As filed with the Securities and Exchange Commission on September 30, 1999
Securities Act Registration No. 33-94668
Investment Company Registration No. 811-9070
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Post-Effective Amendment No. 5 x |X|
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 7 |X|
(Check appropriate box or boxes) x
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DEVCAP TRUST
(a Massachusetts Business Trust)
(Exact Name of Registrant as Specified in Charter)
209 West Fayette Street
Baltimore, Maryland 21201-3443
(Address of principal executive offices)
(800) 371-2655
Registrant's telephone number, including area code
Joseph N. St. Clair
209 West Fayette St.
Baltimore, Maryland 21201-3443
(Name and Address of Agent for Service)
Copy to:
Beth R. Kramer, Esq.
Mayer, Brown & Platt
1675 Broadway
New York, N.Y. 10019-5820
It is proposed that this filing will become effective: (check appropriate box)
____ immediately upon filing pursuant to paragraph (b)
____ on (date) pursuant to paragraph (b)
x 60 days after filing pursuant to paragraph (a)(i)
----
____ on (date) pursuant to paragraph (a)(i)
____ 75 days after filing pursuant to paragraph (a)(ii)
____ on (date) 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
DECLARATION PURSUANT TO RULE 24f-2
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended, the
Registrant has registered an indefinite number or amount of securities under the
Securities Act of 1933, as amended. Registrant will file the Rule 24f-2 Notice
for its fiscal year ended July 31, 1999 on or before October 29, 1999.
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[DEVCAP LOGO]
DEVCAP Shared Return Fund
A mutual fund that has two primary objectives: an investment objective and a
charitable objective. The Fund's investment objective is to achieve long-term
total return which matches the performance of the Domini 400 Social
Index(sm). The Fund's charitable objective is to enable shareholders to
donate a portion of their total annual returns to help finance
micro-enterprise programs in developing countries.
Prospectus
November 29, 1999
As with all mutual funds, the Securities and Exchange Commission
has not approved or disapproved of these securities or passed
on the adequacy of this prospectus.
Anyone who tells you otherwise is committing a crime.
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Table of Contents
Fund Details...................................................................3
Fund Objectives...........................................................3
Principal Investment Strategies...........................................3
Principal Risks of Investing in the Fund..................................4
Performance...............................................................5
Fees and Expenses.........................................................6
Portfolio Management...........................................................7
The Investment Manager and Submanager.....................................7
Fund Distribution.........................................................7
The Master Feeder Structure...............................................8
Shareholder Information........................................................9
Pricing of Fund Shares....................................................9
Buying and Selling Shares.................................................9
Charitable Contributions Program.........................................12
Dividends and Capital Gains Distributions................................13
Tax Consequences.........................................................13
The Year 2000 Problem....................................................14
Financial Highlights..........................................................15
DEVCAP Non-Profit.............................................................16
Account Application...........................................................17
This prospectus describes the objectives and strategies of the Fund, the
potential risks of investing, the Fund's management, and other information
necessary to make an informed investment decision. Please read it carefully
before you invest and then retain it for future reference.
The Fund is a separate series of DEVCAP Trust.
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Fund Details
Fund Objectives
The Fund has two primary objectives: an investment objective and a charitable
objective. The Fund's investment objective is to achieve long-term total return
which matches the performance of the Domini 400 Social Index (sm) ("DSI"), an
index comprised of stocks that meet certain social and environmental criteria
described below. The Fund's charitable objective is to enable shareholders to
donate a portion of their total annual returns to help finance micro-enterprise
programs in developing countries.
Principal Investment Strategies
The Fund seeks to achieve its investment objective by investing all of its
assets in the Domini Social Index Portfolio (the "Portfolio"), a portfolio with
the same investment objective as the Fund. Accordingly, the discussion below
describes the investment strategies of the Portfolio.
The Portfolio's "Investment Manager," Domini Social Investments LLC, and
"Submanager," Mellon Equity Associates, seek to achieve the Portfolio's
investment objective by investing substantially all of the Portfolio's assets in
common stocks in approximately the same proportion as they are represented in
the DSI. For example, if the common stock of a company represents five percent
of the DSI, the Portfolio will invest the same percentage of its assets in that
stock. The Portfolio's securities may be periodically readjusted to reflect
changes to the DSI. The Investment Manager and Submanager seek a correlation
between the performance of the Portfolio, before expenses, and that of the DSI
of 95% or better. The figure of 100% would indicate a perfect correlation.
The DSI is a common stock index comprised of the stocks of approximately 400
U.S. companies which are weighted according to market capitalization. The DSI
was developed and is currently maintained by Kinder, Lydenberg, Domini & Co.,
Inc. ("KLD"). The index consists of stocks of companies chosen for their
corporate and social responsibility, as well as their financial performance.
"Domini(sm)" and "Domini 400 Social Index(sm)" are service marks of KLD which
are licensed to the Investment Manager. KLD has selected companies for the DSI
in accordance with the following social criteria:
o Safe and Useful Products, including a company's record with regard
to product safety, marketing practices and commitment to quality.
o Employee Relations, including a company's record with regard to
labor matters, workplace safety, equal employment opportunities,
employee benefit programs, and meaningful participation in company
profits either through stock purchase or profit sharing plans.
o Corporate Citizenship, including a company's record with regard to
philanthropic activities and community relations.
o The Environmental Performance, including a company's record with
regard to fines or penalties, waste disposal, toxic emissions
efforts in waste reduction and emissions reduction, recycling, and
environmentally beneficial fuels, products and services.
The DSI excludes companies that derive more than 2% of their gross revenues from
the sale of military weapons, companies that derive any revenues from the
manufacture of tobacco products or alcoholic beverages, companies that derive
identifiable revenues from gambling operations, and companies that own or
operate nuclear power plants.
In order to be included in the DSI, a company must also meet certain financial
criteria. In determining which stocks will be included in the DSI, KLD will
evaluate a company's diversification across industries, financial solvency,
market capitalization, and portfolio turnover. Companies that are in bankruptcy
or whose bankruptcy may be imminent may be excluded from the DSI.
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Approximately __% of the stocks in the DSI are stocks of companies included in
the Standard & Poor's(R) 500 Composite Stock Price Index (the "S&P 500"). The
S&P 500 is a broad-based market index that includes common stocks of 500
companies representing a significant portion of the market value of all common
stocks publicly traded in the United States. The remaining stocks comprising the
DSI were selected based on the social and financial criteria described above.
Standard & Poor's Corporation does not sponsor or endorse the Portfolio or the
Fund and makes no representation as to the advisability of investing in the
Portfolio or Fund.
Equity securities or stocks represent an ownership interest, or right to acquire
an ownership interest, in a company. Some of the stocks included in the DSI 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
denominated in United States dollars). The Fund may also invest in options on
equity securities.
In addition, the Portfolio may invest cash reserves in short-term debt
securities, including securities issued by agencies or instrumentalities of the
United States Government, bankers' acceptances, commercial paper, certificates
of deposit, bank deposits or repurchase agreements.
Principal Risks of Investing in the Fund
All investments involve some degree of risk. When you sell shares of the Fund,
they could be worth less than what you paid for them. There is never any
assurance that a fund will perform as it has in the past. Loss of money is a
risk of investing in the Fund. It is important that you understand that the
Fund's and Portfolio's performance may be affected by the risks described below.
o Market risk. Stock markets are volatile and prices of equity
securities can decline significantly in response to adverse
political, regulatory or economic developments. The value of the
Fund may be affected by a decline in financial markets in general.
o Price fluctuations of equity securities. Although equity
securities have a history of long-term growth in value, their
prices fluctuate based on changes in a company's financial
condition and on overall market, economic and political
conditions.
o Foreign securities. 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.
o Investment Manager risk. There can be no assurance that the
Investment Manager's and Sub manager's application of the
Portfolio's investment strategies will be successful and the Fund
and Portfolio may underperform the stock market or other funds.
The ability of the Fund to correlate its performance with the DSI
by investing in the Portfolio will be affected by, among other
things, the size and timing of cash flows into and out of the Fund
and Portfolio and the Fund's and Portfolio's expenses.
o Risk of investing in a passively managed fund. In using a
"passive" investment approach, the Investment Manager and
Submanager seek to track the DSI. The Portfolio's securities will
ordinarily not be sold except to add or remove stocks that
comprise the DSI, or as may be necessary to raise cash to pay
shareholders who wish to sell their shares. As such, the adverse
performance of a particular stock ordinarily will not result in
the removal or substitution of the stock from the Portfolio and
the Portfolio will remain invested in stocks even when stock
prices are generally falling. In addition, the performance of the
DSI does not take into account brokerage and other transaction
costs which will be borne by the Fund and Portfolio (e.g.,
management fee, transfer agency and accounting costs).
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
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Performance
Results based on the past performance of a fund are not an indication of how the
fund will perform in the future. However, a review of the Fund's past
performance can help illustrate the variability of Fund returns that an investor
in the Fund would experience over time. The calculation of total return in the
chart and table below assumes reinvestment of all capital gains and dividends.
The information in the chart below shows the Fund's calendar year annual total
returns over the past three years.
Annual Total Returns (calendar years)
40.00% |
| 34.65%
| 31.89%
30.00% |
|
|
20.00% | 19.96%
|
|
10.00% |
|
|
0.00% |
|
|
-10.00%|__________________________________________________
1996 1997 1998
During the periods shown in the bar chart, the highest return for the Fund for a
quarter was 24.31% (quarter ending December 31, 1998) and the lowest return for
the Fund for a quarter was -9.90% (quarter ending September 30, 1998). The
year-to-date total return through September 30, 1999 for the Fund was ______%.
The table below compares the Fund's average annual returns to the annual returns
of the S&P 500. It provides an indication of the risks of investing in the Fund
by comparing the Fund's performance with a broad measure of market performance.
Average Annual Total Returns
For periods ended December 31, 1998 Past 1 year Past 5 years Life of Fund(1)
- ----------------------------------- ----------- ------------ ------------
DEVCAP Shared Return Fund 31.89% n/a 28.08%
S&P 500(2) 28.57% 24.06% 19.20%
(1) The Fund commenced operations on October 19, 1995.
(2) The S&P 500(R) is the Standard and Poor's Composite Stock Price Index, a
widely recognized, unmanaged index of common stock prices.
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Fees and Expenses
Fee Table
The table below describes the fees and expenses that you may pay if you buy,
hold or sell shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price).................................. None
Maximum Deferred Sales Charge (Load)................................... None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends
and Other Distributions.............................................. None
Redemption Fee(1)...................................................... None
Exchange Fee........................................................... None
Maximum Account Fee.................................................... None
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
Management Fees(2)..................................................... 0.20%
Distribution and/or Service (12b-1) Fees(3)............................ 0.25%
Other Expenses......................................................... 1.52%
Total Annual Fund Operating Expenses................................... 1.97%
(1) The transfer agent charges $10 for each wire redemption and $16 for each IRA
redemption.
(2) DSIL has agreed to waive its fee to the extent necessary to ensure that
aggregate operating expenses of the Portfolio (excluding brokerage fees and
commissions, interest, taxes and other extraordinary expenses) do not exceed
0.20% of the average daily net assets of the Portfolio. This expense waiver
is voluntary and may be reduced or terminated at any time.
(3) The Fund currently pays no 12b-1 fees because its distribution plan is
inactive.
Example
This example illustrates the cost of investing in the Fund over various time
periods. It is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that:
o you invest $10,000 in the Fund and sell all of your shares at the
end of the time periods indicated
o your investment returns 5% each year
o the Fund's operating expenses remain the same for the time periods
indicated
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$200 $618 $1,062 $2,296
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Portfolio Management
The Fund is a passively managed fund that seeks to achieve its investment
objective by investing all of its assets in the Portfolio. As such, the Fund's
assets are managed as part of the Portfolio by the Portfolio's Investment
Manager. The discussion below provides information about the Portfolio's
management, the Fund's distribution arrangements and the Fund's participation in
a master feeder structure. See the Statement of Additional Information for more
detailed information about the Portfolio's management and for additional
information about the Portfolio's and Fund's other service providers.
The Investment Manager and Submanager
Domini Social Investments, LLC, ("DSIL") is the Portfolio's Investment Manager.
DSIL provides investment management and administrative services to the Portfolio
pursuant to an investment management agreement between DSIL and the Portfolio.
These services include investment supervisory services, operational support, the
provision of office facilities and the supervision of the administration of the
Portfolio. DSIL has been a registered investment adviser under the Investment
Advisers Act of 1940 ("1940 Act") since 1997. As of July 31, 1999, DSIL had
approximately $1.3 billion in assets under management. Its principal business
office is located at 11 West 25th Street, New York, New York 10010.
The Portfolio pays DSIL an annual management fee of 0.20% of the Portfolio's
average daily net assets for the services and facilities furnished to the
Portfolio. The Portfolio's investment management agreement describes the
management fee, which is accrued daily and paid monthly, and other expenses that
the Portfolio must pay. DSIL has agreed to waive its fee to the extent necessary
to ensure that aggregate operating expenses of the Portfolio (excluding
brokerage fees and commissions, interest, taxes and other extraordinary
expenses) do not exceed 0.20% of the average daily net assets of the Portfolio.
This expense waiver is voluntary and may be reduced or terminated at any time.
Mellon Equity Associates is the Portfolio's Submanager. Mellon Equity provides
investment submanagement services to the Portfolio on a day-to-day basis
pursuant to a submanagement agreement between Mellon Equity and DSIL. These
services consist primarily of the removal and substitution of securities to
track changes to the DSI. Mellon Equity does not itself determine the
composition of stocks to the DSI. Mellon Equity has been registered as an
investment adviser under the 1940 Act since 1986. Prior to 1987, Mellon Equity
was part of the Equity Management Group of Mellon Bank's Trust and Investment
Department, which has managed domestic equity, tax-exempt and institutional
pension assets since 1947. Its principal business office is located at 500 Grant
Street, Suite 3700, Pittsburgh, PA 15258.
As compensation for its investment submanagement services, DSIL pays Mellon
Equity an annual submanagement fee of 0.10% of the Portfolio's average daily net
assets.
Fund Distribution
CBIS Financial Services, Inc. ("CBIS") is the distributor of the Fund's shares.
The Board of Trustees ("Trustees") of DEVCAP Trust (the "Trust") has adopted a
distribution plan on behalf of the Fund pursuant to Rule 12b-1 under the
Investment Company Act of 1940, to allow the Fund to pay distribution fees
related to the sale and distribution of Fund shares and other fees for services
provided to shareholders. The distribution plan authorizes the Fund to reimburse
CBIS up to 0.25% of the Fund's average daily net assets for expenses incurred in
connection with the sale and distribution of Fund shares and other fees for
services provided to shareholders. The Fund
7
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currently pays no 12b-1 fees because its distribution plan is inactive. If the
Fund's distribution plan were active these fees and expenses would include
payments to employees of CBIS, payments to broker-dealers who advise
shareholders regarding the purchase, sale or retention of shares of the Fund,
expenses related to advertising, printing and distributing prospectuses and
reports, expenses related to preparing and printing sales literature and other
distribution-related expenses. If 12b-1 fees were currently being paid they
would be paid out of the Fund's assets on an on-going basis, and over time such
fees would increase the cost of your investment and could cost you more than
paying other types of sales charges.
The Master Feeder Structure
Unlike traditional mutual funds that directly invest their assets in a portfolio
of securities, the Fund participates in a so-called "master feeder" arrangement.
This arrangement permits one or more mutual funds with substantially identical
investment objectives (the feeder funds) to combine their assets by investing in
a single portfolio (the master fund) having the same investment objective. The
feeder funds sell their shares to the public and invest all of their assets in
the master fund. In turn, the master fund, in accordance with its and the feeder
funds' common investment objective, invests its assets in portfolio securities.
The Fund, along with other mutual funds, seeks to achieve its investment
objective by investing all of its assets in the Portfolio. Each feeder fund that
invests in the Portfolio will do so on the same terms and conditions as the Fund
and will pay its proportionate share of the Portfolio's expenses. However, the
fees and expenses paid by each feeder fund to invest in the Portfolio may vary,
resulting in differences in performance among the feeder funds. Information
about other feeder funds that invest in the Portfolio is available by calling
(212) 352-9290. Generally, when the Portfolio seeks a vote, the Fund will hold a
shareholder meeting and cast its vote proportionately, as instructed by its
shareholders. Fund shareholders are entitled to one vote for each share held.
The Fund may withdraw its assets from the Portfolio at any time if the Trustees
determine that it is in the best interests of the Fund. In the event of such
withdrawal, the Trustees will consider appropriate actions, including investment
of the Fund's assets into another mutual fund having the same investment
objective as the Fund.
8
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Shareholder Information
Pricing of Fund Shares
All purchases and sales of Fund shares will be processed at the net asset value
("NAV") next calculated after your request is received and accepted by the Fund.
The Fund's NAV is calculated by deducting the amount of the Fund's liabilities
from the value of its assets and dividing the difference by the number of
outstanding shares of the Fund.
NAV = Total Assets - Liabilities
Number of Shares Outstanding
The Fund's NAV is determined at the close of the regular trading session of the
New York Stock Exchange ("NYSE") (normally 4:00 p.m. Eastern time) each day that
the NYSE is open. The NAV of Fund shares is not determined on days the NYSE is
closed. In order to receive a day's price, your purchase or redemption request
must be received in good order by the close of the regular trading session of
the NYSE. (Please see page 12 for a definition of "good order.") Securities are
valued at market value or, if a market quotation is not readily available, at
their fair value as determined by the Trustees. Short-term obligations maturing
within 60 days are valued at amortized cost, which approximates market value.
The NAV of the Portfolio is calculated by deducting the amount of the
Portfolio's liabilities from the value of its assets. The Portfolio values
securities at market value by using the last reported sale price, or last
reported bid price if no sales were reported. At the close of each business day,
the value of the Fund's investment in the Portfolio will be determined by
multiplying the NAV of the Portfolio by the Fund's percentage interest of the
Portfolio's net assets.
You can request the Fund's current NAV by calling (800) 371-2655. See the
Statement of Additional Information for more detailed information about the
pricing of Fund shares.
Buying and Selling Shares
General Information
You may buy or sell shares of the Fund directly from the Fund in the manner
described below. The Fund does not impose a sales charge to buy or sell shares.
For general account, product or service information or shareholder questions
concerning the procedures outlined below contact:
DEVCAP Shared Return Fund
P.O. Box 2152
Milwaukee, WI 53201-2152
Telephone: (800) 371-2655
You may also buy or sell shares of the Fund through a retirement account or an
investment professional. If you invest through a retirement account or an
investment professional, the procedures for buying and selling shares of the
Fund may differ. Additional fees may also apply to your investment in the Fund,
including a transaction fee if you buy or sell shares of the Fund through a
broker-dealer or other investment professional.
If you are investing in the Fund for the first time you will need to establish
an account by completing an account application. Please note that the
application(s) which you will need may vary depending on the type of account you
desire. To request an account application call (800) 371-2655. The different
types of accounts you may establish are the following:
o Individual or Joint Account. Individual accounts are owned by one
person. Joint accounts have two or more owners. You can use a
regular account application to open these types of accounts.
o Individual Retirement Plan Accounts. You can purchase shares
through an Individual Retirement Account (IRA). Retirement plan
accounts require a special account application.
o Gifts or Transfers to a Minor (UGMA or UTMA) Accounts. A UGMA/UTMA
account is a custodial account managed for the benefit of a minor.
This type of account requires a regular account application and
may require additional information.
9
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o Trust Accounts. An established trust can open an account. This
type of account requires a regular account application and may
require additional documentation.
o Business Accounts. Corporations and partnerships may also open an
account. This type of account requires a regular account
application and may require additional documentation.
Please note that the following investment minimums apply when buying shares of
the Fund:
Investment Minimums
To open a regular account................................. $ 1,000
To add to a regular account................................ None
To open a regular account with an
Automatic Investment Plan................................ $ 500
To add to a regular account with an
Automatic Investment Plan................................ $ 25
To open an IRA account..................................... $ 250
To add to an IRA account................................... None
These minimums may be waived or lowered by the Fund.
Buying Shares
The price to buy one share of the Fund is the Fund's NAV. There is no sales
charge imposed when buying Fund shares. When you buy shares, your request will
be processed at the next NAV calculated after your order is received and
accepted. When you place an order to buy shares please note the following:
o All of your purchases must be made in U.S. dollars and checks must
be drawn on U.S. banks.
o Cash, credit cards, third party checks and credit card checks will
not be accepted.
o Checks must be made payable to "DEVCAP Shared Return Fund."
o If a purchase does not clear your bank, the Fund reserves the right
to cancel the purchase. The Fund will charge a $20 service fee
against your account for any check or electronic funds transfer
returned unpaid. Your purchase will be canceled, and you will be
responsible for any resulting loss to the Fund.
Short-term or excessive trading into and out of the Fund may harm performance by
disrupting the Fund's investment strategies and increasing the Fund's expenses.
Accordingly, the Fund reserves the right to reject any purchase orders,
particularly from market timers or investors who, in the Investment Manager's
opinion, are likely to engage in short-term or excessive trading that has been
or may be disruptive to the Fund. If your purchase order is canceled, you will
be responsible for any losses or fees imposed by your bank and losses that may
be incurred as a result of any decline in the value of the canceled purchase.
The Fund may stop offering shares completely or may offer shares only on a
limited basis, for a period of time or permanently.
You may buy shares of the Fund through the following options:
o By Mail. Complete and sign the appropriate account application. Make
your check payable to "DEVCAP Shared Return Fund." Mail the account
application and check to the following address:
DEVCAP Shared Return Fund
P.O. Box 2152
Milwaukee, WI 53201-2152
o By Wire. Call (800) 371-2655 to arrange to establish an account
number and receive wire instructions. An investor desiring to
purchase shares by a wire transfer of funds should request its bank
to immediately transmit available funds. Bank wires for the purchase
of shares should be sent to:
10
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UMB Bank NA
ABA# 101000695
For Credit to: DEVCAP Trust
A/C# 987-096-4139
For further credit to:
Include Shareholder Name, Address, and Account Number
You may also buy shares of the Fund through an Automatic Investment Plan which
allows you to invest, through your bank, specified dollar amounts at regular
intervals (minimum of $25 in monthly, quarterly, semi-annual or annual
intervals). For more information call (800) 371-2655.
Shares of the Fund may also be purchased by exchanging securities for shares of
the Fund. The Fund will not accept a security in exchange for Fund shares
unless: (i) the security is consistent with the investment objectives and
policies of the Fund and the Portfolio; and (ii) the security is deemed
acceptable by the Investment Manager and the Submanager.
Selling Shares
The price to sell or redeem one share of the Fund is the Fund's NAV. You may
sell all or a portion of your shares on any business day and there is no
redemption charge imposed on sales of Fund shares. Your shares will be sold at
the next NAV calculated after your redemption request has been received in good
order. (Please see page 12 for a definition of "good order.") The value of the
shares that you sold may be more or less than your original purchase price.
When you place a redemption request please note the following:
o It may take up to seven days to process your redemption request.
o Redemption proceeds may be delayed until money from prior
purchases sufficient to cover your redemption has been received
and collected. This can take up to 15 days after a purchase.
o Redemptions may be suspended or payment dates postponed when the
NYSE, the Fund or the Fund's transfer agent are closed (other than
weekends or holidays), when trading on the NYSE is restricted, or
as permitted by the Securities and Exchange Commission.
o Redemption proceeds may be paid in securities or other assets
rather than in cash if the Trustees determine it is in the best
interests of the Fund.
o The Fund reserves the right to modify its redemption procedures.
o You will not receive interest on amounts represented by uncashed
redemption checks.
o The Fund reserves the right to refuse wire or telephone
redemptions.
o Signature guarantees are required for the following: (i)
redemption requests over $10,000; (ii) redemptions made within 30
days of a change of address; (iii) if the proceeds of redemption
(regardless of amount) are to be sent to a person other than the
registered holder and/or to an address other than the address of
record; and (iv) transfers of shares. Signature guarantees may be
obtained from a commercial bank or trust company in the United
States, a member of the NYSE and some savings and loan
associations. A notary public is not acceptable.
o 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 $250, but not if an account falls below
$250 due to a change in the market value of the Fund's shares.
You may request to sell your shares by mail or by telephone, subject to certain
procedures. You may sell shares of the Fund through the following options:
o By Mail. Send a written redemption request, including your name,
the Fund's name, your account number, and the dollar amount or
number of shares to be sold to the following address:
DEVCAP Shared Return Fund
P.O. Box 2152
Milwaukee, WI 53201-2152
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For overnight deliveries, please use the following address:
DEVCAP Shared Return Fund
c/o Sunstone Financial Group, Inc.
207 East Buffalo St.
Suite 315
Milwaukee, WI 53202
Your redemption request must be in "good order" to be accepted.
Requests in "good order" must include the following:
1. A letter of instruction, if required, signed by all registered
owners of the shares in the exact names in which they are
registered (if the shares are in street name, you must sell the
shares through your investment professional);
2. Any required signature guarantees. To protect shareholder
accounts, the Fund and the Fund's transfer agent from fraud,
signature guarantees may be required in certain instances,
including redemptions in excess of $10,000, to enable the transfer
agent to verify the identity of the person who has authorized a
redemption request from an account.
3. Any additional information or supporting legal documents which
the Fund may require.
o By Telephone. If you did not waive the telephone redemption privilege
on your new account application you may sell shares over the
telephone by calling the Fund's transfer agent at (800) 371-2655. In
order to sell shares over the telephone you must provide your account
number and your social security number. For your protection,
telephone redemption requests will be recorded in order to verify
their accuracy. If the Fund follows reasonable procedures to confirm
that redemption instructions are genuine it shall not be liable for
unauthorized or fraudulent redemption requests.
Redemption proceeds can be sent by mail, wire or electronic funds transfer.
Redemptions will be sent to pre-authorized addresses. There is a $10.00 fee for
wire redemption which will be deducted from your proceeds. Payment may be
delayed for up to 15 days on redemption requests for recent purchases made by
check or electronic funds transfer in order to ensure that the purchase has
cleared.
Any time you sell shares of the Fund in a taxable account, it is considered a
taxable event on which you may recognize a gain or a loss.
Charitable Contributions Program
The Fund is designed to enable you to share the total return of your investment
in the Fund with DEVCAP NonProfit, a non-profit organization that promotes
micro-enterprise development programs in developing countries. You must indicate
your desire to make an annual contribution to DEVCAP Non-Profit when you
initially purchase shares of the Fund. You may elect to contribute a percentage
of your total returns in any one of the following increments: 10%, 25%, 50%, 75%
or 100%. You may subsequently change the amount of your total returns that you
wish to contribute. Additionally, you may elect not to contribute any portion of
your returns on a year-by-year basis.
On or about the third week of November, the Fund will mail a notice of record
indicating the dollar amount of your estimated contribution for that year, based
on your contribution election and your estimated year-to-date total return. In
order to change your contribution election, you must notify the Fund on or
before the second Friday of December by calling (800) 371-2655 (option 3) or by
writing to the following address:
DEVCAP Shared Return Fund
P.O. Box 2152
Milwaukee, WI 53201-2152
By January of the following year, the Fund will mail you a notice of record
indicating the dollar amount of your actual contribution for the previous year.
This contribution will be made by deducting the appropriate number of your
shares (valued at their fair market price) in the Fund equaling your annual
contribution election. The fair market value of your Fund share donation will
generally be tax deductible. See the "Tax Consequences" section below.
12
<PAGE>
The value of your annual contribution will be determined according to the change
in value of your account between January 1 (or the date of the your initial
investment) and the second Friday in December of the same year, adjusted for
redemptions, distributions and purchases. See the Statement of Additional
Information for more detailed information.
Dividends and Capital Gains Distributions
The Fund earns dividends, interest and other income from its investments, and
distributes this income (less expenses) to you as dividends. The Fund also
realizes capital gains from its investments, and distributes these gains (less
any losses) to you as capital gains distributions. The Fund usually pays
dividends and capital gains distributions in December. You may elect to have
your dividends and capital gains distributions paid in cash or reinvested in
additional shares of the Fund.
Tax Consequences
As with any investment, your investment in the Fund will have tax consequences
which you should consider.
Dividends and distributions you receive from the Fund, whether received in cash
or reinvested in additional shares of the Fund, are subject to federal income
tax, and may also be subject to state or local taxes. Distributions may be
taxable at different rates depending on the type of income earned by the Fund
and the length of time the Fund held a security when it was sold. For federal
income tax purposes, the Fund's distributions of dividends and short-term
capital gains are taxable to you as ordinary income. The Fund's distributions of
long-term capital gains are taxable to you generally as long-term capital gain.
In addition, the Fund has been structured in order to enable you to make tax
deductible donations of your Fund shares through the Fund's Charitable
Contribution Program. Under this Program shareholders who donate to DEVCAP
NonProfit may be able to deduct the fair market value of the Fund shares donated
on their annual income tax returns, provided the shares were held for at least
one year. If you held shares for one year or less you may be able to deduct the
cost of your Fund shares.
If you buy shares when the Fund has realized but not yet distributed income or
capital gains, you will be "buying a dividend" by paying the full price for the
shares and then receiving a portion of the price back in the form of a taxable
distribution.
Shortly after the end of each calendar year, you will receive information for
tax purposes on the dividends and distributions received during that calendar
year, including a breakdown of the portions taxable as ordinary income and as
capital gains.
The previous discussion of tax consequences is intended for general information
only. You may wish to consult with your own tax adviser as to the tax
consequences of an investment in the Fund or participation in the Fund's
Charitable Contribution Program. See the Statement of Additional Information for
more detailed information.
13
<PAGE>
The Year 2000 Problem
Most computer systems in use today have been programmed to designate a specific
year by using only the last two digits of that year. As a result, certain
computer systems may be unable to distinguish the year 2000 from the year 1900,
which could impair their ability to function properly after 1999. This inability
to properly process and calculate date-related information is commonly known as
the "Year 2000 Problem." Like other funds and business organizations, the Fund
could be adversely affected by the Year 2000 Problem. The Year 2000 Problem
could disrupt the Fund's operations, including pricing, securities trading and
shareholder servicing.
The Fund's sponsor, DEVCAP Non-Profit, has taken measures it believes are
reasonably designed to monitor the Fund's systems to address the Year 2000
Problem. These measures have included: (i) performing an inventory of the Fund's
information technology and non-information technology systems; (ii) assessing
which items in the inventory may expose the Fund to business interruptions due
to Year 2000 issues; (iii) testing systems for Year 2000 readiness; (iv)
reprogramming or replacing systems that are not Year 2000 compliant; and (v)
returning the systems to operation.
However, despite DEVCAP Non-Profit's efforts, there is no guarantee that the
Year 2000 Problem will not adversely affect the Fund's business operations or
financial condition. Additionally, the Year 2000 Problem could negatively impact
the Portfolio and issuers of securities in which the Portfolio invests and,
consequently, the Fund's performance.
14
<PAGE>
Financial Highlights
The financial highlights table is intended to help you understand the Fund's
financial performance since its inception. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by KPMG LLP, the Fund's independent auditors, whose
report, along with the Fund's financial statements, are included in the annual
report, which is available by calling the Fund at (800) 371-2655.
<TABLE>
<CAPTION>
Period from
October 19, 1995(1)
Year ended Year ended Year ended to
For a share outstanding for the period: July 31, 1999 July 31, 1998 July 31, 1997 July 31, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning
of period................................. $19.58 $ 16.22 $10.71 $10.00
------ ------
Income from investment
operations:
Net investment loss....................... (0.18) (0.06) (0.03) (0.02)
Net realized and unrealized
gain (or losses) on investments......... 4.28 3.44 5.55 0.73
---- ---- ---- ----
Total income from
investment operations..................... 4.10 3.38 5.52 0.71
Less distributions from
net realized gain......................... (0.20) (0.02) (0.01)
---- ------ ------ ------
Net Asset Value, end of
period.................................... 23.48 $ 19.58 $16.22 $10.71
===== ======= ====== ======
Ratios/supplemental data
Total return.............................. 21.03% 20.84% 51.57% 7.10%(4)
Net Assets, end of period
(in 000's).............................. $15,046 $ 10,697 $5,326 $643
Ratio of expenses to average net assets
before reimbursements..................... 1.97% 2.76% 5.93% 26.30%(2)
Ratio of expenses to average net assets
after reimbursements...................... 1.97% 1.75% 1.75% 2.50%(2)
Ratio of net investment income to average
net assets before reimbursements.......... (0.92)% (1.52)% (4.39)% (24.34)%(2)
Ratio of net investment income to average
net assets after reimbursements........... (0.92)% (0.51)% (0.21)% (0.54)%(2)
Portfolio turnover(3)....................... 8% 5% 1% 5%
- -----------
(1) Commencement of Fund operations.
(2) Annualized.
(3) Portfolio turnover rate of the Portfolio.
(4) Not annualized.
</TABLE>
15
<PAGE>
DEVCAP Non-Profit
DEVCAP Non-Profit is a non-profit corporation that functions as a joint venture
with another non-profit organization, Catholic Relief Services ("CRS"). DEVCAP
Non-Profit was created in 1992 to provide fund-raising and other support to
non-profit organizations dedicated to supporting micro-enterprise and other
economic development programs in developing countries. Micro-enterprise
development programs assist underprivileged people by providing direct financing
and technical support, otherwise unavailable through normal business channels,
for business enterprises in developing countries.
Each year, DEVCAP Non-Profit will direct shareholder contributions made pursuant
to the Fund's Charitable Contribution to CRS and other 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. Shareholder contributions are generally allocated by
agreement between DEVCAP Non-Profit and CRS. CRS was founded by the Catholic
Bishops of the United States and funds a "village banking" program which
provides financial services to approximately 150,000 underprivileged people in
24 countries throughout the world. CRS provides the operational funding for
DEVCAP Non-Profit and generally receives all the donations generated by the
Fund's Charitable Contribution Program. At their discretion, DEVCAP Non-Profit's
Board of Directors may also use shareholder contributions to support programs of
other non-profit organizations.
In addition to its primary fund-raising activities, DEVCAP Non-Profit seeks 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 include educational campaigns,
research programs, and implementation of other financial programs to aid in the
development of micro-enterprises.
DEVCAP Non-Profit operates independently of the Investment Manager, Submanager,
Distributor, Administrator and all other service providers of the Fund and
Portfolio. DEVCAP Non-Profit and its personnel receive no compensation from the
Fund or the Portfolio. DEVCAP Non-Profit does not provide any investment
advisory, management or other investment support services to the Fund or the
Portfolio. As the Fund's sponsor, DEVCAP Non-Profit provides marketing,
administrative and shareholder support services to the Fund.
For more information regarding DEVCAP Non-Profit, please contact DEVCAP
Non-Profit directly at (800) 371-2655.
Shareholders who have elected not to participate in the Fund's Charitable
Contribution Program may still make a contribution to DEVCAP Non-Profit by
calling (800) 371-2655.
16
<PAGE>
ACCOUNT REGISTRATION INFORMATION
1. Individual
- ------------------------------------------------ -----------------------------
First M.I. Last
- ------------------------------------------------ -----------------------------
Social Security Number Date of Birth
2. Joint Tenant
- ------------------------------------------------ -----------------------------
First M.I. Last
- ------------------------------------------------ -----------------------------
Social Security Number Date of Birth
3. Gift/Transfer to a Minor (UGMA/UTMA)
Minor
---------------------------------------------------------------------------
Last First M.I.
- ----------------------------------
Minor's Social Security Number
Custodian
------------------------------ ------------------------ -------------
First M.I. Last Minor State of Residence Date of Birth
4. Trust Name
--------------------------------- ---------------------------
Date of Trust
5. Organization
-------------------------------- ---------------------------
Tax identification No.
Type of Organization: [] Corporation [] Association [] Partnership [] Other
------------------------------------- ----------------------------------
Signature of Print Name Date
Joint Owner/Trustee If Any (and title if applicable)
Trusts: Please include date of trust and attach copies of first and last pages
of the trust agreement as well as any pages indicating which signatures are
required to execute transactions.
Corporations: Please attach a certified copy of your corporate resolution or
call 800-371-2655 for alternative form.
17
<PAGE>
ADDRESS
- --------------------------------------------------------------------------------
Number and Street
- --------------------------------------------------------------------------------
City State Zip
- ----------------------------- ------------------ -----------------
Country of Citizenship Business Telephone Home Telephone
Citizenship of Owner, Minor or Trust Beneficiary:
[ ] U.S. Citizen [ ]Resident Alien [ ]Non-Resident
[ ]Alien - Country of Residence
---------------------
Citizenship of Joint Owner:
[ ] U.S. Citizen [ ]Resident Alien [ ]Non-Resident
[ ]Alien - Country of Residence
---------------------
INITIAL INVESTMENT Minimum initial investment - $1,000)
Please establish an account with the enclosed check payable to DEVCAP Shared
Return Fund, in the amount of
$
-----------------------
DIVIDEND & CAPITAL GAIN DISTRIBUTION
Check one box: (If no box is checked, we will reinvest all distributions.)
[ ] Reinvest all dividends and capital gains in my account
[ ] Pay all dividends and capital gains to me by check
CHARITABLE CONTRIBUTION
to Development Capital Fund, a non-profit charitable corporation, or its member
organizations.
Please specify percentage of total annual return to be contributed: (If no box
is checked, 50% will be assumed)
[ ] 10% [ ] 25% [ ] 50% [ ] 75% [ ] 100%
AUTOMATIC INVESTMENT PLAN (Minimum Initial Investment $500)
1. This service lets you invest automatically from your bank account
2. Please be sure to allow three weeks for the plan to begin
3. To establish this feature, complete the information below and staple a
voided check from your bank account to the application. One common name
must appear on your DEVCAP and bank accounts.
18
<PAGE>
I have read the terms and conditions of the Automatic Investment Plan set forth
in the Prospectus
Dollar Amount: (Minimum $25)__________________________
Frequency (deductions made on or about the 15th of the month)
[ ] Monthly [ ] Quarterly [ ] Semi-annually [ ] Annually
REDEMPTION SERVICE
You automatically have the ability to make redemptions by telephone.
I (we) hereby authorize Sunstone Financial Group, Inc. ("Sunstone") to act upon
instructions received by telephone to have amounts withdrawn from my (our)
account in the DEVCAP Shared Return Fund and wired/electronic funds transferred
to my (our) account below.
I (we) hereby ratify any such instructions and agree that neither the DEVCAP
Shared Return Fund or Sunstone will be liable for any loss, liability, cost or
expense for acting upon instructions in accordance with procedures set forth in
the Prospectus.
YES [ ] NO [ ] "YES" will be assumed if neither box is checked
Please attach a voided check.
- -------------------------------------------------------------------------------
Bank Name Account Name
- -------------------------------------------------------------------------------
Account Number Bank ABA Number
- -------------------------------------------------------------------------------
Street Address
- -------------------------------------------------------------------------------
City State Zip
SIGNATURE
Each owner must sign this section.
By signing this application, I certify that
* I have received and read the prospectus for the fund in which I am investing
and I agree to the terms of the prospectus. I have the authority and legal
capacity to purchase mutual fund shares, am of legal age and believe each
investment is suitable for me.
* I understand the fund is not a bank, and fund shares are not backed or
guaranteed by any bank or insured by the FDIC.
* I understand that, for joint accounts, "I" refers to all account owners, and
each of the account owners agrees that any account owner has authority to act
on the account without notice to the other account owners. Sunstone in
its sole discretion, and for its protection, may require the written consent
of all account owners prior to acting upon the instructions of any account
owner.
19
<PAGE>
* If I am a U.S. Citizen or Resident Alien, as I have indicated above, I
certify under penalties of perjury that (1) the Social Security (taxpayer
identification number) provided above is correct, and (2) I am not subject to
IRS backup withholding because (a) I am exempt from backup withholding, or
(b) I have not been notified by the IRS that I am subject to backup with-
holding, or (c) I have been notified by the IRS that I am no longer subject to
backup withholding.
(Please cross out item 2 if it does not apply to you.)
* If I am a Non-Resident Alien, as I have indicated above, I certify under
penalties of perjury that I am not a U.S. Citizen or Resident Alien, and that
I am an "exempt foreign person" as defined under IRS regulations.
- ----------------------------------------- ----------------------------------
Signature of Owner/Trustee/Custodian Date (month, day, year)
- ----------------------------------------- ----------------------------------
Signature of Joint Owner/Trustee if any Date (month, day, year)
MAIL COMPLETED APPLICATION TO:
DEVCAP Shared Return Fund
P.O. Box 2152
Milwaukee, WI 53201-2152
20
<PAGE>
You can obtain additional information about the Fund, including the Fund's
Statement of Additional Information (SAI) and annual or semi-annual shareholders
reports, free of charge. The Fund's SAI includes more detailed information about
the Fund and its investments. The SAI has been filed with the Securities and
Exchange Commission ("SEC") and is incorporated by reference into this
prospectus. In the Fund's annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
Fund's performance during its last fiscal year.
To request a free copy of any of these documents, or to request other
information or ask questions about the Fund, call (800) 371-2655.
The Fund's SAI and annual and semi-annual shareholder reports are available on
the SEC's Internet Web site at http://www.sec.gov. You can obtain copies of this
information upon paying a duplicating fee by writing to the Public Reference
Section of the SEC, Washington, D.C. 20549-6009. You can also review and copy
information about the Fund, including the Fund's SAI, at the SEC's Public
Reference Room in Washington, D.C. Information on the operation of the SEC's
Public Reference Room can be obtained by calling 1-800-SEC-0330.
DEVCAP Trust
DEVCAP Shared Return Fund
209 West Fayette Street
Baltimore, Maryland 21201
(800) 371-2655
www.DEVCAP.org
Investment Manager Distributor
Domini Social Investments LLC CBIS Financial Services, Inc.
11 West 25th Street 915 Harger Road
New York, NY 10010 Oak Brook, Illinois 60521-1476
Submanager Administrator
Mellon Equity Associates Sunstone Financial Group, Inc.
500 Grant Street 207 East Buffalo Street, Suite 400
Suite 3700 Milwaukee, Wisconsin 53202
Pittsburgh, PA 15258-0001 (414) 271-5885
Independent Auditors Custodian
KPMG LLP Investors Bank & Trust Company
99 High Street 89 South Street
Boston, MA 02110 Boston, MA 02111
Transfer Agent Legal Counsel
Sunstone Financial Group, Inc. Mayer, Brown & Platt
207 East Buffalo St. 1675 Broadway
Milwaukee, WI 53201-2152 New York, NY 10019
(800) 371-2655
Investment Company Act of 1940, File No. 811-9070
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
November 29, 1999
DEVCAP Shared Return Fund
A separate series of DEVCAP TRUST
209 West Fayette Street
Baltimore, Maryland 21201
(800) 371-2655
This Statement of Additional Information sets forth information which
may be of interest to investors but which is not necessarily included in the
Prospectus, dated November 29, 1999, as amended from time to time, for DEVCAP
Shared Return Fund. This Statement of Additional Information should be read in
conjunction with the Prospectus, a copy of which may be obtained by an investor
without charge by contacting the Fund at (800) 371-2655.
This Statement of Additional Information is NOT a prospectus and is
authorized for distribution to prospective investors only if preceded or
accompanied by an effective prospectus and should be read only in conjunction
with such prospectus.
<PAGE>
TABLE OF CONTENTS
Page
----
1. THE TRUST................................................................1
2. FUND OBJECTIVE AND INVESTMENT POLICIES AND RESTRICTIONS..................1
Fund Objective..........................................................1
Investment Policies.....................................................1
Loans of Securities.....................................................2
Risk Factors Involved in Option Contracts...............................3
Investment Restrictions.................................................3
Percentage Restrictions.................................................5
3. PERFORMANCE INFORMATION..................................................5
4. DETERMINATION OF NET ASSET VALUE;
VALUATION OF PORTFOLIO SECURITIES.......................................6
5. MANAGEMENT OF THE TRUST AND THE PORTFOLIO................................7
Trustees of the Trust...................................................7
Trustees of the Portfolio...............................................7
Officers of the Trust...................................................8
Officers of the Portfolio...............................................8
Trustee Compensation....................................................9
Investment Manager and Submanager......................................10
Administrator..........................................................13
Fund Sponsor...........................................................14
Distribution Plan......................................................15
Distributor............................................................16
Transfer Agent and Custodian...........................................16
6. INDEPENDENT AUDITORS....................................................17
7. CHARITABLE CONTRIBUTION PROGRAM.........................................17
8. TAXATION................................................................18
Tax Deductibility of Charitable Contributions..........................20
9. PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS........................21
10. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES...................22
11. FINANCIAL STATEMENTS...................................................24
<PAGE>
1. THE TRUST
DEVCAP Trust (the "Trust") was organized as a business trust under the laws
of the Commonwealth of Massachusetts, with DEVCAP Shared Return Fund (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. The Trust
offers to buy back (redeem) shares of the Fund from its shareholders at any time
at net asset value. References in this Statement of Additional Information to
the "Prospectus" are to the current Prospectus of the Fund, as amended or
supplemented from time to time.
Shares of the Fund are continuously sold by the Fund's distributor, CBIS
Financial Services, Inc., ("CBIS" or the "Distributor"), a subsidiary of
Christian Brothers Investment Services, Inc. The minimum initial investment in
the Fund is $1,000. The minimum initial investment when investing through the
Automatic Investment Plan or an Individual Retirement Account is $500 and $250,
respectively. A description of the procedures by which Fund shares may be
purchased and redeemed can be found in the Prospectus.
The Trust seeks to achieve the investment objective of the Fund by
investing all of the Fund's assets in the Domini Social Index Portfolio (the
"Portfolio"), a diversified open-end management investment company having the
same investment objective as the Fund. Domini Social Investments LLC is the
Portfolio's Investment Manager ("DSIL" or the "Investment Manager"). The sponsor
of the Fund is Development Capital Fund ("DEVCAP Non-Profit" or the "Sponsor").
Mellon Equity Associates is the Portfolio's Investment Submanager ("Mellon
Equity" or the "Submanager"). CBIS is the Fund's Distributor. Sunstone Financial
Group, Inc., the Fund's administrator ("Sunstone" or the "Administrator"),
supervises the overall administration of the Fund. Kinder, Lydenberg, Domini &
Co., Inc. ("KLD") determines the composition of the Domini 400 Social IndexSM
("Domini Social Index" or "DSI"). The Investment Manager and Submanager manage
the investments of the Portfolio from day to day in accordance with the
Portfolio's investment objective and policies. "DominiSM" and "Domini 400 Social
IndexSM" are service marks of KLD. The Board of Trustees of the Trust and the
Portfolio provide broad supervision over the affairs of the Trust and Portfolio,
respectively
2. FUND OBJECTIVE AND INVESTMENT POLICIES AND RESTRICTIONS
Fund Objective
The Fund has two primary objectives: an investment objective and a
charitable objective. The Fund's investment objective is to achieve long-term
total return which matches the performance of the Domini 400 Social Index (sm),
an index comprised of stocks that meet certain social and environmental
criteria. The Fund's charitable objective is to enable shareholders to donate a
portion of their total annual returns to help finance micro-enterprise programs
in developing countries.
Investment Policies
The Trust seeks to achieve the investment objective of the Fund by
investing all of the Fund's assets in the Portfolio, which has the same
investment objective as the Fund. The Trust may withdraw the Fund's investment
in 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 retaining of an
investment adviser to manage the Fund's assets in accordance with the investment
policies described below with respect to the Portfolio. The approval of the
Fund's shareholders would not be required to change any of the Fund's investment
policies.
-1-
<PAGE>
The following discussion supplements the information relating to the
Portfolio's investment strategies in the Prospectus and should be read in
conjunction with the Prospectus.
A company which is not included in the Standard & Poor's 500 Composite
Stock Price Index (the "S&P 500") may be included in the Domini Social Index
primarily in order to afford representation to an industrial sector which would
otherwise be under-represented in the DSI. Because of the social criteria
applied in the selection of stocks comprising the Domini Social Index, industry
sector weighting in the DSI may vary materially from the industry weightings in
other stock indices, including the S&P 500.
The Portfolio does not purchase securities which the Portfolio believes, at
the time of purchase, will be subject to foreign withholding taxes; however,
there can be no assurance that foreign withholding taxes may not become
applicable to certain of the Portfolio's investments. In the event unforeseen
foreign withholding taxes are imposed with respect to any of the Portfolio's
investments, the effect may be to reduce the income received by the Portfolio on
such investments.
Although neither the Fund nor the Portfolio has any current intention to do
so, the Fund and the Portfolio may (i) invest in securities which may be resold
pursuant to Rule 144A under the Securities Act of 1933, as amended (the "1933
Act") or (ii) 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.
It is a fundamental policy of the Portfolio and the Fund that neither the
Portfolio nor the Fund may invest more than 25% of the total assets of the
Portfolio or the Fund, respectively, in any one industry. However, the Portfolio
may invest more than 25% of its assets in an industry if stocks in that industry
were to comprise more than 25% of the Domini Social Index, which the Portfolio
seeks to replicate. Based on the current composition of this index, this is
considered highly unlikely. The value of the Portfolio's or the Fund's
securities may decline due to specific economic, political or regulatory
developments in the industry in which the Portfolio or the Fund concentrates.
Loans of Securities
The Portfolio may lend its securities to brokers, dealers and financial
institutions, provided that: (1) the loan is secured continuously by collateral,
consisting of U.S. Government securities, cash or letters of credit, which is
marked to the market daily to ensure that each loan is fully collateralized at
all times; (2) the Portfolio may at any time call the loan and obtain the return
of the securities loaned within three business days; (3) the Portfolio will
receive any interest or dividends paid on the securities loaned; and (4) the
aggregate market value of securities loaned will not at any time exceed 30% of
the total assets of the Portfolio.
The Portfolio may earn income for lending its securities either in the form
of a fee, or as interest income earned on short-term securities purchased with
cash collateral received for securities loaned. Securities lending income is
generally reduced by rebates and fees paid to the lending agent in accordance
with the securities lending agreement. Cash collateral pursuant to these loans
will be invested in short-term money market instruments. Loans of securities
involve a risk that the borrower may fail to return the securities or may fail
to provide additional collateral.
In connection with lending securities, the Portfolio may pay reasonable
finders, administrative and custodial fees. No such fees will be paid to any
person if it or any of its affiliates is affiliated with the Portfolio, the
Investment Manager or the Submanager.
-2-
<PAGE>
Risk Factors Involved in Option Contracts
Although it has no current intention to do so, the Portfolio may in the
future enter into certain transactions in stock options for the purpose of
exposing the Portfolio to possible increases in the value of securities which
are expected to be purchased by the Portfolio or to hedge against possible
declines in the value of securities which are expected to be sold by the
Portfolio. Generally, the Portfolio would only enter into such transactions on a
short-term basis pending readjustment of its holdings of underlying stocks.
The purchase of an option on an equity security provides the holder with
the right, but not the obligation, to purchase the underlying security, in the
case of a call option, or to sell the underlying security, in the case of a put
option, for a fixed price at any time up to a stated expiration date. The holder
is required to pay a non-refundable premium, which represents the purchase price
of the option. The holder of an option can lose the entire amount of the
premium, plus related transaction costs, but not more. Upon exercise of the
option, the holder is required to pay the purchase price of the underlying
security in the case of a call option, or deliver the security in return for the
purchase price in the case of a put option.
Prior to exercise or expiration, an option position may be terminated only
by entering into a closing purchase or sale transaction. This requires a
secondary market on the exchange on which the position was originally
established. While the Portfolio would establish an option position only if
there appears to be a liquid secondary market therefor, there can be no
assurance that such a market will exist for any particular option contract at
any specific time. In that event, it may not be possible to close out a position
held by the Portfolio, and the Portfolio could be required to purchase or sell
the instrument underlying an option, or make or receive a cash settlement. The
inability to close out option positions also could have an adverse impact on the
Portfolio's ability effectively to hedge its portfolio.
Each exchange on which option contracts are traded has established a number
of limitations governing the maximum number of positions which may be held by a
trader, whether acting alone or in concert with others. The Investment Manager
does not believe that these trading and position limits would have an adverse
impact on the possible use of hedging strategies by the Portfolio.
The approval of the Fund and of the other investors in the Portfolio is not
required to change the investment objective or any of the non-fundamental
investment policies discussed above, including those concerning security
transactions.
Investment Restrictions
The Trust (on behalf of the Fund) and the Portfolio have each adopted the
following policies which may not be changed without approval by holders of a
"majority of the outstanding shares" of the Fund or the Portfolio, respectively,
which, as used in this Statement of Additional Information, means the vote of
the lesser of (i) 67% or more of the outstanding "voting securities" of the Fund
or the Portfolio, respectively, present at a meeting, if the holders of more
than 50% of the outstanding "voting securities" of the Fund or the Portfolio,
respectively, are present or represented by proxy, or (ii) more than 50% of the
outstanding "voting securities" of the Fund or the Portfolio, respectively. The
term "voting securities" as used in this paragraph has the same meaning as in
the Investment Company Act of 1940, as amended (the "1940 Act").
Except as described below, whenever the Trust is requested to vote on a
change in the investment restrictions of the Portfolio, the Trust will hold a
meeting of the shareholders of the Fund and will cast its vote proportionately
as instructed by the Fund's shareholders. However, subject to applicable
statutory and regulatory requirements, the Trust would not request a vote of
shareholders of the Fund
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<PAGE>
with respect to (a) any proposal relating to the Portfolio, which proposal, if
made with respect to the Fund, would not require the vote of the shareholders of
the Fund, or (b) any proposal with respect to the Portfolio that is identical in
all material respects to a proposal that has previously been approved by
shareholders of the Fund. Any proposal submitted to holders in the Portfolio,
and that is not required to be voted on by shareholders of the Fund, would,
nevertheless, be voted on by the Trustees of the Trust.
Neither the Fund nor the Portfolio may:
(1) borrow money, except that as a temporary measure for extraordinary
or emergency purposes either the Fund or the Portfolio may borrow an amount not
to exceed 1/3 of the current value of the net assets of the Fund or the
Portfolio, respectively, including the amount borrowed (moreover, neither the
Fund nor the Portfolio may purchase any securities at any time at which
borrowings exceed 5% of the total assets of the Fund or the Portfolio,
respectively, taken in each case at market value) (it is intended that the
Portfolio would borrow money only from banks and only to accommodate requests
for the withdrawal of all or a portion of a beneficial interest in the Portfolio
while effecting an orderly liquidation of securities);
(2) purchase any security or evidence of interest therein on margin,
except that either the Fund or the Portfolio may obtain such short-term credit
as may be necessary for the clearance of purchases and sales of securities and
except that either the Fund or the Portfolio may make deposits of initial
deposit and variation margin in connection with the purchase, ownership, holding
or sale of options;
(3) write any put or call option or any combination thereof, provided
that this shall not prevent (i) the purchase, ownership, holding or sale of
warrants where the grantor of the warrants is the issuer of the underlying
securities, or (ii) the purchase, ownership, holding or sale of options on
securities;
(4) underwrite securities issued by other persons, except that the Fund
may invest all or any portion of its assets in the Portfolio and except insofar
as either the Fund or the Portfolio may technically be deemed an underwriter
under the 1933 Act in selling a security;
(5) make loans to other persons except (a) through the lending of
securities held by either the Fund or the Portfolio and provided that any such
loans not exceed 30% of its total assets (taken in each case at market value),
or (b) through the use of repurchase agreements or the purchase of short-term
obligations and provided that not more than 10% of its net assets will be
invested in repurchase agreements maturing in more than seven days; for
additional related restrictions, see paragraph (6) immediately following;
(6) invest in securities which are subject to legal or contractual
restrictions on resale (other than repurchase agreements maturing in not more
than seven days and other than securities which may be resold pursuant to Rule
144A under the 1933 Act if the Board of Trustees determines that a liquid market
exists for such securities) if, as a result thereof, more than 10% of its net
assets (taken at market value) would be so invested (including repurchase
agreements maturing in more than seven days), except that the Fund may invest
all or any portion of its assets in the Portfolio;
(7) purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity contracts in
the ordinary course of business (the Fund and Portfolio reserve the freedom of
action to hold and to sell real estate acquired as a result of the ownership of
securities by the Fund or the Portfolio);
(8) make short sales of securities or maintain a short position, unless
at all times when a short position is open the Fund or the Portfolio, as
applicable, owns an equal amount of such securities or
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<PAGE>
securities convertible into or exchangeable, without payment of any further
consideration, for securities of the same issue as, and equal in amount to, the
securities sold short, and unless not more than 5% of the Fund's or the
Portfolio's, as applicable, net assets (taken in each case at market value) is
held as collateral for such sales at any one time;
(9) issue any senior security (as that term is defined in the 1940 Act)
if such issuance is specifically prohibited by the 1940 Act or the rules and
regulations promulgated thereunder, except as appropriate to evidence a debt
incurred without violating paragraph (1) above;
(10) as to 75% of its assets, purchase securities of any issuer if such
purchase at the time thereof would cause more than 5% of the Portfolio's or the
Fund's, as applicable, assets (taken at market value) to be invested in the
securities of such issuer (other than securities or obligations issued or
guaranteed by the United States or any agency or instrumentality of the United
States), except that for purposes of this restriction the issuer of an option
shall not be deemed to be the issuer of the security or securities underlying
such contract and except that the Fund may invest all or any portion of its
assets in the Portfolio; or
(11) invest more than 25% of its assets in any one industry unless the
stocks in a single industry were to comprise more than 25% of the Domini Social
Index, in which case the Portfolio or the Fund, as applicable, will invest more
than 25% of its assets in that industry, and except that the Fund may invest all
of its assets in the Portfolio.
Percentage Restrictions
If a percentage restriction or rating restriction on investment or
utilization of assets set forth above or referred to in the Prospectus 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 value of the securities held
by the Fund or the Portfolio or a later change in the rating of a security held
by the Fund or the Portfolio will not be considered a violation of policy;
provided that if at any time the ratio of borrowings of the Fund to the net
asset value of the Fund exceeds the ratio permitted by Section 18(f) of the 1940
Act, the Fund will take the corrective action required by Section 18(f).
3. PERFORMANCE INFORMATION
The Trust will calculate the Fund's total rate of return for any period
by (a) dividing (i) the sum of the net asset value per share on the last day of
the period and the net asset value per share on the last day of the period of
shares purchasable with dividends and capital gains declared during such period
with respect to a share held at the beginning of such period and with respect to
shares purchased with such dividends and capital gains distributions, by (ii)
the public offering price per share (i.e., net asset value) on the first day of
such period, and (b) subtracting 1 from the result. Any annualized total rate of
return quotation will be calculated by adding 1 to the period total rate of
return quotation calculated above, raising such sum to a power which is equal to
365 divided by the number of days in such period, and subtracting 1 from the
result.
Total rate of return information with respect to the Domini Social
Index will be computed in the same fashion as set forth above with respect to
the Fund, except that for purposes of this computation an investment will be
assumed to have been made in a portfolio consisting of all of the stocks
comprising the DSI weighted in accordance with the weightings of the stocks
comprising the DSI index. Performance information with respect to the DSI will
not take into account brokerage commission and other transaction costs which
will be incurred by the Portfolio.
Historical performance 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
-5-
<PAGE>
which are presently in effect were deducted during such periods, as permitted by
applicable Securities and Exchange Commission ("SEC") staff interpretations. The
table that follows sets forth historical average annual total return information
for the periods indicated:
Average Annual Total Returns
For periods ending July 31, 1999 Past 1 year Past 5 years Life of Fund (1)
- -------------------------------- ----------- ------------ ------------
DEVCAP Shared Return Fund 21.03% n/a 25.67%
(1) The Fund commenced operations on October 19, 1995.
4. DETERMINATION OF NET ASSET VALUE;
VALUATION OF PORTFOLIO SECURITIES
The net asset value of each share of the Fund is determined each day on
which the NYSE is open for trading ("Fund Business Day"). (As of the date of
this Statement of Additional Information, the NYSE is open for trading every
weekday except for the following holidays: New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day). This determination of net asset value
of shares of the Fund is made once during each such day as of the close of the
NYSE by dividing the value of the Fund's net assets (i.e., the value of its
investment in the Portfolio and any other assets less its liabilities, including
expenses payable or accrued) by the number of shares outstanding at the time the
determination is made. Purchases and redemptions will be effected at the time of
determination of net asset value next following the receipt of any purchase or
redemption order deemed to be in good order. See the "Buying and Selling Shares"
section in the Prospectus.
The value of the Portfolio's net assets (i.e., the value of its
securities and other assets less its liabilities, including expenses payable or
accrued) is determined at the same time and on the same day as the Fund
determines its net asset value per share. The net asset value of the Fund's
investment in the Portfolio is equal to the Fund's pro rata share of the total
investment of the Fund and of other investors in the Portfolio less the Fund's
pro rata share of the Portfolio's liabilities. 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.
A determination of value used in calculating net asset value must be a
fair value determination made in good faith utilizing procedures approved by the
Portfolio's Board of Trustees. While no single standard for determining fair
value exists, as a general rule, the current fair value of a security would
appear to be the amount which the Portfolio could expect to receive upon its
current sale. Some, but not necessarily all, of the general factors which may be
considered in determining fair value include: (i) the fundamental analytical
data relating to the investment; (ii) the nature and duration of restrictions on
disposition of the securities; and (iii) an evaluation of the forces which
influence the market in which these securities are purchased and sold. Without
limiting or including all of the specific factors which may be considered in
determining fair value, some of the specific factors include: type of security,
financial statements of the issuer, cost at date of purchase, size of holding,
discount from market value, value of unrestricted securities of the same class
at the time of purchase, special reports prepared by
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<PAGE>
analysts, information as to any transactions or offers with respect to the
security, existence of merger proposals or tender offers affecting the security,
price and extent of public trading in similar securities of the issuer or
comparable companies, and other relevant matters.
Interest income on short-term obligations held by the Portfolio is
determined on the basis of interest accrued less amortization of premium.
5. MANAGEMENT OF THE TRUST AND THE PORTFOLIO
The Trustees and officers of the Trust and the Portfolio and their
principal occupations during the past five years are set forth below. Their
titles may have varied during that period. Asterisks indicate those Trustees and
officers who are "interested persons" (as defined in the 1940 Act) of the Trust
or the Portfolio, as applicable. Unless otherwise indicated below, the address
of the Trust is DEVCAP Shared Return Fund, 209 West Fayette Street, Baltimore,
Maryland 21201.
Trustees of the Trust
STEPHEN D. CASHIN (42) -- Trustee of the Trust; Currently Managing
Director of Modern Africa Fund Managers LLC, Vice President (Corporate Finance),
Equator Bank (from 1993 to March, 1997); Vice President (East Africa
Representative), Equator Bank (prior to 1993).
GILBERT H. CRAWFORD* (42) -- Trustee of the Trust; Alternate Director,
PROFUND (since September, 1995); President of Development Capital Fund
(November, 1992 to June 1997); Executive Director, Seed Capital Development
Fund, Ltd. (since September, 1991).
DONALD CARCIERI (57) -- Trustee of the Trust; President and Chief
Executive Officer, Cookson America, Inc. (1986-1996); Director, Catholic Relief
Services Corporate Leadership Council (since 1996).
Trustees of the Portfolio
AMY L. DOMINI* (49) -- 230 Congress Street, Boston, Massachusetts
02110; Chair, President and Trustee of the Portfolio, the Domini Social Equity
Fund, and the Domini Institutional Trust; Managing Principal of DSIL; Officer of
Kinder, Lydenberg, Domini & Co., Inc.; Private Trustee, Loring, Wolcott &
Coolidge (since 1987); Trustee, Episcopal Church Pension Fund; Former Member,
Governing Board, Interfaith Center on Corporate Responsibility; Former Trustee,
National Association Community Loan Funds.
JULIA ELIZABETH HARRIS (51) -- 54 Burroughs Street, Jamaica Plain,
Massachusetts 02130; Vice President, UNC Partners, Inc. (since 1990); Director
and Treasurer, Boom Times, Inc. (since 1997); Director and Chair of Board of
Directors. The Green Book, Inc. (1992-1995); Trustee, Domini Institutional
Trust.
KIRSTEN S. MOY (52) -- 151 North Michigan Avenue, Suite 1209, Chicago,
Illinois 60601; Consultant, Project Director and Principal Researcher, Community
Development Innovation and Infrastructure Initiative (since December 1998); RDFI
Rating System Advisory Board Member, National Community Capital Association
(since 1999); Member, Community Economic Development Board of Overseers, New
Hampshire College (since November 1998); Advisory Group Member, Shorebank
Liquidity Project (since 1999); Consultant, Social Investment Forum, Community
Development Project (June 1998-December 1998); Director, Community Development
Financial Institutions Fund, U.S. Department of the Treasury (October 1995 -
October 1997); Senior Vice President and Portfolio Manager, Equitable Real
Estate Investment Management (prior to 1995); Trustee, Domini Institutional
Trust.
WILLIAM C. OSBORN (55) -- 115 Buckminster Road, Brookline,
Massachusetts 02445; Consultant, Arete Corporation; Manager, Venture Investment
Management Company LLC (prior to 1999); Trustee, Domini Institutional Trust;
Vice President and General Manager, TravElectric Services Corp (prior to 1995);
President, Environmental Technologies (prior to 1993); Director, Evergreen Solar
Inc.; Director, Conservation Services Group; Director, Fingerlakes Aquaculture
LLC; Director, Surgical Sealants, Inc; Director, World Power Technologies, Inc.
KAREN PAUL (55) -- 4050 Park Avenue, Miami, Florida 33133; Associate
Dean and Professor of Business Environment, Florida International University;
Partner, Trinity Industrial Technology (since 1995); Director, Center for
Management in the Americas (since 1997); and Co- Director, Center for Global
Business (since 1998); Trustee Domini Institutional Trust.
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<PAGE>
GREGORY A. RATLIFF (39) -- 1712 Carmen Avenue, Chicago, Illinois 60640;
Director, Access to Economic Opportunity, John D and Catherine T. MacArthur
Foundation (since 1997); Associate Director, Program-Related Investments, John
D. and Catherine T. MacArthur Foundation (1993-1997); Trustee, Domini
Institutional Trust.
TIMOTHY SMITH (56) -- 475 Riverside Drive, New York, New York 10115;
Executive Director, Interfaith Center on Corporate Responsibility (since 1974);
Trustee, Calvert New Africa Fund (since 1994); Trustee, Domini Institutional
Trust.
FREDERICK C. WILLIAMSON (85) -- 5 Roger Williams Green, Providence,
Rhode Island 02904; Treasurer and Trustee, RIGHA (charitable foundation
supporting healthcare needs) (since 1990); Chairman, Rhode Island Historical
Preservation and Heritage Commission (since 1995); Trustee, National Parks and
Conservation Commission (since 1986); Trustee, National Park Trust (since 1991);
Trustee, Domini Institutional Trust.
Officers of the Trust
JOSEPH ST. CLAIR -- President of the Trust (since September 1997);
President of Development Capital Fund (since June 1997); Director of Development
Capital Fund (since December 1994); Director of Internal Audit, Catholic Relief
Services (since May 1993); Departmental Vice-President, Alex. Brown Incorporated
(prior to 1993).
JAMES R. ARNOLD -- Assistant Secretary of the Trust (since December
1997); Senior Administration Services Manager, Sunstone Financial Group, Inc.
(since January, 1997); Secretary and Treasurer, The Primary Trend Fund, Inc.
(since September, 1986) and The Primary Income Funds, Inc. (since September,
1989); Vice President, Arnold Investment Counsel, Inc. (prior to January, 1997);
Officers of the Portfolio
PETER D. KINDER* -- Vice President of the Portfolio; President of
Kinder, Lydenberg, Domini & Co., Inc., (since 1998). Member, Domini Social
Investments, LLC (since 1997). Mr. Kinder is married to Ms. Domini.
CAROLE M. LAIBLE* -- Secretary and Treasurer of the Portfolio (since
1997); Financial Compliance Officer of Domini Social Investments LLC (since
1997); Financial Compliance Officer, Fundamental Shareholder Services, Inc.
(from 1994-1997); Financial Compliance Officer and Secretary of investment
companies within Fundamental Family of Funds (1994-1997); General Service
Manager, McGladrey & Pullen LLP (certified public accountants) prior to 1994.
STEVEN D. LYDENBERG* -- Vice President of the Portfolio; Director of
Research of Kinder, Lydenberg, Domini & Co., Inc.(since 1990); Member, Domini
Social Investments, LLC (since 1997).
SIGWARD M. MOSER* -- Vice President of the Portfolio (since 1997);
President of Communications House International, Inc.; Director of Financial
Communications Society; Managing Principal, Domini Social Investments LLC (since
1997).
DAVID P. WIEDER* -- Vice President of the Portfolio (since 1997);
Managing Principal, Domini Social Investments LLC (since 1997); President of
Fundamental Shareholder Services, Inc.
The Trustees who are not "interested persons" (the "Disinterested
Trustees") of the Trust as defined by the 1940 Act are separate from the
Disinterested Trustees of the Portfolio. Any conflict of interest between the
Trust and the Portfolio will be resolved by the Trustees of the Trust and the
Portfolio in accordance with their fiduciary obligations and in accordance with
the 1940 Act.
As of August 31, 1999, the following shareholders of record owned 5% or
more of the outstanding shares of the Fund: Catholic Relief Services 59.91%. As
of the same date, the officers and Trustees of the Trust and the Portfolio as a
group owned less than 1% of the Fund's outstanding shares.
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<PAGE>
Trustee Compensation
The Trustees of the Trust receive no compensation for serving as
trustees of the Trust. The Trustees of the Portfolio are paid annual fees as
follows for serving as trustees of the Portfolio. The Trustees of the Trust and
the Portfolio are reimbursed for expenses incurred in connection with service as
a trustee. The following tables provide information related to compensation and
benefits paid to the Trustees of the Fund and the Portfolio for the fiscal year
ended July 31, 1999.
Trustees of the Trust
<TABLE>
<CAPTION>
Estimated
Aggregate Compensation
Compensation Pension or
from the Trust Estimated Total Retirement
and the Portfolio from the Trust Benefits Estimated
For the Fiscal for the Fiscal Accrued as Part Annual Benefits
Year Ended Year Ended of upon
July 31, 1999 July 31, 1999 Fund Expenses Retirement
------------- ------------- ------------- ----------
<S> <C> <C> <C> <C>
Stephen D. Cashin, Trustee None None None None
Gilbert H. Crawford, Trustee None None None None
Donald Carcieri, Trustee None None None None
</TABLE>
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<PAGE>
Portfolio Trustees
<TABLE>
<CAPTION>
Total
Compensation
Aggregate from the
Compensation Trust and the
from the Pension or Portfolio Paid to
Portfolio Compensation Retirement Trustees for the
for the Fiscal Benefits Accrued Estimated Fiscal
Year Ended as Part of Annual Benefits Year Ended
July 31, 1999 Fund Expenses upon Retirement July 31, 1999
------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Amy L. Domini, None None None None
Chair, President and
Trustee
Julia Elizabeth Harris, $____ None None $___
Trustee
Kirsten S. Moy, $____ None None $___
Trustee
William C. Osborn, $____ None None $___
Trustee
Karen Paul, $____ None None $___
Trustee
Allen M. Mayes**, $____ None None $___
Trustee
Gregory a. Ratliff, $____ None None $___
Trustee
Timothy Smith, $____ None None $___
Trustee
Frederick C. Williamson, $____ None None $___
Trustee
**Mr. Mayes no longer serves as a Trustee of the Portfolio.
</TABLE>
Investment Manager and Submanager
The Investment Manager -- Domini Social Investments, LLC ("DSIL") --
provides investment advice to the Portfolio pursuant to a Management Agreement
(the "Management Agreement"). Pursuant to the Management Agreement, DSIL will
have authority to determine from time to time what securities are purchased,
sold or exchanged, and what portion of assets of the Portfolio are held
uninvested. DSIL will also perform such administrative and management tasks as
may from time to time be reasonably requested, including: (i) maintaining office
facilities and furnishing clerical services necessary for maintaining the
organization of the Portfolio and for performing administrative and management
functions; (ii) supervising the overall administration of the Portfolio,
including negotiation of contracts and fees with and monitoring of performance
and billings of the Portfolio's transfer agent, shareholder servicing agents,
custodian and other independent contractors or agents; (iii) overseeing (with
the advice of Portfolio's counsel) the preparation of and, if applicable, filing
all documents required for compliance by the Portfolio with applicable laws and
regulations, including registration statements, prospectuses and statements of
additional information, semi-annual and annual reports to shareholders, proxy
statements and tax returns; (iv) preparing agendas and supporting documents for
and minutes of meetings of Trustees, committees of Trustees and shareholders;
and (v)
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<PAGE>
arranging for maintenance of the books and records of the Portfolio. The
Investment Manager furnishes at its own expense all facilities and personnel
necessary in connection with providing these services. The Management Agreement
will continue in effect if such continuance is specifically approved at least
annually by the Portfolio's Board of Trustees or by a majority vote of the
outstanding voting securities of the Portfolio at a meeting called for the
purpose of voting on the Management Agreement (with the vote of each investor in
the Portfolio being in proportion to the amount of their investment), and, in
either case, by a majority of the Portfolio's Trustees who are not parties to
the Management Agreement or interested persons of any such party at a meeting
called for the purpose of voting on the Management Agreement.
The Portfolio pays DSIL an annual management fee of 0.20% of the
Portfolio's average daily net assets for the services and facilities furnished
to the Portfolio. The Portfolio's investment management agreement describes the
management fee, which is accrued daily and paid monthly, and other expenses that
the Portfolio must pay. DSIL has agreed to waive its fee to the extent necessary
to ensure that aggregate operating expenses of the Portfolio (excluding
brokerage fees and commission, interest, taxes and other extraordinary expenses)
do not exceed 0.20% of the average daily net assets of the Portfolio. This
expense waiver is voluntary and may be reduced or terminated at any time.
For the fiscal year ended July 31, 1999, the Investment Manager
received management fees under the Management Agreement in the amount of
$______. For the fiscal period October 22, 1997 to July 31, 1998, the Investment
Manager received management fees under the Management Agreement in the amount of
$701,774.
The Management Agreement provides that the Investment Manager may
render services to others and may permit other investment companies in addition
to the Portfolio to use the name "Domini" or "Domini 400 Social Index" in their
names. DSIL may employ, at its own expense or may request that the Portfolio
employ (subject to the requirements of the 1940 Act) one or more sub-advisors or
submanagers, subject to DSIL's supervision. Pursuant to an agreement with the
Portfolio, if DSIL ceases to manage the Portfolio, the Portfolio will be
required to discontinue the use of such service marks. The Management Agreement
shall remain in effect, provided its continuance is specifically approved at
least annually (i) by the vote of a majority of the Trustees of the Portfolio
who are not " interested persons" of the Portfolio or of DSIL at a meeting
specifically called for the purpose of voting on such approval, and (ii) by the
Board of Trustees of the Portfolio or by vote of a majority of the outstanding
voting securities of the Portfolio. The Management Agreement also provides that
it may be terminated without penalty on not more than 60 days' nor less than 30
days' written notice by the Portfolio when authorized either by majority vote of
the Fund and of the other investors in the Portfolio (with the vote of each in
the Portfolio being in proportion to the amount of its investment) or by a vote
of a majority of its Board of Trustees, or by the Investment Manager, and will
automatically terminate in the event of its assignment. The Management Agreement
provides that neither the Investment Manager nor its personnel shall be liable
for any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in its services to the Portfolio, except
for willful misfeasance, bad faith or gross negligence or reckless disregard of
its or their obligations and duties under the Management Agreement.
DSIL is a Massachusetts limited liability company with offices at 11
West 25th Street, 7th Floor, New York, New York 10010, and is registered as an
investment adviser under the Investment Advisers Act of 1940 (the "Advisers
Act"). The names of the principal owners of DSIL and their relationship to the
Portfolio is as follows: Amy L. Domini, Chairman of the Board and President of
the Portfolio, is the Investment Manager and principal executive officer of
DSIL. Ms. Domini is also Chief Executive Officer, Secretary, Treasurer and a
co-worker of KLD which licenses the Domini Social Index to DSIL. Peter D.
Kinder, Vice President of the Portfolio, is a co-owner of DSIL. Mr. Kinder is
also President and a co-owner of KLD. Sigward M. Moser, Vice President of the
Portfolio, is a co-owner of DSIL. David P. Wieder, Vice President of the
Portfolio is a co-owner of DSIL. Mr. Wieder is also
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<PAGE>
President and an owner of Fundamental Shareholder Services, Inc. ("FSSI"), a
registered transfer agent which served as the Portfolio's transfer agent from
1995 to July, 1998.
Prior to October 22, 1997, pursuant to an investment advisory agreement
(the "KLD Advisory Agreement"), KLD served as investment adviser to the
Portfolio and furnished an investment program by determining the stocks to be
included in the DSI. KLD furnished at its own expense all facilities and
personnel necessary in connection with providing these services. For its
services under its investment advisory agreement with the Portfolio, KLD was
entitled to receive from the Portfolio a fee accrued daily and paid monthly at
an annual rate equal to 0.025% of the Portfolio's average daily net assets. For
the fiscal year ended July 31, 1997, KLD received advisory fees of $46,528. For
the fiscal period July 31, 1997 to October 22, 1997 KLD received advisory fees
of $17,385.
Mellon Equity manages the assets of the Portfolio pursuant to the
Investment Submanagement Agreement (the "Submanagement Agreement"). The
Submanager furnishes at its own expense all services, facilities and personnel
necessary in connection with managing the Portfolio's investments and effecting
securities transactions for the Portfolio. The Submanagement Agreement will
continue in effect if such continuance is specifically approved at least
annually by the Portfolio's Board of Trustees or by a majority of the
outstanding voting securities in the Portfolio at a meeting called for the
purpose of voting on the Submanagement Agreement (with the vote of each investor
in the Portfolio being in proportion to the amount of its investment), and, in
either case, by a majority of the Portfolio's Trustees who are not parties to
the Submanagement Agreement or interested persons of any such party at a meeting
called for the purpose of voting on the Submanagement Agreement.
The Submanagement Agreement provides that the Submanager may render
services to others. The Submanagement Agreement is terminable without penalty
upon not more than 60 days' nor less than 30 days' written notice by the
Portfolio when authorized either by majority of the outstanding voting
securities in the Portfolio (with the vote of each investor in the Portfolio
being in proportion to the amount of its investment) or by a vote of the
majority of its Board of Trustees, or by the Investment Manager, with the
consent of the Trustees and may be terminated by the Submanager on not less than
90 days' written notice to the Investment Manager and the Trustees, and will
automatically terminate in the event of its assignment.
As compensation for its investment submanagement services, DSIL pays
Mellon Equity an annual submanagement fee of 0.10% of the Portfolio's average
daily net assets. For the fiscal year ended July 31, 1999, Mellon Equity
received submanagement fees under the Submanagement Agreement in the amount of
$_____.
Prior to October 22, 1997, Mellon Equity served as investment manager
and managed the assets of the Portfolio on a daily basis pursuant to a
management agreement (the "Mellon Equity Management Agreement"). The aggregate
investment management and administration fees under the Mellon Equity Management
Agreement were equal to 0.15% of the Portfolio's average daily net assets.
For the fiscal year period July 31, 1997 through October 22, 1997, the
Portfolio incurred $86,354 in management fees pursuant to the Mellon Equity
Management Agreement. For the fiscal year ended July 31,1997, the Portfolio
incurred $182,885 in management fees pursuant to the Mellon Equity Management
Agreement.
Mellon Equity is a Pennsylvania business trust founded in 1987, which
is beneficially owned by Mellon Bank, N.A. (99% beneficial interest) and MMIP
(1% beneficial interest), a wholly owned subsidiary of Mellon Bank Corporation
("Mellon Bank"). Mellon Equity is a professional investment counseling firm that
provides investment management services to the equity and balanced pension,
public fund, and profit-sharing investment management markets, and is a
registered investment adviser under the Advisers Act. Mellon Bank's predecessor
organization managed domestic equity, tax-exempt
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and institutional pension accounts since 1947. The address of Mellon Equity and
each of the principal executive officers and directors of Mellon Equity is 500
Grant Street, Suite 3700, Pittsburgh, Pennsylvania 15258.
The Submanagement Agreement provides that neither the Submanager shall
be liable for any error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in its services to the
Portfolio, except for willful misfeasance, bad faith or gross negligence or
reckless disregard for its or their obligations and duties under the Management
Agreement.
Administrator
Pursuant to an Administrative Services Agreement, dated November 4,
1997, (the "Administrative Services Agreement") the Trust's Administrator --
Sunstone Financial Group, Inc. -- provides the Trust with general office
facilities and supervises the overall administration of the Trust, 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; the preparation and filing of all documents required for
compliance by the Trust with applicable laws and regulations; and arranging for
the maintenance of books and records of the Trust. The Administrator provides
persons satisfactory to the Board of Trustees of the Trust to serve as officers
of the Trust. Such officers, as well as certain other employees and Trustees of
the Trust, may be directors, officers or employees of the Administrator or its
affiliates. For these services and facilities, Sunstone receives fees from the
Trust computed daily and paid monthly at an annual rate of 0.15% of the first
$50,000,000 of average daily net assets, 0.08% on the next $50,000,000 of
average daily net assets, 0.05% on the next $50,000,000 of average daily net
assets and 0.03% on average daily net assets in excess of $150,000,000, subject
to a current minimum annual fee of $30,000.
The Administrative Services Agreement provides that Sunstone may render
administrative services to others. The Administrative Services Agreement also
provides that neither the Administrator nor its personnel shall be liable for
any error of judgment or mistake of law or for any act or omission in the
administration or management of the Trust, except for willful misfeasance, bad
faith or gross negligence in the performance of its or their duties or by reason
of reckless disregard of its or their obligations and duties under the
Administrative Services Agreement.
In addition to services provided to the Trust, Sunstone and its
affiliates provide administration, transfer agent and/or distribution services
to 22 fund families representing over $20 billion in assets.
For the fiscal period November 4, 1997 through July 31, 1998 and the
fiscal year ended July 31, 1999 Sunstone received $17,192 and $27,807,
respectively, in administrative fees from the Trust.
Sunstone replaced Signature Broker-Dealer Services, Inc. ("Signature")
as the Trust's Administrator, effective November 4, 1997. For the fiscal year
ended July 31, 1997 and the fiscal period August 1, 1997 to November 4, 1997
Signature received $156,868 and $17,385, respectively, in administrative fees
from the Trust.
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The Fund may from time to time enter into agreements with various
banks, trust companies, broker-dealers or other financial organizations to
provide administrative services for the Fund, such as maintaining shareholder
accounts and records.
Fund Sponsor
The sponsor of the Fund is DEVCAP Non-Profit. DEVCAP Non-Profit is a
non-profit, tax-exempt 501(c)(3) corporation that functions as a joint venture
with another non-profit organization, Catholic Relief Services, Inc. ("CRS").
DEVCAP Non-Profit was created in 1992 in order to provide fund-raising and other
support to non-profit organizations dedicated to supporting micro-enterprise and
other economic development programs in developing countries. Micro-enterprise
development programs assist underprivileged people by providing direct financing
and technical support, which would otherwise be unavailable through normal
business channels, for their business enterprises.
Each year, DEVCAP Non-Profit will direct the shareholder contributions
made pursuant to the Fund's Charitable Contribution Program to CRS and other
non-profit organizations. Shareholder contributions are generally allocated by
agreement between DEVCAP Non-Profit and CRS. CRS was founded by the Catholic
Bishops of the United States and funds a "village banking" program which
provides financial services to approximately 150,000 underprivileged people in
24 countries throughout the world. CRS provides the operational funding for
DEVCAP Non-Profit and generally receives all the donations generated by the
Fund's Charitable Contribution Program. At their discretion, DEVCAP Non-
Profit's Board of Directors may also use shareholder contributions to support
programs of other non-profit organizations.
In addition to its primary fund-raising activities, DEVCAP Non-Profit
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 Non-Profit is independent of the Investment Manager, Submanager,
Distributor, Administrator and all other service providers of the Fund. While
DEVCAP Non-Profit personnel will encourage donations through the Fund and DEVCAP
Non-Profit itself incurs costs in these efforts, DEVCAP Non-Profit and DEVCAP
Non-Profit personnel receive no compensation from the Fund or the Portfolio.
DEVCAP Non-Profit does not provide any investment advisory, management or other
investment support services to the Fund or the Portfolio. DEVCAP Non-Profit does
provide marketing, administrative and shareholder support services to the Fund.
Prior to October 22, 1997, KLD served as sponsor of the Portfolio.
Pursuant to a sponsorship agreement, dated November 6, 1996, KLD was responsible
for the ordinary operating expenses of the Portfolio (other than brokerage fees,
commissions, interest, taxes and extraordinary expenses) and provided the
Portfolio with administrative personnel and services necessary to operate the
Portfolio. For these services and facilities, KLD received from the Portfolio a
fee accrued daily and paid monthly at an annual rate equal to 0.20% of the
average daily net assets of the Portfolio. The KLD Sponsorship Agreement was
terminated, effective October 22, 1997. KLD continues to determine and monitor
the composition of the DSI and provide other services relating to socially
responsible investments pursuant to a license agreement between DSIL and KLD.
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The Trustees of the Trust 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.
Distribution Plan
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, the Distributor acts as agent of the Fund
in connection with the offering of shares of the Fund pursuant to a Distribution
Agreement. The Distributor 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.
Under the Distribution Plan, the Distributor 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 the Distributor, 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.
The Distribution Plan will continue in effect indefinitely if such
continuance is specifically approved at least annually by a vote of both a
majority of the Trust's Trustees and a majority of the Trust's Trustees who are
not "interested persons of the Trust" and who have no direct or indirect
financial interest in the operation of the Distribution Plan or in any agreement
related to such Plan ("Independent Trustees"). The Distributor 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. The Distribution Plan further provides that the selection and nomination
of the Trust's Independent Trustees shall be committed to the discretion of the
Independent Trustees. The Distribution Plan may be terminated at any time by a
vote of a majority of the Trust's Independent Trustees or by a vote of the
shareholders of the Fund. The Distribution Plan may not be amended to increase
materially the amount of permitted expenses thereunder without the approval of
shareholders and may not be materially amended in any case without a vote of the
majority of both the Trust's Trustees and the Trust's Independent Trustees. The
Distributor will preserve copies of any plan, agreement or report made pursuant
to the Distribution Plan for a period of not less than six years from the date
of the Distribution Plan, and for the first two years the Distributor will
preserve such copies in an easily accessible place.
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Distributor
The Trust has entered into a Distribution Agreement, dated November 25,
1997 with CBIS. For the fiscal period November 25, 1997 to July 31, 1998, the
Trust reimbursed CBIS in the amount of $0. For the fiscal year ended July 31,
1999 the Trust reimbursed CBIS in the amount of $0. For the fiscal year ended
July 31, 1999, no payments were made by the Trust under the Distribution Plan
for any of the following: (i) advertising; (ii) the printing and mailing of
prospectuses to other than current shareholders; (iii) compensation to
underwriters; (iv) compensation to broker-dealers; (v) compensation to sales
personnel; and (vi) interest, carrying, or other finance charges.
CBIS Financial Services, Inc. replaced Signature as the Trust's
Distributor, effective November 26, 1997. For the fiscal year ended July 31,
1997 and the period July 31, 1997 to November 26, 1997, the Trust did not accrue
or pay any distribution fees to Signature.
Transfer Agent and Custodian
The Trust has entered into a Transfer Agency and Service Agreement,
dated August 3, 1998, with Sunstone pursuant to which Sunstone acts as the
Transfer Agent for the Fund. The Portfolio has entered into a Transfer Agency
Agreement with Investors Bank & Trust Company ("IBT"), pursuant to which IBT
acts as the Transfer Agent for the Portfolio. For its services, Sunstone will
receive such compensation as may from time to time be agreed upon by Sunstone
and the Fund, subject to an annual minimum fee of $20,000. Each Transfer Agent
maintains an account for each shareholder of the Fund or the Portfolio, performs
other transfer agency functions and acts as dividend disbursing agent for the
Fund and the Portfolio.
Pursuant to a Custodian Agreement, dated September 15, 1995, between
the Fund and IBT (the "Custodian"), IBT acts as custodian of the Fund's assets
(i.e., cash and the Fund's interest in the Portfolio). IBT also acts as
custodian of the Portfolio's assets pursuant to a Custodian Agreement. 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 depositories. 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, Sunstone 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.
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6. INDEPENDENT AUDITORS
KPMG LLP are the independent auditors for the Trust and the Portfolio,
providing audit services, tax return preparation, and assistance with the review
of filings with the SEC.
7. CHARITABLE CONTRIBUTION PROGRAM
The Fund is designed to enable an investor to share with charity,
specifically with DEVCAP NonProfit, 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 declare an intention to make an annual
donation to DEVCAP Non-Profit on his or her account application. Each year,
DEVCAP Non-Profit will direct the shareholder's donation to non-profit
organizations (primarily Catholic Relief Services, Inc.) working to improve the
welfare of underprivileged people 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 Non-Profit a different portion of
the shareholder's annual contribution basis, so long as the shareholder elects
to contribute 10%, 25%, 50%, 75% or 100% 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 the third week of November, 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 or by telephone on or before the second Friday
of that December, at the Fund's address for these purposes: DEVCAP Shared Return
Fund, P.O. Box 2152, Milwaukee, WI 53201-2152. The telephone number for these
purposes is (800) 371-2655, Option 3. 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 made by deducting shares in the Fund whose fair market
value is equal to the shareholder's annual contribution. The fair market value
of the Fund share donation will generally be tax deductible, as explained in
more detail under the "Taxation" Section of this Statement of Additional
Information.
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 second Friday of each December,
adjusted for redemptions, distributions and purchases. The shareholder's annual
contribution will be calculated by the Fund's transfer agent on or about the
second Friday of each December 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
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MINUS
Account value at (a) beginning of year or (b) date of initial investment
EQUALS SHAREHOLDER'S ANNUAL CONTRIBUTION BASIS
The shareholder's annual contribution is calculated by multiplying the
shareholder's annual contribution basis by the shareholder's contribution
election.
On or before the second Friday of each December, a shareholder's annual
contribution basis will be finalized using the above formula. 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 Non-Profit 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 net tax liability from their charitable contribution to
DEVCAP Non-Profit. The Board of Trustees believes no tax liability arises due to
donation of shares in the Fund to DEVCAP Non-Profit and that an investor will be
permitted to take an itemized tax deduction for the fair market value of the
donation so long as the investor has held the shares for more than 12 months on
the date of the donation. 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 that do not
itemize deductions on their Federal tax returns will not receive a Federal
deduction for donations to DEVCAP Non-Profit.
Shareholders desiring to make a contribution to DEVCAP Non-Profit
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
Non-Profit directly at 800-371-2655.
8. TAXATION
Each year the Fund intends to qualify and elect to be treated as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"). Provided the Fund qualifies as a "regulated
investment company" under the Code, and distributes all of its net investment
income and net 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 and will not be required to pay Massachusetts
income or excise taxes. If the Fund should fail to qualify as a "regulated
investment company" in any year, the Fund would incur a regular corporate
federal income tax upon its taxable income and would be required to pay
Massachusetts income and excise taxes. Additionally, Fund distributions would
generally be taxable as ordinary dividend income to the shareholders.
It is assumed that, (1) the Portfolio will be treated for federal
income tax purposes as a partnership and (2) for purposes of determining whether
the Fund satisfies the income and diversification requirements to maintain its
status as a regulated investment company, the Fund, as an investor in the
Portfolio, will be deemed to own a proportionate share of the Portfolio's assets
and will be deemed to be entitled to the Portfolio's income or loss attributable
to that share. The Portfolio has advised the Fund that it intends to conduct its
operations so as to enable its investors, including the Fund, to satisfy those
requirements.
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<PAGE>
Shareholders of the Fund normally will be required to pay federal
income taxes, and any state or local taxes, on distributions of net investment
income and net realized capital gains from the Fund. Dividends from ordinary
income and any distributions from net short-term capital gains are taxable to
shareholders as ordinary income for federal income tax purposes, whether the
distributions are made in cash or in additional shares. A portion of the Fund's
distributions from net investment income is normally eligible for the corporate
dividends received deduction if the recipient otherwise qualifies for that
deduction with respect to its holding of Fund shares. Availability of the
deduction for a particular corporate shareholder is subject to certain
limitations, and deducted amounts may be subject to the alternative minimum tax
and result in certain basis adjustments. Distributions of net capital gains
(i.e., the excess of net long-term capital gains over net short-term capital
losses), whether made in cash or in additional shares, are taxable to
shareholders as long-term capital gains for federal income tax purposes without
regard to the length of time the shareholders have held their shares.
Amounts not distributed on a timely basis in accordance with the
calendar year distribution requirement are subject to a nondeductible 4% excise
tax. To prevent imposition of the excise tax, the Fund must, and intends to,
distribute during each calendar year substantially all of its ordinary income
for that year and substantially all of its capital gain in excess of its capital
losses for that year, plus any undistributed ordinary income and capital gains
from previous years. Any Fund dividend that is declared in October, November, or
December of any calendar year, that is payable to shareholders of record in such
a month, and that is paid the following January will be treated as if received
by the shareholders on December 31 of the year in which the divided is declared.
The Fund will notify shareholders regarding the federal tax status of its
distributions after the end of each calendar year.
Any Fund distribution will have the effect of reducing the per share
net asset value of shares in the Fund by the amount of the distribution.
Shareholders purchasing shares shortly before the record date of any
distribution may thus pay the full price for the shares and then effectively
receive a portion of the purchase price back as a taxable distribution.
In general, any gain or loss realized upon a taxable disposition of
shares of the Fund by a shareholder that holds such shares as a capital asset
will be treated as long-term capital gain or loss if the shares have been held
for more than twelve months. Any gain or loss realized upon shares held for less
than 12 months will be treated as a short-term capital gain or loss. However,
any loss realized upon a disposition of shares in the Fund held for six months
or less will be treated as a long-term capital loss to the extent of any
distributions of net capital gain made with respect to those shares. Any loss
realized upon a disposition of shares may also be disallowed under rules
relating to wash sales.
The maximum tax rate for individual taxpayers on net long-term capital
gains (i.e., the excess of net long-term capital gain over net short-term
capital loss) is 20% for most assets held for more than 12 months at the time of
disposition. A lower rate of 18% will apply after December 31, 2000 for assets
held for more than 5 years. However, the 18% rate applies only to assets
acquired after December 31, 2000 unless the taxpayer elects to treat an asset
held prior to such date as sold for fair market value on January 1, 2001. In the
case of individuals whose ordinary income is taxed at a 15% rate, the 20% rate
for assets held for more than 12 months is reduced to 10% and the 18% rate for
assets held for more than 5 years is reduced to 8%.
As noted above, it is assumed that the Portfolio will be treated as a
partnership for federal income tax purposes. As such, the Portfolio is not
subject to federal income taxation. Instead, the Fund must take into account, in
computing its federal income tax liability, its share of the Portfolio's income,
gains, losses, deductions, credits and tax preference items, without regard to
whether it has received any cash distributions from the Portfolio. Withdrawals
by the Fund from the Portfolio generally will not result in the Fund recognizing
any gain or loss for federal income tax purposes, except that: (1) gain will be
recognized to the extent that any cash distributions exceed the basis of the
Fund's interest in the Portfolio prior to the distribution; (2) income or gain
will be realized if the withdrawal is in liquidation of the Fund's entire
interest in the Portfolio and includes a disproportionate share of any
unrealized receivables held by the
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Portfolio; and (3) loss will be recognized if the distribution is in liquidation
of that entire interest consisting solely of cash and/or unrealized receivables
and such distribution is less than the tax basis of the Fund's interest in the
Portfolio. The basis of the Fund's interest in the Portfolio generally equals
the amount of cash and the basis of any property that the Fund invests in the
Portfolio, increased by the Fund's share of income from the Portfolio and
decreased by the Fund's share of losses from the Portfolio and the amount of any
cash distributions and the basis of any property distributed from the Portfolio.
The Portfolio is organized as a New York trust. The Portfolio is not
subject to any income or franchise tax in the State of New York or the
Commonwealth of Massachusetts. The investment by the Fund in the Portfolio does
not cause the Fund to be liable for any income or franchise tax in the State of
New York.
Fund shareholders may be subject to state and local taxes on Fund
distributions to them. Shareholders are advised to consult with their tax
advisers with respect to the particular tax consequences.
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 Non-Profit through the Program will be entitled
to a tax deduction equal to the fair market value of the Fund shares donated in
the taxable year in which the donation is made provided the investor held such
shares for more than one year on the date of the donation. If shares are held
for one year or less, the investor may be able to deduct the cost of the Fund
shares donated. Under the Program, the charitable donation will be made on or
about the second Friday of each December, thus tracking the taxable year for
most individual investors in the Fund. The Fund will provide investors with the
documentation needed to substantiate this tax deduction. For more information
see the "Charitable Contribution Program" section in this Statement of
Additional Information.
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 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.
DEVCAP Non-Profit's partner, CRS, is recognized by the United States
Internal Revenue Service (the "IRS") as a tax-exempt, section 501(c)(3)
organization under the Code. CRS is not a "private foundation" within the
meaning of the Code. In addition, on October 18, 1995, DEVCAP Non-Profit
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 that are engaged solely in activities designed to support
other tax-exempt charitable organizations.
The Program has been structured so that investors are provided an
opportunity to donate to DEVCAP Non-Profit 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 Non-Profit 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 Non-Profit's filing for recognition as a section 501(c)(3)
organization, and the Fund believes that the granting of tax-exempt status to
DEVCAP Non-Profit represents approval of DEVCAP Non-Profit's activities,
including the Program, and confirmation that the donations are tax deductible.
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9. PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
Specific decisions to purchase or sell securities for the Portfolio are
made by a portfolio manager who is an employee of the Submanager and who is
appointed and supervised by its senior officers. Changes in the Portfolio's
investments are reviewed by its Board of Trustees. The portfolio manager of the
Portfolio may serve other clients of the Submanager in a similar capacity.
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. The Submanager attempts to achieve this result by selecting
broker-dealers to execute transactions on behalf of the Portfolio and other
clients of the Submanager on the basis of their professional capability, the
value and quality of their brokerage services, and the level of their brokerage
commissions. In the case of securities traded in the over-the-counter market
(where no stated commissions are paid but the prices include a dealer's markup
or markdown), the Submanager normally seeks to deal directly with the primary
market makers, unless in its opinion, best execution is available elsewhere. In
the case of securities purchased from underwriters, the cost of such securities
generally includes a fixed underwriting commission or concession. From time to
time, soliciting dealer fees are available to the Submanager on the tender of
the Portfolio's securities in so-called tender or exchange offers. Such
soliciting dealer fees are in effect recaptured for the Portfolio by the
Submanager. At present no other recapture arrangements are in effect. Consistent
with the foregoing primary consideration, the Conduct Rules of the National
Association of Securities Dealers, Inc. and such other policies as the Trustees
of the Portfolio may determine, the Submanager may consider sales of shares of
the Fund and of securities of other investors in the Portfolio as a factor in
the selection of broker-dealers to execute the Portfolio's securities
transactions.
Under the Submanagement Agreement and as permitted by Section 28(e) of
the Securities Exchange Act of 1934, the Submanager may cause the Portfolio to
pay a broker-dealer acting on an agency basis which provides brokerage and
research services to the Submanager or the Investment Manager an amount of
commission for effecting a securities transaction for the Portfolio in excess of
the amount other broker- dealers would have charged for the transaction if the
Submanager determines in good faith that the greater commission is reasonable in
relation to the value of the brokerage and research services provided by the
executing broker-dealer viewed in terms of either a particular transaction or
the Submanager's or the Investment Manager's overall responsibilities to the
Portfolio or to its other clients. Not all of such services are useful or of
value in advising the Portfolio.
The term "brokerage and research services" includes advice as to the
value of securities, the advisability of investing in, purchasing, or selling
securities, and the availability of securities or of purchasers or sellers of
securities; furnishing analyses and reports concerning issues, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts; and effecting securities transactions and performing functions
incidental thereto such as clearance and settlement. However, because of the
Portfolio's policy of investing in accordance with the Domini Social Index, the
Submanager and the Investment Manager currently intend to make only a limited
use of such brokerage and research services.
Although commissions paid on every transaction will, in the judgment of
the Submanager, be reasonable in relation to the value of the brokerage services
provided, commissions exceeding those which another broker might charge may be
paid to broker-dealers who were selected to execute transactions on behalf of
the Portfolio and the Submanager's or the Investment Manager's other clients, in
part for providing advice as to the availability of securities or of purchasers
or sellers of securities and services in effecting securities transactions and
performing functions incidental thereto such as clearance and settlement.
Certain broker-dealers may be willing to furnish statistical, research and other
factual information or services to the Submanager or the Investment Manager for
no consideration other than brokerage or underwriting commissions.
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The Submanager and the Investment Manager attempt to evaluate the
quality of research provided by brokers. The Submanager and the Investment
Manager sometimes use evaluations resulting from this effort as a consideration
in the selection of brokers to execute portfolio transactions. However, neither
the Submanager nor the Investment Manager is able to quantify the amount of
commissions which are paid as a result of such research because a substantial
number of transactions are effected through brokers which provide research but
which are selected principally because of their execution capabilities.
The fees that the Portfolio pays to the Submanager and the Investment
Manager will not be reduced as a consequence of the Portfolio's receipt of
brokerage and research services. To the extent the Portfolio's securities
transactions are used to obtain brokerage and research services, the brokerage
commissions paid by the Portfolio will exceed those that might otherwise be paid
for such portfolio transactions and research, by an amount which cannot be
presently determined. Such services may be useful and of value to the Submanager
or the Investment Manager in serving both the Portfolio and other clients and,
conversely, such services obtained by the placement of brokerage business of
other clients may be useful to the Submanager or the Investment Manager in
carrying out its obligations to the Portfolio. While such services are not
expected to reduce the expenses of the Submanager or the Investment Manager, the
Submanager or the Investment Manager would, through use of the services, avoid
the additional expenses which would be incurred if it should attempt to develop
comparable information through its own staff.
For the fiscal years ended July 31, 1997, 1998 and 1999, respectively,
the Portfolio paid brokerage commissions of $101,337, $175,344 and $_____,
respectively. For the fiscal years ended July 31, 1997, 1998 and 1999,
respectively, the Fund did not pay any brokerage commissions. The Fund did not
pay brokerage commissions to any affiliated brokers or dealers during the fiscal
years ended July 31, 1997, 1998 and 1999. For the fiscal year ended July 31,
1999, the Fund did not pay any brokerage commissions for brokerage transactions
directed to a broker because of research services provided.
In certain instances there may be securities which are suitable for the
Portfolio as well as for one or more of the Submanager's or the Investment
Manager's other clients. Investment decisions for the Portfolio and for the
Submanager's or the Investment Manager's other clients are made with a view to
achieving their respective investment objectives. It may develop that a
particular security is bought or sold for only one client even though it might
be held by, or bought or sold for, other clients. Likewise, a particular
security may be bought for one or more clients when one or more clients are
selling that same security. Some simultaneous transactions are inevitable when
several clients receive investment advice from the same investment adviser,
particularly when the same security is suitable for the investment objectives of
more than one client. When two or more clients are simultaneously engaged in the
purchase or sale of the same security, the securities are allocated among
clients in a manner believed to be equitable to each. It is recognized that in
some cases this system could have a detrimental effect on the price or volume of
the security as far as the Portfolio is concerned. However, it is believed that
the ability of the Portfolio to participate in volume transactions will produce
better executions for the Portfolio.
10. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Fund's Declaration of Trust permits the Fund's Board of Trustees to
issue an unlimited number of full and fractional shares of beneficial interest
(without par value) and to divide or combine the shares into a greater or lesser
number of shares without thereby changing the proportionate beneficial interests
in the Fund. Each share represents an equal proportionate interest in the Fund
with each other share. Upon liquidation or dissolution of the Fund, the Fund's
shareholders are entitled to share pro rata in the Fund's net assets available
for distribution to its shareholders. The Fund reserves the right to create and
issue a number of series of shares, in which case the shares of each series
would participate equally in the earnings, dividends and assets of the
particular series (except for any
-22-
<PAGE>
differences among classes of shares of a series). Shares of each series would be
entitled to vote separately to approve advisory agreements or changes in
investment policy, but shares of all series may vote together in the election or
selection of Trustees, principal underwriters and accountants for the Fund. Upon
liquidation or dissolution of the Fund, the shareholders of each series would be
entitled to share pro rata in the net assets of their respective series
available for distribution to shareholders.
Shareholders are entitled to one vote for each share held. Shareholders
in the Fund do not have cumulative voting rights, and shareholders owning more
than 50% of the outstanding shares of the Fund may elect all of the Trustees of
the Fund if they choose to do so; in such event the other shareholders in the
Fund would not be able to elect any Trustee. The Fund is not required to hold
annual meetings of shareholders but the Fund will hold special meetings of
shareholders when in the judgment of the Fund's Trustees it is necessary or
desirable to submit matters for a shareholder vote. No material amendment may be
made to the Fund's Declaration of Trust without the affirmative vote of the
holders of a majority of its outstanding shares. Shares have no preference,
preemptive, conversion or similar rights. Shares, when issued, are fully paid
and non-assessable, except as set forth below. The Fund may enter into a merger
or consolidation, or sell all or substantially all of its assets, if approved by
the vote of the holders of two-thirds of its outstanding shares, except that if
the Trustees of the Fund recommend such sale of assets, the approval by vote of
the holders of a majority of the Fund's outstanding shares will be sufficient.
The Fund may also be terminated upon liquidation and distribution of its assets,
if approved by the vote of the holders of two-thirds of its outstanding shares.
If not so terminated, the Fund will continue indefinitely. Stock certificates
are issued only upon the written request of a shareholder.
The Fund 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 and liabilities. However, the Declaration of Trust contains an
express disclaimer of shareholder liability for acts or obligations of the Fund
and provides for indemnification and reimbursement of expenses out of Fund
property for any shareholder held personally liable for the obligations of the
Fund. The Declaration of Trust also provides that the Fund shall maintain
appropriate insurance (for example, fidelity bonding and errors and omissions
insurance) for the protection of the Fund, its shareholders, Trustees, officers,
employees and agents covering possible tort and other liabilities. Thus, 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 Fund itself was unable to meet its obligations.
The Declaration of Trust further provides that obligations of the Fund
are not binding upon the Trustees individually but only upon the property of the
Fund and that the Trustees will not be liable for any action or failure to act,
but nothing in the Declaration of Fund protects a Trustee against any liability
to which he or she would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties involved in the
conduct of his or her office.
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 interest in the
Portfolio will be determined by multiplying the net asset value of the Portfolio
by the percentage representing that investor's share of the aggregate beneficial
interests in the Portfolio effective for that day. 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
-23-
<PAGE>
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.
11. FINANCIAL STATEMENTS
The financial statements of the Fund and the Portfolio for the fiscal
year ended July 31, 1999 have been filed as part of the Fund's annual report
with the SEC pursuant to Section 30b of the 1940 Act and Rule 30b2-1 thereunder,
and are incorporated herein by reference. A copy of such the annual report will
be provided, without charge, to shareholders of the Fund.
-24-
<PAGE>
PART C
OTHER INFORMATION
DEVCAP TRUST
Item 23. Exhibits
Exhibit
Number Description of Exhibit
------- ----------------------
(a) Amended and Restated Declaration of Trust, dated
September 15, 1995.(3)
(b) By-Laws.
(c) Specimen of certificate representing ownership of
Registrant's shares of beneficial interest.(1)
(d) Not Applicable.
(e)(1) Distribution Agreement, dated October 5, 1995, between
Registrant and Signature Broker-Dealer Services, Inc.
("SBDS").(1)
(e)(2) Distribution Agreement, dated November 25, 1997, between
Registrant and CBIS Financial Services, Inc. ("CBIS").(5)
(f) Not Applicable.
(g) Custodian Agreement, dated September 15, 1995, between
Registrant and Investors Bank & Trust Company ("IBT").(1)
(h)(1) Administrative Services Agreement, dated October 5, 1995,
between Registrant and SBDS.(4)
(h)(2) Administration Agreement, dated November 4, 1997, between
Registrant and Sunstone Financial Group, Inc. ("Sunstone").(5)
(h)(3) Form of Transfer Agency and Services Agreement, between
Registrant and Fundamental Shareholder Services, Inc.(2)
(h)(4) Transfer Agency Agreement, dated August 3, 1998, between
Registrant and Sunstone Investor Services, LLC ("SIS").(5)
(i) Opinion and Consent of Counsel.(2)
1
<PAGE>
(j)(1) Consent of Independent Auditors.(6)
(j)(2) Consent of Independent Auditors with respect to Domini
Social Index Portfolio.(5)
(k) None.
(l) Investment representation letters of initial shareholders.(2)
(m) Distribution and Services Plan of the Registrant adopted on
October 5, 1995.(1)
(n) Financial Data Schedule.(6)
(o) Not applicable.
(p)(1) Powers of Attorney. (4)
(p)(2) Powers of Attorney of Domini Social Index Portfolio.(6)
- --------------
(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) Incorporated herein by reference from Post-Effective Amendment
("Post-Effective Amendment") No. 1 to the Registration Statement, as
filed with the SEC on March 28, 1996.
(4) Incorporated herein by reference from Post-Effective Amendment No. 3,
as filed with the SEC on October 16, 1997.
(5) Incorporated herein by reference from Post-Effective Amendment No. 4,
as filed with the SEC on November 25, 1998.
(6) Filed herewith.
Item 24. Persons Controlled by or Under Common Control with Registrant.
Not applicable.
Item 25. 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 "Securities 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 Securities Act
and is, therefore,
2
<PAGE>
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 Securities
Act and will be governed by the final adjudication of such issue.
Item 26. Business and Other Connections of Investment Manager.
Not Applicable.
Item 27. Principal Underwriters.
(a) CBIS is the distributor (the "Distributor") for the shares of
the Registrant. CBIS does not also serve as the principal underwriter or
placement agent for other registered investment companies.
(b) The following are the directors and officers of the
Distributor. The principal business address of these individuals is 915 Harger
Road, Oak Brook, Illinois 60521-1476, unless otherwise noted.
Brother Michael W. O'Hern, President, Secretary, Treasurer and
sole director.
Neal J. Berkowitz, Finance and Operations Principal.
(c) Not applicable.
Item 28. 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 "Investment Company
Act"), and the Rules thereunder will be maintained at the offices of:
Sunstone Financial Group, Inc., 207 East Buffalo Street, Suite 400, Milwaukee,
Wisconsin 53202 (records relating to its functions as principal underwriter and
administrator.)
Investors Bank & Trust Company, 89 South Street, Boston, Massachusetts 02111
(records relating to its functions as custodian).
Sunstone Investor Services, LLC, 207 East Buffalo Street, Suite 400, Milwaukee,
Wisconsin 53202 (records relating to its functions as transfer agent).
3
<PAGE>
Item 29. Management Services.
Not applicable.
Item 30. Undertakings.
Not applicable.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all the requirements for effectiveness of this Registration Statement
under Rule 485(a) under the Securities Act and has duly caused this Post-
Effective Amendment No. 5 to Registration Statement on Form N-1A to be signed on
its behalf by the undersigned, thereto duly authorized, in the City of
Baltimore, State of Maryland, on September 30, 1999.
DEVCAP TRUST
By: /s/ Joseph N. St. Clair
----------------------------------
Name: Joseph N. St. Clair
Title: President
5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Post-Effective Amendment No. 5 to Registration Statement on Form N-1A has been
signed below by the following persons in the capacities indicated on
September 30, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Joseph N. St. Clair President, Treasurer and Secretary September 30, 1999
- ------------------------ (Principal Executive and
Joseph N. St. Clair Accounting and Financial Officer)
/s/ James R. Arnold Assistant Secretary September 30, 1999
- -------------------------
James R. Arnold
/s/ Gilbert H. Crawford Trustee September 30, 1999
- ------------------------
Gilbert H. Crawford
/s/ Stephen D. Cashin Trustee September 30, 1999
- -----------------------
Stephen D. Cashin
/s/ Donald Carcieri Trustee September 30, 1999
- -----------------------
Donald Carcieri
</TABLE>
* Pursuant to Powers of Attorney filed with Post-Effective Amendment No. 3, as
filed with the SEC on October 16, 1997.
6
<PAGE>
SIGNATURES
Domini Social Index Portfolio has duly caused this Post Effective
Amendment No. 5 to the Registration Statement on Form N-1A to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boston and
Commonwealth of Massachusetts on the September 30, 1999.
DOMINI SOCIAL INDEX PORTFOLIO
By: /s/ Amy L. Domini
-------------------------------------
Name: Amy L. Domini
Title: President
This Post-Effective Amendment No. 5 to the Registration Statement on
Form N-1A of the Registrant has been signed below by the following persons in
the capacities indicated below on September 30, 1999.
Signature Title
- --------- -----
/s/ Amy L. Domini President (Principal Executive Officer) and
- -------------------------------- Trustee of Domini Social Index Portfolio
Amy L. Domini
Treasurer (Principal Accounting and
/s/ Carole M. Laible Financial Officer) of Domini Social Index
- -------------------------------- Portfolio
Carole M. Laible
/s/ Julia Elizabeth Harris* Trustee of Domini Social Index Portfolio
- --------------------------------
Julia Elizabeth Harris
/s/ Kirsten S. Moy* Trustee of Domini Social Index Portfolio
- --------------------------------
Kirsten S. Moy
/s/ William C. Osborn* Trustee of Domini Social Index Portfolio
- --------------------------------
William C. Osborn
/s/ Karen Paul* Trustee of Domini Social Index Portfolio
- --------------------------------
Karen Paul
/s/ Gregory A. Ratliff* Trustee of Domini Social Index Portfolio
- --------------------------------
Gregory A. Ratliff
/s/ Timothy H. Smith* Trustee of Domini Social Index Portfolio
- --------------------------------
Timothy H. Smith
/s/ Frederick C. Williamson, Sr.* Trustee of Domini Social Index Portfolio
- --------------------------------
Frederick C. Williamson, Sr.
*By: /s/ Amy L. Domini Executed by Amy L. Domini on behalf of
- -------------------------------- those indicated pursuant to Powers of
Amy L. Domini Attorney
* Pursuant to Powers of Attorney filed herewith.
7
<PAGE>
DEVCAP TRUST
Devcap Shared Return Fund
EXHIBIT INDEX
TO
POST-EFFECTIVE AMENDMENT NO. 5
TO
REGISTRATION STATEMENT
ON FORM N-1A
Exhibit No. Description of Document
- ----------- -----------------------
j(1). Consent of Independent Auditors
n. Financial Data Schedule
p(2) Powers of Attorney
<PAGE>
Exhibit j(1)
Consent of Independent Auditors
<PAGE>
Independent Auditors' Consent
The Board of Trustees
DEVCAP Trust
We consent to the use of our reports for the DEVCAP Shared Return Fund, dated
September 15, 1999, incorporated herein by reference, and to the reference to
our firm under the heading "Financial Highlights" in the prospectus and
"Independent Auditors" in the statement of additional information.
/s/ KPMG LLP
-------------------
KPMG LLP
Boston, Massachusetts
September 16, 1999
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000948119
<NAME> DEVCAP TRUST
<SERIES>
<NUMBER> 1
<NAME> DEVCAP SHARED RETURN FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> AUG-01-1998
<PERIOD-END> JUL-31-1999
<INVESTMENTS-AT-COST> 10,966,862
<INVESTMENTS-AT-VALUE> 15,046,292
<RECEIVABLES> 6,861
<ASSETS-OTHER> 26,606
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 15,079,759
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 33,427
<TOTAL-LIABILITIES> 33,427
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10,846,299
<SHARES-COMMON-STOCK> 640,828
<SHARES-COMMON-PRIOR> 546,424
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 120,603
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,079,430
<NET-ASSETS> 15,046,332
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 105,778
<EXPENSES-NET> 221,005
<NET-INVESTMENT-INCOME> (115,227)
<REALIZED-GAINS-CURRENT> 219,391
<APPREC-INCREASE-CURRENT> 2,204,098
<NET-CHANGE-FROM-OPS> 2,308,262
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 111,246
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 119,601
<NUMBER-OF-SHARES-REDEEMED> 30,144
<SHARES-REINVESTED> 4,947
<NET-CHANGE-IN-ASSETS> 4,349,475
<ACCUMULATED-NII-PRIOR> (39,982)
<ACCUMULATED-GAINS-PRIOR> 70,014
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 221,005
<AVERAGE-NET-ASSETS> 12,478,900
<PER-SHARE-NAV-BEGIN> 19.58
<PER-SHARE-NII> (0.18)
<PER-SHARE-GAIN-APPREC> 4.28
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.20
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.48
<EXPENSE-RATIO> 1.97
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
Exhibit (p)(2)
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Carole M. Laible,
Sigward M. Moser, and David P. Wieder, and each of them, with full powers of
substitution as her true and lawful attorneys and agents to execute in her name
and on her behalf in any and all capacities the Registration Statements on Form
N-1A, and any and all amendments thereto, filed by Domini Social Equity Fund,
and the Domini Institutional Trust, (each, a "Trust"), or the Registration
Statement(s), and any and all amendments thereto, filed by any other investor
(collectively, with each Trust, the "Investors") in Domini Social Index
Portfolio (the "Portfolio") (insofar as each of the Investors invests all its
assets in the Portfolio), with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, and/or the Securities Act of 1933,
as amended, and any and all instruments which such attorneys and agents, or any
of them, deem necessary or advisable to enable any of the Investors or the
Portfolio, as applicable, to comply with such Acts, the rules, regulations and
requirements of the Securities and Exchange Commission, and the securities or
Blue Sky laws of any state or other jurisdiction, and the undersigned hereby
ratifies and confirms as her own act and deed any and all acts that such
attorneys and agents, or any of them, shall do or cause to be done by virtue
hereof. Any one of such attorneys and agents have, and may exercise, all of the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has executed this instrument as of
the 30th day of September, 1999.
/s/ Amy L. Domini
---------------------------
Amy L. Domini
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Amy L. Domini, Carole
M. Laible, Sigward M. Moser, and David P. Wieder, and each of them, with full
powers of substitution as her true and lawful attorneys and agents to execute in
her name and on her behalf in any and all capacities the Registration Statements
on Form N-1A, and any and all amendments thereto, filed by Domini Social Equity
Fund, and the Domini International Trust, (each, a "Trust"), or the Registration
Statement(s), and any and all amendments thereto, filed by any other investor
(collectively, with each Trust, the "Investors") in Domini Social Index
Portfolio (the "Portfolio") (insofar as each of the Investors invests all its
assets in the Portfolio), with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, and/or the Securities Act of 1933,
as amended, and any and all instruments which such attorneys and agents, or any
of them, deem necessary or advisable to enable any of the Investors or the
Portfolio, as applicable, to comply with such Acts, the rules, regulations and
requirements of the Securities and Exchange Commission, and the securities or
Blue Sky laws of any state or other jurisdiction, and the undersigned hereby
ratifies and confirms as her own act and deed any and all acts that such
attorneys and agents, or any of them, shall do or cause to be done by virtue
hereof. Any one of such attorneys and agents have, and may exercise, all of the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has executed this instrument as of
the 30th day of September, 1999.
/s/ Julia Elizabeth Harris
-----------------------------
Julia Elizabeth Harris
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Amy L. Domini, Carole
M. Laible, Sigward M. Moser, and David P. Wieder, and each of them, with full
powers of substitution as her true and lawful attorneys and agents to execute in
her name and on her behalf in any and all capacities the Registration Statements
on Form N-1A, and any and all amendments thereto, Domini Social Equity Fund, and
the Domini International Trust, (each, a "Trust"), or the Registration
Statement(s), and any and all amendments thereto, filed by any other investor
(collectively, with each Trust, the "Investors") in Domini Social Index
Portfolio (the "Portfolio") (insofar as each of the Investors invests all its
assets in the Portfolio), with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, and/or the Securities Act of 1933,
as amended, and any and all instruments which such attorneys and agents, or any
of them, deem necessary or advisable to enable any of the Investors or the
Portfolio, as applicable to comply with such Acts, the rules, regulations and
requirements of the Securities and Exchange Commission, and the securities or
Blue Sky laws of any state or other jurisdiction, and the undersigned hereby
ratifies and confirms as her own act and deed any and all acts that such
attorneys and agents, or any of them, shall do or cause to be done by virtue
hereof. Any one of such attorneys and agents have, and may exercise, all of the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has executed this instrument as of
the 30th day of September, 1999.
/s/ Kirsten S. Moy
----------------------------
Kirsten S. Moy
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Amy L. Domini, Carole
M. Laible, Sigward M. Moser, and David P. Wieder, and each of them, with full
powers of substitution as his true and lawful attorneys and agents to execute in
his name and on his behalf in any and all capacities the Registration Statements
on Form N-1A, and any and all amendments thereto, filed by Domini Social Equity
Fund, and the Domini International Trust, (each, a "Trust"), or the Registration
Statement(s), and any and all amendments thereto, filed by any other investor
(collectively, with each Trust, the "Investors") in Domini Social Index
Portfolio (the "Portfolio") (insofar as each of the Investors invests all its
assets in the Portfolio), with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, and/or the Securities Act of 1933,
as amended, and any and all instruments which such attorneys and agents, or any
of them, deem necessary or advisable to enable any of the Investors or the
Portfolio, as applicable to comply with such Acts, the rules, regulations and
requirements of the Securities and Exchange Commission, and the securities or
Blue Sky laws of any state or other jurisdiction, and the undersigned hereby
ratifies and confirms as his own act and deed any and all acts that such
attorneys and agents, or any of them, shall do or cause to be done by virtue
hereof. Any one of such attorneys and agents have, and may exercise, all of the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has executed this instrument as of
the 30th day of September, 1999.
/s/ Gregory A. Ratliff
--------------------------
Gregory A. Ratliff
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Amy L. Domini, Carole
M. Laible, Sigward M. Moser, and David P. Wieder, and each of them, with full
powers of substitution as his true and lawful attorneys and agents to execute in
his name and on his behalf in any and all capacities the Registration Statements
on Form N-1A, and any and all amendments thereto, filed by Domini Social Equity
Fund, and the Domini International Trust, (each, a "Trust"), or the Registration
Statement(s), and any and all amendments thereto, filed by any other investor
(collectively, with each Trust, the "Investors") in Domini Social Index
Portfolio (the "Portfolio") (insofar as each of the Investors invests all its
assets in the Portfolio), with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, and/or the Securities Act of 1933,
as amended, and any and all instruments which such attorneys and agents, or any
of them, deem necessary or advisable to enable any of the Investors or the
Portfolio, as applicable, to comply with such Acts, the rules, regulations and
requirements of the Securities and Exchange Commission, and the securities or
Blue Sky laws of any state or other jurisdiction, and the undersigned hereby
ratifies and confirms as his own act and deed any and all acts that such
attorneys and agents, or any of them, shall do or cause to be done by virtue
hereof. Any one of such attorneys and agents have, and may exercise, all of the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has executed this instrument as of
the 30th day of September, 1999.
/s/ Timothy Smith
--------------------------
Timothy Smith
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Amy L. Domini, Carole
M. Laible, Sigward M. Moser, and David P. Wieder, and each of them, with full
powers of substitution as his true and lawful attorneys and agents to execute in
his name and on his behalf in any and all capacities the Registration Statements
on Form N-1A, and any and all amendments thereto, filed by Domini Social Equity
Fund, and the Domini International Trust, (each, a "Trust"), or the Registration
Statement(s), and any and all amendments thereto, filed by any othe r investor
(collectively, with each Trust, the "Investors") in Domini Social Index
Portfolio (the "Portfolio") (insofar as each of the Investors invests all its
assets in the Portfolio), with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, and/or the Securities Act of 1933,
as amended, and any and all instruments which such attorneys and agents, or any
of them, deem necessary or advisable to enable any of the Investors or the
Portfolio, as applicable to comply with such Acts, the rules, regulations and
requirements of the Securities and Exchange Commission, and the securities or
Blue Sky laws of any state or other jurisdiction, and the undersigned hereby
ratifies and confirms as his own act and deed any and all acts that such
attorneys and agents, or any of them, shall do or cause to be done by virtue
hereof. Any one of such attorneys and agents have, and may exercise, all of the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has executed this instrument as of
the 30th day of September, 1999.
/s/ Frederick C. Williamson, Sr.
---------------------------------
Frederick C. Williamson, Sr.
