As filed with the Securities and Exchange Commission on March 28, 1996
Registration Nos. 33-94668 and 811-9070
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 1
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 3
DEVCAP TRUST
(Exact Name of Registrant as Specified in Charter)
6 St. James Avenue, Boston, Massachusetts 02116
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (617) 423-0800
Thomas M. Lenz
6 St. James Avenue
Boston, Massachusetts 02116
(Name and Address of Agent for Service)
Copy to:
Keith a. Palzer
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[x] on March 29, 1996 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] 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:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant has previously registered an indefinite number of its shares
under the Securities Act of 1933, as amended, pursuant to Rule 24f-2 under the
Investment Company Act of 1940, as amended. The Registrant expects to file a
Rule 24f-2 notice with respect to DEVCAP Shared Return Fund for its fiscal year
ending July 31, 1996 on or before September 30, 1996.
Domini Social Index Portfolio has also executed this registration statement.
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DEVCAP SHARED RETURN FUND
CROSS REFERENCE SHEET
(As Required by Rule 495)
PART A ITEM NO.: Prospectus Headings.
1. COVER PAGE: Front Cover Page.
2. SYNOPSIS: The Fund; Expense Summary.
3. CONDENSED FINANCIAL INFORMATION: Financial Hightlights.
4. GENERAL DESCRIPTION OF REGISTRANT: Front Cover Page; The Fund;
Charitable Contribution Program; Investment Objective, Policies and
Risks.
5. MANAGEMENT OF THE FUND: The Fund; Management; Service Organizations,
Transfer Agent and Custodian; Back Cover Page; Other Information
Concerning Shares of the Fund.
5A. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE: Not Applicable.
6. CAPITAL STOCK AND OTHER SECURITIES: Other Information Concerning
Shares of the Fund; Service Organizations, Transfer Agent and
Custodian; Tax Matters.
7. PURCHASE OF SECURITIES BEING OFFERED: Purchases and Redemptions of
Shares; Other Information Concerning Shares of the Fund; Service
Organizations, Transfer Agent and Custodian.
8. REDEMPTION OR REPURCHASE: Purchases and Redemption of Shares.
9. PENDING LEGAL PROCEEDINGS: Not Applicable.
PART B ITEM NO.: Statement of Additional Information Headings.
10. COVER PAGE: Front Cover Page.
11. TABLE OF CONTENTS: Front Cover Page.
12. GENERAL INFORMATION AND HISTORY: The Trust.
13. INVESTMENT OBJECTIVES AND POLICIES: Investment Objective, Policies and
Restrictions.
14. MANAGEMENT OF THE FUND: Management of the Trust and the Portfolio.
15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES: Management of the
Trust and Portfolio.
16. INVESTMENT ADVISORY AND OTHER SERVICES: Management of the Trust and
the Portfolio; Independent Auditors.
17. BROKERAGE ALLOCATION AND OTHER PRACTICES: Portfolio Transactions and
Brokerage Commissions.
18. CAPITAL STOCK AND OTHER SECURITIES: Description of Shares, Voting
Rights and Liabilities.
19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED:
Determination of Net Asset Value; Valuation of Portfolio Securities.
20. TAX STATUS: Taxation.
21. UNDERWRITERS: Management of the Fund and the Portfolio -- Distributor.
22. CALCULATION OF PERFORMANCE DATA: Performance Information.
23. FINANCIAL STATEMENTS: Financial Statements.
PART C
Information required to be included in Part C is set forth under the
appropriately numbered item in Part C of this registration statement.
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EXPLANATORY NOTE
This post-effective amendment No. 1 (the "Amendment") to the Registrant's
Registration Statement on Form N-1A is being filed with respect to DEVCAP Shared
Return Fund, the only active series of the Registrant, pursuant to the
Registrant's undertaking to file a post-effective amendment, using financials
which need not be certified, within four to six months following the effective
date of this Registration Statement. The Amendment is being filed to include (i)
updated unaudited financial information in the Prospectus, and (ii) a supplement
to the Registrant's Statement of Additional Information containing unaudited
financial statements. As a result, the Amendment does not otherwise affect the
Registrant's Statement of Additional Information, which is hereby incorporated
herein by reference as most recently filed pursuant to 497(c) under the
Securities Act of 1933, as amended.
<PAGE>
PROSPECTUS
October 16, 1995, as amended March 29, 1996
DEVCAP SHARED RETURN FUND
The DEVCAP Shared Return Fund (the "Fund") has two primary objectives: (i)
an investment objective, to provide its shareholders with long-term total return
which corresponds to the total return performance of the Domini Social Index SM,
an index comprised of stocks selected based upon social criteria and; (ii) a
charitable objective, to enable each shareholder of the Fund to make a donation
of a portion of that shareholder's annual contribution basis to finance the
economic development of underprivileged people in developing countries. The Fund
is a separate series of shares of DEVCAP Trust, which is organized as a business
trust under the laws of the Commonwealth of Massachusetts. The Fund seeks to
achieve its investment objective by investing all of its investable assets in
the Domini Social Index Portfolio (the "Portfolio"), a diversified open-end
management investment company having the same investment objective as the Fund.
The Portfolio invests in the common stocks included in the Domini Social Index
SM.
The Fund seeks to achieve its charitable objective by providing for the
tax- deductible donation of a portion of each shareholder's annual contribution
basis in the Fund to further the charitable purposes of the Development Capital
Fund ("DEVCAP"). DEVCAP is a non-profit charitable corporation that functions as
a consortium of non-profit organizations and is independent of the Fund. DEVCAP
is dedicated to supporting micro-enterprise and other economic development
programs in developing countries, in an effort to improve the welfare of
underprivileged persons in those countries. See "Charitable Contribution
Program" herein for more detailed information. In general, investors will not
incur net tax liability as a result of providing for donations of a portion of
their annual contribution basis in the Fund. See "Tax Matters--Tax Deductibility
of Charitable Contributions" herein for more detailed information.
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TABLE OF CONTENTS PAGE
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The Fund................................................................ 3
Expense Summary......................................................... 4
Financial Highlights.................................................... 5
Charitable Contribution Program......................................... 6
DEVCAP.................................................................. 7
Performance Information................................................. 8
Investment Objective, Policies and Risk Factors......................... 9
Management.............................................................. 14
Purchases and Redemptions of Shares..................................... 17
Tax Matters............................................................. 20
Other Information Concerning Shares of the Fund......................... 21
Service Organizations, Transfer Agent and Custodian..................... 25
</TABLE>
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 investment adviser of the Portfolio is Kinder, Lydenberg, Domini & Co.,
Inc. The investment manager of the Portfolio is Mellon Equity Associates. The
administrator and distributor of the Fund, and the administrator of the
Portfolio, is Signature Broker-Dealer Services, Inc. INVESTMENTS IN THE FUND ARE
NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.
<PAGE>
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY BANK OR OTHER DEPOSITORY INSTITUTION, AND THE SHARES ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER FEDERAL, STATE OR OTHER
GOVERNMENTAL AGENCY.
"Domini(SM)" and "Domini Social Index(SM)" are service marks of Kinder,
Lydenberg, Domini & Co., Inc.
This Prospectus sets forth concisely the information concerning the Fund
that a prospective investor ought to know before investing. The Fund has filed
with the Securities and Exchange Commission a Statement of Additional
Information, dated October 16, 1995, as amended from time to time, which
contains more detailed information about the Fund and is incorporated into this
Prospectus by reference. An investor may obtain a copy of the Statement of
Additional Information without charge by contacting the Distributor (see back
cover for address and phone number).
UNLIKE OTHER MUTUAL FUNDS WHICH DIRECTLY ACQUIRE AND MANAGE THEIR OWN
PORTFOLIO OF SECURITIES, THE FUND SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE BY
INVESTING ALL OF ITS INVESTABLE ASSETS IN THE PORTFOLIO. THE FUND INVESTS IN THE
PORTFOLIO THROUGH SIGNATURE FINANCIAL GROUP, INC.'S HUB AND SPOKE(R) MULTI-TIER
INVESTMENT FUND STRUCTURE. "HUB AND SPOKE(R)" IS A REGISTERED SERVICE MARK OF
SIGNATURE FINANCIAL GROUP, INC. SEE "SPECIAL INFORMATION CONCERNING THE HUB AND
SPOKE(R) STRUCTURE" ON PAGE 12.
INVESTORS SHOULD READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE REFERENCE.
2
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THE FUND
DEVCAP Trust (the "Trust") was organized as a business trust under the laws
of the Commonwealth of Massachusetts, with the Fund established as a separate
series of the Trust, on June 29, 1995. The Fund is a no-load diversified open-
end management investment company. Although shares of the Fund are sold without
a sales load, Signature Broker-Dealer Services, Inc. ("Signature") may receive a
distribution fee from the Fund pursuant to a Distribution Plan adopted in
accordance with Rule 12b-1 under the Investment Company Act of 1940, as amended
(the "1940 Act"). The Trust offers to buy back (redeem) shares of the Fund from
its shareholders at any time at net asset value.
Shares of the Fund are sold continuously by Signature, the Fund's
distributor (the "Distributor"). The minimum initial investment is $1,000,
except that the minimum initial investment when selecting the Automatic
Investment Plan is $500. An investor should obtain from the Distributor, and
should read in conjunction with this Prospectus, the materials describing the
procedures under which Fund shares may be purchased and redeemed. See "Purchases
and Redemptions" herein.
The Fund seeks to achieve its investment objective by investing the
proceeds from the sales of its shares in the Portfolio, which has the same
investment objective as the Fund and which invests all of its assets in stocks
included in the Domini Social Index. There can be no assurance that the Fund or
the Portfolio will be able to achieve their investment objective. It should be
noted that the limitation of the Portfolio's investments to stocks included in
the Domini Social Index will tend to limit the availability of investment
opportunities to the Fund compared to other investment companies that have a
comparable investment objective to that of the Fund. See "Investment Objective,
Policies and Risk Factors" herein.
Kinder, Lydenberg, Domini & Co., Inc. ("KLD") is the Portfolio's investment
adviser (the "Adviser"). Mellon Equity Associates ("Mellon Equity") is the
Portfolio's investment manager (the "Manager"). Signature, the administrator of
the Fund (the "Administrator") and of the Portfolio (the "Portfolio
Administrator"), supervises the overall administration of the Fund and of the
Portfolio. The Boards of Trustees of the Trust and the Portfolio provide broad
supervision over the affairs of the Fund and the Portfolio, respectively. The
Trustees who are not "interested persons" of the Trust as defined in the 1940
Act (the "Independent Trustees") are separate and independent from the
Independent Trustees of the Portfolio. For further information about the
Trustees of the Trust and the Portfolio, see "Management of the Fund and the
Portfolio" in the Statement of Additional Information. A majority of the Fund's
Trustees are not affiliated with the Adviser.
The Adviser determines the composition of the Domini Social Index. The
following persons are primarily responsible for the development and maintenance
of the Domini Social Index (which determines the composition of the Portfolio's
securities): Steven D. Lydenberg, Director of Research, KLD, since 1990; Peter
D. Kinder, President, KLD, since 1988. The Manager manages the investments of
the Portfolio from day to day in accordance with the Portfolio's investment
objective and policies.
The Trust is obligated to pay a fee to the Administrator at an annual rate
equal to 0.15% of the Fund's average daily net assets, and the Trust may pay a
fee to the Distributor up to an annual rate equal to 0.25% of the Fund's average
daily net assets, in each case calculated on an annualized basis for the Fund's
then-current fiscal year.
The Portfolio is obligated to pay a fee to the Adviser at an annual rate
equal to 0.05% of the Portfolio's average daily net assets and a fee to the
Portfolio Administrator at an annual rate equal to 0.05% of the Portfolio's
average daily net assets, in each case on an annualized basis for the
3
<PAGE>
Portfolio's then-current fiscal year. The Portfolio is obligated to pay a fee to
the Manager equal on an annual basis to the following percentages of the
Portfolio's average daily net assets for its then-current fiscal year: 0.10% of
assets up to $50 million; 0.30% of assets between $50 million and $100 million;
0.20% of assets between $100 million and $500 million; and 0.15% of assets over
$500 million. See "Management--Manager" herein for more detailed information on
the fees of the Manager. The Fund and the Portfolio must also pay all of their
other respective expenses.
DEVCAP provides no investment advisory, management, administrative or other
investment support services to the Fund or the Portfolio.
EXPENSE SUMMARY
The following table provides (i) a summary of estimated expenses relating
to purchases and sales of shares of the Fund, and the aggregate annual operating
expenses for the Fund and the Portfolio, as a percentage of average net assets
of the Fund, and (ii) an example illustrating the dollar cost of such estimated
expenses on a $1,000 investment in the Fund.
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SHAREHOLDER TRANSACTION EXPENSES....................................... 0%
ANNUAL OPERATING EXPENSES*
Advisory and Management Fees......................................... 0.25%
12b-1 Fee............................................................ 0.25%
Other Expenses....................................................... 1.25%
----
--Administrative Services Fees.................................. 0.20%
--Expense Payment Fee........................................... 0.20%
--Other Operating Expenses (other expense reimbursement)........ 0.85%
Total Operating Expenses (other expense reimbursement)............... 1.75%
----
* These expenses are based on estimated expenses of the Fund and the Portfolio
and estimated average net assets for the Fund's first fiscal year, after any
applicable expense reimbursement by DEVCAP. Without such expected reimbursement,
the estimated Total Operating Expenses would be equal on an annual basis to
2.50% of the estimated average daily net assets of the Fund. See "Other
Information Concerning Shares of the Fund" herein.
EXAMPLE: A
shareholder of the Fund would pay the following expenses on a $1,000 investment
in the Fund, assuming (1) 5% annual return and (2) redemption at the end of:
1 year........................................................$ 18
3 years.......................................................$ 55
</TABLE>
THE "EXAMPLE" SET FORTH ABOVE IS HYPOTHETICAL AND SHOULD NOT BE CONSIDERED
A REPRESENTATION OF PAST OR FUTURE EXPENSES OF THE FUND. ACTUAL EXPENSES AND
RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN. The purpose of the expense table
provided above is to assist investors in understanding the various costs and
expenses that a shareholder will bear directly or indirectly. For more
information with respect to the expenses of the Fund and the Portfolio, see
"Management" herein.
The Trust will pay a distribution fee at an annual rate of up to 0.25% of
the Fund's average daily net assets in reimbursement of, or in anticipation of,
expenses incurred by the Distributor in connection with the sale of shares of
the Fund. Long-term shareholders may pay more than the economic equivalent of
the maximum distribution charges permitted by the National Association of
Securities Dealers, Inc. The Trust may pay fees to Service Organizations at an
annual rate in amounts up to 0.25% of the daily net asset value of shares of the
Fund owned by shareholders with whom the Service Organization has a servicing
relationship. The Trust does not currently intend to enter into agreements with
and pay fees to Service Organizations with respect to the Fund, but it may do so
in the future. See "Distribution Plan and Agreement" and "Service Organizations,
Transfer Agent and Custodian" herein.
4
<PAGE>
Pursuant to an expense payment arrangement between Signature and the
Portfolio, Signature pays all of the operating expenses of the Portfolio,
including the advisory and management fees. Under this arrangement, Signature
receives an expense payment fee from the Portfolio, at an annual rate equal to
0.50% of the Portfolio's average daily net assets for its then-current fiscal
year. All of the advisory and management fees shown above and 0.05% of the
administrative services fees shown above are paid through the expense payment
arrangement. See "Other Information Concerning Shares of the Fund--Expenses"
herein.
The Trust's Trustees believe that the aggregate per share expenses of the
Fund and the Portfolio will be less than or approximately equal to the expenses
which the Fund would incur if it retained the services of an investment adviser
and an investment manager and invested directly in the types of securities being
held by the Portfolio. See "Other Information Concerning Shares of the
Fund--Expenses" herein for further discussion of Fund and Portfolio expenses.
FINANCIAL HIGHLIGHTS
The following selected data for a share outstanding for the indicated
period have not been audited by independent accountants. The Fund's Annual
Report will include a discussion of those factors, strategies and techniques
that materially affected its performance during the period of the report, as
well as certain related information. A copy of the Fund's Annual Report will be
made available without charge upon request.
For the period
October 18, 1995
(commencement
of operations) to
January 31, 1996
(Unaudited)
----------------
Net Asset Value, beginning of period ........................... $10.00
------
Income from investment operations:
Net investment income ........................................ (0.01)
Net realized and unrealized gain on investments .............. 0.66
------
Total income from investment operations ........................ 0.65
------
Net Asset Value, end of period ................................. $10.65
======
Ratios/supplemental data
Total return ................................................. 6.50%
Net Assets, end of period (in 000's) ......................... $ 232
Ratio of expenses to average net assets* ..................... 2.50%**
Ratio of net investment income to average net assets* ........ -0.65%**
- --------------------
* Reflects the Fund's proportionate share of the Portfolio's expenses as well
as voluntary fee waivers and reimbursement by agents of the Fund. If the
voluntary waivers and expense reimbursement had not been in place, the
ratios of expenses and net investment income to average net assets would
have been as follows:
Ratio of expenses to average net assets 47.75%
Ratio of net investment income to averge net assets -45.86%
** Annualized
5
<PAGE>
CHARITABLE CONTRIBUTION PROGRAM
The Fund is designed to enable an investor to share with charity,
specifically with DEVCAP, on an annual basis the return on his or her investment
in the Fund. When a shareholder makes an initial purchase of shares of the Fund,
the shareholder must also declare an intention to make an annual donation to
DEVCAP of fifty percent, seventy-five percent or all of the annual contribution
basis (calculated as indicated below) derived from the shareholder's investment
in the Fund. DEVCAP will direct the shareholder's donation to non-profit
organizations working to improve the welfare of underprivileged persons in
developing countries through grants or loans for micro-enterprises and other
economic development programs.
After the initial purchase of shares and contribution election, a
shareholder may elect to contribute to DEVCAP a different portion of the
shareholder's annual contribution basis, so long as the shareholder elects to
contribute fifty percent, seventy-five percent or all of the shareholder's
annual contribution basis. Alternatively, a shareholder may elect at year's end
not to contribute any portion of the shareholder's annual contribution basis. On
or about December 1 of each year, the Fund will mail a notice to each
shareholder of record indicating the dollar amount of the shareholder's
estimated contribution for that year, based on the shareholder's then current
contribution election and the shareholder's estimated annual contribution basis
on that date. To change a shareholder's contribution election, the shareholder
must notify the Fund in writing on or before the fifth business day prior to the
last business day of that December, at the Fund's address: DEVCAP Shared Return
Fund, P.O. Box 107, New York, NY 10274-0107. By the end of the following
January, the Fund will mail a notice to each shareholder of record indicating
the dollar amount of the shareholder's actual contribution for the previous
year. This contribution will be tax deductible, as explained in more detail
under "Tax Matters" herein.
A shareholder's contribution (if any) will consist of a percentage (which
must be fifty percent, seventy-five percent or all) of the shareholder's annual
contribution basis derived from the shareholder's investment in the Fund. A
shareholder's annual contribution basis is the change in value of that
particular shareholder's account between (a) January 1 or the date of the
shareholder's initial investment and (b) the fifth business day prior to the end
of the calendar year, adjusted for redemptions, distributions and purchases. The
shareholder's annual contribution will be calculated by the Fund's transfer
agent on or about five business days before the end of each calendar year in
accordance with the following formula:
[Account value at year-end calculation date (including reinvested
distributions, if any)]
PLUS
[Shareholder redemptions during the year, if any]
PLUS
[Cash distributions from the Fund during the year, if any]
MINUS
[Shareholder purchases during the year, if any]
MINUS
[Account value at (a) beginning of year or (b) date of initial investment]
EQUALS SHAREHOLDER'S ANNUAL CONTRIBUTION BASIS
6
<PAGE>
The shareholder's annual contribution is calculated by multiplying the
shareholder's annual contribution basis by the shareholder's specified
percentage of contribution.
On or about the fifth business day prior to the last business day of
December, a shareholder's annual contribution basis will be finalized using the
above formula. Shares in the Fund, equal to the value of the contribution amount
derived by applying the specified percentage to the shareholder's annual
contribution basis, will be redeemed for the shareholder and the funds generated
from that redemption will be contributed to DEVCAP. If a shareholder's annual
contribution basis has been zero, or if a shareholder's account has been closed
before the end of the year, or if the specified percentage has been reduced to
zero after proper notice to the Fund, no contribution will result. A shareholder
may still make a contribution by using the convenient donation form provided by
DEVCAP for that purpose.
Note that, notwithstanding the above formula, if a shareholder liquidates
his or her total investment in the Fund before the year-end calculation date,
the shareholder's annual contribution will be deemed to be zero. The method of
calculation of the shareholder's annual contribution combined with the
shareholder's contribution election could result in a complete redemption of the
shareholder's end of year account.
In general, shareholders participating in the Charitable Contribution
Program will not incur a tax liability from their charitable contribution to
DEVCAP. The Board of Trustees believes that generally any tax liability that
might arise due to liquidation of shares in the Fund to make the charitable
deduction will normally be offset by a corresponding itemized tax deduction for
the contribution for taxpayers that itemize deductions. However, certain
taxpayers may be subject to limits on itemized deductions or charitable
deductions on their U.S. or state tax returns. Shareholders are advised to
consult with their tax advisers with respect to the particular tax consequences
to them of an investment in the Fund and participation in the Charitable
Contribution Program.
Shareholders desiring to make a contribution to DEVCAP outside the
Charitable Contribution Program, either in cash or in kind (i.e., by donating
shares of the Fund or other non-cash assets), should contact DEVCAP directly at
800-371-2655.
DEVCAP
DEVCAP is a non-profit, tax-exempt 501(c)(3) corporation that functions as
a consortium of non-profit organizations. DEVCAP was created to support a class
of existing charities, each of which is dedicated to improving the welfare of
underprivileged people in developing countries by supporting micro-enterprise
and other economic development programs. Micro- enterprise development programs
assist underprivileged people by providing direct financing and technical
support for their business enterprises, which support would be unavailable
through normal business channels. Contributions made pursuant to the Charitable
Contribution Program are allocated equally among the member organizations of
DEVCAP listed below.
The member organizations of DEVCAP pursue their shared development
objectives in different ways:
(i) Appropriate Technology International provides technical and financial
assistance to organizations of small producers throughout Africa, Asia and
Latin America in agricultural and other strategic sectors.
(ii) Catholic Relief Services, founded by the Catholic Bishops of the
United States, funds a "village banking" program which provides financial
services to over 10,000 underprivileged people in nine countries throughout
the world;
7
<PAGE>
(iii) Save the Children funds credit and savings programs for women in
numerous developing regions of the world in order to generate income
necessary to improve the lives of their children.
(iv) Seed Capital Development Fund invests in and lends funds to a network
of finance companies located in developing countries that specialize in
micro-enterprise lending programs.
DEVCAP was formed in 1992 in order to provide fund-raising and other
support to member organizations and other non-profits engaged in international
economic development for the world's poor. The money generated by the Fund will
be used as direct grants or loans to DEVCAP member organizations in support of
their programs. The money may also be used to support the programs of non-member
organizations.
In addition to its primary fund-raising activities, DEVCAP also plans to
promote cooperation among micro-enterprise development agencies and
organizations, and to provide information and support for micro-enterprise
development around the world. These activities could include educational
campaigns, research programs, and implementation of other financial programs to
aid in the development of micro-enterprises.
DEVCAP is independent of the Adviser, Manager, Distributor, Administrator
and all other service providers of the Fund. While DEVCAP personnel will
encourage donations through the Fund and DEVCAP itself incurs costs in these
efforts, DEVCAP and DEVCAP personnel receive no compensation from the Fund or
the Portfolio other than through charitable donations from individual
shareholders, as described above. Neither DEVCAP nor DEVCAP member organizations
provide any investment advisory, Broker-dealer, management, administrative or
other investment support services to the Fund or the Portfolio.
For more information regarding DEVCAP or its member organizations, please
contact DEVCAP directly at 800-371-2655.
PERFORMANCE INFORMATION
Performance information concerning the Fund may from time to time be used
in advertisements, shareholder reports or other communications to shareholders.
The Trust may provide period and average annualized "total rates of return" with
respect to the Fund. The "total rate of return" of the Fund refers to the change
in the value of an investment in a Fund over a stated period based on any change
in net asset value per share and includes the value of any shares purchasable
with any dividends or capital gain distributions declared during such period.
Period total rates of return may be annualized. An annualized total rate of
return is a compounded total rate of return which assumes that the period total
rate of return is generated over a 52-week period, and that all dividends and
capital gain distributions are reinvested. An annualized total rate of return
will be slightly higher than a period total rate of return if the period is
shorter than one year, because of the effect of compounding.
Historical total return information for any period or portion thereof prior
to the establishment of the Fund will be that of the Portfolio, adjusted to
assume that all charges, expenses and fees of the Fund and the Portfolio which
are presently in effect were deducted during such periods.
The Trust may provide "yield" quotations with respect to the Fund. The
"yield" of the Fund refers to the income generated by an investment in the Fund
over a 30-day or one-month period (which period shall be stated in any
advertisement or communications with a shareholder). This income is then
"annualized", that is, the amount of income generated by the investment over the
period is assumed to be generated over a 52-week period and is shown as a
percentage of investment. A "yield" quotation, unlike a total rate of return
quotation, does not reflect changes in net asset value.
From time to time the Trust may also quote fund rankings from various
sources, such as Lipper Analytical Services, Inc., and may compare its
performance to that of the Domini Social Index and various other unmanaged
securities indices, such as the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500") and the Dow Jones Industrial Average. "Standard & Poor
(R)", "S&P (R)" and "Standard & Poor's 500 (R)" are trademarks of Standard &
Poor's Corporation.
See the Statement of Additional Information for further information
concerning the calculation of yield and any total rate of return quotations.
Since the Fund's yield and total rate of return quotations are based on
historical earnings and since such yield and rates of return fluctuate over
time, such quotations should not be considered as an indication or
representation of the future performance of the Fund.
INVESTMENT OBJECTIVE, POLICIES AND RISK FACTORS
INVESTMENT OBJECTIVE--The investment objective of the Fund is to provide
its shareholders with long-term total return (reflecting both dividend and price
performance of the Fund) which corresponds to the total return performance of
the Domini Social Index (sometimes referred to herein as the "Index"). There
can, of course, be no assurance that the Fund will achieve its investment
objective. The investment objective of the Fund may be changed without approval
by the Fund's shareholders.
INVESTMENT POLICIES--The Fund seeks to achieve its investment objective by
investing all of its investable assets in the Portfolio, which has the same
investment objective as the Fund. The Portfolio seeks to achieve its investment
objective by investing in the common stocks comprising the Domini Social Index.
The Portfolio will approximate the weightings of securities held by the
Portfolio to the weightings of the stocks in the Index, except as described
below, and will seek a correlation between the weightings of securities held by
the Portfolio and the weightings of the stocks in the Index of 0.95 or better. A
figure of 1.0 would indicate a perfect correlation. As ofJune 30, 1995, the
correlation between the weightings of securities held by the Portfolio and the
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weightings of the stocks in the Index was 0.99. To the extent practicable, the
Portfolio will attempt to be fully invested. The ability of the Fund to
duplicate the performance of the Domini Social Index by investing in the
Portfolio will depend to some extent on the size and timing of cash flows into
and out of the Fund and the Portfolio as well as the Fund's and the Portfolio's
expenses. Adjustments in the securities holdings of the Portfolio to accommodate
cash flows will track the Domini Social Index to the extent practicable, but
this will result in brokerage expenses.
SOCIAL CRITERIA--The Domini Social Index is a common stock index developed
and maintained by the Adviser comprised of the common stocks of approximately
400 companies which meet certain social criteria. The weightings of the stocks
comprising the Index are based upon market capitalization. The criteria used in
developing and maintaining the Domini Social Index involve subjective judgment
by the Adviser. The Adviser seeks to exclude companies which, based on data
available to the Adviser, derive more than 2% of their gross revenues from the
sale of military weapons; derive any revenues from the manufacture of tobacco
products or alcoholic beverages; derive any revenues from gambling enterprises;
own directly or operate nuclear power plants or participate in businesses
related to the nuclear fuel cycle. In evaluating stocks for inclusion in the
Index, the Adviser considers criteria such as environmental performance,
particularly in taking positive initiatives in environmental matters; its
employee relations; its corporate citizenship; and the quality of a company's
products and its attitudes with regard to consumer issues. Environmental
performance includes a company's record on waste disposal, toxic emissions,
fines or penalties, and efforts in waste and emissions reductions, recycling,
and use of environmentally beneficial fuels. Corporate citizenship includes the
company's record on philanthropic activities and its interaction with the
communities it affects. Employee relations includes a company's record with
regard to labor matters, its commitment to work place safety and to equal
employment opportunity (reflected, for example, in the number of women and
minorities in executive positions), the breadth, quality and innovation of its
employee benefit programs, and its commitment to provide employees with a
meaningful participation in company profits either through stock purchase or
profit sharing plans.
The Adviser intends to vote proxies of companies included in the Portfolio
consistent with the social criteria used in developing and maintaining the
Index.
INDEX MANAGEMENT--The Portfolio is not managed in the traditional
investment sense, since changes in the composition of its securities holdings
are made in order to track the changes in the composition of securities included
in the Index. Moreover, inclusion of a stock in the Domini Social Index does not
imply an opinion by the Adviser as to the merits of that specific stock as an
investment. However, the Adviser believes that enterprises which exhibit a
social awareness, based on the criteria described above, should be better
prepared to meet future societal needs for goods and services and may also be
less likely to incur certain legal liabilities that may be incurred when a
product or service is determined to be harmful, and that such enterprises should
over the longer term be able to provide a positive return to investors.
In selecting stocks for inclusion in the Index:
1. The Adviser evaluated, in accordance with the social criteria described
above, each of the companies the stocks of which comprise the S&P 500. If a
company whose stock was included in the S&P 500 met the Adviser's social
criteria and met the Adviser's further criteria for industry diversification,
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financial solvency, market capitalization, and minimal portfolio turnover, it
was included in the Domini Social Index. As of June 30, 1995, of the 500
companies whose stocks comprised the S&P 500, approximately 51% were included in
the Index.
2. The remaining stocks comprising the Domini Social Index (i.e., those
which are not included in the S&P 500) were selected based upon the Adviser's
evaluation of the social criteria described above, as well as upon the Adviser's
criteria for industry diversification, financial solvency, market
capitalization, and minimal portfolio turnover. Because of the social criteria
applied in the selection of stocks comprising the Domini Social Index, industry
sector weighting in the Domini Social Index may vary materially from the
industry weightings in other stock indices, including the S&P 500, and certain
industry sectors will be excluded altogether.
The component stocks of the S&P 500 are chosen by Standard & Poor's
Corporation ("S&P") solely with the aim of achieving a distribution by broad
industry groupings that approximates the distribution of these groupings in the
New York Stock Exchange common stock population, taken as the assumed model for
the composition of the total market. Construction of the S&P 500 by S&P proceeds
from industry groups to the whole. Since some industries are characterized by
companies of relatively small stock capitalization, the S&P 500 does not
comprise the 500 largest companies listed on the New York Stock Exchange. Not
all stocks included in the S&P 500 are listed on the New York Stock Exchange.
However, the total market value of the S&P 500 as of June 30, 1995 represented
74% of the aggregate market value of common stocks traded on the New York Stock
Exchange.
Inclusion of a stock in the S&P 500 Index in no way implies an opinion by
S&P as to its attractiveness as an investment, nor is S&P a sponsor of or
otherwise affiliated with the Fund or the Portfolio.
Some of the stocks included in the Domini Social Index may be stocks of
foreign issuers (provided that the stocks are traded in the United States in the
form of American Depositary Receipts or similar instruments the market for which
is denominated in United States dollars). Securities of foreign issuers may
represent a greater degree of risk (i.e., as a result of exchange rate
fluctuation, tax provisions, war or expropriation) than do securities of
domestic issuers.
The weightings of stocks in the Domini Social Index are based on each
stock's relative total market capitalization (i.e., market price per share times
the number of shares outstanding). Because of this weighting, as of June 30,
1995 approximately 38% of the Domini Social Index was comprised of the 20
largest companies in that Index.
The Adviser may exclude from the Domini Social Index stocks issued by
companies which are in bankruptcy or whose bankruptcy the Adviser believes may
be imminent.
The Portfolio intends to readjust its securities holdings periodically such
that those holdings will correspond, to the extent reasonably practicable, to
the Domini Social Index both in terms of composition and weighting. The timing
and extent of adjustments in the holdings of the Portfolio, and the extent of
the correlation of the holdings of the Portfolio with the Domini Social Index,
will reflect the Manager's judgment as to the appropriate balance between the
goal of correlating the holdings of the Portfolio with the composition of the
Index, and the goals of minimizing transaction costs and keeping sufficient
reserves available for anticipated redemptions of shares. To the extent
practicable, the Portfolio will seek a correlation between the weightings of
securities held by the Portfolio to the weightings of the securities in the
Index of 0.95 or better. Subject to the goal of achieving a 0.95 or better
correlation between the weightings of the securities held by the Portfolio and
the weightings of the securities in the Index, the Manager may slightly
overweight and/or underweight certain holdings of the Portfolio compared to the
Index in an effort to enhance the performance of the Portfolio to help offset
the expenses of the Portfolio and the Fund and the effect of the size and timing
of cash flows into and out of the Portfolio and the Fund. There can be no
assurances, of course, that such portfolio enhancement strategies will be
successful, and the performance of the Portfolio may as a result be worse than
if such strategies were not undertaken. The Board of Trustees of the Portfolio
will receive and review, at least quarterly, a report prepared by the Manager
comparing the performance of the Fund and the Portfolio with that of the Index,
and comparing the composition and weighting of the Portfolio's holdings with
those of the Index, and will consider what action, if any, should be taken in
the event of a significant variation between the performance of the Fund or the
Portfolio, as the case may be, and that of the Index, or between the composition
and weighting of the Portfolio's securities holdings with those of the stocks
comprising the Index. If the correlation between the weightings of securities
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held by the Portfolio and the weightings of the stocks in the Index falls below
0.95, the Board of Trustees will review with the Manager methods for increasing
such correlation, such as through adjustments in securities holdings of the
Portfolio.
The Portfolio may invest cash reserves in short-term debt securities (i.e.,
securities having a remaining maturity of one year or less) issued by agencies
or instrumentalities of the United States Government, bankers' acceptances,
commercial paper or certificates of deposit, provided that the issuer satisfies
the Adviser's social criteria. The Portfolio does not currently intend to invest
in direct obligations of the United States Government. Short- term debt
securities purchased by the Portfolio will be rated at least Prime-1 by Moody's
Investors Service, Inc. or A-1+ or A-1 by S&P or, if not rated, determined to be
of comparable quality by the Portfolio's Board of Trustees. The Portfolio's
policy is to hold its assets in such securities pending readjustment of its
portfolio holdings of stocks comprising the Domini Social Index and in order to
meet anticipated redemption requests. Such investments are not intended to be
used for defensive purposes in periods of anticipated market decline.
Frequent changes in the Portfolio's holdings may result from the policy of
attempting to correlate the Portfolio's securities holdings with the composition
of the Index, and the frequency of such changes will increase as the rate and
volume of purchases and redemptions of shares of the Portfolio increases. The
annual portfolio turnover rates of the Portfolio for the fiscal years ended July
31, 1994 and July 31, 1995 were 8% and 6%, respectively.
The Portfolio's primary consideration in placing securities transactions
with broker-dealers for execution is to obtain, and maintain the availability
of, execution at the most favorable prices and in the most effective manner
possible. Neither the Portfolio nor the Fund will engage in brokerage
transactions with the Adviser, the Manager or the Administrator or any of their
respective affiliates or any affiliate of the Fund or the Portfolio. For further
discussion regarding securities trading by the Portfolio, see the Statement of
Additional Information.
Consistent with applicable regulatory policies, including those of the
Board of Governors of the Federal Reserve System and the Securities and Exchange
Commission, the Portfolio may make loans of its securities to member banks of
the Federal Reserve System and to broker-dealers. Such loans would be required
to be secured continuously by collateral and cash or cash equivalents maintained
on a current basis at an amount at least equal to the market value of the
securities loaned. The Portfolio would have the right to call a loan and obtain
the securities loaned at any time on five days' notice. During the existence of
a loan, the Portfolio would continue to collect the equivalent of the dividends
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<PAGE>
paid by the issuer on the securities loaned and would also receive interest on
investment of cash collateral. The Portfolio may pay finder's and other fees in
connection with securities loans. Loans of securities involve a risk that the
borrower may fail to return the securities or may fail to provide additional
collateral.
Although it has no current intention to do so, the Portfolio may make short
sales of securities or maintain a short position, if at all times when a short
position is open the Portfolio owns an equal amount of such securities, or
securities convertible into such securities.
SPECIAL INFORMATION CONCERNING THE HUB AND SPOKE(R) STRUCTURE
The Fund and the Portfolio are utilizing certain proprietary rights, know-
how and financial services referred to as the Hub and Spoke (R) investment fund
structure from Signature Financial Group, Inc. ("Signature Financial"), of which
the Administrator is a wholly owned subsidiary. Hub and Spoke (R) is a
registered service mark of Signature Financial.
Unlike other mutual funds which directly acquire and manage their own
portfolio securities, the Trust seeks to achieve the investment objective of the
Fund by investing all of the investable assets of the Fund in the Portfolio, a
separate registered investment company. The Portfolio has the same investment
objective and policies as the Fund. In addition to selling a beneficial interest
to the Fund, the Portfolio may sell beneficial interests to other mutual funds
or institutional investors. Such investors will invest in the Portfolio on the
same terms and conditions as the Fund and will pay a proportionate share of the
Portfolio's expenses. However, the other investors investing in the Portfolio
are not required to sell their shares at the same public offering price as the
Fund due to variations in sales commissions and other operating expenses.
Furthermore, the other investors may not participate in the charitable
contribution program of the Fund. Investors in the Fund should be aware that
these differences may result in differences in returns experienced by investors
in the different funds that invest in the Portfolio. Such differences in returns
are also present in other mutual fund structures. Information concerning other
holders of interests in the Portfolio is available from the Administrator at
(617) 423-0800. The Hub and Spoke(R) investment fund structure has been
developed relatively recently, so shareholders should carefully consider this
investment approach.
The investment objective of the Fund may be changed without the approval of
the Fund's shareholders, but not without written notice thereof to shareholders
thirty days prior to implementing the change. If there were a change in the
Fund's investment objective, shareholders should consider whether the Fund
remains an appropriate investment in light of their then- current financial
positions and needs. The investment objective of the Portfolio may also be
changed without the approval of the investors in the Portfolio, but not without
written notice thereof to the investors in the Portfolio (and notice by the Fund
to its shareholders) 30 days prior to implementing the change. There can, of
course, be no assurance that the investment objective of either the Fund or the
Portfolio will be achieved. See "Investment Restrictions" in the Statement of
Additional Information for a description of the fundamental policies of the Fund
and the Portfolio that cannot be changed without approval by the holders of a
"majority of the outstanding voting securities" (as defined in the 1940 Act) of
the Fund and the Portfolio, respectively. Except as stated otherwise, all
investment objectives, policies, strategies and restrictions described herein
and in the Statement of Additional Information are non-fundamental.
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Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws from the Portfolio, the remaining funds may experience higher pro rata
operating expenses, thereby producing lower returns. Additionally, the Portfolio
may become less diverse, resulting in increased portfolio risk. (However, this
possibility exists as well for traditionally structured funds which have large
or institutional investors.) Also, funds with a greater pro rata ownership in
the Portfolio could have effective voting control of the operations of the
Portfolio. Whenever the Trust is requested to vote on matters pertaining to the
Portfolio (other than a vote by the Fund to continue the operation of the
Portfolio upon the withdrawal of another investor in the Portfolio), the Trust
will hold a meeting of shareholders of the Fund and will cast all of its votes
in the same proportion as the votes of the Fund's shareholders. Fund
shareholders who do not vote will not affect the Fund's votes at the Portfolio
meeting. The percentage of the Trust's votes representing Fund shareholders not
voting will be voted by the Trustees of the Trust in the same proportion as the
Fund shareholders who do, in fact, vote. Certain changes in the Portfolio's
investment objective, policies or restrictions may require the Fund to withdraw
its interest in the Portfolio. Any such withdrawal could result in a
distribution "in kind" of portfolio securities (as opposed to a cash
distribution from the Portfolio). If securities are distributed, the Fund could
incur brokerage, tax or other charges in converting the securities to cash. In
addition, the distribution in kind may result in a less diversified portfolio of
investments or adversely affect the liquidity of the Fund. Notwithstanding the
above, there are other means for meeting shareholder redemption requests, such
as borrowing.
The Trust may withdraw the investment of the Fund from the Portfolio at any
time, if the Board of Trustees of the Trust determines that it is in the best
interests of the Fund to do so. Upon any such withdrawal, the Board of Trustees
would consider what action might be taken, including the investment of all the
assets of the Fund in another pooled investment entity having the same
investment objective as the Fund or the retention of an investment adviser to
manage the Fund's assets in accordance with the investment policies described
above with respect to the Portfolio.
For descriptions of the investment objective, policies and restrictions of
the Portfolio, see "Investment Objective, Policies and Risk Factors" herein and
"Investment Objective, Policies and Restrictions" in the Statement of Additional
Information. For descriptions of the management of the Portfolio, see
"Management" herein and "Management of the Trust and the Portfolio" in the
Statement of Additional Information. For descriptions of the expenses of the
Portfolio, see "Management" and "Other Information Concerning Shares of the
Fund--Expenses" below.
---------------------
As a matter of fundamental policy, the Fund will invest all of its
investable assets (either directly or through the Portfolio) in one or more of:
(i) stocks comprising an index of securities selected applying social criteria,
which initially will be the Domini Social Index, (ii) short-term debt securities
of issuers which meet social criteria, (iii) cash, and (iv) options on equity
securities. This fundamental policy cannot be changed without the approval of
the holders of a majority of the Fund's shares (which, as used in this
Prospectus, means the lesser of (a) more than 50% of the outstanding shares of
the Fund, or (b) 67% or more of the outstanding shares of the Fund present at a
meeting at which holders of more than 50% of the Fund's outstanding shares are
represented in person or by proxy). Except for this fundamental policy, investor
approval is not required to change the Fund's or the Portfolio's investment
objective or any of the investment policies described above.
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The Statement of Additional Information includes a discussion of other
investment policies and a listing of specific investment restrictions which
govern the Portfolio's and the Fund's investment policies. Certain of the
investment restrictions listed in the Statement of Additional Information may
not be changed by the Portfolio without the approval of the Fund and the other
investors in the Portfolio or by the Fund without the approval of the
shareholders of the Fund. If a percentage or rating restriction on investment or
utilization of assets is adhered to at the time an investment is made or assets
are so utilized, a later change in percentage resulting from changes in the
Portfolio's total assets or the value of the Portfolio's securities or a later
change in the rating of a security held by the Portfolio will not be considered
a violation of policy.
MANAGEMENT
The Boards of Trustees of the Trust and the Portfolio provide broad
supervision over the affairs of the Fund and the Portfolio, respectively. The
Trust has retained the services of Signature as administrator of the Fund, but
has not retained the services of an investment adviser or investment manager
since the Fund seeks to achieve its investment objective by investing all its
investable assets in the Portfolio. The Portfolio has retained the services of
Signature as administrator, KLD as investment adviser, and Mellon Equity as
investment manager.
ADVISER
KLD provides advice to the Portfolio pursuant to an Investment Advisory
Agreement (the "Advisory Agreement"). The services provided by the Adviser
consist of determining the stocks to be included in the Index and evaluating, in
accordance with the Adviser's social criteria, debt securities which may be
purchased by the Portfolio.
For its services under the Advisory Agreement, the Adviser receives from
the Portfolio a fee accrued daily and paid monthly at an annual rate equal to
0.05% of the Portfolio's average daily net assets, on an annualized basis for
the Portfolio's then-current fiscal year.
Amy Lee Domini is a principal executive officer of KLD. Ms. Domini is a
Chartered Financial Analyst and has been in the investment field for twenty
years. She has co-authored three books on social investing, Ethical Investing
(Addison-Wesley, 1986), Investing for Good (Herbert Collins, 1993) and The
Social Investment Almanac (Henry Holt Reference Books, 1992), and is currently a
trustee of Loring, Wolcott & Coolidge, a firm of private trustees. Ms. Domini
serves on the Governing Board of the Interfaith Center on Corporate
Responsibility and is a former member of the Board of the National Association
of Community Development Loan Funds. She is a member of both the Committee on
Trust Funds and the Church Pension Fund at the Episcopal Church (USA). Ms.
Domini has worked to promote both shareholder activism and community development
investing which, in combination with the integration of social criteria into
investment decisions, in her view serve to encourage the business community to
accept more responsibility for its impact on society.
Peter D. Kinder, president of KLD, received his training as a lawyer and
has practiced in both the public and private sectors with a particular emphasis
on administrative law. He co-authored Law and Business (McGraw-Hill, 1990 [third
ed.]), Ethical Investing (Addison-Wesley, 1986), Investing for Good (Herbert
Collins, 1993) and The Social Investment Almanac (Henry Holt Reference Books,
1992). A member of the Board of the Social Investment Forum, Mr. Kinder
participated in the Forum's CERES Project which developed the Valdez Principles
proposing environmental standards to be adopted by U.S. corporations.
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Steven D. Lydenberg, Director of Research of KLD, has been active in social
research for nineteen years. For twelve years he served the Council on Economic
Priorities, ultimately as Director of Corporate Accountability Research. From
1987 to 1989, Mr. Lydenberg was an investment associate with Franklin Research
and Development, where he edited Franklin's newsletter, Investing for a Better
World.Mr. Lydenberg has authored numerous publications on issues of corporate
social responsibility, including Rating America's Corporate Conscience
(Addison-Wesley, 1986) and The Social Investment Almanac (Henry Holt Reference
Books, 1992), as well as co-authoring Investing for Good (Herbert Collins,
1993). He is a Chartered Financial Analyst.
"Dominism" and "Domini Social Indexsm" are service marks of KLD. Pursuant
to agreements with the Fund and the Portfolio, the Portfolio will be required to
discontinue use of such service marks if KLD ceases to be the investment adviser
of the Portfolio, and the Fund will be required to discontinue the use of such
service marks if either KLD ceases to be the investment adviser of the Portfolio
or the Fund ceases to invest all of its assets in the Portfolio.
MANAGER
Mellon Equity manages the Portfolio on a day-to-day basis pursuant to an
Investment Management Agreement (the "Management Agreement"). Mellon Equity does
not determine the composition of the Domini Social Index.
Prior to November 21, 1994, the investment manager of the Portfolio was
State Street Bank and Trust Company (the "Former Manager"). For the fiscal year
ended July 31, 1994, the Former Manager voluntarily waived a portion of its
management fees and was paid investment management fees equal to 0.07% of the
average daily net assets of the Portfolio. On October 5, 1994 the Portfolio
notified the Former Manager of its intent to terminate the investment management
agreement between the Portfolio and the Former Manager (the "Former Agreement").
The Board of Trustees of the Portfolio authorized the Portfolio to enter
into a new investment management agreement (the "Management Agreement") with
Mellon Equity, pursuant to which Mellon Equity assumed responsibilities for the
management of the Portfolio's assets on November 21, 1994. Except for the
investment management fee to be paid thereunder, the terms and conditions of the
Management Agreement are not substantially different from the terms and
conditions of the Former Agreement. Under the Management Agreement, the
Portfolio will pay Mellon Equity an investment management fee equal on an annual
basis to the following percentages of the Portfolio's average daily net assets
for its then-current fiscal year: 0.10% of assets up to $50 million; 0.30% of
assets between $50 million and $100 million; 0.20% of assets between $100
million and $500 million; and 0.15% of assets over $500 million.
Mellon Equity is a Pennsylvania business trust whose sole beneficiary is
MBC Investments Corporation, a wholly-owned subsidiary of Mellon Bank
Corporation. Mellon Equity has been registered as an investment adviser under
the 1940 Act since 1986. Prior to 1987, the Manager was part of the Equity
Management Group of Mellon Bank Corporation's Trust and Investment Department,
which has managed pension assets since 1947.
As of March 31, 1995, the Manager had approximately $6.0 billion of assets
under management.
Mellon Equity believes that performance of investment management services
for the Portfolio will not violate the Glass-Steagall Act or other applicable
banking laws or regulations. However, future statutory or regulatory changes, as
15
<PAGE>
well as future judicial or administrative decisions and interpretations of
present and future statutes and regulations, could prevent Mellon Equity from
continuing to perform such services for the Portfolio. If Mellon Equity were
prohibited from acting as investment manager to the Portfolio, it is expected
that the Trustees would recommend to shareholders approval of a new investment
management agreement with another qualified investment manager selected by the
Trustees, or that the Trustees would recommend other appropriate action.
ADMINISTRATOR
Pursuant to Administrative Services Agreements, Signature provides the
Trust and the Portfolio with general office facilities and supervises the
overall administration of the Trust and the Portfolio, including, among other
responsibilities, the negotiation of contracts and fees with, and the monitoring
of performance and billings of, the independent contractors and agents of the
Trust or the Portfolio; the preparation and filing of all documents required for
compliance by the Trust or the Portfolio with applicable laws and regulations;
and arranging for the maintenance of books and records of the Trust and the
Portfolio. Signature provides persons satisfactory to the Board of Trustees of
the Trust or the Portfolio to serve as officers of the Trust or the Portfolio.
Such officers, as well as certain other employees and Trustees of the Trust or
the Portfolio, may be directors, officers or employees of Signature or its
affiliates. For these services and facilities, Signature receives fees computed
and paid monthly from the Trust at an annual rate equal to 0.15% of the first
$100 million of average daily net assets of the Fund and 0.10% of the average
daily net assets of the Fund in excess of $100 million, and from the Portfolio
at an annual rate equal to 0.05% of the average daily net assets of the
Portfolio, in each case on an annualized basis for the Fund's or the Portfolio's
then-current fiscal year.
Signature is a wholly-owned subsidiary of Signature Financial Group, Inc.
PURCHASES AND REDEMPTIONS OF SHARES
PURCHASES
Shares of the Fund may be purchased without a sales load at the net asset
value next determined after an order for shares is received and accepted by the
Fund provided such order is received and accepted prior to the close of the New
York Stock Exchange on any day the New York Stock Exchange is open for trading
(a "Fund Business Day"). The minimum initial investment in the Fund is $1,000,
except that the minimum initial investment when selecting the Automatic
Investment Plan is $500. There is no minimum on additional investments.
The Fund reserves the right to cease offering its shares for sale at any
time or to reject any order for the purchase of its shares.
For each shareholder of record, the Fund establishes an open account to
which all shares purchased are credited together with any dividends and capital
gain distributions which are paid in additional shares. See "Dividends and
Capital Gain Distributions" herein. The Trust has a policy of not issuing share
certificates.
Shares may be purchased directly from the Distributor or through Service
Organizations (see "Service Organizations" below) by clients of those Service
Organizations. If an investor purchases shares through a Service Organization,
the Service Organization must promptly transmit such order to the Fund so that
the order receives the net asset value next determined following receipt of the
order. Service Organizations may impose minimum customer account and other
requirements in addition to those imposed by the Fund. Investors wishing to
16
<PAGE>
purchase shares through a Service Organization should contact that organization
directly for appropriate instructions. Other investors may purchase Fund shares
in the manner described below.
Investors desiring to purchase shares of the Fund by mail should complete
an Account Application and mail the Application and a check (in U.S. dollars),
payable to "DEVCAP Shared Return Fund," to the Fund at the following address:
DEVCAP Shared Return Fund
P.O. Box 107
New York, NY 10274-0107
An investor desiring to purchase shares by a wire transfer of funds should
request its bank to transmit immediately available funds. The information
transmitted with the funds must include the investor's name and address and a
statement indicating whether a new account is being established by such wire
transfer or whether such wire transfer is being made by a shareholder with an
account with the Fund. If the initial purchase by an investor is by a wire
transfer of funds, an account number will be assigned to such investor and an
Account Application must subsequently be completed and mailed to the Fund. Bank
wires for the purchase of shares should be sent to:
Chase Manhattan Bank, N.A.
ABA# 021000021
BBK = United States Trust Company of New York
A/C# 920-1-073195
For Credit to: DEVCAP Shared Return Fund
A/C# 10-12-592
FBO: "Include Shareholder Name, Address, and Social Security
Number (if purchase is for a New Account) or Account
Number (if shareholder account is existing.)"
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.
For further information on how to purchase shares of the Fund, an investor
should contact the Distributor (see back cover for address and phone number).
AUTOMATIC INVESTMENT PLAN
The Trust offers a plan for regularly investing specified dollar amounts
($25.00 minimum in monthly, quarterly, semi-annual or annual intervals) in the
Fund. If the 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 to forward the bank withdrawal information to
the 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 the form required by the Fund. Further
information about the plan and form may be obtained from the Distributor at the
telephone number listed on the back cover of the Prospectus.
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REDEMPTIONS
A shareholder may redeem all or any portion of the shares in its account at
any time at the net asset value next determined after a redemption request in
proper form is furnished by the shareholder to the Fund. Redemptions will
therefore be effected on the same day the redemption order is received by the
Fund provided such order is received and accepted prior to the close of the Fund
Business Day. In addition to the procedures discussed in this section,
redemption of shares of an investor may also occur as described under
"Charitable Contribution Program" herein. The proceeds of a redemption will be
paid by the Fund in federal funds normally on the next Fund Business Day, but in
any event within seven days if all checks in payment for the purchase of shares
to be redeemed have been cleared by the Fund (which may take up to 15 days).
Redemptions may be made by letter to the DEVCAP Shared Return Fund specifying
the dollar amount or number of shares to be redeemed and the account number. The
letter must be signed in exactly the same way the account is registered, with
respect to redemptions in excess of $5,000, and the signatures must be
guaranteed by a member firm of the New York, American, Boston, Midwest,
Philadelphia or Pacific Stock Exchange or by a commercial bank (not a savings
bank) which is a member of the Federal Deposit Insurance Corporation. In some
cases the Fund may require the furnishing of additional documents.
An investor may redeem shares in any amount by written or telephonic
request. For telephonic redemptions, an investor should contact the Fund at
800-371-2655. Written redemption requests should be mailed to the Fund at the
following address:
DEVCAP Shared Return Fund
P.O. Box 107
New York, NY 10274-0107
An investor may redeem shares by wire or telephone if the appropriate box
on the Account Application has been completed. Redemptions may be paid by the
Fund by check or by wire transfer. Instructions for wire redemptions are set
forth in the Account Application.
The Fund, Transfer Agent and Distributor reserve the right to refuse wire
or telephone redemptions. Procedures for redeeming shares by wire or telephone
may be modified or terminated at any time by the Fund or the Distributor. The
Fund, Transfer Agent and Distributor will not be liable for any loss, liability,
cost or expense for acting upon telephone instructions believed to be genuine.
Accordingly, shareholders will bear the risk of loss. The Fund will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine, including, without limitation, recording telephone instructions and/or
requiring the caller to provide some form of personal identification. Failure to
employ reasonable procedures may make the Fund liable for any losses due to
unauthorized or fraudulent telephone instructions. The following information
must be supplied by the shareholder or broker at the time a request for a
telephone redemption is made: (1) the shareholder's account number;(2) the
shareholder's social security number; and (3) the name and account number of the
shareholder's designated securities dealer or bank.
A Service Organization may request a wire redemption provided a Wire
Authorization Form is on file with the Fund. The proceeds of a wire redemption
will be sent to an account with a Service Organization designated on the
appropriate form. Proceeds of wire redemptions will be transferred within seven
days after receipt of the request.
18
<PAGE>
The Fund reserves the right to redeem involuntarily on at least 30 days'
notice the balance in a shareholder's account having a current value of less
than $500, but not if an account falls below $500 due to a change in the market
value of the Fund's shares.
The value of shares redeemed may be more or less than the shareholder's
cost, depending on the Fund's performance during the period the shareholder
owned its shares. Redemptions of shares are taxable events on which the
shareholder may recognize a gain or a loss.
The right of any shareholder or DEVCAP to receive payment with respect to
any redemption may be suspended or the payment of the redemption proceeds
postponed during any period in which the New York Stock Exchange is closed
(other than weekends or holidays) or trading on such Exchange is restricted, or,
to the extent otherwise permitted by the 1940 Act, if an emergency exists.
TAX MATTERS
FUND TAXATION
Each year the Trust intends to qualify the Fund and elect that the Fund be
treated as a "regulated investment company" under the Internal Revenue Code of
1986, as amended (the "Code"). Provided the Fund meets all income, distribution
and diversification requirements of the Code, and distributes all of its net
investment income and realized capital gains to shareholders in accordance with
the timing requirements imposed by the Code, the Fund will not be required to
pay any federal income or excise taxes. The Portfolio will also not be required
to pay any federal income or excise taxes. However, shareholders of the Fund
normally will have to pay federal income taxes, and any state or local taxes, on
the dividends and any realized net capital gain distributions they receive from
the Fund. At the end of each calendar year, each shareholder receives
information for tax purposes on the dividends and any realized net capital gain
distributions received during that calendar year including the portion taxable
as ordinary income, the portion taxable as capital gains, the portion, if any,
representing a return of capital (which generally is free of current taxes but
results in a basis reduction) and the amount of dividends eligible for the
dividends-received deduction for corporations.
Distributions of net long-term capital gains (i.e., the excess of net long-
term capital gains over net short-term capital losses) will cause any short-
term capital loss realized on the disposition by a Fund's shareholder of Fund
shares held for six or fewer months to be recharacterized, to the extent of
those distributions, as long-term capital loss. Under the back-up withholding
rules of the Code, certain shareholders may be subject to 31% withholding of
federal income tax on distributions and payments made by the Fund. Generally,
shareholders are subject to back-up withholding if they have not provided the
Fund with a correct taxpayer identification number and certain other
certifications.
The Trust is organized as a Massachusetts business trust and, under current
law, is not liable for any income or franchise tax in the Commonwealth of
Massachusetts as long as the Fund qualifies as a regulated investment company
under the Code.
The foregoing discussion is intended for general information only. A
prospective shareholder should consult with its own tax advisor as to the tax
consequences of an investment in the Fund including the status of distributions
from the Fund under applicable state or local law.
19
<PAGE>
TAX DEDUCTIBILITY OF CHARITABLE CONTRIBUTIONS
The Charitable Contribution Program of the Fund (the "Program") has been
designed so that individual investors utilizing the cash method of accounting
who donate to DEVCAP through the Program will be entitled to a tax deduction for
the value of the donation in the taxable year in which the donation is made.
Under the Program, the charitable donation will be made within the last five
business days of any calendar year of the Fund, thus tracking the taxable year
for most individual investors in the Fund. See "Charitable Contribution Program"
herein.
The tax effect of the donation for a particular investor of the Fund may
vary according to the individual circumstances of that investor. For example,
the Code sets an upper limit on the dollar amount of tax deductions that can be
taken by individual taxpayers for charitable donations in a given year. In
addition, the redemption of shares in the Fund under the Program for the value
of the charitable contribution to DEVCAP may be subject to capital gains tax. In
view of the foregoing, as well as the possibility of other tax consequences of
the donation to particular investors, potential purchasers of the Fund should
consult their own tax advisors in determining the federal, state, local and
other tax consequences of purchasing shares of the Fund and participating in the
Program.
Each of DEVCAP's member organizations is recognized by the United States
Internal Revenue Service (the "IRS") as a tax-exempt, section 501(c)(3)
organization under the Code. In addition, on October 18, 1995, DEVCAP received
from the IRS recognition as a tax-exempt "supporting organization," a category
of exemption available under sections 501(c)(3) and 509(a)(3) of the Code for
organizations, like DEVCAP, that are engaged solely in activities designed to
support other tax-exempt charitable organizations. In the case of DEVCAP, these
supported organizations are the DEVCAP member organizations and other charities
that are engaged in micro-enterprise and other economic development programs for
underprivileged people in developing countries.
The Program (as described above) has been structured so that investors are
provided an opportunity to donate to DEVCAP each year. The Fund has been
structured this way in order to allow the contributions made through the Program
to be tax deductible donations made to non-profit organizations under existing
interpretations of section 170(c) of the Code. Investors should recognize,
however, that neither the Fund nor DEVCAP are tax advisers, that existing law
and interpretations thereof may be modified, and that no ruling has been sought
from the IRS confirming the tax deductible nature of Program contributions.
Nevertheless, the IRS has been informed of the details of the Program in
DEVCAP's filing for recognition as a section 501(c)(3) organization, and the
Fund believes that the granting of tax-exempt status to DEVCAP represents
approval of DEVCAP's activities, including the Program, and confirmation that
the donations are tax deductible.
20
<PAGE>
OTHER INFORMATION CONCERNING SHARES OF THE FUND
NET ASSET VALUE
The Trust determines the net asset value of the shares of the Fund on each
Fund Business Day. This determination is made once during each such day as of
the close of regular trading of the New York Stock Exchange by deducting the
amount of the Fund's liabilities from the value of its assets and dividing the
difference by the number of shares of the Fund outstanding. A share's net asset
value is effective for orders received by the Distributor prior to the close of
the Fund Business Day on which such net asset value is determined.
Since the Fund will invest all of its assets in the Portfolio, the value of
the Fund's assets will be equal to the value of its beneficial interest in the
Portfolio. The net asset value of the Portfolio is determined as of the close of
regular business on the New York Stock Exchange on each day on which such
Exchange is open for trading, by deducting the amount of the Portfolio's
liabilities from the value of its assets. At the close of each such business
day, the value of the Fund's beneficial interest in the Portfolio will be
determined by multiplying the net asset value of the Portfolio by the
percentage, effective for that day, which represents the Fund's share of the
aggregate beneficial interests in the Portfolio. See "Description of Shares,
Voting Rights and Liabilities" below.
Equity securities held by the Portfolio are valued at the last sale price
on the exchange on which they are primarily traded or on the NASDAQ system for
unlisted national market issues, or at the last quoted bid price for securities
in which there were no sales during the day or for unlisted securities not
reported on the NASDAQ system. If the Portfolio purchases option contracts, such
option contracts which are traded on commodities or securities exchanges are
normally valued at the settlement price on the exchange on which they are
traded. Short-term obligations with remaining maturities of less than sixty days
are valued at amortized cost, which constitutes fair value as determined by the
Board of Trustees of the Portfolio. Portfolio securities (other than short-term
obligations with remaining maturities of less than sixty days) for which there
are no such quotations or valuations are valued at fair value as determined in
good faith by or at the direction of the Portfolio's Board of Trustees.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Substantially all of the Fund's net income from dividends and interest is
paid to the Fund's shareholders annually as a dividend, usually in December. For
this purpose, the Fund's "net income from dividends and interest" consists of
all income from dividends and interest accrued on the assets of the Fund (i.e.,
the Fund's share of the Portfolio's net income from dividends and interest),
less all actual and accrued expenses of the Fund determined in accordance with
generally accepted accounting principles.
The Fund also declares a long-term capital gain distribution to its
shareholders on an annual basis, usually in December, if the Fund's share of the
Portfolio's profits during the year from the sale of securities held for longer
than the applicable long-term capital gains holding period exceeds the Fund's
share of the Portfolio's losses during such year from the sale of securities
together with the Fund's share of the Portfolio's net capital losses carried
forward from prior years (to the extent not used to offset short-term capital
gains). The Fund's share of the Portfolio's net short-term capital gains
realized during each fiscal year will also be distributed at that time.
21
<PAGE>
The Fund will also make additional distributions to its shareholders to the
extent necessary to avoid application of the 4% non-deductible excise tax
created by the Tax Reform Act of 1986 on certain undistributed income and net
capital gains of mutual funds.
A shareholder of the Fund may receive dividends and capital gain
distributions in cash or additional shares of the Fund.
After the Fund has paid to its shareholders (i) substantially all of its
net income from dividends and interests and (ii) any long-term capital gain
distributions, a portion of the shareholder's total return will be donated to
DEVCAP to support charitable organizations. See "Charitable Contribution
Program" herein for more detailed information.
EXPENSES
Expenses of the Fund and the Portfolio include the compensation of their
respective Trustees who are not affiliated with the Administrator or the
Adviser; governmental fees, interest charges; taxes; membership dues in the
Investment Company Institute allocable to the Fund or the Portfolio; fees and
expenses of independent auditors, of legal counsel and of any transfer agent,
custodian, registrar or dividend disbursing agent of the Fund or the Portfolio;
insurance premiums; and expenses of calculating the net asset value of the
Portfolio and of shares of the Fund.
Expenses of the Fund also include all fees under its Administrative
Services Plan; expenses of distributing and redeeming shares and servicing
shareholder accounts; expenses of preparing, printing and mailing prospectuses,
reports, notices, proxy statements and reports to shareholders and to
governmental offices and commissions; expenses of shareholder meetings; and
expenses relating to the issuance, registration and qualification of shares of
the Fund and the preparation, printing and mailing of prospectuses for such
purposes.
Expenses of the Portfolio also include the expenses connected with the
execution, recording and settlement of security transactions; fees and expenses
of the Portfolio's custodian for all services to the Portfolio, including
safekeeping of funds and securities and maintaining required books and accounts;
expenses of preparing and mailing reports to investors and to governmental
offices and commissions; expenses of meetings of investors; and the advisory
fees payable to the Adviser under the Advisory Agreement, the management fees
payable to the Manager under the Management Agreement and the administrative
fees payable to the Portfolio Administrator.
Pursuant to an expense payment arrangement between Signature and the
Portfolio, Signature has agreed to pay all of the operating expenses of the
Portfolio until December 31, 1999. Under this arrangement, Signature receives an
expense payment fee from the Portfolio, computed and paid monthly at an annual
rate equal to 0.50% of the Portfolio's average daily net assets for its
then-current fiscal year.
DEVCAP has agreed that it will reimburse the Fund through at least November
30, 1996 to the extent necessary to maintain the Fund's total operting expenses
(which includes expenses of the Fund and the Portfolio) at the annual rate of
1.75% of the Fund's average daily net assets. This limit does not cover
extraordinary increases in these expenses during the period and no longer
applies in the event of a precipitous decline in assets due to unforeseen
circumstances. DEVCAP will review its undertaking annually, however, there is no
assurance that DEVCAP will continue this reimbursement beyond the specified
period, except as required by the following sentence. DEVCAP has agreed to
reimburse the Fund as necessary if in any fiscal year the sum of the Fund's
expenses exceeds the limits set by applicable regulations of state securities
commissions. Such annual limits are currently 2.50% of the first $30 million of
average net assets, 2% of the next $70 million of such net assets, and 1.50% of
such net assets in excess of $100 million for any fiscal year.
DISTRIBUTION PLAN AND AGREEMENT
The Trustees of the Trust have adopted a Distribution Plan (the
"Distribution Plan") with respect to the Fund in accordance with Rule 12b-1
under the 1940 Act after having concluded that there is a reasonable likelihood
that the Distribution Plan will benefit the Fund and its shareholders. As
contemplated by the Distribution Plan, Signature acts as agent of the Fund in
connection with the offering of shares of the Fund pursuant to a Distribution
Agreement. Signature acts as the principal underwriter of shares of the Fund and
bears the compensation of personnel necessary to provide such services and all
costs of travel, office expenses (including rent and overhead) and equipment.
22
<PAGE>
Under the Distribution Plan, Signature may receive a fee from the Trust at
an annual rate not to exceed 0.25% of the Fund's average daily net assets in
anticipation of, or as reimbursement for, costs and expenses incurred in
connection with the sale of shares of the Fund, such as payments to
broker-dealers who advise shareholders regarding the purchase, sale or retention
of shares of the Fund, payments to employees of Signature, advertising expenses
and the expenses of printing and distributing prospectuses and reports used for
sales purposes, expenses of preparing and printing sales literature and other
distribution- related expenses. Signature will provide to the Trustees of the
Trust a quarterly written report of amounts expended by it under the
Distribution Plan and the purposes for which such expenditures were made.
No payments under the Distribution Plan are made to the Service
Organizations, although Service Organizations may receive payments under the
Administrative Services Plan. See "Service Organizations" below.
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (par value $0.01 per
share) and to divide or combine the shares into a greater or lesser number of
shares without thereby changing the proportionate beneficial interests in the
Trust. The Fund is presently the only series of the Trust. However, the Trust
reserves the right to create and issue additional series of shares, in which
case the shares of each series would participate equally in the dividends and
assets of the particular series. The Trust may establish additional classes of
any series of shares. For example, the Fund may offer another class of shares
that has lower annual distribution fees or shareholder servicing fees. Prior to
offering another class of shares, the Fund would either issue a new Prospectus
and Statement of Additional Information or amend this Prospectus and the
Statement of Additional Information to reflect such issuance.
Each share of the Fund represents an equal proportionate interest in the
Fund with each other share. Shares have no preference, preemptive, conversion or
similar rights. Shares when issued are fully paid and nonassessable, except as
set forth below. Shareholders are entitled to one vote for each share held on
matters on which they are entitled to vote. The Trust is not required to and has
no current intention of holding annual meetings of shareholders, although the
Trust will hold special meetings of Fund shareholders when, in the judgment of
the Trustees of the Trust, it is necessary or desirable to submit matters for a
shareholder vote. Shares of each series are entitled to vote separately to
approve amendments to the Distribution Plan or changes in fundamental investment
policies or restrictions, but shares of all series will vote together in the
election or selection of Trustees and accountants for the Trust. If holders of
10% or more of the Trust's outstanding shares so request, a meeting of the Trust
shareholders will be called for the purpose of voting on the removal of a
Trustee or Trustees. The Trust will assist in shareholder communications as
required bySection 16(c) of the 1940 Act.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust". Under Massachusetts law, shareholders of such a business trust
may, under certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
The Portfolio is organized as a trust under the laws of the State of New
York. The Portfolio's Declaration of Trust provides that the Fund and other
entities investing in the Portfolio (i.e., other investment companies, insurance
23
<PAGE>
company separate accounts and common and commingled trust funds) will each be
liable for all obligations of the Portfolio. However, the risk of the Fund
incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed and the Portfolio
itself was unable to meet its obligations. Accordingly, the Trust's Trustees
believe that neither the Fund nor its shareholders will be adversely affected by
reason of the Fund's investing in the Portfolio. Whenever the Fund is requested
to vote on a fundamental policy of the Portfolio, the Fund will hold a meeting
of its shareholders and will cast its vote as instructed by its shareholders.
Each investor in the Portfolio, including the Fund, may add to or reduce
its investment in the Portfolio on each Fund Business Day. At the close of each
such business day, the value of each investor's beneficial interest in the
Portfolio will be determined by multiplying the net asset value of the Portfolio
by the percentage, effective for that day, which represents that investor's
share of the aggregate beneficial interests in the Portfolio. Any additions or
withdrawals, which are to be effected as of the close of business on that day,
will then be effected. The investor's percentage of the aggregate beneficial
interests in the Portfolio will then be re-computed as the percentage equal to
the fraction (i) the numerator of which is the value of such investor's
investment in the Portfolio as of the close of business on such day plus or
minus, as the case may be, the amount of any additions to or withdrawals from
the investor's investment in the Portfolio effected as of the close of business
on such day, and (ii) the denominator of which is the aggregate net asset value
of the Portfolio as of the close of business on such day plus or minus, as the
case may be, the amount of the net additions to or withdrawals from the
aggregate investments in the Portfolio by all investors in the Portfolio. The
percentage so determined will then be applied to determine the value of the
investor's interest in the Portfolio as of the close of business on the
following Fund Business Day.
SERVICE ORGANIZATIONS, TRANSFER AGENT AND CUSTODIAN
SERVICE ORGANIZATIONS
The Trust may also contract with various banks, trust companies (other than
Mellon Equity), broker-dealers (other than Signature) or other financial
organizations (collectively, "Service Organizations") to provide administrative
services for the Fund, such as maintaining shareholder accounts and records. The
Fund may pay fees to Service Organizations (which may vary depending upon the
services provided) in amounts up to an annual rate of 0.25% of the daily net
asset value of shares of the Fund 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 investment specified by the Fund 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 Fund. 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.
The Trust does not currently intend to enter into agreements with and pay
fees to Service Organizations with respect to the Fund, but it may do so in the
future.
The Glass-Steagall Act and other applicable laws, among other things,
prohibit banks from engaging in the business of underwriting, selling or
distributing securities. There is currently no precedent prohibiting banks from
performing administrative and shareholder servicing functions as Service
Organizations. However, judicial or administrative decisions or interpretations
24
<PAGE>
of such laws, as well as changes in either federal or state statutes or
regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, could prevent a bank Service Organization from
continuing to perform all or a part of its servicing activities. If a bank were
prohibited from so acting, its shareholder clients would be permitted to remain
shareholders of the Fund and alternative means for continuing the servicing of
such shareholders would be sought. It is not expected that shareholders would
suffer any adverse financial consequences as a result of any of these
occurrences.
TRANSFER AGENT AND CUSTODIAN
The Trust and the Portfolio have each entered into a Transfer Agency
Agreement with Fundamental Shareholder Services, Inc. ("FSSI"), pursuant to
which FSSI acts as Transfer Agent for the Fund and the Portfolio. The Transfer
Agent maintains an account for each shareholder of the Fund and the Portfolio,
performs other transfer agency functions and acts as dividend disbursing agent
for the Fund and the Portfolio. Pursuant to Custodian Agreements, Investors Bank
& Trust Company ("IBT") acts as the custodian of the Fund's assets, (i.e., cash
and the Fund's interest in the Portfolio) and as the custodian of the
Portfolio's assets (the "Custodian"). The Custodian's responsibilities include
safeguarding and controlling the Portfolio's cash and securities, handling the
receipt and delivery of securities, determining income and collecting interest
on the Portfolio's investments, maintaining books of original entry for
portfolio and fund accounting and other required books and accounts, and
calculating the daily net asset value of shares of the Portfolio. Securities
held by the Portfolio may be deposited into certain securities depositaries. The
Custodian does not determine the investment policies of the Portfolio or decide
which securities the Portfolio will buy or sell. The Portfolio may, however,
invest in securities of the Custodian and may deal with the Custodian as
principal in securities transactions. For their services, FSSI and IBT will
receive such compensation as may from time to time be agreed upon by each of
them and the Fund or the Portfolio.
---------------------
The Fund's Statement of Additional Information contains more detailed
information about the Fund and the Portfolio, including information related to
(i) investment policies and restrictions of the Fund and the Portfolio, (ii) the
Trustees, officers, investment adviser, investment manager and administrator of
the Fund and the Portfolio,(iii) portfolio transactions, (iv) the Fund's shares,
including rights and liabilities of shareholders, (v) additional performance
information, including the method used to calculate yield and total rate of
return quotations of the Fund, (vi) determination of the net asset value of
shares of the Fund, and (vii) the audited Statements of Assets and Liabilities
of the Fund at September 13, 1995, the audited financial statements of the
Portfolio at July 31, 1995, and unaudited financial statements of the Fund and
the Portfolio at January 31, 1996.
25
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
DEVCAP SHARED RETURN FUND
6 St. James Avenue
Boston, MA 02116
(800) 371-2655
PORTFOLIO INVESTMENT ADVISER:
Kinder, Lydenberg,
Domini & Co., Inc.
129 Mt. Auburn Street
Cambridge, MA 02138
(617) 547-7479
PORTFOLIO INVESTMENT MANAGER:
Mellon Equity Associates
500 Grant Street
Suite 3700
Pittsburgh, PA 15258-0001
ADMINISTRATOR AND DISTRIBUTOR:
Signature Broker-Dealer
Services, Inc.
6 St. James Avenue
Boston, MA 02116
(617) 423-0800
CUSTODIAN:
Investors Bank &
Trust Company
89 South Street
Boston, MA 02111
AUDITORS:
KPMG Peat Marwick LLP
99 High Street
Boston, MA 02110
LEGAL COUNSEL:
Mayer, Brown & Platt
1675 Broadway
New York, NY 10019
TRANSFER AGENT:
Fundamental Shareholder Services, Inc.
90 Washington Street
New York, NY 10006
(800) 371-2655
[RECYCLING LOGO APPEARS HERE]
[SOY INK LOGO APPEARS HERE] Printed on recycled paper with soy inks
<PAGE>
THE DEVCAP SHARED RETURN FUND
SUPPLEMENT DATED MARCH 28, 1996
TO STATEMENT OF ADDITIONAL INFORMATION DATED OCTOBER 16, 1995
THE DEVCAP SHARED RETURN FUND
FINANCIAL STATEMENTS (UNAUDITED)
JANUARY 31, 1996
--------------------
THE DOMINI SOCIAL INDEX PORTFOLIO
FINANCIAL STATEMENTS (UNAUDITED)
JANUARY 31, 1996
<PAGE>
<TABLE>
<CAPTION>
DEVCAP SHARED RETURN FUND
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1996 (UNAUDITED)
- -------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Investment in Domini Social Index Portfolio, at value (Note 1) $ 232,791
Deferred organization expenses (Note 1) 53,993
Receivable from affiliate (Note 2) 21,735
---------------
Total Assets 308,519
---------------
LIABILITIES:
Organization expenses payable (Note 2) 57,289
Accrued expenses 19,421
---------------
Total Liabilities 76,710
---------------
NET ASSETS $ 231,809
===============
NET ASSETS CONSIST OF:
Paid - in capital $ 219,630
Undistributed net investment income (314)
Accumulated net realized gain on investment 754
Net unrealized appreciation of investment 11,739
---------------
NET ASSETS 231,809
===============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE($231,809/21,756 SHARES) $ 10.65
===============
</TABLE>
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
DEVCAP SHARED RETURN FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD OCTOBER 19, 1995 (COMMENCEMENT OF OPERATIONS) TO JANUARY 31, 1996
(UNAUDITED)
- -------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME FROM PORTFOLIO (NOTE 1):
Interest income from Portfolio $ 909
Expenses from Portfolio (241)
---------
Net Income from Portfolio 668
EXPENSES (NOTES 1 AND 2):
Transfer agent fee 8,770
Professional fees 7,047
Amortization of organization expenses (Note 1) 3,296
Servicing and fund accounting agent fee(Note ) 2,589
Trustee fees and expenses (Note ) 867
Registration fees 76
Administration fees (Note 2) 72
---------
Total Expenses 22,717
Less:Reimbursement of expenses (Note 2) (21,735)
---------
Net Expenses 982
---------
NET INVESTMENT INCOME (314)
---------
NET REALIZED AND UNREALIZED GAIN FROM PORTFOLIO
Net realized gain from Portfolio 754
Net change in unrealized appreciation from Portfolio 11,739
---------
Net realized and unrealized gain from Portfolio 12,493
---------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 12,179
=========
</TABLE>
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
DEVCAP SHARED RETURN FUND
STATEMENT OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------------------
For the period
October 19, 1995
(commencement of
of operations) to
January 31, 1996
(Unaudited)
-------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment loss $ (314)
Net realized gain from Portfolio 754
Accumulated undistributed net realized gain from Portfolio 11,739
-----------
Net increase in net assets resulting from operations 12,179
-----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of shares 220,550
Payments for shares redeemed (920)
-----------
Net increase in Net Assets from Capital Share Transactions 219,630
-----------
Total Increase in Net Assets 231,809
NET ASSETS:
Beginning of period 0
-----------
End of period (including undistributed net investment loss of $314) $ 231,809
===========
OTHER INFORMATION:
SHARE TRANSACTIONS:
Sold 21,845
Redeemed (89)
-----------
Net increase 21,756
===========
</TABLE>
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
DEVCAP SHARED RETURN FUND
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------------------
For the period
October 19, 1995
(commencement of
of operations) to
January 31, 1996
(Unaudited)
-------------------
<S> <C> <C>
Net Asset Value, beginning of period $ 10.00
---------
Income from investment operations:
Net investment income (0.01)
Net realized and unrealized gain on investments 0.66
---------
Total income from investment operations 0.65
---------
Net Asset Value, end of period $ 10.65
=========
Ratios/supplemental data
Total return 6.50%
Net Assets, end of period (in 000's) $ 232
Ratio of expenses to average net assets * 2.50%**
Ratio of net investment income to average net assets * -0.65%**
- -------------------
* Reflects the Fund's proportionate share of the Portfolio's expenses as well as reimbursements
by agents of the Fund. If the reimbursements had not been in place, the ratios of expenses and
net investment income to average net assets would have been as follows:
Ratio of expenses to average net assets 47.75%
Ratio of net investment income to average net assets -45.86%
** Annualized.
</TABLE>
See Notes to Financial Statements
<PAGE>
DEVCAP SHARED RETURN FUND
January 31, 1996
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
DEVCAP Shared Return Fund (the "Fund") is a separate series of shares
of DEVCAP Trust, which is organized as a business trust under the laws of the
Commonwealth of Massachusetts. The Fund is a diversified open-end management
investment company registered under the Investment Company Act of 1940 (the
"Act"). The Fund has two primary objectives: (i) an investment objective, to
provide its shareholders with long-term total return which corresponds to the
total return performance of the Domini Social Index (sm), an index comprised of
stocks selected based upon social criteria and; (ii) a charitable objective, to
enable each shareholder of the Fund to make a donation of a portion of that
shareholder's annual contribution basis to finance the economic development of
underprivileged people in developing countries. The Fund seeks to achieve its
investment objective by investing all of its investable assets in the Domini
Social Index Portfolio (the "Portfolio"), a diversified open-end management
investment company having the same investment objective as the Fund. The
Portfolio invests in the common stocks included in the Domini Social Index.
Following is a summary of the significant accounting policies of the
Fund:
A. INVESTMENT VALUATION -
Valuation of securities by the Portfolio is discussed in Note 1 of the
Portfolio's Notes to Financial Statements which are included elsewhere
in this report.
B. INVESTMENT INCOME AND DIVIDENDS TO SHAREHOLDERS -
The Fund earns income, net of Portfolio expenses, daily based on its
investment in the Portfolio. Dividends to shareholders are declared and
paid semiannually from net investment income. Distributions to
shareholders of realized capital gains, if any are made annually.
C. FEDERAL TAXES -
The Fund's policy is to comply with the provisions of the Internal
Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income, including net
realized gains, if any, within the prescribed time periods.
Accordingly, no provisions for Federal income or excise tax are
necessary.
D. DEFERRED ORGANIZATION EXPENSES -
Organizational costs are being amortized on a straight line basis over
a five year period. The amount paid by the Fund on any redemption of the Fund's
initial shares will be reduced by the pro rata number of initial shares
outstanding immediately prior to such redemption. To the extent that the
proceeds of the redemptions are less than such pro rata portion of any
unamortized organization expenses,
NOTE 2 - TRANSACTIONS WITH AFFILIATES
A. ADMINISTRATION -
The Fund has retained Signature Broker Dealer Services, Inc. ("Signature")
to serve as the Administrator and Distributor. Signature provides
administrative services necessary for the operations of the Fund, furnishes
office space and facilities required for the conducting of business of the
Fund and pays the compensation of the Fund's officers. For its services
under the Administrative Services Agreement, Signature receives from the
Fund a fee accrued daily at an annual rate equal to 0.15% of the Fund's
average daily net assets.
B. DISTRIBUTION -
The Fund has adopted a Distribution Plan in accordance with Rule 12b-1
under the Act. Signature acts as agent of the Fund and principal
underwriter of shares of the Fund pursuant to the Plan. Under the Plan, the
Fund may pay the Signature a fee not to exceed 0.25% per annum of the
Fund's average daily net assets in anticipation of, or in reimbursement
for, expenses incurred in connection with the sale of shares of the Fund.
Such expenses include payments to broker-dealers who advise shareholders
regarding the purchase, sale or retention of shares of the Fund, payments
to employees of the Distributor, advertising used for sales purposes,
expenses of preparing and printing sales literature and other
distribution-related expenses.
C. TRUSTEES -
Independent Trustees are reimbursed for reasonable expenses incurred when
acting in their capacity as Trustees.
D. REIMBURSEMENT OF EXPENSES -
DEVCAP has agreed that it will reimburse the Fund through at least November
30, 1996 to the extent necessary to maintain the Fund's total operating
expenses (which includes expenses of the Fund and Portfolio) at the annual
rate of 1.75% of the Fund's average daily net assets. This limit does not
cover extraordinary increases in these expenses during the period and no
longer applies in the event of a precipitous decline in assets due to
unforeseen circumstances. DEVCAP will review its undertaking annually,
however, there is no assurance that DEVCAP will continue this reimbursement
beyond the specific period, except as required by the following sentence.
DEVCAP has agreed to reimburse the Fund as necessary if in any fiscal year
the sum of the Fund's expenses exceeds the limits set by applicable
regulations of state securities commissions. Such annual limits are
currently 2.5.% of the first $30 million of average net assets, 2% of the
next $70 million of such net assets, and 1.50% of such net assets in excess
of $100 million for any fiscal year.
NOTE 3 - INVESTMENT TRANSACTIONS
Additions and reductions in the Fund's investment in the Portfolio
aggregated $220,550 and $920 for the period from October 19, 1995 (commencement
of operations) to January 31, 1996.
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1996 (UNAUDITED)
COMMON STOCKS--98.4%
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
<S> <C> <C>
APPAREL--0.8%
Brown Group Inc............................................... 400 $ 5,500
Hartmax Corp. (b)............................................. 600 2,325
Lands' End Inc................................................ 800 11,700
Liz Claiborne, Inc............................................ 2,400 66,900
Nike Inc. (Class B)........................................... 4,400 306,900
Oshkosh B'Gosh, Inc........................................... 300 5,100
Phillips-Van Heusen Corp...................................... 600 6,300
Reebok International Ltd...................................... 2,500 67,500
Russell Corp.................................................. 1,400 38,500
Stride Rite Corp.............................................. 1,200 9,900
Timberland Co................................................. 250 4,719
VF Corp....................................................... 1,950 98,475
---------
623,819
---------
COMMERCIAL PRODUCTS & SERVICES--1.7%
Autodesk Inc.................................................. 1,400 42,350
Banta Corp.................................................... 700 29,575
Cintas Corp................................................... 1,400 64,400
Deluxe Corp................................................... 2,600 76,375
Donnelley, R.R. & Sons........................................ 4,800 172,200
Harland (J.H.) Co............................................. 900 19,800
HON Industries Inc............................................ 800 16,600
Kelly Services (Class A)...................................... 1,475 42,775
Miller, (Herman) Inc.......................................... 800 25,600
Moore Corp., Ltd.............................................. 3,300 65,175
National Education Corporation................................ 600 5,400
National Service Industries, Inc.............................. 1,700 59,287
New England Business Services, Inc............................ 300 5,325
Pitney Bowes Inc.............................................. 4,900 221,725
Standard Register Co.......................................... 700 13,475
Xerox Corp.................................................... 3,300 407,962
---------
1,268,024
---------
CONSTRUCTION--0.3%
Centex Corp................................................... 900 29,025
Fleetwood Enterprises, Inc.................................... 1,300 33,150
Graco Inc..................................................... 500 13,875
Kaufman & Broad Home Corp..................................... 800 12,800
Rouse Co...................................................... 1,700 31,662
Sherwin-Williams Co........................................... 2,500 105,313
TJ International Inc.......................................... 400 6,500
---------
232,325
---------
CONSUMER PRODUCTS & SERVICES--0.1%
Avery Dennison Corp........................................... 1,700 90,738
ISCO Inc...................................................... 200 1,850
Tennant Co.................................................... 200 4,750
---------
97,338
---------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
ENERGY--3.7%
Amoco Corp.................................................. 15,600 $ 1,097,850
Anadarko Petroleum Corp..................................... 1,800 90,900
Apache Corp................................................. 2,300 61,812
Atlantic Richfield Co....................................... 5,000 568,125
Consolidated Natural Gas Co................................. 2,900 130,500
ENERGEN Corp................................................ 300 7,463
Enron Corp.................................................. 8,100 299,700
Helmerich & Payne Inc....................................... 900 28,350
Louisiana Land & Exploration Co............................. 1,200 51,600
Oryx Energy Company (b)..................................... 3,100 40,688
Pennzoil Co................................................. 1,600 65,000
Rowan Companies Inc. (b).................................... 2,700 29,363
Santa Fe Energy Resources Inc. (b).......................... 2,500 24,062
Sun Company................................................. 3,000 81,750
Williams Companies Inc. (The)............................... 3,100 146,088
-----------
2,723,251
-----------
FINANCIAL--11.2%
Ahmanson (H.F.) & Co........................................ 4,100 98,400
American Express Co......................................... 15,200 699,200
Banc One Corp............................................... 12,823 485,671
Bank of Boston.............................................. 3,600 164,700
BankAmerica Corp............................................ 11,500 774,813
Bankers Trust (N.Y.) Corp................................... 2,500 162,188
Barnett Banks Inc........................................... 3,100 181,350
Beneficial Corp............................................. 1,600 78,200
Block (H. & R.), Inc........................................ 3,200 118,000
Cincinnati Financial Corp................................... 1,705 106,989
CoreStates Financial Corp................................... 4,300 172,000
Dime Bancorp Inc. (b)....................................... 3,200 37,200
Edwards (A.G.), Inc......................................... 2,225 55,903
Federal National Mortgage Assoc............................. 34,500 1,190,250
Fifth Third Bancorp......................................... 3,300 156,131
First Chicago Corp.......................................... 10,106 392,892
First Fed Financial Corp. (b)............................... 200 2,725
Golden West Financial Corp.................................. 1,900 98,325
Great Western Financial Corp................................ 4,200 100,800
Household International Inc................................. 3,050 197,869
Mellon Bank Corp............................................ 4,400 233,200
Merrill Lynch & Co., Inc.................................... 5,500 312,812
Morgan (J.P.) & Co., Inc.................................... 5,900 479,375
Norwest Corp................................................ 11,000 378,125
PNC Bank Corp............................................... 10,600 318,000
Piper Jaffray Inc........................................... 300 4,125
ReliaStar Financial Corp.................................... 1,100 51,838
Schwab (Charles) Corp....................................... 5,300 132,500
Student Loan Marketing Association.......................... 1,950 143,569
SunTrust Banks Inc.......................................... 3,500 241,938
Transamerica Corp........................................... 2,100 159,862
Value Line Inc.............................................. 300 11,700
Vermont Financial Services Corp............................. 100 3,200
</TABLE>
12
<PAGE>
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1996 (UNAUDITED)
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
<S> <C> <C>
FINANCIAL--CONTINUED
Wachovia Corp................................................. 5,300 $ 237,175
Wells Fargo & Co.............................................. 1,400 328,475
Wesco Financial Corp.......................................... 200 34,500
----------
8,344,000
----------
FOODS & BEVERAGES--10.2%
Archer-Daniels-Midland Co..................................... 1 19
Ben & Jerry's (Class A) (b)................................... 100 1,625
CPC International Inc......................................... 4,600 334,650
Campbell Soup Co.............................................. 7,700 487,988
Coca-Cola Company............................................. 39,300 2,962,237
Fleming Cos. Inc.............................................. 1,200 22,800
General Mills, Inc............................................ 5,200 299,000
Heinz (H.J.) Company.......................................... 11,800 405,625
Hershey Foods Corp............................................ 2,500 176,875
Kellogg Co.................................................... 6,700 513,388
Odwalla Inc................................................... 300 5,325
PepsiCo., Inc................................................. 24,700 1,472,737
Quaker Oats Co................................................ 4,100 140,937
Ralston Purina Group.......................................... 3,500 225,313
Smucker (J.M.) Co. (Class A).................................. 1,000 20,750
Super Valu Inc................................................ 2,300 71,300
Sysco Corp.................................................... 5,700 182,400
TCBY Enterprises, Inc......................................... 500 2,000
Tootsie Roll Industries, Inc.................................. 618 24,109
Wrigley, (Wm.) Jr. Co......................................... 3,600 214,200
----------
7,563,278
----------
HEALTH CARE--9.5%
Acuson Corp. (b).............................................. 1,000 14,875
Allergan Inc.................................................. 1,900 63,175
Alza Corp. (b)................................................ 2,800 79,100
Angelica Corp................................................. 300 6,075
Apogee Enterprises, Inc....................................... 300 5,250
Becton Dickinson & Company.................................... 2,000 172,750
Bergen Brunswig Corp. (Class A)............................... 1,245 32,837
Biomet Inc. (b)............................................... 3,800 71,250
Community Psychiatric Centers (b)............................. 1,000 11,500
Forest Laboratories, Inc. (b)................................. 1,500 81,000
Humana Inc. (b)............................................... 5,000 138,125
Johnson & Johnson............................................. 20,300 1,948,800
Manor Care Inc................................................ 2,100 82,425
Medtronic Inc................................................. 7,200 411,300
Merck & Co., Inc.............................................. 38,700 2,718,675
Mylan Laboratories Inc........................................ 3,600 68,400
Oxford Health Plans........................................... 1,100 75,900
Schering-Plough Corp.......................................... 11,400 617,025
St. Jude Medical Inc.......................................... 2,100 92,663
Stryker Corp.................................................. 1,600 89,400
</TABLE>
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
<S> <C> <C>
HEALTH CARE--CONTINUED
Sunrise Medical Inc. (b)..................................... 600 $ 11,325
US Healthcare Inc............................................ 4,900 237,650
United American Healthcare................................... 200 2,200
----------
7,031,700
----------
HOUSEHOLD GOODS--5.9%
Alberto Culver Co. (Class B)................................. 700 25,200
Avon Products, Inc........................................... 2,100 165,900
Bassett Furniture Industries, Inc............................ 300 7,350
Church & Dwight Co., Inc..................................... 900 17,437
Clorox Co.................................................... 1,600 132,200
Colgate-Palmolive Co......................................... 4,600 340,400
Handleman Co................................................. 700 4,463
Harman International Industries, Inc......................... 630 24,176
Hasbro Inc................................................... 2,800 116,200
Huffy Corp................................................... 300 3,300
Kimberly-Clark Corp.......................................... 8,732 704,018
Leggett & Platt Inc.......................................... 2,500 60,000
Mattel, Inc.................................................. 6,969 224,750
Maytag Co.................................................... 3,400 66,725
Newell Co.................................................... 5,100 134,513
Oneida, Ltd.................................................. 200 3,100
Procter & Gamble Co.......................................... 21,600 1,811,700
Rubbermaid Inc............................................... 5,200 147,550
Shaw Industries.............................................. 4,700 59,337
Snap-On Tools Corp........................................... 1,300 57,038
Springs Industries Inc. (Class A)............................ 600 24,000
Stanhome, Inc................................................ 600 16,050
Stanley Works (The).......................................... 1,400 72,100
Thomas Industries............................................ 200 4,275
Whirlpool Corp............................................... 2,300 125,062
----------
4,346,844
----------
INSURANCE--6.5%
Aetna Life & Casualty Co..................................... 3,600 268,200
Alexander & Alexander Services Inc........................... 1,400 27,125
American General Corp........................................ 6,300 237,825
American International Group, Inc............................ 14,800 1,433,750
Chubb Corp................................................... 2,700 280,125
CIGNA Corp................................................... 2,350 278,769
General Re Corp.............................................. 2,600 397,800
Hartford Steam Boiler........................................ 600 31,350
Jefferson-Pilot Corp......................................... 2,250 112,219
Lincoln National Corp........................................ 3,200 169,200
Marsh & McLennan Companies, Inc.............................. 2,300 209,300
Providian Corp............................................... 3,100 136,012
SAFECO Corp.................................................. 3,800 136,325
St. Paul Companies........................................... 2,700 153,900
Torchmark Corp............................................... 2,200 104,225
Travelers Corp............................................... 9,909 651,517
</TABLE>
13
<PAGE>
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1996 (UNAUDITED)
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
<S> <C> <C>
INSURANCE--CONTINUED
UNUM Corp..................................................... 2,300 $ 141,450
USF&G Corp.................................................... 3,400 54,400
USLIFE Corp................................................... 1,125 36,141
----------
4,859,633
----------
MANUFACTURING--2.1%
Applied Materials, Inc. (b)................................... 5,900 218,300
Briggs & Stratton Corp........................................ 800 35,100
Boston Scientific Corp........................................ 5,400 276,750
Cincinnati Milacron........................................... 900 21,487
Clarcor, Inc.................................................. 300 6,188
Deere & Co.................................................... 8,400 315,000
Dionex Corp. (b).............................................. 400 15,000
Fastenal Co................................................... 1,200 40,650
Goulds Pumps, Inc............................................. 600 13,350
Hunt Manufacturing Co......................................... 400 6,400
Illinois Tool Works Inc....................................... 3,600 220,950
James River Corp. of Virginia................................. 2,600 68,250
Lawson Products, Inc.......................................... 300 7,200
Millipore Corp................................................ 1,500 64,125
Nordson Corp.................................................. 500 27,000
Thermo Electron Corp.......................................... 2,700 147,150
Watts Industries Inc. (Class A)............................... 1,000 17,375
Wellman Inc................................................... 1,000 20,000
Zum Industries Inc............................................ 400 8,950
----------
1,529,225
----------
MEDIA--5.5%
BET Holdings Inc. (Class B) (b)............................... 800 19,600
Capital Cities/ABC, Inc....................................... 4,600 591,675
Comcast Corp. (Class A)....................................... 7,700 154,963
Disney (Walt) Company (The)................................... 16,300 1,047,275
Dow Jones & Co. Inc........................................... 3,300 129,112
Frontier Corp................................................. 5,000 148,750
Gannett Co., Inc.............................................. 4,400 279,400
King World Productions Inc. (b)............................... 1,100 47,300
Knight-Ridder Inc............................................. 1,600 106,200
Lee Enterprises, Inc.......................................... 1,400 29,225
McGraw-Hill Inc............................................... 1,500 133,500
Media General Inc. (Class A).................................. 800 26,700
Meredith Corp................................................. 800 36,400
New York Times Co. (The) (Class A)............................ 2,900 84,100
Scholastic Corp............................................... 500 36,500
Tele-Communications, Inc.
(Class A) (b)................................................ 20,000 422,500
Times Mirror Co. (Class A).................................... 3,500 108,500
Turner Broadcasting System Inc.
(Class A).................................................... 5,000 135,000
US West Media Group (b)....................................... 14,900 314,762
</TABLE>
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
<S> <C> <C>
MEDIA--CONTINUED
Viacom Inc. (b).............................................. 2,500 $ 100,000
Washington Post Co. (The) (Class B).......................... 350 101,325
----------
4,052,787
----------
MISCELLANEOUS--1.9%
Alco Standard Corp........................................... 3,700 145,225
Allwaste, Inc. (b)........................................... 1,200 5,700
American Greetings Corp. (Class A)........................... 2,450 66,762
Avnet, Inc................................................... 1,300 55,738
Bemis Co., Inc............................................... 1,800 50,850
CPI Corp..................................................... 400 5,900
Cross, A.T. Co. (Class A).................................... 500 7,313
DeVRY Inc. (b)............................................... 400 10,900
Fedders Corp................................................. 600 3,600
Fuller (H.B.) Co............................................. 500 18,125
General Signal Corp.......................................... 1,650 55,687
Groundwater Technology, Inc.................................. 200 2,650
Harcourt General Inc......................................... 2,400 93,600
Hillenbrand Industries Inc................................... 2,400 79,800
Ionics Inc. (b).............................................. 400 16,050
Jostens Inc.................................................. 1,400 32,200
KENETECH Corp. (b)........................................... 900 1,125
Marriott International Corp.................................. 3,900 167,213
Omnicom Group, Inc........................................... 2,400 92,700
Polaroid Corporation......................................... 1,350 60,581
Premier Industrial Corp...................................... 2,850 87,637
Sealed Air Corp. (b)......................................... 1,400 41,125
Service Corp. International.................................. 3,900 169,163
Sonoco Products Co........................................... 3,005 80,384
Toro Co. (The)............................................... 300 10,425
Whitman Corp................................................. 3,100 70,525
----------
1,430,978
----------
RESOURCE DEVELOPMENT--2.6%
Air Products & Chemicals, Inc................................ 3,500 186,812
Aluminum Co. of America...................................... 5,600 310,800
ARCO Chemical Company........................................ 3,000 155,625
Battle Mountain Gold Co...................................... 2,400 25,500
Betz Laboratories, Inc....................................... 1,000 41,375
Cabot Corp................................................... 1,200 69,000
Calgon Carbon Corp........................................... 1,200 13,350
Consolidated Papers Inc...................................... 1,600 87,200
Cyprus Amax Minerals Co...................................... 3,000 79,500
Echo Bay Mines Ltd........................................... 3,900 50,213
Inland Steel Industries Inc.................................. 1,500 42,937
Mead Corp.................................................... 1,600 88,400
Morton International Inc..................................... 4,600 170,200
Nalco Chemical Co............................................ 2,300 70,437
Nucor Corp................................................... 2,700 156,938
</TABLE>
14
<PAGE>
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1996 (UNAUDITED)
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
<S> <C> <C>
RESOURCE DEVELOPMENT--CONTINUED
Praxair Inc................................................... 4,500 $ 153,000
Sigma-Aldrich Corp............................................ 1,500 78,750
Westvaco Corp................................................. 3,000 87,000
Worthington Industries, Inc................................... 2,700 56,700
----------
1,923,737
----------
RETAIL--9.9%
Albertson's, Inc.............................................. 8,000 273,000
American Stores Co............................................ 4,900 127,400
Bob Evans Farms, Inc.......................................... 1,200 20,100
Charming Shoppes Inc.......................................... 2,500 6,875
Circuit City Stores Inc....................................... 3,100 79,825
Claire's Stores Inc........................................... 500 9,562
Dayton-Hudson Corp............................................ 2,200 164,450
Dillard Department Stores..................................... 3,500 101,500
Dollar General Corp........................................... 1,956 48,655
Egghead Inc. (b).............................................. 300 1,838
Gap, Inc. (The)............................................... 4,400 207,350
Giant Food Inc. (Class A)..................................... 2,100 67,200
Gibson Greetings Inc.......................................... 500 7,750
Great Atlantic & Pacific Tea Co., Inc......................... 1,200 28,200
Hannaford Brothers Co......................................... 1,300 35,263
Hechinger Co. (Class A)....................................... 800 4,600
Home Depot, Inc. (The)........................................ 14,833 682,318
International Dairy Queen, Inc.
(Class A) (b)................................................ 600 13,050
K-Mart Corp................................................... 13,300 78,137
Kroger Co. (b)................................................ 4,000 139,000
Lillian Vernon Corp........................................... 200 2,700
Limited, Inc. (The)........................................... 11,150 186,762
Longs Drug Stores, Inc........................................ 700 31,675
Lowe's Companies, Inc......................................... 4,900 152,513
Luby's Cafeterias, Inc........................................ 1,000 21,000
May Department Stores Co...................................... 7,700 342,650
McDonald's Corp............................................... 22,000 1,105,500
Melville Corp................................................. 3,200 91,200
Mercantile Stores Co., Inc.................................... 1,200 56,550
Morrison Restaurants Inc...................................... 1,000 16,000
Nordstrom Inc................................................. 2,700 105,975
Penney, J.C. Co., Inc......................................... 6,850 335,650
Pep Boys-Manny, Moe & Jack.................................... 2,250 65,250
Petrie Stores Corp............................................ 1,200 2,550
Price/Costco Inc. (b)......................................... 5,865 91,641
Ryan's Family Steakhouse, Inc. (b)............................ 1,300 9,100
Sears Roebuck & Co............................................ 12,200 506,300
Skyline Corp.................................................. 200 4,150
Specs Music Inc. (b).......................................... 200 475
Starbucks Corp................................................ 2,000 33,500
TJX Companies Inc. (The)...................................... 2,600 49,075
Tandy Corp.................................................... 2,000 76,500
Toys "R' Us, Inc. (b)......................................... 8,770 194,036
</TABLE>
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
<S> <C> <C>
RETAIL--CONTINUED
Wal-Mart Stores, Inc........................................ 71,900 $ 1,464,963
Walgreen Co................................................. 7,700 268,537
Whole Foods Market (b)...................................... 300 4,462
Woolworth (F.W.) Co......................................... 4,000 45,000
-----------
7,359,787
-----------
TECHNOLOGIES--14.1%
Advanced Micro Devices, Inc. (b)............................ 4,100 81,487
Amdahl Corp. (b)............................................ 3,900 28,519
American Power Conversion
Corp. (b) 2,900 25,194
Analog Devices, Inc......................................... 3,600 81,000
Apple Computer, Inc......................................... 3,800 104,975
Automatic Data Processing, Inc.............................. 8,900 354,888
Baldor Electric Co.......................................... 1,050 21,525
Borland International, Inc. (b)............................. 1,200 22,350
Caliber Systems Inc......................................... 1,100 41,800
Cisco Systems, Inc. (b)..................................... 8,700 724,275
Compaq Computer Corp. (b)................................... 8,400 395,850
Computer Assoc. International Inc........................... 7,600 519,650
Cooper Industries Inc....................................... 3,600 135,450
DSC Communications Corp. (b)................................ 3,950 115,044
Digital Equipment Corp. (b)................................. 4,800 347,400
Grainger, (W.W.) Inc........................................ 1,600 107,800
Hewlett-Packard Co.......................................... 16,000 1,356,000
Hubbell Inc. (Class B)...................................... 1,130 75,993
Intel Corp.................................................. 25,700 1,419,522
International Business Machines, Inc........................ 17,800 1,935,750
MCI Communications Corp..................................... 21,400 612,575
Micron Technology, Inc...................................... 6,500 222,625
Molex, Inc.................................................. 3,000 96,750
National Semiconductor Corp................................. 4,200 72,450
Novell Inc. (b)............................................. 11,300 152,550
Perkin-Elmer Corp........................................... 1,400 66,150
Quarterdeck Corp. (b)....................................... 1,000 16,000
Raychem Corp................................................ 1,400 93,625
Shared Medical Systems Corp................................. 800 45,600
Solectron Corp. (b)......................................... 1,500 69,000
Sprint Corp................................................. 10,900 470,062
Stratus Computer Inc. (b)................................... 700 18,550
Sun Microsystems Inc. (b)................................... 5,900 271,400
Tandem Computers Inc. (b)................................... 3,400 31,875
Tektronix, Inc.............................................. 1,000 45,750
Tellabs, Inc. (b)........................................... 2,800 123,200
Thomas & Betts Corp......................................... 600 47,175
Xilinx Inc. (b)............................................. 2,400 92,700
-----------
10,442,509
-----------
TRANSPORTATION--2.2%
AMR Corp. (b)............................................... 2,500 190,000
Airborne Freight Corp....................................... 600 15,975
</TABLE>
15
<PAGE>
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1996 (UNAUDITED)
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
<S> <C> <C>
TRANSPORTATION--CONTINUED
Alaska Air Group, Inc. (b)..................................... 300 $ 5,925
CSX Corp....................................................... 6,700 310,712
Conrail Inc.................................................... 2,700 191,025
Consolidated Freightways, Inc.................................. 1,500 34,500
Delta Air Lines, Inc........................................... 1,600 109,400
Federal Express Corp. (b)...................................... 1,900 144,637
GATX Corp...................................................... 600 27,750
Norfolk Southern Corp.......................................... 4,100 323,387
Roadway Services............................................... 550 6,050
Ryder System, Inc.............................................. 2,700 63,113
Southwest Airlines Inc......................................... 4,800 124,800
UAL Corp. (b).................................................. 450 72,450
Yellow Corp.................................................... 600 7,200
---------
1,626,924
---------
UTILITIES--9.6%
American Water Works Co., Inc.................................. 1,200 45,750
Ameritech Corp................................................. 17,300 1,040,163
Atlanta Gas & Light Co......................................... 2,000 40,500
Bell Atlantic Corp............................................. 13,700 943,587
BellSouth Corp................................................. 31,100 1,333,413
Brooklyn Union Gas Company (The)............................... 1,650 46,200
California Energy Co., Inc. (b)................................ 1,700 34,000
Citizens Utilities Co. (Class A) (b)........................... 7,287 88,357
Connecticut Energy Corp........................................ 200 4,200
Eastern Enterprises............................................ 900 31,050
El Paso Natural Gas Co......................................... 1,000 32,375
Equitable Resources Inc........................................ 1,200 34,050
Idaho Power Co................................................. 1,400 43,050
LG & E Energy Corp............................................. 1,100 47,437
MCN Corp....................................................... 2,100 51,712
NICOR Inc...................................................... 1,900 51,775
Noram Energy Corp.............................................. 4,300 37,625
Northwestern Public Service Co................................. 200 5,850
NYNEX.......................................................... 13,500 723,938
Oklahoma Gas & Electric Co..................................... 1,200 50,400
ONEOK Inc...................................................... 700 14,612
Pacific Enterprises............................................ 2,500 69,375
Pacific Telesis Group.......................................... 13,300 392,350
Peoples Energy Corp............................................ 1,200 39,150
Potomac Electric Power Co...................................... 3,600 97,200
Public Service Co. of Colorado................................. 2,100 75,600
</TABLE>
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
<S> <C> <C>
UTILITIES--CONTINUED
SBC Telecommunications.................................... 19,200 $ 1,087,200
Southern New England Telecom.............................. 2,000 80,000
Telephone & Data Systems.................................. 1,800 73,125
US West Communications Group.............................. 14,700 516,338
Washington Gas Light Co................................... 1,200 26,250
-----------
7,156,632
-----------
VEHICLE COMPONENTS--0.6%
Cooper Tire & Rubber Co................................... 2,550 63,112
Cummins Engine Inc........................................ 1,450 56,006
Dana Corp................................................. 3,100 101,913
Federal-Mogul Corp........................................ 1,100 21,312
Genuine Parts............................................. 3,800 169,100
Modine Manufacturing Co................................... 800 20,200
SPX Corp.................................................. 200 2,950
Smith, A.O................................................ 600 15,075
Spartan Motors Inc. (b)................................... 300 2,887
-----------
452,555
-----------
Total Common Stocks (Cost $56,214,285)........................... 73,065,346
-----------
PREFERRED STOCK--0.6%
FEDERAL SPONSORED CREDIT--0.6%
Federal Home Loan Mortgage Corp........................... 5,600 479,500
-----------
Total Preferred Stocks (Cost $309,353)........................... 479,500
-----------
TOTAL INVESTMENTS (A)--99.0%
(Cost $56,523,638).............................................. 73,544,846
Other Assets Less Liabilities--1.0%.............................. 740,826
-----------
NET ASSETS--100.0%............................................... $74,285,672
===========
</TABLE>
- -------
(a) The aggregate cost for federal income tax purposes is $56,523,637, the
aggregate gross unrealized appreciation is $18,591,743, and the aggregate
gross unrealized depreciation is $1,570,535, resulting in net unrealized
appreciation of $17,021,208.
(b) Non-income producing security.
See Notes to Financial Statements
16
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments at value (Cost $56,523,638) (Note 1)................... $73,544,846
Cash............................................................... 991,492
Dividends receivable............................................... 132,636
Deferred organization expenses (Note 1)............................ 3,435
-----------
Total assets.................................................... 74,672,409
-----------
LIABILITIES:
Expenses payable (Note 2).......................................... 104
Payable for securities purchased................................... 386,633
-----------
Total liabilities............................................... 386,737
-----------
NET ASSETS APPLICABLE TO INVESTORS' BENEFICIAL INTERESTS........... $74,285,672
===========
NET ASSETS CONSIST OF:
Paid-in Capital.................................................... $74,285,672
===========
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JANUARY 31, 1996
(UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends........................................................... $ 640,453
EXPENSES (NOTES 1 AND 2):
Investment management fee................................ $ 46,898
Investment advisory fee.................................. 16,200
Administration fee....................................... 16,200
Expense payment fees..................................... 77,540
Amortization of organization expenses.................... 5,222
----------
Total expenses................................................... 162,060
----------
NET INVESTMENT INCOME............................................... 478,393
NET REALIZED GAIN ON INVESTMENTS (NOTE 3):
Proceeds from sales...................................... 1,935,525
Cost of securities sold.................................. 1,600,204
----------
Net realized gain on investments................................. 335,321
NET UNREALIZED APPRECIATION OF INVESTMENTS:
Beginning of year........................................ 9,759,028
End of year.............................................. 17,021,208
----------
Net unrealized appreciation of investments....................... 7,262,180
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................ $8,075,894
==========
</TABLE>
See Notes to Financial Statements
17
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE
ENDED YEAR ENDED
JANUARY 31, 1996 JULY 31, 1995
(UNAUDITED) (AUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From Operations:
Net investment income.......................... $ 478,393 $ 734,456
Net realized gain on investments............... 335,321 405,427
Net change in unrealized appreciation.......... 7,262,180 8,729,434
----------- -----------
Net increase resulting from operations......... 8,075,894 9,869,317
----------- -----------
Transactions in Investors' Beneficial Interests:
Additions...................................... 13,013,750 14,888,452
Reductions..................................... (806,760) (2,076,641)
----------- -----------
Net increase from transactions in investors'
beneficial interests.......................... 12,206,990 12,811,811
----------- -----------
Total Increase in Net Assets.................... 20,282,884 22,681,128
NET ASSETS:
Beginning of period............................ 54,002,788 31,321,660
----------- -----------
End of period.................................. $74,285,672 $54,002,788
=========== ===========
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE FOR THE
SIX MONTHS PERIOD
ENDED FOR THE YEAR ENDED JULY 31, AUGUST 10, 1990(c)
JANUARY 31, 1996 --------------------------------------------- TO JULY 31, 1991
1995 1994 1993 1992
(UNAUDITED) (AUDITED) (AUDITED) (AUDITED) (AUDITED) (AUDITED)
<S> <C> <C> <C> <C> <C> <C>
Ratio of net investment
income to average net
assets................. 1.48%(b) 1.85%(a) 2.13%(a) 1.88%(a) 1.99%(a) 1.85%(a)(b)
Ratio of expenses to av-
erage net assets....... 0.50%(b) 0.43%(a) 0.29%(a) 0.29%(a) 0.29%(a) 0.29%(a)(b)
Portfolio Turnover...... 3% 6% 8% 4% 3% --
</TABLE>
(a) Reflects a voluntary waiver of fees by the Administrator and Adviser of the
Index Portfolio. Due to the limitations set forth in the Expense
Reimbursement Agreement, had the Administrator and Adviser not waived their
fees, the ratios of net investment income and expenses to average net
assets as stated would not have changed for the periods ended July 31,
1993, 1992 and 1991. For the years ended July 31, 1995 and 1994, the ratios
of net investment income and expenses to average net assets would have been
1.75% and 0.53% and 2.00% and 0.42%, respectively. (See Note 2.)
(b) Annualized.
(c) Commencement of operations.
See Notes to Financial Statements
18
<PAGE>
DOMINI SOCIAL INDEX PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1996
(UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
Domini Social Index Portfolio (the "Index Portfolio") is registered under the
Investment Company Act of 1940 (the "Act") as a no-load, diversified, open-end
management investment company which was organized as a trust under the laws of
the State of New York on June 7, 1989. The Index Portfolio intends to correlate
its investment portfolio as closely as is practicable with the Domini Social
Index (the "Index"), which is a common stock index developed and maintained by
Kinder, Lydenberg, Domini & Co., Inc. ("KLD"), the Index Portfolio's Adviser.
The Declaration of Trust permits the Trustees to issue an unlimited number of
beneficial interests in the Index Portfolio. The Index Portfolio commenced
operations upon effectiveness on August 10, 1990 and began investment
operations on June 3, 1991. The following is a summary of the significant
accounting policies of the Index Portfolio:
(A) VALUATION OF INVESTMENTS: The Index Portfolio values securities at the last
reported sale price, or at the last reported bid price if no sales are
reported.
(B) DIVIDEND INCOME: Dividend income is recorded on the ex-dividend date.
(C) FEDERAL TAXES: The Index Portfolio's policy is to comply with the
applicable provisions of the Internal Revenue Code. Accordingly, no provision
for Federal taxes is necessary.
(D) DEFERRED ORGANIZATION EXPENSE: Expenses incurred by the Index Portfolio in
connection with its organization are being amortized by the Index Portfolio on
a straight-line basis over a five-year period.
(E) OTHER: Investment transactions are accounted for on the trade date. Gains
and losses are determined on the basis of identified cost.
NOTE 2--TRANSACTIONS WITH AFFILIATES
(A) INVESTMENT ADVISORY FEES: The Index Portfolio has retained KLD as the
Investment Adviser of the Index Portfolio. The services provided by KLD consist
of the determination of the stocks to be included in the Index and evaluating,
in accordance with KLD's criteria, debt securities which may be purchased by
the Index Portfolio. For its services under the Investment Advisory Agreement,
KLD receives from the Index Portfolio a fee accrued daily at an annual rate
equal to 0.05% of the Index Portfolio's average daily net assets.
(B) INVESTMENT MANAGEMENT FEES: The Index Portfolio has retained Mellon Equity
Associates ("MEA") as the Investment Manager of the Index Portfolio. MEA does
not determine the composition of the Index. Under the Management Agreement, the
Index Portfolio pays MEA an investment management fee equal on an annual basis
to the following percentages of the Index Portfolio's average daily net assets
for its then-current fiscal year: 0.10% of assets up to $50 million; 0.30% of
assets between $50 million and $100 million; 0.20% of assets between $100
million and $500 million; and 0.15% of assets over $500 million.
(C) ADMINISTRATION FEES: The Index Portfolio has retained Signature Broker-
Dealer Services, Inc. ("Signature") to serve as Administrator of the Index
Portfolio. Certain officers of Signature serve as officers and trustee to the
Index Portfolio. Under the Administrative Services Agreement, Signature
provides management and administrative services necessary for the operations of
the Index Portfolio, furnishes office space and facilities required for
conducting the business of the Index Portfolio and pays the compensation of the
Index Portfolio's officers and Trustee affiliated with Signature. For these
services, Signature receives from the Index Portfolio a fee accrued daily at an
annual rate equal to 0.05% of the Index Portfolio's average daily net assets.
(D) REIMBURSEMENT OF EXPENSES: The Administrator has agreed to pay certain
expenses of the Index Portfolio subject to reimbursement. To accomplish such
reimbursement, the Administrator will receive an expense reimbursement fee from
the Index Portfolio such that after such reimbursement the aggregate expenses
of the Index Portfolio will not exceed 0.50% of the average daily net assets of
the Index Portfolio. The expense reimbursement fee agreement will terminate on
the earlier of April 30, 2000, or the date on which the cumulative
reimbursement fee equals the cumulative payments of the reimbursable expenses
made by the Administrator. For the six months ended January 31, 1996, the
Administrator incurred approximately $56,590 in expenses on behalf of the Index
Portfolio.
NOTE 3--INVESTMENT TRANSACTIONS
Purchase and sales of investments, other than U.S. Government securities and
short-term obligations, aggregated $14,086,023 and $1,600,204, respectively.
<PAGE>
PART C
ITEM 24.FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements Included In Part A:
Financial Highlights
Financial Statements Included In Part B:
For the Registrant:
Statements of Assets and Liabilities as of September 13, 1995
Independent Auditors' Report
Statement of Assets and Liabilities (unaudited), January 31, 1996
Statement of Operations (unaudited) for the period September 13, 1995 through
January 31, 1996
Statements of Changes in Net Assets (unaudited)
Financial Highlights (unaudited)
Notes to Financial Statements (unaudited)
For the Domini Social Index Portfolio:
Portfolio of Investments, July 31, 1995
Statement of Assets and Liabilities, July 31, 1995
Statement of Operations for the year ended July 31, 1995
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Independent Auditors' Report
Portfolio of Investments (unaudited), January 31, 1996
Statement of Assets and Liabilities (unaudited), January 31, 1996
Statement of Operations (unaudited) for the fiscal year ended July 31, 1995 and
the six months ended January 31, 1996
Statements of Changes in Net Assets (unaudited)
Financial Highlights (unaudited)
Notes to Financial Statements (unaudited)
(b) Exhibits
1 Amended and Restated Declaration of Trust.3
2 By-Laws.3
4 Specimen of certificate representing ownership of Registrant's shares
of beneficial interest.1
6 Distribution Agreement between Registrant and Signature Broker-Dealer
Services, Inc. ("SBDS").1
8 Custodian Contract between Registrant and Investors Bank & Trust
Company.1
9(a) Administrative Services Agreement between Registrant and SBDS.1
9(b) Form of Transfer Agency and Services Agreement between Registrant and
Fundamental Shareholder Services, Inc.2
10 Opinion and consent of counsel.2
11 Consent of independent auditors.3
13 Investment representation letters of initial shareholders.2
15 Distribution and Services Plan of the Registrant.1
16 Schedule for computation of performance quotations.1
17 Financial Data Schedule.3
18 Powers of Attorney.2
- --------------------
1 Incorporated herein by reference from Pre-Effective Amendment No. 1 to
Registrant's registration statement on Form N-1A (File Nos. 33-94668 and
811-9070) (the "Registration Statement"), as filed with the Securities and
Exchange Commission (the "SEC") on September 8, 1995.
2 Incorporated herein by reference from Pre-Effective Amendment No. 2 to the
Registration Statement, as filed with the SEC on October 11, 1995.
3 Filed herewith.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not applicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of March 4, 1996:
TITLE OF CLASS: SHARES OF BENEFICIAL INTEREST
DEVCAP Shared Return Fund (par value $0.01): 47
ITEM 27. INDEMNIFICATION.
Reference is made to Section 5.3 of Registrant's Declaration of Trust
and Article 4 of Registrant's Distribution Agreement.
Registrant, its Trustees and officers are insured against certain
expenses in connection with the defense of claims, demands, actions, suits, or
proceedings, and certain liabilities that might be imposed as a result of such
actions, suits or proceedings.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "1933 Act"), may be permitted to directors,
trustees, officers and controlling persons of the Registrant and the principal
underwriter pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, trustee, officer, or controlling person of the
Registrant and the principal underwriter in connection with the successful
defense of any action, suite or proceeding) is asserted against the Registrant
by such director, trustee, officer or controlling person or principal
underwriter 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 1933 Act
and will be governed by the final adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
Not applicable.
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) SBDS is the distributor (the "Distributor") for the shares of the
Registrant. SBDS also serves as the principal underwriter or placement agent for
numerous other registered investment companies.
(b) The following are the directors and officers of the Distributor. The
principal business address of these individuals is 6 St. James Avenue, Suite
900, Boston, Massachusetts 02116, unless otherwise noted.
PHILIP W. COOLIDGE: President, Chief Executive Officer and Director of SBDS.
President of Registrant.
JOHN R. ELDER: Treasurer of Registrant.
BARBARA M. O'DETTE: Assistant Treasurer of SBDS. Assistant Treasurer of
Registrant.
DAVID G. DANIELSON: Assistant Treasurer of Registrant.
DANIEL E. SHEA: Assistant Treasurer of Registrant.
LINWOOD C. DOWNS: Treasurer of SBDS.
THOMAS M. LENZ: Assistant Secretary of SBDS. Secretary of Registrant.
MOLLY S. MUGLER: Assistant Secretary of SBDS. Assistant Secretary of Registrant.
LINDA T. GIBSON: Assistant Secretary of SBDS. Assistant Secretary of Registrant.
BETH A. REMY: Assistant Treasurer of SBDS.
ANDRES E. SALDANA: Assistant Secretary of SBDS. Assistant Secretary of
Registrant.
SUSAN JAKUBOSKI: Assistant Treasurer of SBDS.
JULIE J. WYETZNER: Product Management Officer of SBDS.
ROBERT G. DAVIDOFF: Director of SBDS; CMNY Capital, L.P., 135 East 57th Street,
New York, NY 10022.
LEEDS HACKETT: Director of SBDS; Hackett Associates Limited, 1260 Avenue of the
Americas, 12th Floor, New York, NY 10020
LAURENCE B. LEVINE: Director of SBDS; Blair Corporation, 250 Royal Palm Way,
Palm Beach, FL 33480
DONALD S. CHADWICK: Director of SBDS; 4609 Bayard Street, Apartment 411,
Pittsburgh, PA 15213.
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940, as amended (the "1940
Act"), and the Rules thereunder will be maintained at the offices of:
Signature Broker-Dealer Services, Inc.: 6 St. James Avenue, Boston,
Massachusetts 02116 (records relating to its functions as distributor and
administrator).
Investors Bank and Trust Company: 89 South Street, Boston, Massachusetts 02111
(records relating to its functions as custodian).
Fundamental Shareholder Services, Inc.: 90 Washington Street, New York, New York
10006 (records relating to its functions as transfer agent).
ITEM 31. MANAGEMENT SERVICES.
Not applicable.
ITEM 32. UNDERTAKINGS.
(a) If the information called for by Item 5A of Form N-1A is contained in the
latest annual report to shareholders, the Registrant shall furnish each person
to whom a prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders upon request and without charge.
(b) The Registrant undertakes to file a post-effective amendment, using
financials which need not be certified, within four to six months following the
effective date of this registration statement. The financial statements included
in such amendment will be as of and for the time period ended on a date
reasonably close or as soon as practicable to the date of the filing of the
amendment.
(c) The Registrant undertakes to comply with Section 16(c) of the 1940 Act as
though such provisions of the 1940 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 of shares held by
such requesting shareholders.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this registration statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereto
duly authorized in the City of Boston, and Commonwealth of Massachusetts on the
28th day of March, 1996.
DEVCAP TRUST
By /S/PHILIP W. COOLIDGE
PHILIP W. COOLIDGE
President
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities
indicated on March 28, 1996.
SIGNATURE TITLE
/S/PHILIP W. COOLIDGE President
PHILIP W. COOLIDGE
/S/JOHN R. ELDER Treasurer, principal financial
JOHN R. ELDER officer and principal accounting officer
GILBERT H. CRAWFORD* Trustee
GILBERT H. CRAWFORD
STEPHEN D. CASHIN* Trustee
STEPHEN D. CASHIN
Trustee
ALICE TEPPER MARLIN
CAROLINE L. WILLIAMS* Trustee
CAROLINE L. WILLIAMS
*By /S/ANDRES E. SALDANA
ANDRES E. SALDANA
*As attorney-in-fact pursuant to a power of attorney previously filed.
<PAGE>
SIGNATURES
Domini Social Index Portfolio has duly caused the registration statement on
Form N-1A (File No. 33-94668) of DEVCAP Trust (the "Registration Statement") to
be signed on its behalf by the undersigned, thereto duly authorized in the
City of Boston, and Commonwealth of Massachusetts on the 28th day of March,
1996.
DOMINI SOCIAL INDEX PORTFOLIO
By /S/PHILIP W. COOLIDGE
PHILIP W. COOLIDGE
President
Pursuant to the requirements of the 1933 Act, the Registration Statement on
Form N-1A of DEVCAP Trust has been signed below by the following persons in the
capacities indicated on March 28, 1996.
SIGNATURE TITLE
/S/PHILIP W. COOLIDGE President and Trustee of Domini
PHILIP W. COOLIDGE Social Index Portfolio
/S/JOHN R. ELDER Treasurer, principal financial
JOHN R. ELDER officer and principal accounting officer of
Domini Social Index Portfolio
AMY L. DOMINI* Trustee of
AMY L. DOMINI Domini Social Index Portfolio
ALLEN M. MAYES* Trustee of
ALLEN M. MAYES Domini Social Index Portfolio
FREDERICK C. WILLIAMSON* Trustee of
FREDERICK C. WILLIAMSON Domini Social Index Portfolio
TIMOTHY SMITH* Trustee of
TIMOTHY SMITH Domini Social Index Portfolio
*By /S/ANDRES E. SALDANA
ANDRES E. SALDANA
*As attorney-in-fact pursuant to a power of attorney previously filed.
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
1 Amended and Restated Declaration of Trust.
2 Bylaws.
11 Consent of independent auditors.
17 Financial Data Schedule.
DEVCAP TRUST
AMENDED AND RESTATED DECLARATION OF TRUST
Dated as of September 15, 1995
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I--Name and Definitions 1
Section 1.1 Name 1
Section 1.2 Definitions 1
ARTICLE II--Trustees 3
Section 2.1 Number of Trustees 3
Section 2.2 Term of Office of Trustees 3
Section 2.3 Resignation and Appointment of Trustees 3
Section 2.4 Vacancies 4
Section 2.5 Delegation of Power to Other Trustees 4
ARTICLE III--Powers of Trustees 4
Section 3.1 General 4
Section 3.2 Investments 5
Section 3.3 Legal Title 6
Section 3.4 Issuance and Repurchase of Securities 6
Section 3.5 Borrowing Money; Lending Trust Property 6
Section 3.6 Delegation; Committees 6
Section 3.7 Collection and Payment 6
Section 3.8 Expenses 7
Section 3.9 Manner of Acting; By-Laws 7
Section 3.10 Miscellaneous Powers 7
Section 3.11 Principal Transactions 8
Section 3.12 Trustees and Officers as Shareholders 8
ARTICLE IV--Investment Adviser, Distributor, Administrator, Transfer
Agent and Shareholder Servicing Agents 9
Section 4.1 Investment Adviser 9
Section 4.2 Distributor 9
Section 4.3 Administrator 9
Section 4.4 Transfer Agent and Shareholder Servicing
Agents 9
Section 4.5 Parties to Contract 10
ARTICLE V--Limitations of Liability of Shareholders, Trustees and Others 10
Section 5.1 No Personal Liability of Shareholders,
Trustees, etc. 10
Section 5.2 Non-Liability of Trustees, etc. 11
Section 5.3 Mandatory Indemnification; Insurance 11
Section 5.4 No Bond Required of Trustees 12
Section 5.5 No Duty of Investigation; Notice in Trust
Instruments, etc. 13
Section 5.6 Reliance on Experts, etc. 13
i
<PAGE>
ARTICLE VI--Shares of Beneficial Interest 13
Section 6.1 Beneficial Interest 13
Section 6.2 Rights of Shareholders 13
Section 6.3 Trust Only 14
Section 6.4 Issuance of Shares 14
Section 6.5 Register of Shares 14
Section 6.6 Transfer of Shares 14
Section 6.7 Notices 15
Section 6.8 Voting Powers 15
Section 6.9 Series and Class Designation 16
ARTICLE VII--Redemptions 18
Section 7.1 Redemptions 18
Section 7.2 Suspension of Right of Redemption 18
Section 7.3 Redemption of Shares; Disclosure of Holding 19
Section 7.4 Redemptions of Accounts of Less than
Minimum Amount 19
ARTICLE VIII--Determination of Net Asset Value, Net Income and
Distributions 20
ARTICLE IX--Duration; Termination of Trust; Amendment; Mergers, etc. 20
Section 9.1 Duration 20
Section 9.2 Termination of Trust 20
Section 9.3 Amendment Procedure 21
Section 9.4 Merger, Consolidation and Sale of Assets 22
Section 9.5 Incorporation, Reorganization 22
Section 9.6 Incorporation or Reorganization of Series 23
ARTICLE X--Reports to Shareholders and Shareholder Communications 23
ARTICLE XI--Miscellaneous 23
Section 11.1 Filing 23
Section 11.2 Governing Law 24
Section 11.3 Counterparts 24
Section 11.4 Reliance by Third Parties 24
Section 11.5 Provisions in Conflict with Law or R 24
Section 11.6 Principal Office 25
ii
<PAGE>
AMENDED AND RESTATED DECLARATION OF TRUST
OF
DEVCAP TRUST
Dated as of September 15, 1995
WHEREAS, the Trustees desire to establish a trust for the investment and
reinvestment of funds contributed thereto; and
WHEREAS, the Trustees desire that the beneficial interest in the trust
assets be divided into transferable shares of beneficial interest (par value
$0.01 per share) ("Shares") issued in one or more series, which series may be
divided into one or more classes, as hereinafter provided and
NOW THEREFORE, the Trustees hereby declare that all money and property
contributed to the trust established hereunder shall be held and managed in
trust for the benefit of holders, from time to time, of the Shares issued
hereunder and subject to the provisions hereof.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. Name. The name of the trust created hereby is "DEVCAP
Trust."
Section 1.2. Definitions. Wherever they are used herein, the following
terms have the following respective meanings:
(a) "Administrator" means a party furnishing services to the Trust
pursuant to any contract described in Section 4.3 hereof.
(b) "By-Laws" means the By-laws referred to in Section 3.9 hereof, as
from time to time amended.
(c) "Commission" has the meaning given that term in the 1940 Act.
(d) "Custodian" means a party employed by the Trust to furnish
services as described in Article X of the By-Laws.
(e) "Declaration" means this Declaration of Trust as amended from time
to time. Reference in this Declaration of Trust to "Declaration", "hereof",
"herein", and "hereunder" shall be deemed to refer to this Declaration rather
than the article or section in which such words appear.
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(f) "Distributor" means a party furnishing services to the Trust
pursuant to any contract described in Section 4.2 hereof.
(g) "Interested Person" has the meaning given that term in the 1940
Act.
(h) "Investment Adviser" means a party furnishing services to the
Trust pursuant to any contract described in Section 4.1 hereof.
(i) "Majority Shareholder Vote" has the same meaning as the phrase
"vote of a majority of the outstanding voting securities" as defined in the 1940
Act, except that such term may be used herein with respect to the Shares of the
Trust as a whole or the Shares of any particular series, or class of any series,
as the context may require.
(j) "1940 Act" means the Investment Company Act of 1940 and the rules
and regulations thereunder, as amended from time to time.
(k) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities, whether
or not legal entities, and governments and agencies and political subdivisions
thereof, whether domestic or foreign.
(l) "Shareholder" means a record owner of outstanding Shares.
(m) "Shares" means the shares of beneficial interest into which the
beneficial interest in the Trust shall be divided from time to time or, when
used in relation to any particular series or class of Shares established by the
Trustees pursuant to Section 6.9 hereof, equal proportionate transferable units
into which such series or class of Shares shall be divided from time to time.
The term "Shares" includes fractions of Shares as well as whole Shares.
(n) "Shareholder Servicing Agent" means a party furnishing services to
the Trust pursuant to any shareholder servicing contract described in Section
4.4 hereof.
(o) "Transfer Agent" means a party furnishing services to the Trust
pursuant to any transfer agency contract described in Section 4.4 hereof.
(p) "Trust" means the trust created hereby.
(q) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees, including, without limitation, any and all property
allocated or belonging to any series of Shares pursuant to Section 6.9 hereof.
(r) "Trustees" means the persons who have signed the Declaration, so
long as they shall continue in office in accordance with the terms hereof, and
all other persons who may from time to time be duly elected or appointed,
qualified and serving as Trustees in accordance with the provisions hereof, and
reference herein to a Trustee or the Trustees shall refer to such person or
persons in their capacity as trustees hereunder.
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(s) "Charitable Contribution Program" shall have the meaning set forth
under Section 3.10.
ARTICLE II
TRUSTEES
Section 2.1. Number of Trustees. The number of Trustees shall be such
number as shall be fixed from time to time by a written instrument signed by a
majority of the Trustees, provided, however, that the number of Trustees shall
in no event be less than three nor more than 15.
Section 2.2. Term of Office of Trustees. Subject to the provisions of
Section 16(a) of the 1940 Act, the Trustees shall hold office during the
lifetime of this Trust and until its termination as hereinafter provided; except
that (a) any Trustee may resign his trust (without need for prior or subsequent
accounting) by an instrument in writing signed by him and delivered to the other
Trustees, which shall take effect upon such delivery or upon such later date as
is specified therein; (b) any Trustee may be removed with cause, at any time by
written instrument signed by at least two-thirds of the remaining Trustees,
specifying the date when such removal shall become effective; (c) any Trustee
who has attained a mandatory retirement age established pursuant to any written
policy adopted from time to time by at least two thirds of the Trustees shall,
automatically and without action of such Trustee or the remaining Trustees, be
deemed to have retired in accordance with the terms of such policy, effective as
of the date determined in accordance with such policy; (d) any Trustee who has
become incapacitated by illness or injury as determined by a majority of the
other Trustees, may be retired by written instrument signed by a majority of the
other Trustees, specifying the date of his retirement; and (e) a Trustee may be
removed at any meeting of Shareholders by a vote of two thirds of the
outstanding Shares of each series. For purposes of the foregoing clause (b), the
term "cause" shall include, but not be limited to, failure to comply with such
written policies as may from time to time be adopted by at least two thirds of
the Trustees with respect to the conduct of Trustees and attendance at meetings.
Upon the resignation, retirement or removal of a Trustee, or his otherwise
ceasing to be a Trustee, he shall execute and deliver such documents as the
remaining Trustees shall require for the purpose of conveying to the Trust or
the remaining Trustees any Trust Property held in the name of the resigning,
retiring or removed Trustee. Upon the incapacity or death of any Trustee, his
legal representative shall execute and deliver on his behalf such documents as
the remaining Trustees shall require as provided in the preceding sentence.
Section 2.3. Resignation and Appointment of Trustees. In case of the
declination, death, resignation, retirement, removal or inability of any of the
Trustees, or in case a vacancy shall, by reason of an increase in number, or for
any other reason, exist, the remaining Trustees shall fill such vacancy by
appointing such other individual as they in their discretion shall see fit. Such
appointment shall be evidenced by a written instrument signed by a majority of
the Trustees in office. Any such appointment shall not become effective,
however, until the person named in the written instrument of appointment shall
have accepted in writing such appointment and agreed in writing to be bound by
the terms of the Declaration. Within twelve months of such appointment, the
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Trustees shall cause notice of such appointment to be mailed to each Shareholder
at his address as recorded on the books of the Trustees. An appointment of a
Trustee may be made by the Trustees then in office and notice thereof mailed to
Shareholders as aforesaid in anticipation of a vacancy to occur by reason of
retirement, resignation or increase in number of Trustees effective at a later
date, provided that said appointment shall become effective only at or after the
effective date of said retirement, resignation or increase in number of
Trustees. The power of appointment is subject to the provisions of Section 16
(a) of the 1940 Act.
Section 2.4. Vacancies. The death, declination, resignation,
retirement, removal or incapacity of the Trustees, or any one of them, shall not
operate to annul the Trust or to revoke any existing agency created pursuant to
the terms of this Declaration. Whenever a vacancy in the number of Trustees
shall occur, until such vacancy is filled as provided in Section 2.3, the
Trustees in office, regardless of their number, shall have all the powers
granted to the Trustees and shall discharge all the duties imposed upon the
Trustees by the Declaration. A written instrument certifying the existence of
such vacancy signed by a majority of the Trustees shall be conclusive evidence
of the existence of such vacancy.
Section 2.5. Delegation of Power to Other Trustees. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six months at
any one time to any other Trustee or Trustees; provided that in no case shall
fewer than two Trustees personally exercise the powers granted to the Trustees
under the Declaration except as herein otherwise expressly provided.
ARTICLE III
POWERS OF TRUSTEES
Section 3.1. General. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the same
extent as if the Trustees were the sole owners of the Trust Property and
business in their own right, but with such powers of delegation as may be
permitted by the Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the Commonwealth of Massachusetts,
in any and all states of the United States of America, in the District of
Columbia, and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities of the United States of America and
of foreign governments, and to do all such other things and execute all such
instruments as the Trustees deem necessary, proper or desirable in order to
promote the interests of the Trust although such things are not herein
specifically mentioned. Any determination as to what is in the interests of the
Trust made by the Trustees in good faith shall be conclusive. In construing the
provisions of the Declaration, the presumption shall be in favor of a grant of
power to the Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
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Section 3.2. Investments. (a) The Trustees shall have the power:
(i) to conduct, operate and carry on the business of an investment
company;
(ii) to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, own, hold, pledge, sell, assign, transfer, exchange, distribute, lend
or otherwise deal in or dispose of U.S. and foreign currencies, any form of gold
or other precious metal, commodity contracts, any form of option contract,
contracts for the future acquisition or delivery of fixed income or other
securities, shares of, or any other interest in, any investment company as
defined in the 1940 Act, and securities and related derivatives of every nature
and kind, including, without limitation, all types of bonds, debentures, stocks,
negotiable or non-negotiable instruments, obligations, evidences of
indebtedness, certificates of deposit or indebtedness, commercial paper,
repurchase agreements, bankers' acceptances, and other securities of any kind,
issued, created, guaranteed or sponsored by any and all Persons, including,
without limitation,
(A) states, territories and possessions of the United States and the
District of Columbia and any political subdivision, agency or instrumentality of
any such Person,
(B) the U.S. Government, any foreign government, any political
subdivision or any agency or instrumentality of the U.S. Government, any foreign
government or any political subdivision of the U.S. Government or any foreign
government,
(C) any international or supranational instrumentality,
(D) any bank or savings institution, or
(E) any corporation, trust, partnership or other organization organized
under the laws of the United States or of any state, territory or possession
thereof, or under any foreign law;
or in "when issued" contracts for any such securities, to retain Trust assets in
cash and from time to time to change the securities or obligations in which the
assets of the Trust are invested; and to exercise any and all rights, powers and
privileges of ownership or interest in respect of any and all such investments
of every kind and description, including, without limitation, the right to
consent and otherwise act with respect thereto, with power to designate one or
more Persons to exercise any of said rights, powers and privileges in respect of
any of said investments; and
(iii) to carry on any other business in connection with or incidental
to any of the foregoing powers, to do everything necessary, proper or desirable
for the accomplishment of any purpose or the attainment of any object or the
furtherance of any power hereinbefore set forth, and to do every other act or
thing incidental or appurtenant to or connected with the aforesaid purposes,
objects or powers.
(b) The Trustees shall not be limited to investing in securities or
obligations maturing before the possible termination of the Trust, nor shall the
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Trustees be limited by any law limiting the investments which may be made by
fiduciaries.
(c) Notwithstanding any other provision of this Declaration to the
contrary, the Trustees shall have the power in their discretion without any
requirement of approval by shareholders to either invest all or a portion of the
Trust Property, or sell all or a portion of the Trust Property and invest the
proceeds of such sales, in another investment company that is registered under
the 1940 Act.
Section 3.3. Legal Title. Legal title to all Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust, or in the name of any
other Person or nominee, on such terms as the Trustees may determine. The right,
title and interest of the Trustees in the Trust Property shall vest
automatically in each Person who may hereafter become a Trustee. Upon the
resignation, removal or death of a Trustee, such Trustee shall automatically
cease to have any right, title or interest in any of the Trust Property, and the
right, title and interest of such Trustee in the Trust Property shall vest
automatically in the remaining Trustees. Such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed and
delivered.
Section 3.4. Issuance and Repurchase of Securities. The Trustees shall
have the power to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares and,
subject to the provisions set forth in Articles VII, VIII and IX and Section 6.9
hereof, to apply to any such repurchase, redemption, retirement, cancellation or
acquisition of Shares any funds of the Trust or other Trust Property whether
capital or surplus or otherwise, to the full extent now or hereafter permitted
by the laws of the Commonwealth of Massachusetts governing business
corporations.
Section 3.5. Borrowing Money; Lending Trust Property. The Trustees
shall have power to borrow money or otherwise obtain credit and to secure the
same by mortgaging, pledging or otherwise subjecting as security the Trust
Property, to endorse, guarantee, or undertake the performance of any obligation,
contract or engagement of any other Person and to lend Trust Property.
Section 3.6. Delegation; Committees. The Trustees shall have power to
delegate from time to time to such of their number or to officers, employees or
agents of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient.
Section 3.7. Collection and Payment. Subject to Section 6.9 hereof, the
Trustees shall have power to collect all property due to the Trust; to pay all
claims, including taxes, against the Trust Property; to prosecute, defend,
compromise or abandon any claims relating to the Trust Property; to foreclose
any security interest securing any obligations, by virtue of which any property
is owed to the Trust; and to enter into releases, agreements and other
instruments.
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Section 3.8. Expenses. Subject to Section 6.9 hereof, the Trustees
shall have the power to incur and pay any expenses which in the opinion of the
Trustees are necessary or incidental to carry out any of the purposes of the
Declaration, and to pay reasonable compensation from the funds of the Trust to
themselves as Trustees. The Trustees shall fix the compensation of all officers,
employees and Trustees.
Section 3.9. Manner of Acting; By-Laws. Except as otherwise provided
herein or in the By-Laws, any action to be taken by the Trustees may be taken by
a majority of the Trustees present at a meeting of Trustees at which a quorum is
present, including any meeting held by means of a conference telephone circuit
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, or by written consents of a majority of the
Trustees. The Trustees may adopt By-Laws not inconsistent with this Declaration
to provide for the conduct of the business of the Trust and may amend or repeal
such By-Laws to the extent such power is not reserved to the Shareholders.
Section 3.10. Miscellaneous Powers. The Trustees shall have the power
to: (a) employ or contract with such Persons as the Trustees may deem desirable
for the transaction of the business of the Trust; (b) enter into joint ventures,
partnerships and any other combinations or associations; (c) remove Trustees or
fill vacancies in or add to their number, elect and remove such officers and
appoint and terminate such agents or employees as they consider appropriate, and
appoint from their own number, and terminate, any one or more committees which
may exercise some or all of the power and authority of the Trustees as the
Trustees may determine; (d) purchase, and pay for out of Trust Property,
insurance policies insuring the Shareholders, the Administrator, Trustees,
officers, employees, agents, the Investment Adviser, the Distributor, selected
dealers or independent contractors of the Trust against all claims arising by
reason of holding any such position or by reason of any action taken or omitted
by any such Person in such capacity, whether or not constituting negligence, or
whether or not the Trust would have the power to indemnify such Person against
such liability; (e) establish pension, profit-sharing, Share purchase, and other
retirement, incentive and benefit plans for any Trustees, officers, employees or
agents of the Trust; (f) to the extent permitted by law, indemnify any person
with whom the Trust has dealings, including any Investment Adviser,
Administrator, Custodian, Distributor, Transfer Agent, Shareholder Servicing
Agent and any dealer, to such extent as the Trustees shall determine; (g)
guarantee indebtedness or contractual obligations of others; (h) determine and
change the fiscal year of the Trust and the method by which its accounts shall
be kept; and (i) adopt a seal for the Trust, provided, that the absence of such
seal shall not impair the validity of any instrument executed on behalf of the
Trust. In addition to the foregoing, the Trustees shall have the power to
organize and oversee implementation of a charitable contribution program (the
"Charitable Contribution Program") that will allow shareholders to make
donations (x) to Development Capital Fund, a consortium of non-profit
organizations dedicated to supporting micro-enterprise and other economic
development programs in order to improve the welfare of underprivileged people
in developing countries, or (y) to its member organizations. Such donations
shall be based on a formula reflecting the net increase in value of a
Shareholder's Shares and may require liquidation of such Shares on behalf of the
Shareholder.
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Section 3.11. Principal Transactions. Except in transactions permitted
by the 1940 Act, or any order of exemption issued by the Commission, the
Trustees shall not, on behalf of the Trust, buy any securities (other than
Shares) from or sell any securities (other than Shares) to, or lend any assets
of the Trust to, any Trustee or officer of the Trust or any firm of which any
such Trustee or officer is a member acting as principal, or have any such
dealings with any Investment Adviser, Administrator, Shareholder Servicing
Agent, Custodian, Distributor or Transfer Agent or with any Interested Person of
such Person; but the Trust may, upon customary terms, employ any such Person, or
firm or company in which such Person is an Interested Person, as broker, legal
counsel, registrar, transfer agent, dividend disbursing agent or custodian.
Section 3.12. Trustees and Officers as Shareholders. Except as
hereinafter provided, no officer, Trustee or member of any advisory board of the
Trust, and no member, partner, officer, director or trustee of the Investment
Adviser, Administrator or of the Distributor, and no Investment Adviser,
Administrator or Distributor of the Trust, shall take long or short positions in
the securities issued by the Trust. The foregoing provision shall not prevent:
(a) The Distributor from purchasing Shares from the Trust if such
purchases are limited (except for reasonable allowances for clerical errors,
delays and errors of transmission and cancellation of orders) to purchases for
the purpose of filling orders for Shares received by the Distributor and
provided that orders to purchase from the Trust are entered with the Trust or
the Custodian promptly upon receipt by the Distributor of purchase orders for
Shares, unless the Distributor is otherwise instructed by its customer;
(b) The Distributor from purchasing Shares as agent for the account of
the Trust;
(c) The purchase from the Trust or from the Distributor of Shares by
any officer, Trustee or member of any advisory board of the Trust or by any
member, partner, officer, director or trustee of the Investment Adviser or of
the Distributor at a price not lower than the net asset value of the Shares at
the moment of such purchase, provided that any such sales are only to be made
pursuant to a uniform offer described in the current prospectus or statement of
additional information for the Shares being purchased; or
(d) The Investment Adviser, the Distributor, the Administrator, or any
of their officers, partners, directors or trustees from purchasing Shares prior
to the effective date of the Trust's registration statement under the Securities
Act of 1933, as amended, relating to the Shares.
ARTICLE IV
INVESTMENT ADVISER, DISTRIBUTOR, ADMINISTRATOR, TRANSFER AGENT
AND SHAREHOLDER SERVICING AGENTS
Section 4.1. Investment Adviser. Subject to a Majority Shareholder Vote
of the Shares of each series affected thereby, the Trustees may in their
discretion from time to time enter into one or more investment advisory or
management contracts whereby the other party to each such contract shall
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undertake to furnish the Trust such management, investment advisory, statistical
and research facilities and services, promotional activities, and such other
facilities and services, if any, with respect to one or more series of Shares,
as the Trustees shall from time to time consider desirable and all upon such
terms and conditions as the Trustees may in their discretion determine.
Notwithstanding any provision of the Declaration, the Trustees may delegate to
the Investment Adviser authority (subject to such general or specific
instructions as the Trustees may from time to time adopt) to effect purchases,
sales, loans or exchanges of assets of the Trust on behalf of the Trustees or
may authorize any officer, employee or Trustee to effect such purchases, sales,
loans or exchanges pursuant to recommendations of the Investment Adviser (and
all without further action by the Trustees). Any of such purchases, sales, loans
or exchanges shall be deemed to have been authorized by all the Trustees. Such
services may be provided by one or more Persons.
Section 4.2. Distributor. The Trustees may in their discretion from
time to time enter into one or more distribution contracts providing for the
sale of Shares whereby the Trust may either agree to sell the Shares to the
other party to any such contract or appoint any such other party its sales agent
for such Shares. In either case, any such contract shall be on such terms and
conditions as the Trustees may in their discretion determine, provided that such
terms and conditions are not inconsistent with the provisions of the Declaration
or the By-Laws; and such contract may also provide for the repurchase or sale of
Shares by such other party as principal or as agent of the Trust and may provide
that such other party may enter into selected dealer and sales agreements with
registered securities dealers and depository institutions to further the purpose
of the distribution or repurchase of the Shares. Such services may be provided
by one or more Persons.
Section 4.3. Administrator. The Trustees may in their discretion from
time to time enter into one or more administrative services contracts whereby
the other party to each such contract shall undertake to furnish such
administrative services to the Trust as the Trustees shall from time to time
consider desirable and all upon such terms and conditions as the Trustees may in
their discretion determine, provided that such terms and conditions are not
inconsistent with the provisions of this Declaration or the By-Laws. Such
services may be provided by one or more Persons.
Section 4.4. Transfer Agent and Shareholder Servicing Agents. The
Trustees may in their discretion from time to time enter into one or more
transfer agency and shareholder servicing contracts whereby the other party to
each such contract shall undertake to furnish such transfer agency and/or
shareholder services to the Trust or to shareholders of the Trust as the
Trustees shall from time to time consider desirable and all upon such terms and
conditions as the Trustees may in their discretion determine, provided that such
terms and conditions are not inconsistent with the provisions of this
Declaration or the By-Laws. Such services may be provided by one or more
Persons. Such services may include services related to the administration of the
Charitable Contribution Program. Except as otherwise provided in the applicable
shareholder servicing contract, a Shareholder Servicing Agent shall be deemed to
be the record owner of outstanding Shares beneficially owned by customers of
such Shareholder
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Servicing Agent for whom it is acting pursuant to such shareholder servicing
contract.
Section 4.5. Parties to Contract. Any contract of the character
described in Section 4.1, 4.2, 4.3 or 4.4 of this Article IV or any Custodian
contract as described in Article X of the By-Laws may be entered into with any
Person, although one or more of the Trustees or officers of the Trust may be an
officer, partner, director, trustee, shareholder, or member of such other party
to the contract, and no such contract shall be invalidated or rendered voidable
by reason of the existence of any such relationship; nor shall any Person
holding such relationship be liable merely by reason of such relationship for
any loss or expense to the Trust under or by reason of any such contract or
accountable for any profit realized directly or indirectly therefrom, provided
that the contract when entered into was not inconsistent with the provisions of
this Article IV or the By-Laws. The same Person may be the other party to
contracts entered into pursuant to Sections 4.1, 4.2, 4.3 and 4.4 above or any
Custodian contract as described in Article X of the By-Laws, and any individual
may be financially interested or otherwise affiliated with Persons who are
parties to any or all of the contracts mentioned in this Section 4.5.
ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
Section 5.1. No Personal Liability of Shareholders, Trustees, etc. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust Property or the acts, obligations or affairs of the
Trust. No Trustee, officer, employee or agent of the Trust shall be subject to
any personal liability whatsoever to any Person, other than the Trust or its
Shareholders, in connection with Trust Property or the affairs of the Trust,
save only that arising from bad faith, wilful misfeasance, gross negligence or
reckless disregard for his duty to such Person; and all such Persons shall look
solely to the Trust Property for satisfaction of claims of any nature arising in
connection with the affairs of the Trust. If any Shareholder, Trustee, officer,
employee, or agent, as such, of the Trust, is made a party to any suit or
proceeding to enforce any such liability, he shall not, on account thereof, be
held to any personal liability. The Trust shall indemnify and hold each
Shareholder harmless from and against all claims and liabilities to which such
Shareholder may become subject by reason of his being or having been a
Shareholder, and shall reimburse such Shareholder for all legal and other
expenses reasonably incurred by him in connection with any such claim or
liability. The rights accruing to a Shareholder under this Section 5.1 shall not
exclude any other right to which such Shareholder may be lawfully entitled, nor
shall anything herein contained restrict the right of the Trust to indemnify or
reimburse a Shareholder in any appropriate situation even though not
specifically provided herein. Notwithstanding any other provision of this
Declaration to the contrary, no Trust Property shall be used to indemnify or
reimburse any Shareholder of any Shares of any series or class thereof other
than Trust Property allocated or belonging to that series, or allocable to the
class thereof.
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Section 5.2. Non-Liability of Trustees, etc. No Trustee, officer,
employee or agent of the Trust shall be liable to the Trust or to any
Shareholder, Trustee, officer, employee, or agent thereof for any action or
failure to act (including without limitation the failure to compel in any way
any former or acting Trustee to redress any breach of trust) except for his own
bad faith, wilful misfeasance, gross negligence or reckless disregard of his
duties.
Section 5.3. Mandatory Indemnification; Insurance. (a) Subject to the
exceptions and limitations contained in paragraph (b) below:
(i) every person who is or has been a Trustee or officer of the Trust
shall be indemnified by the Trust, to the fullest extent permitted by law
(including the 1940 Act) as currently in effect or as hereafter amended, against
all liability and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having been a Trustee
or officer and against amounts paid or incurred by him in the settlement
thereof;
(ii) the words "claim", "action", "suit", or "proceeding" shall apply
to all claims, actions, suits or proceedings (civil, criminal, administrative or
other, including appeals), actual or threatened; and the words "liability" and
"expenses" shall include, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or
officer:
(i) against any liability to the Trust or the Shareholders by reason of
a final adjudication by the court or other body before which the proceeding was
brought that he engaged in wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Trust; or
(iii) in the event of a settlement involving a payment by a Trustee or
officer or other disposition not involving a final adjudication as provided in
paragraph (b) (i) or (b) (ii) above resulting in a payment by a Trustee or
officer, unless there has been either a determination that such Trustee or
officer did not engage in wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office by the
court or other body approving the settlement or other disposition or by a
reasonable determination, based upon a review of readily available facts (as
opposed to a full trial-type inquiry) that he did not engage in such conduct:
(a) by vote of a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees then in office
act on the matter); or
(b) by written opinion of independent legal counsel.
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(c) Subject to the provisions of the 1940 Act, the Trust may maintain
insurance for the protection of the Trust Property, its Shareholders, Trustees,
officers, employees and agents in such amount as the Trustees shall deem
adequate to cover possible tort liability (whether or not the Trust would have
the power to indemnify such Persons against such liability), and such other
insurance as the Trustees in their sole judgment shall deem advisable.
(d) The rights of indemnification herein provided shall be severable,
shall not affect any other rights to which any Trustee or officer may now or
hereafter be entitled, shall continue as to a Person who has ceased to be such a
Trustee or officer and shall inure to the benefit of the heirs, executors and
administrators of such Person. Nothing contained herein shall affect any rights
to indemnification to which personnel other than Trustees and officers may be
entitled by contract or otherwise under law.
(e) Expenses of preparation and presentation of a defense to any claim,
action, suit, or proceeding of the character described in paragraph (a) of this
Section 5.3 shall be advanced by the Trust prior to final disposition thereof
upon receipt of an undertaking by or on behalf of the recipient to repay such
amount if it is ultimately determined that he is not entitled to indemnification
under this Section 5.3, provided that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising out of
any such advances; or
(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act on
the matter) or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.
As used in this Section 5.3 a "Disinterested Trustee" is one (i) who is
not an "Interested Person" of the Trust (including anyone who has been exempted
from being an "Interested Person" by any rule, regulation or order of the
Commission), and (ii) 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 had been pending.
Section 5.4. No Bond Required of Trustees. No Trustee shall be
obligated to give any bond or other security for the performance of any of his
duties hereunder.
Section 5.5. No Duty of Investigation; Notice in Trust Instruments,
etc. No purchaser, lender, Shareholder Servicing Agent, Transfer Agent or other
Person dealing with the Trustees or any officer, employee or agent of the Trust
shall be bound to make any inquiry concerning the validity of any transaction
purporting to be made by the Trustees or by said officer, employee or agent or
be liable for the application of money or property paid, loaned, or delivered to
or on the order of the Trustees or of said officer, employee or agent. Every
obligation, contract, instrument, certificate, Share, other security of the
Trust
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13
or undertaking, and every other act or thing whatsoever executed in connection
with the Trust shall be conclusively presumed to have been executed or done by
the executors thereof only in their capacity as Trustees under the Declaration
or in their capacity as officers, employees or agents of the Trust. Every
written obligation, contract, instrument, certificate, Share, other security of
the Trust or undertaking made or issued by the Trustees shall recite that the
same is executed or made by them not individually, but as Trustees under the
Declaration, and that the obligations of any such instrument are not binding
upon any of the Trustees or Shareholders individually, but bind only the trust
estate, and may contain any further recital which they or he may deem
appropriate, but the omission of such recital shall not operate to bind any of
the Trustees or Shareholders individually. The Trustees shall at all times
maintain insurance for the protection of the Trust Property, Shareholders,
Trustees, officers, employees and agents in such amount as the Trustees shall
deem adequate to cover possible tort liability, and such other insurance as the
Trustees in their sole judgment shall deem advisable.
Section 5.6. Reliance on Experts, etc. Each Trustee and officer or
employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
of the Trust, upon an opinion of counsel, or upon reports made to the Trust by
any of its officers or employees or by the Investment Adviser, the Distributor,
Transfer Agent, any Shareholder Servicing Agent, selected dealers, accountants,
appraisers or other experts or consultants selected with reasonable care by the
Trustees, officers or employees of the Trust, regardless of whether such counsel
or expert may also be a Trustee.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 6.1. Beneficial Interest. The interest of the beneficiaries
hereunder may be divided into transferable Shares, which may be divided into one
or more series as provided in Section 6.9 hereof. Each such series shall have
such class or classes of Shares as the Trustees may from time to time determine.
The number of Shares authorized hereunder is unlimited. All Shares issued
hereunder including, without limitation, Shares issued in connection with a
dividend in Shares or a split of Shares, shall be fully paid and non-assessable.
Section 6.2. Rights of Shareholders. The ownership of the Trust
Property of every description and the right to conduct any business hereinbefore
described are vested exclusively in the Trustees, and the Shareholders shall
have no interest therein other than the beneficial interest conferred by their
Shares, and they shall have no right to call for any partition or division of
any property, profits, rights or interests of the Trust nor can they be called
upon to assume any losses of the Trust or suffer an assessment of any kind by
virtue of their ownership of Shares. The Shares shall be personal property
giving only the rights specifically set forth in the Declaration. The Shares
shall not entitle the holder to preference, preemptive, appraisal, conversion or
exchange rights, except as the Trustees may determine with respect to any series
or class of Shares.
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14
Section 6.3. Trust Only. It is the intention of the Trustees to create
only the relationship of trustee and beneficiary between the Trustees and the
Shareholders. It is not the intention of the Trustees to create a general
partnership, limited partnership, joint stock association, corporation, bailment
or any form of legal relationship other than a trust. Nothing in the Declaration
shall be construed to make the Shareholders, either by themselves or with the
Trustees, partners or members of a joint stock association.
Section 6.4. Issuance of Shares. The Trustees, in their discretion may,
from time to time without vote of the Shareholders, issue Shares, in addition to
the then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount and type of consideration, including cash
or property, and on such terms as the Trustees may deem best, and may in such
manner acquire other assets (including the acquisition of assets subject to, and
in connection, with the assumption of liabilities) and businesses. In connection
with any issuance of Shares, the Trustees may issue fractional Shares. The
Trustees may from time to time divide or combine the Shares of any series into a
greater or lesser number without thereby changing their proportionate beneficial
interests in Trust Property allocated or belonging to such series. Contributions
to the Trust may be accepted for, and Shares shall be redeemed as, whole Shares
and/or fractions of a Share.
Section 6.5. Register of Shares. A register or registers shall be kept
at the principal office of the Trust or at an office of the Transfer Agent
(and/or any sub-transfer agent which may be a Shareholder Servicing Agent) which
register or registers, taken together, shall contain the names and addresses of
the Shareholders and the number of Shares held by them respectively and a record
of all transfers thereof. Such register or registers shall be conclusive as to
who are the holders of the Shares and who shall be entitled to receive dividends
or distributions or otherwise to exercise or enjoy the rights of Shareholders.
No Shareholder shall be entitled to receive payment of any dividend or
distribution, nor to have notice given to him as herein or in the By-Laws
provided, until he has given his address to the Transfer Agent, a sub-transfer
agent, or such other officer or agent of the Trustees as shall keep the said
register for entry thereon. It is not contemplated that certificates will be
issued for the Shares; however, the Trustees, in their discretion, may authorize
the issuance of Share certificates and promulgate appropriate rules and
regulations as to their use.
Section 6.6. Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by his agent thereunto
duly authorized in writing, upon delivery to the Trustees, the Transfer Agent or
a sub-transfer agent, of a duly executed instrument of transfer, together with
any certificate or certificates (if issued) for such Shares and such evidence of
the genuineness of each such execution and authorization and of other matters as
may reasonably be required. Upon such delivery the transfer shall be recorded on
the register of the Trust. Until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor any Transfer Agent, a sub-transfer agent or registrar
nor any officer, employee or agent of the Trust shall be affected by any notice
of the proposed transfer.
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15
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees, the Transfer
Agent or a sub-transfer agent; but until such record is made, the Shareholder of
record shall be deemed to be the holder of such Shares for all purposes
hereunder and neither the Trustees nor any Transfer Agent, sub-transfer agent or
registrar nor any officer or agent of the Trust shall be affected by any notice
of such death, bankruptcy or incompetence, or other operation of law.
Section 6.7. Notices. Any and all notices to which any Shareholder may
be entitled and any and all communications shall be deemed duly served or given
if mailed, postage prepaid, addressed to any Shareholder of record at his last
known address as recorded on the register of the Trust.
Section 6.8. Voting Powers. The Shareholders shall have power to vote
only (i) for the removal of Trustees as provided in Section 2.2 hereof, (ii)
with respect to any investment advisory or management contract as provided in
Section 4.1 hereof, (iii) with respect to termination of the Trust as provided
in Section 9.2 hereof, (iv) with respect to any amendment of this Declaration to
the extent and as provided in Section 9.3 hereof, (v) with respect to any
merger, consolidation or sale of assets as provided in Sections 9.4 and 9.6
hereof, (vi) with respect to incorporation of the Trust or any series to the
extent and as provided in Sections 9.5 and 9.6 hereof, (vii) to the same extent
as the stockholders of a Massachusetts business corporation as to whether or not
a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or the
Shareholders, and (viii) with respect to such additional matters relating to the
Trust as may be required by the Declaration, 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. Each whole Share shall be entitled
to one vote as to any matter on which it is entitled to vote and each fractional
Share shall be entitled to a proportionate fractional vote, except that Shares
held in the treasury of the Trust shall not be voted. Shares shall be voted by
individual series or class on any matter submitted to a vote of the Shareholders
of the Trust except as provided in Section 6.9(g) hereof. There shall be no
cumulative voting in the election of Trustees. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any action
required by law, the Declaration or the By-Laws to be taken by Shareholders. At
any meeting of Shareholders of the Trust or of any series or class of the Trust,
a Shareholder Servicing Agent may vote any shares as to which such Shareholder
Servicing Agent is the agent of record and which are not otherwise represented
in person or by proxy at the meeting, proportionately in accordance with the
votes cast by beneficial owners of all shares otherwise represented at the
meeting in person or by proxy as to which such Shareholder Servicing Agent is
the agent of record. Any shares so voted by a Shareholder Servicing Agent will
be deemed represented at the meeting for quorum purposes. The By-Laws may
include further provisions for Shareholder votes and meetings and related
matters.
Section 6.9. Series and Class Designation. As set forth in Appendix I
hereto, the Trustees have authorized the division of Shares into series and
classes, as designated and established pursuant to the provisions of Appendix I
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16
and this Section 6.9. The Trustees, in their discretion, may authorize the
division of Shares into one or more additional series, which may be divided into
one or more classes, and the different series and classes shall be established
and designated, and the variations in the relative rights, privileges and
preferences as between the different series and classes shall be fixed and
determined by the Trustees upon and subject to the following provisions:
(a) All Shares shall be identical except that there may be such
variations as shall be fixed and determined by the Trustees between different
series and different classes thereof as to purchase price, right of redemption
and the price, terms and manner of redemption, and special and relative rights
as to dividends and on liquidation.
(b) The number of authorized Shares and the number of Shares of each
series or classes that may be issued shall be unlimited. The Trustees may
classify or reclassify any unissued Shares or any Shares previously issued and
reacquired of any series or classes into one or more series or classes that may
be established and designated from time to time. The Trustees may hold as
treasury shares (of the same or some other series or class), reissue for such
consideration and on such terms as they may determine, or cancel any Shares of
any series or class reacquired by the Trust at their discretion from time to
time.
(c) All consideration received by the Trust for the issuance or sale of
Shares of a particular series, together with all assets in which such
consideration is invested or reinvested, all income and earnings thereon,
profits therefrom, 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
irrevocably belong to that series (and are allocable to any classes of that
series) for all purposes, subject only to the rights of creditors of such
series, and shall be so recorded upon the books of account of the Trust. In the
event that there are any assets, income, earnings, profits, proceeds, funds or
payments which are not readily identifiable as belonging to any particular
series, the Trustees shall allocate them to and among any one or more of the
series and the classes thereof established and designated from time to time in
such manner and on such basis as the Trustees, in their sole discretion, deem
fair and equitable. Each such allocation by the Trustees shall be conclusive and
binding upon the Shareholders of all series and classes for all purposes. No
Shareholder of any particular series or class thereof shall have any claim on or
right to any assets allocated or belonging to any other series, and allocable to
any class thereof, of Shares.
(d) The assets belonging to each particular series, and allocable to
any class thereof, shall be charged with the liabilities of the Trust in respect
of that series, and allocable to any class thereof, and all expenses, costs,
charges and reserves attributable to that series, and allocable to any class
thereof, and any general liabilities, expenses, costs, charges or reserves of
the Trust which are not readily identifiable as belonging to any particular
series or class shall be allocated and charged by the Trustees to and among any
one or more of the series and the classes thereof established and designated
from time to time in such manner and on such basis as the Trustees, in their
sole discretion, deem
<PAGE>
17
fair and equitable. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon the Shareholders
of all series and classes for all purposes. 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. Under no circumstances shall the assets allocated or belonging to
any particular series or class be charged with liabilities, expenses, costs,
charges or reserves attributable to any other series or class. All Persons who
have extended credit which has been allocated to a particular series or class,
or who have a claim or contract which has been allocated to any particular
series or class, shall look only to the assets of that particular series or
class for payment of such credit, claim or contract.
(e) The power of the Trustees to invest and reinvest the Trust Property
allocated or belonging to any particular series shall be governed by Section 3.2
hereof unless otherwise provided in the instrument of the Trustees establishing
such series which is hereinafter described.
(f) Each Share of a series or of any class thereof shall represent a
beneficial interest in the net assets allocated or belonging to such series
only, and such interest shall not extend to the assets of the Trust generally.
Dividends and distributions on Shares of a particular series or of any class
thereof may be paid with such frequency as the Trustees may determine, which may
be monthly or otherwise, pursuant to a standing vote or votes adopted only once
or with such frequency as the Trustees may determine, to the Shareholders of
that series or class only, from such of the income and capital gains, accrued or
realized, from the assets belonging to that series, or allocable to that class,
as the Trustees may determine, after providing for actual and accrued
liabilities belonging to that series or allocable to that class. All dividends
and distributions on Shares of a particular series or class thereof shall be
distributed pro rata to the Shareholders of that series in proportion to the
number of Shares of that series or class held by such Shareholders at the date
and time of record established for the payment of such dividends or
distributions. Shares of any particular series or class thereof of the Trust may
be redeemed solely out of Trust Property allocated or belonging to that series
or class. Upon liquidation or termination of a series of the Trust, Shareholders
of such series shall be entitled to receive a pro rata share of the net assets
of such series (or allocable to that series) only.
(g) Notwithstanding any provision hereof to the contrary, on any matter
submitted to a vote of the Shareholders of the Trust, all Shares then entitled
to vote shall be voted by individual series or class, except that (i) when
required by the 1940 Act to be voted in the aggregate, Shares shall not be voted
by individual series or classes, and (ii) when the Trustees have determined that
the matter affects only the interests of Shareholders of one or more series or
class, only Shareholders of such series or class shall be entitled to vote
thereon.
(h) The establishment and designation of any series or class of Shares
shall be effective upon the execution by a majority of the Trustees of an
instrument setting forth such establishment and designation and the relative
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18
rights and preferences of such series or class, or as otherwise provided in such
instrument, or upon a resolution adopted by a majority of the Trustees and the
execution by an officer of the Trust on behalf of the Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of such series or class, or as otherwise provided in such
instrument. At any time that there are no Shares outstanding of any particular
series or class previously established and designated, the Trustees may by an
instrument executed by a majority of their number abolish that series or class
and the establishment and designation thereof. Each instrument referred to in
this paragraph shall have the status of an amendment to this Declaration.
ARTICLE VII
REDEMPTIONS
Section 7.l Redemptions. In case any Shareholder at any time desires to
dispose of his Shares, he may deposit his certificate or certificates therefor,
duly endorsed in blank or accompanied by an instrument of transfer executed in
blank, or if the Shares are not represented by any certificate, a written
request or other such form of request as the Trustees may from time to time
authorize, at the office of the Transfer Agent, the Shareholder Servicing Agent
which is the agent of record for such Shareholder, or at the office of any bank
or trust company, either in or outside of the Commonwealth of Massachusetts,
which is a member of the Federal Reserve System and which the said Transfer
Agent or the said Shareholder Servicing Agent has designated in writing for that
purpose, together with an irrevocable offer in writing in a form acceptable to
the Trustees to sell the Shares represented thereby to the Trust at the net
asset value per Share thereof, next determined after such deposit as provided in
Section 8.1 hereof. Payment for said Shares shall be made to the Shareholder
within seven days after the date on which the deposit is made, unless (i) the
date of payment is postponed pursuant to Section 7.2 hereof, or (ii) the
receipt, or verification of receipt, of the purchase price for the Shares to be
redeemed is delayed, in either of which events payment may be delayed beyond
seven days. The redemption procedure set forth in this Section 7.1 may be
utilized, with appropriate modifications by the Trustees, in order to permit a
Shareholder to participate in the Charitable Contribution Program.
Section 7.2 Suspension of Right of Redemption. The Trust may declare a
suspension of the right of redemption or postpone the date of payment of the
redemption proceeds for the whole or any part of any period (i) during which the
New York Stock Exchange is closed other than customary week-end and holiday
closings, (ii) during which trading on the New York Stock Exchange is
restricted, (iii) during which an emergency exists as a result of which disposal
by the Trust of securities owned by it is not reasonably practicable or it is
not reasonably practicable for the Trust fairly to determine the value of its
net assets, or (iv) during which the Commission for the protection of
Shareholders by order permits the suspension of the right of redemption or
postponement of the date of payment of the redemption proceeds; provided that
applicable rules and regulations of the Commission shall govern as to whether
the conditions prescribed in (ii), (iii) or (iv) exist. Such suspension shall
take effect at such time as the Trust shall specify but not later than the close
of business on
<PAGE>
19
the business day next following the declaration of suspension, and thereafter
there shall be no right of redemption or payment of the redemption proceeds
until the Trust shall declare the suspension at an end, except that the
suspension shall terminate in any event on the first day on which said stock
exchange shall have reopened or the period specified in (ii) or (iii) shall have
expired (as to which, in the absence of an official ruling by the Commission,
the determination of the Trust shall be conclusive). In the case of a suspension
of the right of redemption, a Shareholder may either withdraw his request for
redemption or receive payment based on the net asset value existing after the
termination of the suspension.
Section 7.3. Redemption of Shares; Disclosure of Holding. If the
Trustees shall, at any time and in good faith, be of the opinion that direct or
indirect ownership of Shares has or may become concentrated in any Person to an
extent which would disqualify the Trust, or any series of the Trust, as a
regulated investment company under the Internal Revenue Code of 1986, as amended
(the "Code"), then the Trustees shall have the power by lot or other means
deemed equitable by them (i) to call for redemption by any such Person a number
of Shares of the Trust, or such series or class of the Trust, sufficient to
maintain or bring the direct or indirect ownership of Shares of the Trust, or
such series or class of the Trust, into conformity with the requirements for
such qualification, and (ii) to refuse to transfer or issue Shares of the Trust,
or such series or class of the Trust, to any Person whose acquisition of the
Shares of the Trust, or such series or class of the Trust, would result in such
disqualification. The redemption shall be effected at the redemption price and
in the manner provided in Section 7.l hereof.
The Shareholders of the Trust shall upon demand disclose to the
Trustees in writing such information with respect to direct and indirect
ownership of Shares of the Trust as the Trustees deem necessary to comply with
the provisions of the Code, or to comply with the requirements of any other
authority. Upon the failure of a Shareholder to disclose such information and to
comply with such demand of the Trustees, the Trust shall have the power to
redeem such Shares at a redemption price determined in accordance with Section
7.1 hereof.
Section 7.4 Redemptions of Accounts of Less than Minimum Amount. The
Trustees shall have the power, and any Shareholder Servicing Agent with whom the
Trust has so agreed (or a subcontractor of such Shareholder Servicing Agent)
shall have the power, at any time to redeem Shares of any Shareholder at a
redemption price determined in accordance with Section 7.l hereof if at such
time the aggregate net asset value of the Shares owned by such Shareholder is
less than a minimum amount as determined from time to time and disclosed in a
prospectus of the Trust or in the Shareholder Servicing Agent's (or sub-
contractor's) agreement with its customer. A Shareholder shall be notified that
the aggregate value of his Shares is less than such minimum amount and allowed
60 days to make an additional investment before redemption is processed.
ARTICLE VIII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
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20
The Trustees, in their absolute discretion, may prescribe and shall set
forth in the By-Laws or in a duly adopted vote or votes of the Trustees such
bases and times for determining the per Share net asset value of the Shares or
net income, or the declaration and payment of dividends and distributions, as
they may deem necessary or desirable.
ARTICLE IX
DURATION; TERMINATION OF TRUST;
AMENDMENT; MERGERS, ETC.
Section 9.1. Duration. The Trust shall continue without limitation of
time but subject to the provisions of this Article IX.
Section 9.2. Termination of Trust. (a) The Trust may be terminated (i)
by a Majority Shareholder Vote of its Shareholders, or (ii) by the Trustees by
written notice to the Shareholders. Any series or class of the Trust may be
terminated (i) by a Majority Shareholder Vote of the Shareholders of that series
or class, or (ii) by the Trustees by written notice to the Shareholders of that
series or class. Upon the termination of the Trust or any series or class of the
Trust:
(i) The Trust or series or class of the Trust shall carry on no
business except for the purpose of winding up its affairs;
(ii) The Trustees shall proceed to wind up the affairs of the Trust,
series or class of the Trust and all the powers of the Trustees under this
Declaration shall continue until the affairs of the Trust or series of the Trust
shall have been wound up, including the power to fulfill or discharge the
contracts of the Trust, collect the assets of the Trust or series of the Trust,
sell, convey, assign, exchange, transfer or otherwise dispose of all or any part
of the remaining Trust Property of the Trust or series (or allocable to a class)
of the Trust to one or more Persons at public or private sale for consideration
which may consist in whole or in part of cash, securities or other property of
any kind, discharge or pay the liabilities of the Trust, series or class of the
Trust, and to do all other acts appropriate to liquidate the business of the
Trust, series or class of the Trust; provided, that any sale, conveyance,
assignment, exchange, transfer or other disposition of all or substantially all
of the Trust Property of the Trust, series or Trust of the Trust shall require
Shareholder approval in accordance with Section 9.4 or 9.6 hereof, respectively;
and
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property of the Trust or series (or allocable to
a class) of the Trust, in cash or in kind or partly in cash and partly in kind,
among the Shareholders of the Trust, series or class of the Trust according to
their respective rights.
(b) After termination of the Trust, series or class of the Trust and
distribution to the Shareholders of the Trust, series or class of the Trust as
herein provided, a majority of the Trustees shall execute and lodge among the
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21
records of the Trust an instrument in writing setting forth the fact of such
termination, and the Trustees shall thereupon be discharged from all further
liabilities and duties hereunder with respect to the Trust, series or class of
the Trust, and the rights and interests of all Shareholders of the Trust, series
or class of the Trust shall thereupon cease.
Section 9.3. Amendment Procedure. (a) This Declaration may be amended
by a Majority Shareholder Vote of the Shareholders or by any instrument in
writing, without a meeting, signed by a majority of the Trustees and consented
to by the holders of not less than a majority of the Shares of the Trust. The
Trustees may also amend this Declaration without the vote or consent of
Shareholders to designate series in accordance with Section 6.9 hereof, to
change the name of the Trust, to supply any omission, to cure, correct or
supplement any ambiguous, defective or inconsistent provision hereof, or to
conform this Declaration to the requirements of applicable federal laws or
regulations or the requirements of the regulated investment company provisions
of the Internal Revenue Code of 1986, as amended, or to (i) change the state or
other jurisdiction designated herein as the state or other jurisdiction whose
laws shall be the governing law hereof, (ii) effect such changes herein as the
Trustees find to be necessary or appropriate (A) to permit the filing of this
Declaration under the laws of such state or other jurisdiction applicable to
trusts or voluntary associations, (B) to permit the Trust to elect to be treated
as a "regulated investment company" under the applicable provisions of the
Internal Revenue Code of 1986, as amended, or (C) to permit the transfer of
shares (or to permit the transfer of any other beneficial interests or shares in
the Trust, however denominated), and (iii) in conjunction with any amendment
contemplated by the foregoing clause (i) or the foregoing clause (ii) to make
any and all such further changes or modifications to this Declaration as the
Trustees find to be necessary or appropriate, any finding of the Trustees
referred to in the foregoing clause (ii) or clause (iii) to be conclusively
evidenced by the execution of any such amendment by a majority of the Trustees,
but the Trustees shall not be liable for failing so to do.
(b) No amendment which the Trustees have determined would affect the
rights, privileges or interests of holders of a particular series or class of
Shares, but not the rights, privileges or interests of holders of all series or
classes of Shares generally, and which would otherwise require a Majority
Shareholder Vote under paragraph (a) of this Section 9.3, may be made except
with the vote or consent by a Majority Shareholder Vote of Shareholders of such
series or class.
(c) Notwithstanding any other provision of this Declaration to the
contrary, the Trustees shall have the power in their discretion without any
requirement of approval by shareholders to either invest all or a portion of the
Trust Property, or sell all or a portion of the Trust Property and invest the
proceeds of such sales, in another investment company that is registered under
the 1940 Act.
(d) Notwithstanding any other provision hereof, no amendment may be
made under this Section 9.3 which would change any rights with respect to the
Shares, or any series or class of Shares, by reducing the amount payable thereon
upon liquidation of the Trust or by diminishing or eliminating any voting rights
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22
pertaining thereto, except with the Majority Shareholder Vote of the Shares or
that series or class of Shares. Nothing contained in this Declaration shall
permit the amendment of this Declaration to impair the exemption from personal
liability of the Shareholders, Trustees, officers, employees and agents of the
Trust or to permit assessments upon Shareholders.
(e) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders or by the
Trustees as aforesaid, and executed by a majority of the Trustees, shall be
conclusive evidence of such amendment when lodged among the records of the
Trust.
(f) Notwithstanding any other provision hereof, until such time as a
registration statement under the Securities Act of 1933, as amended, covering
the first public offering of Shares of the Trust shall have become effective,
this Declaration may be amended in any respect by the affirmative vote of a
majority of the Trustees or by an instrument signed by a majority of the
Trustees.
Section 9.4. Merger, Consolidation and Sale of Assets. The Trust may
merge or consolidate with any other corporation, association, trust or other
organization or may sell, lease or exchange all or substantially all of the
Trust Property (or all or substantially all of the Trust Property allocated or
belonging to a particular series or allocable to a particular class of the
Trust) including its good will, upon such terms and conditions and for such
consideration when and as authorized at any meeting of Shareholders called for
such purpose by the vote of the holders of two-thirds of the outstanding Shares
of all series of the Trust voting as a single class, or of the affected series
of the Trust, as the case may be, or by an instrument or instruments in writing
without a meeting, consented to by the vote of the holders of two-thirds of the
outstanding Shares of all series and classes of the Trust voting as a single
class, or of the affected series or classes of the Trust, as the case may be;
provided, however, that if such merger, consolidation, sale, lease or exchange
is recommended by the Trustees, the vote or written consent by Majority
Shareholder Vote shall be sufficient authorization; and any such merger,
consolidation, sale, lease or exchange shall be deemed for all purposes to have
been accomplished under and pursuant to the statutes of the Commonwealth of
Massachusetts. Nothing contained herein shall be construed as requiring approval
of Shareholders for any sale of assets in the ordinary course of the business of
the Trust.
Section 9.5. Incorporation, Reorganization. With the approval of the
holders of a majority of the Shares outstanding and entitled to vote, the
Trustees may cause to be organized or assist in organizing a corporation or
corporations under the laws of any jurisdiction, or any other trust, unit
investment trust, partnership, association or other organization to take over
all of the Trust Property or to carry on any business in which the Trust shall
directly or indirectly have any interest, and to sell, convey and transfer the
Trust Property to any such corporation, trust, partnership, association or
organization in exchange for the shares or securities thereof or otherwise, and
to lend money to, subscribe for the shares or securities of, and enter into any
contracts with any such corporation, trust, partnership, association or
organization in which the Trust holds or is about to acquire shares or any other
interest. Subject to Section 9.4 hereof, the Trustees may also cause a merger
<PAGE>
23
or consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to the
extent permitted by law. Nothing contained in this Section 9.5 shall be
construed as requiring approval of Shareholders for the Trustees to organize or
assist in organizing one or more corporations, trusts, partnerships,
associations or other organizations and selling, conveying or transferring a
portion of the Trust Property to such organization or entities.
Section 9.6. Incorporation or Reorganization of Series. With the
approval of a Majority Shareholder Vote of any series or class, the Trustees may
sell, lease or exchange all of the Trust Property allocated or belonging to that
series or class, or cause to be organized or assist in organizing a corporation
or corporations under the laws of any other jurisdiction, or any other trust,
unit investment trust, partnership, association or other organization, to take
over all of the Trust Property allocated or belonging to that series or
allocable to that class and to sell, convey and transfer such Trust Property to
any such corporation, trust, unit investment trust, partnership, association, or
other organization in exchange for the shares or securities thereof or
otherwise.
ARTICLE X
REPORTS TO SHAREHOLDERS AND SHAREHOLDER COMMUNICATIONS
The Trustees shall at least semi-annually submit to the Shareholders a
written financial report of the transactions of the Trust, including financial
statements which shall at least annually be certified by independent public
accountants.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Filing. This Declaration and any amendment hereto shall
be filed in the office of the Secretary of the Commonwealth of Massachusetts and
in such other place or places as may be required under the laws of the
Commonwealth of Massachusetts and may also be filed or recorded in such other
places as the Trustees deem appropriate. Each amendment so filed shall state or
be accompanied by a certificate signed and acknowledged by a Trustee stating
that such action was duly taken in the manner provided herein, and unless such
amendment or such certificate sets forth some later time for the effectiveness
of such amendment, such amendment shall be effective upon its filing. A restated
Declaration, integrating into a single instrument all of the provisions of the
Declaration which are then in effect and operative, may be executed from time to
time by a majority of the Trustees and shall, upon filing with the Secretary of
the Commonwealth of Massachusetts, be conclusive evidence of all amendments
contained therein and may thereafter be referred to in lieu of this original
Declaration and the various amendments thereto.
Section 11.2. Governing Law. This Declaration is executed by the
Trustees and delivered in the Commonwealth of Massachusetts and with reference
to the laws thereof, and the rights of all parties and the validity and
construction of every
<PAGE>
24
provision hereof shall be subject to and construed according to the laws of said
Commonwealth.
Section 11.3. Counterparts. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
Section 11.4. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust, is a Trustee hereunder
certifying to: (i) the number or identity of Trustees or Shareholders, (ii) the
due authorization of the execution of any instrument or writing, (iii) the form
of any vote passed at a meeting of Trustees or Shareholders, (iv) the fact that
the number of Trustees or Shareholders present at any meeting or executing any
written instrument satisfies the requirements of this Declaration, (v) the form
of any By-Laws adopted by or the identity of any officers elected by the
Trustees, or (vi) the existence of any fact or facts which in any manner relates
to the affairs of the Trust, shall be conclusive evidence as to the matters so
certified in favor of any Person dealing with the Trustees and their successors.
Section 11.5. Provisions in Conflict with Law or Regulations. (a) The
provisions of this Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any such provision is in conflict
with the 1940 Act, the regulated investment company provisions of the Internal
Revenue Code of 1986, as amended, or with other applicable laws and regulations,
the conflicting provision shall be deemed never to have constituted a part of
this Declaration; provided however, that such determination shall not affect any
of the remaining provisions of this Declaration or render invalid or improper
any action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of the
Declaration in any jurisdiction.
<PAGE>
25
Section 11.6. Principal Office. The principal office of the Trust is
6 St. James Avenue, 9th Floor, Boston, Massachusetts 02116.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
the 15th day of September, 1995.
/s/ James B. Craver
as Trustee
and not individually
6 St. James Avenue
Boston, Massachusetts
/s/ Linda T. Gibson
as Trustee
and not individually
6 St. James Avenue
Boston, Massachusetts
/s/ Andres E. Saldana
as Trustee
and not individually
6 St. James Avenue
Boston, Massachusetts
<PAGE>
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, SS.
September 15, 1995
Then personally appeared the above-named James B. Craver, Linda T. Gibson
and Andres E. Saldana, who severally acknowledged the foregoing instrument to be
their free act and deed.
Before me,
/s/ BRIAN PALINSKI
Notary Public
My commission expires August 9, 2002
<PAGE>
DSI168A Appendix I
DEVCAP TRUST
Establishment and
Designation of Series of Shares of
Beneficial Interest (par value $0.01 per share)
Pursuant to Section 6.9 of Declaration of Trust, dated as of June 29,
1995 (the "Declaration of Trust"), of DEVCAP Trust (the "Trust"), the Trustees
of the Trust hereby establish and designate one initial series of Shares (as
defined in the Declaration of Trust) (a "Fund") to have the following special
and relative rights:
1. The Funds shall be designated as follows:
DEVCAP Shared Return Fund
2. The Fund shall be authorized to hold cash, invest in securities,
instruments and other properties and use investment techniques as from time to
time described in the Trust's then currently effective registration statement
under the Securities Act of 1933 to the extent pertaining to the offering of
Shares of such Fund. Each Share of a Fund shall be redeemable, shall be entitled
to one vote (or fraction thereof in respect of a fractional share) on matters on
which Shares of the Fund shall be entitled to vote, shall represent a pro rata
beneficial interest in the assets allocated or belonging to the Fund, and shall
be entitled to receive its pro rata share of the net assets of the Fund upon
liquidation of the Fund, all as provided in Section 6.9 of the Declaration of
Trust. The proceeds of sales of Shares of a Fund, together with any income and
gain thereon, less any diminution or expenses thereof, shall irrevocably belong
to that Fund, unless otherwise required by law.
3. Shareholders of the Fund shall vote separately as a class on any
matter to the extent required by, and any matter shall be deemed to have been
effectively acted upon with respect to the Fund as provided in, Rule 18f-2, as
from time to time in effect, under the Investment Company Act of 1940, as
amended, or any successor rule, and by the Declaration of Trust.
4. The assets and liabilities of the Trust shall be allocated among the
Funds as set forth in Section 6.9 of the Declaration of Trust.
5. Subject to the provisions of Section 6.9 and Article IX of the
Declaration of Trust, the Trustees (including any successor Trustees) shall have
the right at any time and from time to time to reallocate assets and expenses,
to change the designation of any Fund now or hereafter created, or otherwise to
change the special and relative rights of any Fund.
DSI168A
BY-LAWS
OF
DEVCAP TRUST
ARTICLE I
DEFINITIONS
The terms "Commission", "Declaration", "Distributor", "Investment
Adviser", "Majority Shareholder Vote", "1940 Act", "Shareholder", "Shares",
"Transfer Agent", "Trust", "Trust Property" and "Trustees" have the respective
meanings given them in the Declaration of Trust of DEVCAP Trust dated as of June
29, 1995.
ARTICLE II
OFFICES
Section 1. Principal Office. Until changed by the Trustees, the
principal office of the Trust in the Commonwealth of Massachusetts shall be in
the City of Boston, County of Suffolk.
Section 2. Other Offices. The Trust may have offices in such other
places without as well as within the Commonwealth as the Trustees may from time
to time determine.
ARTICLE III
SHAREHOLDERS
Section 1. Meetings. A meeting of Shareholders may be called at any
time by a majority of the Trustees and shall be called by any Trustee upon
written request, which shall specify the purpose or purposes for which such
meeting is to be called, of Shareholders holding in the aggregate not less than
10% of the outstanding Shares entitled to vote on the matters specified in such
written request. Any such meeting shall be held within or without the
Commonwealth of Massachusetts on such day and at such time as the Trustees shall
designate. The holders of a majority of outstanding Shares entitled to vote
present in person or by proxy shall constitute a quorum at any meeting of the
Shareholders. In the absence of a quorum, a majority of outstanding Shares
entitled to vote present in person or by proxy may adjourn the meeting from time
to time until a quorum shall be present.
Whenever a matter is required to be voted by Shareholders of the Trust
in the aggregate under Section 6.8 and Section 6.9 and Section 6.9(g) of the
Declaration, the Trust may either hold a meeting of Shareholders of all series
and classes, as established and designated pursuant to Section 6.9 of the
<PAGE>
2
Declaration, to vote on such matter, or hold separate meetings of shareholders
of each of the individual series and/or classes to vote on such matter, provided
that (i) such separate meetings shall be held within one year of each other,
(ii) a quorum consisting of the holders of the majority of outstanding Shares of
the individual series and/or classes entitled to vote present in person or by
proxy shall be present at each such separate meeting and (iii) a quorum
consisting of the holders of a majority of all Shares of the Trust entitled to
vote present in person or by proxy shall be present in the aggregate at such
separate meetings, and the votes of Shareholders at all such separate meetings
shall be aggregated in order to determine if sufficient votes have been cast for
such matter to be voted.
Section 2. Notice of Meetings Notice of all meetings of Shareholders,
stating the time, place and purposes of the meeting, shall be given by the
Trustees by mail to each Shareholder entitled to vote at such meeting at his
address as recorded on the register of the Trust, mailed at least 10 days and
not more than 60 days before the meeting. Only the business stated in the notice
of the meeting shall be considered at such meeting. Any adjourned meeting may be
held as adjourned without further notice. No notice need be given to any
Shareholder who shall have failed to inform the Trust of his current address or
if a written waiver of notice, executed before or after the meeting by the
Shareholder or his attorney thereunto authorized, is filed with the records of
the meeting.
Where separate meetings are held for Shareholders of each of the
individual series and/or classes to vote on a matter required to be voted on by
Shareholders of the Trust in the aggregate, as provided in Article III, Section
1 above, notice of each such separate meeting shall be provided in the manner
described above in this Section 2.
Section 3. Record Date. For the purpose of determining the
Shareholders who are entitled to notice of and to vote at any meeting, or to
participate in any 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, as the Trustees may determine; or without closing the
transfer books the Trustees may fix a date not more than 60 days prior to the
date of any meeting of Shareholders or distribution or other action as a record
date for the determination of the persons to be treated as Shareholders of
record for such purpose.
Where separate meetings are held for Shareholders of each of the
individual series to vote on a matter required to be voted on by Shareholders of
the Trust in the aggregate, as provided in Article III, Section 1 above, the
record date of each such separate meeting shall be determined in the manner
described above in this Section 3.
Section 4. Proxies. At any meeting of Shareholders, any holder of
Shares entitled to vote thereat may vote by proxy, provided that no proxy shall
be voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent of the Trust as the Secretary may
direct, for verification prior to the time at which such vote shall be taken.
Pursuant to a vote of a majority of the Trustees, proxies may be solicited in
the name of the
<PAGE>
3
Trust or one or more Trustees or officers of the Trust. Only Shareholders of
record shall be entitled to vote. Each full Share shall be entitled to one vote
and fractional Shares shall be entitled to a vote of such fraction. When any
Share is held jointly by several persons, any one of them may vote at any
meeting in person or by proxy in respect of such Share, but if more than one of
them shall be present at such meeting in person or by proxy, and such joint
owners or their proxies so present disagree as to any vote to be cast, such vote
shall not be received in respect of such Share. 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. If the holder of any such Share is a minor or a
person of unsound mind, and subject to guardianship or to the legal control of
any other person as regards the charge or management of such Share, such Share
may be voted by such guardian or such other person appointed or having such
control, and such vote may be given in person or by proxy.
Section 5. Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
shareholders of a Massachusetts business corporation.
Section 6. Action without Meeting. Any action which may be 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 law, the Declaration or these By-Laws for approval of such matter)
consent to the action in writing and the 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.
ARTICLE IV
TRUSTEES
Section 1. Meetings of the Trustees. The Trustees may in their
discretion provide for regular or stated meetings of the Trustees. Notice of
regular or stated meetings need not be given. Meetings of the Trustees other
than regular or stated meetings shall be held whenever called by the Chairman or
by any Trustee. Notice of the time and place of each meeting other than regular
or stated meetings shall be given by the Secretary or an Assistant Secretary or
by the officer or Trustee calling the meeting and shall be mailed to each
Trustee at least two days before the meeting, or shall be telegraphed, cabled,
or wirelessed to each Trustee at his business address, or personally delivered
to him at least one day before the meeting. Notice of a meeting need not be
given to any Trustee if a written waiver of notice, executed by him 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. A notice or waiver of notice need not specify the
purpose of any meeting. The Trustees may meet by means of a telephone conference
circuit or similar communications equipment by means of which all persons
participating in the meeting can hear each other, which telephone conference
meeting shall be deemed to have been held at a place designated by the Trustees
at the meeting. Participation in a telephone conference meeting shall constitute
presence in person at such meeting. Any action required or permitted to be taken
at any
<PAGE>
4
meeting of the Trustees may be taken by the Trustees without a meeting if all
the Trustees consent to the action in writing and the written consents are filed
with the records of the Trustees' meetings. Such consents shall be treated as a
vote for all purposes.
Section 2. Quorum and Manner of Acting. A majority of the Trustees
present in person at any regular or special meeting of the Trustees shall
constitute a quorum for the transaction of business at such meeting and (except
as otherwise required by law, the Declaration or these By-Laws) the act of a
majority of the Trustees present at any such meeting, at which a quorum is
present, shall be the act of the Trustees. In the absence of a quorum, a
majority of the Trustees present may adjourn the meeting from time to time until
a quorum shall be present. Notice of an adjourned meeting need not be given.
ARTICLE V
COMMITTEES AND ADVISORY BOARD
Section 1. Executive and Other Committees. The Trustees by vote of a
majority of all the Trustees may elect from their own number an Executive
Committee to consist of not less than three Trustees to hold office at the
pleasure of the Trustees. While the Trustees are not in session, the Executive
Committee shall have the power to conduct the current and ordinary business of
the Trust, including the purchase and sale of securities and the designation of
securities to be delivered upon redemption of Shares of the Trust, and such
other powers of the Trustees as the Trustees may, from time to time, delegate to
the Executive Committee except those powers which by law, the Declaration or
these By-Laws the Trustees are prohibited from so delegating. The Trustees may
also elect from their own number other Committees from time to time, the number
composing such Committees, the powers conferred upon the same (subject to the
same limitations as with respect to the Executive Committee) and the term of
membership on such Committees to be determined by the Trustees. The Trustees may
designate a chairman of any such Committee. In the absence of such designation a
Committee may elect its own chairman.
Section 2. Meeting, Quorum and Manner of Acting. The Trustees may (i)
provide for stated meetings of any Committee, (ii) specify the manner of calling
and notice required for special meetings of any Committee, (iii) specify the
number of members of a Committee required to constitute a quorum and the number
of members of a Committee required to exercise specified powers delegated to
such Committee, (iv) authorize the making of decisions to exercise specified
powers by written assent of the requisite number of members of a Committee
without a meeting, and (v) authorize the members of a Committee to meet by means
of a telephone conference circuit.
Each Committee shall keep regular minutes of its meetings and records
of decisions taken without a meeting and cause them to be recorded in a book
designated for that purpose and kept in the office of the Trust.
Section 3. Advisory Board. The Trustees may appoint an Advisory Board
to consist in the first instance of not less than three members. Members of such
<PAGE>
5
Advisory Board shall not be Trustees or officers and need not be Shareholders. A
member of such Advisory Board shall hold office for such period as the Trustees
may by vote provide and may resign therefrom by a written instrument signed by
him which shall take effect upon its delivery to the Trustees. The Advisory
Board shall have no legal powers and shall not perform the functions of Trustees
in any manner, such Advisory Board being intended merely to act in an advisory
capacity. Such Advisory Board shall meet at such times and upon such notice as
the Trustees may by vote provide.
Section 4. Chairman. The Trustees may, by a majority vote of all the
Trustees, elect from their own number a Chairman, to hold office until his
successor shall have been duly elected and qualified. The Chairman shall not
hold any other office. The Chairman may be, but need not be, a Shareholder. The
Chairman shall preside at all meetings of the Trustees and shall have such other
duties as from time to time may be assigned to him by the Trustees.
ARTICLE VI
OFFICERS
Section 1. General Provisions. The officers of the Trust shall be a
President, a Treasurer and a Secretary, each of whom shall be elected by the
Trustees. The Trustees may elect or appoint such other officers or agents as the
business of the Trust may require, including one or more Vice Presidents, one or
more Assistant Treasurers, and one or more Assistant Secretaries. The Trustees
may delegate to any officer or committee the power to appoint any subordinate
officers or agents.
Section 2. Term of Office and Qualifications. Except as otherwise
provided by law, the Declaration or these By-Laws, the President, the Treasurer
and the Secretary shall hold office until his respective successor shall have
been duly elected and qualified, and all other officers shall hold office at the
pleasure of the Trustees. The Secretary and Treasurer may be the same person. A
Vice President and the Treasurer or a Vice President and the Secretary may be
the same person, but the offices of Vice President, Secretary and Treasurer
shall not be held by the same person. The President shall not hold any other
office. Except as above provided, any two offices may be held by the same
person. Any officer may be, but does not need be, a Trustee or Shareholder.
Section 3. Removal. The Trustees, at any regular or special meeting of
the Trustees, may remove any officer with or without cause by a vote of a
majority of the Trustees. Any officer or agent appointed by any officer or
committee may be removed with or without cause by such appointing officer or
committee.
Section 4. Powers and Duties of the President. The President, unless
the Chairman, if any, is so appointed by the Trustees, shall be the principal
executive officer of the Trust. Subject to the control of the Trustees and any
committee of the Trustees, the President shall at all times exercise a general
supervision and direction over the affairs of the Trust. The President shall
have the power to employ attorneys and counsel for the Trust and to employ such
<PAGE>
6
subordinate officers, agents, clerks and employees as he may find necessary to
transact the business of the Trust. The President shall also have the power to
grant, issue, execute or sign such powers of attorney, proxies or other
documents as may be deemed advisable or necessary in the furtherance of the
interests of the Trust. The President shall have such other powers and duties
as, from time to time, may be conferred upon or assigned to him by the Trustees.
Section 5. Powers and Duties of Vice Presidents. In the absence or
disability of the President, the Vice President or, if there are more than one
Vice President, any Vice President designated by the Trustees shall perform all
the duties and may exercise any of the powers of the President, subject to the
control of the Trustees. Each Vice President shall perform such other duties as
may be assigned to him from time to time by the Trustees or the President.
Section 6. Powers and Duties of the Treasurer. The Treasurer shall be
the principal financial and accounting officer of the Trust. The Treasurer shall
deliver all funds of the Trust which may come into his hands to such custodian
as the Trustees may employ pursuant to Article X hereof. The Treasurer shall
render a statement of condition of the finances of the Trust to the Trustees as
often as they shall require the same and shall in general perform all the duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned to him by the Trustees. The Treasurer shall give a bond for the
faithful discharge of his duties, if required to do so by the Trustees, in such
sum and with such surety or sureties as the Trustees shall require.
Section 7. Powers and Duties of the Secretary. The Secretary shall
keep the minutes of all meetings of the Shareholders in proper books provided
for that purpose; shall keep the minutes of all meetings of the Trustees; shall
have custody of the seal of the Trust; and shall have charge of the Share
transfer books, lists and records unless the same are in the charge of the
Transfer Agent. The Secretary shall attend to the giving and serving of all
notices by the Trust in accordance with the provisions of these By-Laws and as
required by law; and subject to these By-Laws, shall in general perform all the
duties incident to the office of Secretary and such other duties as from time to
time may be assigned to him by the Trustees.
Section 8. Powers and Duties of Assistant Treasurers. In the absence
or disability of the Treasurer, any Assistant Treasurer designated by the
Trustees shall perform all the duties, and may exercise any of the powers, of
the Treasurer. Each Assistant Treasurer shall perform such other duties as from
time to time may be assigned to him by the Trustees. Each Assistant Treasurer
shall give a bond for the faithful discharge of his duties, if required to do so
by the Trustees, in such sum and with such surety or sureties as the Trustees
shall require.
Section 9. Powers and Duties of Assistant Secretaries. In the absence
or disability of the Secretary, any Assistant Secretary designated by the
Trustees shall perform all of the duties, and may exercise any of the powers, of
the Secretary. Each Assistant Secretary shall perform such other duties as from
time to time may be assigned to him by the Trustees.
<PAGE>
7
Section 10. Compensation of Officers and Trustees and Members of the
Advisory Board. Subject to any applicable law or provision of the Declaration,
the compensation of the officers and Trustees and members of the Advisory Board
shall be fixed from time to time by the Trustees or, in the case of officers, by
any committee of officers upon whom such power may be conferred by the Trustees.
No officer shall be prevented from receiving such compensation as such officer
by reason of the fact that he is also a Trustee.
ARTICLE VII
FISCAL YEAR
The fiscal year of each series of the Trust shall be determined by the
Trustees, and the Trustees may from time to time change any fiscal year.
ARTICLE VIII
SEAL
The Trustees may adopt a seal which shall be in such form and shall
have such inscription thereon as the Trustees may from time to time prescribe.
ARTICLE IX
WAIVERS OF NOTICE
Whenever any notice is required to be given by law, the Declaration or
these By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent thereto. A notice shall be deemed to have been telegraphed,
cabled or wirelessed for the purposes of these By-Laws when it has been
delivered to a representative of any telegraph, cable or wireless company with
instruction that it be telegraphed, cabled or wirelessed. Any notice shall be
deemed to be given at the time when the same shall be mailed, telegraphed,
cabled or wirelessed.
ARTICLE X
CUSTODIAN
Section 1. Appointment and Duties. The Trustees shall at all times
employ a bank or trust company having a capital, surplus and undivided profits
of at least $5,000,000 as custodian with authority as its agent, but subject to
such restrictions, limitations and other requirements, if any, as may be
contained in the Declaration, these By-Laws and the 1940 Act:
(i) to hold the securities owned by the Trust and deliver the
same upon written order; (ii) to receive and receipt for any
monies due to the Trust and deposit the same in its own
banking department
<PAGE>
8
or elsewhere as the Trustees may direct; (iii) to disburse
such funds upon orders or vouchers; (iv) if authorized by the
Trustees, to keep the books and accounts of the Trust and
furnish clerical and accounting services; and (v) if
authorized by the Trustees, to compute the net income of the
Trust and the net asset value of Shares;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian and upon such terms and conditions as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees. Subject to the
approval of the Trustees, the custodian may enter into arrangements with
securities depositories. All such custodial, sub-custodial and depository
arrangements shall be subject to, and comply with, the provisions of the 1940
Act and the rules and regulations promulgated thereunder.
Section 2. Central Certificate System. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct the
custodian to deposit all or any part of the securities owned by the Trust in a
system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, or with such other person
as may be permitted by the Commission, or otherwise in accordance with the 1940
Act, pursuant to which system all securities of any particular class or series
of any issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust or its custodian.
Section 3. Acceptance of Receipts in Lieu of Certificates. Subject to
such rules, regulations and orders as the Commission may adopt, the Trustees may
direct the custodian to accept written receipts or other written evidences
indicating purchases of securities held in book-entry form in the Federal
Reserve System in accordance with regulations promulgated by the Board of
Governors of the Federal Reserve System and the local Federal Reserve Banks in
lieu of receipt of certificates representing such securities.
Section 4. Provisions of Custodian Contract. The following provisions
shall apply to the employment of a custodian pursuant to this Article X and to
any contract entered into with the custodian so employed:
(a) The Trustees shall cause to be delivered to the custodian all
securities owned by the Trust or to which it may become entitled, and
shall order the same to be delivered by the custodian only upon
completion of a sale, exchange, transfer, pledge, or other disposition
thereof, and upon receipt by the custodian of the consideration
therefor or a certificate of deposit or a receipt of an issuer or of
its Transfer Agent, all as the Trustees
<PAGE>
9
may generally or from time to time require or approve, or to a
successor custodian; and the Trustees shall cause all funds owned by
the Trust or to which it may become entitled to be paid to the
custodian, and shall order the same disbursed only for investment
against delivery of the securities acquired, or in payment of expenses,
including management compensation, and liabilities of the Trust,
including distributions to Shareholders, or to a successor custodian;
provided, however, that nothing herein shall prevent delivery of
securities for examination to the broker purchasing the same in accord
with the "street delivery" custom whereby such securities are delivered
to such broker in exchange for a delivery receipt exchanged on the same
day for an uncertified check of such broker to be presented on the same
day for certification.
(b) In case of the resignation, removal or inability to serve of any such
custodian, the Trust shall promptly appoint another bank or trust
company meeting the requirements of this Article X as successor
custodian. The agreement with the custodian shall provide that the
retiring custodian shall, upon receipt of notice of such appointment,
deliver all Trust Property in its possession to and only to such
successor, and that pending appointment of a successor custodian, or a
vote of the Shareholders to function without a custodian, the custodian
shall not deliver any Trust Property to the Trust, but may deliver all
or any part of the Trust Property to a bank or trust company doing
business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus and undivided profits (as shown in its last
published report) of at least $5,000,000; provided that arrangements are
made for the Trust Property to be held under terms similar to those on
which they were held by the retiring custodian.
ARTICLE XI
AMENDMENTS
These By-Laws, or any of them, may be altered, amended or repealed, or
new By-Laws may be adopted (a) by the Shareholders by a Majority Shareholder
Vote, or (b) by the Trustees, provided, however, that no By-Law may be amended,
adopted or repealed by the Trustees if such amendment, adoption or repeal
requires, pursuant to law, the Declaration or these By-Laws, a vote of the
Shareholders.
CONSENT OF INDEPENDENT AUDITORS
The Trustees
DEVCAP Shared Return Fund and
Domini Social Index Portfolio:
We consent to the use of our reports, dated September 13, 1995 with respect to
the balance sheet of the DEVCAP Shared Return Fund as of September 13, 1995 and
dated August 25, 1995 with respect to the financial statements of the Domini
Social Index Portfolio as of and for the year ended July 31, 1995, included in
the statement of additional information which statement of additional
information is included herein by reference.
KPMG Peat Marwick LLP
Boston, Massachusetts
March 26, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the January
31, 1996 DEVCAP Shared Return Fund Semi-Annual Report and is qualified in its
entirety to such Semi-Annual Report.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> DEVCAP SHARED RETURN FUND
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> OCT-19-1995
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 232,791
<INVESTMENTS-AT-VALUE> 232,791
<RECEIVABLES> 21,735
<ASSETS-OTHER> 53,993
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 308,519
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 76,710
<TOTAL-LIABILITIES> 76,710
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 219,630
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> (314)
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 754
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,739
<NET-ASSETS> 231,809
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 909
<OTHER-INCOME> 0
<EXPENSES-NET> 1,223
<NET-INVESTMENT-INCOME> (314)
<REALIZED-GAINS-CURRENT> 754
<APPREC-INCREASE-CURRENT> 11,739
<NET-CHANGE-FROM-OPS> 12,179
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 21,845
<NUMBER-OF-SHARES-REDEEMED> 89
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 231,809
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 22,958
<AVERAGE-NET-ASSETS> 167,582
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> 0.66
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.65
<EXPENSE-RATIO> 2.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
