majority
of the Trustees then in office.
(e) VOTING. On each matter submitted to a vote of the Shareholders,
each holder of a Share shall be entitled to one vote for each whole Share
standing in such Shareholder's name on the books of the Trust irrespective of
the Series thereof or class thereof and all Shares of all Series and classes
thereof shall vote together as a single class; provided, however, that as to any
matter (i) with respect to which a separate vote of one or more Series or
classes thereof is required by the 1940 Act or the provisions of the writing
establishing and designating the Sub-Trust or class, such requirements as to a
separate vote by such Series or class thereof shall apply in lieu of all Shares
of all Series and classes thereof voting together; and (ii) as to any matter
which affects the interests of one or more particular Series or classes thereof,
only the holders of Shares of the one or more affected Series or classes shall
be entitled to vote, and each such Series or class shall vote as a separate
class.
(f) REDEMPTION BY SHAREHOLDER. Each holder of Shares of a particular
Sub-Trust or any class thereof shall have the right at such times as may be
permitted by the Trust to require the Trust to redeem all or any part of such
holder's Shares of that Sub-Trust or class thereof at a redemption price equal
to the net asset value per Share of that Sub-Trust or class thereof next
determined in accordance with subsection (h) of this Section 4.2 after the
Shares are properly tendered for redemption, subject to any contingent deferred
sales charge or redemption charge in effect at the time of redemption. Payment
of the redemption price shall be in cash; provided, however, that if the
Trustees determine, which determination shall be conclusive, that conditions
exist which make payment wholly in cash unwise or undesirable, the Trust may,
subject to the requirements of the 1940 Act, make payment wholly or partly in
securities or other assets belonging to the Sub-Trust of which the Shares being
redeemed are part at the value of such securities or assets used in such
determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the holders of Shares of any
Sub-Trust or class thereof to require the Trust to redeem Shares of that
Sub-Trust during any period or at any time when and to the extent permissible
under the 1940 Act.
(g)REDEMPTION BY TRUST. Each Share of each Sub-Trust or class thereof that
has been established and designated is subject to redemption by the Trust at the
redemption price which would be applicable if such Share was then being redeemed
by the Shareholder pursuant to subsection (f) of this Section 4.2: (i) at any
time, in the sole discretion of the Trustees, or (ii) upon such other conditions
as may from time to time be determined by the Trustees and set forth in the then
current Prospectus of the Trust. Upon such redemption the holders of the Shares
so redeemed shall have no further right with respect thereto other than to
receive payment of such redemption price.
(h) NET ASSET VALUE. The net asset value per Share of any Sub-Trust
shall be (i) in the case of a Sub-Trust whose Shares are not divided into
classes, the quotient obtained by dividing the value of the net assets of that
Sub-Trust (being the value of the assets belonging to that Sub-Trust less the
liabilities belonging to that Sub-Trust) by the total number of Shares of that
Sub-Trust outstanding, and (ii) in the case of a class of Shares of a Sub-Trust
whose Shares are divided into classes, the quotient obtained by dividing the
value of the net assets of that Sub-Trust allocable to such class (being the
value of the assets belonging to that Sub-Trust allocable to such class less the
liabilities belonging to such class) by the total number of Shares of such class
outstanding; all determined in accordance with the methods and procedures,
including without limitation those with respect to rounding, established by the
Trustees from time to time.
The Trustees may in their sole discretion determine to maintain the net
asset value per Share of any Sub-Trust at a designated constant dollar amount
and in connection therewith may adopt procedures not inconsistent with the 1940
Act for the continuing declarations of income attributable to that Sub-Trust as
dividends payable in additional Shares of that Sub-Trust at the designated
constant dollar amount and for the handling of any losses attributable to that
Sub-Trust. Such procedures may provide that in the event of any loss each
Shareholder shall be deemed to have contributed to the capital of the Trust
attributable to that Sub-Trust such Shareholder's pro rata portion of the total
number of Shares required to be cancelled in order to permit the net asset value
per Share of that Sub-Trust to be maintained, after reflecting such loss, at the
designated constant dollar amount. Each Shareholder of the Trust shall be deemed
to have agreed, by making an investment in any Sub-Trust with respect to which
the Trustees shall have adopted any such procedure, to make the contribution
referred to in the preceding sentence in the event of any such loss.
(i) TRANSFER. All Shares of each particular Sub-Trust or class thereof
shall be transferable, but transfers of Shares of a particular Sub-Trust or
class thereof will be recorded on the Share transfer records of the Trust
applicable to that Sub-Trust or class only at such times as Shareholders shall
have the right to require the Trust to redeem Shares of that Sub-Trust or class
and at such other times as may be permitted by the Trustees.
(j) EQUALITY. Except as provided herein or in the instrument
designating and establishing any class of Shares or any Sub-Trust, all Shares of
each particular Sub-Trust or class thereof shall represent an equal
proportionate interest in the assets belonging to that Sub-Trust, or in the case
of a class, belonging to that Sub-Trust and allocable to that class,
subject to the liabilities belonging to that Sub-Trust or class, and each Share
of any particular Sub-Trust or class shall be equal to each other Share of that
Sub-Trust or class; but the provisions of this sentence shall not restrict any
distinctions permissible under subsection (c) of this Section 4.2 that may exist
with respect to dividends and distributions on Shares of the same Sub-Trust or
class. The Trustees in their sole discretion may from time to time divide or
combine the Shares of any particular Sub-Trust or class into a greater or lesser
number of Shares of that Sub-Trust or class without thereby changing the
proportionate beneficial interest in the assets belonging to that Sub-Trust or
class or in any way affecting the rights of Shares of any other Sub-Trust or
class.
(k) FRACTIONS. Any fractional Share of any Sub-Trust or class, if any
such fractional Share is outstanding, shall carry proportionately all the rights
and obligations of a whole Share of that Sub-Trust or class, including rights
and obligations with respect to voting, receipt of dividends and distributions,
redemption of Shares, and liquidation of the Trust.
(l) CONVERSION RIGHTS. Subject to compliance with the requirements of
the 1940 Act, the Trustees shall have the authority to provide that holders of
Shares of any Sub-Trust or class thereof shall have the right to convert said
Shares into Shares of one or more other Sub-Trust or class thereof in accordance
with such requirements and procedures as may be established by the Trustees.
(m) CLASS DIFFERENCES. Subject to Section 4.1, the relative rights and
preferences of the classes of any Sub-Trust may differ in such other respects as
the Trustees may determine to be appropriate in their sole discretion, provided
that such differences are set forth in the instrument establishing and
designating such classes and executed by a majority of the Trustees (or by an
instrument executed by an officer of the Trust pursuant to a vote of a majority
of the Trustees).
Section 4.3 OWNERSHIP OF SHARES. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each
Sub-Trust and each class thereof that has been established and designated. No
certificates certifying the ownership of Shares need be issued except as the
Trustees in their sole discretion may otherwise determine from time to time. The
Trustees may make such rules as they consider appropriate for the issuance of
Share certificates, the use of facsimile signatures, the transfer of Shares and
similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent, as the case may be, shall be conclusive as to who are
the Shareholders and as to the number of Shares of each Sub-Trust and class
thereof held from time to time by each such Shareholder.
Section 4.4 INVESTMENTS IN THE TRUST. The Trustees may accept or reject
investments in the Trust and each Sub-Trust from such persons and on such terms
and for such consideration, not inconsistent with the provisions of the 1940
Act, as they from time to time authorize or determine. The Trustees may
authorize any distributor, principal underwriter, custodian, transfer agent or
other person to accept orders for the purchase of Shares that conform to such
authorized terms and to reject any purchase orders for Shares whether or not
conforming to such authorized terms.
Section 4.5 NO PREEMPTIVE RIGHTS. Shareholders shall have no pre-emptive or
other right to subscribe to any additional Shares or other securities issued by
the Trust or any Sub-Trust.
Section 4.6 STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY.
Shares shall be deemed to be personal property giving only the rights provided
in this Declaration of Trust. Every Shareholder by virtue of acquiring Shares
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death, incapacity, dissolution, termination or
bankruptcy of a Shareholder during the continuance of the Trust shall not
operate to dissolve or terminate the Trust or any Sub-Trust thereof nor entitle
the representative of such Shareholder to an accounting or to take any action in
court or elsewhere against the Trust or the Trustees, but only to the rights of
such Shareholder under this Trust. Ownership of Shares shall not entitle the
Shareholder to any title in or to the whole or any part of the Trust property or
right to call for a partition or division of the same or for an accounting, nor
shall the ownership of Shares constitute the Shareholders partners. Neither the
Trust nor the Trustees, nor any officer, employee or agent of the Trust shall
have any power to bind personally any Shareholder, nor except as specifically
provided herein to call upon any Shareholder for the payment of any sum of money
or assessment whatsoever other than such as the Shareholder may at any time
personally agree to pay.
Section 4.7 NO APPRAISAL RIGHTS. Shareholders shall have no right to
demand payment for their shares or to any other rights of dissenting
shareholders in the event the Trust participates in any transaction which would
give rise to appraisal or dissenters' rights by a shareholder of a corporation
organized under the General Corporation Law of the State of Delaware, or
otherwise.
ARTICLE V - SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 VOTING POWERS. The Shareholders shall have power to vote only
(i) for the election or removal of Trustees as provided in Section 3.1, (ii)
with respect to any contract with a Contracting Party as provided in Section 3.3
as to which Shareholder approval is required by the 1940 Act, (iii) with respect
to any termination or reorganization of the Trust to the extent and as provided
in Sections 7.1 and 7.2, (iv) with respect to any amendment of this Declaration
of Trust to the extent and as provided in Section 7.3, and (v) with respect to
such additional matters relating to the Trust as may be required by the 1940
Act, this Declaration of Trust, the By-Laws or any registration of the Trust
with the Commission (or any successor agency) or any state, or as the Trustees
may consider necessary or desirable. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy. Proxies may be
given orally or in writing or pursuant to any computerized or mechanical data
gathering process specifically approved by the Trustees. A proxy with respect to
Shares held in the name of two or more persons shall be valid if executed by any
one of them unless at or prior to exercise of the proxy the Trust receives a
specific written notice to the contrary from any one of them. A proxy purporting
to be executed by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger. Until Shares are issued, the Trustees may exercise
all rights of Shareholders and may take any action required by law, this
Declaration of Trust or the By-Laws to be taken by Shareholders.
Section 5.2 MEETINGS. No annual or regular meeting of Shareholders is
required. Special meetings of Shareholders may be called by the Trustees from
time to time for the purpose of taking action upon any matter requiring the vote
or authority of the Shareholders as herein provided or upon any other matter
deemed by the Trustees in their sole discretion to be necessary or desirable.
Shareholder meetings may be held at such time and place within the continental
United States as may be fixed by the Trustees. Written notice of any meeting of
Shareholders shall be given or caused to be given by the Trustees by mailing
such notice at least seven days and not more than 90 days before such meeting,
postage prepaid, stating the time, place and purpose of the meeting, to each
Shareholder at the Shareholder's address as it appears on the records of the
Trust. The Trustees shall promptly call and give notice of a meeting of
Shareholders for the purpose of voting upon removal of any Trustee of the Trust
when requested to do so in writing by Shareholders holding not less than 10% of
the Shares then outstanding. If the Trustees shall fail to call or give notice
of any meeting of Shareholders for a period of 30 days after written application
by Shareholders holding at least 10% of the Shares then outstanding requesting a
meeting be called for any other purpose requiring action by the Shareholders as
provided herein or in the By-Laws, then Shareholders holding at least 10% of the
Shares then outstanding may call and give notice of such meeting, and thereupon
the meeting shall be held in the manner provided for herein in case of call
thereof by the Trustees.
Section 5.3 RECORD DATES. For the purpose of determining the Shareholders
who are entitled to vote or act at any meeting or any adjournment thereof, or
who are entitled to participate in any dividend or distribution, or for the
purpose of any other action, the Trustees may from time to time close the
transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date and time not more
than 90 days prior to the date of any meeting of Shareholders or other action as
the date and time of record for the determination of Shareholders entitled to
vote at such meeting or any adjournment thereof or to be treated as Shareholders
of record for purposes of such other action, and any Shareholder who was a
Shareholder at the date and time so fixed shall be entitled to vote at such
meeting or any adjournment thereof or to be treated as a Shareholder of record
for purposes of such other action, even though such Shareholder has since that
date and time disposed of such Shareholder's Shares, and no Shareholder becoming
such after that date and time shall be so entitled to vote at such meeting or
any adjournment thereof or to be treated as a Shareholder of record for purposes
of such other action.
Section 5.4 QUORUM AND REQUIRED VOTE. Except as otherwise provided by
the 1940 Act or other applicable law, thirty percent of the Shares entitled to
vote shall be a quorum for the transaction of business at a Shareholders'
meeting, but any lesser number shall be sufficient for adjournments. Any meeting
of shareholders, whether or not a quorum is present, may be adjourned for any
lawful purpose provided that no meeting shall be adjourned for more than six
months beyond the originally scheduled meeting date. Any adjourned session or
sessions may be held, within a reasonable time after the date set for the
original meeting without the necessity of further notice. A majority of the
Shares voted at a meeting at which a quorum is present, shall decide any
questions and a plurality shall elect a Trustee, except when a different vote is
required or permitted by any provision of the 1940 Act or other applicable law
or by this Declaration of Trust or the By-Laws.
Section 5.5 ACTION BY WRITTEN CONSENT. Subject to the provisions of the
1940 Act and other applicable law, any action taken by Shareholders may be taken
without a meeting if a majority of Shareholders entitled to vote on the matter
(or such larger proportion thereof as shall be required by the 1940 Act or by
any express provision of this Declaration of Trust or the By-Laws) consent to
the action in writing and such written consents are filed with the records of
the meetings of Shareholders. Such consent shall be treated for all purposes as
a vote taken at a meeting of Shareholders.
Section 5.6 INSPECTION OF RECORDS. The records of the Trust shall be
open to inspection by Shareholders for any lawful purpose reasonably related to
a Shareholder's interest as a Shareholder. The Trustees may from time to time
establish reasonable standards, including standards governing what information
and documents are to be furnished, at what time and location and at whose
expense, with respect to Shareholders' inspection of Trust records.
Section 5.7 ADDITIONAL PROVISIONS. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
ARTICLE VI - LIMITATION OF LIABILITY; INDEMNIFICATION
Section 6.1 TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE. All
persons extending credit to, contracting with or having any claim against the
Trust shall look only to the assets of the Sub-Trust with which such person
dealt for payment under such credit, contract or claim; and neither the
Shareholders of any Sub-Trust nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, nor any other Sub-Trust
shall be personally liable therefor. Every note, bond, contract, instrument,
certificate or undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Trust, any Sub-Trust or the Trustees or any of them
in connection with the Trust shall be conclusively deemed to have been executed
or done only by or for the Trust (or the Sub-Trust) or the Trustees and not
personally. The Trustees and the Trust's officers, employees and agents shall
not be liable to the Trust or the Shareholders; provided however, that nothing
in this Declaration of Trust shall protect any Trustee or officer, employee or
agent against any liability to the Trust or the Shareholders to which such
Trustee or officer, employee or agent would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee or of such officer,
employee or agent.
Every note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or by any officers or officer shall give notice that
the same was executed or made by or on behalf of the Trust or by them as
Trustees or Trustee or as officers or officer and not individually and that the
obligations of such instrument are not binding upon any of them or the
Shareholders individually but are binding only upon the assets and property of
the Trust, or the particular Sub-Trust in question, as the case may be, but the
omission thereof shall not operate to bind any Trustees or Trustee or officers
or officer or Shareholders or Shareholder individually or otherwise invalidate
any such note, bond, contract, instrument, certificate or undertaking.
Section 6.2 TRUSTEE'S GOOD FAITH ACTION; EXPERT ADVICE; NO BOND OR SURETY.
The exercise by the Trustees of their powers and discretion hereunder shall be
binding upon everyone interested. A Trustee shall be liable to the Trust and the
Shareholders for such Trustee's own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee, and for nothing else, and shall not be liable for errors of
judgment or mistakes of fact or law. Subject to the foregoing, (a) the Trustees
shall not be responsible or liable in any event for any neglect or wrongdoing of
any officer, agent, employee, consultant, adviser, administrator, distributor or
principal underwriter, custodian or transfer, dividend disbursing, Shareholder
servicing or accounting agent of the Trust, nor shall any Trustee be responsible
for the act or omission of any other Trustee; (b) the Trustees may take advice
of counsel or other experts with respect to the meaning and operation of this
Declaration of Trust and their duties as Trustees, and shall be under no
liability for any act or omission in accordance with such advice or for failing
to follow such advice; and (c) in discharging their duties, the Trustees, when
acting in good faith, shall be entitled to rely upon the books of account of the
Trust and upon written reports made to the Trustees by any officer appointed by
them, any independent public accountant, and (with respect to the subject matter
of the contract involved) any officer, partner or responsible employee of a
Contracting Party appointed by the Trustees pursuant to Section 3.3. The
Trustees as such shall not be required to give any bond or surety or any other
security for the performance of their duties. To the extent that, at law or in
equity, a Trustee has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to a Shareholder, any such Trustee acting under
this Declaration of Trust shall not be liable to the Trust or to any such
Shareholder for the Trustee's good faith reliance on the provisions of this
Declaration of Trust. The provisions of this Declaration of Trust, to the extent
that they restrict the duties and liabilities of a Trustee otherwise existing at
law or in equity, are agreed by the Shareholders to replace such other duties
and liabilities of such Trustee.
Section 6.3 INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder
(or former Shareholder) of any Sub-Trust of the Trust shall be charged or held
to be personally liable for any obligation or liability of the Trust solely by
reason of being or having been a Shareholder and not because of such
Shareholder's acts or omissions or for some other reason, the Trust on behalf of
said Sub-Trust (upon proper and timely request by the Shareholder) shall assume
the defense against such charge and satisfy any judgment thereon, and, to the
fullest extent permitted by law, the Shareholder or former Shareholder (or such
Shareholder's heirs, executors, administrators or other legal representatives or
in the case of a corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets of said Sub-Trust estate to be
held harmless from and indemnified against all loss and expense arising from
such liability.
Section 6.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC. To the fullest
extent permitted by law, the Trust shall indemnify (from the assets of the
Sub-Trust or Sub-Trusts in question) each of its Trustees and officers
(including persons who serve at the Trust's request as directors, officers or
trustees of another organization in which the Trust has any interest as a
shareholder, creditor or otherwise [hereinafter referred to as a "Covered
Person"]) against all liabilities, including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel fees, incurred by any
Covered Person in connection with the defense or disposition of any action, suit
or other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered Person may be or may
have been involved as a party or otherwise or with which such person may be or
may have been threatened, while in office or thereafter, by reason of being or
having been such a Trustee or officer, director or trustee, except with respect
to any matter as to which it has been determined that such Covered Person had
acted with willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office
(such conduct referred to hereafter as "Disabling Conduct"). A determination
that the Covered Person is entitled to indemnification may be made by (i) a
final decision on the merits by a court or other body before whom the proceeding
was brought that the person to be indemnified was not liable by reason of
Disabling Conduct, (ii) dismissal of a court action or an administrative
proceeding against a Covered Person for insufficiency of evidence of Disabling
Conduct, or (iii) a reasonable determination, based upon a review of the facts,
that the Covered Person was not liable by reason of Disabling Conduct by (a) a
vote of a majority of a quorum of Trustees who are neither "interested persons"
of the Trust as defined in section 2(a)(l9) of the 1940 Act nor parties to the
proceeding, or (b) an independent legal counsel in a written opinion. Expenses,
including accountants' and counsel fees so incurred by any such Covered Person
(but excluding amounts paid in satisfaction of judgments, in compromise or as
fines or penalties), may be paid from time to time from funds attributable to
the Sub-Trust in question in advance of the final disposition of any such
action, suit or proceeding, provided that the Covered Person shall have
undertaken to repay the amounts so paid to the Sub-Trust in question if it is
ultimately determined that indemnification of such expenses is not authorized
under this Article VI and (i) the Covered Person shall have provided security
for such undertaking, (ii) the Trust shall be insured against losses arising by
reason of any lawful advances, or (iii) a majority of a quorum of the
disinterested Trustees who are not a party to the proceeding, or an independent
legal counsel in a written opinion, shall have determined, based on a review of
readily available facts (as opposed to a full trial-type inquiry), that there is
reason to believe that the Covered Person ultimately will be found entitled to
indemnification.
Section 6.5 COMPROMISE PAYMENT. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 6.4,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless such
indemnification shall be approved (a) by a majority of the disinterested
Trustees who are not parties to the proceeding or (b) by an independent legal
counsel in a written opinion. Approval by the Trustees pursuant to clause (a) or
by independent legal counsel pursuant to clause (b) shall not prevent the
recovery from any Covered Person of any amount paid to such Covered Person in
accordance with any of such clauses as indemnification if such Covered Person is
subsequently adjudicated by a court of competent jurisdiction to have been
liable to the Trust or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office.
Section 6.6 INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article VI, "Covered Person" shall include such person's heirs, executors
and administrators, an "interested Covered Person" is one against whom the
action, suit or other proceeding in question or another action, suit or other
proceeding on the same or similar grounds is then or has been pending or
threatened, and a "disinterested" person is a person against whom none of such
actions, suits or other proceedings or another action, suit or other proceeding
on the same or similar grounds is then or has been pending or threatened.
Nothing contained in this Article shall affect any rights to indemnification to
which personnel of the Trust, other than Trustees and officers, and other
persons may be entitled by contract or otherwise under law, nor the power of the
Trust to purchase and maintain liability insurance on behalf of any such person.
Section 6.7 LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
Section 6.8 DISCRETION. Whenever in this Declaration of Trust the
Trustees are permitted or required to make a decision (a) in their "sole
discretion," "sole and absolute discretion," "full discretion" or "discretion,"
or under a similar grant of authority or latitude, the Trustees shall be
entitled to consider only such interests and factors as they desire, whether
reasonable or unreasonable, and may consider their own interests, and shall have
no duty or obligation to give any consideration to any interests of or factors
affecting the Trust or the Shareholders, or (b) in their "good faith" or under
another express standard, the Trustees shall act under such express standard and
shall not be subject to any other or different standards imposed by this
Declaration of Trust or by law or any other agreement contemplated herein. Each
Shareholder and Trustee hereby agrees that any standard of care or duty imposed
in this Declaration of Trust or any other agreement contemplated herein or under
the Act or any other applicable law, rule or regulation shall be modified,
waived or limited in each case as required to permit the Trustees to act under
this Declaration of Trust or any other agreement contemplated herein and to make
any decision pursuant to the authority prescribed in this Declaration of Trust.
ARTICLE VII - MISCELLANEOUS
Section 7.1 DURATION AND TERMINATION OF TRUST. Unless terminated as
provided herein, the Trust shall continue without limitation of time and,
without limiting the generality of the foregoing, no change, alteration or
modification with respect to any Sub-Trust or class thereof shall operate to
terminate the Trust. The Trust may be terminated at any time by a majority of
the Trustees then in office subject to a favorable vote of a Majority of the
Outstanding Voting Shares of the Trust.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with the
provisions of subsection (d) of Section 4.2.
Section 7.2 REORGANIZATION. The Trust, or any one or more Sub-Trusts,
may, either as the successor, survivor, or non-survivor, (1) consolidate or
merge with one or more other trusts, Sub-Trusts, partnerships, limited liability
companies, associations or corporations organized under the laws of the State of
Delaware or any other state of the United States, to form a consolidated or
merged trust, partnership, limited liability company, association or corporation
under the laws of which any one of the constituent entities is organized, with
the Trust in the case of a merger to be the survivor or non-survivor of such
merger, or (2) transfer a substantial portion of its assets to one or more other
trusts, Sub-Trusts, partnerships, limited liability companies, associations or
corporations organized under the laws of the State of Delaware or any other
state of the United States, or have one or more such trusts, Sub-Trusts,
partnerships, limited liability companies, associations or corporations merged
into or transfer a substantial portion of its assets to it, any such
consolidation, merger or transfer to be upon such terms and conditions as are
specified in an agreement and plan of reorganization authorized and approved by
the Trustees and entered into by the Trust, or one or more Sub-Trusts as the
case may be, in connection therewith. Any such consolidation, merger or transfer
shall require the affirmative vote of the holders of a Majority of the
Outstanding Voting Shares of the Trust (or each Sub-Trust affected thereby,
as the case may be), except that (a) such affirmative vote of the holders of
Shares shall not be required if the Trust (or Sub-Trust affected thereby, as the
case may be) shall be the survivor of such consolidation or merger or transferee
of such assets; (b) the Trustees may, without shareholder approval, cause the
Trust or any series of the Trust to invest any or all of its assets in
securities issued by a registered investment company or series thereof, subject
to the provisions of the 1940 Act; and (c) the Trustees may, without shareholder
approval, cause the Trust, or any series of the Trust, to transfer all or
substantially all of its assets and liabilities to another registered investment
company having substantially identical investment objectives and policies in
exchange for shares of such other investment company if, but only if, the Trust
or series, as the case may be, retains the shares of such other investment
company as an investment.
Section 7.3 AMENDMENTS. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or repeal the prohibition of assessment upon the Shareholders without the
express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) may be amended at any time, so long as such
amendment does not materially adversely affect the rights of any Shareholder
with respect to which such amendment is or purports to be applicable and so long
as such amendment is not in contravention of applicable law, including the 1940
Act, by an instrument in writing signed by a majority of the then Trustees (or
by an officer of the Trust pursuant to the vote of a majority of such Trustees).
Any amendment to this Declaration of Trust that materially adversely affects the
rights of Shareholders may be adopted at any time by an instrument in writing
signed by a majority of the then Trustees (or by an officer of the Trust
pursuant to a vote of a majority of such Trustees) when authorized to do so by
the vote in accordance with subsection (e) of Section 4.2 of Shareholders as
specified in Section 5.4 hereof. Subject to the foregoing, any such amendment
shall be effective as of any past or future time as provided in the instrument
containing the terms of such amendment or, if there is no provision therein with
respect to effectiveness, upon the execution of such instrument and of a
certificate (which may be a part of such instrument) executed by a Trustee or
officer of the Trust to the effect that such amendment has been duly adopted.
Section 7.4 FILING OF COPIES; REFERENCES; HEADINGS. The original or a copy
of this instrument and of each amendment hereto shall be kept at the office of
the Trust where it may be inspected by any Shareholder. Anyone dealing with the
Trust may rely on a certificate by an officer of the Trust as to whether or not
any such amendments have been made, as to the identities of the Trustees and
officers, and as to any matters in connection with the Trust hereunder; and,
with the same effect as if it were the original, may rely on a copy certified by
an officer of the Trust to be a copy of this instrument or of any such
amendments. In this instrument and in any such amendment, references to this
instrument, and all expressions like "herein", "hereof" and "hereunder" shall be
deemed to refer to this instrument as a whole as the same may be amended or
affected by any such amendments. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or control or affect the
meaning, construction or effect of this instrument. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
Section 7.5 APPLICABLE LAW. This Declaration of Trust is created under
and is to be governed by and construed and administered according to the laws of
the State of Delaware. The Trust shall be of the type referred to in Section
3801 of the Act and of the type commonly called a business trust, and without
limiting the provisions hereof, the Trust may exercise all powers which are
ordinarily exercised by such a trust.
Section 7.6 REGISTERED AGENT. The Corporation Trust Company of 1209
Orange Street, City of Wilmington, County of New Castle, Delaware 19801 is
hereby designated as the initial registered agent for service of process on the
Trust in Delaware. The address of the registered office of the Trust in the
State of Delaware is 1209 Orange Street, City of Wilmington, County of New
Castle, Delaware 19801.
Section 7.7 INTEGRATION. This Declaration of Trust constitutes the
entire agreement among the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements and understandings pertaining
thereto.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals for themselves and their assigns, as of the day and year first above
written.
/S/ DEXTER A. DODGE
Dexter A. Dodge
/S/ JOHN J. DANELLO
John J. Danello
FM042
FUNDMANAGER TRUST
AMENDMENT NO. I
TO
MASTER TRUST AGREEMENT
AMENDMENT NO. 1 to the Master Trust Agreement of FundManager Trust (the
"Trust") dated February 7, 1995 (the "Agreement"), made as of the 13th day of
June, 1995.
WITNESSETH:
WHEREAS, Section 7.3 of the Agreement provides that the Agreement may
be amended at any time, so long as such amendment does not adversely affect the
rights of any shareholder and so long as such amendment is not in contravention
of applicable law, including the Investment Company Act of 1940, by an
instrument in writing signed by an officer of the Trust pursuant to a vote of a
majority of the Trustees; and
WHEREAS, on June 13, 1995 a majority of the Trustees voted to authorize
a change in the name of the Income Fund Sub-Trust of the Trust from "Income
Fund" to "Bond Fund" (the "Bond Fund"); and
WHEREAS, Section 4.1 of the Agreement authorizes the Trustees of the
Trust to issue classes of shares of any Sub-Trust or divide the Shares of any
Sub-Trust into classes, having different dividend, liquidation, voting and other
rights as the Trustees may determine, and to establish and designate the
specific classes of Shares of each Sub- Trust; and
WHEREAS, on June 13, 1995 a majority of the Trustees voted that (i)
Shares of each of the Aggressive Growth Fund, Growth Fund, Growth & Income Fund
and Bond Fund SubTrusts of the Trust be divided into two Classes, such Classes
to be established and designated as "Financial Adviser Class" shares and
"No-Load Class" shares and (ii) Shares of the Managed Total Return Fund
Sub-Trust of the Trust be established and designated as "Financial Adviser
Class" shares; each such establishment and designation to be effective upon the
effectiveness of the amendment to the Trust's registration statement on Form
N-IA (the "Amendment") describing such Classes; and
WHEREAS, on June 13, 1995 a majority of the Trustees voted that upon
the effectiveness of the establishment and designation of such Classes, all the
then-issued and outstanding shares of each of the Aggressive Growth Fund, Growth
Fund, Growth &
<PAGE>
Income fund, Bond Fund and Managed Total Return Fund shall be redesignated as
Financial Adviser Class shares of such Fund; and
WHEREAS, the undersigned has been duly authorized by the Trustees to
execute and file this Amendment No. I to the Agreement.
NOW, THEREFORE, effective upon the effectiveness of the Amendment
referred to herein, the Agreement is hereby amended as follows:
1. AMENDMENT TO SECTION 4.2. The first paragraph of Section 4.2 of the
Agreement is hereby amended to read in pertinent part as follows:
"Section 4.2 ESTABLISHMENT AND DESIGNATION OF SUB-TRUSTS AND CLASSES.
Without limiting the authority of the Trustees set forth in Section 4.1 to
establish and designate any further Sub-Trusts, the Trustees hereby establish
and designate five Sub-Trusts: "Aggressive Growth Fund", "Growth Fund", "Growth
& Income Fund", "Bond Fund", and "Managed Total Return Fund." Each of the
Aggressive Growth Fund, Growth Fund, Growth & Income Fund and Bond Fund shall
consist of two classes designated as the "Financial Adviser Class" and the
"No-Load Class." The Managed Total Return Fund shall consist of one class
designated as the "Financial Adviser Class." The Shares of such Sub-Trusts and
any Shares of any further Sub-Trust or class thereof that may from time to time
be established and designated by the Trustees shall (unless the Trustees
otherwise determine with respect to some further Sub-Trust at the time of
establishing and designating the same) have the following relative rights and
preferences:"
The undersigned hereby certifies that the Amendment set forth above has
been duly adopted in accordance with the provisions of the Agreement.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the
day and year first above written.
FUNDMANAGER TRUST
/s/ JOHN J. DANELLO
John J. Danello,
Executive Vice President
BY-LAWS
OF
FUNDMANAGER TRUST
(A Delaware Business Trust)
ARTICLE 1
AGREEMENT AND DECLARATION OF TRUST AND PRINCIPAL OFFICE
1.1 AGREEMENT AND DECLARATION OF TRUST. These By-Laws shall be subject to the
Master Trust Agreement, as from time to time in effect (the "Declaration of
Trust"), of FundManager Trust, the Delaware business trust established by the
Declaration of Trust (the "Trust").
1.2 PRINCIPAL OFFICE OF THE TRUST. The principal office of the Trust shall be
located in Boston, Massachusetts.
ARTICLE 2
MEETINGS OF TRUSTEES
2.1 REGULAR MEETINGS. Regular meetings of the Trustees may be held without call
or notice at such places either within or without the State of Delaware and at
such times as the Trustees may from time to time determine, provided that notice
of the first regular meetings following any such determination shall be given to
absent Trustees.
2.2 SPECIAL MEETINGS. Special meetings of the Trustees may be held at any time
and at any place designated in the call of the meeting when called by the
Chairman of the Board, the President or the Treasurer or by two or more
Trustees, sufficient notice thereof being given to each Trustee by the Secretary
or an Assistant Secretary or by the officer of the Trust calling the meeting.
2.3 NOTICE. It shall be sufficient notice to a Trustee of a special meeting to
send notice by mail at least forty-eight hours or by telegram at least
twenty-four hours before the meeting addressed to the Trustee at his or her
usual or last known business or residence address or to give notice to him or
her in person or by telephone at least twenty-four hours before the meeting.
Notice of a meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her before or after the meeting, is filed with the
records of the meeting, or to any Trustee who attends the meeting without
protesting prior thereto or at its commencement the lack of notice to him or
her. Neither notice of a meeting nor a waiver of a notice need specify the
purposes of the meeting.
2.4 QUORUM; ADJOURNMENT; VOTE REQUIRED FOR ACTION. At any meeting of the
Trustees a majority of the Trustees then in office shall constitute a quorum.
Any meeting may be adjourned from time to time by a majority of the votes cast
upon the question, whether or not a quorum is present, and the meeting may be
held as adjourned without further notice. At the adjourned meeting, the Trustees
may transact any business which might have been transacted at the original
meeting. Except in cases where the Declaration of Trust or these By-Laws
otherwise provide, the vote of a majority of the Trustees present at a meeting
at which a quorum is present shall be the act of the Trustees.
2.5 PARTICIPATION BY TELEPHONE. One or more of the Trustees or of any committee
of the Trustees may participate in a meeting thereof by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at a meeting.
ARTICLE 3
OFFICERS
3.1 ENUMERATION; QUALIFICATION. The officers of the Trust shall be a Chairman of
the Board, a President, a Treasurer, a Secretary and such other officers,
including Vice Presidents. Assistant Treasurers and Assistant Secretaries, if
any, as the Trustees from time to time may in their discretion elect. The Trust
may also have such agents as the Trustees from time to time may in their
discretion appoint. The Chairman of the Board shall be a Trustee and may but
need not be a beneficial owner of the Trust (a "Shareholder"); and any other
officer may be but none need be a Trustee or Shareholder. Any two or more
offices may be held by the same person.
3.2 ELECTION. The Chairman of the Board, the President, the Treasurer, and the
Secretary shall be elected annually by the Trustees at a meeting held within the
first four months of the Trust's fiscal year. The meeting at which the officers
are elected shall be known as the annual meeting of Trustees. Other officers, if
any, may be elected or appointed by the Trustees at said meeting or at any other
time. Vacancies in any office may be filled at any time.
3.3 TENURE. The Chairman of the Board, the President, the Treasurer, and the
Secretary shall hold office until the next annual meeting of the Trustees and
until their respective successors are chosen and qualified, or in each case
until he or she sooner dies, resigns, is removed or becomes disqualified. Each
other officer shall hold office and each agent shall retain authority at the
pleasure of the Trustees.
3.4 POWERS. Subject to the other provisions of these By-Laws, each officer shall
have, in addition to the duties and powers herein and in the Declaration of
Trust set forth, such duties and powers as are commonly incident to the office
occupied by him or her as if the Trust were organized as a Delaware business
corporation and such other duties and powers as the Trustees may from time to
time designate.
3.5 CHAIRMAN, PRESIDENT. Unless the Trustees otherwise provide, the Chairman
of the Board, or, if there is none, or in the absence of the Chairman, the
President shall preside at all meetings of the shareholders and of the Trustees.
3.6 VICE PRESIDENT. The Vice President, or if there be more than one Vice
President, the Vice Presidents in the order determined by the Trustees (or if
there be no such determination, then in the order of their election) shall in
the absence of the President or in the event of his or her inability or refusal
to act, perform the duties of the President, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the President. The
Vice Presidents shall perform such other duties and have such other powers as
the Trustees may from time to time prescribe.
3.7 TREASURER. The Treasurer shall be the chief financial and accounting officer
of the Trust, and shall, subject to the provisions of the Declaration of Trust
and to any arrangement made by the Trustees with a custodian, investment adviser
or manager, or transfer, shareholder servicing or similar agent, be in charge of
the valuable papers, books of account and accounting records of the Trust, and
shall have such other duties and powers as may be designated from time to time
by the Trustees or by the President.
3.8 ASSISTANT TREASURER. The Assistant Treasurer, or if there shall be more than
one, the Assistant Treasurers in the order determined by the Trustees (or if
there be no such determination, then in the order of their election), shall, in
the absence of the Treasurer or in the event of his or her inability or refusal
to act, perform the duties and exercise the powers of the Treasurer and shall
perform such other duties and have such other powers as the Board of Trustees
may from time to time prescribe.
3.9 SECRETARY. The Secretary shall record all proceedings of the Shareholders
and the Trustees in books to be kept therefor, which books or a copy thereof
shall be kept at the principal office of the Trust. In the absence of the
Secretary from any meeting of the Shareholders or Trustees, an assistant
secretary, or if there be none or if he or she is absent, a temporary secretary
chosen at such meeting shall record the proceedings thereof in the aforesaid
books.
3.10 ASSISTANT SECRETARY. The Assistant Secretary, or if there be more than one,
the Assistant Secretaries in the order determined by the Trustees (or if there
be no determination, then in the order of their election), shall, in the absence
of the Secretary or in the event of his or her inability or refusal to act,
perform the duties and exercise the powers of the Secretary and shall perform
such other duties and have such other powers as the Board of Trustees may from
time to time prescribe.
3.11 RESIGNATIONS AND REMOVALS. Any Trustee or officer may resign at any time by
written instrument signed by him or her and delivered to the Chairman, the
President or the Secretary or to a meeting of the Trustees. Such resignation
shall be effective upon receipt unless specified to be effective at some other
time. The Trustees may remove any officer elected by them with or without cause.
Except to the extent expressly provided in a written agreement with the Trust,
no Trustee or officer resigning and no officer removed shall have any right to
any compensation for any period following his or her resignation or removal, or
any right to damages on account of such removal.
ARTICLE 4
COMMITTEES
4.1 GENERAL. The Trustees, by vote of a majority of the Trustees then in office,
may elect from their number an Executive Committee or other committees and may
delegate thereto some or all of their powers except those which by law, by the
Declaration of Trust, or by these By-Laws may not be delegated. Except as the
Trustees may otherwise determine, any such committee may make rules for the
conduct of its business, but unless otherwise provided by the Trustees or in
such rules, its business shall be conducted so far as possible in the same
manner as is provided by these By-Laws for the Trustees themselves. All members
of such committees shall hold such offices at the pleasure of the Trustees. The
Trustees may abolish any such committee at any time. Any committee to which the
Trustees delegate any of their powers or duties shall keep records of its
meetings and shall report its action to the Trustees. The Trustees shall have
power to rescind any action of any committee, but no such rescission shall have
retroactive effect.
ARTICLE 5
REPORTS
5.1 GENERAL. The Trustees and officers shall render reports at the time and in
the manner required by the Declaration of Trust or any applicable law. Officers
and Committees shall render such additional reports as they may deem desirable
or as may from time to time be required by the Trustees.
ARTICLE 6
FISCAL YEAR
6.1 GENERAL. The fiscal year of the Trust shall be fixed by resolution of the
Trustees.
ARTICLE 7
SEAL
7.1 GENERAL. The seal of the Trust shall consist of a flat-faced die with the
word "Delaware", together with the name of the Trust and the year of its
organization cut or engraved thereon, but, unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on, and its absence shall
not impair the validity of, any document, instrument or other paper executed and
delivered by or on behalf of the Trust.
ARTICLE 8
EXECUTION OF PAPERS
8.1 GENERAL. Except as the Trustees may generally or in particular cases
authorize the execution thereof in some other manner, all deeds, leases,
contracts, notes and other obligations made by the Trustees shall be signed by
the President, any Vice President, or by the Treasurer and need not bear the
seal of the Trust.
ARTICLE 9
ISSUANCE OF SHARE CERTIFICATES
9.1 SHARE CERTIFICATES. In lieu of issuing certificates for shares of the Trust,
the Trustees or the transfer agent may either issue receipts therefor or may
keep accounts upon the books of the Trust for the record holders of such shares,
who shall in either case be deemed, for all purposes hereunder, to be the
holders of certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof.
The Trustees may at any time authorize the issuance of share certificates
either in limited cases or to all Shareholders. In that event, a Shareholder may
receive a certificate stating the number of shares owned by him or her, in such
form as shall be prescribed from time to time by the Trustees. Such certificate
shall be signed by the President or a Vice President and by the Treasurer or
Assistant Treasurer. Such signatures may be facsimiles if the certificate is
signed by a transfer agent, or by a registrar, other than a Trustee, officer or
employee of the Trust. In case any officer who has signed or whose facsimile
signature has been placed on such certificate shall cease to be such officer
before such certificate is issued, it may be issued by the Trust with the same
effect as if he were such officer at the time of its issue.
9.2 LOSS OF CERTIFICATES. In case of the alleged loss or destruction or the
mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe. The Trust may
require the owner of the lost, destroyed or mutilated share certificate, or his
or her legal representative, to give the Trust a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
destruction or mutilation of any such certificate or the issuance of such new
certificate.
9.3 ISSUANCE OF NEW CERTIFICATE TO PLEDGEE. A pledgee of shares transferred as
collateral security shall be entitled to a new certificate if the instrument of
transfer substantially describes the debt or duty that is intended to be secured
thereby. Such new certificate shall express on its face that it is held as
collateral security, and the name of the pledgor shall be stated thereon. who
alone shall be liable as a Shareholder, and entitled to vote thereon.
9.4 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees may at any time
discontinue the issuance of share certificates and may, by written notice to
each Shareholder, require the surrender of shares certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect the ownership of
shares in the Trust.
ARTICLE 10
DEALINGS WITH TRUSTEES AND OFFICERS
10.1 GENERAL. Any Trustee, officer or other agent of the Trust may acquire, own
and dispose of shares of the Trust to the same extent as if he or she were not a
Trustee, officer- or agent; and the Trustees may accept subscriptions to shares
or repurchase shares from any firm or company in which any Trustee, officer or
other agent of the Trust may have an interest.
ARTICLE 11
AMENDMENTS TO THE BY-LAWS
11.1 GENERAL. These By-Laws may be amended or repealed, in whole or in part, by
a majority of the Trustees then in office at any meeting of the Trustees, or by
one or more writings signed by such a majority.
Adopted: February 7, 1995
FM043
<PAGE>
MASTER INVESTMENT ADVISORY CONTRACT
FundManager Trust
One Beacon Street
Boston, Massachusetts 02108
May 8, 1995
Freedom Capital Management Corporation
One Beacon Street
Boston, Massachusetts 02108-3105
Dear Sirs:
This will confirm the agreement between the undersigned (the "Trust")
and Freedom Capital Management Corporation (the "Adviser") as follows:
1. The Trust is an open-end investment company organized as a Massachusetts
business trust and consists of one or more separate investment portfolios (the
"Funds") as may be established and designated by the Trust's Board of Trustees
(the "Board of Trustees") from time to time. This Contract shall pertain to such
Funds as shall be designated in Supplements to this Contract as further agreed
between the Trust and the Adviser. A separate series of shares of beneficial
interest in the Trust is offered to investors with respect to each Fund. The
Trust engages in the business of investing and reinvesting the assets of each
Fund in the manner and in accordance with the investment objectives and
restrictions specified in the currently effective prospectus (the "Prospectus")
relating to the Trust and the Funds included in the company's Registration
Statement, as amended from time to time, filed by the Trust under the Investment
Company Act of 1940, as amended (the "1940 Act") and the Securities Act of 1933.
Copies of the documents referred to in the preceding sentence have been
furnished to the Adviser. Any amendments to those documents shall be furnished
to the Adviser promptly. Pursuant to Master Distribution Contracts and
Supplements thereto between the Trust and each of Tucker Anthony Incorporated,
Sutro & Co., Inc. and Signature Broker-Dealer Services, Inc. (the
"Distributor"), the Trust has employed the Distributor to act as principal
underwriters for each Fund pursuant to a Master Administrative Services Contract
and supplements thereto between the Trust and Signature Broker-Dealer Services,
Inc. (the "Administrator"). The Trust has employed the Administrator to provide
to the Trust management and other services.
2. The Trust hereby appoints the Adviser to provide the investment advisory
services specified in this Contract and the Adviser hereby accepts such
appointment.
3. (a) The Adviser shall, at its expense, (i) employ or associate with itself
such persons as it believes appropriate to assist it in performing its
obligations under this Contract and (ii) provide all services, equipment and
facilities necessary to perform its obligations under this Contract.
(b) The Trust shall be responsible for all of its expenses and liabilities,
including compensation of its Trustees who are not affiliated with the
Distributors or any of their affiliates; taxes and governmental fees; interest
charges; fees and expenses of the Trust's independent accountants and legal
counsel; trade association membership dues; fees and expenses of any custodian
(including maintenance of books and accounts and calculation of the net asset
value of shares of the Funds), transfer agent, registrar and dividend disbursing
agent of the Trust; expenses of issuing, selling, redeeming, registering and
qualifying for sale shares of beneficial interest in the Trust; expenses of
preparing and printing share certificates, prospectuses and reports to
shareholders, notices, proxy statements and reports to regulatory agencies; the
cost of office supplies, including stationery; travel expenses of all officers,
Trustees and employees; insurance premiums; brokerage and other expenses of
executing portfolio transactions; expenses of shareholders' meetings;
organization expenses; and extraordinary expenses.
4. (a) The Adviser shall provide to the Trust investment guidance and policy
direction in connection with the management of the portfolio of each Fund,
including oral and written research, analysis, advice, statistical and economic
data and information and judgments of both a macroeconomic and microeconomic
character.
The Adviser will determine the securities to be purchased or sold by each Fund
and will place orders pursuant to its determinations either directly with the
issuer or with any broker or dealer who deals in such securities. The Adviser
will determine what portion of each Fund's portfolio shall be invested in
securities described by the policies of such Fund and what portion, if any,
should be invested otherwise or held uninvested.
The Trust will have the benefit of the investment analysis and research, the
review of current economic conditions and trends and the consideration of
long-range investment policy generally available to investment advisory
customers of the Adviser. It is understood that the Adviser will not use any
inside information pertinent to investment decisions undertaken in connection
with this Contract that may be in its possession or in the possession of any of
its affiliates nor will the Adviser seek to obtain any such information.
(b) The Adviser also shall provide to the Trust's officers administrative
assistance in connection with the operation of the Trust and each of the Funds,
which shall include (i) compliance with all reasonable requests of the Trust for
information, including information required in connection with the Trust's
filings with the Securities and Exchange Commission and state securities
commissions and (ii) such other services as the Adviser shall from time to time
determine, upon consultation with the Administrator, to be necessary or useful
to the administration of the Trust and each of the Funds.
(c) As manager of the assets of each Fund, the Adviser shall make investments
for the account of each Fund in accordance with the Adviser's best judgment and
within the investment objectives and restrictions set forth in the Prospectus,
the 1940 Act and the provisions of the Internal Revenue Code of 1986 relating to
regulated investment companies subject to policy decisions adopted by the Board
of Trustees.
(d) The Adviser shall furnish to the Board of Trustees periodic reports on the
investment performance of each Fund and on the performance of its obligations
under this Contract and shall supply such additional reports and information as
the Trust's officers or Board of Trustees shall reasonably request.
(e) On occasions when the Adviser deems the purchase or sale of a security to be
in the best interest of a Fund as well as other customers, the Adviser, to the
extent permitted by applicable law, may aggregate the securities to be so sold
or purchased in order to obtain the best execution or lower brokerage
commissions, if any. The Adviser may also on occasions purchase or sell a
particular security for one or more customers in different amounts. On either
occasion, and to the extent permitted by applicable law and regulations,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Adviser in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to that Fund and to such other customers.
5. The Adviser shall give the Trust the benefit of the Adviser's best judgment
and efforts in rendering services under this Contract. As an inducement to the
Adviser's undertaking to render these services, the Trust agrees that the
Adviser shall not be liable under this Contract for any mistake in judgment or
in any other event whatsoever PROVIDED that nothing in this Contract shall be
deemed to protect or purport to protect the Adviser against any liability to the
Trust or its shareholders to which the Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of the Adviser's duties under this Contract or by reason of the Adviser's
reckless disregard of its obligations and duties hereunder.
6. In consideration of the services to be rendered by the Adviser under this
Contract, each Fund shall pay the Adviser a monthly fee on the first business
day of each month based upon the average daily value (as determined on each
business day at the time set forth in the Prospectus for determining net asset
value per share) of the net assets of each Fund during the preceding month, at
annual rates set forth in a Supplement to this Contract with respect to each
Fund. If the fees payable to the Adviser pursuant to this paragraph 6 begin to
accrue before the end of any month or if this Contract terminates before the end
of any month, the fees for the period from that date to the end of that month or
from the beginning of that month to the date of termination, as the case may be,
shall be prorated according to the proportion which the period bears to the full
month in which the effectiveness or termination occurs. For purposes of
calculating the monthly fees, the value of the net assets of each Fund shall be
computed in the manner specified in the Prospectus for the computation of net
asset value. For purposes of this Contract, a "business day" is any day the New
York Stock Exchange is open for trading.
7. If the aggregate expenses of every character incurred by, or allocated to,
each Fund in any fiscal year, other than interest, taxes, expenses under the
Master Distribution Plan, brokerage commissions and other portfolio transaction
expenses, other expenditures which are capitalized in accordance with generally
accepted accounting principles and any extraordinary expense (including, without
limitation, litigation and indemnification expense), but including the fees
payable under this Contract and the fees payable to the Distributors under the
Master Distribution Plan ("includible expenses"), shall exceed the expense
limitations applicable to that Fund imposed by state securities law or
regulations thereunder, as these limitations may be raised or lowered from time
to time, the Adviser shall pay that Fund an amount equal to 50% of that excess.
With respect to portions of a fiscal year in which this Contract shall be in
effect, the foregoing limitations shall be prorated according to the proportion
which that portion of the fiscal year bears to the full fiscal year. At the end
of each month of the Trust's fiscal year, the Distributors will review the
includible expenses accrued during that fiscal year to the end of the period and
shall estimate the contemplated includible expenses for the balance of that
fiscal year. If, as a result of that review and estimation, it appears likely
that the includible expenses will exceed the limitations referred to in this
paragraph 7 for a fiscal year with respect to a Fund, the monthly fees relating
to that Fund payable to the Adviser under this Contract for such month shall be
reduced, subject to a later reimbursement to reflect actual expenses, by an
amount equal to 50% of a pro rata portion (prorated on the basis of the
remaining months of the fiscal year, including the month just ended) of the
amount by which the includible expenses for the fiscal year (less an amount
equal to the aggregate of actual reductions made pursuant to this provision with
respect to prior months of the fiscal year) are expected to exceed the
limitations provided in this paragraph 7. For purposes of the foregoing, the
value of the net assets of each Fund shall be computed in the manner specified
in paragraph 6, and any payments required to be made by the Adviser shall be
made once a year promptly after the end of the Trust's fiscal year.
8. (a) This Contract and any Supplement hereto shall become effective with
respect to a Fund on the date specified in such Supplement and shall thereafter
continue in effect with respect to that Fund for a period of more than two years
from such date only so long as the continuance is specifically approved at least
annually (i) by the vote of a majority of the outstanding voting securities of
the Fund (as defined in the 1940 Act) or by the Board of Trustees and (ii) by
the vote, cast in person at a meeting called for that purpose, of a majority of
the members of the Board of Trustees who are not parties to this Contract or
"interested persons" (as defined in the 1940 Act) of any such party.
(b) This Contract and any Supplement hereto may be terminated with respect to a
Fund at any time, without the payment of any penalty, by a vote of a majority of
the outstanding voting securities of that Fund (as defined in the 1940 Act) or
by a vote of a majority of the entire Board of Trustees on 60 days' written
notice to the Adviser or by the Adviser on 60 days' written notice to the Trust.
This Contract shall terminate automatically in the event of its assignment (as
defined in the 1940 Act).
9. Except to the extent necessary to perform the Adviser's obligations under
this Contract, nothing herein shall be deemed to limit or restrict the right of
the Adviser, or any affiliate of the Adviser, or any employee of the Adviser, to
engage in any other business or to devote time and attention to the management
or other aspects of any other business, whether of a similar or dissimilar
nature, or to render services of any kind to any other corporation, firm,
individual or association.
10. The investment management services of the Adviser to the Trust under this
Contract are not to be deemed exclusive as to the Adviser and the Adviser will
be free to render similar services to others.
11. This Contract shall be construed in accordance with the laws of the State of
Delaware provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act.
12. In the event that the Board of Trustees shall establish one or more
additional investment portfolios, it shall so notify the Adviser in writing. If
the Adviser wishes to render investment advisory services to such portfolio, it
shall so notify the Trust in writing, whereupon such portfolio shall become a
Fund hereunder.
13. The Master Trust Agreement establishing the Trust (the "Master Trust
Agreement") provides that the name "FundManager Trust" refers to the Trustees
under the Master Trust Agreement collectively as Trustees and not as individuals
or personally, and that no shareholder, Trustee, officer, employee or agent of
the Trust shall be subject to claims against or obligations of the Trust to any
extent whatsoever, but that the Trust estate only shall be liable.
If the foregoing correctly sets forth the agreement between the Trust and the
Adviser, please so indicate by signing and returning to the Trust the enclosed
copy hereof.
Very truly yours,
FUNDMANAGER TRUST
By /S/ JOHN J. DANELLO
John J. Danello
President
ACCEPTED:
FREEDOM CAPITAL MANAGEMENT CORPORATION
By /S/ JOHN J. DANELLO
John J. Danello
Managing Director
<PAGE>
INVESTMENT ADVISORY CONTRACT SUPPLEMENT
FundManager Trust
One Beacon Street
Boston, Massachusetts 02108
May 8, 1995
Freedom Capital Management Corporation
One Beacon Street
Boston, Massachusetts 02108-3105
Dear Sirs:
RE: AGGRESSIVE GROWTH FUND
This will confirm the agreement between the undersigned (the "Trust") and
Freedom Capital Management Corporation (the "Adviser") as follows:
1. The Trust is an open-end management investment company organized as a
Massachusetts business trust and consists of such separate investment portfolios
as have been or may be established by the Trustees of the Trust from time to
time. A separate class of shares of beneficial interest of the Trust is offered
to investors with respect to each investment portfolio. Aggressive Growth Fund
(the "Fund") is a separate investment portfolio of the Trust.
2. The Trust and the Adviser have entered into a Master Investment Advisory
Contract ("Master Advisory Contract") pursuant to which the Trust has employed
the Adviser to provide investment advisory and other services specified in the
Master Advisory Contract and the Adviser has accepted such employment. Terms
used but not otherwise defined herein shall have the same meanings assigned to
them by the Master Advisory Contract.
3. As provided in paragraph 1 of the Master Advisory Contract, the Trust hereby
adopts the Master Advisory Contract with respect to the Fund and the Adviser
hereby acknowledges that the Master Advisory Contract shall pertain to the Fund,
the terms and conditions of the Master Advisory Contract being hereby
incorporated herein by reference.
4. The term "Fund" as used in the Master Advisory Contract shall, for purposes
of this Supplement, pertain to the Fund.
5. As provided in paragraph 6 of the Master Advisory Contract and subject to
further conditions as set forth therein, the Trust shall with respect to the
Fund pay the Adviser a monthly fee on the first business day of each month based
upon the average daily value (as determined on each business day at the time set
forth in the Prospectus for determining net asset value per share) of the net
assets of the Fund during the preceding month at the following annual rates:
Portion of Average Daily
VALUE OF NET ASSETS OF THE FUND FEE RATE
Assets not exceeding $500 million 0.50%
Assets in excess of $500 million 0.40%
6. This Supplement and the Master Advisory Contract (together, the "Contract")
shall become effective with respect to the Fund on May 8, 1995 and shall
thereafter continue in effect with respect to the Fund only so long as the
continuance is specifically approved at least annually (a) by the vote of a
majority of the outstanding voting securities of the Fund (as defined in the
1940 Act) or by the Board of Trustees and (b) by the vote, cast in person at a
meeting called for that purpose, of a majority of the members of the Board of
Trustees who are not parties to this Contract or "interested persons" (as
defined in the 1940 Act) of any such party. This Contract may be terminated with
respect to the Fund at any time, without the payment of any penalty, by vote of
a majority of the outstanding voting securities of the Fund (as defined in the
1940 Act) or by a vote of a majority of the members of the Board of Trustees on
60 days' written notice to the Trust. This Contract shall terminate
automatically in the event of its assignment as defined in the 1940 Act.
If the foregoing correctly sets forth the agreement between the Trust and the
Adviser, please so indicate by signing and returning to the Trust the enclosed
copy hereof.
Very truly yours,
FUNDMANAGER TRUST
By /S/ JOHN J. DANELLO
John J. Danello
President
ACCEPTED:
FREEDOM CAPITAL MANAGEMENT CORPORATION
By /S/ JOHN J. DANELLO
John J. Danello
Managing Director
<PAGE>
INVESTMENT ADVISORY CONTRACT SUPPLEMENT
FundManager Trust
One Beacon Street
Boston, Massachusetts 02108
May 8, 1995
Freedom Capital Management Corporation
One Beacon Street
Boston, Massachusetts 02108-3105
Dear Sirs:
RE: GROWTH FUND
This will confirm the agreement between the undersigned (the "Trust")
and Freedom Capital Management Corporation (the "Adviser") as follows:
1. The Trust is an open-end management investment company organized as a
Massachusetts business trust and consists of such separate investment portfolios
as have been or may be established by the Trustees of the Trust from time to
time. A separate class of shares of beneficial interest of the Trust is offered
to investors with respect to each investment portfolio. Growth Fund (the "Fund")
is a separate investment portfolio of the Trust.
2. The Trust and the Adviser have entered into a Master Investment Advisory
Contract ("Master Advisory Contract") pursuant to which the Trust has employed
the Adviser to provide investment advisory and other services specified in the
Master Advisory Contract and the Adviser has accepted such employment. Terms
used but not otherwise defined herein shall have the same meanings assigned to
them by the Master Advisory Contract.
3. As provided in paragraph 1 of the Master Advisory Contract, the Trust hereby
adopts the Master Advisory Contract with respect to the Fund and the Adviser
hereby acknowledges that the Master Advisory Contract shall pertain to the Fund,
the terms and conditions of the Master Advisory Contract being hereby
incorporated herein by reference.
4. The term "Fund" as used in the Master Advisory Contract shall, for purposes
of this Supplement, pertain to the Fund.
5. As provided in paragraph 6 of the Master Advisory Contract and subject to
further conditions as set forth therein, the Trust shall with respect to the
Fund pay the Adviser a monthly fee on the first business day of each month based
upon the average daily value (as determined on each business day at the time set
forth in the Prospectus for determining net asset value per share) of the net
assets of the Fund during the preceding month at the following annual rates:
Portion of Average Daily
VALUE OF NET ASSETS OF THE FUND FEE RATE
Assets not exceeding $500 million 0.50%
Assets in excess of $500 million 0.40%
6. This Supplement and the Master Advisory Contract (together, the "Contract")
shall become effective with respect to the Fund on May 8, 1995 and shall
thereafter continue in effect with respect to the Fund only so long as the
continuance is specifically approved at least annually (a) by the vote of a
majority of the outstanding voting securities of the Fund (as defined in the
1940 Act) or by the Board of Trustees and (b) by the vote, cast in person at a
meeting called for that purpose, of a majority of the members of the Board of
Trustees who are not parties to this Contract or "interested persons" (as
defined in the 1940 Act) of any such party. This Contract may be terminated with
respect to the Fund at any time, without the payment of any penalty, by vote of
a majority of the outstanding voting securities of the Fund (as defined in the
1940 Act) or by a vote of a majority of the members of the Board of Trustees on
60 days' written notice to the Trust. This Contract shall terminate
automatically in the event of its assignment as defined in the 1940 Act.
If the foregoing correctly sets forth the agreement between the Trust and the
Adviser, please so indicate by signing and returning to the Trust the enclosed
copy hereof.
Very truly yours,
FUNDMANAGER TRUST
By /S/ JOHN J. DANELLO
John J. Danello
President
ACCEPTED:
FREEDOM CAPITAL MANAGEMENT CORPORATION
By /S/ JOHN J. DANELLO
John J. Danello
Managing Director
<PAGE>
INVESTMENT ADVISORY CONTRACT SUPPLEMENT
FundManager Trust
One Beacon Street
Boston, Massachusetts 02108
May 8, 1995
Freedom Capital Management Corporation
One Beacon Street
Boston, Massachusetts 02108-3105
Dear Sirs:
RE: GROWTH & INCOME FUND
This will confirm the agreement between the undersigned (the "Trust") and
Freedom Capital Management Corporation (the "Adviser") as follows:
1. The Trust is an open-end management investment company organized as a
Massachusetts business trust and consists of such separate investment portfolios
as have been or may be established by the Trustees of the Trust from time to
time. A separate class of shares of beneficial interest of the Trust is offered
to investors with respect to each investment portfolio. Growth & Income Fund
(the "Fund") is a separate investment portfolio of the Trust.
2. The Trust and the Adviser have entered into a Master Investment Advisory
Contract ("Master Advisory Contract") pursuant to which the Trust has employed
the Adviser to provide investment advisory and other services specified in the
Master Advisory Contract and the Adviser has accepted such employment. Terms
used but not otherwise defined herein shall have the same meanings assigned to
them by the Master Advisory Contract.
3. As provided in paragraph 1 of the Master Advisory Contract, the Trust hereby
adopts the Master Advisory Contract with respect to the Fund and the Adviser
hereby acknowledges that the Master Advisory Contract shall pertain to the Fund,
the terms and conditions of the Master Advisory Contract being hereby
incorporated herein by reference.
4. The term "Fund" as used in the Master Advisory Contract shall, for purposes
of this Supplement, pertain to the Fund.
5. As provided in paragraph 6 of the Master Advisory Contract and subject to
further conditions as set forth therein, the Trust shall with respect to the
Fund pay the Adviser a monthly fee on the first business day of each month based
upon the average daily value (as determined on each business day at the time set
forth in the Prospectus for determining net asset value per share) of the net
assets of the Fund during the preceding month at the following annual rates:
Portion of Average Daily
VALUE OF NET ASSETS OF THE FUND FEE RATE
Assets not exceeding $500 million 0.50%
Assets in excess of $500 million 0.40%
6. This Supplement and the Master Advisory Contract (together, the "Contract")
shall become effective with respect to the Fund on May 8, 1995 and shall
thereafter continue in effect with respect to the Fund only so long as the
continuance is specifically approved at least annually (a) by the vote of a
majority of the outstanding voting securities of the Fund (as defined in the
1940 Act) or by the Board of Trustees and (b) by the vote, cast in person at a
meeting called for that purpose, of a majority of the members of the Board of
Trustees who are not parties to this Contract or "interested persons" (as
defined in the 1940 Act) of any such party. This Contract may be terminated with
respect to the Fund at any time, without the payment of any penalty, by vote of
a majority of the outstanding voting securities of the Fund (as defined in the
1940 Act) or by a vote of a majority of the members of the Board of Trustees on
60 days' written notice to the Trust. This Contract shall terminate
automatically in the event of its assignment as defined in the 1940 Act.
If the foregoing correctly sets forth the agreement between the Trust and the
Adviser, please so indicate by signing and returning to the Trust the enclosed
copy hereof.
Very truly yours,
FUNDMANAGER TRUST
By /S/ JOHN J. DANELLO
John J. Danello
President
ACCEPTED:
FREEDOM CAPITAL MANAGEMENT CORPORATION
By /S/ JOHN J. DANELLO
John J. Danello
Managing Director
<PAGE>
INVESTMENT ADVISORY CONTRACT SUPPLEMENT
FundManager Trust
One Beacon Street
Boston, Massachusetts 02108
May 8, 1995
Freedom Capital Management Corporation
One Beacon Street
Boston, Massachusetts 02108-3105
Dear Sirs:
RE: INCOME FUND
This will confirm the agreement between the undersigned (the "Trust") and
Freedom Capital Management Corporation (the "Adviser") as
1. The Trust is an open-end management investment company organized as a
Massachusetts business trust and consists of such separate investment portfolios
as have been or may be established by the Trustees of the Trust from time to
time. A separate class of shares of beneficial interest of the Trust is offered
to investors with respect to each investment portfolio. Income Fund (the "Fund")
is a separate investment portfolio of the Trust.
2. The Trust and the Adviser have entered into a Master Investment Advisory
Contract ("Master Advisory Contract") pursuant to which the Trust has employed
the Adviser to provide investment advisory and other services specified in the
Master Advisory Contract and the Adviser has accepted such employment. Terms
used but not otherwise defined herein shall have the same meanings assigned to
them by the Master Advisory Contract.
3. As provided in paragraph 1 of the Master Advisory Contract, the Trust hereby
adopts the Master Advisory Contract with respect to the Fund and the Adviser
hereby acknowledges that the Master Advisory Contract shall pertain to the Fund,
the terms and conditions of the Master Advisory Contract being hereby
incorporated herein by reference.
4. The term "Fund" as used in the Master Advisory Contract shall, for purposes
of this Supplement, pertain to the Fund.
5. As provided in paragraph 6 of the Master Advisory Contract and subject to
further conditions as set forth therein, the Trust shall with respect to the
Fund pay the Adviser a monthly fee on the first business day of each month based
upon the average daily value (as determined on each business day at the time set
forth in the Prospectus for determining net asset value per share) of the net
assets of the Fund during the preceding month at the following annual rates:
Portion of Average Daily
VALUE OF NET ASSETS OF THE FUND FEE RATE
Assets not exceeding $500 million 0.50%
Assets in excess of $500 million 0.40%
6. This Supplement and the Master Advisory Contract (together, the "Contract")
shall become effective with respect to the Fund on May 8, 1995 and shall
thereafter continue in effect with respect to the Fund only so long as the
continuance is specifically approved at least annually (a) by the vote of a
majority of the outstanding voting securities of the Fund (as defined in the
1940 Act) or by the Board of Trustees and (b) by the vote, cast in person at a
meeting called for that purpose, of a majority of the members of the Board of
Trustees who are not parties to this Contract or "interested persons" (as
defined in the 1940 Act) of any such party. This Contract may be terminated with
respect to the Fund at any time, without the payment of any penalty, by vote of
a majority of the outstanding voting securities of the Fund (as defined in the
1940 Act) or by a vote of a majority of the members of the Board of Trustees on
60 days' written notice to the Trust. This Contract shall terminate
automatically in the event of its assignment as defined in the 1940 Act.
If the foregoing correctly sets forth the agreement between the Trust and the
Adviser, please so indicate by signing and returning to the Trust the enclosed
copy hereof.
Very truly yours,
FUNDMANAGER TRUST
By /S/ JOHN J. DANELLO
John J. Danello
President
ACCEPTED:
FREEDOM CAPITAL MANAGEMENT CORPORATION
By /S/ JOHN J. DANELLO
John J. Danello
Managing Director
<PAGE>
INVESTMENT ADVISORY CONTRACT SUPPLEMENT
FundManager Trust
One Beacon Street
Boston, Massachusetts 02108
May 8, 1995
Freedom Capital Management Corporation
One Beacon Street
Boston, Massachusetts 02108-3105
Dear Sirs:
RE: MANAGED TOTAL RETURN FUND
This will confirm the agreement between the undersigned (the "Trust") and
Freedom Capital Management Corporation (the "Adviser") as follows:
1. The Trust is an open-end management investment company organized as a
Massachusetts business trust and consists of such separate investment portfolios
as have been or may be established by the Trustees of the Trust from time to
time. A separate class of shares of beneficial interest of the Trust is offered
to investors with respect to each investment portfolio. Managed Total Return
Fund (the "Fund") is a separate investment portfolio of the Trust.
2. The Trust and the Adviser have entered into a Master Investment Advisory
Contract ("Master Advisory Contract") pursuant to which the Trust has employed
the Adviser to provide investment advisory and other services specified in the
Master Advisory Contract and the Adviser has accepted such employment. Terms
used but not otherwise defined herein shall have the same meanings assigned to
them by the Master Advisory Contract.
3. As provided in paragraph 1 of the Master Advisory Contract, the Trust hereby
adopts the Master Advisory Contract with respect to the Fund and the Adviser
hereby acknowledges that the Master Advisory Contract shall pertain to the Fund,
the terms and conditions of the Master Advisory Contract being hereby
incorporated herein by reference.
4. The term "Fund" as used in the Master Advisory Contract shall, for purposes
of this Supplement, pertain to the Fund.
5. As provided in paragraph 6 of the Master Advisory Contract and subject to
further conditions as set forth therein, the Trust shall with respect to the
Fund pay the Adviser a monthly fee on the first business day of each month based
upon the average daily value (as determined on each business day at the time set
forth in the Prospectus for determining net asset value per share) of the net
assets of the Fund during the preceding month at the following annual rates:
Portion of Average Daily
VALUE OF NET ASSETS OF THE FUND FEE RATE
Assets not exceeding $500 million 0.50%
Assets in excess of $500 million 0.40%
6. This Supplement and the Master Advisory Contract (together, the "Contract")
shall become effective with respect to the Fund on May 8, 1995 and shall
thereafter continue in effect with respect to the Fund only so long as the
continuance is specifically approved at least annually (a) by the vote of a
majority of the outstanding voting securities of the Fund (as defined in the
1940 Act) or by the Board of Trustees and (b) by the vote, cast in person at a
meeting called for that purpose, of a majority of the members of the Board of
Trustees who are not parties to this Contract or "interested persons" (as
defined in the 1940 Act) of any such party. This Contract may be terminated with
respect to the Fund at any time, without the payment of any penalty, by vote of
a majority of the outstanding voting securities of the Fund (as defined in the
1940 Act) or by a vote of a majority of the members of the Board of Trustees on
60 days' written notice to the Trust. This Contract shall terminate
automatically in the event of its assignment as defined in the 1940 Act.
If the foregoing correctly sets forth the agreement between the Trust and the
Adviser, please so indicate by signing and returning to the Trust the enclosed
copy hereof.
Very truly yours,
FUNDMANAGER TRUST
By /S/ JOHN J. DANELLO
John J. Danello
President
ACCEPTED:
FREEDOM CAPITAL MANAGEMENT CORPORATION
By /S/ JOHN J. DANELLO
John J. Danello
Managing Director
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Financial
Highlights" in the Financial Adviser Class of Shares Prospectus and "Independent
Auditors" in the No-Load Class of Shares and Financial Adviser Class of Shares
Statement of Additional Information and to the use, in this Post-Effective
Amendment Number 2 to Registration Statement (Form N-1A Nos. 33-89754 and
811-8992) dated January 29, 1996, of our report on the financial statements and
financial highlights of FundManager Trust (comprising, respectively, Aggressive
Growth Fund, Growth Fund, Growth & Income Fund, Bond Fund and Managed Total
Retum Fund, formerly Republic Funds) dated November 10, 1995.
/s/ERNST & YOUNG LLP
ERNST & YOUNG LLP
Boston, Massachusetts
January 25, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
DATED SEPTEMBER 30, 1995 FOR THE FUNDMANAGER TRUST FUNDS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT.
</LEGEND>
<CIK> 0000939891
<NAME> FUNDMANAGER TRUST
<SERIES>
<NUMBER> 1
<NAME> AGGRESSIVE GROWTH FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 28,398,165
<INVESTMENTS-AT-VALUE> 33,675,272
<RECEIVABLES> 68,224
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 33,743,498
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 76,836
<TOTAL-LIABILITIES> 76,836
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 23,193,103
<SHARES-COMMON-STOCK> 1,838,433
<SHARES-COMMON-PRIOR> 2,458,054
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 33,667,662
<DIVIDEND-INCOME> 357,196
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 609,196
<NET-INVESTMENT-INCOME> (252,000)
<REALIZED-GAINS-CURRENT> 5,735,631
<APPREC-INCREASE-CURRENT> 2,550,693
<NET-CHANGE-FROM-OPS> 8,034,324
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 94,361
<DISTRIBUTIONS-OF-GAINS> 1,959,235
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 574,640
<NUMBER-OF-SHARES-REDEEMED> 1,297,234
<SHARES-REINVESTED> 135,951
<NET-CHANGE-IN-ASSETS> (4,098,779)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 183,747
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 609,196
<AVERAGE-NET-ASSETS> 36,855,081
<PER-SHARE-NAV-BEGIN> 15.57
<PER-SHARE-NII> (0.13)
<PER-SHARE-GAIN-APPREC> 3.70
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.83
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.31
<EXPENSE-RATIO> 1.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
DATED SEPTEMBER 30, 1995 FOR THE FUNDMANAGER TRUST FUNDS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT.
</LEGEND>
<CIK> 0000939891
<NAME>FUNDMANAGER TRUST
<SERIES>
<NUMBER> 2
<NAME> GROWTH FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 21,153,942
<INVESTMENTS-AT-VALUE> 24,855,666
<RECEIVABLES> 1,252,598
<ASSETS-OTHER> 8
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 26,108,272
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 86,331
<TOTAL-LIABILITIES> 86,331
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 17,715,294
<SHARES-COMMON-STOCK> 1,612,567
<SHARES-COMMON-PRIOR> 2,408,508
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 26,021,941
<DIVIDEND-INCOME> 503,564
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 537,237
<NET-INVESTMENT-INCOME> (33,673)
<REALIZED-GAINS-CURRENT> 4,679,348
<APPREC-INCREASE-CURRENT> 1,567,149
<NET-CHANGE-FROM-OPS> 6,212,824
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 202,424
<DISTRIBUTIONS-OF-GAINS> 1,998,155
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 408,816
<NUMBER-OF-SHARES-REDEEMED> 1,380,354
<SHARES-REINVESTED> 157,112
<NET-CHANGE-IN-ASSETS> (8,182,772)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 156,209
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 537,237
<AVERAGE-NET-ASSETS> 31,339,521
<PER-SHARE-NAV-BEGIN> 14.09
<PER-SHARE-NII> (0.02)
<PER-SHARE-GAIN-APPREC> 2.99
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.92
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.14
<EXPENSE-RATIO> 1.71
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
DATED SEPTEMBER 30, 1995 FOR THE FUNDMANAGER TRUST FUNDS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT.
</LEGEND>
<CIK> 0000939891
<NAME> FUNDMANAGER TRUST
<SERIES>
<NUMBER> 3
<NAME> GROWTH & INCOME FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 29,891,297
<INVESTMENTS-AT-VALUE> 35,715,326
<RECEIVABLES> 40,928
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 35,756,254
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 112,835
<TOTAL-LIABILITIES> 112,835
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 23,331,585
<SHARES-COMMON-STOCK> 1,949,419
<SHARES-COMMON-PRIOR> 3,117,731
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 35,643,424
<DIVIDEND-INCOME> 1,526,211
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 733,788
<NET-INVESTMENT-INCOME> 792,423
<REALIZED-GAINS-CURRENT> 5,826,326
<APPREC-INCREASE-CURRENT> 2,841,531
<NET-CHANGE-FROM-OPS> 9,460,280
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 999,120
<DISTRIBUTIONS-OF-GAINS> 2,699,191
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 336,532
<NUMBER-OF-SHARES-REDEEMED> 1,909,597
<SHARES-REINVESTED> 232,936
<NET-CHANGE-IN-ASSETS> (16,951,603)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 230,166
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 733,788
<AVERAGE-NET-ASSETS> 46,177,516
<PER-SHARE-NAV-BEGIN> 15.99
<PER-SHARE-NII> 0.27
<PER-SHARE-GAIN-APPREC> 3.19
<PER-SHARE-DIVIDEND> 0.33
<PER-SHARE-DISTRIBUTIONS> 0.84
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.28
<EXPENSE-RATIO> 1.59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
DATED SEPTEMBER 30, 1995 FOR THE FUNDMANAGER TRUST FUNDS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT.
</LEGEND>
<CIK> 0000939891
<NAME> FUNDMANAGER TRUST
<SERIES>
<NUMBER> 4
<NAME> BOND FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 76,507,225
<INVESTMENTS-AT-VALUE> 76,775,135
<RECEIVABLES> 1,656,828
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 78,431,963
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,013,347
<TOTAL-LIABILITIES> 1,013,347
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 79,311,765
<SHARES-COMMON-STOCK> 7,583,952
<SHARES-COMMON-PRIOR> 7,500,172
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 77,418,616
<DIVIDEND-INCOME> 5,043,620
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,068,521
<NET-INVESTMENT-INCOME> 3,975,099
<REALIZED-GAINS-CURRENT> (2,141,804)
<APPREC-INCREASE-CURRENT> 5,689,746
<NET-CHANGE-FROM-OPS> 7,523,041
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,486,674
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,074,856
<NUMBER-OF-SHARES-REDEEMED> 4,770,571
<SHARES-REINVESTED> 335,974
<NET-CHANGE-IN-ASSETS> 649,821
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 368,185
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,068,521
<AVERAGE-NET-ASSETS> 73,846,077
<PER-SHARE-NAV-BEGIN> 9.66
<PER-SHARE-NII> 0.52
<PER-SHARE-GAIN-APPREC> 0.49
<PER-SHARE-DIVIDEND> 0.46
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.21
<EXPENSE-RATIO> 1.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
DATED SEPTEMBER 30, 1995 FOR THE FUNDMANAGER TRUST FUNDS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT.
</LEGEND>
<CIK> 0000939891
<NAME> FUNDMANAGER TRUST
<SERIES>
<NUMBER> 5
<NAME> MANAGED TOTAL RETURN FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 13,561,881
<INVESTMENTS-AT-VALUE> 14,772,234
<RECEIVABLES> 25,754
<ASSETS-OTHER> 5
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 14,797,993
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 48,666
<TOTAL-LIABILITIES> 48,666
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,818,588
<SHARES-COMMON-STOCK> 1,266,151
<SHARES-COMMON-PRIOR> 1,420,655
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 14,749,327
<DIVIDEND-INCOME> 660,235
<INTEREST-INCOME> 16,320
<OTHER-INCOME> 0
<EXPENSES-NET> 322,926
<NET-INVESTMENT-INCOME> 353,629
<REALIZED-GAINS-CURRENT> 691,877
<APPREC-INCREASE-CURRENT> 963,916
<NET-CHANGE-FROM-OPS> 2,009,422
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 437,840
<DISTRIBUTIONS-OF-GAINS> 1,100,015
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 151,194
<NUMBER-OF-SHARES-REDEEMED> 590,034
<SHARES-REINVESTED> 146,354
<NET-CHANGE-IN-ASSETS> (2,765,366)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 77,116
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 322,926
<AVERAGE-NET-ASSETS> 15,464,390
<PER-SHARE-NAV-BEGIN> 11.24
<PER-SHARE-NII> 0.28
<PER-SHARE-GAIN-APPREC> 1.18
<PER-SHARE-DIVIDEND> 0.30
<PER-SHARE-DISTRIBUTIONS> 0.75
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.65
<EXPENSE-RATIO> 2.09
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
