UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14 (a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Country Mutual Funds Trust
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(Name of Registrant as Specified In Its Charter)
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Notes:
COUNTRY GROWTH FUND, INC.
COUNTRY ASSET ALLOCATION FUND, INC.
COUNTRY TAX EXEMPT BOND FUND, INC.
&
COUNTRY TAXABLE FIXED INCOME SERIES FUND, INC.
Country Money Market Fund
Country Short-Term Government Bond Fund
Country Long-Term Bond Fund
808 IAA Drive
Bloomington, Illinois 61702
PROXY STATEMENT MATERIALS
IMPORTANT VOTING INFORMATION INSIDE
Table of Contents
Letter from the Chairman of the Boards
Notice of Annual Meeting of Shareholders
Proxy Statement
Proxy Card
Exhibit A: Form of Agreement and Plan of Reorganization
Exhibit B: Declaration of Trust
COUNTRY GROWTH FUND, INC.
COUNTRY ASSET ALLOCATION FUND, INC.
COUNTRY TAX EXEMPT BOND FUND, INC.
&
COUNTRY TAXABLE FIXED INCOME SERIES FUND, INC.
Country Money Market Fund
Country Short-Term Government Bond Fund
Country Long-Term Bond Fund
808 IAA Drive
Bloomington, Illinois 61702
August 31, 2001
Dear Shareholder:
We are pleased to invite you to an Annual Meeting of Shareholders of COUNTRY
GROWTH FUND, INC., COUNTRY ASSET ALLOCATION FUND, INC., COUNTRY TAX EXEMPT BOND
FUND, INC. and COUNTRY TAXABLE FIXED INCOME SERIES FUND, INC. (including COUNTRY
MONEY MARKET FUND, COUNTRY SHORT-TERM GOVERNMENT BOND FUND AND COUNTRY LONG-TERM
BOND FUND) (the "Funds") to be held in the Board of Directors room of the
Illinois Agricultural Association(R) building, 1701 N. Towanda Avenue,
Bloomington, Illinois on Monday, October 29, 2001 at 10:30 a.m. central time. At
the meeting you will be asked to vote on important proposals affecting the
Funds. The Boards of Directors of the Funds unanimously agreed that these
proposals are in the Funds' and your best interests.
I am sure that you, like most people, lead a busy life and are tempted to put
this proxy aside for another day. Please do not delay. When shareholders fail to
return their proxies, additional expenses incur to pay for follow-up mailings
and telephone calls. PLEASE REVIEW THIS PROXY STATEMENT AND SIGN AND RETURN THE
PROXY CARD TODAY.
After reviewing each matter carefully, the Boards of Directors unanimously
recommend that you vote `FOR' each proposal.
YOUR VOTE IS IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
Detailed information about the proposals and the reasons for them are contained
in the proxy statement. Please take the time to review the material, cast your
vote on the enclosed proxy card and return the Proxy Card in the enclosed
postage-paid envelope.
We thank you for your time in considering these important proposals and for your
continuing investment in and support of COUNTRY Mutual Funds.
Sincerely,
/s/ Ronald R. Warfield
----------------------
Ronald R. Warfield
President & Director
COUNTRY GROWTH FUND, INC.
COUNTRY ASSET ALLOCATION FUND, INC.
COUNTRY TAX EXEMPT BOND FUND, INC.
&
COUNTRY TAXABLE FIXED INCOME SERIES FUND, INC.
Country Money Market Fund
Country Short-Term Government Bond Fund
Country Long-Term Bond Fund
808 IAA Drive
Bloomington, Illinois 61702
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held Monday, October 29, 2001
THIS IS THE FORMAL AGENDA FOR THE FUNDS' ANNUAL MEETING. IT TELLS YOU WHAT
MATTERS WILL BE VOTED ON AND THE TIME AND PLACE OF THE MEETING, IN CASE YOU WANT
TO ATTEND IN PERSON.
TO OUR SHAREHOLDERS:
An Annual Meeting of Shareholders of COUNTRY GROWTH FUND, INC., COUNTRY ASSET
ALLOCATION FUND, INC., COUNTRY TAX EXEMPT BOND FUND, INC. and COUNTRY TAXABLE
FIXED INCOME SERIES FUND, INC. (including COUNTRY MONEY MARKET FUND, COUNTRY
SHORT-TERM GOVERNMENT BOND FUND AND COUNTRY LONG-TERM BOND FUND) (collectively
with their series, the "Funds"), will be held in the Board of Directors room of
the Illinois Agricultural Association(R)building, 1701 N. Towanda Avenue,
Bloomington, Illinois on Monday, October 29, 2001 at 10:30 a.m., central time,
to vote on the following proposals:
1. A proposal to approve an Agreement and Plan of Reorganization
providing for the reorganization of the Funds from Maryland
corporations into a Delaware business trust, Country Mutual Funds
Trust (the "Trust") with individual series for each of the Funds (the
"Successor Funds"). THE BOARDS OF DIRECTORS RECOMMEND THAT YOU VOTE
FOR THIS PROPOSAL.
2. A proposal to approve certain changes to the fundamental investment
restrictions of each of the Funds. THE BOARDS OF DIRECTORS RECOMMEND
THAT YOU VOTE FOR THIS PROPOSAL.
3. A proposal to elect the nominees named in the attached proxy statement
to serve on the Funds' Boards of Directors. THE BOARDS OF DIRECTORS
RECOMMEND THAT YOU VOTE FOR THE ELECTION OF EACH NOMINEE.
4. Any other business that may properly come before the meeting or any
adjournment.
Shareholders of record at the close of business on August 31, 2001 are entitled
to receive notice of and to vote at the Annual Meeting or any postponements or
adjournments.
YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
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As a shareholder of the Fund(s), you are asked to attend the Meeting either in
person or by proxy. If you are unable to attend the Meeting, we urge you to
complete, sign, date and return the enclosed proxy card in the enclosed postage
prepaid envelope. Your prompt return of the proxy card will help assure a quorum
at the Meeting and avoid additional expenses to the Fund associated with further
solicitation. Sending in your proxy card will not prevent you from voting your
shares in person at the Meeting and you may revoke your proxy by advising the
Secretary of the Fund in writing (by subsequent proxy or otherwise) of such
revocation at any time before it is voted.
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By Order of the Boards of Directors,
/s/ Paul M. Harmon
-------------------
Paul M. Harmon
Secretary
Bloomington, Illinois
August 31, 2001
PROXY STATEMENT
OF
COUNTRY GROWTH FUND, INC.
COUNTRY ASSET ALLOCATION FUND, INC.
COUNTRY TAX EXEMPT BOND FUND, INC.
&
COUNTRY TAXABLE FIXED INCOME SERIES FUND, INC.
Country Money Market Fund
Country Short-Term Government Bond Fund
Country Long-Term Bond Fund
This proxy statement contains the information you should know before voting on
the proposals summarized below regarding Country Growth Fund, Inc., Country
Asset Allocation Fund, Inc., Country Tax Exempt Bond Fund, Inc. and Country
Taxable Fixed Income Series Fund, Inc. (the "Companies") (the Companies and
their series are collectively referred to herein as the "Funds" and individually
as the "Fund").
The Funds will furnish without charge a copy of their Annual Report and most
recent Semi-Annual Report to any shareholder who asks for them. Shareholders who
want to obtain a copy of the Funds' reports should write to: Country Mutual
Funds, PO Box 701, Milwaukee, WI 53201-0701 or should call (800) 245-2100.
INTRODUCTION
This proxy statement is being used by the Boards of Directors to solicit proxies
to be voted at an Annual Meeting of Shareholders of the Funds. This meeting will
be held in the Board of Directors room of the Illinois Agricultural
Association(R) Building, 1701 N. Towanda Avenue, Bloomington, Illinois 61702, at
10:30 a.m., central time, on Monday, October 29, 2001 to consider and act upon
the following:
1. A proposal to approve an Agreement and Plan of Reorganization
providing for the reorganization of the Funds from Maryland
corporations into a Delaware business trust, Country Mutual Funds
Trust (the "Trust") with individual series for each of the Funds (the
"Successor Funds"). THE BOARDS OF DIRECTORS RECOMMEND THAT YOU VOTE
FOR THIS PROPOSAL.
2. A proposal to approve certain changes to the fundamental investment
restrictions of each of the Funds. THE BOARDS OF DIRECTORS RECOMMEND
THAT YOU VOTE FOR THIS PROPOSAL.
3. A proposal to elect the nominees named in the attached proxy statement
to serve on the Funds' Boards of Directors. THE BOARDS OF DIRECTORS
RECOMMEND THAT YOU VOTE FOR THE ELECTION OF EACH NOMINEE.
4. Any other business that may properly come before the meeting or any
adjournment.
These proposals affect shareholders of all Funds. This proxy statement and the
proxy card are being mailed to the Funds' shareholders on or about September 21,
2001.
WHO IS ELIGIBLE TO VOTE?
Shareholders of record on August 31, 2001, are entitled to attend and vote on
each proposal at the meeting or any adjourned meeting. Each share is entitled to
one vote. Shares represented by properly executed proxies, unless revoked before
or at the meeting, will be voted according to shareholders' instructions. If you
sign a proxy, but do not fill in a vote, your shares will be voted to approve
the proposals. If any other business comes before the meeting, your shares will
be voted at the discretion of the persons named as proxies.
PROPOSAL 1
TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION
At the meeting, the shareholders of each of the Companies will be asked to
approve the reorganization. If shareholder approval is obtained for one or more
of the Funds, and the other conditions to the closing of the reorganization (the
"Closing") are met, shareholders of each of the Funds approving the proposal
will receive shares of the Successor Fund equal in value to their holdings of
Fund shares immediately before the reorganization. Each Fund approving the
proposal will then be terminated and liquidated, and the Companies will be
dissolved under Maryland law and deregistered under the Investment Company Act
of 1940, as amended (the "1940 Act").
Each Successor Fund will differ in some respects from the Funds, and these
differences are described in more detail below. The following sections describe:
>> Purpose of the Reorganization
>> Description of the Reorganization
>> Governance of the Trust
>> Changes to Names & Investment Strategies of Certain Funds
>> New Share Classes of the Funds
>> Comparison of Investment Policies & Restrictions
>> Ratification of Election of Trustees
>> Other Information About the Reorganization
PURPOSE OF THE REORGANIZATION
At the meeting of the Funds' Boards of Directors on July 30, 2001, the
Directors, including the Directors who are not "interested persons" of the Funds
or their Adviser ("Independent Directors"), unanimously approved and recommended
that the Funds' shareholders approve a reorganization of the Funds as series of
a business trust under the laws of the state of Delaware. The Funds are
currently organized through four (4) separate corporations under the laws of the
state of Maryland. The most efficient way for the Funds to become a Delaware
business trust is by a tax-free reorganization of the type described in this
proxy statement.
By operating all six (6) Funds under one Delaware business trust, the Funds will
take advantage of the greater operational flexibility available under the
Delaware Business Trust Act and the efficiencies of operating under one
corporate charter. These advantages include:
o Cost savings relating to the reduction of certain accounting, legal
and securities registration costs, through streamlining our corporate
structure from four (4) corporations into one (1) business trust.
These savings will be partially offset by additional costs associated
with operating multiple classes and other changes associated with the
reorganization;
o Granting the Funds' Trustees greater power to act without shareholder
approval, thus avoiding the time and expense of calling a shareholder
meeting, mailing proxy materials and soliciting shareholders; and
o Enabling the Funds to adopt new methods of operation and employ new
technologies that are expected to reduce costs of operation and are
generally not expressly permitted under Maryland law, such as
electronic communications with shareholders.
Also, as described below, reorganization of the Funds will entail several other
changes that will benefit shareholders. These changes include new names and
investment strategies for some of the Funds, the creation of new classes of
shares of the Funds and streamlined investment restrictions.
Based on information provided by the Funds' Adviser, COUNTRYSM Trust Bank, and
distributor, Quasar Distributors, LLC, the Boards of Directors believe that
reorganizing the Funds as series of a Delaware business trust offers certain
advantages over the current form of organization. The Funds' management expects
that shareholders ultimately will benefit from these advantages. In addition,
the new form of organization will not change the investment objectives, policies
or procedures of the Funds, except as described in this proxy statement. Because
it believes that these advantages would allow the Funds to operate more
efficiently, the Boards of Directors have determined that the proposed
reorganization would be in the best interests of the Funds and their
shareholders.
DESCRIPTION OF REORGANIZATION
The reorganization will take place according to the terms and conditions of an
Agreement and Plan of Reorganization between the Funds and the Delaware business
trust. You are being asked to approve the Agreement and Plan of Reorganization,
a copy of the form of which is attached to this proxy statement as Exhibit A.
The agreement provides for the reorganization of the Funds as series of a
Delaware business trust on the following terms:
A new Delaware business trust has been created with one trustee and
shareholder. The sole shareholder will, prior to the reorganization,
elect a full Board of Trustees, authorize the issuance of the proper
series and classes of shares, approve the investment advisory
agreement, distribution plan and other agreements, approve the
selection of auditors and all other actions necessary for the Trust to
begin operations.
The reorganization is scheduled to occur on or about October 31, 2001.
The Funds will transfer all of their assets to a corresponding series
of the new Delaware business trust and the new series will assume all
of the Funds' liabilities. Until the completion of this transfer and
the actions described below, the Successor Funds will have no assets.
Each Successor Fund will issue to the corresponding Fund a number of
Class Y shares identical to the number of, and with the same net asset
value per share as, the corresponding Fund's common shares.
Each Fund will distribute shares of the corresponding Successor Fund
to shareholders of record of the Fund on the reorganization date. As a
result, shareholders of the Funds will end up as Class Y shareholders
of the Successor Funds.
After the reorganization, the Funds will be terminated and you will own shares
of the Successor Funds, which will continue to carry on the business of the
Funds in substantially the same manner as before the reorganization.
The Funds' Boards of Directors may terminate the Agreement and Plan of
Reorganization (even if the shareholders of the Funds have already approved it)
at any time before the reorganization date, if the Boards believe that
proceeding with the reorganization would no longer be advisable.
GOVERNANCE OF THE TRUST
If shareholders approve this proposal, the Funds will be governed by one
Delaware Declaration of Trust rather than by four Maryland Articles of
Incorporation. The table below will answer several questions that you might have
about how the Successor Funds' operations under the Delaware Declaration of
Trust will differ from operation of the Funds under the Maryland Articles of
Incorporation.
MARYLAND DELAWARE
DIFFERENCES IN FUND OPERATIONS CORPORATIONS BUSINESS TRUST
o Liability for state franchise taxes? Yes No
o Can the fund issue unlimited number of shares? No Yes
o Can the fund offer multiple classes of shares, without amending No Yes
governing documents.
o Do the Directors/Trustees have the power to amend the governing Generally no Generally yes
instrument without shareholder approval?
o Termination possible without shareholder approval? No Yes
o Can the Directors/Trustees amend the bylaws with a majority (as No Yes
opposed to a supermajority) vote?
o Can Directors/Trustees act without a meeting, with the written No Yes
approval of a majority of members?
o Can Directors/Trustees effect a merger or consolidation with No Yes
another entity without shareholder approval?
o Can Directors/Trustees cause any series to become a separate No Yes
trust without shareholder approval?
o Can Directors/Trustees change the corporation's or trust's No Yes
domicile without shareholder approval?
o Can Directors/Trustees approve a share split without Generally no Yes
shareholder approval?
o Is dollar based voting (i.e., one vote per dollar of net asset No Yes
value, rather than one vote per share) permissible?
o Does state law impose additional Director/Trustee liability Yes No
other than what the federal securities law already prescribes?
o Does state law impose additional possible shareholder liability Yes No
for receipt of distributions in excess of legal limits?
o Quorum of Shareholder Requirements Majority of Shares 1/3 % of Shares
o Quorum of Director/Trustee Requirements Majority of 1/3rd of Trustees
Directors
Although these changes will reduce the role of shareholders in governing certain
aspects of the Funds, they will benefit shareholders in many ways. They will
reduce expenses that otherwise would be borne by shareholders, such as the
expenses related to conducting an Annual or Special Meeting of Shareholders, and
will reduce accounting, legal and securities registration costs through
streamlining the corporate structure. They will permit the Board of Trustees to
more quickly take actions that benefit shareholders. They will make it easier to
convene meetings of the Board of Trustees and shareholders.
The above discussion is only a summary of certain of the differences between (i)
The Trust, its Declaration of Trust and Bylaws and Delaware law, and (ii) the
Funds, their Articles of Incorporation and Bylaws and Maryland law. It is not a
complete list of differences. You may refer to the provisions of the Articles of
Incorporation and Bylaws of the Funds and Maryland law, and the Declaration of
Trust, Trust Bylaws and Delaware law for a more thorough comparison. The
Declaration of Trust is attached as Exhibit B. You can also obtain a copy of the
Companies' Articles of Incorporation, Bylaws, and the Declaration of Trust and
Trust Bylaws without charge by calling the Secretary of the Funds at (309)
557-2542.
CHANGES TO NAMES AND INVESTMENT STRATEGIES OF CERTAIN FUNDS
As previously noted, there will be some differences between the names and
investment strategies of the Funds and the Successor Funds. These changes do not
require shareholder approval, however, and the Funds will adopt these changes
even if shareholders do not approve the reorganization.
----------------------------- ---------------------------- -------------------------- -------------------------
Current Name New Name Change In Investment Change In Strategy
Limitations
----------------------------- ---------------------------- -------------------------- -------------------------
Country Asset Allocation Fund Country Balanced Fund Balanced Fund will be None. The Fund has
required to invest no less historically been
than 25% in bonds and no operated within these
more than 75% in stocks constraints, although
(and no less than 25% in it was not required to
stocks and no more than do so.
75% in bonds).
----------------------------- ---------------------------- -------------------------- -------------------------
Country Short-Term Government Country Short-Term Bond Fund The Short-Term Bond Fund Greater flexibility to
Bond Fund will not be required to invest in corporate
invest 80% of its assets bonds. Under previous
in Government Bonds, as SEC rules, the Fund
it would have been could invest up to 35%
under new SEC rules if of assets in non-Government
"Government" was bonds, which amount would
left in the name have been reduced to 20%
of Successor Fund, under new SEC rules. By
under new SEC eliminating "Government"
rules. from the name, the Successor
Fund will be able to
invest freely in both
government and corporate
bonds.
----------------------------- ---------------------------- -------------------------- -------------------------
Country Long-Term Bond Fund Country Bond Fund The Successor Fund will More flexibility in
not be required to average maturity of the
maintain a dollar-weighted Fund. The Successor
average maturity of ten Fund will be able to
(10) or more years, as it maintain a maturity of
would have under new SEC five (5) years or
rules, if "Long-Term" were more. Therefore, it is
left in the name of the likely that at times
Fund. the Bond Fund will
operate with a lower
average maturity than
at present as the
Long-Term Bond Fund.
------------------------------------------------------------------------------------- -----------------------
CLASSES OF SHARES OF EACH FUND
One difference between operation of the Funds and the Successor Funds is that
the Successor Funds (except the Money Market Fund) will begin offering two
classes of shares for sale to the public. As described in more detail below,
shareholders of the Funds as of the Closing will receive Class Y shares of the
applicable Successor Fund . Class Y shares will not be subject to an initial
sales charge (although they will have a 12b-1 Plan of Distribution, in
substantially the same form as currently used by the Funds). On a going forward
basis after the reorganization, as of a date to be selected by the Board of
Trustees and officers of the Trust (currently estimated to be January 1, 2002),
the Successor Funds will begin the sale of Class A shares of each series (except
the Money Market Fund). Class A shares will be subject to an initial sales
charge and will also have a 12b-1 Plan of Distribution in substantially the same
form as currently used by the Funds.
The purpose for offering Class A shares is to grow the assets of the Trust, with
resulting reductions in the relative expenses of the Successor Funds.
Existing shareholders of the Funds will not be adversely affected by the
creation of Class A shares, because they will not be subject to a sales charge
on their existing shares and will be eligible to purchase Class Y shares of any
of the COUNTRY Mutual Funds. Others eligible to purchase Class Y shares will
include: trust and investment management customers of COUNTRY Trust Bank (the
"Adviser"), and employees and agents of the Adviser and its affiliated
companies. A complete list of those eligible to purchase Class Y shares will be
provided in the new Prospectus of the Successor Funds.
Comparison of Investment Policies and Restrictions
Except as described in these Proxy Materials, the Funds' investment objectives,
principal investment strategies and investment risks will not change as a result
of the reorganization. However, as noted, after the reorganization, the
Successor Funds will have a more streamlined set of fundamental and
non-fundamental investment policies and restrictions. Some of the Funds' current
investment policies and restrictions may limit their respective portfolio
managers from investing in a security that is both consistent with the
investment objective of such Fund and that may be a good investment. One reason
for changing some of these investment policies is to remove restrictions that
unnecessarily hamper the portfolio managers' investment discretion. Many of
these restrictions were put in place by the Funds as a result of the directives
of various state securities commissions. Changes to federal securities laws have
superseded these directives. Another reason is the desire to create consistency
between the investment restrictions of the various COUNTRY Mutual Funds.
Finally, some of the changes have been made to comply with new SEC rules
relating to the names of mutual funds.
The following chart describes the changes to the Fundamental Investment
Restrictions:
--------------- -------------------------------- -------------------------------- -----------------------------------
Fund Before After Purposes / Intended Effect
--------------- -------------------------------- -------------------------------- -----------------------------------
All All Funds are prohibited from No Fund will: Borrow money or Consistency between Successor
borrowing money, except as a authorize or issue any class Funds. Simplify language and
temporary measure for of senior securities, except create greater flexibility to
extraordinary or emergency to the extent permitted by the adapt to future changes in laws
purposes and subject to a 1940 Act, the rules and and regulations. Prevent the
limit of 10% of assets (5% if regulations thereunder and any need to seek shareholder approval
the debt matures more than 60 exemptive relief obtained by each time there is a change in
days after issuance). The the Funds. the laws and regulations relating
Money Market Fund also cannot to borrowing by funds.
borrow more than 10% of
assets, but is not subject to
the 5% limitation. However,
it is also prohibited from
purchasing securities at any
time a loan to such fund is
outstanding.
--------------- -------------------------------- -------------------------------- -----------------------------------
All No fund will underwrite or No Fund will: Underwrite or Add exception for underwriting
participate in the participate in the restrictions to permit normal
underwriting of securities of underwriting of securities of purchases and sales of securities
other issuers. other issuers, except when it that may technically be
might technically be deemed to considered "underwriting."
be an underwriter either (a) Prevent inadvertent violations of
in connection with the Fundamental Investment
disposition of a portfolio Restrictions.
security, or (b) in connection
with the purchase of
securities directly from the
issuer thereof in accordance
with its investment
objective. This restriction
shall not limit the Funds'
ability to invest in
securities issued by other
registered investment
companies.
--------------- -------------------------------- -------------------------------- -----------------------------------
All No fund will purchase or sell No Fund will: purchase or Add exception to real estate
real estate, commodities, or sell real estate, commodities, restrictions to permit
commodity contracts. or commodity contracts. investments in real estate
However, subject to other companies and real estate
investment policies and acquired through default,
restrictions the Funds may liquidation or other
invest in securities of distributions. Clarify permitted
companies that deal in real practices and prevent inadvertent
estate or are engaged in the violations of Fundamental
real estate business. A Fund Investment Restrictions.
may hold and sell real estate
acquired through default,
liquidation or other
distribution of an interest in
real estate as a result of the
Fund's ownership of
securities.
--------------- -------------------------------- -------------------------------- -----------------------------------
Money Market Invest more than 5% of its No Fund will: Purchase Add provision permitting
total assets in the securities securities (except securities investments in the securities of
of any one issuer. issued or guaranteed by the US any one issuer in the manner
Government, its agencies or prescribed by Rule 2a-7 of the
instrumentalities) of any one 1940 Act. Prevent inadvertent
issuer if, as a result, more violations of Fundamental
than 5% of its total assets Investment Restrictions and Rule
will be invested in the 2a-7. Prevent need to seek
securities of such issuer or shareholder approval each time
if it would own more than 10% Rule 2a-7 is amended or
of the voting securities of reinterpreted.
such issuer, except that (a)
up to 25% of its total assets
may be invested without regard
to these limitations; and (b)
a Fund's assets may be
invested in the securities of
one or more management
investment companies to the
extent permitted by the 1940
Act, the rules and regulations
thereunder and any exemptive
relief obtained by the Funds.
Notwithstanding the foregoing
paragraph, in order to
maintain a stable net asset
value per share, the Money
Market Fund follows the
practice of limiting its
investment in the securities
of any one issuer in the
manner prescribed by Rule 2a-7
of the 1940 Act and compliance
with Rule 2a-7 shall be
considered compliance with the
investment restrictions of
this paragraph.
---------------- ------------------------------- -------------------------------- -----------------------------------
Growth The GROWTH FUND will not: No Fund will: Purchase Add exception to per-issuer
Concentrate the investments of securities (except securities limitation for 25% of the
more than 25% of the total issued or guaranteed by the US Successor Funds' assets. Create
value of its assets in any Government, its agencies or consistency with other Successor
single industry. instrumentalities) of any one Funds. Greater flexibility for
issuer if, as a result, more portfolio managers. Eliminate
than 5% of its total assets restriction that went beyond
will be invested in the requirements of 1940 Act.
securities of such issuer or
if it would own more than 10%
of the voting securities of
such issuer, except that (a)
up to 25% of its total assets
may be invested without regard
to these limitations; and (b)
a Fund's assets may be
invested in the securities of
one or more management
investment companies to the
extent permitted by the 1940
Act, the rules and regulations
thereunder and any exemptive
relief obtained by the Funds.
---------------- -------------------------------- -------------------------------- -----------------------------------
In addition, the Board proposes to adopt the following Non-fundamental
Investment Restrictions in order to comply with new SEC Rule 35d-1 under the
1940 Act. While the Board may make changes to these policies in the future they
will provide the shareholders with at least 60 days' prior notice.
------------- -------------------------------- -------------------------------- -----------------------------------
Fund Before After Purposes / Intended Effect
------------- -------------------------------- -------------------------------- -----------------------------------
Short-Term No Restriction, previously. The Short-Term Bond, Bond and Add restriction that require
Bond, Bond Tax Exempt Bond Funds will not 80% assets be invested in
and invest less than 80% of their bonds. Add restriction for
Tax Exempt assets in bonds. The Tax Tax Exempt Bond Fund that
Bond Funds Exempt Bond Fund will not requires that 80% of assets
invest less than 80% its be invested in securities the
assets in investments the income of which is exempt from
income from which is exempt federal income tax. Comply with
income tax. new SEC Rule 35d-1 under the 1940
Act.
------------- ------------------------------- -------------------------------- -----------------------------------
Balanced No Restriction, previously The Balanced Fund will not: Add restriction requiring that
Invest less than 25% of its the Balanced Fund, at all times,
assets in equities or less be invested at least 25% in
than 25% of its assets in equities and 25% in bonds.
fixed income securities. Comply with SEC guidance for
Balanced Funds.
------------- ------------------------------- -------------------------------- -----------------------------------
This discussion is only a summary of certain of the differences between the
Fundamental Investment Restrictions found in the SAI of the Funds and the
Successor Funds. For a thorough comparison of the Fundamental Investment
Restrictions and changes to the Non-fundamental Investment Restrictions and
other investment policies, you may refer to the provisions of the current SAI of
the Funds and the proposed SAI of the Successor Funds. You can obtain a copy of
the current and proposed SAI by calling the Secretary of the Funds at (309)
557-2542.
RATIFICATION OF THE ELECTION OF TRUSTEES
As series of a Delaware business trust, the Funds will be governed by a Board of
Trustees whose duties and responsibilities in governing mutual funds are
essentially the same as those of the Boards of Directors. By voting in favor of
the reorganization, stockholders of the Funds effectively will be ratifying the
election by the Trust's sole initial shareholder of the Board of Trustees
comprised of the members described below in the description of Proposal 3.
OTHER INFORMATION ABOUT THE REORGANIZATION
Shareholder Accounts
The Funds' transfer agent will establish accounts for all fund shareholders
containing the appropriate number of shares of the Trust to be received by each
shareholder at the close of the reorganization. Each account will be identical
in all material respects to those currently maintained by the Funds for their
shareholders.
Shareholder Voting Rights & Meetings
The voting rights of shareholders will change as a result of the conversion.
Under the Articles of Incorporation of the four (4) Maryland corporations, each
shareholder is entitled to one vote for each share owned. Under the Declaration
of Trust of the Trust, shareholders are entitled to one vote for each dollar
value invested. This will eliminate any discrepancy in voting rights between
shareholders of different series, based solely on the difference in share
prices.
The Funds do not intend to conduct Annual Meetings of shareholders each year.
There is no requirement that either a Maryland corporation or a Delaware
business trust conduct an annual meeting of shareholders each year, except, when
required to elect directors (trustees) and for certain other actions. Because a
Delaware business trust is not required to obtain shareholder approval for
certain actions (described above) that do require shareholder approval for
Maryland corporations, it is anticipated that the Trust will conduct fewer
shareholder meetings than were held by the Maryland corporations.
Service Providers
The Funds and Successor Funds have the same service providers. Upon completion
of the reorganization, these service providers will continue to serve the
Successor Funds in the capacities indicated:
----------------------------------------------------------------------------
Service Providers to Country Mutual Funds
----------------------------------------------------------------------------
Investment Adviser Country Trust Bank
-------------------------------- -------------------------------------------
Distributor Quasar Distributors, LLC
-------------------------------- -------------------------------------------
Custodian Country Trust Bank
-------------------------------- -------------------------------------------
Transfer Agent Firstar Mutual Fund Services, LLC
-------------------------------- -------------------------------------------
Administrator Firstar Mutual Fund Services, LLC
-------------------------------- -------------------------------------------
Accounting Service Provider Firstar Mutual Fund Services, LLC
-------------------------------- -------------------------------------------
Independent Auditors PricewaterhouseCoopers LLP
-------------------------------- -------------------------------------------
Selection of Auditors
By voting in favor of the reorganization, stockholders of the Funds effectively
will be ratifying the selection by the Trust's sole initial shareholder of
PricewaterhouseCoopers, LLP as auditors for the Trust for the fiscal year ending
June 30, 2002. PricewaterhouseCoopers, LLP currently serves as auditors of the
Funds. PricewaterhouseCoopers, LLP has no direct or indirect financial interest
in the Funds or the Trust, except as auditors and independent accountants.
Investment Advisory Agreement
Country Trust Bank currently serves as investment adviser to the Funds, and the
Trust and Country Trust Bank will enter into an Investment Advisory Agreement
that is identical in substance to the current agreements between the Funds and
the Adviser. By voting in favor of the reorganization, stockholders of the Funds
effectively will be ratifying the selection of Country Trust Bank as investment
adviser to the Trust and the approval by the Trust's sole initial shareholder of
the Investment Advisory Agreement.
Distribution Plan
The Trust will adopt a Distribution Plan that is identical in substance to the
current Plans adopted by the Funds. By voting in favor of the reorganization,
stockholders of the Funds effectively will be ratifying the adoption of a Plan
of Distribution under Rule 12b-1 for all of the Successor Funds (except the
Money Market Fund) and the approval of the Trust's sole initial shareholder of
the Plan of Distribution.
Expenses of the Reorganization
The costs of the reorganization are expected to be approximately $50,000.
Country Trust Bank and Country Capital Management Company will bear the costs of
the reorganization. However, the Successor Funds will have some additional costs
associated with operating multiple classes of shares and due to other changes
associated with the reorganization.
Tax Consequences
The reorganization will be tax-free for federal income tax purposes and will not
take place unless the Funds receive a satisfactory opinion from Dechert, counsel
to the Funds, substantially to the effect that:
The reorganization will be a "reorganization" within the meaning of
Section 368(a)(1) of the Internal Revenue Code of 1986 (the "Code"),
and each fund will be "a party to a reorganization" within the meaning
of Section 368(b) of the Code;
No gain or loss will be recognized by the Funds upon (1) the transfer
of all of its assets and liabilities to the new series as described
above or (2) the distribution by the Funds of shares of the Successor
Funds to the Funds' shareholders;
No gain or loss will be recognized by the Successor Funds upon the
receipt of the Funds' assets solely in exchange for the issuance of
shares of the Successor Funds and the assumption of all of the Funds'
liabilities by the Successor Funds;
The tax basis of the assets of the Funds acquired by the Successor
Funds will be the same as the tax basis of those assets in the hands
of the Funds immediately before the transfer;
The tax holding period of the assets of the Funds in the hands of the
Successor Funds will include the Funds' tax holding period for those
assets;
The shareholders of the Funds will not recognize gain or loss upon the
exchange of all their shares of the Funds solely for shares of the
Successor Funds as part of the reorganization;
The tax basis of shares of the Successor Funds received by the Funds'
shareholders in the reorganization will be the same as the tax basis
of the shares of the Funds surrendered in exchange; and
The tax holding period of the shares of the Successor Funds received
by the Funds' shareholders will include the tax holding period of the
Funds' shares surrendered in the exchange, provided that the shares of
the Funds were held as capital assets on the date of the exchange.
Surrender of Share Certificates
If your shares are represented by one or more share certificates before the
reorganization date, you must either surrender the certificates to the Funds or
deliver to the Funds a lost certificate affidavit, in the form that the Funds
require. In addition, the Funds may require a surety bond to accompany the
affidavit. On the reorganization date, all certificates that have not been
surrendered: will be canceled, will not evidence ownership of a Fund's shares
and will evidence ownership of a Successor Fund's shares.
Shareholders may not redeem or transfer shares of the Successor Funds received
in the reorganization until they have surrendered their Fund share certificates
or delivered a lost certificate affidavit. THE SUCCESSOR FUND WILL NOT ISSUE
SHARE CERTIFICATES IN THE REORGANIZATION.
BOARD EVALUATION AND RECOMMENDATION
For the reasons described above, the Boards of Directors of the Funds, including
the Independent Directors, unanimously approved the reorganization. In
particular, the Directors determined that the reorganization was in the best
interests of the Funds and that the interests of the Funds' shareholders would
not be diluted as a result of the reorganization.
THE DIRECTORS RECOMMEND THAT THE FUNDS' SHAREHOLDERS VOTE FOR THE PROPOSAL TO
APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.
REQUIRED VOTE
The affirmative vote of two-thirds (2/3rds) of each Fund's shares outstanding
and entitled to vote is required to approve the reorganization of such Fund as a
series of a Delaware business trust.
PROPOSAL 2
CHANGES TO FUNDAMENTAL INVESTMENT RESTRICTIONS
In the event that the reorganization is not approved, the Board nevertheless
proposes to change the Fundamental Investment Restrictions in the manner set
forth earlier. These changes can not be made without shareholder approval. The
changes to the Fund names and investment strategies discussed above will also be
made if the reorganization is not approved, since they do not require
shareholder vote.
CHANGES TO FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
The proposed changes to the fundamental investment policies and restrictions of
each of the Funds are described in detail in Proposal 1. The Boards of Directors
believe that it would be advantageous to the Funds and their shareholders to
proceed with these changes, even if the shareholders do not approve the
reorganization as a whole. For more detailed discussion of these changes, please
consult Proposal 1(Comparison of Investment Policies and Restrictions).
The proposed Fundamental Investment Restrictions are set forth below:
------------ ----------------- -------------------------------------------------
Fund Fundamental Investment Restrictions
------------ ----------------- -------------------------------------------------
2A All No Fund will: Borrow money or authorize or
issue any class of senior securities, except to
the extent permitted by the 1940 Act, the rules
and regulations thereunder and any exemptive
relief obtained by the Funds.
------------ ----------------- -------------------------------------------------
2B All No Fund will: Underwrite or participate in the
underwriting of securities of other issuers,
except when it might technically be deemed to be
an underwriter either (a) in connection with the
disposition of a portfolio security, or (b) in
connection with the purchase of securities
directly from the issuer thereof in accordance
with its investment objective. This restriction
shall not limit the Funds' ability to invest
in securities issued by other registered
investment companies.
------------ ----------------- -------------------------------------------------
2C All No Fund will: purchase or sell real estate,
commodities, or commodity contracts. However,
subject to other investment policies and r
restrictions the Funds may invest in securities
of companies that deal in real estate or are
engaged in the real estate business. A Fund may
hold and sell real estate acquired through
default, liquidation or other distribution of an
interest in real estate as a result of the Fund's
ownership of securities.
------------ ----------------- -------------------------------------------------
2D Money Market No Fund will: Purchase securities (except
securities issued or guaranteed by the US
Government, its agencies or instrumentalities) of
any one issuer if, as a result, more than 5% of
its total assets will be invested in the
securities of such issuer or if it would own more
than 10% of the voting securities of such issuer,
except that (a) up to 25% of its total assets may
be invested without regard to these limitations;
and (b) a Fund's assets may be invested in the
securities of one or more management investment
companies to the extent permitted by the 1940
Act, the rules and regulations thereunder and any
exemptive relief obtained by the Funds.
Notwithstanding the foregoing paragraph, in order
to maintain a stable net asset value per share,
the Money Market Fund follows the practice of
limiting its investment in the securities of any
one issuer in the manner prescribed by Rule 2a-7
of the 1940 Act and compliance with Rule 2a-7
shall be considered compliance with the
investment restrictions of this paragraph.
------------ ----------------- -------------------------------------------------
2E Growth No Fund will: Purchase securities (except
securities issued or guaranteed by the US
Government, its agencies or instrumentalities) of
any one issuer if, as a result, more than 5% of
its total assets will be invested in the
securities of such issuer or if it would own more
than 10% of the voting securities of such issuer,
except that (a) up to 25% of its total assets may
be invested without regard to these limitations;
and (b) a Fund's assets may be invested in the
securities of one or more management investment
companies to the extent permitted by the 1940
Act, the rules and regulations thereunder and any
exemptive relief obtained by the Funds.
------------ ----------------- -------------------------------------------------
BOARD EVALUATION AND RECOMMENDATION
The Boards of Directors of the Funds, including the Independent Directors
believe the above referenced changes to the names and investment strategies of
certain Funds and the investment policies and restrictions of each of the Funds
is in the best interests of the Funds and the Funds' shareholders.
THE DIRECTORS RECOMMEND THAT THE FUNDS' SHAREHOLDERS VOTE FOR THE PROPOSAL TO
APPROVE THE INVESTMENT POLICIES AND RESTRICTIONS OF EACH OF THE FUNDS.
REQUIRED VOTE
The fundamental investment restrictions may only be changed by the vote of a
majority of a fund's outstanding shares, which means the lesser of: (1) 67% of
such fund's outstanding shares present at a meeting, if the holders of more than
50% of the outstanding shares are present in person or by proxy, or (2) more
than 50% of such fund's outstanding shares.
PROPOSAL 3
ELECTION OF BOARDS OF DIRECTORS
If the stockholders of any of the Funds do not approve the reorganization,
stockholders of any Fund not approving the reorganization will be asked to elect
each of the seven nominees described below as Directors of the Funds. Directors
elected at the Meeting will serve as Directors until the next meeting of
stockholders called for this purpose or until their successors are elected and
qualified. Of those seven individuals, Messrs. Warfield, Shauman and Phelps and
Ms. Erickson, Miller and Cole currently serve on the Boards of the Funds. Mr.
Grace has not previously served on the Boards. Mr. Allen is not standing for
reelection. Unless you direct otherwise, the persons named on the accompanying
proxy card intend to vote at the meeting for the election of each nominee.
The following table sets forth each nominee's position(s) with the fund, age,
address, principal occupation or employment during the past five years and
Directorships.
-------------------------------------------------------------------------------------------------------------
Interested Directors (1)
------------------------------- ------------------ ----------------------------------------------------------
NAME, AGE, POSITION(S) WITH FIRST BECAME PRINCIPAL OCCUPATION OR EMPLOYMENT AND
THE FUND, ADDRESS (2) DIRECTOR OTHER DIRECTORSHIPS
------------------------------- ------------------ ----------------------------------------------------------
Ronald R. Warfield, 58 1994 Director and President: Illinois Agricultural
Director & President Association and Affiliated Companies, 1993 to date(3);
Director and President: Country Trust Bank(4), 1993 to
date; Director: American Farm Bureau Federation and
certain of its Affiliated Companies, 1996
to date. Farmer.
------------------------------- ------------------ ----------------------------------------------------------
Robert L. Phelps, 49 Director 2000 Director: Illinois Agricultural Association and
Affiliated Companies, 1992 to date; Director: Country
Trust Bank, 1996 to date. Farmer.
------------------------------- ------------------ ----------------------------------------------------------
Wendell L. Shauman, 56 1999 Director: Illinois Agricultural Association and
Director Affiliated Companies, 1992 to 2000; Director:
Country Trust Bank, 1998 to 2000. Farmer.
-------------------------------------------------------------------------------------------------------------
Non-Interested (Independent) Directors
------------------------------- ------------------ ----------------------------------------------------------
NAME, AGE, POSITION(S) WITH FIRST BECAME PRINCIPAL OCCUPATION OR EMPLOYMENT AND
THE FUND, ADDRESS (2) DIRECTOR OTHER DIRECTORSHIPS
------------------------------- ------------------ -----------------------------------------------------------
Nancy J. Erickson, 44 Director 1995 President of McHatton Farm Management, Inc., 1981
to date. Farmer.
------------------------------- ------------------ -----------------------------------------------------------
Ailene Miller, 75 1991 McLean County (Illinois) Board Member, 1986 to date;
Director Member of IAA Foundation Trustee Emeritus, 1988 to date.
------------------------------- ------------------ -----------------------------------------------------------
Charlot R. Cole, 60 Director 1996 Property Developer, 1979 to date; Member Macoupin-Greene
County Cooperation Extension Council (formerly Macoupin
County Cooperative Extension Council), 1992 to date and
President, 1995 to date; Secretary/Treasurer, Cole
Farms, Inc., 1993 to date. Farmer.
------------------------------- ------------------ -----------------------------------------------------------
Roger D. Grace, 54 Nominee Director, Illini FS, Inc., 1990 to date; Secretary,
Director Illini FS, Inc., 1997 to date. Farmer.
------------------------------- ------------------ -----------------------------------------------------------
------------------------
(1) Each of the interested Directors/nominees serves (or in the
case of Mr. Shauman, served within the past two (2) years)
as a Director of the Illinois Agricultural Association
(IAA), Illinois Agricultural Holding Co. (IAHC), Country
Life Insurance Company (CLIC), Country Mutual Insurance
Company (CMIC), Country Trust Bank (CTB) and Country Capital
Management Company (CCMC). IAA owns 98.3% of the outstanding
voting securities of IAHC. IAHC owns 99.9% of the
outstanding voting securities of CLIC. CLIC owns 95% (and
CMIC owns 5% of) the outstanding voting securities of CTB.
CLIC owns 100% of the outstanding voting securities of CCMC.
Ronald R. Warfield is President of IAA, IAHC, CLIC, CMIC and
CTB and Chairman of the Board of CCMC.
(2) The mailing address for all the Funds' Officers and
Directors is in care of the COUNTRY Mutual Funds, 808 IAA
Drive, Bloomington, Illinois 61702.
(3) Affiliated Companies of the Illinois Agricultural
Association include without limitation members of the
COUNTRY Insurance & Financial Services Group, Illinois
Agricultural Holding Co., AgriVisor Services, Inc., Illinois
Agricultural Service Company and IAA Foundation.
(4) Country Trust Bank was formed on May 1, 2000 and is the
successor to IAA Trust Company an Illinois corporation with
trust powers which was reorganized into a federal thrift.
As of June 30, 2001, the Officers, Directors and nominees, as a group, owned
less than one percent (1%) of the outstanding shares of each of the Funds.
Information about beneficial ownership of shares is based on information
provided to the Funds by the Officers, Directors and nominees.
The same seven individuals serve on the Boards of all four corporations,
representing the six Funds that comprise the COUNTRY Mutual Funds complex.
The following individual currently serves on the Boards of the Funds, but is not
standing for reelection as a Director of the Companies:
---------------------------------- ---------------------------------------------
NAME, AGE, POSITION WITH THE FUND PRINCIPAL OCCUPATION OR EMPLOYMENT AND OTHER
DIRECTORSHIPS
---------------------------------- ---------------------------------------------
Herbert G. Allen, 71 Farmer.
Director
---------------------------------- ---------------------------------------------
During the fiscal year ended June 30, 2001, the Boards of Directors held four
meetings. All of the nominees then serving as Directors attended at least 75% of
the meetings of the Boards or applicable committee, if any, held during the
fiscal year.
All of the nominees, except for Wendell L. Shauman, Roger D. Grace, and Robert
L. Phelps were most recently elected as Directors of the Fund at the Annual
Meeting of Stockholders held on September 30, 1996, to serve until the next
meeting of stockholders or until their successors are elected and qualified. All
nominees have consented to serve as Directors and the Boards of Directors have
no reason to believe that any of the persons named will become unavailable for
election. Should any nominee withdraw from the election or otherwise be unable
to serve, the named proxies will vote for the election of such substitute
nominee as the Boards of Directors may recommend, unless a decision is made to
reduce the number of Directors serving on the Boards of Directors.
Equity Securities Beneficially Owned by Directors & Nominees
---------------------------------- ------------------------------------- ----------------------------------
Name of Director or Nominee Dollar Range of Equity Securities Aggregate Dollar Range of Equity
In The Funds Securities In All Funds Overseen
or to be Overseen by Director or
Nominee in Family of Investment
Companies
---------------------------------- ------------------------------------- ----------------------------------
Ronald R. Warfield Growth: $10,001-$50,000
Asset Allocation: $10,001-$50,000
Tax Exempt: None Over $100,000
Short-Term Gov't: $1-$10,000
Long-Term: $10,001-$50,000
Money Market: $10,001-$50,000
---------------------------------- ------------------------------------- ----------------------------------
Robert L. Phelps Growth: $10,001-$50,000
Asset Allocation: $1-$10,000
Tax Exempt: None $10,001-$50,000
Short-Term Gov't: None
Long-Term: None
Money Market:$1-$10,000
---------------------------------- ------------------------------------- ----------------------------------
Charlot R. Cole Growth: $10,001-$50,000
Asset Allocation: $10,001-$50,000
Tax Exempt: $1-$10,000 $10,001-$50,000
Short-Term Gov't: None
Long-Term: None
Money Market: $1-$10,000
---------------------------------- ------------------------------------- ----------------------------------
Nancy J. Erickson Growth: None
Asset Allocation: None
Tax Exempt: None None
Short-Term Gov't: None
Long-Term: None
Money Market: None
---------------------------------- ------------------------------------- ----------------------------------
Ailene Miller Growth: Over $100,000
Asset Allocation: None
Tax Exempt: None Over $100,000
Short-Term Gov't: None
Long-Term: None
Money Market: None
---------------------------------- ------------------------------------- ----------------------------------
Wendell L. Shauman Growth: $1-$10,000
Asset Allocation: $10,001-$50,000
Tax Exempt: None $10,001-$50,000
Short-Term Gov't: None
Long-Term: None
Money Market: $1-$10,000
---------------------------------- ------------------------------------- ----------------------------------
Roger D. Grace Growth: None
Asset Allocation: None
Tax Exempt: None None
Short-Term Gov't: None
Long-Term: None
Money Market: None
---------------------------------- ------------------------------------- ----------------------------------
None of the Directors or Nominees hold any interest in the Funds' Adviser,
Principal Underwriter or any person directly or indirectly controlling,
controlled by or under common control with the Funds' Adviser or Principal
Underwriter.
EXECUTIVE OFFICERS
Following is a list of the Funds' Executive Officers who are neither Directors
nor Director nominees. Each Executive Officer who was elected by the Directors
is expected to serve until a successor is chosen and qualified, or until
resignation or removal by the Boards. The business address of the Officers of
the Funds is 1701 N. Towanda Avenue, Bloomington, Illinois 61702.
------------------------------- ------------------ -----------------------------------------------------------
Name of Officer, Age & Service Since Principal Occupation(s) for Last Five Years
Position With Funds
------------------------------- ------------------ -----------------------------------------------------------
John Blackburn, 53 2001 Chief Executive Officer: COUNTRY Insurance & Financial
Vice President Services(1), 2001 to date; Senior Vice President
Marketing: COUNTRY Insurance & Financial Services, 1996
to 2001.
------------------------------- ------------------ -----------------------------------------------------------
Robert W. Rush, Jr. , 56 Vice 1999 Executive Vice President & Trust Officer: Country Trust
President Bank, 1999 to date: Chairman, President & CEO: Bank One
Illinois, 1972 to 1999 (includes predecessor positions and
companies).
------------------------------- ------------------ -----------------------------------------------------------
Bruce D. Finks, 48 1996 Vice President - Investments: Country Trust Bank, 1995 to
Vice President date.
------------------------------- ------------------ -----------------------------------------------------------
Richard M. Miller, 63 1992 Senior Vice President and Senior Trust Officer: Country
Vice President Trust Bank, 1991 to date.
------------------------------- ------------------ -----------------------------------------------------------
Phillip T. Nelson, 44 Vice 2000 Director and Vice President: Illinois Agricultural
President Association and Affiliated Companies, 1999 to date; Vice
President: Country Trust Bank, 1999 to date; President -
LaSalle County Farm Bureau 1993 to 1999. Farmer.
------------------------------- ------------------ -----------------------------------------------------------
Paul M. Harmon, 59 General 1995 General Counsel: Illinois Agricultural Association and
Counsel & Secretary (Secretary) 1996 Affiliated Companies, 1996 to date; Secretary: Illinois
(GeneralCounsel) Agricultural Association and affiliated companies, 1998
to date; General Counsel & Secretary, Country Trust Bank,
1996 to date.
------------------------------- ------------------ -----------------------------------------------------------
David A. Magers, 46 Treasurer 1999 Vice President- Finance & Treasurer: Illinois
Agricultural Association and Affiliated Companies, 1998
to date; Controller: Illinois Agricultural Association
and Affiliated Companies, 1988 to date. Treasurer:
Country Trust Bank, 1998 to date.
------------------------------- ------------------ -----------------------------------------------------------
Richard F. Day, 61 1992 Controller, Country Trust Bank, 1974 to date.
Controller
------------------------------- ------------------ -----------------------------------------------------------
(1) COUNTRY Insurance & Financial Services is a group of
insurance and financial services companies which includes:
Country Mutual Insurance Company, Country Preferred
Insurance Company, Country Casualty Insurance Company,
Country Life Insurance Company, Country Investors Life
Assurance Company, Country Medical Plans, Inc., Country
Capital Management Company, Country Trust Bank and CC
Services, Inc. and other Affiliated Companies.
REMUNERATION OF DIRECTORS AND OFFICERS
Directors of the Funds are entitled to $200 (Growth Fund) and $50 (each other
Fund) for each day or a portion thereof spent in a meeting or meetings of the
Boards of Directors or while engaged in special work authorized by the President
or the Boards of Directors and to reimbursement of expenses for each Directors'
meeting attended or while engaged in special work authorized by the President or
by the Boards of Directors. Directors and Officers receive no other compensation
from the Fund for their services. During the fiscal year ended June 30, 2001,
the aggregate amount of fees and expenses paid by the Funds to Directors and
Officers was $7,348.
The following table provides information about the compensation paid by the
Funds to the nominees for their services as Fund Directors during the most
recent fiscal year. The Funds paid no pension or retirement benefits to the
Directors. The Funds paid no salary or other compensation to Officers of the
Funds.
------------------------------ ----------------------------------- ----------------------------------
NAME OF PERSON, POSITION AGGREGATE COMPENSATION FROM EACH TOTAL COMPENSATION FROM EACH FUND
FUND FOR FISCAL YEAR ENDED JUNE 30, AND FUND COMPLEX FOR FISCAL YEAR
2001 ENDED JUNE 30, 2001
------------------------------ ----------------------------------- ----------------------------------
Charlot R. Cole, Director Growth: $947
Asset Allocation: $218
Tax Exempt: $212 $1,679
Short-Term Gov't: $88
Long-Term: $98
Money Market: $116
------------------------------ ----------------------------------- -----------------------------
Nancy J. Erickson, Director Growth: $942
Asset Allocation: $218
Tax Exempt: $211 $1,668
Short-Term Gov't: $86
Long-Term: $97
Money Market: $114
------------------------------ ----------------------------------- -----------------------------
Ailene Miller, Director Growth: $839
Asset Allocation: $205
Tax Exempt: $203 $1,474
Short-Term Gov't: $72
Long-Term: $74
Money Market: $81
------------------------------ ----------------------------------- -----------------------------
Ronald R. Warfield, Director* Growth: None
Asset Allocation: None
Tax Exempt: None None
Short-Term Gov't: None
Long-Term: None
Money Market: None
------------------------------ ----------------------------------- -----------------------------
Robert L. Phelps, Director* Growth: $255
Asset Allocation: $57
Tax Exempt: $54 $4,52
Short-Term Gov't: $24
Long-Term: $27
Money Market: $35
------------------------------ ----------------------------------- -----------------------------
Wendell L. Shauman, Director* Growth: $203
Asset Allocation: $50
Tax Exempt: $50 $3,55
Short-Term Gov't: $17
Long-Term: $17
Money Market: $18
------------------------------ ----------------------------------- -----------------------------
* Directors who are also directors, officers or employees of the investment
adviser of the Funds are not currently compensated by the Funds. However, during
the fiscal year ended June 30, 2001, certain directors who are directors,
officers or employees of the investment adviser were paid fees by the Funds, as
described in the chart.
BOARDS RECOMMENDATION
THE FUNDS' DIRECTORS RECOMMEND THAT THE SHAREHOLDERS VOTE FOR THE ELECTION OF
EACH NOMINEE TO SERVE AS A DIRECTOR OF THE FUNDS UNTIL THE ELECTION OR
APPOINTMENT OF THEIR SUCCESSOR(S).
REQUIRED VOTE
A plurality of the shares of each of the Funds present in person or by proxy at
the Meeting and entitled to vote is required to elect the Nominees.
OTHER MATTERS
INFORMATION CONCERNING THE CURRENT ORGANIZATION OF THE FUNDS
The Funds are open-end management investment companies organized as corporations
under the laws of the state of Maryland on August 5, 1965 (Growth Fund), March
20, 1978 (Asset Allocation Fund & Tax Exempt Bond Fund) and April 14, 1981
(Taxable Fixed Income Series Fund).
INFORMATION CONCERNING THE FUNDS' ADVISER
Country Trust Bank, 808 IAA Drive, Bloomington, Illinois 61702, serves as
investment adviser to the Funds, pursuant to Advisory Agreements dated September
29, 1992 (for the Growth, Tax Exempt and Money Market Funds), April 23, 1993
(for the Asset Allocation Fund) and October 1, 1996 (for the Short-Term
Government Bond and Long-Term Bond Fund). The Adviser is organized as a federal
thrift and is a bank as that term is defined in the Investment Company Act of
1940. The Adviser was previously organized as an Illinois corporation on
December 30, 1970 and was reorganized as a federal thrift effective May 1, 2000.
The Adviser exercises fiduciary powers as permitted by its charter with the
Office of Thrift Supervision. For the fiscal year ended June 30, 2001,
approximately 17% of the Adviser's income was received from trust service fees.
The Adviser is supervised by the Office of Thrift Supervision.
INFORMATION CONCERNING THE FUNDS' DISTRIBUTOR AND ADMINISTRATOR
Quasar Distributors, LLC (the 'Distributor') is the distributor of the Funds
pursuant to Distribution Agreements with each of the Funds dated September 1,
2000. The Distributor is a Wisconsin limited liability company formed on January
21, 2000, and is a broker-dealer registered with the SEC and a member of the
National Association of Securities Dealers, Inc. The Distributor, located at 615
E. Michigan Street, Milwaukee, WI 53202 is a wholly-owned subsidiary of Firstar
Mutual Fund Services, LLC (the administrator, transfer agent and
accounting/pricing agent for the Fund). Firstar Mutual Fund Services, LLC is
located at the same address as the Distributor. At the present time, the
Distributor serves as distributor for 17 other nonaffiliated Fund groups.
INFORMATION CONCERNING THE FUNDS' INDEPENDENT ACCOUNTANTS
Audit services performed by PricewaterhouseCoopers LLP during the most recent
fiscal year included examination of the financial statements of the Fund, review
of filings with the Securities and Exchange Commission and preparation of tax
returns.
During the fiscal year ended June 30, 2001, the Funds paid the following fees to
PricewaterhouseCoopers LLP:
------------------ ---------------------------------- --------------------------
Audit Fees Financial Information Systems All Other Fees1
Design and Implementation Fees1
------------------ ---------------------------------- --------------------------
$72,000 $ 0 $4,500
------------------ ---------------------------------- --------------------------
1 The aggregate fees billed for financial information systems
design and implementation services and all other fees
include services rendered by PricewaterhouseCoopers LLP to
the Funds, its investment adviser, and entities controlling,
controlled by or under common control with the investment
adviser that provide services to the Funds.
Effective February 5, 2001, new Securities and Exchange Commission rules
generally require the disclosure in a Fund's proxy statement of whether the
Fund's Audit Committee considered whether the provision of non-audit services to
the Fund and of professional services to the Fund's adviser and to entities
controlling, controlled by, and under common control with, the Fund's adviser
that provide services to the Fund is compatible with maintaining the
independence of the Fund's independent accountants.
INFORMATION CONCERNING COMMITTEES
The Funds currently have an Executive Committee, Nominating Committee and an
Audit Committee, but do not have a Compensation Committee.
The Executive Committee is currently comprised of Directors Warfield, Allen and
Miller. Under the Bylaws of the Funds, the Executive Committee is empowered to
exercise any and all of the powers of the Boards of Directors in the management
of the business and affairs of the Funds. The Executive Committee did not hold
any meetings during the last fiscal year. It is anticipated that the Trust will
have an Executive Committee substantially identical to the current committee of
the Funds.
The four (4) disinterested Directors (currently Herb Allen, Charlot Cole, Nancy
Erickson and Ailene Miller) of the Funds serve on the Audit and Nominating
Committee of the Funds' Boards of Directors. The functions of the Audit
Committee include recommending independent auditors to the Boards, monitoring
the independent auditors' performance, reviewing the results of audits and
responding to certain other matters deemed appropriate by the Boards. The Audit
Committee was formed by the Boards of Directors on April 30, 2001, and did not
hold any meetings during the last fiscal year, but met subsequently on July 30,
2001. It is anticipated that the Trust will have an Audit Committee
substantially identical to the current committee of the Funds.
The function of the Nominating Committee is to nominate for election (or
appointment) non-interested Directors of the Funds. The Nominating Committee did
not hold any meetings during the last fiscal year, but met subsequently on July
30, 2001, and nominated Roger D. Grace for election by the shareholders. It is
anticipated that the Trust will have a Nominating Committee substantially
identical to the current committee of the Funds.
INFORMATION CONCERNING THE MEETING
VOTING RIGHTS
Each share of the Funds is entitled to one vote and each fractional share is
entitled to that fractional vote. The vote required to approve each proposal is
described in the proposal.
Shares of the Funds represented in person or by proxy, including shares that
abstain or do not vote on a proposal, will be counted for purposes of
determining whether there is a quorum at the meeting. Accordingly, an abstention
from voting has the same effect as a vote against a proposal.
Shareholders of each of the Funds (including each Series, individually) will
vote separately to approve each Proposal.
SOLICITATION OF PROXIES
In addition to the mailing of these proxy materials, proxies may be solicited by
telephone, by fax or in person by a proxy solicitation firm, by the Directors,
Officers and employees of the Funds, by personnel of the Adviser, the Funds'
principal distributor, and the Funds' transfer agent or by broker-dealer firms.
The Adviser has retained D.F. King & Co., Inc. to assist in the solicitation of
proxies for certain of the Funds at an estimated cost of $10,000 which will be
borne by the Adviser.
The mailing address of the Funds and the Adviser is 808 IAA Drive, Bloomington,
Illinois 61702. The address of the distributor, Quasar Distributors, LLC, is 615
E. Michigan Street, Milwaukee, Wisconsin 53202.
REVOKING PROXIES
A shareholder signing and returning a proxy has the power to revoke it at any
time before it is exercised:
o By filing a written notice of revocation with the Funds' distributor,
Quasar Distributors, LLC, 615 E. Michigan Street, Milwaukee, Wisconsin
53202.
o By returning a duly executed proxy with a later date before the time
of the meeting, or
o If a shareholder has executed a proxy but is present at the meeting
and wishes to vote in person, by notifying the Secretary of the Funds
(without complying with any formalities) at any time before it is
voted.
Being present at the meeting alone does not revoke a previously executed and
returned proxy.
OUTSTANDING SHARES AND QUORUM
As of June 30, 2001, the following number of shares of common stock of each of
the Funds were outstanding: Growth Fund, 8,011,019; Asset Allocation Fund,
1,328,342; Tax Exempt Bond Fund, 1,830,105; Money Market Fund, 65,087,937;
Short-Term Government Bond Fund, 2,774,775; Long-Term Bond Fund, 4,270,243.
Only shareholders of record on August 31, 2001, (record date) are entitled to
notice of and to vote at the meeting. A majority of the outstanding shares of
each Fund that are entitled to vote will be considered a quorum for the
transaction of business.
VOTING REQUIREMENTS
1. Approving the reorganization: two-thirds (2/3rds) of the outstanding
shares of each Fund.
2. Approving Changes to Fundamental Investment Restrictions: a majority
of each Fund's outstanding shares, which means the lesser of: (1) 67%
of such fund's outstanding shares present at a meeting, if the holders
of more than 50% of the outstanding shares are present in person or by
proxy, or (2) more than 50% of such Fund's outstanding shares.
3. Election of Directors: A plurality of the shares of each Fund present
in person or by proxy at the Meeting and entitled to vote.
OTHER BUSINESS
The Funds' Boards of Directors know of no business to be presented for
consideration at the meeting other than the proposals in this proxy statement
and the approval of the minutes of the 1996 annual meeting. Approval of the
minutes indicates only that the minutes accurately reflect the events of the
meeting. If other business is properly brought before the meeting, proxies will
be voted according to the best judgment of the persons named as proxies.
ADJOURNMENTS
If a quorum is not present in person or by proxy at the time any session of the
meeting is called to order, the persons named as proxies may vote those proxies
that have been received to adjourn the meeting to a later date. If a quorum is
present but there are not sufficient votes in favor of a proposal, the persons
named as proxies may propose one or more adjournments of the meeting to permit
further solicitation of proxies concerning that proposal. Any adjournment will
require the affirmative vote of a majority of the Funds' shares present at the
session of the meeting to be adjourned. If an adjournment of the meeting is
proposed because there are not sufficient votes in favor of a proposal, the
persons named as proxies will vote those proxies favoring that proposal in favor
of adjournment, and will vote those proxies against the proposal against
adjournment.
TELEPHONE AND ELECTRONIC VOTING
In addition to soliciting proxies by mail, by fax or in person, the Funds may
arrange to have votes recorded by telephone by Officers and employees of the
Funds or by personnel of the Adviser or transfer agent. The telephone and
electronic voting procedures are designed to verify a shareholder's identity, to
allow a shareholder to authorize the voting of shares in accordance with the
shareholder's instructions and to confirm that the voting instructions have been
properly recorded.
o A shareholder will be called on a recorded line at the telephone
number in the Funds' account records and will be asked to provide the
shareholder's social security number or other identifying information.
o The shareholder will then be given an opportunity to authorize proxies
to vote his or her shares at the meeting in accordance with the
shareholder's instructions.
o To ensure that the shareholder's instructions have been recorded
correctly, the shareholder will also receive a confirmation of the
voting instructions by mail.
A toll-free number will be available in case the voting information contained in
the confirmation is incorrect.
If the shareholder decides after voting by telephone to attend the meeting, the
shareholder can revoke the proxy at that time and vote the shares at the
meeting.
OWNERSHIP OF SHARES OF THE FUND
To the knowledge of the Funds, as of June 30, 2001, the following persons owned
of record or beneficially 5% or more of the outstanding shares of the Funds.
------------------------------- ---------------------------- ------------------ ----------------------------
FUND ACCOUNT NAME NUMBER OF SHARES PERCENT OF SHARES
BENEFICIALLY OWNED
DIRECTLY OR INDIRECTLY ON
JUNE 30, 2001
------------------------------- ---------------------------- ------------------ ----------------------------
Country Growth Fund, Inc. IAATCO
c/o COUNTRYSM Trust Bank 4,546,021.42 56.8%
808 IAA Drive
Bloomington, IL 61702
------------------------------- ---------------------------- ------------------ ----------------------------
Country Asset Allocation IAATCO
Fund, Inc. c/o COUNTRYSM Trust Bank 1,001,127.47 75.4%
808 IAA Drive
Bloomington, IL 61702
------------------------------- ---------------------------- ------------------ ----------------------------
Country Tax Exempt Bond Fund, IAATCO
Inc. c/o COUNTRYSM Trust Bank 149,788.81 8.2%
808 IAA Drive
Bloomington, IL 61702
------------------------------- ---------------------------- ------------------ ----------------------------
Country Money Market Fund IAATCO
c/o COUNTRYSM Trust Bank 54,073,246.09 83.4%
808 IAA Drive
Bloomington, IL 61702
------------------------------- ---------------------------- ------------------ ----------------------------
Country Short-Term Government IAATCO
Bond Fund c/o COUNTRYSM Trust Bank 2,578,784.88 93.0%
808 IAA Drive
Bloomington, IL 61702
------------------------------- ---------------------------- ------------------ ----------------------------
Country Long-Term Bond Fund IAATCO
c/o COUNTRYSM Trust Bank 4,126,769.8 96.8%
808 IAA Drive
Bloomington, IL 61702
------------------------------- ---------------------------- ------------------ ----------------------------
Country Asset Allocation COUNTRY Life Insurance 96,227.589 7.24%
Fund, Inc. Company(R)
P.O. Box 2000
Bloomington, IL 61702-2000
------------------------------- ---------------------------- ------------------ ----------------------------
Country Short-Term Government COUNTRY Life Insurance 149,455.984 5.39%
Bond Fund Company(R)
P.O. Box 2000
Bloomington, IL 61702-2000
------------------------------- ---------------------------- ------------------ ----------------------------
Country Tax Exempt Bond Fund COUNTRY Mutual Insurance 234,484.573 12.8%
Company(R)
1701 Towanda Avenue
Bloomington, IL 61702
------------------------------- ---------------------------- ------------------ ----------------------------
Security Ownership of Management: The Officers and Directors (and nominee
Directors/Trustees) of each of the Funds do not own, as a group, more than one
percent of any of the Funds. IAATCO, COUNTRY Life Insurance and COUNTRY Mutual
Insurance are affiliated with the investment adviser. Record ownership of shares
by the affiliates of the percentages indicated in the chart above will likely
increase the chance that shareholders approve the proposal.
Approximately 99.99% of the issued and outstanding stock of COUNTRY Life
Insurance Company is owned by Illinois Agricultural Holding Co. and 98.30% of
the shares of the latter company are owned by Illinois Agricultural
Association(R) of 1701 N. Towanda Avenue, Bloomington, Illinois, an Illinois
not-for-profit corporation which was formed to promote agriculture and the
mutual interests of its members therein.
Respectfully Submitted,
/s/ Paul M. Harmon
-------------------
August 31, 2001 Paul M. Harmon
Bloomington, Illinois Secretary
APPENDIX 1
PROXY CARD
COUNTRY GROWTH FUND, INC.
COUNTRY ASSET ALLOCATION FUND, INC.
COUNTRY TAX EXEMPT BOND FUND, INC.
&
COUNTRY TAXABLE FIXED INCOME SERIES FUND, INC.
Country Money Market Fund
Country Short-Term Government Bond Fund
Country Long-Term Bond Fund
--------------------------------------------------------------------------------
The undersigned holder of shares of beneficial interest of the COUNTRY Growth
Fund, Inc., COUNTRY ASSET ALLOCATION FUND, INC., COUNTRY TAX EXEMPT BOND FUND,
INC. or COUNTRY TAXABLE FIXED INCOME SERIES FUND, INC., (including COUNTRY MONEY
MARKET FUND, COUNTRY SHORT-TERM GOVERNMENT BOND FUND AND COUNTRY LONG-TERM BOND
FUND) (the "Funds") hereby constitutes and appoints Paul M. Harmon, or in his
absence, David A. Magers, as proxies and attorneys of the undersigned, with full
power of substitution to each, for and in the name of the undersigned, to vote
and act upon all matters at the Annual Meeting of Shareholders of the Funds to
be held on Monday, October 29, 2001, at Earl Smith Hall, Illinois Agricultural
Association(R) Building, 1701 N. Towanda Avenue, Bloomington, Illinois, at 10:30
a.m. central time, and at any and all adjournments thereof, relating to all
shares of the Fund(s) held by the undersigned or relating to all shares of the
Fund(s) held by the undersigned which the undersigned would be entitled to vote
or act, with all the powers the undersigned would possess if personally present.
All proxies previously given by the undersigned relating to the meeting are
hereby revoked.
Specify your desired action by check marks in the appropriate space. This proxy
will be voted as specified. If no specification is made, the proxy will be voted
in favor of each item. The persons named as proxies have discretionary
authority, which they intend to exercise in favor of the proposals referred to
and according to their
--------------------------------------------------------------------------------
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
Please complete, sign, date and return this proxy in the enclosed envelope as
soon as possible.
Please sign exactly as your name or names appear above. When signing as
attorney, executor, administrator, Trustee or guardian, please give your full
title as such.
If a corporation, please sign in full corporate name by president or other
authorized Officer.
If a partnership, please sign in partnership name by authorized person.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
-------------------------------------------------------------------------- -------------- ------------- --------------
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
-------------------------------------------------------------------------- -------------- ------------- --------------
1. To approve the Agreement and Plan of Reorganization [ ] [ ] [ ]
-------------------------------------------------------------------------- -------------- ------------- --------------
2. To approve changes to the Fund's fundamental investment restrictions:
-------------------------------------------------------------------------- -------------- ------------- --------------
2a. All Funds: To approve changes to the Fund's fundamental investment [ ] [ ] [ ]
restriction regarding borrowing.
-------------------------------------------------------------------------- -------------- ------------- --------------
2b. All Funds: To approve changes to the Fund's fundamental investment [ ] [ ] [ ]
restriction regarding underwriting of securities.
-------------------------------------------------------------------------- -------------- ------------- --------------
2c. All Funds: To approve changes to the Fund's fundamental investment [ ] [ ] [ ]
restriction regarding purchase of real estate, commodities and commodity
contracts.
-------------------------------------------------------------------------- -------------- ------------- --------------
2d. Money Market Fund only: To approve changes to the Fund's [ ] [ ] [ ]
fundamental investment restriction regarding limitation on investments
in any one issuer.
-------------------------------------------------------------------------- -------------- ------------- --------------
2e. Growth Fund only: To approve changes to the Fund's fundamental [ ] [ ] [ ]
investment restriction regarding limitation on investments in any one
issuer.
-------------------------------------------------------------------------- -------------- ------------- --------------
VOTE ON DIRECTORS FOR AGAINST ABSTAIN
ALL ALL
(Except as
indicated)*
-------------------------------------------------------------------------- -------------- ------------- --------------
3. To elect the all of the nominees listed below to the Boards of
Directors (except as marked to the contrary below). [ ] [ ] [ ]
* Instruction: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list below.
----------------------------------------------------------------------------------------------------------------------
Ronald R. Warfield
Robert L. Phelps
Charlot R. Cole
Nancy J. Erickson
Ailene Miller
Wendell L. Shauman
Roger D. Grace
-------------------------------------------------------------------------- -------------- ------------- --------------
4. To transact any other business that may properly come before the
meeting or any adjournment. [ ] [ ] [ ]
-------------------------------------------------------------------------- -------------- ------------- --------------
Signature (Joint Owners) Date
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
COUNTRY GROWTH FUND, INC.
COUNTRY ASSET ALLOCATION FUND, INC.
COUNTRY TAX EXEMPT BOND FUND, INC.
COUNTRY TAXABLE FIXED INCOME SERIES FUND, INC.
COUNTRY MUTUAL FUNDS TRUST
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this _____ day of _______, 2001 by and between COUNTRY GROWTH FUND, INC, a
Maryland corporation, for itself and on behalf of its sole series Country Growth
Fund, COUNTRY ASSET ALLOCATION FUND, INC., a Maryland corporation, for itself
and on behalf of its sole series Country Asset Allocation Fund, COUNTRY TAX
EXEMPT BOND FUND, INC., a Maryland corporation, for itself and on behalf of its
sole series Country Tax Exempt Bond Fund, COUNTRY TAXABLE FIXED INCOME SERIES
FUND, INC., a Maryland corporation, for itself and on behalf of its three series
Country Money Market Fund, Country Short-Term Government Bond Fund, and Country
Long-Term Bond Fund, and COUNTRY MUTUAL FUNDS TRUST, a Delaware business trust,
on behalf of its six series Country Growth Fund, Country Balanced Fund, Country
Tax Exempt Bond Fund, Country Money Market Fund, Country Short-Term Bond Fund,
and Country Bond Fund
WHEREAS, the COUNTRY GROWTH FUND, INC., COUNTRY ASSET ALLOCATION FUND,
INC., COUNTRY TAX EXEMPT BOND FUND, INC., and COUNTRY TAXABLE FIXED INCOME
SERIES FUND, INC., (each a "Company" and collectively, the "Companies") and the
COUNTRY MUTUAL FUNDS TRUST, (the "Trust") are open-end management investment
companies registered with the Securities and Exchange Commission (the "SEC")
under the Investment Company Act of 1940, as amended (the "Act").
WHEREAS, the parties desire that the Fund Assets and Liabilities (as
defined below) of the Country Growth Fund, Country Asset Allocation Fund,
Country Tax Exempt Bond Fund, Country Money Market Fund, Country Short-Term
Government Bond Fund, and Country Long-Term Bond Fund (each an "Acquired Fund"
and collectively, the "Acquired Funds") be conveyed to and, acquired and
assumed, respectively, by the Trust's Country Growth Fund, Country Balanced
Fund, Country Tax Exempt Bond Fund, Country Money Market Fund, Country
Short-Term Bond Fund, and Country Bond Fund, respectively (each an "Acquiring
Fund" and collectively, the "Acquiring Funds") in exchange for shares of equal
net asset value of such Acquiring Fund which shall thereafter promptly be
distributed to the shareholders of the Acquired Funds in connection with their
liquidation as described in this Agreement and set forth in Schedule A attached
hereto (each such acquisition and assumption of an Acquired Fund's Fund Assets
and Liabilities by the corresponding Acquiring Fund a "Reorganization," and
collectively, the "Reorganizations"); and
WHEREAS, the parties intend that each Reorganization qualify as a
"reorganization," within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and that each Acquiring Fund and
corresponding Acquired Fund will each be a "party to a reorganization," within
the meaning of Section 368(b) of the Code, with respect to each respective
Reorganization.
NOW, THEREFORE, in accordance with the terms and conditions described
herein, the Acquired Funds and Acquiring Funds shall be consolidated as follows:
1. Conveyance of Fund Assets and Liabilities of the Acquired Funds.
(a) Except as provided below, at the Effective Time of the
Reorganization (as defined in Section 8) all assets of every
kind, and all interests, rights, privileges and powers of the
Acquired Funds (the "Fund Assets"), subject to all liabilities of
the Acquired Funds existing as of the Effective Time of the
Reorganization (the "Liabilities"), shall be transferred by each
Acquired Fund to each corresponding Acquiring Fund and shall be
accepted and assumed by such Acquiring Fund, as more particularly
set forth in this Agreement, such that at and after the Effective
Time of the Reorganization: (i) all Fund Assets of each Acquired
Fund shall become the assets of the corresponding Acquiring Fund;
and (ii) all Liabilities of each Acquired Fund shall attach to
the corresponding Acquiring Fund, enforceable against each
Acquiring Fund to the same extent as if originally incurred by
such Acquiring Fund.
(b) It is understood and agreed that the Fund Assets shall include
all property and assets of any nature whatsoever, including,
without limitation, all cash, cash equivalents, securities,
claims (whether absolute or contingent, known or unknown, accrued
or unaccrued) and receivables (including dividend and interest
receivables) owned or exercisable by an Acquired Fund, and any
deferred or prepaid expenses shown as an asset on such Acquired
Fund's books, that the Liabilities of an unknown accrued or
unaccrued, absolute or contingent, in all cases, existing at the
Effective Time of the Reorganization.
(c) At least fifteen (15) business days prior to the Closing Date (as
defined in Section 8), each Acquired Fund will provide to, or
cause to be provided to, the corresponding Acquiring Fund, a
schedule of its securities, other assets and its known
liabilities. It is understood and agreed that each such Acquired
Fund may sell any of the securities or other assets shown on such
schedule prior to the Effective Time of the Reorganization but
will not, without the prior approval of the corresponding
Acquiring Fund, acquire any additional securities other than
securities that the Acquiring Fund is permitted to purchase in
accordance with its stated investment objective and policies. At
least ten (10) business days prior to the Closing Date, each
Acquiring Fund will advise each corresponding Acquired Fund of
any investments of each such Acquired Fund shown on such schedule
that such Acquiring Fund would not be permitted to hold, pursuant
to its stated investment objective and policies or otherwise.
Each Acquired Fund, if requested by the corresponding Acquiring
Fund, will dispose of any such securities prior to the Closing
Date to the extent practicable and consistent with applicable
legal requirements. In addition, if it is determined that the
investment portfolios of an Acquired Fund and its corresponding
Acquiring Fund, when aggregated, would contain investments
exceeding certain percentage limitations applicable to such
Acquiring Fund, an Acquired Fund, if requested by the
corresponding Acquiring Fund, will dispose of a sufficient amount
of such investments as may be necessary to avoid violating such
limitations as of the Effective Time of the Reorganization.
(d) The Fund Assets shall be transferred and conveyed to the
Acquiring Funds on the following basis:
(1) In exchange for the transfer of the Fund Assets, each
Acquiring Fund shall simultaneously issue to the
corresponding Acquired Fund at the Effective Time of the
Reorganization full and fractional Shares of the Acquiring
Funds, as set forth in Schedule A attached hereto, having an
aggregate net asset value equal to the net value of the Fund
Assets minus Liabilities so conveyed and assumed, all
determined in accordance with this Agreement. In this
regard, the number of full and fractional shares of the
Acquiring Funds delivered to each Acquired Fund shall be
determined by dividing the value of the Fund Assets minus
Liabilities, computed in the manner and as of the time and
date set forth in this Agreement, by the net asset value of
one Acquiring Fund share of such designated class, computed
in the manner and as of the time and date set forth in this
Agreement.
(2) The net asset value of shares to be delivered by each
Acquiring Fund, and the net value of the Fund Assets minus
Liabilities to be conveyed by each Acquired Fund and assumed
by the Acquiring Funds, shall, in each case, be determined
as of the Valuation Time as defined in Section 3. The net
asset value of Shares of the Acquiring Funds shall be
computed in accordance with its then current valuation
procedures. In determining the value of the Fund Assets,
each security to be included in the Fund Assets shall be
priced in accordance with each Acquiring Fund's then current
valuation procedures.
2. Liquidation of Each Acquired Fund. At the Effective Time of the
Reorganization, each Acquired Fund shall make a liquidating
distribution to its shareholders as follows: Shareholders of record of
an Acquired Fund shall be credited with full and fractional shares of
the respective Shares that are issued by the corresponding Acquiring
Fund in connection with the Reorganization corresponding to the
Acquired Fund shares that are held of record by the shareholder at the
Effective Time of the Reorganization. Each such shareholder also shall
have the right to receive any unpaid dividends or other distributions
which were declared before the Effective Time of the Reorganization
with respect to the Acquired Fund shares that are held of record by
the shareholder at the Effective Time of the Reorganization, and the
Trust shall record on its books the ownership of the respective
Acquiring Fund shares by such shareholders (the "Transferor Record
Holders"). All of the issued and outstanding shares of an Acquired
Fund at the Effective Time of the Reorganization shall be redeemed and
canceled on the books of each Company at such time. As soon as
reasonably possible after the Effective Time of the Reorganization,
each Company shall wind up the affairs of each Acquired Fund and shall
file any final regulatory reports, including but not limited to any
Form N-SAR and Rule 24f-2 filings, with respect to each Acquired Fund,
and also shall take all other steps as are necessary and proper to
effect the termination or declassification of the Acquired Funds in
accordance with all applicable laws.
3. Valuation Time. The "Valuation Time" shall be the time as of which the
net asset value of each class of shares of the Acquired Funds and the
Acquiring Funds is determined pursuant to their respective valuation
procedures on the Closing Date or such earlier or later time as may be
mutually agreed to in writing by the parties hereto.
4. Certain Representations, Warranties and Agreements of each Company on
behalf of its corresponding Acquired Funds. Each Company, for itself
and, where appropriate, on behalf of its corresponding Acquired
Fund(s), represents and warrants to, and agrees with, the Trust, on
behalf of each Acquiring Fund as follows, with such representations,
warranties and agreements made on behalf of the Acquired Funds on a
several (and not joint, or joint and several) basis:
(a) Each Company is a corporation, duly incorporated,
validly existing and in good standing under the laws of
the State of Maryland. Each Company is registered with
the SEC as an open-end management investment company
under the 1940 Act, and such registration is in full
force and effect.
(b) Each Company has the power to own all of its properties
and assets and to consummate the transactions
contemplated herein, and has all necessary federal,
state and local authorizations to carry on its business
as now being conducted and to consummate the
transactions contemplated by this Agreement.
(c) This Agreement has been duly authorized by the Board of
Directors of each Company on behalf of each Acquired
Fund, and has been executed and delivered by duly
authorized officers of each Company, and represents a
valid and binding contract, enforceable in accordance
with its terms, subject as to enforcement to
bankruptcy, insolvency, reorganization, arrangement,
moratorium, and other similar laws of general
applicability relating to or affecting creditors'
rights and to general equity principles. The execution
and delivery of this Agreement does not, and, subject
to the approval of shareholders referred to in Section
7, the consummation of the transactions contemplated by
this Agreement will not, violate the Articles of
Incorporation or the By-Laws of each Company, or any
material agreement or arrangement to which each Company
is a party or by which it is bound.
(d) For each taxable year of its operation (including the
taxable year ending on the Closing Date (as defined in
Section 8)), each Acquired Fund has met (or will meet)
the requirements of Subchapter M of the Code for
qualification as a regulated investment company, has
been (or will be) eligible to and has computed (or will
compute) its federal income tax under Section 852 of
the Code, and will have distributed all of its
investment company taxable income and net capital gain
(as defined in the Code) that has accrued through the
Closing Date, and before the Closing Date will have
declared dividends sufficient to distribute all of its
investment company taxable income and net capital gain
for the period ending on the Closing Date.
(e) Each Company has valued, and will continue to value,
the portfolio securities and other assets of its
corresponding Acquired Fund(s) in accordance with
applicable legal requirements.
(f) The proxy statement and form of proxy included within
each Company's Schedule 14A (the "Proxy Statement"),
from its effective date with the SEC through the time
of the shareholders meeting referred to in Section 6
and the Effective Time of the Reorganization, insofar
as they relate to each Company, or the Acquired Funds
(i) shall comply in all material respects with the
provisions of the Securities Exchange Act of 1934, as
amended (the "1934 Act") and the 1940 Act, the rules
and regulations thereunder, and applicable state
securities laws, and (11) shall not contain any untrue
statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements made therein not
misleading.
(g) All of the issued and outstanding shares of each
Company's Acquired Funds have been validly issued and
are fully paid and non-assessable, and were offered for
sale and sold in conformity with the registration
requirements of all applicable federal and state
securities laws.
(h) Each Company shall operate the business of its
corresponding Acquired Fund(s) in the ordinary course
between the date hereof and the Effective Time of the
Reorganization, except that each Company shall complete
all measures in respect of its corresponding Acquired
Fund(s) prior to the Effective Time of the
Reorganization to ensure that each Reorganization
qualifies as a "reorganization" within the meaning of
Section 368(a) of the Code, regardless of whether such
measures are in the ordinary course. It is understood
that such ordinary course of business will include the
declaration and payment of customary dividends and
distributions and any other dividends and distributions
deemed advisable in anticipation of the
Reorganizations. Notwithstanding anything herein to the
contrary, each Company shall take all appropriate
action necessary in order for each Company to receive
the opinion provided for in Sections 9(f),(g) and (h).
(i) At the Effective Time of the Reorganization, each
Company's Acquired Fund(s) will have good and
marketable title to the Fund Assets and full right,
power and authority to assign, deliver and otherwise
transfer such assets.
(j) At the Effective Time of the Reorganization, all
federal and other tax returns and reports of the
Acquired Funds required by law to have been filed by
such time including extensions shall have been filed
and are or will be correct in all material respects,
and all federal and other taxes shown as due or
required to be shown as due on such returns and
reportsshall have been paid so far as due, or provision
shall have been made for the payment thereof and, to
the best knowledge of management of each Company, no
such return or report shall be currently under audit
and no assessment shall have been asserted with respect
to such returns or reports.
5. Certain Representations, Warranties and Agreements of the Trust on
behalf of the Acquiring Funds. The Trust, on behalf of itself and
where appropriate, on behalf of each Acquiring Fund, represents and
warrants to, and agrees with, each Company on behalf of each Acquired
Fund as follows, with such representations, warranties and agreements
made on behalf of the Acquiring Funds on a several (and not joint, or
joint and several) basis:
(a) The Trust is a business trust duly created, validly
existing and in good standing under the laws of the
Stateof Delaware and is registered with the SEC as an
open-end management investment company under the 1940
Act and such registration is in full force and effect.
(b) The Trust has the power to own all of its properties
and assets and to consummate the transactions
contemplated herein, and has all necessary federal,
state and local authorizations to carry on its business
as now being conducted and to consummate the
transactions contemplated by this Agreement.
(c) This Agreement has been duly authorized by the Board of
Trustees of the Trust on behalf of the Acquiring Funds,
and executed and delivered by duly authorized officers
of the Trust, and represents a valid and binding
contract, enforceable in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency,
reorganization, arrangement, moratorium and other
similar laws of general applicability relating to or
affecting creditors rights and to general equity
principles. The execution and delivery of this
Agreement does not, and the consummation of the
transactions contemplated by this Agreement will not,
violate the Amended and Restated Declaration of Trust
of the Trust or any material agreement or arrangement
to which it is a party or by which it is bound.
(d) For each taxable year of its operation (including the
taxable year that includes the Closing Date (as defined
in Section 8)), each Acquiring Fund has met (or
reasonably intends to meet) the requirements of
Subchapter M of the Code for qualification as a
regulated investment company, has been (or reasonably
intends to be) eligible to and has computed (or
reasonably intends to compute) its federal income tax
under Section 852 of the Code.
(e) The Trust has valued, and will continue to value, the
portfolio securities and other assets of the Acquiring
Fund in accordance with applicable legal requirements.
(f) The Proxy Statement, from its effective date with the
SEC through the time of the shareholders meeting
referred to in Section 7 and at the Effective Time of
the Reorganization, insofar as it relates to the Trust,
or the Acquiring Funds (i) shall comply in all material
respects with the provisions of the 1934 Act and the
1940 Act, the rules and regulations thereunder, and
state securities laws, and (11) shall not contain any
untrue statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements made therein not
misleading.
(g) The shares of the Acquiring Fund to be issued and
delivered to the corresponding Acquired Funds for the
account of the shareholders of each Acquired Fund,
pursuant to the terms hereof, shall have been duly
authorized as of the Effective Time of the
Reorganization and, when so issued and delivered, shall
be duly and validly issued, fully paid and
non-assessable, and no shareholder of the Acquiring
Funds shall have any preemptive right of subscription
or purchase in respect thereto.
(h) All of the issued and outstanding shares of the
Acquiring Funds have been validly issued and are fully
paid and non-assessable, and were offered for sale and
sold in conformity with the registration requirements
of all applicable federal and state securities laws.
(i) The Trust shall operate the business of the Acquiring
Funds in the ordinary course between the date hereof
and the Effective Time of the Reorganization, it being
understood that such ordinary course of business will
include the declaration and payment of customary
dividends and distributions and any other dividends and
distributions deemed advisable in anticipation of the
Reorganizations. Notwithstanding anything herein to the
contrary, the Trust shall take all appropriate action
necessary in order for the Trust to receive the opinion
provided for in Sections 10(d), (e) and (f).
(j) At the Effective Time of the Reorganization, all
federal and other tax returns and reports if any of the
Acquiring Funds required by law to have been filed by
such time including extensions shall have been filed
and are or will be correct in all material respects,
and all federal and other taxes shown as due or
required to be shown as due on such returns and reports
shall have been paid so far as due, or provision shall
have been made for the payment thereof and, to the best
knowledge of management of the Trust, no such return or
report shall be currently under audit and no assessment
shall have been asserted with respect to such returns
or reports.
(k) Prior to the Effective Time of the Reorganization, each
Acquiring Fund will have carried on no business
activity and will have had no assets or liabilities.
6. Regulatory Filings. Each Company has filed the Proxy Statement with
the SEC.
7. Shareholder Action. After the effective date of the Proxy Statement
each Company shall hold a meeting(s) of the shareholders of each
Acquired Fund for the purpose of considering and voting upon:
(a) approval of this Agreement and the Reorganization
contemplated hereby; and
(b) such other matters as may be determined by the Board of
Directors of each Company.
8. Closing Date, Effective Time of the Reorganization. The "Closing Date"
shall be October 31, 2001, or such earlier or later date as may be
mutually agreed in writing by the parties hereto. Delivery of the Fund
Assets and the shares of each Acquiring Fund to be issued pursuant to
Section 1 and the liquidation of the Acquired Funds pursuant to
Section 2 shall occur on the day following the Closing Date, whether
or not such day is a business day, or on such other date, and at such
place and time, as may be mutually agreed in writing, by the parties
hereto. The date and time at which such actions are taken are referred
to herein as the "Effective Time of the Reorganization." To the extent
any Fund Assets are, for any reason, not transferred at the Effective
Time of the Reorganization, each Company shall cause such Fund Assets
to be transferred in accordance with this Agreement at the earliest
practicable date thereafter.
9. Conditions to the Trust's Obligations on Behalf of the Acquiring
Funds. The obligations of the Trust hereunder shall be subject to the
following conditions precedent:
(a) This Agreement and the Reorganization shall have been
approved by the Board of Directors of each Company and by a
requisite vote of the shareholders of the Acquired Funds in
the manner required by each Company's Articles of
Incorporation, By-Laws, applicable law and this Agreement.
(b) All representations and warranties of each Company made in
this Agreement shall be true and correct in all material
respects as if made at and as of the Valuation Time and the
Effective Time of the Reorganization.
(c) Each Company shall have delivered to the Trust a statement
of assets and liabilities of each Acquired Fund, showing the
tax basis of such assets for federal income tax purposes by
lot and the holding periods of such assets, as of the
Valuation Time.
(d) Each Company shall have duly executed and delivered to the
Trust such bills of sale, assignments, certificates and
other instruments of transfer ("Transfer Documents") as the
Trust may deem necessary or desirable to transfer all of the
Acquired Funds' rights, title and interest in and to the
Fund Assets.
(e) Each Company shall have delivered a certificate executed in
its name by an appropriate officer, in a form reasonably
satisfactory to the Trust and dated as of the Closing Date,
to the effect that the representations and warranties of
each Company on behalf of each Acquired Fund made in this
Agreement are true and correct at and as of the Valuation
Time and that, to the best of its knowledge, the Fund Assets
include only assets which the corresponding Acquiring Fund
may properly acquire under its investment objectives,
policies and limitations and may otherwise be lawfully
acquired by such Acquiring Fund.
(f) Each Company shall have received an opinion of Dechert, upon
which each Acquiring Fund and their shareholders may rely,
based upon representations made in certificates provided by
each Company, and/or its affiliates and/or principal
shareholders of the Acquired Funds to Dechert, addressed to
each Company in a form reasonably satisfactory to it, and
dated as of the Closing Date, substantially to the effect
that, for federal income tax purposes, each Reorganization
will qualify as a "reorganization" within the meaning of
Section 368(a) of the Code, and the Acquired Funds and the
Acquiring Funds will be a party to a "reorganization,"
within the meaning of Section 368 (b) of the Code, with
respect to the Reorganizations.
(g) The Proxy Statement shall have become effective and no stop
order suspending the effectiveness shall have been
instituted, or to the knowledge of each Company,
contemplated by the SEC.
(h) No action, suit or other proceeding shall be threatened or
pending before any court or governmental agency in which it
is sought to restrain or prohibit, or obtain damages or
other relief in connection with, this Agreement or the
transactions contemplated herein.
(i) The SEC shall not have issued any unfavorable advisory
report under Section 25(b) of the 1940 Act nor instituted
any proceeding seeking to enjoin consummation of the
transactions contemplated by this Agreement under Section
25(c) of the 1940 Act.
(j) Each Company on behalf of each Acquired Fund shall have
performed and complied in all material respects with each of
its agreements and covenants required by this Agreement to
be performed or complied with by it prior to or at the
Valuation Time and the Effective Time of the Reorganization.
(k) Each Company shall have received a duly executed instrument
whereby each Acquiring Fund assumes all of the liabilities
of each Company's corresponding Acquired Fund.
(l) Each Acquired Fund shall have declared and paid a
distribution or distributions prior to the Closing Date,
which, together with all previous distributions, shall have
the effect of distributing to its shareholders (a) all of
its investment company taxable income and all of its net
capital gain, if any, for the period from the close of its
last taxable year to 4:00 p.m. Eastern Time on the Closing
Date; and (b) any undistributed investment company taxable
income or net capital gain from any period to the extent not
already distributed.
10. Conditions to each Company's Obligations on behalf of the Acquired
Funds. The obligations of each Company hereunder shall be subject to
the following conditions precedent:
(a) This Agreement and the Reorganization shall have been
approved by the Board of Trustees of the Trust on behalf of
each Acquiring Fund.
(b) All representations and warranties of the Trust made in this
Agreement shall be true and correct in all material respects
as if made at and as of the Valuation Time and the Effective
Time of the Reorganization.
(c) The Trust shall have delivered a certificate executed in its
name by an appropriate officer, in a form reasonably
satisfactory to each Company and dated as of the Closing
Date, to the effect that the representations and warranties
of each Acquiring Fund made in this Agreement are true and
correct at and as of the Valuation Time.
(d) The Trust shall have received an opinion of Dechert, upon
which each Acquired Fund and its shareholders may rely,
based upon representations made in certificates provided by
the Trust, and/or its affiliates and/or principal
shareholders of the Acquiring Funds to Dechert, addressed to
the Trust in a form reasonably satisfactory to it, and dated
as of the Closing Date, substantially to the effect that,
for federal income tax purposes, each Reorganization will
qualify as a "reorganization" within the meaning of Section
368 (a) of the Code, and the Acquired Funds and the
Acquiring Funds will each be a party to a "reorganization,"
within the meaning of Section 368 (b) of the Code, with
respect to the Reorganizations.
(e) The Proxy Statement shall have become effective and no stop
order suspending such effectiveness shall have been
instituted or, to the knowledge of the Trust, contemplated
by the SEC.
(f) No action, suit or other proceeding shall be threatened or
pending before any court or governmental agency in which it
is sought to restrain or prohibit or obtain damages or other
relief in connection with this Agreement or the transactions
contemplated herein.
(g) The SEC shall not have issued any unfavorable advisory
report under Section 25 (b) of the 1940 Act nor instituted
any proceeding seeking to enjoin consummation of the
transactions contemplated by this Agreement under Section 25
(c) of the 1940 Act.
(h) The Trust on behalf of each Acquiring Fund shall have
performed and complied in all material respects with each of
its agreements and covenants required by this Agreement to
be performed or complied with by it prior to or at the
Valuation Time and the Effective Time of the Reorganization.
11. Tax Matters.
(a) Each Company and the Trust hereby represent and warrant and
that each shall use its best efforts to cause each
Reorganization to qualify, and will not (whether before or
after consummation of the Reorganizations) take any actions
that could prevent each Reorganization from qualifying, as a
"reorganization" under the provisions of Section 368 of the
Code.
(b) Except where otherwise required by law, the parties shall
not take a position on any tax returns inconsistent with the
treatment of each Reorganization for tax purposes as a
"reorganization," within the meaning of Section 368 (a) of
the Code and each Acquiring Fund and each Acquired Fund will
comply with the record keeping and information filing
requirements of Section 1.368-3 of the Treasury Regulation
in accordance therewith.
12. Survival of Representations and Warranties. The representations and
warranties of the Trust on behalf of each Acquiring Fund set forth in
this Agreement shall survive the delivery of the Fund Assets to such
Acquiring Fund and the issuance of the shares of each Acquiring Fund
at the Effective Time of the Reorganization to the corresponding
Acquired Fund shareholders.
13. Termination of Agreement. This Agreement may be terminated by a party
at or, in the case of Subsection 13(c), below, at any time prior to,
the Effective Time of the Reorganization by a vote of a majority of
its Board members as provided below:
(a) By the Trust on behalf of its Acquiring Funds if the
conditions set forth in Section 9 are not satisfied as
specified in said Section;
(b) By each Company on behalf of its Acquired Funds if the
conditions set forth in Section 10 are not satisfied as
specified in said Section;
(c) By mutual written consent of the Trust and each Company.
14. Governing Law. This Agreement and the transactions contemplated hereby
shall be governed, construed and enforced in accordance with the laws
of the State of Delaware, except to the extent preempted by federal
law.
15. Brokerage Fees and Expenses.
(a) The Trust represents and warrants that there are no brokers
or finders entitled to receive any payments in connection
with the transactions provided for herein.
(b) The Companies and/or their affiliates will be responsible
for the expenses related to entering into and carrying out
the provisions of this Agreement, whether or not the
transactions contemplated hereby are consummated.
16. Amendments.
This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized
officers of each Company, acting on behalf of the Acquired Funds or
the Trust, acting on behalf of the Acquiring Funds; provided, however,
that following the meeting of the shareholders of an Acquired Fund, no
such amendment may have the effect of changing the provisions for
determining the number of shares of the Acquiring Funds to be issued
to the Transferor Record Holders under this Agreement to the detriment
of such Transferor Record Holders, or otherwise materially and
adversely affecting an Acquired Fund, without such Acquired Fund
obtaining its shareholders' further approval:
(a) At any time prior to or (to the fullest extent permitted by
law) after approval of this Agreement by the shareholders of
an Acquired Fund, each Company on behalf of an Acquired
Fund, may waive any breach by the Trust, on behalf of an
Acquiring Fund, or the failure to satisfy any of the
conditions to its obligations (such waiver to be in writing
and signed by an officer of such registered investment
companies);
(b) At any time prior to or (to the fullest extent permitted by
law) after approval of this Agreement by the shareholders of
an Acquired Fund, the Trust, on behalf of an Acquiring Fund,
may waive any breach by each Company on behalf of an
Acquired Fund, or the failure to satisfy any of the
conditions to either of their obligations (such waiver to be
in writing and signed by an officer of such registered
investment companies).
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers
designated below as of the date first written above.
Dated: _______________, 2001
COUNTRY GROWTH FUND, INC.
By: __________________________
Its: __________________________
ATTEST: _____________________
Secretary
COUNTRY ASSET ALLOCATION FUND, INC.
By: __________________________
Its: __________________________
ATTEST: _____________________
Secretary
COUNTRY TAX EXEMPT BOND FUND, INC.
By: __________________________
Its: __________________________
ATTEST: _____________________
Secretary
COUNTRY TAXABLE FIXED INCOME SERIES FUND, INC.
By: __________________________
Its: __________________________
ATTEST: _____________________
Secretary
COUNTRY MUTUAL FUNDS TRUST on behalf of its series Country Growth Fund,
Country Balanced Fund, Country Tax Exempt Bond Fund, Country Short Term
Bond Fund, Country Money Market Fund and Country Bond Fund
By: __________________________
Its: _________________________
ATTEST: _____________________
Secretary
SCHEDULE A
SHAREHOLDERS OWNING SHARES OF THE WOULD RECEIVE SHARES OF THE
FOLLOWING ACQUIRED FUND AND SERIES FOLLOWING ACQUIRING FUND
OF EACH COMPANY: AND SERIES OF THE TRUST:
COUNTRY Growth Fund COUNTRY Growth Fund
COUNTRY Asset Allocation Fund COUNTRY Balanced Fund
COUNTRY Tax Exempt Bond Fund COUNTRY Tax Exempt Bond Fund
COUNTRY Money Market Fund COUNTRY Money Market Fund
COUNTRY Short-Term Government Bond Fund COUNTRY Short-Term Bond Fund
COUNTRY Long-Term Bond Fund COUNTRY Bond Fund
DECLARATION OF TRUST
OF
COUNTRY MUTUAL FUNDS TRUST
a Delaware Business Trust
Dated as of August 9, 2001
Principal Place of Business
Bloomington, Illinois
TABLE OF CONTENTS
Page
ARTICLE I Name and Definitions................................................1
Section 1. Name...............................................1
Section 2. Definitions........................................1
(a) "Bylaws"................................................1
(b) "Certificate of Trust"..................................1
(c) "Class".................................................1
(d) "Commission"............................................1
(e) "Declaration of Trust"..................................1
(f) "Delaware Act"..........................................1
(g) "Interested Person".....................................2
(h) "Manager"...............................................2
(i) "1940 Act"..............................................2
(j) "Person"................................................2
(k) "Principal Underwriter".................................2
(l) "Series"................................................2
(m) "Shareholder"...........................................2
(n) "Shares"................................................2
(o) "Trust".................................................2
(p) "Trust Property"........................................2
(q) "Trustees"..............................................2
ARTICLE II Purpose of Trust....................................................2
ARTICLE III Shares.............................................................3
Section 1. Division of Beneficial Interest..........................3
Section 2. Ownership of Shares......................................4
Section 3. Transfer of Shares.......................................4
Section 4. Investments in the Trust.................................4
Section 5. Status of Shares and Limitation of Personal Liability....4
Section 6. Establishment and Designation of Series or Class.........4
(a) Assets Held with Respect to a Particular Series..........5
(b) Liabilities Held with Respect to a Particular Series.....5
(c) Dividends, Distributions, Redemptions, and Repurchases...6
(d) Equality.................................................6
(e) Fractions................................................6
(f) Exchange Privilege.......................................6
(g) Combination of Series or Class...........................7
Section 7. Indemnification of Shareholders.....................7
ARTICLE IV Trustees............................................................7
Section 1. Number, Election and Tenure..............................7
Section 2. Effect of Death, Resignation, . . . etc. of a Trustee....7
Section 3. Powers...................................................8
Section 4. Payment of Expenses by the Trust........................11
Section 5. Payment of Expenses by Shareholders.....................11
Section 6. Ownership of Assets of the Trust........................12
Section 7. Service Contracts.......................................12
Section 8. Trustees and Officers as Shareholders...................13
Section 9. Independent Trustees....................................13
ARTICLE V Shareholders' Voting Powers and Meetings............................14
Section 1. Voting Powers, Meetings, and Record Dates...............14
Section 2. Quorum and Required Vote................................14
Section 3. Record Dates............................................15
Section 4. Additional Provisions...................................15
ARTICLE VI Net Asset Value, Distributions and Redemptions.....................15
Section 1. Determination of Net Asset Value, Net Income,
and Distributions.......................................15
Section 2. Redemptions and Repurchases.............................15
ARTICLE VII Compensation, Limitation of Liability and Indemnification
of Trustees.......................................................17
Section 1. Compensation............................................17
Section 2. Limitation of Liability.................................17
Section 3. Indemnification.........................................18
Section 4. Trustee's Good Faith Action, Expert Advice,
No Bond or Surety.......................................19
Section 5. Insurance...............................................19
ARTICLE VIII Miscellaneous....................................................19
Section 1. Liability of Third Persons Dealing with Trustees........19
Section 2. Termination of the Trust or Any Series or Class.........20
Section 3. Reorganization..........................................20
Section 4. Amendments..............................................21
Section 5. Filing of Copies, References, Headings..................21
Section 6. Applicable Law..........................................22
Section 7. Provisions in Conflict with Law or Regulations..........22
Section 8. Business Trust Only.....................................22
DECLARATION OF TRUST
OF
COUNTRY MUTUAL FUNDS TRUST
THIS DECLARATION OF TRUST is made and entered into as of the date set forth
below by the Trustees named hereunder for the purpose of forming a Delaware
business trust in accordance with the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby direct that the Certificate of Trust be
filed with the office of the Secretary of State of the State of Delaware and do
hereby declare that the Trustees will hold IN TRUST all cash, securities, and
other assets which the Trust now possesses or may hereafter acquire from time to
time in any manner and manage and dispose of the same upon the following terms
and conditions for the benefit of the holders of Shares of this Trust.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known as Country Mutual Funds Trust
and the Trustees shall conduct the business of the Trust under that name or any
other name as they may from time to time determine.
Section 2. Definitions. Whenever used herein, unless otherwise required by
the context or specifically provided:
(a) "Bylaws" shall mean the Bylaws of the Trust as amended from time
to time, which Bylaws are expressly herein incorporated by reference as
part of the "governing instrument" within the meaning of the Delaware Act;
(b) "Certificate of Trust" means the certificate of trust, as amended
or restated from time to time, filed by the Trustees in the office of the
Secretary of State of the State of Delaware in accordance with the Delaware
Act;
(c) "Class" means a class of Shares of a Series of the Trust
established in accordance with the provisions of Article III hereof;
(d) "Commission" shall have the meaning given such term in the 1940
Act;
(e) "Declaration of Trust" means this Declaration of Trust, as amended
or restated from time to time;
(f) "Delaware Act" means the Delaware Business Trust Act 12 Del.
Code ss.3801 et seq., as amended from time to time;
(g) "Interested Person" shall have the meaning given it in section
2(a)(19) of the 1940 Act;
(h) "Manager" means a party furnishing services to the Trust pursuant
to any contract described in Article IV, section 7(a) hereof;
(i) "1940 Act" means the Investment Company Act of 1940 and the rules
and regulations thereunder, all as amended from time to time;
(j) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures, estates, and other
entities, whether or not legal entities, and governments and agencies and
political subdivisions thereof, whether domestic or foreign;
(k) "Principal Underwriter" shall have the meaning given such term in
the 1940 Act;
(l) "Series" means each series of Shares established and designated
under or in accordance with the provisions of Article III hereof;
(m) "Shareholder" means a record owner of outstanding Shares;
(n) "Shares" means the shares of beneficial interest into which the
beneficial interest in the Trust shall be divided from time to time and
includes fractions of shares as well as whole shares;
(o) "Trust" means the Delaware Business Trust established under the
Delaware Act by this Declaration of Trust and the filing of the Certificate
of Trust in the office of the Secretary of State of the State of Delaware;
(p) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is from time to time owned or held by or for
the account of the Trust; and
(q) "Trustees" means the Person or Persons who have signed this
Declaration of Trust and all other Persons who may from time to time be
duly elected or appointed to serve as Trustees in accordance with the
provisions hereof, in each case so long as such Person shall continue in
office in accordance with the terms of this Declaration of Trust, and
reference herein to a Trustee or the Trustees shall refer to such Person or
Persons in his or her or their capacity as Trustees hereunder.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on the business
of an open-end management investment company registered under the 1940 Act
through one or more Series investing primarily in securities, and to carry on
such other business as the Trustees may from time to time determine pursuant to
their authority under this Declaration of Trust.
ARTICLE III
Shares
Section 1. Division of Beneficial Interest. The beneficial interest in the
Trust shall be divided into one or more Series. The Trustees may divide each
Series into two or more Classes. Subject to the further provisions of this
Article III and any applicable requirements of the 1940 Act, the Trustees shall
have full power and authority, in their sole discretion, and without obtaining
any authorization or vote of the Shareholders of any Series or Class thereof,
(i) to divide the beneficial interest in each Series or Class thereof into
Shares, with or without par value as the Trustees shall determine, (ii) to issue
Shares without limitation as to number (including fractional Shares) to such
Persons and for such amount and type of consideration, subject to any
restriction set forth in the Bylaws, including cash or securities, at such time
or times and on such terms as the Trustees may deem appropriate, (iii) to
establish and designate and to change in any manner any Series or Class thereof
and to fix such preferences, voting powers, rights, duties and privileges and
business purpose of each Series or Class thereof as the Trustees may from time
to time determine, which preferences, voting powers, rights, duties and
privileges may be senior or subordinate to (or in the case of business purpose,
different from) any existing Series or Class thereof and may be limited to
specified property or obligations of the Trust or profits and losses associated
with specified property or obligations of the Trust, (iv) to divide or combine
the Shares of any Series or Class thereof into a greater or lesser number
without thereby materially changing the proportionate beneficial interest of the
Shares of such Series or Class thereof in the assets held with respect to that
Series, (v) to classify or reclassify any issued Shares of any Series or Class
thereof into Shares of one or more Series or Classes, (vi) to change the name of
any Series or Class thereof, (vii) to abolish any one or more Series or Classes
thereof, and (viii) to take such other action with respect to the Shares as the
Trustees may deem desirable.
Subject to the distinctions permitted among Classes of the same Series as
established by the Trustees, consistent with the requirements of the 1940 Act,
each Share of a Series of the Trust shall represent an equal beneficial interest
in the net assets of such Series, and each holder of Shares of a Series shall be
entitled to receive such holder's pro rata share of distributions of income and
capital gains, if any, made with respect to such Series. Upon redemption of the
Shares of any Series, the applicable Shareholder shall be paid solely out of the
funds and property of such Series of the Trust.
All references to Shares in this Declaration of Trust shall be deemed to be
Shares of any or all Series or Classes thereof, as the context may require. All
provisions herein relating to the Trust shall apply equally to each Series of
the Trust and each Class thereof, except as the context otherwise requires.
All Shares issued hereunder, including, without limitation, Shares issued
in connection with a dividend in Shares or a split or reverse split of Shares,
shall be fully paid and non-assessable. Except as otherwise provided by the
Trustees, Shareholders shall have no preemptive or other right to subscribe to
any additional Shares or other securities issued by the Trust.
Section 2. Ownership of Shares. The ownership of Shares shall be recorded
on the books of the Trust or those of a transfer or similar agent for the Trust,
which books shall be maintained separately for the Shares of each Series or
Class of the Trust. No certificates certifying the ownership of Shares shall be
issued except as the Trustees may otherwise determine from time to time. The
Trustees may make such rules as they consider appropriate for the issuance of
Share certificates, the transfer of Shares of each Series or Class of the Trust
and similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent, as the case may be, shall be conclusive as to the
identity of the Shareholders of each Series or Class of the Trust and as to the
number of Shares of each Series or Class of the Trust held from time to time by
each Shareholder.
Section 3. Transfer of Shares. Except as otherwise provided by the
Trustees, Shares shall be transferable on the books of the Trust only by the
record holder thereof or by his or her duly authorized agent upon delivery to
the Trustees or the Trust's transfer agent of a duly executed instrument of
transfer, together with a Share certificate if one is outstanding, and such
evidence of the genuineness of each such execution and authorization and of such
other matters as may be required by the Trustees. Upon such delivery, and
subject to any further requirements specified by the Trustees or contained in
the Bylaws, the transfer shall be recorded on the books of the Trust. Until a
transfer is so recorded, the Shareholder of record of Shares shall be deemed to
be the holder of such Shares for all purposes hereunder and neither the Trustees
nor the Trust, nor any transfer agent or registrar or any officer, employee, or
agent of the Trust, shall be affected by any notice of a proposed transfer.
Section 4. Investments in the Trust. Investments may be accepted by the
Trust from Persons, at such times, on such terms, and for such consideration as
the Trustees from time to time may authorize.
Section 5. Status of Shares and Limitation of Personal Liability. Shares
shall be deemed to be personal property giving only the rights provided in this
instrument. Every Shareholder by virtue of having become a Shareholder shall be
held to have expressly assented and agreed to the terms hereof. The death,
incapacity, dissolution, termination, or bankruptcy of a Shareholder during the
existence of the Trust shall not operate to terminate the Trust, nor entitle the
representative of any such Shareholder to an accounting or to take any action in
court or elsewhere against the Trust or the Trustees, but entitles such
representative only to the rights of such Shareholder under this Declaration of
Trust. Ownership of Shares shall not entitle the Shareholder to any title in or
to the whole or any part of the Trust Property or right to call for a
participation or division of the same or for an accounting, nor shall the
ownership of Shares constitute the Shareholders as partners. No Shareholder
shall be personally liable for the debts, liabilities, obligations and expenses
incurred by, contracted for, or otherwise existing with respect to, the Trust or
any Series. Neither the Trust nor the Trustees, nor any officer, employee, or
agent of the Trust shall have any power to bind personally any Shareholders,
nor, except as specifically provided herein, to call upon any Shareholder for
the payment of any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay.
Section 6. Establishment and Designation of Series or Class. The
establishment and designation of any Series or Class of Shares of the Trust
shall be effective upon the adoption by a majority of the then Trustees of a
resolution that sets forth such establishment and designation and the relative
rights and preferences of such Series or Class of the Trust, whether directly in
such resolution or by reference to another document including, without
limitation, any registration statement of Trust, or as otherwise provided in
such resolution.
Shares of each Series or Class of the Trust established pursuant to this
Article III, unless otherwise provided in the resolution establishing such
Series or Class, shall have the following relative rights and preferences:
(a) Assets Held with Respect to a Particular Series. All consideration
received by the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or reinvested,
all income, earnings, profits, and proceeds thereof from whatever source derived
(including, without limitation, any proceeds derived from the sale, exchange or
liquidation of such assets and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be) shall
irrevocably be held separately with respect to that Series for all purposes,
subject only to the rights of creditors of such Series from the assets of the
Trust and every other Series, and shall be so recorded upon the books of account
of the Trust. Such consideration, assets, income, earnings, profits and proceeds
thereof, from whatever source derived, (including, without imitation, any
proceeds derived from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds), in whatever
form the same may be, are herein referred to as "assets held with respect to"
that Series. In the event that there are any assets, income, earnings, profits
and proceeds thereof, funds or payments which are not readily identifiable as
assets held with respect to any particular Series (collectively "General
Assets"), the Trustees shall allocate such General Assets to, between or among
any one or more of the Series in such manner and on such basis as the Trustees,
in their sole discretion, deem fair and equitable, and any General Assets so
allocated to a particular Series shall be held with respect to that Series. Each
such allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Series for all purposes. Separate and distinct records shall
be maintained for each Series and the assets held with respect to each Series
shall be held and accounted for separately from the assets held with respect to
all other Series and the General Assets of the Trust not allocated to such
Series.
(b) Liabilities Held with Respect to a Particular Series. The assets of the
Trust held with respect to each particular Series shall be charged against the
liabilities of the Trust held with respect to that Series and all expenses,
costs, charges, and reserves attributable to that Series, except that
liabilities and expenses allocated solely to a particular Class shall be borne
by that Class. Any general liabilities of the Trust which are not readily
identifiable as being held with respect to any particular Series or Class shall
be allocated and charged by the Trustees to and among any one or more of the
Series or Classes in such manner and on such basis as the Trustees in their sole
discretion deem fair and equitable. All liabilities, expenses, costs, charges,
and reserves so charged to a Series or Class are herein referred to as
"liabilities held with respect to" that Series or Class. Each allocation of
liabilities, expenses, costs, charges, and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all Series or Classes for all
purposes. Without limiting the foregoing, but subject to the right of the
Trustees to allocate general liabilities, expenses, costs, charges or reserves
as herein provided, the debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to a particular Series shall
be enforceable against the assets held with respect to such Series only and not
against the assets of the Trust generally or against the assets held with
respect to any other Series. Notice of this contractual limitation on
liabilities among Series may, in the Trustees' discretion, be set forth in the
Certificate of Trust of the Trust (whether originally or by amendment) as filed
or to be filed in the Office of the Secretary of State of the State of Delaware
pursuant to the Delaware Act, and upon the giving of such notice in the
Certificate of Trust, the statutory provisions of Section 3804 of the Delaware
Act relating to limitations on liabilities among Series (and the statutory
effect under Section 3804 of setting forth such notice in the Certificate of
Trust) shall become applicable to the Trust and each Series. Any person
extending credit to, contracting with or having any claim against any Series may
look only to the assets of that Series to satisfy or enforce any debt, with
respect to that Series. No Shareholder or former Shareholder of any Series shall
have a claim on or any right to any assets allocated or belonging to any other
Series.
(c) Dividends, Distributions, Redemptions, and Repurchases. Notwithstanding
any other provisions of this Declaration of Trust, including, without
limitation, Article VI, no dividend or distribution, including, without
limitation, any distribution paid upon termination of the Trust or of any Series
or Class with respect to, nor any redemption or repurchase of, the Shares of any
Series or Class, shall be effected by the Trust other than from the assets held
with respect to such Series, nor shall any Shareholder of any particular Series
or Class otherwise have any right or claim against the assets held with respect
to any other Series except to the extent that such Shareholder has such a right
or claim hereunder as a Shareholder of such other Series. The Trustees shall
have full discretion, to the extent not inconsistent with the 1940 Act, to
determine which items shall be treated as income and which items as capital, and
each such determination and allocation shall be conclusive and binding upon the
Shareholders.
(d) Equality. All the Shares of each particular Series shall represent an
equal proportionate interest in the assets held with respect to that Series
(subject to the liabilities held with respect to that Series or Class thereof
and such rights and preferences as may have been established and designated with
respect to any Class within such Series), and each Share of any particular
Series shall be equal to each other Share of that Series. With respect to any
Class of a Series, each such Class shall represent interests in the assets of
that Series and have identical voting, dividend, liquidation and other rights
and the same terms and conditions, except that expenses allocated to a Class may
be borne solely by such Class as determined by the Trustees, and voting rights
of each Series or Class shall be determined in accordance with Article V.
(e) Fractions. Any fractional Share of a Series or Class thereof, shall
carry proportionately all the rights and obligations of a whole Share of that
Series or Class, including rights with respect to voting, receipt of dividends
and distributions, redemption of Shares and termination of the Trust.
(f) Exchange Privilege. The Trustees shall have the authority to provide
that the holders of Shares of any Series or Class shall have the right to
exchange said Shares for Shares of one or more other Series of Shares or Class
of Shares of the Trust or of other investment companies registered under the
1940 Act in accordance with such requirements and procedures as may be
established by the Trustees.
(g) Combination of Series or Class. The Trustees shall have the authority,
without the approval of the Shareholders of any Series or Class unless otherwise
required by applicable law, to combine the assets and liabilities held with
respect to any two or more Series or Classes into assets and liabilities held
with respect to a single Series or Class.
Section 7. Indemnification of Shareholders. In case any Shareholder of any
Series shall be held to be personally liable solely by reason of his being or
having been a Shareholder of such Series and not because of his acts or
omissions or for some other reason, the Shareholder or former Shareholder (or
his heirs, executors, administrators or other legal representatives, or, in the
case of a corporation or other entity, its corporate or other general successor)
shall be entitled out of the assets belonging to the applicable Series to be
held harmless from and indemnified against all loss and expense arising from
such liability. The Trust, on behalf of the affected Series, shall, upon request
by the Shareholder, assume the defense of any claim made against the Shareholder
for any act or obligation of the Series and satisfy any judgment thereon from
the assets of the Series.
ARTICLE IV
Trustees
Section 1. Number, Election and Tenure. The number of Trustees shall
initially be one, who shall be Paul M. Harmon. Hereafter, the number of Trustees
shall at all times be at least one and no more than fifteen as determined, from
time to time, by the Trustees pursuant to Section 3 of this Article IV. To the
extent required by applicable law, the Shareholders may elect Trustees at any
meeting of Shareholders called by the Trustees for that purpose. Any Trustee may
be removed at any meeting of Shareholders by a vote of two-thirds of the
outstanding Shares of the Trust. Each Trustee shall serve during the lifetime of
the Trust until he or she dies, resigns, has reached the mandatory retirement
age as set by the Trustees, is declared bankrupt or incompetent by a court of
appropriate jurisdiction, or is removed, or, if sooner, until the election and
qualification of his or her successor. In the event that less than the majority
of the Trustees holding office have been elected by the Shareholders, the
Trustees then in office shall call a meeting of Shareholders for the election of
Trustees. Any Trustee may resign at any time by written instrument signed by him
or her and delivered to any officer of the Trust or to a meeting of the
Trustees. Such resignation shall be effective upon receipt unless specified to
be effective at some other time. Except to the extent expressly provided in a
written agreement with the Trust, no Trustee resigning and no Trustee removed
shall have any right to any compensation for any period following his or her
resignation or removal, or any right to damages on account of such removal. The
Shareholders may elect Trustees at any meeting of Shareholders called by the
Trustees for that purpose.
Section 2. Effect of Death, Resignation, . . . etc. of a Trustee. The
death, resignation, declination to serve, retirement, removal or incapacity of
one or more Trustees, or all of them, shall not operate to annul the Trust or to
revoke any existing agency created pursuant to the terms of this Declaration of
Trust. Whenever there shall be fewer than the designated number of Trustees,
until additional Trustees are elected or appointed as provided herein to bring
the total number of Trustees equal to the designated number, the Trustees in
office, regardless of their number, shall have all the powers granted to the
Trustees and shall discharge all the duties imposed upon the Trustees by this
Declaration of Trust. As conclusive evidence of such vacancy, a written
instrument certifying the existence of such vacancy may be executed by an
officer of the Trust or by a majority of the Trustees. In the event of the
death, declination, resignation, retirement, removal, or incapacity of all the
then Trustees within a short period of time and without the opportunity for at
least one Trustee being able to appoint additional Trustees to replace those no
longer serving, the Trust's Manager(s) are empowered to appoint new Trustees
subject to the provisions of section 16(a) of the 1940 Act. In that case, any
officer of the Trust may call a Shareholders meeting for the election of
Trustees.
Section 3. Powers. Subject to the provisions of this Declaration of Trust,
the business of the Trust shall be managed by the Trustees, and the Trustees
shall have all powers necessary or convenient to carry out that responsibility
including the power to engage in securities transactions of all kinds on behalf
of the Trust. Without limiting the foregoing, the Trustees may: adopt Bylaws not
inconsistent with this Declaration of Trust providing for the management of the
affairs of the Trust and may amend and repeal such Bylaws to the extent that
such Bylaws do not reserve that right to the Shareholders; enlarge or reduce the
number of Trustees; remove any Trustee with or without cause at any time by
written instrument signed by a least two-thirds of the number of Trustees prior
to such removal, specifying the date when such removal shall become effective,
and fill vacancies caused by enlargement of their number or by the death,
resignation, retirement or removal of a Trustee; elect and remove, with or
without cause, such officers and appoint and terminate such agents as they
consider appropriate; establish and terminate one or more committees, that may
exercise the powers and authority of the Board of Trustees to the extent that
the Trustees so determine; employ one or more custodians of the assets of the
Trust and may authorize such custodians to employ subcustodians and to deposit
all or any part of such assets in a system or systems for the central handling
of securities or with a Federal Reserve Bank; employ an administrator for the
Trust and may authorize such administrator to employ subadministrators; employ
an investment adviser or other Manager of the Trust and may authorize such
Person to employ subadvisers; retain a transfer agent or a Shareholder servicing
agent, or both; provide for the issuance and distribution of Shares by the Trust
directly or through one or more Principal Underwriters or otherwise; redeem,
repurchase and transfer Shares pursuant to applicable law; set record dates for
the determination of Shareholders with respect to various matters; declare and
pay dividends and distributions to Shareholders of each Series from the assets
of such Series; and in general delegate such authority as they consider
desirable to any officer of the Trust, to any committee established by the
Trustees and to any agent or employee of the Trust or to any such custodian,
transfer or Shareholder servicing agent, Principal Underwriter, investment
adviser, administrator or other Manager. Any determination as to what is in the
interests of the Trust made by the Trustees in good faith shall be conclusive.
In construing the provisions of this Declaration of Trust, the presumption shall
be in favor of a grant of power to the Trustees. Unless otherwise specified
herein or in the Bylaws or required by law, any action by the Trustees shall be
deemed effective if approved or taken by a majority of the Trustees present at a
meeting of Trustees at which a quorum of Trustees is present, within or without
the State of Delaware.
Without limiting the foregoing, the Trustees shall have the power and
authority to cause the Trust (or to act on behalf of the Trust):
(a) To invest and reinvest cash and other property, to hold cash and other
property uninvested, and to subscribe for, invest in, reinvest in, purchase or
otherwise acquire, own, hold, pledge, sell, assign, transfer, exchange,
distribute, write options on, lend or otherwise deal in or dispose of contracts
for the future acquisition or delivery of, securities, property and instruments
of every nature and kind, including, without limitation, all types of bonds,
debentures, stocks, negotiable or non-negotiable instruments, obligations,
evidences of indebtedness, certificates of deposit or indebtedness, commercial
papers, repurchase agreements, bankers' acceptances, currency (including foreign
currency) and other securities, property, and instruments of any kind, issued,
created, guaranteed, or sponsored by any and all Persons, including without
limitation, states, territories, and possessions of the United States and the
District of Columbia and any political subdivision, agency, or instrumentality
thereof, and foreign government or any political subdivision of the United
States Government or any foreign government, or any international
instrumentality, or by any bank or savings institution, or by any corporation or
organization organized under the laws of the United States or of any state,
territory, or possession thereof, or by any corporation or organization
organized under any foreign law, or in "when issued" contracts for any such
securities, property or instruments, to change the investments of the assets of
the Trust; and to exercise any and all rights, powers, and privileges of
ownership or interest in respect of any and all such investments of every kind
and description, including, without limitation, the right to consent and
otherwise act with respect thereto, with power to designate one or more Persons,
to exercise any of said rights, powers, and privileges in respect of any of said
instruments;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, lease, or write
options (including, options on futures contracts) in respect to, or otherwise
deal in any property rights relating to, any or all of the assets of the Trust
or any Series;
(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
proxies or powers of attorney to such Person or Persons as the Trustees shall
deem proper, granting to such Person or Persons such power and discretion with
relation to securities or property as the Trustees shall deem proper;
(d) To exercise powers and right of subscription or otherwise which in any
manner arise out of ownership or securities;
(e) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form, or in its own name or
in the name of a custodian or subcustodian or a nominee or nominees or
otherwise;
(f) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer of any security which is
held in the Trust; to consent to any contract, lease, mortgage, purchase or sale
of property by such corporation or issuer; and to pay calls or subscriptions
with respect to any security held in the Trust;
(g) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depositary or
trustee, and to delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees shall deem
proper;
(h) To compromise, arbitrate or otherwise, adjust claims in favor of or
against the Trust or any matter in controversy, including, but not limited to,
claims for taxes;
(i) To enter into joint ventures, general or limited partnerships and any
other combinations or associations;
(j) To borrow funds or other property in the name of the Trust exclusively
for Trust purposes and in connection therewith issue notes or other evidence of
indebtedness; and to mortgage and pledge the Trust Property or any part thereof
to secure any or all of such indebtedness;
(k) To endorse or guarantee the payment of any notes or other obligations
of any Person; to make contracts of guaranty or suretyship, or otherwise assume
liability for payment thereof; and to mortgage and pledge the Trust Property or
any part thereof to secure any of or all of such obligations;
(l) To purchase and pay for entirely out of Trust Property such insurance
as the Trustees may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the assets
of the Trust or payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers, Principal Underwriters, or
independent contractors of the Trust, individually against all claims and
liabilities of every nature arising by reason of holding, being or having held
any such office or position, or by reason of any action, alleged to have been
taken or omitted by any such Person as Trustee, officer employee, agent,
investment adviser, Principal Underwriter, or independent contractor, including
any action taken or independent contractor, including any action taken or
omitted that may be determined to constitute negligence, whether or not the
Trust would have the power to indemnify such Person against liability;
(m) To adopt, establish and carry out pension, profit-sharing, Share bonus,
Share purchase, savings, thrift and other retirement, incentive and benefit
plans and trusts, including the purchasing of life insurance and annuity
contracts as a means of providing such retirement and other benefits, for any or
all of the Trustees, officers, employees and agents of the Trust;
(n) To operate as and carry out the business of an investment company, and
exercise all the powers necessary or appropriate to the conduct of such
operations;
(o) To enter into contracts of any kind and description;
(p) To employ as custodian of any assets of the Trust one or more banks,
trust companies or companies that are members of a national securities exchange
or such other entities as the Commission may permit as custodians of the Trust,
subject to any conditions set forth in this Declaration of Trust or in the
Bylaws;
(q) To employ auditors, counsel or other agents of the Trust, subject to
any conditions set forth in this Declaration of Trust or in the Bylaws;
(r) To interpret the investment policies, practices, or limitations of any
Series or Class; and
(s) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes, and with
separate Shares representing beneficial interests in such Series, and to
establish separate Classes, all in accordance with the provisions of Article
III;
(t) To the full extent permitted by Section 3804 of the Delaware Act, to
allocate assets, liabilities and expenses of the Trust to a particular Series
and liabilities and expenses to a particular Class or to apportion the same
between or among two or more Series or Classes, provided that any liabilities or
expenses incurred by a particular Series or Class shall be payable solely out of
the assets belonging to that Series or Class as provided for in Article III;
(u) To establish, from time to time, a minimum investment for Shareholders
in the Trust or in one or more Series or Classes, and to require the redemption
of the Shares of any Shareholders whose investment is less than such minimum, or
who does not satisfy any other criteria the Trustees may set from time to time,
upon giving any requisite notice to such Shareholder; and
(v) Subject to the 1940 Act, to engage in any other lawful act or activity
in which a business trust organized under the Delaware Act may engage.
The Trust shall not be limited to investing in obligations maturing before
the possible termination of the Trust or one or more of its Series. The Trust
shall not in any way be bound or limited by any present or future law or custom
in regard to investment by fiduciaries. The Trust shall not be required to
obtain any court order to deal with any assets of the Trust or take any other
action hereunder.
Section 4. Payment of Expenses by the Trust. The Trustees are authorized to
pay or cause to be paid out of the principal or income of the Trust, or partly
out of the principal and partly out of income, as they deem fair, all expenses,
fees, charges, taxes and liabilities incurred or arising in connection with the
Trust, or in connection with the management thereof, including, but not limited
to, the Trustees' compensation and such expenses and charges for the services of
the Trust's officers, employees, investment adviser or other Manager, Principal
Underwriter, auditors, counsel, custodian, transfer agent, Shareholder servicing
agent, and such other agents or independent contractors and such other expenses
and charges as the Trustees may deem necessary or proper to incur, which
expenses, fees, charges, taxes and liabilities shall be allocated in accordance
with Article III, Section 6 hereof.
Section 5. Payment of Expenses by Shareholders. The Trustees shall have the
power, as frequently as they may determine, to cause each Shareholder, or each
Shareholder of any particular Series, to pay directly, in advance or arrears,
expenses of the Trust as described in Section 4 of this Article IV ("Expenses"),
in an amount fixed from time to time by the Trustees, by setting off such
Expenses due from such Shareholder from declared but unpaid dividends owed such
Shareholder and/or by reducing the number of Shares in the account of such
Shareholder by that number of full and/or fractional Shares which represents the
outstanding amount of such Expenses due from such Shareholder, provided that the
direct payment of such Expenses by Shareholders is permitted under applicable
law.
Section 6. Ownership of Assets of the Trust. Title to all of the assets of
the Trust shall at all times be considered as vested in the Trust, except that
the Trustees shall have power to cause legal title to any Trust Property to be
held by or in the name of one or more of the Trustees, or in the name of the
Trust, or in the name of any other Person as nominee, on such terms as the
Trustees may determine. The right, title and interest of the Trustees in the
Trust Property shall vest automatically in each Person who may hereafter become
a Trustee. upon the resignation, removal or death of a Trustee, he or she shall
automatically cease to have any right, title or interest in any of the Trust
Property, and the right, title and interest of such Trustee in the Trust
Property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered.
Section 7. Service Contracts.
(a) Subject to such requirements and restrictions as may be set forth under
federal and/or state law and in the Bylaws, including, without limitation, the
requirements of Section 15 of the 1940 Act, the Trustees may, at any time and
from time to time, contract for exclusive or nonexclusive advisory, management
and/or administrative services for the Trust or for any Series (or Class
thereof) with any corporation, trust, association, or other organization or
Person (each, a Manager); and any such contract may contain such other terms as
the Trustees may determine, including, without limitation, authority for the
Managers to supervise and direct the investment of all assets held, and to
determine from time to time without prior consultation with the Trustees what
investments shall be purchased, held, sold or exchanged and what portion, if
any, of the assets of the Trust shall be held uninvested and to make changes in
the Trust's investments; authority for a Manager to delegate certain or all of
its duties under such contracts to qualified investment advisers and
administrators (each, a Sub-Manager); and authority to conduct such other
activities as may specifically be delegated to such party.
(b) The Trustees may also, at any time and from time to time, contract with
any corporation, trust, association, or other organization, appointing it
exclusive or nonexclusive distributor or Principal Underwriter for the Shares of
one or more of the Series (or Classes) or other securities to be issued by the
Trust. Every such contract shall comply with such requirements and restrictions
as may be set forth under federal and/or state law and in the Bylaws, including,
without limitation, the requirements of Section 15 of the 1940 Act; and any such
contract may contain such other terms as the Trustees may determine.
(c) The Trustees are also empowered, at any time and from time to time, to
contract with any corporations, trusts, associations or other organizations,
appointing it or them the custodian, transfer agent and/or Shareholder servicing
agent for the Trust or one or more of its Series. Every such contract shall
comply with such requirements and restrictions as may be set forth under federal
and/or state law and in the Bylaws or stipulated by resolution of the Trustees.
(d) Subject to applicable law, the Trustees are further empowered, at any
time and from time to time, to contract with any Person to provide such other
services to the Trust or one or more of the Series, as the Trustees determine to
be in the best interests of the Trust and the applicable Series.
(e) The fact that:
(i) any of the Shareholders, Trustees, or officers of the Trust is a
Shareholder, director, officer, partner, trustee, employee, Manager,
adviser, Principal Underwriter, distributor, or affiliate or agent of
or for any corporation, trust, association, or other organization, or
for any parent or affiliate of any organization with which an
advisory, management, or administration contract, or Principal
Underwriter's or distributor's contract, or transfer agent,
Shareholder servicing agent or other type of service contract may have
been or may hereafter be made, or that any such organization, or any
parent or affiliate thereof, is a Shareholder or as an interest in the
Trust; or that
(ii) any corporation, trust, association or other organization with which
an advisory, management, or administration contract or Principal
Underwriter's or distributor's contract, or transfer agent or
Shareholder servicing agent contract may have been or may hereafter be
made also has an advisory, management, or administration contract, or
Principal Underwriter's or distributor's or other service contract
with one or more other corporations, trusts, associations, or other
organizations, or has other business or interests,shall not affect the
validity of any such contract or disqualify any Shareholder, Trustee
or officer of the Trust from voting upon or executing the same, or
create any liability or accountability to the Trust or its
Shareholders, provided approval of each such contract is made pursuant
to the requirements of the 1940 Act.
Section 8. Trustees and Officers as Shareholders. Any Trustee, officer or
agent of the Trust may acquire, own and dispose of Shares to the same extent as
if he or she were not a Trustee, officer or agent; and the Trustees may issue
and sell and cause to be issued and sold Shares to, and redeem such Shares from,
any such Person or any firm or company in which such Person is interested,
subject only to the general limitations contained herein or in the Bylaws
relating to the sale and redemption of such Shares.
Section 9. Independent Trustees. In accordance with Section 3801(h) of the
Delaware Act, a Trustee is an independent Trustee if the Trustee is not an
Interested Person of the Trust; provided that the receipt of compensation for
service as an independent Trustee of the Trust and also for service as an
independent Trustee of one or more other investment companies managed by a
single investment adviser (or an affiliated person, as defined in Section
2(a)(3) of the 1940 Act, of such investment adviser) shall not affect the status
of the Trustee as an independent Trustee under the Delaware Act. An independent
Trustee shall be deemed to be independent and disinterested for all purposes.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers, Meetings, and Record Dates. The Shareholders
shall have power to vote only: (i) for the election or removal of Trustees as
provided in Article IV, Section 1 hereof, and (ii) with respect to such
additional matters relating to the Trust as may be required by applicable law,
this Declaration of Trust, the Bylaws or any registration of the Trust with the
Commission (or any successor agency), or as the Trustees may consider necessary
or desirable. Each whole Share shall be entitled to one vote for each dollar
value invested as to any matter on which it is entitled to vote and each
fractional Share shall be entitled to a proportionate fractional vote.
Notwithstanding any other provision of this Declaration of Trust, on any matters
submitted to a vote of the Shareholders, all Shares of the Trust then entitled
to vote shall be voted in aggregate except: (i) when required by the 1940 Act,
Shares shall be voted by individual Series and/or Classes; (ii) when the matter
involves any action that the Trustees have determined will affect only the
interests of one or more Series, then only Shareholders of such Series shall be
entitled to vote thereon; and (iii) when the matter involves any action that the
Trustees have determined will affect only the interests of one or more Classes,
then only the Shareholders of such Class or Classes shall be entitled to vote
thereon. There shall be no cumulative voting in the election of Trustees. Shares
may be voted in person or by proxy. A proxy may be given by any means acceptable
under applicable law, including by an electronic or telecommunications device if
so authorized by the Trustees. Notwithstanding anything else contained herein or
in the Bylaws, in the event a proposal by anyone other than the officers or
Trustees of the Trust is submitted to a vote of the Shareholders of one or more
Series or Classes thereof or of the Trust, or in the event of any proxy contest
or proxy solicitation or proposal in opposition to any proposal by the officers
or Trustees of the Trust, Shares may be voted only by written proxy or in person
at a meeting. Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required by law, this Declaration of Trust
or the Bylaws to be taken by the Shareholders. Meetings of the Shareholders
shall be called and notice thereof and record dates therefor shall be given and
set as provided in the Bylaws.
Section 2. Quorum and Required Vote. Except when a larger quorum is
required by applicable law, by the Bylaws or by this Declaration of Trust,
thirty-three and one-third percent (33-1/3%) of the Shares entitled to vote
shall constitute a quorum at a Shareholders' meeting. When any one or more
Series (or Classes) is to vote as a single Class separate from any other Shares,
thirty-three and one-third percent (33-1/3%) of the Shares of each such Series
(or Class) entitled to vote shall constitute a quorum at a Shareholders' meeting
of that Series (or Class). Except when a larger vote is required by any
provision of this Declaration of Trust or the Bylaws or by applicable law, when
a quorum is present at any meeting, a majority of the Shares voted shall decide
any questions and a plurality of the Shares voted shall elect a Trustee,
provided that where any provision of law or of this Declaration of Trust
requires that the holders of any Series shall vote as a Series (or that holders
of a Class shall vote as a Class), then a majority of the Shares of that Series
(or Class) voted on the matter (or a plurality with respect to the election of a
Trustee) shall decide that matter insofar as that Series (or Class) is
concerned.
Section 3. Record Dates. For the purpose of determining the Shareholders of
any Series (or Class) who are entitled to receive payment of any dividend or of
any other distribution, the Trustees may from time to time fix a date, which
shall be before the date for the payment of such dividend or such other payment,
as the record date for determining the Shareholders of such Series (or Class)
having the right to receive such dividend or distribution. Without fixing a
record date, the Trustees may for distribution purposes close the register or
transfer books for one or more Series (or Classes) at any time prior to the
payment of a distribution. Nothing in this Section shall be construed as
precluding the Trustees from setting different record dates for different Series
(or Classes).
Section 4. Additional Provisions. The Bylaws may include further provisions
for Shareholders' votes and meetings and related matters.
ARTICLE VI
Net Asset Value, Distributions and Redemptions
Section 1. Determination of Net Asset Value, Net Income, and Distributions.
Subject to applicable law and Article III, Section 6 hereof, the Trustees, in
their absolute discretion, may prescribe and shall set forth in the Bylaws or in
a duly adopted vote of the Trustees such bases and time for determining the per
Share or net asset value of the Shares of any Series or Class or net income
attributable to the Shares of any Series or Class, or the declaration and
payment of dividends and distributions on the Shares of any Series or Class, as
they may deem necessary or desirable.
Section 2. Redemptions and Repurchases.
(a) The Trust shall purchase such Shares as are offered by any Shareholder
for redemption, upon the presentation of a proper instrument of transfer
together with a request directed to the Trust, or a Person designated by the
Trust, that the Trust purchase such Shares or in accordance with such other
procedures for redemption as the Trustees may from time to time authorize; and
the Trust will pay therefor the net asset value thereof as determined by the
Trustees (or on their behalf), in accordance with any applicable provisions of
the Bylaws and applicable law. Payment for said Shares shall be made by the
Trust to the Shareholder in accordance with the 1940 Act and any rules and
regulations thereunder or as otherwise required by the Commission. The
obligation set forth in this Section 2 is subject to the provision that, in the
event that any time the New York Stock Exchange, Inc. (the "Exchange") is closed
other than for weekends or holidays, or if permitted by the rules and
regulations or an order of the Commission during periods when trading on the
Exchange is restricted or during any emergency which makes it impracticable for
the Trust to dispose of the investments of the applicable Series or to determine
fairly the value of the net assets held with respect to such Series or during
any other period permitted by order of the Commission for the protection of
investors, such obligation may be suspended or postponed by the Trustees. In the
case of a suspension of the right of redemption as provided herein, a
Shareholder may either withdraw the request for redemption or receive payment
based on the net asset value per Share next determined after the termination of
such suspension.
(b) Payment for any Shares which are presented for redemption shall be made
in cash or property from the assets of the relevant Series and payment for such
Shares shall be made within seven (7) days after the date upon which the
redemption request is effective, or such longer period as provided above, or as
otherwise may be required. Subject to the foregoing, the fair value, selection
and quantity of securities or other property so paid or delivered as all or part
of the redemption price may be determined by or under authority of the Trustees
in accordance with any procedures adopted by the Board of Trustees. In no case
shall the Trust be liable for any delay of any Manager or other Person in
transferring securities selected for delivery as all or part of any
payment-in-kind.
(c) If the Trustees shall, at any time and in good faith, determine that
direct or indirect ownership of Shares of any Series or Class thereof has or may
become concentrated in any Person to an extent that would disqualify any Series
as a regulated investment company under the Internal Revenue Code of 1986, as
amended (or any successor statute thereto), then the Trustees shall have the
power (but not the obligation) by such means as they deem equitable (i) to call
for the redemption by any such Person of a number, or principal amount, of
Shares sufficient to maintain or bring the direct or indirect ownership of
Shares into conformity with the requirements for such qualification, (ii) to
refuse to transfer or issue Shares of any Series or Class thereof to such Person
whose acquisition of the Shares in question would result in such
disqualification, or (iii) to take such other actions as they deem necessary and
appropriate to avoid such disqualification. Any such redemption shall be
effected at the redemption price and in the manner provided in this Article VI.
(d) The holders of Shares shall upon demand disclose to the Trustees in
writing such information with respect to direct and indirect ownership of Shares
as the Trustees deem necessary to comply with the provisions of the Internal
Revenue Code of 1986, as amended (or any successor statute thereto), or to
comply with the requirements of any other taxing authority.
(e) The Trust shall have the right at any time without prior notice to the
Shareholder to redeem Shares of any Shareholder for their then current net asset
value per Share if:
(i) at such time the Shareholder owns Shares having an aggregate net
asset value of less than an amount set from time to time by the
Trustees subject to such terms and conditions as the Trustees may
approve, and subject to the Trust's giving general notice to all
Shareholders of its intention to avail itself of such right,
either by publication in the Trust's registration statement, if
any, or by such other means as the Trustees may determine;
(ii) the Trustees believe that it is in the best interest of the Trust
to do so because of prior involvement by the Shareholder in
fraudulent acts relating to securities transactions; or
(iii)the Trustees determine in light of relevant circumstances that
redemption is appropriate, and such redemption is permitted under
the Delaware Act and any other applicable law.
ARTICLE VII
Compensation, Limitation of Liability and Indemnification of Trustees
Section 1. Compensation. The Trustees in such capacity shall be entitled to
reasonable compensation from the Trust and they may fix the amount of such
compensation. However, the Trust will not compensate those Trustees who are
Interested Persons of the Trust, its Manager, Sub-Manager, distributor or
Principal Underwriter. Nothing herein shall in any way prevent the employment of
a Trustee for advisory, management, legal, accounting, investment banking or
other services and payment for such services by the Trust.
Section 2. Limitation of Liability. A Trustee, when acting in such
capacity, shall not be personally liable to any Person, other than the Trust or
a Shareholder to the extent provided in this Article VII, for any act, omission
or obligation of the Trust, any Trustee, or any officer, Manager, Sub-Manager,
agent, employee, or Principal Underwriter of the Trust. A Trustee shall not be
liable for any act or omission or any conduct whatsoever in his capacity as
Trustee, provided that nothing contained herein shall protect any Trustee
against any liability to the Trust or to Shareholders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee hereunder, provided however, that a Trustee shall not be
liable for errors of judgment or mistakes of fact or law.
All persons extending credit to, contracting with or having any claim
against the Trust or the Trustees shall look only to the assets of the
appropriate Series of the Trust for payment under such credit, contract, or
claim; and neither the Trustees nor the Shareholders, nor any of the Trust's
officers, employees, or agents, whether past, present, or future, shall be
personally liable therefor.
Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustees by any of them in connection with the Trust shall
conclusively be deemed to have been executed or done only in or with respect to
his, her or their capacity as Trustee or Trustees, and such Trustee or Trustees
shall not be personally liable thereon. At the Trustees' discretion, any note,
bond, contract, instrument, certificate or undertaking made or issued by the
Trustees or by any officer or officers may give notice that the Certificate of
Trust is on file in the office of the Secretary of State of the State of
Delaware and that a limitation on liability of Series exists and such note,
bond, contract, instrument, certificate or undertaking may, if the Trustees so
determine, recite that the same was executed or made on behalf of the Trust by a
Trustee or Trustees in such capacity and not individually and that the
obligations of such instrument are not binding upon any of them or the
Shareholders individually but are binding only on the assets and property of the
Trust or a Series thereof, and may contain such further recital as such Person
or Persons may deem appropriate. The omission of any such notice or recital
shall in no way operate to bind any Trustee, officer, or Shareholder
individually.
Section 3. Indemnification.
(a) Subject to the exceptions and limitations contained in Section
3(b) of this Article:
(i) every Person who is, or has been, a Trustee or officer of
the Trust (hereinafter referred to as a "Covered Person")
shall be indemnified by the Trust to the fullest extent
permitted by law against all liabilities and against all
expenses reasonably incurred or paid by him or her in
connection with any claim, action, suit or proceeding in
which he or she becomes involved as a party or otherwise by
virtue of his or her being or having been a Trustee or
officer and against amounts paid or incurred by him or her
in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil,
criminal, administrative, investigative or other, including
appeals), threatened, pending or completed, while in office
or thereafter, and the words "liability" and "expenses"
shall include, without limitation, attorneys' fees, costs,
judgments, amounts paid in settlement, fines, penalties and
all other liabilities whatsoever.
(b) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought to be liable to the Trust
or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office, (A) by the court or other body approving the
settlement; (B) by at least a majority of those Trustees who
are neither Interested Persons of the Trust nor are parties
to the matter based upon a review of readily available facts
(as opposed to a full trial-type inquiry); or (C) by written
opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type
inquiry).
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable,
shall not be exclusive of or affect any other rights to which any
Covered Person may now or hereafter be entitled, shall continue
as to a person who has ceased to be a Covered Person and shall
inure to the benefit of the heirs, executors and administrators
of such a person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than
Covered Persons, and other persons may be entitled by contract or
otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character
described in Section 3(a) of this Article shall be paid by the
Trust or Series prior to final disposition thereof upon receipt
of an undertaking by or on behalf of such Covered Person that
such amount will be paid over by him or her to the Trust, unless
it is ultimately determined that he or she is entitled to
indemnification under this Section 3; provided, however, that
either (i) such Covered Person shall have provided appropriate
security for such undertaking, or (ii) the Trust is insured
against losses arising out of any such advance payments, or (iii)
either a majority of the Trustees who are neither Interested
Persons of the Trust nor parties to the matter, or independent
legal counsel in a written opinion, shall have determined, based
upon a review of readily available facts (as opposed to a
trial-type inquiry or full investigation), that there is reason
to believe that such Covered Person will be found entitled to
indemnification under Section 3.
Section 4. Trustee's Good Faith Action, Expert Advice, No Bond or Surety.
The exercise by the Trustees of their powers and discretion hereunder shall be
binding upon everyone interested. A Trustee shall not be liable to the Trust and
to any Shareholder except for his or her own willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
the office of Trustee, and shall not be liable for errors of judgment or
mistakes of fact or law. The Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Declaration of Trust,
and shall be under no liability for any act or omission in accordance with such
advice nor for failing to follow such advice. The Trustees shall not be required
to give any bond as such, nor any surety if a bond is required.
Section 5. Insurance. The Trustees shall be entitled and empowered to the
fullest extent permitted by law to purchase with Trust assets insurance for
liability and for all expenses reasonably incurred or paid or expected to be
paid by a Trustee, officer, employee, or agent of the Trust in connection with
any claim, action, suit, or proceeding in which he or she may become involved by
virtue of his or her present capacity or former capacity as a Trustee of the
Trust.
ARTICLE VIII
Miscellaneous
Section 1. Liability of Third Persons Dealing with Trustees. No Person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
Section 2. Termination of the Trust or Any Series or Class.
(a) Unless terminated as provided herein, the Trust shall continue without
limitation of time. The Trust may be terminated at any time by vote of a
majority of the Shares of each Series entitled to vote, voting separately by
Series, or by the Trustees by written notice to the Shareholders. Any Series of
Shares or Class thereof may be terminated at any time by vote of a majority of
the Shares of such Series or Class entitled to vote, or by the Trustees by
written notice to the Shareholders of such Series or Class.
(b) Upon the requisite Shareholder vote or action by the Trustees to
terminate the Trust or any one or more Series or Class, after paying or
otherwise providing for all charges, taxes, expenses, and liabilities, whether
due or accrued or anticipated, of the Trust or of the particular Series or Class
as may be determined by the Trustees, the Trust shall in accordance with such
procedures as the Trustees may consider appropriate reduce the remaining assets
of the Trust or of the affected Series or Class to distributable form in cash or
Shares (if any Series remain) or other securities, or any combination thereof,
and distribute the proceeds to the Shareholders of the Series or Classes
involved, ratably according to the number of Shares of such Series or Class held
by the Shareholders of such Series or Class on the date of distribution.
Thereupon, the Trust or any affected Series or Class shall terminate and the
Trustees and the Trust shall be discharged of any and all further liabilities
and duties relating thereto or arising therefrom, and the right, title, and
interest of all parties with respect to the Trust or such Series or Class shall
be canceled and discharged.
(c) Upon termination of the Trust, following completion of winding up of
its business, the Trustees shall cause a certificate of cancellation of the
Trust's Certificate of Trust to be filed in accordance with the Delaware Act,
which certificate of cancellation may be signed by any one Trustee.
Section 3. Reorganization.
(a) Notwithstanding anything else herein, the Trustees may, without
Shareholder approval unless such approval is specifically required by applicable
law, (i) cause the Trust or any Series or Class thereof to sell, lease,
exchange, transfer, pledge or otherwise dispose of all or substantially all of
the Trust Property or the property of any Series or Class, including its good
will, upon such terms and conditions and for such consideration as authorized by
the Trustees, (ii) cause the Trust or any one or more Series (or Classes) of the
Trust to merge or consolidate with or into one or more trusts (or Series or
Classes thereof to the extent permitted by law), partnerships, associations,
corporations or other business entities (including trusts, partnerships,
associations, corporations or other business entities created by the Trustees to
accomplish such merger or consolidation), or any one or more other Series (or
Classes) of the Trust, (iii) cause the Shares to be exchanged under or pursuant
to any state or federal statute to the extent permitted by law, or (iv) cause
the Trust to reorganize as a corporation, business trust, limited liability
company or limited liability partnership under the laws of Delaware or any other
state or jurisdiction. Any agreement of merger or consolidation or exchange or
certificate of merger or consolidation shall be approved and, to the extent
required by applicable law, signed by a majority of the Trustees.
(b) Pursuant to and in accordance with the provisions of Section 3815(f) of
the Delaware Act, and notwithstanding anything to the contrary contained in this
Declaration of Trust, an agreement of merger or consolidation approved by the
Trustees in accordance with this Section 3 may (i) effect any amendment to the
governing instrument of the Trust or (ii) effect the adoption of a new governing
instrument of the Trust if the Trust is the surviving or resulting trust in the
merger or consolidation.
(c) The Trustees may create one or more business trusts to which all or any
part of the assets, liabilities, profits, or losses of the Trust or any Series
or Class thereof may be transferred any may provide for the conversion of Shares
in the Trust or any Series or Class thereof into beneficial interests in any
such newly created trust or trusts or any series of classes thereof.
Section 4. Amendments. Except as specifically provided in this Section 4,
the Trustees may, without Shareholder vote, restate, amend, or otherwise
supplement this Declaration of Trust. Shareholders shall have the right to vote
on (i) any amendment that would affect their right to vote granted in Article V,
Section 1 hereof, (ii) any amendment to this Section 4 of Article VIII affecting
their rights; (iii) any amendment that requires their vote under applicable law
or by the Trust's registration statement, as filed with the Commission, and (iv)
any amendment submitted to them for their vote by the Trustees. Any amendment
required or permitted to be submitted to the Shareholders that, as the Trustees
determine, shall affect the Shareholders of one or more Series shall be
authorized by a vote of the Shareholders of each Series affected and no vote of
Shareholders of a Series not affected shall be required. Notwithstanding
anything else herein, no amendment hereof shall limit the rights to
indemnification or insurance provided by Article VII hereof with respect to any
acts or omissions of Persons covered thereby prior to such amendment. The
Trustees may, without Shareholder vote, restate, amend, or otherwise supplement
the Certificate of Trust as they deem necessary or desirable.
Section 5. Filing of Copies, References, Headings. The original or a copy
of this instrument and of each restatement and/or amendment hereto shall be kept
at the office of the Trust where it may be inspected by any Shareholder. Anyone
dealing with the Trust may rely on a certificate by an officer of the Trust as
to whether or not any such restatements and/or amendments have been made and as
to any matters in connection with the Trust hereunder; and, with the same effect
as if it were the original, may rely on a copy certified by an officer of the
Trust to be a copy of this instrument or of any such restatements and/or
amendments. In this instrument and in any such restatements and/or amendments,
references to this instrument, and all expressions such as "herein," "hereof,"
and "hereunder," shall be deemed to refer to this instrument as amended or
affected by any such restatements and/or amendments. Headings are placed herein
for convenience of reference only and shall not be taken as a part hereof or
control or affect the meaning construction or effect of this instrument.
Whenever the singular number is used herein, the same shall include the plural;
and the neuter, masculine and feminine genders shall include each other, as
applicable. This instrument may be executed in any number of counterparts each
of which shall be deemed an original.
Section 6. Applicable Law.
(a) The Trust is created under, and this Declaration of Trust is to be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware. The Trust shall be of the type commonly called a business
trust, and without limiting the provisions hereof, the Trust specifically
reserves the right to exercise any of the powers or privileges afforded to
business trusts or actions that may be engaged in by business trusts under the
Delaware Act, and the absence of a specific reference herein to any such power,
privilege, or action shall not imply that the Trust may not exercise such power
or privilege or take such actions.
(b) Notwithstanding the first sentence of Section 6(a) of this Article
VIII, there shall not be applicable to the Trust, the Trustees, or this
Declaration of Trust either the provisions of Section 3540 of Title 12 of the
Delaware Code or any provisions of the laws (statutory or common) of the State
of Delaware (other than the Delaware Act) pertaining to trusts that relate to or
regulate: (i) the filing with any court or governmental body or agency of
trustee accounts or schedules of trustee fees and charges; (ii) affirmative
requirements to post bonds for trustees, officers, agents, or employees of a
trust; (iii) the necessity for obtaining a court or other governmental approval
concerning the acquisition, holding, or disposition of real or personal
property; (iv) fees or other sums applicable to trustees, officers, agents or
employees of a trust; (v) the allocation of receipts and expenditures to income
or principal; (vi) restrictions or limitations on the permissible nature,
amount, or concentration of trust investments or requirements relating to the
titling, storage, or other manner of holding of trust assets; or (vii) the
establishment of fiduciary or other standards or responsibilities or limitations
on the acts or powers or liabilities or authorities and powers of trustees that
are inconsistent with the limitations or liabilities or authorities and powers
of Trustees set forth or referenced in this Declaration of Trust.
Section 7. Provisions in Conflict with Law or Regulations.
(a) The provisions of this Declaration of Trust are severable, and if the
Trustees shall determine, with the advice of counsel, that any such provision is
in conflict with the 1940 Act, the regulated investment company provisions of
the Internal Revenue Code of 1986, as amended (or any successor statute
thereto), and the regulations thereunder, the Delaware Act or with other
applicable laws and regulations, the conflicting provision shall be deemed never
to have constituted a part of this Declaration of Trust; provided, however, that
such determination shall not affect any of the remaining provisions of this
Declaration of Trust or render invalid or improper any action taken or omitted
prior to such determination.
(b) If any provision of this Declaration of Trust shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration of Trust in any jurisdiction.
Section 8. Business Trust Only. It is the intention of the Trustees to
create a business trust pursuant to the Delaware Act. It is not the intention of
the Trustees to create a general partnership, limited partnership, joint stock
association, corporation, bailment, or any form of legal relationship other than
a business trust pursuant to the Delaware Act. Nothing in this Declaration of
Trust shall be construed to make the Shareholders, either by themselves or with
the Trustees, partners, or members of a joint stock association.
IN WITNESS WHEREOF, the Trustee named below does hereby make and enter into
this Declaration of Trust as of the 9th day of August, 2001.
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Paul M. Harmon, as Trustee, and not individually
THE PRINCIPAL PLACE OF BUSINESS OF THE TRUST IS:
Bloomington, Illinois