SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14 (a) of the Securities
Exchange Act of 1934 (Amendment No.__)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of
the Commission Only
(as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
Definitive additional materials
Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
TOUCHSTONE TAX-FREE TRUST
(Name of Registrant as Specified in Its Charter/Declaration of Trust)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
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TOUCHSTONE TAX-FREE TRUST
221 East Fourth Street, Suite 300
Cincinnati, Ohio 45202
800.638.8194
March __, 2002
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of the
Touchstone Tax-Free Trust (the "Trust") on Thursday, April 25, 2002 at 10 a.m.
Eastern time, at the offices of the Trust, 221 East Fourth Street, Suite 300,
Cincinnati, Ohio 45202.
The special meeting is being held to consider the following: (1) authorizing the
Trustees and Touchstone Advisors to select and change sub-advisors without
shareholder approval, 2) approval of revisions to the Trust's Agreement and
Declaration of Trust, and 3) approval of multiple changes to the fundamental
investment restrictions of the Trust. Please review the enclosed proxy statement
for more information about the proposals.
The Board of Trustees has given full and careful consideration to each of these
matters and has concluded that the proposals are in the best interest of the
Trust and its shareholders. The Board of Trustees therefore recommends that you
vote "FOR" the matters discussed in this proxy statement.
Your vote is important, no matter how many shares you own. To assure your
representation at the meeting, we must receive the enclosed authorization card
with your voting instructions no later than April 22, 2002 in order to process
your instructions prior to the Special Meeting of shareholders on April 25,
2002.
By mail: Complete, sign and mail the enclosed authorization card in the
postage-paid envelope that has been provided. Please allow adequate
time for mailing.
By fax: Complete and sign the enclosed authorization card and fax both sides
to 513-362-8319.
If you attend the meeting, you may revoke your proxy and vote your shares in
person.
If you have any questions or need any help with your voting instructions, please
call Touchstone toll-free at 1.800.638.8194.
Sincerely,
/s/ Jill T. McGruder
Jill T. McGruder
President
Touchstone Family of Funds and Variable Annuities
THE TOUCHSTONE FAMILY OF FUNDS IS DISTRIBUTED BY TOUCHSTONE SECURITIES, INC.*
* MEMBER NASD/ SIPC
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March 18, 2002
Dear Financial Professional:
The attached letter, proxy statement and authorization card was mailed to
Touchstone Tax-Free Trust (the "Trust") shareholders on March 15, 2002. Clients
are being asked to provide voting instructions on several proposals which will
affect the Trust.
Shareholders are being asked (1) To authorize the Trustees and Touchstone
Advisors, Inc. to select and change investment sub-advisors and enter into
investment sub-advisory agreements without obtaining the approval of
shareholders, (2) to make revisions to the Trust's Agreement and Declaration of
Trust, and (3) to ratify multiple changes to the fundamental investment
restrictions of the Trust. We must receive the client's authorization card by
the close of business on April 22, 2002 in order to process the voting
instructions prior to the April 25, 2002 meeting of shareholders.
Please read the attached letter and proxy statement to familiarize yourself with
the proposals. The Board of Trustees has recommended a vote "FOR" all items. If
you or your clients have any questions, please call Touchstone at
1.800.638.8194.
Thank you for doing business with Touchstone.
Sincerely,
/s/ Jill T. McGruder
Jill T. McGruder
President
Touchstone Family of Funds and Variable Annuities
THE TOUCHSTONE FAMILY OF FUNDS IS DISTRIBUTED BY TOUCHSTONE SECURITIES, INC.*
* MEMBER NASD/ SIPC
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TOUCHSTONE TAX-FREE TRUST
221 East Fourth Street, Suite 300
Cincinnati, Ohio 45202
800-638-8194
NOTICE OF SPECIAL MEETING
Notice is hereby given that a special meeting of shareholders of Touchstone
Tax-Free Trust (the "Trust"), will be held on April 25, 2002 at 10:00 a.m.,
Eastern time, at the offices of the Trust, 221 East Fourth Street, Suite 300,
Cincinnati, Ohio 45202.
The special meeting is being held for the following purposes:
1. To authorize the Board and Touchstone Advisors, Inc. to select and
change investment sub-advisors and to enter into or amend investment
sub-advisory agreements without obtaining the approval of
shareholders.
2. To authorize the Board to adopt an Amended and Restated Declaration of
Trust.
3a. To change the fundamental investment restrictions of the Fund with
respect to borrowing money.
b. To change the fundamental investment restrictions of the Fund with
respect to underwriting securities.
c. To change the fundamental investment restrictions of the Fund with
respect to loans.
d. To change the fundamental investment restrictions of the Fund with
respect to real estate.
e. To eliminate the fundamental investment restrictions of the Fund
regarding oil, gas or mineral leases.
f. To change the fundamental investment restrictions of the Fund with
respect to commodities.
g. To change the fundamental investment restrictions of the Fund with
respect to concentration of investments.
h. To change the fundamental investment restrictions of the Fund with
respect to issuing senior securities.
i. To eliminate the fundamental investment restrictions of the Fund
regarding amounts invested in one issuer.
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4. To transact such other business as may properly come before the
special meeting or any adjournments thereof.
Shareholders of record at the close of business on February 25, 2002 are
entitled to notice of, and to vote at, the special meeting. The accompanying
Proxy Statement contains more information about the special meeting.
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY SHARES YOU OWN. TO AVOID THE COST OF
FOLLOW UP SOLICITATION AND A POSSIBLE ADJOURNMENT, PLEASE READ THE ENCLOSED
PROXY STATEMENT AND COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD AS
PROMPTLY AS POSSIBLE. IT IS IMPORTANT THAT YOUR VOTE BE RECEIVED BY APRIL 22,
2002.
By order of the Board of Trustees of the Touchstone Tax-Free Trust.
Tina D. Hosking
Secretary
Cincinnati, Ohio
March 15, 2002
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TOUCHSTONE TAX-FREE TRUST
221 East Fourth Street, Suite 300
Cincinnati, Ohio 45202
800-638-8194
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
APRIL 25, 2002
This Proxy Statement is furnished by Touchstone Tax-Free Trust (the
"Trust") to the shareholders of the Tax-Free Intermediate Term Fund, the Ohio
Insured Tax-Free Fund, the Tax-Free Money Fund, the Ohio Tax-Free Money Fund,
the California Tax-Free Money Fund and the Florida Tax-Free Money Fund (the
"Funds") on behalf of the Trust's Board of Trustees (the "Board") in connection
with the Trust's solicitation of the accompanying proxy. This proxy will be
voted at a special meeting of shareholders to be held on April 25, 2002 at 10:00
a.m., Eastern time, at the offices of the Trust, 221 East Fourth Street, Suite
300, Cincinnati, Ohio 45202, for the purposes set forth below and in the
accompanying Notice of Special Meeting. This Proxy Statement is being mailed to
Trust shareholders on or about March 15, 2002.
IN THIS PROXY STATEMENT, ACTIONS FROM TIME TO TIME MAY BE DESCRIBED AS
BEING TAKEN BY THE FUND, WHICH IS A SERIES OF THE TRUST, ALTHOUGH ALL ACTIONS
ARE ACTUALLY TAKEN BY THE TRUST ON BEHALF OF THE FUND.
REPORTS TO SHAREHOLDERS
Copies of the Trust's most recent Annual and Semiannual Reports have
previously been mailed to shareholders. These reports may be obtained without
charge by calling (800) 638-8194 or by writing to the Trust, 221 East Fourth
Street, Suite 300, Cincinnati, Ohio 45202.
The following table summarizes the proposals applicable to each class of
shares of each Fund:
Proposal # Proposal Description Applicable Fund(s) Page
- ---------- -------------------- ------------------ ----
1 To vote on authorizing the Trustees All
and Touchstone Advisors, Inc. to
select and change investment
sub-advisors and enter into
investment sub-advisory agreements
without obtaining the approval of
shareholders.
2 To approve changes to the Agreement All
and Declaration of Trust.
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3a To change the fundamental All
investment restrictions of the
Trust with respect to borrowing
money.
3b To change the fundamental All
investment restrictions of the
Trust with respect to underwriting
securities.
3c To change the fundamental All
investment restrictions of the
Trust with respect to loans.
3d To change the fundamental All
investment restrictions of the Fund
with respect to real estate.
3e To eliminate the fundamental All
investment restrictions of the
Trust regarding oil, gas or mineral
leases.
3f To change the fundamental All
investment restrictions of the
Trust with respect to commodities.
3g To change the fundamental All
investment restrictions of the
Trust with respect to concentration
of investments.
3h To change the fundamental All
investment restrictions of the
Trust with respect to issuing
senior securities.
3i To eliminate the fundamental All
investment restrictions of the
Trust regarding amounts invested in
one issuer.
4 To transact such other business as All
may properly come before the
special meeting or any adjournments
thereof.
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PROPOSAL 1 IS TO BE VOTED ON BY SHAREHOLDERS OF ALL FUNDS OF THE TRUST.
Proposal No. 1
TO AUTHORIZE THE BOARD AND TOUCHSTONE ADVISORS, INC. TO SELECT AND CHANGE
INVESTMENT SUB-ADVISORS AND TO ENTER INTO OR AMEND INVESTMENT SUB-ADVISORY
AGREEMENTS WITHOUT OBTAINING THE APPROVAL OF SHAREHOLDERS
Proposal 1 is to be voted on by shareholders of each Fund voting
separately. For the purposes of the following discussion of this Proposal 1, the
Funds of the Trust will be referred to individually as a "Fund" and collectively
as the "Funds," and Proposal 1 will be referred to as this "Proposal."
BACKGROUND
Touchstone Advisors, Inc. (the "Advisor") currently employs sub-advisers,
each a registered investment adviser, for each of the Funds. The current
sub-adviser for the Funds is Fort Washington Investment Advisors, Inc. ("Fort
Washington"). Fort Washington is an affiliate of the Advisor.
Sub-advisers perform the daily management of the assets of the Funds. The
Advisor monitors and supervises the activities of the sub-advisers, and may
terminate the services of any sub-adviser at any time, subject to the notice
periods set forth in the applicable sub-advisory agreement. However, entering
into a new sub-advisory agreement or amending an existing sub-advisory agreement
with a sub-adviser currently requires approval of the applicable Fund's
shareholders.
The Investment Company Act of 1940 (the "1940 Act") requires that all
contracts pursuant to which persons serve as investment advisers to investment
companies be approved by shareholders. This requirement applies to the
appointment of a new or replacement sub-adviser to any Fund and generally to the
amendment of agreements with existing sub-advisers. (There is an exception to
this requirement that permits, under certain circumstances, entities to serve as
replacement investment advisers or sub-advisers for an interim period without
shareholder approval if their contracts have been approved by the board of the
investment company.) The Securities and Exchange Commission (the "Commission")
has previously granted exemptions to investment companies, such as the Trust,
from the requirement for a shareholder vote provided that certain conditions are
satisfied.
The Trust and the Advisor currently are seeking similar exemptive relief
from the Commission. If the Trust and the Advisor obtain this exemptive relief
and this Proposal 1 is approved, the Board and the Advisor will be able, without
further shareholder approval, to enter into new and amended sub-advisory
agreements with sub-advisers, other than sub-advisers who are affiliates of
either the Trust or the Advisor, other than by reason of serving as a
sub-adviser to one or more Funds (an "Affiliated Sub-Adviser"). The Board will
not, however, be able to (a) replace the Advisor as investment manager or (b)
enter into a new or amended sub-advisory
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agreement with an Affiliated Sub-Adviser, without complying with the 1940 Act
and applicable regulations governing shareholder approval of advisory contracts.
Although the Trust applied for this exemptive relief in January 2002, the Trust
has not yet received this exemptive relief from the Commission, and there is no
assurance that the Trust will receive such relief.
REASONS FOR THIS PROPOSAL
This Proposal is intended to facilitate the efficient supervision and
management of the Funds by the Advisor and the Board and to give the Advisor
flexibility in managing the Funds in the future. The Advisor continuously
monitors the performance of the sub-advisers and may, from time to time,
recommend that the Board replace one or more sub-advisers or appoint additional
sub-advisers, depending on the Advisor's assessment of which sub-advisers it
believes will optimize each Fund's chances of achieving its investment
objective. Under the 1940 Act, the Advisor currently is required to obtain
shareholder approval to add or replace a sub-adviser. In most cases, the Advisor
must also obtain shareholder approval to amend an existing sub-advisory
agreement. Obtaining shareholder approval requires a Fund to hold a meeting of
its shareholders, which entails substantial costs, including costs related to
preparing, printing and distributing proxy materials. If the Funds obtain
exemptive relief from the Commission and shareholders approve this Proposal, the
Board, subject to certain exceptions, will no longer be required to call a Fund
shareholder meeting each time a new sub-adviser is proposed or a material
amendment to a sub-advisory agreement is proposed.
Even in the absence of a shareholder approval requirement, any proposal to
add or replace sub-advisers will receive careful review. First, the Advisor will
assess a Fund's needs and, if the Advisor believes additional or replacement
sub-advisers might benefit the Fund, will search for available investment
sub-advisers. Second, any recommendations made by the Advisor will have to be
approved by a majority of the Board, including a majority of the Trustees who
are not "interested persons" (within the meaning of the 1940 Act) of the Trust,
the Advisor or the proposed sub-advisor. In selecting any new or replacement
sub-advisers, the Board is required to determine that a sub-advisory agreement
is reasonable, fair and in the best interests of a fund and its shareholders.
The Board will consider the factors it deems relevant in approving sub-advisory
agreements, including the nature, quality and scope of the services to be
provided. The Board will review information about the sub-adviser's ability to
provide its services to a Fund, as well as its personnel, operations, financial
condition or any factors that will affect the sub-adviser's performance as an
investment adviser. Finally, any further appointments of additional or
replacement sub-advisers will have to comply with any conditions contained in
the Commission's exemptive order, if such order is granted.
The Advisor expects that the conditions in the Commission's exemptive
order, if such an order is granted, will include the following:
o The Funds will disclose in their prospectus the details of this
structure whereby the Board and the Advisor may select and change
investment sub-advisers and enter into investment sub-advisory
agreements or amend existing investment sub-advisory agreements
without obtaining the approval of shareholders.
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o The Funds will continue to seek shareholder approval if a sub-advisory
agreement with an Affiliated Sub-Adviser is involved.
o Within 90 days of hiring any new sub-adviser (other than an Affiliated
Sub-Adviser), the Advisor will furnish the shareholders of the
affected Funds with detailed information about the sub-adviser.
o In most cases, the Advisor also will furnish the shareholders of
affected Funds with detailed information about changes in a
sub-advisory agreement.
The Board believes that the proposed arrangement to select and change
investment sub-advisers and enter into investment sub-advisory agreements
without obtaining the approval of shareholders is in the best interests of the
shareholders of each Fund.
VOTE REQUIRED AND RECOMMENDATION
The shareholders of each Fund will vote separately on this Proposal. With
respect to a Fund, approval of this Proposal requires the affirmative vote of
the holders of the lesser of (a) 67% or more of the voting securities of the
Fund present at the Meeting or represented by proxy if holders of more than 50%
of the outstanding voting securities of the Fund are present or represented by
proxy, or (b) more than 50% of the outstanding voting securities of the Fund. If
this Proposal is not approved by shareholders of a Fund, the Board will be
required to seek shareholder approval for each new or amended sub-advisory
agreement with respect to that Fund.
The Board of Trustees unanimously recommends that the shareholders vote
"FOR" the proposal to authorize the Board and the Advisor to select and change
investment sub-advisers and enter into investment sub-advisory agreements or,
generally, to amend existing investment sub-advisory agreements without
obtaining the approval of shareholders.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
THE PROPOSAL TO AUTHORIZE THE BOARD AND THE ADVISOR TO SELECT AND CHANGE
INVESTMENT SUB-ADVISORS AND TO ENTER INTO OR AMEND INVESTMENT SUB-ADVISORY
AGREEMENTS WITHOUT OBTAINING THE APPROVAL OF SHAREHOLDERS.
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PROPOSAL 2 IS TO BE VOTED ON BY SHAREHOLDERS OF ALL FUNDS OF THE TRUST.
PROPOSAL 2
TO AUTHORIZE THE TRUSTEES TO ADOPT AN
AMENDED AND RESTATED DECLARATION OF TRUST.
Each Fund, like other mutual funds, is subject to comprehensive federal laws and
regulations, and in particular, the Investment Company Act of 1940. Each mutual
fund is also subject to state law. The Funds are subject to Massachusetts law
because each Fund is a series of an entity known as a Massachusetts business
trust. Under Massachusetts law, a business trust generally operates under a
charter or organization document, usually called a declaration of trust, that
sets forth various provisions relating primarily to the authority of the trust
to conduct business and the governance of the trust. The Funds currently operate
under such a declaration of trust.
At the Meeting, you will be asked to authorize the Trustees to adopt the Amended
and Restated Declaration of Trust appearing as Appendix (A) to this proxy
statement (called, in this proxy statement, the Restated Declaration). The
Restated Declaration amends the Funds' existing declaration of trust (called, in
this proxy statement, the Existing Declaration) in its entirety. The Trustees
have approved the Restated Declaration and unanimously recommend that you
authorize the Trustees to adopt it.
The Restated Declaration gives the Trustees more flexibility and broader
authority to act than the Existing Declaration. This increased flexibility may
allow the Trustees to react more quickly to changes in competitive and
regulatory conditions and, as a consequence, may allow the Funds to operate in a
more efficient and economical manner. Although the Restated Declaration reduces
or removes certain shareholder voting and other rights as more fully discussed
below, adoption of the Restated Declaration will not remove any of the
protections of federal law or alter the Trustees' existing fiduciary obligations
to act with due care and in the shareholders' best interests. Before utilizing
any new flexibility that the Restated Declaration may afford, the Trustees must
first consider the shareholders' interests and then act in accordance with those
interests.
You should note that your Fund's investments and investment policies will not
change by virtue of the adoption of the Restated Declaration.
The Restated Declaration makes a number of significant changes to the Existing
Declaration. Certain of these changes give the Trustees greater flexibility and
broader authority to act without shareholder approval. The most significant
changes are summarized below. In addition to the changes described below, there
are other substantive and stylistic differences between the Restated Declaration
and the Existing Declaration. The following summary is qualified in its entirety
by reference to the Restated Declaration itself in Appendix (A). The attached
Restated Declaration has been marked to show changes from the Existing
Declaration.
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SIGNIFICANT CHANGES
1. DOLLAR - WEIGHTED VOTING. The Restated Declaration provides that each
shareholder of each fund is entitled to one vote for each dollar of net asset
value of the fund represented by the shareholder's shares of the fund, on each
matter on which that shareholder is entitled to vote. This means that
shareholders with larger economic investments will have more votes than
shareholders with smaller economic investments. The Existing Declaration
provides that each share of each fund is entitled to one vote on each matter on
which shares of that fund are entitled to vote. The Funds are proposing the
change to dollar-weighted voting in order to equalize the voting power of the
shareholders of the various funds in the trust.
Dollar-weighted voting is important when a fund is part of a trust that has more
than one series. Because each fund, as a series of a trust, typically has a
different share price than other funds that are also series of the trust,
shareholders of a fund with lower-priced shares may have more voting power than
shareholders of a fund with higher-priced shares. For example, if a fund is as a
money market fund with shares selling for $1.00 per share, a $1,000 investment
will purchase 1,000 shares of that fund. If another fund in the trust has shares
that are selling for $10.00 per share, that same $1,000 investment will purchase
only 100 shares of that fund. The Existing Declaration gives one vote for each
share owned. Therefore, under the Existing Declaration, when the shareholders of
the trust vote together as a single class, a shareholder of the money market
fund has ten times the vote of a shareholder of the second fund, even though the
economic interest of each shareholder is the same. The change would match a
shareholder's economic interest in the trust with the shareholder's voting
powers, and conversely would prevent a shareholder who holds many shares with a
relatively low price per share, such as a money market investor, from having
disproportionately large voting powers.
2. FUTURE AMENDMENTS. The Restated Declaration may be amended without
shareholder approval in most cases. The Existing Declaration may be amended
without shareholder approval only in certain limited circumstances. Under the
Restated Declaration, shareholders generally have the right to vote only on an
amendment affecting their voting powers, on an amendment affecting the amendment
provisions of the Restated Declaration, on an amendment required by law or by a
fund's registration statement to be approved by shareholders, and on any
amendment submitted to shareholders by the Trustees. By allowing amendment of
the Restated Declaration without shareholder approval, the Restated Declaration
gives the Trustees the necessary authority to react quickly to future
contingencies. Where a shareholder vote is required for an amendment, the
Restated Declaration provides that approval requires a vote of the majority of
the outstanding voting securities, as that term is defined in the 1940 Act, of
the Trust as a whole, or of the shareholders affected. Therefore, if a proposed
amendment would affect only a particular fund or class of a fund, only
shareholders of that fund or class of a fund would be required to vote on the
amendment. The Existing Declaration requires a majority vote of the shares of
each fund to approve an amendment submitted for shareholder approval.
3. REDEMPTION. The Restated Declaration permits the Trustees to cause the
involuntary redemption of a shareholder's shares at any time for any reason the
Trustees deem appropriate. The Existing Declaration also permits the Trustees to
involuntarily redeem shares, but only in more limited circumstances. Under the
Restated Declaration, the Trustees will be able to cause a
13
shareholder's shares to be redeemed in order to eliminate small accounts for
administrative efficiencies and cost savings, to protect the tax status of a
fund if necessary and to eliminate ownership of shares by a particular
shareholder when the Trustees determine, pursuant to adopted policies, that the
particular shareholder's ownership is not in the best interests of the other
shareholders of a fund (for example, in the case of a market timer).
The Restated Declaration also clarifies that redemption fees and back-end sales
charges may be charged upon redemption.
4. INVESTMENT IN OTHER INVESTMENT COMPANIES. The Restated Declaration permits
each Fund to invest in other investment companies to the extent not prohibited
by the 1940 Act, and the rules and regulations thereunder. Recent amendments to
the 1940 Act permit mutual funds to invest their assets in one or more
registered investment companies so long as certain conditions are met. It is
possible that there could be additional changes in law in the future, which will
affect mutual funds' ability to invest in other funds. An investment structure
where a fund invests its assets in one investment company is sometimes referred
to as a "master/feeder" structure. An investment structure where a fund invests
all or a portion of its assets in more than one investment company is sometimes
referred to as a "fund of funds" structure. Both the master/feeder and
fund-of-funds structures attempt to achieve economies of scale and efficiencies
in portfolio management by consolidating portfolio management with other
investment companies, while permitting a fund to retain its own characteristics
and identity. The Restated Declaration will permit the Funds to take advantage
of the recent changes in law, as well as any future changes in law or regulation
on this topic. Under the Restated Declaration, the Trustees have the power to
implement a master/feeder, fund-of-funds or other similar structure without
seeking shareholder approval.
Although the Trustees have no intention of changing the structure of the
Funds at this time, the Restated Declaration would give the Trustees the
flexibility to implement a master/feeder or fund-of-funds structure for a Fund
in the event that they were to determine that such a structure was in the best
interests of Fund shareholders. Shareholders of a Fund would be notified if the
Trustees decide to implement such a structure for that Fund in the future.
OTHER CHANGES
Other changes to the Existing Declaration include:
1. The Restated Declaration clarifies that the principal office of the Trust
and the resident agent for the Trust may be changed by the Trustees without
shareholder approval.
2. The Restated Declaration removes provisions relating to the election of
Trustees that simply mirror current requirements under applicable laws, and
reduces the required number of Trustees from three to two. In addition, the
Restated Declaration provides for the automatic retirement of Trustees in
accordance with any retirement policy set by the Trustees or when their
terms, if any, expire, and for the retirement of incapacitated Trustees.
Further, the Restated Declaration removes the requirement that there be
three remaining Trustees in order for the Trustees to exercise their power
to fill vacancies. Finally, the Restated Declaration
14
explicitly permits a Trustee to delegate his or her powers for a limited
period of time to another Trustee.
3. The Restated Declaration confirms and clarifies various existing Trustee
powers. For example, the Restated Declaration clarifies that, among other
things, the Trustees may invest fund assets in all types of investments
including derivatives, may pay Trust or fund or class expenses out of any
assets of the Trust or the applicable fund or class, and may establish
committees consisting of Trustees and others.
4. The Restated Declaration removes many of the provisions relating to the
contracts that the Trust may enter into with its service providers, as the
1940 Act already governs many of these contracts, and specifically permits
subcontractual arrangements with respect to such services with the consent
of the Trustees. The Restated Declaration also removes certain provisions
relating to contracts between the Trust and certain affiliated parties,
because these concerns are already addressed by applicable laws, including
laws relating to the exercise of fiduciary duties by trustees.
5. The Restated Declaration permits the Trust to issue shares either with or
without par value.
6. The Restated Declaration updates the provisions relating to the division of
the Trust into various series and classes, using the term "class" rather
than "sub-series," and gives flexibility to the Trustees to designate or
redesignate series, such as a Fund, to classify and reclassify classes and
to make any other changes with respect to a series or class, including
terminating a series or class, whether or not shares of the series or class
are outstanding, in each case without shareholder approval. The Restated
Declaration also emphasizes that shareholders of a particular fund are not
entitled to share in the assets of any of fund, nor are they permitted to
bring a claim against any other fund, unless they are also shareholders of
that fund. Finally, the Restated Declaration removes the designation of
current series and classes of the Trust to a separate appendix to the
Declaration.
7. The Restated Declaration removes specific provisions relating to the
operation of the trust in order to qualify as a regulated investment
company for tax purposes.
8. The Restated Declaration provides that holders are required to provide
information concerning share ownership to the Trust when required by law,
and that the Trust is authorized to disclose share holdings when so
required by law.
9. The Restated Declaration provides that shareholders of all funds generally
will vote together on all matters except when the Trustees determine that
only shareholders of particular funds or classes are affected by a
particular matter or when applicable law requires shareholders to vote
separately by fund or class. The Restated Declaration also removes a
provision which sets a majority of the shares entitled to be cast on a
matter as the highest vote required to approve any action, notwithstanding
any applicable law to the contrary. Finally the Restated Declaration
provides that broker non-votes and abstentions shall not be counted as
having voted on a matter.
15
10. The Restated Declaration removes provisions relating to the holding of
shareholder meetings, including quorum requirements, record dates, proxy
voting and notice requirements, which provisions are better suited to the
Bylaws, which can be easily changed to take advantage of new technologies,
such as internet voting, and new regulatory initiatives, such as
householding of proxy statements.
11. The Restated Declaration provides that rights to indemnification or
insurance cannot be limited retroactively.
12. The Restated Declaration extends certain protections currently granted to
the Trustees, such as the ability to rely in good faith on expert advice,
to officers of the Trust as well, and provides that officers, like the
Trustees, are liable only for their own willful misfeasance, bad faith,
gross negligence or reckless disregard of their duties, and not for errors
of judgment or mistakes of fact or law. The Restated Declaration also adds
certain definitions to the provisions relating to indemnification of the
Trust's Trustees and officers.
13. The Restated Declaration provides that shareholders may not bring suit on
behalf of a fund without first requesting that the Trustees bring such suit
unless there would be irreparable injury to the fund or if a majority of
the Trustees have a personal financial interest in the action. Trustees are
not considered to have a personal financial interest by virtue of being
compensated for their services as Trustees or as trustees of funds with the
same or an affiliated investment adviser or distributor. The effect of this
change may be to discourage suits brought against the Funds by
shareholders.
14. The Restated Declaration extends the provisions relating to sale of assets
and reorganizations to classes of shares.
15. The Restated Declaration would permit the termination of the Trust without
shareholder approval, and expands on the procedures to be followed in the
event of the termination of a fund or class or the Trust.
16. The Restated Declaration substitutes a simple provision that permits a pro
rata reduction in the number of shares outstanding of any fund that holds
itself out as a money market fund or a stable value fund in order to
maintain the net asset value per share at a constant dollar amount, for a
similar but more detailed provision.
17. The Restated Declaration is subject to Massachusetts law, without specific
reference to the Massachusetts Business Corporation Law.
RECOMMENDATION AND REQUIRED VOTE
For each Fund, the affirmative vote of the holders of more than 50% of the
outstanding voting securities of the Fund, is required to authorize the Trustees
to adopt the Restated Declaration. If the Restated Declaration is not approved
by each Fund, the Existing Declaration will remain in effect.
16
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
AUTHORIZING THE TRUSTEES TO ADOPT THE AMENDED AND RESTATED DECLARATION OF TRUST.
PROPOSAL NO. 3
CHANGE OF FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUNDS
INTRODUCTION
The 1940 Act requires investment companies like the Funds to have certain
specific investment policies that can be changed only by a shareholder vote.
Investment companies may also elect to designate other policies as policies that
may be changed only by a shareholder vote. Both types of policies are referred
to as "fundamental" policies. Some of the Funds' fundamental investment
restrictions were adopted in the past by the Fund to reflect certain regulatory,
business or industry conditions which are no longer in effect.
After conducting an analysis of the Funds' fundamental investment
restrictions, the Advisor has recommended to the Board that certain fundamental
investment restrictions be amended or eliminated to promote the following goals:
(i) to clarify the language of the Funds' fundamental investment restrictions;
(ii) to simplify the Funds' fundamental investment restrictions by omitting any
unnecessary discussion regarding non-fundamental exceptions, explanations or
interpretations presently contained in the fundamental investment restrictions;
(iii) to eliminate any fundamental investment restrictions which are not
required under state securities laws, the 1940 Act, or the positions of the
staff of the SEC in interpreting the 1940 Act; and (iv) to conform the
fundamental investment restrictions to restrictions which are expected to become
standard for all funds managed by the Advisor.
The Advisor believes the proposed amendments to or elimination of certain
of the Funds' fundamental investment restrictions as set forth in Proposal 3
will give the Funds the flexibility to change their investment methods in the
future without incurring the costs and delay associated with a shareholder vote,
and enhance the Advisor or sub-advisors' ability to manage the Fund in changing
regulatory or investment environments. In addition, the Advisor believes that
standardization of fundamental investment restrictions will promote operational
efficiencies and facilitate compliance monitoring.
The Board has reviewed the Advisor's proposed amendments to or elimination
of certain of the Funds' fundamental investment restrictions as set forth in
Proposal 3 and believes they are in the best interests of the applicable Fund
and its shareholders.
PROPOSAL NO. 3(a)
CHANGE OF FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO BORROWING MONEY
The California Tax-Free Money Fund and the Florida Tax-Free Money Fund's
current fundamental investment restriction with respect to borrowing money
state:
17
EACH FUND WILL NOT BORROW MONEY, EXCEPT FROM A BANK FOR TEMPORARY
PURPOSES ONLY, PROVIDED THAT, WHEN MADE, SUCH TEMPORARY BORROWINGS ARE
IN AN AMOUNT NOT EXCEEDING 10% OF ITS TOTAL ASSETS. EACH FUND WILL NOT
MAKE ANY ADDITIONAL PURCHASES OF PORTFOLIO SECURITIES IF OUTSTANDING
BORROWINGS EXCEED 5% OF THE VALUE OF ITS TOTAL ASSETS.
The Ohio Tax-Free Money Fund's current fundamental investment restriction
with respect to borrowing money states:
THE FUND WILL NOT BORROW MONEY, EXCEPT (a) FROM A BANK, PROVIDED THAT
IMMEDIATELY AFTER SUCH BORROWING THERE IS ASSET COVERAGE OF 300% FOR
ALL BORROWINGS OF THE FUND; OR (b) FROM A BANK OR OTHER PERSONS FOR
TEMPORARY PURPOSES ONLY, PROVIDED THAT, WHEN MADE, SUCH TEMPORARY
BORROWINGS ARE IN AN AMOUNT NOT EXCEEDING 5% OF THE FUND'S TOTAL
ASSETS. THE FUND ALSO WILL NOT MAKE ANY BORROWINGS WHICH WOULD CAUSE
OUTSTANDING BORROWINGS TO EXCEED ONE-THIRD OF THE VALUE OF ITS TOTAL
ASSETS. THE FUND WILL NOT MAKE ANY ADDITITIONAL PURCHASES OF PORTFOLIO
SECURITIES IF OUTSTANDING BORROWINGS EXCEED 5% OF THE VALUE OF ITS
TOTAL ASSETS.
The Tax-Free Money Fund, the Tax-Free Intermediate Term Fund and the Ohio
Insured Tax-Free Fund's current fundamental investment restrictions with respect
to borrowing money state:
EACH FUND WILL NOT BORROW MONEY OR PLEDGE, MORTGAGE OR HYPOTHECATE ITS
ASSETS, EXCEPT AS A TEMPORARY MEASURE FOR EXTRAORDINARY OR EMERGENCY
PURPOSES AND THEN ONLY IN AMOUNTS NOT IN EXCESS OF 10% OF THE VALUE OF
THE FUND'S TOTAL ASSETS. A FUND WILL NOT MAKE ANY ADDITIONAL PURCHASES
OF PORTFOLIO SECURITIES WHILE BORROWINGS ARE OUTSTANDING.
The Board recommends that shareholders of each Fund vote to replace the
Funds' fundamental investment restriction with respect to borrowing money with
the following amended fundamental investment restriction:
THE FUND MAY NOT ENGAGE IN BORROWING EXCEPT AS PERMITTED BY THE
INVESTMENT COMPANY ACT OF 1940, ANY RULE, REGULATION OR ORDER UNDER
THE ACT OR ANY SEC STAFF INTERPRETATION OF THE ACT.
18
The primary purpose of the proposal is to simplify the fundamental
investment restriction by omitting an unnecessary discussion of exceptions and
explanations to the fundamental investment restriction. The 1940 Act generally
permits each Fund to borrow money under the following circumstances:
(1) The Fund may borrow an amount equal to or less than 33 1/3% of
its total assets (including the amount borrowed) from banks.
(2) The Fund may borrow an amount equal to or less than 5% of its
total assets for temporary purposes from any person.
As a matter of current operating policy, each Fund intends to borrow money
only as a temporary measure for extraordinary or emergency purposes. In
addition, each Fund may engage in reverse repurchase agreements, forward roll
transactions involving mortgage-backed securities or other investment techniques
entered into for the purpose of leverage. Operating policies may be changed by
the Board without shareholder approval.
The Advisor believes that the proposed simplification of the fundamental
investment restriction will give each Fund the flexibility to respond to future
changes in the regulatory or investment environments by changing its operating
policies without incurring the costs and delay associated with a shareholder
vote. Adoption of the amended fundamental investment restriction is not expected
to affect the way in which each Fund is managed, the investment performance of
each Fund, or the securities or instruments in which each Fund invests.
The Board has reviewed the Advisor's proposed simplification of the
fundamental investment restriction and believes it is in the best interests of
each Fund and its shareholders.
The amended fundamental restriction will become effective on the later of
May 1, 2002 or immediately upon shareholder approval. If the proposal is not
approved by the shareholders of a Fund, the Fund's current restriction will
remain unchanged.
PROPOSAL NO. 3(b)
CHANGE OF FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO UNDERWRITING
SECURITIES
The California Tax-Free Money Fund and the Florida Tax-Free Money Fund's
current fundamental investment restrictions with respect to underwriting
securities state:
EACH FUND WILL NOT ACT AS UNDERWRITER OF SECURITIES ISSUED BY OTHER
PERSONS. THIS LIMITATION IS NOT APPLICABLE TO THE EXTENT THAT, IN
CONNECTION WITH THE DISPOSITION OF ITS PORTFOLIO SECURITIES (INCLUDING
RESTRICTED SECURITIES), A FUND MAY BE DEEMED AN UNDERWRITER UNDER
CERTAIN FEDERAL SECURITIES LAWS.
19
The Tax-Free Money Fund, the Tax-Free Intermediate Fund and the Ohio
Insured Tax-Free Fund's current fundamental investment restrictions with respect
to underwriting securities state:
EACH FUND WILL NOT ACT AS UNDERWRITERS OF SECURITIES ISSUED BY OTHER
PERSONS, EITHER DIRECTLY OR THROUGH A MAJORITY OWNED SUBSIDIARY. THIS
LIMITATION IS NOT APPLICABLE TO THE EXTENT THAT, IN CONNECTION WITH
THE DISPOSITION OF ITS PORTFOLIO SECURITIES (INCLUDING RESTRICTED
SECURITIES), A FUND MAY BE DEEMED AN UNDERWRITER UNDER CERTAIN FEDERAL
SECURITIES LAWS.
CHANGE OF FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO UNDERWRITING
SECURITIES
The Ohio Tax-Free Money Fund's current fundamental investment restriction
with respect to underwriting securities states:
THE FUND WILL NOT ACT AS UNDERWRITER OF SECURITIES ISSUED BY OTHER
PERSONS. THIS LIMITATION IS NOT APPLICABLE TO THE EXTENT THAT, IN
CONNECTION WITH THE DISPOSITION OF ITS PORTFOLIO SECURITIES (INCLUDING
RESTRICTED SECURITIES), THE FUND MAY BE DEEMED AN UNDERWRITER UNDER
CERTAIN FEDERAL SECURITIES LAWS.
The Board recommends that shareholders of each Fund vote to replace the
Fund's fundamental investment restriction with respect to underwriting
securities with the following amended fundamental investment restriction:
THE FUND MAY NOT UNDERWRITE SECURITIES ISSUED BY OTHER PERSONS, EXCEPT
TO THE EXTENT THAT, IN CONNECTION WITH THE SALE OR DISPOSITION OF
PORTFOLIO SECURITIES, THE FUND MAY BE DEEMED TO BE AN UNDERWRITER
UNDER CERTAIN FEDERAL SECURITIES LAWS.
The primary purpose of the proposal is to expand the stated exception to
each Fund's fundamental investment restriction to include being deemed an
underwriter under federal securities laws in addition to the 1933 Act. The
Advisor believes that the proposed clarification will enable each Fund to
respond to changes in federal securities law or regulatory interpretation
thereof without incurring the costs and delay associated with a shareholder
vote. Adoption of the amended fundamental investment restriction is not expected
to affect the way in which each Fund is managed, the investment performance of
each Fund, or the securities or instruments in which each Fund invests.
20
The Board has reviewed the Advisor's proposed clarification of the
fundamental investment restriction and believes it is in the best interests of
each Fund and its shareholders.
The amended fundamental restriction will become effective on the later of
May 1, 2002 or immediately upon shareholder approval. If the proposal is not
approved by the shareholders of a Fund, the Fund's current restriction will
remain unchanged.
PROPOSAL NO. 3(c)
CHANGE OF FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO LOANS
The California Tax-Free Money Fund and the Florida Tax-Free Money Fund's
current fundamental investment restrictions with respect to loans state:
EACH FUND WILL NOT MAKE LOANS TO OTHER PERSONS EXCEPT: (a) BY LOANING
PORTFOLIO SECURITIES, OR (b) BY ENGAGING IN REPURCHASE AGREEMENTS. FOR
PURPOSES OF THIS LIMITATION, THE TERM "LOANS" SHALL NOT INCLUDE THE
PURCHAE OF A PORTION OF AN ISSUE OF TAX-EXEMPT OBLIGATIONS OR PUBLICLY
DISTRIBUTED BONDS, DEBENTURES OR OTHER SECURITIES.
The Tax-Free Money Fund, the Tax-Free Intermediate Term Fund and the Ohio
Insured Tax-Free Fund's current fundamental investment restrictions with respect
to loans state:
EACH FUND WILL NOT MAKE LOANS TO OTHER PERSONS, EXCEPT (a) BY THE
PURCHASE OF A PORTION OF AN ISSUE OF DEBT SECURITIES IN ACCORDANCE
WITH ITS INVESTMENT OBJECTIVE, POLICIES AND LIMITATIONS, (b) BY
LOANING PORTFOLIO SECURITIES, OR (c) BY ENGAGING IN REPURCHASE
TRANSACTIONS.
The Ohio Tax-Free Money Fund's current fundamental investment restriction
with respect to loans states:
THE FUND WILL NOT MAKE LOANS TO OTHER PERSONS, EXCEPT (a) BY LOANING
PORTFOLIO SECURITIES, OR (b) BY ENGAGING IN REPURCHASE AGREEMENTS. FOR
PURPOSES OF THIS LIMITATION, THE TERM "LOANS" SHALL NOT INCLUDE THE
PURCHASE OF A PORTION OF AN ISSUE OF TAX-EXEMPT OBLIGATIONS OR
PUBLICLY DISTRIBUTED BONDS, DEBENTURES OR OTHER SECURITIES.
21
The Board recommends that shareholders of each Fund vote to replace the
Fund's fundamental investment restriction with respect to loans with the
following amended fundamental investment restriction:
THE FUND MAY NOT MAKE LOANS TO OTHER PERSONS EXCEPT THAT THE FUND MAY
(1) ENGAGE IN REPURCHASE AGREEMENTS, (2) LEND PORTFOLIO SECURITIES,
(3) PURCHASE DEBT SECURITIES, (4) PURCHASE COMMERCIAL PAPER, AND (5)
ENTER INTO ANY OTHER LENDING ARRANGEMENT PERMITTED BY THE INVESTMENT
COMPANY ACT OF 1940, ANY RULE, REGULATION OR ORDER UNDER THE ACT OR
ANY SEC STAFF INTERPRETATION OF THE ACT.
The primary purpose of the proposal is to expand the stated exceptions to
each Fund's fundamental investment restriction to include lending arrangements
permitted by the 1940 Act, any rule, regulation or order under the 1940 Act or
any SEC staff interpretation of the 1940 Act. The Advisor believes that the
proposed amendment of the fundamental investment restriction will give each Fund
the flexibility to respond to future changes in the regulatory or investment
environments without incurring the costs and delay associated with a shareholder
vote. Adoption of the amended fundamental investment restriction is not expected
to affect the way in which each Fund is managed, the investment performance of
each Fund, or the securities or instruments in which each Fund invests.
The Board has reviewed the Advisor's proposed amendment of the fundamental
investment restriction and believes it is in the best interests of each Fund and
its shareholders.
The amended fundamental restriction will become effective on the later of
May 1, 2002 or immediately upon shareholder approval. If the proposal is not
approved by the shareholders of a Fund, the Fund's current restriction will
remain unchanged.
PROPOSAL NO. 3(d)
CHANGE OF FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO REAL ESTATE
The California Tax-Free Money Fund, the Florida Tax-Free Money Fund, the
Tax-Free Money Fund and the Ohio Tax-Free Money Fund's current fundamental
investment restrictions with respect to real estate state:
EACH FUND WILL NOT PURCHASE, HOLD OR DEAL IN REAL ESTATE. THIS
LIMITATION IS NOT APPLICABLE TO INVESTMENTS IN SECURITIES WHICH ARE
SECURED BY OR REPRESENT INTERESTS IN REAL ESTATE.
The Tax-Free Money Fund, the Tax-Free Intermediate Term Fund and the Ohio
Insured Tax-Free Fund's current fundamental investment restrictions with respect
to real estate state:
22
EACH FUND WILL NOT PURCHASE, HOLD OR DEAL IN REAL ESTATE BUT THIS
SHALL NOT PREVENT INVESTMENTS IN MUNICIPAL OBLIGATIONS WHICH ARE
SECURED BY OR REPRESENT INTERESTS IN REAL ESTATE.
The Board recommends that shareholders of each Fund vote to replace the
Fund's fundamental investment restriction with respect to real estate with the
following amended fundamental investment restriction:
THE FUND MAY NOT PURCHASE OR SELL REAL ESTATE EXCEPT THAT THE FUND MAY
(1) HOLD AND SELL REAL ESTATE ACQUIRED AS A RESULT OF THE FUND'S
OWNERSHIP OF SECURITIES OR OTHER INSTRUMENTS, (2) PURCHASE OR SELL
SECURITIES OR OTHER INSTRUMENTS BACKED BY REAL ESTATE OR INTERESTS IN
REAL ESTATE, AND (3) PURCHASE OR SELL SECURITIES OF ENTITIES OR
INVESTMENT VEHICLES, INCLUDING REAL ESTATE INVESTMENT TRUSTS, THAT
INVEST, DEAL OR OTHERWISE ENGAGE IN TRANSACTIONS IN REAL ESTATE OR
INTERESTS IN REAL ESTATE.
The primary purpose of the proposal is to clarify the language describing
the exceptions to each Fund's fundamental investment restriction. The Advisor
believes that the proposed clarification of the fundamental investment
restriction will enhance each Fund's ability to pursue its investment methods
and facilitate compliance monitoring. Adoption of the amended fundamental
investment restriction is not expected to affect the way in which each Fund is
managed, the investment performance of each Fund or the securities or
instruments in which each Fund invests.
The Board has reviewed the Advisor's proposed clarification of the
fundamental investment restriction and believes it is in the best interests of
each Fund and its shareholders.
The amended fundamental restriction will become effective on the later of
May 1, 2002 or immediately upon shareholder approval. If the proposal is not
approved by the shareholders of a Fund, the Fund's current restriction will
remain unchanged.
PROPOSAL NO. 3(e)
ELIMINATION OF FUNDAMENTAL INVESTMENT RESTRICTION REGARDING OIL, GAS OR MINERAL
LEASES
The Board has approved, and recommends that shareholders of each Fund
approve, the elimination of each Fund's fundamental investment restriction
regarding oil, gas or mineral leases. Each Fund's current fundamental investment
restriction with respect to oil, gas or mineral leases states:
23
THE FUNDS WILL NOT INVEST IN OIL, GAS OR OTHER MINERAL EXPLORATIVE OR
DEVELOPMENT PROGRAMS.
The primary purpose of the proposal is to eliminate a fundamental
investment restriction that is no longer required under state securities laws or
the positions of the staff of the SEC in interpreting the 1940 Act. Elimination
of the investment restriction would provide each Fund with the flexibility to
change its investment methods in the future without incurring the costs and
delay associated with a shareholder vote. Elimination of the fundamental
investment restriction is not expected to affect the way in which each Fund is
managed, the investment performance of each Fund, or the securities or
instruments in which each Fund invests.
The Board has reviewed the proposed elimination of the fundamental
investment restriction and believes it to be in the best interest of each Fund
and its shareholders.
The elimination of the fundamental restriction will become effective on the
later of May 1, 2002 or immediately upon shareholder approval. If the proposal
is not approved by the shareholders of a Fund, the Fund's current restriction
will remain unchanged.
PROPOSAL NO. 3(f)
CHANGE OF FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO COMMODITIES
The California Tax-Free Money Fund, the Florida Tax-Free Money Fund, the
Tax-Free Money Fund and the Ohio Tax-Free Money Fund's current fundamental
investment restrictions with respect to commodities state:
[EACH FUND] WILL NOT PURCHASE, HOLD OR DEAL IN COMMODITIES OR
COMMODITIES FUTURES CONTRACTS. THIS LIMITATION IS NOT APPLICABLE TO
THE EXTENT THAT THE TAX-EXEMPT OBLIGATIONS, U.S. GOVERNMENT
OBLIGATIONS AND OTHER SECURITIES IN WHICH THE FUNDS MAY OTHERWISE
INVEST WOULD BE CONSIDERED TO BE SUCH COMMODITIES, CONTRACTS OR
INVESTMENTS.
The Tax-Free Money Fund, the Tax-Free Intermediate Term Fund and the Ohio
Insured Tax-Free Fund's current fundamental investment restrictions with respect
to commodities state:
EACH FUND WILL NOT PURCHASE, HOLD OR DEAL IN COMMODITIES OR
COMMODITIES FUTURES CONTRACTS.
The Board recommends that shareholders of each Fund vote to replace the
Fund's fundamental investment restriction with respect to commodities with the
following amended fundamental investment restriction:
24
THE FUND MAY NOT PURCHASE OR SELL PHYSICAL COMMODITIES EXCEPT THAT THE
FUND MAY (1) HOLD AND SELL PHYSICAL COMMODITIES ACQUIRED AS A RESULT
OF THE FUND'S OWNERSHIP OF SECURITIES OR OTHER INSTRUMENTS, (2)
PURCHASE OR SELL SECURITIES OR OTHER INSTRUMENTS BACKED BY PHYSICAL
COMMODITIES, (3) PURCHASE OR SELL OPTIONS, AND (4) PURCHASE OR SELL
FUTURES CONTRACTS.
The primary purpose of the proposal is to clarify the language describing
the exceptions to each Fund's fundamental investment restriction. The Advisor
believes that the proposed clarification of the fundamental investment
restriction will enhance each Fund's ability to pursue its investment methods
and facilitate compliance monitoring. Adoption of the amended fundamental
investment restriction is not expected to affect the way in which each Fund is
managed, the investment performance of each Fund or the securities or
instruments in which each Fund invests.
The Board has reviewed the Advisor's proposed clarification of the
fundamental investment restriction and believes it is in the best interests of
each Fund and its shareholders.
The amended fundamental restriction will become effective on the later of
May 1, 2002 or immediately upon shareholder approval. If the proposal is not
approved by the shareholders of a Fund, the Fund's current restriction will
remain unchanged.
PROPOSAL NO. 3(g)
CHANGE OF FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO CONCENTRATION OF
INVESTMENTS
The California Tax-Free Money Fund, the Florida Tax-Free Money Fund, the
Tax-Free Money Fund and the Ohio Tax-Free Money Fund's current fundamental
investment restrictions with respect to concentration of investments state:
EACH FUND WILL NOT INVEST MORE THAN 25% OF ITS TOTAL ASSETS IN A
PARTICULAR INDUSTRY; THIS LIMITATION IS NOT APPLICABLE TO INVESTMENTS
IN TAX-EXEMPT OBLIGATIONS ISSUED BY GOVERNMENTS OR POLITICAL
SUBDIVISIONS OF GOVERNMENTS.
The Tax-Free Money Fund, the Tax-Free Intermediate Term Fund and the Ohio
Insured Tax-Free Fund's current fundamental investment restrictions with respect
to concentration of investments state:
EACH FUND WILL NOT INVEST MORE THAN 25% OF ITS TOTAL ASSETS IN A
PARTICULAR INDUSTRY; THIS LIMITATION IS NOT APPLICABLE TO INVESTMENTS
IN
25
TAX-EXEMPT OBLIGATIONS ISSUED BY GOVERNMENTS OR POLITICAL SUBDIVISIONS
OF GOVERNMENTS. EACH FUND MAY INVESTMENT MORE THAN 25% OF ITS TOTAL
ASSETS IN TAX-EXEMPT OBLIGATIONS IN A PARTICULAR SEGMENT OF THE BOND
MARKET.
The Ohio Tax-Free Money Fund's current fundamental investment restriction
with respect to concentration of investments states:
THE FUND WILL NOT INVEST MORE THAN 25% OF ITS TOTAL ASSETS IN A
PARTICULAR INDUSTRY; THIS LIMITATION IS NOT APPLICABLE TO INVESTMENTS
IN TAX-EXEMPT OBLIGATIONS ISSUED BY THE U.S. GOVERNMENT, ITS
TERRITORIES AND POSSESSIONS, THE DISTRICT OF COLUMBIA AND THEIR
RESPECTIVE AGENCIES AND INSTRUMENTALITIES OR ANY STATE AND ITS
POLITICAL SUBDIVISIONS, AGENCIES, AUTHORITIES AND INSTRUMENTALITIES.
THE FUND MAY INVEST MORE THAN 25% OF ITS TOTAL ASSETS IN TAX-EXEMPT
OBLIGATIONS IN A PARTICULAR SEGMENT OF THE BOND MARKET.
The Board recommends that shareholders of each Fund vote to replace the
Fund's fundamental investment restriction with respect to concentration of
investments with the following amended fundamental investment restriction:
THE FUND MAY NOT PURCHASE THE SECURITIES OF AN ISSUER (OTHER THAN
SECURITIES ISSUED OR GUARANTEED BY THE UNITED STATES GOVERNMENT, ITS
AGENCIES OR ITS INSTRUMENTALITIES) IF, AS A RESULT, MORE THAN 25% OF
THE FUND'S TOTAL ASSETS WOULD BE INVESTED IN THE SECURITIES OF
COMPANIES WHOSE PRINCIPAL BUSINESS ACTIVITIES ARE IN THE SAME
INDUSTRY.
The primary purpose of the proposal is to clarify the language describing
the fundamental investment restriction. The Advisor believes that the proposed
clarification of the fundamental investment restriction will enhance each Fund's
ability to pursue its investment methods and facilitate compliance monitoring
without incurring the costs and delay associated with a shareholder vote.
Adoption of the amended fundamental investment restriction is not expected to
affect the way in which each Fund is managed, the investment performance of each
Fund, or the securities or instruments in which each Fund invests.
The Board has reviewed the Advisor's proposed clarification of the
fundamental investment restriction and believes it is in the best interests of
each Fund and its shareholders.
The amended fundamental restriction will become effective on the later of
May 1, 2002 or immediately upon shareholder approval. If the proposal is not
approved by the shareholders of a Fund, the Fund's current restriction will
remain unchanged.
26
PROPOSAL NO. 3(h)
CHANGE OF FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO ISSUING SENIOR
SECURITIES
Each Fund's current fundamental investment restriction with respect to
issuing senior securities states:
EACH FUND WILL NOT ISSUE OR SELL ANY CLASS OF SENIOR SECURITY AS
DEFINED BY THE INVESTMENT COMPANY ACT OF 1940 EXCEPT TO THE EXTENT
THAT NOTES EVIDENCING TEMPORARY BORROWINGS OR THE PURCHASE OF
SECURITIES ON A WHEN-ISSUED BASIS MIGHT BE DEEMED AS SUCH.
The Board recommends that shareholders of each Fund vote to replace the
Fund's fundamental investment restriction with respect to issuing senior
securities with the following amended fundamental investment restriction:
THE FUND MAY NOT ISSUE SENIOR SECURITIES EXCEPT AS PERMITTED BY THE
INVESTMENT COMPANY ACT OF 1940, ANY RULE, REGULATION OR ORDER UNDER
THE ACT OR ANY SEC STAFF INTERPRETATION OF THE ACT.
The primary purpose of the proposal is to simplify the fundamental
investment restriction by omitting an unnecessary discussion of exceptions and
explanations to the fundamental investment restriction. As a matter of current
operating policy the following activities will not be considered to be issuing
senior securities for purposes of this restriction:
(1) Collateral arrangements in connection with any type of option,
future contract, forward contract, or swap.
(2) Collateral arrangements in connection with initial and variation
margin.
(3) A pledge, mortgage or hypothecation of a Fund's assets to secure
its borrowings.
(4) A pledge of a Fund's assets to secure letters of credit solely
for the purpose of participating in a captive insurance company
sponsored by the Investment Company Institute.
Operating policies may be changed by the Board without shareholder
approval.
The Advisor believes that the proposed clarification of the fundamental
investment restriction will give each Fund the flexibility to respond to future
changes in the regulatory or investment environments by changing its operating
policies without incurring the costs and delay associated with a shareholder
vote. Adoption of the amended fundamental investment restriction is not expected
to affect the way in which each Fund is managed, the investment performance of
each Fund, or the securities or instruments in which each Fund invests.
27
The Board has reviewed the Advisor's proposed simplification of the
fundamental investment restriction and believes it is in the best interests of
each Fund and its shareholders.
The amended fundamental restriction will become effective on the later of
May 1, 2002 or immediately upon shareholder approval. If the proposal is not
approved by the shareholders of a Fund, the Fund's current restriction will
remain unchanged.
As provided in the 1940 Act, approval of this Proposal No. 8 by a Fund's
shareholders requires an affirmative vote of the lesser of (i) 67% or more of
the Fund's shares present at the special meeting if more than 50% of the
outstanding shares of the Fund are present, or (ii) more than 50% of the
outstanding shares of the Fund. Shares represented by proxies that reflect
abstentions or broker non-votes will be counted as shares that are present and
entitled to vote on the matter for purposes of determining the presence of a
quorum. Abstentions and broker non-votes have the effect of a negative vote on
this Proposal No. 8.
PROPOSAL NO. 3(i)
ELIMINATION OF FUNDAMENTAL INVESTMENT RESTRICTION OF THE TAX-FREE MONEY FUND,
THE TAX-FREE INTERMEDIATE TERM FUND AND THE OHIO INSURED TAX-FREE FUND REGARDING
AMOUNTS INVESTED IN ONE ISSUER
The Board has approved, and recommends that shareholders of each Fund
approve the elimination of each Fund's fundamental investment restriction
regarding amounts invested in one issuer. Each Fund's current fundamental
investment restriction with respect to amounts invested in one issuer states:
EACH FUND WILL NOT PURCHASE MORE THAN 10% OF THE OUTSTANDING PUBLICLY
ISSUED DEBT OBLIGATIONS OF ANY ISSUER. WITH RESPECT TO THE OHIO
INSURED TAX-FREE FUND, THIS LIMITATION DOES NOT APPLY TO SECURITIES
ISSUED OR GUARANTEED BY THE STATE OF OHIO AND ITS POLITICAL
SUBDIVISIONS AND DULY CONSTITUTED AUTHORITIES AND CORPORATIONS. THIS
LIMITATION IS NOT APPLICABLE TO PRIVATELY ISSUED MUNICIPAL
OBLIGATIONS.
The diversification requirements set forth in this restriction are based on
the diversification requirements for a "diversified company" under the 1940 Act.
As a diversified investment company, each Fund must comply with these
diversification requirements unless it changes its classification under the 1940
Act to a "non-diversified" management investment company. A Fund cannot change
its classification under the 1940 Act without a shareholder vote. Therefore the
foregoing investment restriction is redundant and unnecessary. In addition,
elimination of this investment restriction at the present time would enable each
Fund to take advantage of a future amendment to the 1940 Act or a new rule that
liberalizes the diversification requirements without having to incur the expense
and delay of obtaining shareholder approval of a similar change to the Fund's
investment restriction with respect to diversification. Elimination
28
of the fundamental investment restriction is not expected to affect the way in
which each Fund is managed, the investment performance of each Fund, or the
securities or instruments in which each Fund invests.
The Board has reviewed the proposed elimination of the fundamental
investment restriction and believes it to be in the best interest of each Fund
and its shareholders.
The elimination of the fundamental restriction will become effective on the
later of May 1, 2002 or immediately upon shareholder approval. If the proposal
is not approved by the shareholders of a Fund, the Fund's current restriction
will remain unchanged.
RECOMMENDATION AND REQUIRED VOTE
As provided in the 1940 Act, approval of this Proposal No. 3 by a Fund's
shareholders requires an affirmative vote of the lesser of (i) 67% or more of
the Fund's shares present at the special meeting if more than 50% of the
outstanding shares of the Fund are present, or (ii) more than 50% of the
outstanding shares of the Fund. Shares represented by proxies that reflect
abstentions or broker non-votes will be counted as shares that are present and
entitled to vote on the matter for purposes of determining the presence of a
quorum. Abstentions and broker non-votes have the effect of a negative vote on
this Proposal No. 3.
The Board recommends that shareholders of each Fund vote to approve the
change of fundamental investment restriction in Proposal No. 3.
ADDITIONAL INFORMATION
SHARE OWNERSHIP INFORMATION
GENERAL INFORMATION. As of February 25, 2002 there were ____________
outstanding shares of the Trust.
5% BENEFICIAL OWNERSHIP INFORMATION. As of February 25, 2002 the following
persons were known by the Fund to own 5% or more of the outstanding shares of
the Fund:
Name and Address of Record Owner Number of Shares Percent of Total
----------- -------%
No other person owned of record and, according to information available to
the Trust, no other person owned beneficially, 5% or more of the outstanding
shares of the Trust on the record date.
SHARE OWNERSHIP OF TRUSTEES AND OFFICERS. As of February 25, 2002, no
Officers or Trustees of the Trust were known by the Trust to be record owners of
1% or more of the outstanding shares of the Trust.
29
INVESTMENT ADVISOR AND OTHER SERVICE PROVIDERS
Touchstone Advisors, Inc., located at 221 East Fourth Street, Suite 300,
Cincinnati, Ohio 45202, serves as the investment advisor to the Fund.
Touchstone Securities, Inc. (the "Underwriter") serves as the principal
underwriter of the shares of the Fund. The address of the Underwriter is 221
East Fourth Street, Suite 300, Cincinnati, Ohio 45202. For the period from
January 1, 2001, through December 31, 2001, the Underwriter received $_______ in
underwriting commissions from the funds in the Touchstone complex.
The Advisor is a wholly-owned subsidiary of IFS Financial Services, Inc.,
which is a wholly-owned subsidiary of Western-Southern Life Assurance Company
("WSLAC"). The underwriter is wholly-owned subsidiary of WSLAC. The address of
WSLAC is 400 Broadway, Cincinnati, Ohio 45202. WSLAC is a stock life insurance
company organized under the laws of the State of Ohio on December 1, 1980. WSLAC
is a wholly-owned subsidiary of The Western and Southern Life Insurance Company,
a stock life insurance company originally organized under the laws of the State
of Ohio on February 23, 1888 ("WSLIC"). WSLIC is wholly owned by an
Ohio-domiciled intermediate holding company, Western-Southern Financial Group,
Inc., which is wholly owned by an Ohio-domiciled mutual insurance holding
company, Western-Southern Mutual Holding Company. WSLAC is in the business of
issuing insurance and annuity contracts.
The following officers of the Trust hold positions with the Advisor and the
Underwriter.
Position Position with Position with
Name with Trust Touchstone Advisors Touchstone Securities
- -------------------------------------------------------------------------------------------
Jill T. McGruder Trustee, Director, President Director, President
President and Chief Executive and Chief Executive
Officer Officer
Terrie A. Wiedenheft Controller Chief Financial Officer Chief Financial Officer
_____________________ serves as the administrator, custodian and fund
accounting agent for the Fund. The address of __________________ is
__________________________________________.
PROXY SOLICITATION
The principal solicitation of proxies will be by mail, but proxies may be
solicited by telephone, facsimile and personal contact by directors, officers
and regular employees of the Advisor. All costs associated with the preparation,
filing and distribution of this Proxy Statement, the solicitation and the
meeting will be borne by the Advisor. Management Information Services Corp. has
been engaged to assist in the distribution and tabulation of proxies. As the
special meeting date approaches, a representative of the Advisor, or its
affiliates,
30
may contact shareholders whose votes have not yet been received. The anticipated
cost of the proxy solicitation is approximately $--------, of which
approximately $------ will be paid to Management Information Services Corp.
CERTAIN VOTING MATTERS
Only shareholders of record on February 25, 2002 (the "record date") are
entitled to be present and to vote at the special meeting or any adjourned
meeting. The number of shares of the Fund outstanding as of the record date was
__________. Each share of a Fund is entitled to one vote and each fractional
share is entitled to a proportionate share of one vote.
The persons named in the accompanying proxy will vote as directed by the
proxy. If a proxy is signed and returned but does not give voting directions, it
will be voted for the approval of the Proposals described in this Proxy
Statement.
If a shareholder signs and returns a proxy but abstains from voting, the
shares represented by the proxy will be counted as present and entitled to vote
for purposes of determining a quorum at the meeting, but the abstention will
have the effect of a vote against each proposal.
If a broker indicates on a proxy that it does not have discretionary
authority as to certain shares, those shares will be counted as present at the
meeting for quorum purposes but not entitled to vote and thus will also have the
effect of a vote against each proposal.
A shareholder may revoke the accompanying proxy at any time before its use
by filing with the Secretary of the Trust a written revocation or duly executed
proxy bearing a later date. The proxy will not be voted if a shareholder is
present at the meeting and elects to vote in person. Attendance at the meeting
alone will not serve to revoke the proxy.
PORTFOLIO TRANSACTIONS
The Trust does not allocate its portfolio brokerage on the basis of the
sale of its shares, although brokerage firms whose customers purchase shares of
the Fund may participate in brokerage commissions. During the period from
January 1, 2001, through December 31, 2001, brokerage transactions were not
placed with any person affiliated with any Fund, the Trust, or the Advisor.
SHAREHOLDER PROPOSALS
The meeting is a special meeting of shareholders. The Trust is not required
to, nor does it intend to, hold regular annual meetings of Fund shareholders.
Any shareholders who wish to submit proposals for consideration at a subsequent
shareholder meeting should submit written proposals to the Trust at 221 East
Fourth Street, Suite 300, Cincinnati, Ohio 45202 so that the proposals are
received within a reasonable period of time prior to the meeting. Timely
submission of a proposal does not guarantee its consideration at the meeting.
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OTHER MATTERS TO COME BEFORE THE MEETING
The Trust's management does not know of any matters to be presented at the
meeting other than those described in this Proxy Statement. If other business
should properly come before the meeting, the proxyholders will vote thereon in
their discretion.
PLEASE COMPLETE THE ENCLOSED PROXY CARD(S) AND RETURN THE CARD(S) BY APRIL 22,
2002 IN THE ENCLOSED SELF-ADDRESSED, POSTAGE-PAID ENVELOPE.
March 15, 2002 By Order of the Board of Trustees of the Trust.
Cincinnati, Ohio
Tina Hosking, Secretary
32
EXHIBIT A
New language is italicized and deleted language is lined through
(cover page and table of contents omitted)
TOUCHSTONE INVESTMENT TRUST
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
The Agreement and Declaration of Trust initially made in Bedford,
Massachusetts on December 7, 1980 under the name "Midwest Income Trust", as
restated as of August 26, 1993, and as heretofore amended is hereby further
amended and restated in its entirety as of this ___________day of
___________2002 to provide as follows:
WITNESSETH:
WHEREAS, this Trust has been formed to carry on the business of an
investment company; and
WHEREAS, this Trust has also been formed to succeed to the business of
Midwest Income Investment Company, an Ohio Corporation; and
WHEREAS, the Trustees have agreed to manage all property coming into their
hands as trustees of a Massachusetts business trust in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the benefit of the holders from time to time
of shares of beneficial interest in this Trust as hereinafter set forth.
ARTICLE I
NAME AND DEFINITION
SECTION 1.1. NAME AND ADDRESS. This Trust shall be known as "Touchstone
Investment 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. Until
otherwise determined, the principal place of business of the Trust is 221 East
Fourth Street, Cincinnati, Ohio 45202. The Trust's resident agent in
Massachusetts is CT Corporation System, 101 Federal Street, Boston,
Massachusetts 02110. The Trustees, without a vote of Shareholders, may change
the principal place of business or the Trust's resident agent.
SECTION 1.2 DEFINITIONS. Whenever used herein, unless otherwise required by
the context or specifically provided:
(a) The "Trust" refers to the Massachusetts business trust established by
this Amended and Restated Agreement and Declaration of Trust, as
amended from time to time;
(b) "Trustees" means the persons who have signed the Declaration, so long
as they shall continue in office in accordance with the terms hereof,
and all other persons who may from time to time be duly elected or
appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and reference herein to a Trustee or the Trustees
shall refer to such person or persons in their capacity as trustees
hereunder;
33
(c) "Shares" refers to the transferable units of interest into which the
beneficial interest in the Trust or any Series or Class of shares of
the Trust (as the context may require) shall be divided from time to
time in accordance with the terms hereof. The term "Shares" includes
fractions of Shares as well as whole Shares;
(d) "Series" refers to Series of Shares established and designated under
or in accordance with the provisions of Article IV;
(e) "Shareholder" means a record owner of Shares;
(f) The "1940 Act" refers to the Investment Company Act of 1940 , the
Rules and Regulations thereunder and any applicable order of the
Commission, all as amended from time to time;
(g) "Commission" shall have the meaning given it in the 1940 Act;
(h) " Declaration of Trust" or "Declaration" shall mean this Amended and
Restated Agreement and Declaration of Trust as amended or restated
from time to time;
(i) "Bylaws" shall mean the Bylaws of the Trust as amended from time to
time;
(j) "Class" refers to any Class of Shares established and designated under
or in accordance with the provisions of Article IV hereof; and
(k) "Majority Shareholder Vote" has the same meaning as the phrase "vote
of a majority of the outstanding voting securities" as defined in the
1940 Act, except that such term may be used herein with respect to the
Shares of the Trust as a whole or the Shares of any particular Series
or Class, as the context may require, and except that each Share shall
have one vote for each dollar of net asset value as provided in
Article V hereof.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to operate as an investment company, to offer
Shareholders one or more investment programs primarily in securities and
financial instruments and to transact any or all lawful business.
ARTICLE III
THE TRUSTEES
SECTION 3.1 NUMBER, DESIGNATION, ELECTION, TERM, ETC.
34
(a) Number. The Trustees then serving as such may increase or decrease (to not
less than two) the number of Trustees to a number other than the number
theretofore determined. No decrease in the number of Trustees shall have
the effect of removing any Trustee from office prior to the expiration of
his term, but the number of Trustees may be decreased in conjunction with
the removal or retirement of a Trustee pursuant to the terms of this
Section 3.1.
(b) Term. Subject to the provisions set forth below, and subject to the
applicable provisions of the 1940 Act, each Trustee shall serve as a
Trustee during the lifetime of the Trust and until its termination as
hereinafter provided or until such Trustee sooner dies, resigns, retires or
is removed or the election and qualification of his successor, provided
however that any Trustee who has served to the end of his term of office as
has been established pursuant to any written policy adopted from time to
time by at least two-thirds of the Trustees shall, automatically and
without action of such Trustee or the remaining Trustees, be deemed to have
retired in accordance with the terms of such policy, effective as of the
date determined in accordance with such policy. The Trustees may elect
their own successors and may, pursuant to Section 3.1(g) hereof, appoint
Trustees to fill vacancies..
(c) Resignation and Retirement. Any Trustee may resign his trust or retire as a
trustee, by written instrument signed by him and delivered to the other
Trustees or to any officer of the Trust, and such resignation or retirement
shall take effect upon such delivery or upon such later date as is
specified in such instrument.
(d) Mandatory Retirement. Any Trustee who has attained a mandatory retirement
age established pursuant to any written policy adopted from time to time by
at least two-thirds of the Trustees shall, automatically and without action
of such Trustee or the remaining Trustees, be deemed to have retired in
accordance with the terms of such policy, effective as of the date
determined in accordance with such policy.
(e) Incapacitation. Any Trustee who has become incapacitated by illness or
injury, as determined by a majority of the other Trustees in their
reasonable judgment, may be retired by written instrument signed by a
majority of the other Trustees, specifying the date of his or her
retirement.
(f) Removal. Any Trustees may be removed with or without cause at any time: (i)
by written instrument, signed by at least two-thirds of the number of
Trustees prior to such removal, specifying the date upon which such removal
shall become effective, (ii) by vote of the Shareholders holding not less
than two-thirds of the voting power of the Shares then outstanding, cast in
person or by proxy at any meeting called for the purpose, or (iii) by a
declaration in writing signed by Shareholders holding not less than
two-thirds of the voting power of the Shares then outstanding and filed
with the Trust. .
(g) Vacancies. Any vacancy or anticipated vacancy resulting from any reason,
including without limitation the death, resignation, retirement, removal or
incapacity of any of the Trustees, or resulting from an increase in the
number of Trustees by the Trustees may , unless otherwise required by the
1940 Act, be filled either by a majority of the remaining Trustees through
the appointment of such other person as such remaining Trustees in their
discretion shall determine or by the election by the Shareholders, at a
meeting called for the purpose, of a person to fill such vacancy, and such
appointment or election shall be effective upon the written acceptance of
the person named therein to serve as a Trustee and agreement by such person
to be bound by the provisions of this Declaration , except that any such
appointment or election in anticipation of a vacancy to occur by reason of
retirement, resignation, or increase in number of Trustees to be effective
at a later date shall become effective only at or after the effective date
of said retirement, resignation, or increase in number of Trustees. As soon
as any Trustee so appointed or elected shall have accepted such appointment
or election and shall have agreed in writing to be bound by this
Declaration and the appointment or election is effective, the
35
Trust estate shall vest in the new Trustee, together with the continuing
Trustees, without any further act or conveyance.
(h) Effect of Death, Resignation, Etc. The death, resignation, retirement,
removal, or incapacity of the Trustees, or any one of them, shall not
operate to annul or terminate the Trust or to revoke or terminate any
existing agency or contract created or entered into pursuant to the terms
of this Declaration. Upon the death, resignation, retirement, removal or
incapacity of a Trustee, such Trustee shall automatically cease to have any
right, title or interest in any of the Trust property, and the right, title
and interest of such Trustee in the Trust property shall vest automatically
in the remaining Trustees. Such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and
delivered. Whenever a vacancy in the number of Trustees shall occur, until
such vacancy is filled as provided herein or while any Trustee is
incapacitated, the other Trustees in office, regardless of their number,
shall have all the powers granted to the Trustees and shall discharge all
the duties imposed upon the Trustees by the Declaration, and only such
other Trustees shall be counted for the purposes of the existence of a
quorum or the taking of any action to be taken by the Trustees. A written
instrument certifying the existence of such vacancy or incapacity signed by
a majority of the Trustees shall be conclusive evidence of the existence
thereof.
(i) No Accounting. Except to the extent required by the 1940 Act or under
circumstances which would justify his removal for cause, no person ceasing
to be a Trustee as a result of his death, resignation, retirement, removal
or incapacity (nor the estate of any such person) shall be required to make
an accounting to the Shareholders or remaining Trustees upon such
cessation.
(j) Delegation of Power to Other Trustees. Any Trustee may, by power of
attorney, delegate his power for a period not exceeding six months at any
one time to any other Trustee or Trustees; provided that in no case shall
fewer than two Trustees personally exercise the powers granted to the
Trustees under the Declaration except as otherwise expressly provided
herein.
SECTION 3.2 POWERS OF THE TRUSTEES. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purpose of the Trust. Without limiting the
foregoing, the Trustees may adopt Bylaws not inconsistent with this Declaration
for the conduct of the business and affairs of the Trust and may amend and
repeal them at any time to the extent that such Bylaws do not reserve that right
to the Shareholders; they may as they consider appropriate elect and remove
officers and appoint and terminate agents and consultants and hire and terminate
employees, in each case with or without cause, any one or more of the foregoing
of whom may be a Trustee, and may provide for the compensation of all of the
foregoing; they may appoint and terminate any one or more committees, including
without implied limitation an executive committee, which may, when the Trustees
are not in session and subject to the 1940 Act, exercise some or all of the
power and authority of the Trustees as the Trustees may determine; they 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 suchdetermination and allocation shall be conclusive and binding upon
Shareholders; and in general they may delegate to any officer of the Trust, to
any committee and to any employee, adviser, administrator, distributor,
depository, custodian, transfer and dividend disbursing agent, or any other
agent or consultant of the Trust such
36
authority, powers, functions and duties as they consider desirable or
appropriate for the conduct of the business and affairs of the Trust, including
without implied limitation the power and authority to act in the name of the
Trust and of the Trustees, to sign documents and to act as attorney-in-fact for
the Trustees.
The Trustees shall have power to conduct the business of the Trust and
carry on its operations in any and all of its branches and maintain offices both
within and without The Commonwealth of Massachusetts and within and without the
United States of America, and to do all such other things and execute all such
instruments as the Trustees deem necessary, proper or desirable in order to
promote the interests of the Trust although such things are not herein
specifically mentioned. Any determination as to what is in the interests of the
Trust made by the Trustees in good faith shall be conclusive. In construing the
provisions of the Declaration, the presumption shall be in favor of a grant of
power to the Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power or any other power of the Trustees hereunder. Such
powers of the Trustees may be exercised without order of or resort to any court.
Without limiting the foregoing and to the extent not inconsistent with the
1940 Act or other applicable law, the Trustees shall have power and authority:
(a) Investments. To subscribe for, or invest and reinvest cash and other
property in, securities of every nature and kind, U.S. and foreign
currencies, any form of gold or other precious metal, commodity contracts,
any form of option contract, contracts for the future acquisition or
delivery of fixed income or other securities, derivative instruments of
every kind, "when-issued" or standby contracts, and all types of
obligations or financial instruments of any kind and to hold cash or other
property uninvested without in any event being bound or limited by any
present or future law or custom in regard to investments by trustees or
fiduciaries including, without limitation, any law or custom relating to
investing in securities or obligations maturing before the possible
termination of the Trust;
(b) Disposition of Assets. To sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the assets of the
Trust;
(c) Ownership Powers. To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities, instruments or
property; and to execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting to such
person or persons such power and discretion with relation to securities,
instruments or property as the Trustees shall deem proper;
(d) Subscription. To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities or other
instruments;
(e) Form of Holding. To hold any security, instrument or property in a form not
indicating any trust, whether in bearer, unregistered or other negotiable
form, or in the name of the Trustees or of the Trust or in the name of a
custodian, subcustodian or other depository or a nominee or nominees or
otherwise;
(f) Reorganization, etc. To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer, any
security or instrument of which is or was held in the Trust; to consent to
any contract, lease, mortgage, purchase or sale of property by such
corporation or issuer, and to pay calls or subscriptions with respect to
any security or instrument held in the Trust;
(g) Voting Trusts, etc. To join with other holders of any securities or
instruments in acting through a committee, depository, voting trustee or
otherwise, and in that connection to deposit any security or instrument
with, or transfer any security or instrument to, any such committee,
depository or trustee, and to delegate to them such power and authority
with relation to any security or instrument (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay, and to
pay, such portion of the expenses and compensation of such committee,
depository or trustee as the Trustees shall deem proper;
37
(h) Compromise. To pay, defend, compromise, arbitrate, abandon or otherwise
adjust claims in favor of or against the Trust or any matter in
controversy, including but not limited to claims for taxes and to enter
into releases, agreements and other instruments;
(i) Partnerships, etc. To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(j) Borrowing and Security. To borrow funds and to issue notes or other
instruments in connection therewith and to mortgage and pledge the assets
of the Trust or any part thereof to secure obligations arising in
connection with such borrowing;
(k) Guarantees, etc. To endorse or guarantee the payment of any notes or other
obligations of any person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof; and to mortgage and pledge
the Trust property or any part thereof to secure any of or all such
obligations;
(l) Insurance. To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the
assets of the Trust and payment of distributions and principal on its
portfolio investments, and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, consultants, investment advisers,
managers, administrators, distributors, principal underwriters, or
independent contractors, or any thereof (or any person connected
therewith), of the Trust individually against all claims and liabilities of
every nature arising by reason of holding, being or having held any such
office or position, or by reason of any action alleged to have been taken
or omitted by any such person in any such capacity, including any action
taken or omitted that may be determined to constitute negligence whether or
not the Trust would have the power to indemnify such person against such
liability;
(m) Pensions, etc. To pay pensions for faithful service, as deemed appropriate
by the Trustees, and to adopt, establish and carry out pension,
profit-sharing, share bonus, share purchase, deferred compensation,
savings, thrift and other retirement, incentive and benefit plans, trusts
and provisions, including the purchasing of life insurance and annuity
contracts as a means of providing such retirement and other benefits, for
any or all of the Trustees, officers, employees and agents of the Trust;
and
(n) Investment in Other Investment Companies. To either invest all or a portion
of the property of the Trust or, as applicable, the property of one or more
Series of the Trust, or sell all or a portion of such property and invest
the proceeds of such sales, in one or more other investment companies, in
each case without any requirement of approval by Shareholders, to the
extent not prohibited by the 1940 Act.
To carry on any other business in connection with or incidental to any of
the foregoing powers, to do everything necessary, proper or desirable for the
accomplishment of any purpose or the attainment of any object or the furtherance
of any power hereinbefore set forth, and to do every other act or thing
incidental or appurtenant to or connected with the aforesaid purposes, objects
or powers. Except as otherwise provided by the 1940 Act or other applicable law,
this Declaration or the Bylaws, any action to be taken by the Trustees may be
taken by a majority of the Trustees present at a meeting of Trustees (a quorum,
consisting of at least a majority of the Trustees then in office, being
present), within or without Massachusetts, including any meeting held by means
of a conference telephone or other communications equipment by means of which
all persons participating in the
38
meeting can hear each other at the same time and participation by such means
shall constitute presence in person at a meeting, or by written consents of a
majority of the Trustees then in office (or such larger or different number as
may be required by the 1940 Act or other applicable law).
SECTION 3.3 CERTAIN CONTRACTS. Subject to compliance with the provisions of
the 1940 Act, but notwithstanding any limitations of present and future law or
custom in regard to delegation of powers by trustees generally, the Trustees
may, at any time and from time to time and without limiting the generality of
their powers and authority otherwise set forth herein, enter into one or more
contracts with any one or more corporations, trusts, associations, partnerships,
limited partnerships, other type of organizations, or individuals ("Contracting
Party") to provide for the performance and assumption of some or all of any
services, duties and responsibilities to, for or of the Trust or any Series or
Class thereof and/or the Trustees, and to provide for the performance and
assumption of such other services, duties and responsibilities as the Trustees
may determine appropriate.
The same person may be the Contracting Party for some or all of the
services, duties and responsibilities to, for and of the Trust or any Series or
Class thereof and/or the Trustees, and the contracts with respect thereto may
contain such terms that are not inconsistent with the 1940 Act as the Trustees
may determine. Nothing herein shall preclude, prevent or limit the Trust or, at
the discretion of the Trustees, a Contracting Party, from entering into
subcontractual arrangements with respect to services to be rendered hereunder.
Subject to the provisions of the 1940 Act, the fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter or distributor or agent of or for
39
any Contracting Party, or of or for any parent or affiliate of any
Contracting Party or that the Contracting Party or any parent or affiliate
thereof is a Shareholder or has an interest in the Trust, or that
(ii) any Contracting Party may have a contract providing for the
rendering of any similar services to one or more other corporations,
trusts, associations, partnerships, limited partnerships or other
organizations, or has other business or interests,
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust or any Series
or Class thereof and/or the Trustees and, subject to applicable laws, shall not
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.
SECTION 3.4 PAYMENT OF TRUST EXPENSES AND COMPENSATION OF TRUSTEES. The
Trustees are authorized to pay or to cause to be paid out of the assets of the
Trust and to charge or allocate the same to, between or among such one or more
of the Series or Classes that may be established and designated pursuant to
Article IV hereof, as the Trustees 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, agents, consultants, and independent contractors
and such other expenses and charges as the Trustees may deem necessary or proper
to incur. Without limiting the generality of any other provision hereof, the
Trustees shall be entitled to reasonable compensation from the Trust for their
services as Trustees and may at their sole discretion, fix the amount of such
compensation.
ARTICLE IV
SHARES
SECTION 4.1. DESCRIPTION OF SHARES. The beneficial interest in the Trust shall
be divided into transferable Shares of beneficial interest, with or without par
value, which may be divided into one or more Series and Classes as provided
herein. The number of Shares authorized hereunder is unlimited.
SECTION 4.2. ISSUANCE OF SHARES. The Trustees in their discretion may, from time
to time without vote of the Shareholders, issue Shares (including fractional
Shares), in addition to the then issued and outstanding Shares and Shares held
in the treasury, to such party or parties and for such amount and type of
consideration (or for no consideration if pursuant to a share dividend or share
split), including cash or property, at such time or times, and on such terms as
the Trustees may deem best, and may in such manner acquire other assets
(including the
40
acquisition of assets subject to, and in connection with, the assumption of
liabilities) and businesses, and may accept or reject or authorize its
distributor or other agents to accept or reject any purchase order. The Trustees
may from time to time divide or combine the Shares of the Trust or of any Series
or Class into a greater or lesser number without thereby changing their
proportionate beneficial interests in the property allocated or belonging to
such Series or Class. All Shares issued pursuant to this Declaration, including,
without limitation, Shares issued in connection with a dividend in Shares or a
split of Shares shall be fully paid and non-assessable.
SECTION 4.3 OWNERSHIP OF SHARES. The ownership of Shares shall be recorded
on the books of the Trust or its transfer or similar agent, which books shall be
maintained separately for the Shares of each Series. No certificates certifying
the ownership of Shares need be issued except as the Trustees may otherwise
determine from time to time, and, if so issued, may be retired by the Trustees
at any time. The Trustees may make such rules as they consider appropriate for
the issuance of Share certificates, the use of facsimile signatures, the
transfer of Shares and similar matters, and until transferred in accordance with
such rules, the holder shown on the books of the Trust with respect to any
Shares shall be deemed the Shareholder with respect to such Shares for all
purposes hereunder. The record books of the Trust as kept by the Trust or any
transfer or similar agent, as the case may be, shall be conclusive as to who are
the Shareholders and as to the number of Shares of each Series and Class held
from time to time by each such Shareholder. No Shareholder shall be entitled to
receive payment of any dividend or distribution, nor to have notice given to
that Shareholder as provided herein or in the Bylaws, until the Shareholder has
given his or her address to the transfer agent or similar agent of the Trust.
SECTION 4.4 STATUS OF SHARES AND LIMITATION OF LIABILITY. The ownership of
the Trust property of every description and the right to conduct any business
described herein are vested exclusively in the Trustees. Shares shall be deemed
to be personal property giving only the rights provided in this instrument. The
Shares shall not entitle the holder to preference, preemptive, appraisal,
conversion or exchange rights, except as the Trustees may determine with respect
to any Series or Class of Shares. Every Shareholder by virtue of having become a
Shareholder shall be held to have expressly assented and agreed to the terms
hereof and to have become a party hereto. The death of a Shareholder during the
continuance of the Trust shall not operate to terminate the Trust nor entitle
the representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to the
rights of said decedent under this Trust. Ownership of Shares shall not entitle
the Shareholder to any title in or to the whole or any part of the Trust
property or right to call for a partition or division of the same or for an
accounting. It is the intention of the Trustees to create only the relationship
of Trustee and beneficiary between the Trustees and each Shareholder from time
to time. It is not the intention of the Trustees to create a general
partnership, limited partnership, joint stock association, corporation, bailment
or any form of legal relationship other than a trust. Nothing in the Declaration
shall be construed to make the Shareholders, either by themselves or with the
Trustees, partners or members of a joint stock association. Neither the Trust
nor the Trustees, nor any officer, employee or agent of the Trust shall have any
power to bind personally any Shareholder, nor except as specifically provided
herein, to call upon any Shareholder for the payment of any sum of money or
assessment whatsoever other than such as the Shareholder may at the time
personally agree to pay.
SECTION 4.5 SERIES OF SHARES. Shares of the Trust may be divided into
Series, the number and relative rights, privileges and preferences of which
shall be established and designated by the Trustees, in their
41
discretion, in accordance with the terms of this Section. The Trustees may from
time to time exercise their power to authorize the division of Shares into one
or more Series by establishing and designating one or more Series of Shares upon
and subject to the following provisions:
(a) All Shares of the different Series shall be identical (subject to such
variations between Classes of Shares as may be permitted hereunder, except
with respect to such differences among such Series as the Trustees shall
from time to time approve and as are consistent with the 1940 Act or other
applicable laws. .
(b) The number of Shares of each Series authorized and that may be issued shall
be unlimited. The Trustees may classify or reclassify any Shares or any
Shares of any Series, including outstanding Shares , previously issued and
reacquired of any Series into one or more Series that may be established
and designated from time to time. The Trustees may hold as treasury Shares
(of the same or some other Series), reissue for such consideration and on
such terms as they may determine, or cancel, at their discretion from time
to time, any Shares of any Series reacquired by the Trust.
42
(c) Assets Belonging to 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, including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same
may be, shall irrevocably belong to that Series for all purposes, subject
only to the rights of creditors of such Series, and shall be so recorded
upon the books of account of the Trust. In the event that there are any
assets, income, earnings, profits, and proceeds thereof, funds, or payments
which are not readily identifiable as belonging to any particular Series,
the Trustees shall allocate them to and among any one or more of the Series
established and designated from time to time in such manner and on such
basis as they, in their sole discretion, deem fair and equitable. Each such
allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Series for all purposes. No holder of Shares of any
particular Series shall have any claim on or right to any assets allocated
or belonging to any other Series of Shares. No holder of Shares of any
particular Series shall be entitled to participate in a derivative or class
action on behalf of any other Series or the Shareholders of any other
Series.
(d) Liabilities Belonging to Series. The assets belonging to each particular
Series shall be charged with the liabilities of the Trust in respect of
that Series and all expenses, costs, charges and reserves attributable to
that Series, and any general liabilities, expenses, costs, charges or
reserves of the Trust which are not readily identifiable as belonging to
any particular Series shall be allocated and charged by the Trustees to and
among any one or more of the Series established and designated from time to
time in such manner and on such basis as the Trustees in their sole
discretion deem fair and equitable. Each allocation of liabilities,
expenses, costs, charges and reserves by the Trustees shall be conclusive
and binding upon the holders of all Series for all purposes. Under no
circumstances shall the assets allocated or belonging to any particular
Series be charged with liabilities attributable to any other Series. All
persons who have extended credit which has been allocated to a particular
Series, or who have a claim or contract which has been allocated to any
particular Series, shall look only to the assets of that particular Series
for payment of such credit, claim or contract.
(e) Dividends. Dividends and distributions on Shares of a particular Series may
be paid with such frequency as the Trustees may determine, which may be
daily or otherwise pursuant to a standing resolution or resolutions adopted
only once or with such frequency as the Trustees may determine, to the
holders of Shares of that Series only, from such of the income and capital
gains, accrued or realized, from the assets
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belonging to that Series, as the Trustees may determine, after providing
for actual and accrued liabilities belonging to that Series. All dividends
and distributions on Shares of a particular Series shall be distributed pro
rata to the holders of that Series in proportion to the number of Shares of
that Series held by such holders at the date and time of record established
for the payment of such dividends or distributions, except that in
connection with any dividend or distribution program or procedure the
Trustees may determine that no dividend or distribution shall be payable on
Shares as to which the Shareholder's purchase order and/or payment have not
been received by the time or times established by the Trustees under such
program or procedure, and except that if Classes have been established for
any Series, the rate of dividends or distributions may vary among such
Classes pursuant to resolution, which may be a standing resolution, of the
Board of Trustees. Such dividends and distributions may be made in cash or
Shares or a combination thereof as determined by the Trustees or pursuant
to any program that the Trustees may have in effect at the time for the
election by each Shareholder of the mode of the making of such dividend or
distribution to that Shareholder. Any such dividend or distribution paid in
Shares will be paid at the net asset value thereof determined in accordance
with this Declaration.
(f) Liquidation. In event of the liquidation or dissolution of a Series, or the
Trust as a whole, the Shareholders of each Series shall be entitled to
receive a pro rata share of the net assets of such Series only. a such
Series
(g) Voting. On each matter submitted to a vote of the Shareholders, all Shares
of all Series and Classes entitled to vote shall be voted in the aggregate,
except that (i) as to any matter with respect to which a vote by individual
Series or Class is required by the 1940 Act or (ii) when the Trustees have
determined that a matter affects only the interests of Shareholders of a
particular Series or Class, only the holders of Shares of the one or more
affected Series or Classes shall be entitled to vote.
SECTION 4.6 CLASSES OF SHARES. The Trustees may, in their discretion,
authorize the division of Shares of the Trust (or any Series of the Trust) into
one or more Classes, the number and relative rights, privileges and preferences
of which shall be established and designated by the Trustees, in their
discretion, in accordance with
44
the terms of the 1940 Act. The number of Shares of each Class that may be issued
is unlimited, and the Trustees may classify or reclassify any Shares of any
Class, including outstanding Shares, into one or more Classes that may be
established and designated from time to time. All Shares of a Class shall be
identical with each other and with the Shares of each other Class of the Trust
or the same Series of the Trust (as applicable), except for such variations
between Classes as may be approved by the Trustees and not prohibited by the
1940 Act.
SECTION 4.7 SERIES AND CLASS DESIGNATIONS. The establishment and
designation of any Series or Class of Shares shall be effective (a) upon the
execution by a majority of the then Trustees of an instrument setting forth such
establishment and designation and the relative rights and preferences of such
Series or Class, (b) upon the vote of a majority of the Trustees as set forth in
an instrument executed by an officer of the Trust, or (c) at such other time as
the instrument referred to in the foregoing clause (a) or the vote referred to
in the foregoing clause (b) may provide. The Trustees may at any time by an
instrument executed by a majority of their number abolish any Series or Class
and the establishment and designation thereof. Each instrument referred to in
this paragraph shall have the status of an amendment to the Declaration.
The instrument designating the Series of Shares existing as of the date
hereof is attached as Appendix A hereto.
The instrument designating the Classes of Shares of each Series existing as
of the date hereof is attached as Appendix B hereto.
SECTION 4.8. REDEMPTION BY SHAREHOLDER. Each Share of each Series properly
tendered for redemption shall be redeemable at such times as may be permitted by
the Trust at a redemption price equal to the net asset value per Share of the
applicable Series thereof next determined in accordance with Section .11 hereof,
less any applicable redemption fee or sales charge. Payment of the redemption
price shall be made from the assets of the applicable Series in cash at such
times and in such manner not inconsistent with the 1940 Act or other applicable
law as determined by the Trustees; provided, however, that if the Trustees
determine, which determination shall be conclusive, that conditions exist which
make payment wholly in cash unwise or undesirable, the Trust may make payment
wholly or partly in securities or other assets belonging to the Series of which
the Shares being redeemed are part at the value of such securities or assets
used in such determination of net asset value of the Series. The Trustees may
from time to time specify procedures and conditions, not inconsistent with the
1940 Act, regarding the redemption of Shares.
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the holders of Shares of any
Series or Class to require the Trust to redeem Shares of that Series or Class
during any period or at any time when and to the extent permissible under the
1940 Act, and such redemption is conditioned upon the Trust having funds or
property legally available therefor. Any such suspension shall take effect at
such time as the Trust shall specify, and thereafter there shall be no right of
redemption or payment of the redemption proceeds until the Trust shall declare
the suspension at an end.
SECTION 4.9. REDEMPTION BY TRUST. Each Share is subject to redemption by
the Trust at the redemption price and under the terms which would be applicable
if such Share was then being redeemed by the Shareholder pursuant to the terms
of Section 4.8 hereof at any time and for any reason under terms set by the
Trustee, including, but not limited to,
45
(a) the determination of the Trustees that direct or indirect ownership of
Shares of any Series has or may become concentrated in such Shareholder to an
extent that would disqualify that Series as a regulated investment company under
the Internal Revenue Code of 1986, as amended (or any successor statute
thereto), (b) the failure of a Shareholder to supply a tax identification number
if required to do so, (c) the failure of a Shareholder to pay when due for the
purchase of Shares issued to that Shareholder, (d) the value of a Shareholder's
Shares being less than a minimum amount established from time to time by the
Trustees, (e) failure of a Shareholder to meet or maintain the qualifications
for ownership of a particular Series or Class of Shares, or (f) the
determination by the Trustees or pursuant to policies adopted by the Trustees
that ownership of Shares by a particular Shareholder is not in the best
interests of the remaining Shareholders of the Trust or applicable Series or
Class. Upon such redemption the holders of the Shares so redeemed shall have no
further right with respect thereto other than to receive payment of such
redemption price.
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4.10. DISCLOSURE OF HOLDING. The holders of Shares or other securities of
the Trust shall upon demand disclose to the Trustees in writing such information
with respect to direct and indirect ownership of Shares or other securities of
the Trust as the Trustees deem necessary to comply with the provisions of the
Internal Revenue Code of 1986, as amended (or any successor statute), or to
comply with the requirements of any other law or regulation, and ownership of
Shares may be disclosed by the Trustees if so required by law or regulation.
SECTION 4.11. NET ASSET VALUE; NET INCOME AND DISTRIBUTIONS; REDUCTION IN
SHARES. 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
times for determining the per Share net asset value of the Shares or net income,
or the declaration and payment of dividends and distributions, as they may deem
necessary or desirable. The Trustees may determine to maintain the net asset
value per Share of any Series at a designated constant dollar amount and in
connection therewith may reduce the number of outstanding Shares of the Series
by reducing the number of Shares in the account of each Shareholder on a pro
rata basis, so as to maintain the net asset value per Share of such Series at a
constant dollar amount.
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ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
The Shareholders shall have power to vote only (i) for the election or
removal of Trustees to the extent provided in Section 3.1, (ii) with respect to
any action on a contract as to which Shareholder approval is required by the
1940 Act, (iii) with respect to any termination or reorganization, consolidation
or sale of assets of the Trust or any Series or Class thereof to the extent and
as provided in Sections 7.1 and 7.2, (iv) with respect to any amendment of this
Declaration of Trust to the extent and as provided in Section 7.3, (v) to the
same extent as the stockholders of a Massachusetts business corporation as to
whether or not a court action, proceeding or claim should or should not be
brought or maintained derivatively or as a class action on behalf of the Trust
or the Shareholders, and (vi) with respect to such additional matters relating
to the Trust as may be required by the 1940 Act, this Declaration of Trust, the
Bylaws or any registration of the Trust with the Commission (or any successor
agency) or any state, or as the Trustees may consider necessary or desirable.
A Shareholder of each Series or Class shall be entitled to one vote for
each dollar of net asset value (number of Shares owned times net asset value per
Share) of such Series or Class, on each matter on which such Shareholder is
entitled to vote and each fractional dollar amount shall be entitled to a
proportionate fractional vote, except that the Trustees may, in conjunction with
the establishment of any Series or Class of Shares (but subject to applicable
law), establish conditions under which the several Series or Classes shall have
separate or no voting rights. Shares held in the treasury of the Trust shall not
be voted.
There shall be no cumulative voting in the election of any Trustee or
Trustees. Shares of all Series shall be voted in the aggregate on any matter
submitted to a vote of the Shareholders of the Trust, except as otherwise
provided in this Declaration or by applicable law. Shares entitled to vote and
representing a majority of the voting power of the Shares voted on the matter in
person or by proxy at a meeting of which a quorum is present shall decide any
questions and a plurality shall elect a Trustee, except when a different vote is
required by any provision of the 1940 Act or other applicable law or by this
Declaration of Trust or the Bylaws, provided that where any provision of law or
of the Declaration requires that the holders of any Series or Class shall vote
as a Series or Class, then Shares representing a majority of the voting power of
the Shares of that Series or Class entitled to vote and voted on the matter
shall decide that matter insofar as that Series or Class is concerned, and
provided further that subject to applicable law, abstentions and broker
non-votes shall not be counted as having been voted on the applicable matter.,
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 Shareholders.
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The Bylaws may include further provisions with respect to meetings of
Shareholders' including the establishment of record dates, notices of meetings,
the determination of a quorum, Shareholder voting and related matters.
ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 6.1 TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE. No
Trustee, officer, employee or agent of the Trust shall be subject to any
personal liability whatsoever to any Person, other than the Trust or its
Shareholders, in connection with Trust property or the affairs of the Trust; and
all persons shall look solely to the Trust property for satisfaction of claims
of any nature arising in connection with the affairs of the Trust. No
Shareholder or former Shareholder shall be subject to any personal liability
whatsoever to any person in connection with Trust property or the acts,
obligations or affairs of the Trust solely by reason of being or having been a
Shareholder.
All persons extending credit to, contracting with or having any claim
against the Trust shall look only to the assets of the Trust for payment under
such credit, contract or claim; and neither the Shareholders nor the Trustees,
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 or any of them in
connection with the Trust shall be conclusively deemed to have been executed or
done only by or for the Trust or the
49
Trustees in their capacity as Trustees under this Declaration or by the
officers, employees or agents of the Trust in their capacity as officers,
employees or agents of the Trust and not personally. Nothing in this Declaration
of Trust shall protect any Trustee or officer against any liability to the Trust
or the Shareholders to which such Trustee or officer would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustee or of
such officer.
Every written note, bond, contract, instrument, certificate or undertaking
made or issued by the Trustees or by any officers or officer shall give notice
that this Declaration of Trust is on file with the Secretary of The Commonwealth
of Massachusetts and shall recite to the effect that the same was executed or
made by or on behalf of the Trust or by them as Trustees or Trustee or as
officers or officer and not individually and that the obligations of such
instrument are not binding upon any of them or the Shareholders individually but
are binding only upon the assets and property of the Trust, but the omission
thereof shall not operate to bind any Trustees or Trustee or officers or officer
or Shareholders or Shareholder individually.
SECTION 6.2 TRUSTEE'S AND OFFICERS GOOD FAITH ACTION; EXPERT ADVICE; NO
BOND OR SURETY. The exercise in good faith by the Trustees or the officers of
the Trust of their powers and discretions hereunder shall be binding upon
everyone interested. A Trustee or officer of the Trust shall be liable for his
own willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of the office of Trustee or officer, and for
nothing else, and shall not be liable for errors of judgment or mistakes of fact
or law. Subject to the foregoing (a) neither the Trustees nor the officers shall
be responsible or liable in any event for any neglect or wrongdoing of any other
officer, agent, employee, consultant, adviser, administrator, distributor or
principal underwriter, custodian or transfer, dividend disbursing, Shareholder
servicing or accounting agent of the Trust, nor shall any Trustee be responsible
for the act or omission of any other Trustee; (b) the Trustees and officers may
take advice of counsel or other experts with respect to the meaning and
operation of this Declaration of Trust and their duties as Trustees or officers,
and shall be under no liability for any act or omission in accordance with such
advice or for failing to follow such advice; and (c) in discharging their
duties, the Trustees and officers, when acting in good faith, shall be entitled
to rely upon the books of account of the Trust and upon written reports made to
the Trust by any of its officers, any independent public accountant, and (with
respect to the subject matter of the contract involved) any officer, partner or
responsible employee of a Contracting Party appointed by the Trustees pursuant
to Section 3.3. The Trustees as such shall not be required to give any bond or
surety or any other security for the performance of their duties.
SECTION 6.3 INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder or
former Shareholder shall be charged or held to be personally liable for any
obligation or liability of the Trust or any Series thereof solely by reason of
being or having been a Shareholder (other than taxes payable by virtue of owning
shares) and not because of such Shareholder's acts or omissions or for some
other
50
reason, the Trust (upon proper and timely request by the Shareholder) shall
assume the defense against such charge and satisfy any judgment thereon, and 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 of the
applicable Series to be held harmless from and indemnified against all loss and
expense arising from such liability.
SECTION 6.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC. The Trust shall
indemnify each of its Trustees and officers (including persons who serve at the
Trust's request as directors, officers or trustees of another organization in
which the Trust has any interest as a shareholder creditor or otherwise, and
including persons who served as directors or officers of Midwest Income
Investment Company) (hereinafter referred to as a "Covered Person") against all
liabilities, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses including
reasonable accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Trustee or officer, director or trustee, and except that no Covered
Person shall be indemnified against any liability to the Trust or its
Shareholders to which such Covered Person would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office ("disabling
conduct"). Anything herein contained to the contrary notwithstanding, no Covered
Person shall be indemnified for any liability to the Trust or its Shareholders
to which such Covered Person would otherwise be subject unless (1) a final
decision on the merits is made by a court or other body before whom the
proceeding was brought that the Covered Person to be indemnified was not liable
by reason of disabling conduct or, (2) in the absence of such a decision, a
reasonable determination is made, based upon a review of the facts, that the
Covered Person was not liable by reason of disabling conduct, by (a) the vote of
a majority of a quorum of Trustees who are neither "interested persons" of the
Trust as defined in the 1940 Act nor parties to the proceeding ("disinterested,
non-party Trustees"), or (b) an independent legal counsel in a written opinion.
SECTION 6.5 ADVANCES OF EXPENSES. The Trust shall advance attorneys' fees
or other expenses incurred by a Covered Person in defending a proceeding, upon
the undertaking by or on behalf of the Covered Person to repay the advance
unless it is ultimately determined that such Covered Person is entitled to
indemnification, so long as one of the following conditions is met: (i) the
Covered
51
Person shall provide security for his undertaking, (ii) the Trust shall be
insured against losses arising by reason of any lawful advances, or (iii) a
majority of a quorum of the disinterested non-party Trustees of the Trust, or an
independent legal counsel in a written opinion, shall determine, based on a
review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the Covered Person ultimately will be found
entitled to indemnification.
SECTION 6.6. INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article VI, "Trust" shall include Midwest Income Investment Company,
"Covered Person" shall include such person's heirs, executors and
administrators, an "interested Covered Person" is one against whom the action,
suit or other proceeding in question or another action, suit or other proceeding
on the same or similar grounds is then or has been pending or threatened, and a
"disinterested" person is a person against whom none of such actions, suits or
other proceedings or another action, suit or other proceeding on the same or
similar grounds is then or has been pending or threatened. Nothing contained in
this article shall affect any rights to indemnification to which personnel of
the Trust, other than Trustees and officers, and other persons may be entitled
by contract or otherwise under law, nor the power of the Trust to purchase and
maintain liability insurance on behalf of any such person.
SECTION 6.7. LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
SECTION 6.8. DERIVATIVE ACTIONS. No Shareholder shall have the right to
bring or maintain any court action, proceeding or claim on behalf of the Trust
or any Series or Class thereof without first making demand on the Trustees
requesting the Trustees to bring or maintain such action, proceeding or claim.
Such demand shall be excused only when the plaintiff makes a specific showing
that irreparable injury to the Trust or any Series or Class thereof would
otherwise result, or if a majority of the Trustees, or a majority of any
committee established to consider the merits of such action, has a personal
financial interest in the action at issue. A Trustee shall not be deemed to have
a personal financial interest in an action or otherwise be disqualified from
ruling on a Shareholder demand by virtue of the fact that such Trustee receives
remuneration from his or her service on the Board of Trustees of the Trust or on
the boards of one or more investment companies with the same or an affiliated
investment adviser or underwriter, or the amount of such remuneration.
Such demand shall be mailed to the Secretary of the Trust at the Trust's
principal office and shall set forth in reasonable detail the nature of the
proposed court action, proceeding or claim and the essential facts relied upon
by the Shareholder to support the allegations made in the demand. The Trustees
shall consider such demand within 45 days of its receipt by the Trust. In their
sole discretion, the Trustees may submit the matter to a vote of Shareholders of
the Trust or any Series or Class thereof, as appropriate. Any decision by the
Trustees to bring, maintain or settle (or not to bring, maintain or settle) such
court action, proceeding or claim, or to submit the matter to a vote of
Shareholders, shall be made by the Trustees in their business judgment and shall
be binding upon the Shareholders. Any decision by the Trustees to bring or
maintain a court action, proceeding or suit on behalf of the Trust or any Series
or Class thereof shall be subject to the right of the Shareholders under Article
V of this Declaration to vote on whether or not such court action, proceeding or
suit should or should not be brought or maintained.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 DURATION AND TERMINATION OF TRUST. Unless terminated as
provided herein, the Trust shall continue without limitation of time.
52
(a) The Trust may be terminated at any time (i) by a majority of the
Trustees then in office or (ii) by a Majority Shareholder Vote by the
holders of its Shares. Any Series of the Trust, or any Class of any
Series, may be terminated at any time (i) by a Majority Shareholder
Vote of the holders of Shares of that Series or Class, or (ii) by a
majority of the Trustees then in office.
(b) Upon the termination of the Trust or any Series of the Trust:
(i) The Trust or Series shall carry on no business except for the
purpose of winding up its affairs;
(ii) The Trustees shall proceed to wind up the affairs of the Trust or
Series and all the powers of the Trustees under the Declaration shall
continue until the affairs of the Trust or Series shall have been
wound up, including the power to fulfill or discharge the contracts of
the Trust or Series, collect its assets, sell, convey, assign,
exchange, transfer or otherwise dispose of all or any part of the
remaining property of the Trust or Series to one or more persons at
public or private sale for consideration which may consist in whole or
in part of cash, securities or other property of any kind, discharge
or pay its liabilities, and do all other acts appropriate to liquidate
its business; and
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and
refunding agreements as they deem necessary for their protection, the
Trustees may distribute the remaining property of the Trust or Series,
in cash or in kind or partly in cash and partly in kind, among the
Shareholders of the Trust or the Series according to their respective
rights as set forth in Section 4.5(f) hereof.
The foregoing provisions shall also apply mutatis mutandis to the
termination of any Class.
(c) After termination of the Trust or Series or Class and distribution to
the Shareholders of the Trust or Series or Class as herein provided, a
majority of the Trustees shall execute and lodge among the records of
the Trust an instrument in writing setting forth the fact of such
termination, and the Trustees shall thereupon be discharged from all
further liabilities and duties hereunder with respect to the Trust or
Series or Class, and the rights and interests of all Shareholders of
the Trust or Series or Class shall thereupon cease.
SECTION 7.2 REORGANIZATION. The Trustees may sell, convey and transfer the
assets of the Trust, or the assets belonging to any one or more Series, to
another trust, partnership, association or corporation organized under the laws
of any state of the United States, or to the Trust to be held as assets
belonging to another Series of the Trust, in exchange for cash, shares or other
securities (including, in the case of a transfer to another Series of the Trust,
Shares of such other Series) with such transfer being made subject to, or with
the assumption by the transferee of, all or substantially all of the liabilities
belonging to each Series the assets of which are so transferred; provided,
however, that if shareholder approval is required by the 1940 Act, no assets
belonging to the
53
Trust or any particular Series shall be so transferred unless the terms of such
transfer shall have first been approved at a meeting called for the purpose by
Majority Shareholder Vote, of the Trust or that Series, as the case may be.
Following such transfer, the Trustees shall distribute such cash, shares or
other securities (giving due effect to the assets and liabilities belonging to
and any other differences among the various Series the assets belonging to which
have been so transferred) among the Shareholders of the Series the assets
belonging to which have been so transferred; and if all of the assets of the
Trust have been so transferred, the Trust shall be terminated.
The foregoing provisions shall also apply mutatis mutandis to the sale or
transfer of the assets of any Class or the reorganization of any Class.
SECTION 7.3 AMENDMENTS.
(a) All rights granted to the Shareholders under this Declaration of Trust
are granted subject to the reservation of the right to amend this
Declaration of Trust as herein provided. Subject to the foregoing, and
except as specifically provided herein, the Trustees may, without any
Shareholder vote, amend or otherwise supplement the Declaration by
making an amendment, a Declaration of Trust supplemental hereto or an
amended and restated Declaration. Without limiting the foregoing power
reserved to the Trustees, the Trustees may, without any Shareholder
vote, amend the Declaration in order (i) to establish and designate
any new Series of Shares or any Class or amend any such establishment
and designation; (ii) to change the name of the Trust or its principal
office or agent; (iii) to supply any omission, cure any ambiguity or
cure, correct or supplement any provision hereof which is internally
inconsistent with any other provision hereof; or (iv) if the Trustees
deem it necessary and advisable, to conform the Declaration to the
requirements
54
of applicable law, including the 1940 Act and Internal Revenue Code
and applicable regulations, in order that the Trust may obtain the
most favorable treatment thereunder available to regulated investment
companies, but the Trustees shall not be liable for failing to do so.
(b) Shareholders shall have the right to vote on (i) any amendment that
would affect their right to vote granted hereunder; (ii) any amendment
to this Section; (iii) any amendment as may be required by law, or by
the Trust's registration statement, to be approved by Shareholders;
and (iv) any amendment submitted to them by the Trustees. Any
amendment on which Shareholders have the right to vote shall require a
Majority Shareholder Vote of the Shareholders of the Trust, or the
written consent, without a meeting, of the holders of Shares
representing not less than a majority of the voting power of the
Shares of the Trust. Notwithstanding the foregoing, if the Trustees
shall determine that any amendment required or permitted to be
submitted to Shareholders would affect only the interest of
Shareholders of particular Series or Classes of Shares, then only
Shareholders of such Series or Classes, as applicable, shall be
entitled to vote thereon, and no vote of Shareholders of any other
Series or Classes shall be required. Subject to the foregoing, any
such amendment shall be effective as provided in the instrument
containing the terms of such amendment or, if there is no provision
therein with respect to effectiveness, upon the execution of such
instrument and of a certificate (which may be a part of such
instrument) executed by a Trustee or officer of the Trust to the
effect that such amendment has been duly adopted.
(c) Nothing contained in the Declaration shall permit the amendment of the
Declaration to impair the exemption from personal liability of the
Shareholders, former Shareholders, Trustees, officers, employees and
agents of the Trust or to permit assessments upon Shareholders or
former Shareholders. Notwithstanding anything else herein, any
amendment to Section 6.4 shall not limit the rights to indemnification
or insurance provided therein with respect to actions or omissions of
persons entitled to indemnification under such Section prior to such
amendment.
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(d) Notwithstanding any other provision hereof, until such time as Shares
of a particular Series or Class are first issued, the Declaration may
be terminated or amended in any respect as to that Series or Class,
and as to any Series or Class in which Shares are not outstanding, by
the affirmative vote of a majority of the Trustees or by an instrument
signed by a majority of the Trustees.
SECTION 7.4 FILING OF COPIES; REFERENCES; HEADINGS. The original or a copy
of this instrument and of each amendment hereto shall be kept at the office of
the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust with the
Secretary of The Commonwealth of Massachusetts , as well as any other
governmental office where such filing may from time to time be required, but the
failure to make any such filing shall not impair the effectiveness of this
instrument or any such amendment. Anyone dealing with the Trust may rely on a
certificate by an officer of the Trust as to whether or not any such amendments
have been made, as to the identities of the Trustees and officers, and as to any
matters in connection with the Trust hereunder; and, with the same effect as if
it were the original, may rely on a copy certified by an officer of the Trust to
be a copy of this instrument or of any such amendments. In this instrument and
in any such amendment, references to this instrument, and all expressions like
"herein," "hereof" and "hereunder" shall be deemed to refer to this instrument
as a whole as the same may be amended or affected by any such amendments. The
masculine gender shall include the feminine and neuter genders. Headings are
placed herein for convenience of reference only and shall not be taken as a part
hereof or control or affect the meaning, construction or effect of this
instrument. This instrument may be executed in any number of counterparts each
of which shall be deemed an original.
SECTION 7.5 APPLICABLE LAW. This Declaration of Trust is made in The
Commonwealth of Massachusetts, and it is created under and is to be governed by
and construed and administered according to the laws of said Commonwealth. The
Trust shall be of the type referred to in Section 1 of Chapter 182 of the
Massachusetts General Laws and of the type commonly called a Massachusetts
business trust, and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust.
IN WITNESS WHEREOF, the undersigned Trustees, for themselves and their
respective successors and assigns, have executed one or more counterparts of
this Amended and Restated Agreement and Declaration of Trust under seal as of
the day and year first above written.
[Trustee signature lines]
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APPENDIX A
----------
FORM OF
ESTABLISHMENT AND
DESIGNATION OF SERIES OF SHARES OF
BENEFICIAL INTEREST
The Trustees of the Trust, acting pursuant to the Trust's Declaration, have
previously established and designated the series (each, a "Fund") of Shares of
Beneficial Interest listed below.
1. The Funds are ________________.
2. Each Fund shall be authorized to hold cash, invest in securities,
instruments and other property and use investment techniques as from time to
time described in the Trust's then currently effective registration statement
under the Securities Act of 1933 to the extent pertaining to the offering of
Shares of the Fund. Each Share of each Fund shall be redeemable as provided in
the Declaration. Subject to differences among classes, each Share of each Fund
shall be entitled to vote on matters on which Shares of the Fund shall be
entitled to vote as provided in Article V of the Trust's Declaration, shall
represent a pro rata beneficial interest in the assets allocated or belonging to
the Fund, and shall be entitled to receive its pro rata share of the net assets
of the Fund upon liquidation of the Fund, all as provided in Section 4.5 of the
Declaration. The proceeds of sales of Shares of each Fund, together with any
income and gain thereon, less any diminution or expenses thereof, shall
irrevocably belong to the Fund, unless otherwise required by law.
3. Shareholders of each Fund shall vote separately as a class on any
matter to the extent required by, and any matter shall have been deemed
effectively acted upon with respect to the Fund as provided in, Rule 18f-2, as
from time to time in effect, under the 1940 Act or any successor rule, and the
Declaration.
4. The assets and liabilities of the Trust shall be allocated among each
Fund and any series of the Trust designated in the future as set forth in
Section 4.5 of the Declaration.
5. Subject to the provisions of Section 4.5 and Article VII of the
Declaration, the Trustees (including any successor Trustees) shall have the
right at any time and from time to time to reallocate assets and expenses or to
change the designation of each Fund, or otherwise to change the special and
relative rights of each Fund.
6. Any Fund may be terminated by the Trustees at any time by written
notice to the Shareholders of the Fund.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of the
____ day of __________, ____.
[Trustee signature lines]
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APPENDIX B
----------
FORM OF
ESTABLISHMENT AND
DESIGNATION OF CLASSES
Pursuant to Section 4.6 of the Declaration, the Trustees have divided the
Shares of each series 4.6, listed below.
1. The classes of Shares are designated _______________.
2. Shares of each class are entitled to all the rights and preferences
accorded to Shares under the Declaration.
3. For Shares of each class, the purchase price, the method of
determination of the net asset value, the price, the terms and manner of
redemption, any conversion feature, the relative dividend rights of holders
thereof, and any other rights, privileges, features or qualifications, shall be
as determined from time to time by the Trustees of the Trust in accordance with
the Declaration, as set forth in the current prospectus and statement of
additional information of the Trust or any series thereof relating to the class,
as amended from time to time, contained in the Trust's registration statement
under the Securities Act of 1933, as amended.
4. A class of Shares of any series of the Trust may be terminated by the
Trustees at any time by written notice to the Shareholders of the class.
5. The designation of each class of Shares of the Fund hereby shall not
impair the power of the Trustees from time to time to designate additional
classes of Shares of the Fund.
6. Subject to the applicable provisions of the 1940 Act and the
Declaration, the Trustees may from time to time modify the preferences, voting
powers, rights and privileges of any of the classes designated hereby without
any action or consent of the Shareholders.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of the
____ day of __________, ____.
[Trustee signature lines]
58
TOUCHSTONE TAX-FREE TRUST
PROXY SOLICITED ON BEHALF OF THE TRUSTEES
FOR THE TOUCHSTONE ___________________ FUND (THE "FUND")
The undersigned hereby appoints Maryellen Peretzky and Terrie A.
Wiedenheft, and each of them, attorneys and proxies for the undersigned, with
full power of substitution and revocation to represent the undersigned and to
vote on behalf of the undersigned all shares of Touchstone Tax-Free Trust
______________ Fund (the "Fund") which the undersigned is entitled to vote at
the special meeting of shareholders of the Fund to be held on April 25, 2002 at
10:00 a.m., Eastern Time, at the offices of the Fund, 221 East Fourth Street,
Suite 300, Cincinnati, Ohio and at any adjournments thereof. The undersigned
hereby acknowledges receipt of the Notice of Special Meeting and accompanying
Proxy Statement and hereby instructs said attorneys and proxies to vote said
shares as indicated hereon. In their discretion, the proxies are authorized to
vote upon such other business as may properly come before the meeting. A
majority of the proxies present and acting at the meeting in person or by
substitute (or, if only one shall be so present, then that one) shall have and
may exercise all of the power of authority of said proxies hereunder. The
undersigned hereby revokes any proxy previously given.
NOTE: Please sign exactly as your
name appears on the Proxy. If joint
owners, EITHER may sign this Proxy.
When signing as attorney, executor,
administrator, trustee, guardian or
corporate officer, please give full
title.
Date ______________, 2002
Signature(s), (Title(s), if
applicable) PLEASE SIGN, DATE, AND
RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
I PLAN/DO NOT PLAN TO ATTEND THE SPECIAL MEETING OF SHAREHOLDERS ON APRIL 25,
2002
Please indicate your vote by an "X" in the appropriate box below. This Proxy, if
properly executed, will be voted in the manner directed by the shareholder.
Please refer to the Proxy Statement for a discussion of the Proposals.
59
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT YOU VOTE "FOR" EACH PROPOSAL.
1. To authorize the Board and Touchstone Advisors, Inc. to select and change
investment sub-advisors and to enter into or amend investment sub-advisory
agreements without obtaining the approval of shareholders.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To authorize the Board to adopt an Amended and Restated Declaration of
Trust.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3a. To change the fundamental investment restriction of the Fund with respect
to borrowing money:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
b. To change the fundamental investment restriction of the Fund with respect
to underwriting securities:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
c. To change the fundamental investment restriction of the Fund with respect
to loans:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
d. To change the fundamental investment restriction of the Fund with respect
to real estate:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
e. To eliminate the fundamental investment restriction of the Fund regarding
oil, gas or mineral leases:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
f. To change the fundamental investment restriction of the Fund with respect
to commodities:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
g. To change the fundamental investment restriction of the Fund with respect
to concentration of investments:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
60
h. To change the fundamental investment restriction of the Fund with respect
to issuing senior securities:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
i. To eliminate the fundamental investment restriction of the Fund regarding
amounts invested in one issuer:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
61