COMMONWEALTH INTERNATIONAL SERIES TRUST DEF14A
Preliminary Proxy Statement - Date Filed: 03/17/2006
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the registrant: /x/
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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
COMMONWEALTH INTERNATIONAL SERIES TRUST
---------------------------------------
(Name of Registrant as Specified in its Charter)
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and 0-11.
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computed pursuant to Exchange Act Rule 0-11 (set forth the
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paid previously. Identify the previous filing by the registration statement
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Page 1
COMMONWEALTH INTERNATIONAL SERIES TRUST DEF14A
Preliminary Proxy Statement - Date Filed: 03/17/2006
COMMONWEALTH INTERNATIONAL SERIES TRUST
ON BEHALF OF ITS FUNDS
COMMONWEALTH AUSTRALIA/NEW ZEALAND FUND
COMMONWEALTH JAPAN FUND
COMMONWEALTH GLOBAL FUND
COMMONWEALTH REAL ESTATE SECURITIES FUND
[Date]
To the Shareholders of the Commonwealth International Trust Family of Funds:
The Commonwealth International Series Trust (the "Trust") is holding a
special meeting of its shareholders on Friday, May 19, 2006, at 10:00 a.m. (cst)
at 5847 San Felipe, Suite 850, Houston, Texas 77057. If a quorum is not present
or represented by proxy on that date, the meeting will be adjourned to another
date and time without further notice.
The Trust is a Massachusetts Business Trust, operating as an open end
registered management Investment Company. The Trust has previously authorized
the division of its shares into four (4) separate series (each a "Fund" and
together the "Funds") and currently offers shares of the following Funds to the
public: Commonwealth Australia/New Zealand Fund, Commonwealth Japan Fund,
Commonwealth Global Fund and Commonwealth Real Estate Securities Fund. Each Fund
has only one (1) class of stock.
Enclosed is a proxy statement that has been prepared in anticipation of
the May 19, 2006, special meeting of shareholders of all the Commonwealth Funds.
Shareholders of each Commonwealth Fund are asked to consider two (2) matters.
I(a) - (g) Shareholders of each Fund are asked to approve the revision of
the Fund's fundamental investment restrictions in the Fund's
proxy statement.
II. Shareholders of each Fund are asked to approve such other
business as may properly come before the meeting, or any
adjournments thereof.
This proxy represents an effort to simplify your Fund's investment
restrictions. It is a result of many meetings by your Fund's Board of Trustees
to consider these proposals. Therefore, to enhance governance and the Board's
overseeing of the Funds, which have many operational issues in common, the Board
of Trustees, including all the Independent Trustees, believe that each of these
proposals set forth herein would be in the best interests of each Fund and
recommend that each Fund's shareholders vote FOR them. Please read the enclosed
materials, complete and execute the enclosed "Proxy Card" and return it promptly
in the enclosed envelope that requires no postage if mailed in the United
States.
Shareholders of record as of the close of business on March 17, 2006 are
entitled to vote at the meeting and any related follow-up meetings.
YOU ARE URGED TO VOTE PROMPTLY TO MINIMIZE EXPENSES OF ADDITIONAL SOLICITATIONS.
As always, we thank you for your confidence and support.
Sincerely,
Jack Ewing, Chairman of the Board
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING,
PLEASE COMPLETE AND RETURN THE ENCLOSED "PROXY CARD".
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COMMONWEALTH INTERNATIONAL SERIES TRUST DEF14A
Preliminary Proxy Statement - Date Filed: 03/17/2006
COMMONWEALTH INTERNATIONAL SERIES TRUST
ON BEHALF OF ITS FUNDS
COMMONWEALTH AUSTRALIA/NEW ZEALAND FUND
COMMONWEALTH JAPAN FUND
COMMONWEALTH GLOBAL FUND
COMMONWEALTH REAL ESTATE SECURITIES FUND
5847 San Felipe, Suite 850, Houston, Texas 77057
Toll Free: 1-888-345-1898
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
to be held May 19, 2006
NOTICE IS HEREBY GIVEN that a special meeting of shareholders ("Meeting")
of the Commonwealth International Series Trust ("Trust"), which include
shareholders of its four (4) series ("Funds"), Commonwealth Australia/New
Zealand Fund ("Australia/New Zealand Fund"), Commonwealth Japan Fund ("Japan
Fund"), Commonwealth Global Fund ("Global Fund") and the Commonwealth Real
Estate Securities Fund ("Real Estate Securities Fund"), will be held at 10:00
a.m. (cst) on Friday, May 19, 2006, at 5847 San Felipe, Suite 850, Houston,
Texas 77057 for the following purposes:
I(a) - (g) Shareholders of each Fund are asked to approve the revision of
the Funds' fundamental investment restrictions in the Funds'
proxy statement.
II. Shareholders of each Fund are asked to approve such other
business as may properly come before the meeting, or any
adjournments thereof.
The Board of Trustees has fixed the close of business on March 17, 2006 as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the meeting or at any adjournment(s) thereof.
Shareholders are requested to complete, date and sign the enclosed form of
proxy (whether or not they intend to attend the meeting in person) and to return
the proxy promptly in the enclosed envelope that requires no postage if mailed
in the United States. The enclosed proxy is solicited on behalf of the Board of
Trustees of the Trust who recommends that you vote FOR the proposals.
By Order of the Board of Trustees,
Dave Ganley
Assistant Secretary
Houston, Texas
March 31, 2006
Page 3
COMMONWEALTH INTERNATIONAL SERIES TRUST DEF14A
Preliminary Proxy Statement - Date Filed: 03/17/2006
COMMONWEALTH INTERNATIONAL SERIES TRUST
ON BEHALF OF ITS FUNDS
COMMONWEALTH AUSTRALIA/NEW ZEALAND FUND
COMMONWEALTH JAPAN FUND
COMMONWEALTH GLOBAL FUND
COMMONWEALTH REAL ESTATE SECURITIES FUND
5847 San Felipe, Suite 850, Houston Texas 77057
Toll Free: 1-888-345-1898
PROXY STATEMENT
Dated: March 31, 2006
SPECIAL MEETING OF SHAREHOLDERS
To Be Held: May 19, 2006
This proxy statement contains the information you should know before
voting on the proposals summarized below.
The Fund will furnish without charge a copy of its most recent annual
report and any more recent semi-annual report to any shareholder upon request.
Shareholders who want to obtain a copy of the Funds' reports should direct all
written requests to the attention of the Fund, at the address listed above, or
may call InCap Fund Administration Services at 1-888-345-1898 or visit the
Fund's website at www.commonwealthfunds.com.
WHEN IS THE SPECIAL MEETING?
The Board of Trustees (the "Board") of the Commonwealth International
Series Trust (the "Trust") has voted to call a special meeting of all
shareholders of each of its four (4) separate series listed above (each a "Fund"
and together the "Funds"), in order to seek shareholder approval of the
proposals set forth below relating to the Trust. The meeting will be held at the
Trust's offices, located at 5847 San Felipe, Suite 850, Houston, Texas 77057 at
10:00 a.m., Central Time, on Friday, May 19, 2006, and at any adjournments of
the meeting held on a later date, for the purposes as set forth in the
accompanying notice of special meeting of shareholders. If you expect to attend
the meeting in person, please call the Trust at 1-888-345-1898 to inform them of
your intentions.
WHO IS ELIGIBLE TO VOTE?
Shareholders of record of each Fund as of the close of business on March
17, 2006 (the "Record Date") are entitled to vote on all of the business
relating to each Fund for which they are a shareholder at the special
shareholder meeting and any adjournments thereof. Each share is entitled to one
vote. Shares represented by properly executed proxies, unless revoked before or
at the meeting, will be voted according to the shareholder's instructions. If
you sign a proxy but do not fill in a vote, your shares will be voted in favor
of Proposal No. I. If any other business comes before the shareholder meeting,
your shares will be voted at the discretion of the persons named as proxies if
you vote FOR Proposal II. .
WHAT ITEMS OF TRUST BUSINESS AM I BEING ASKED TO VOTE ON?
The Board is asking you to approve two (2) proposals: (1) the modification
or restatement of the Funds' fundamental investment restriction, as described in
the Funds' proxy statement; and (2) such other business as may properly come
before the meeting or any adjournments thereof.
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COMMONWEALTH INTERNATIONAL SERIES TRUST DEF14A
Preliminary Proxy Statement - Date Filed: 03/17/2006
WHY AM I BEING ASKED TO VOTE ON THE AMENDMENT AND RESTATEMENT OF THE FUNDS'
FUNDAMENTAL RESTRICTIONS?
The Investment Company Act of 1940, as amended, (the "Act") requires an
investment company to adopt certain specified investment restrictions which can
be changed only by a shareholder vote. Those restrictions are often referred to
as "fundamental" investment restrictions. In the past, fundamental investment
restrictions were adopted by the Funds, and in some cases amended by vote of the
shareholders of the affected Fund, in order to reflect regulatory, business or
industry conditions which were in effect at the time the particular action was
taken. The Funds' Advisor, FCA Corp, and the Board have reviewed each Fund's
fundamental investment restrictions with the goal of simplifying and conforming
the fundamental investment restrictions of the Commonwealth Funds to the terms
of the Act as interpreted or modified from time to time, which will simplify the
process of monitoring compliance with fundamental investment restrictions. These
Proposals seek shareholder approval of changes that are intended to further this
goal and to provide each Fund, consistent with its investment objectives and
strategies, with the flexibility to respond to changing markets, new investment
opportunities and future changes in applicable law.
The proposed revision to the fundamental investment restrictions are
discussed in detail below. Upon shareholder approval of these new fundamental
investment restrictions each would become effective as soon as practicable after
your Fund's prospectus and/or statement of additional information has been
supplemented to describe the revised restriction.
The reference below to interpretation or modification by a regulatory
authority having jurisdiction is intended to include no-action letters or
interpretive positions or releases issued by the staff of the Securities and
Exchange Commission or another regulatory agency with jurisdiction over the
Funds.
The Act requires a vote of the shareholders of a fund whenever there is a
change in any fundamental investment restriction of the Fund. Accordingly, the
proposed change in the Funds' fundamental investment restrictions require your
approval under the Act as a shareholder of one or more of the Funds.
HOW WILL THESE CHANGES AFFECT ME AS A FUND SHAREHOLDER?
The Proposals seek to modify or restate existing fundamental restrictions
to conform them to the language of the Act as it may be modified or amended from
time to time.
WHICH PROPOSALS APPLY TO ME?
The table below summarizes each proposal to be presented at the meeting
and shows the Funds whose shareholders may vote for each proposal.
PROPOSAL WHICH SHAREHOLDERS MAY VOTE
I. Approve the modification or restatement of:
(a). The Fund's fundamental investment restriction All shareholders of each Fund
relating to the Fund's borrowing as described
herein.
(b). The Fund's fundamental investment restriction All shareholders of each Fund
relating to the Fund's portfolio diversification as
described herein.
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COMMONWEALTH INTERNATIONAL SERIES TRUST DEF14A
Preliminary Proxy Statement - Date Filed: 03/17/2006
(c). The Fund's fundamental investment restriction All shareholders of each Fund
relating to the Fund's portfolio concentration of
assets as described herein.
(d). The Fund's fundamental investment restriction All shareholders of each Fund
relating to the Fund's underwriting of securities
as described herein.
(e). The Fund's fundamental investment restriction All shareholders of each Fund
relating to the Fund's real estate investments as
described herein.
(f). The Fund's fundamental investment restriction All shareholders of each Fund
relating to the Fund's investments in commodities
as described herein.
(g). The Fund's fundamental investment restriction All shareholders of each Fund
relating to the Fund's lending of portfolio securities
as described herein.
II. Approve such other business as shall be properly pre- All shareholders of each Fund
sented at the meeting or any adjournment thereof.
HOW DO I VOTE?
Voting By Proxy
To vote, complete, sign and date the enclosed proxy card and mail it back
to the Trust in the envelope provided. The Board urges you to fill out and
return your proxy card even if you plan to attend the meeting. Returning your
proxy card will not affect your right to attend the meeting and vote.
The Board has named Dave Ganley and Bonnie Scott, as proxies, and their
names appear on your proxy card(s). By signing your proxy card and returning it,
you are appointing these persons to vote for you at the meeting. If you properly
fill in your proxy card and return it to the Trust in time to vote, one of the
appointed proxies will vote your shares as you have directed. If you sign and
return your proxy card, but do not cast your votes on the proxy card, one of the
appointed proxies will vote your shares on each proposal as recommended by the
Board. Your vote(s) will be applied only to the Fund(s) for which you are a
shareholder and no other Fund. IF YOU OWN SHARES IN MORE THAN ONE FUND, YOU MUST
CAST YOUR VOTE FOR EACH FUND.
If an additional matter is presented for vote at the meeting, one of the
appointed proxies will vote in accordance with his or her best judgment if you
vote FOR Proposal II.. At the time this proxy statement was printed, the Board
was not aware of any other matter that needed to be acted upon at the meeting
other than Proposals I(a)-(g) discussed in this proxy statement.
If you appoint a proxy by signing and returning your proxy card, you can
revoke that appointment at any time BEFORE it is exercised. You can revoke your
proxy by sending in another proxy with a later date, or by notifying the Trust's
Secretary in writing, BEFORE the meeting, that you have revoked your proxy, at
the following address: Bonnie Scott, Inspector of Election, 5847 San Felipe,
Suite 850, Houston Texas 77057
Page 6
COMMONWEALTH INTERNATIONAL SERIES TRUST DEF14A
Preliminary Proxy Statement - Date Filed: 03/17/2006
Voting In Person
If you attend the meeting and wish to vote in person, you will be given a
ballot when you arrive. If you have already voted by proxy and wish to vote in
person instead, you will be given an opportunity to do so during the meeting. If
you attend the meeting, but your shares are held in the name of your broker,
bank or other nominee, you must bring with you a letter from that nominee
stating that you are the beneficial owner of the shares on the Record Date and
authorizing you to vote.
HOW DOES THE BOARD RECOMMEND THAT I VOTE?
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE PROPOSALS
DESCRIBED IN THIS PROXY STATEMENT.
WHAT IS A QUORUM AND WHY IS IT IMPORTANT?
A quorum is the number of outstanding shares of each Fund, as of the
Record Date, which must be present, in person or by proxy, in order for each
Fund to hold a valid shareholder meeting. The Fund cannot hold a valid
shareholder meeting unless there is a quorum of shareholders for each Fund
present in person or by proxy. The Trust's Declaration of Trust requires that
the presence, in person or by proxy, of a majority of the outstanding shares of
each Fund entitled to vote on a matter shall constitute a quorum, unless a
larger number of shares is required pursuant to law. In the absence of a quorum,
the meeting will be adjourned to a later date without further notice. The table
below sets forth the quorum required for each Fund to hold a valid meeting as to
each proposal:
PROPOSAL NUMBER OF SHARES REQUIRED FOR QUORUM
I. Approve the modification or restatement of:
(a). The Fund's fundamental investment A majority of the outstanding shares of each Fund
restriction relating to the Fund's (as of March 17, 2006)
borrowing as described herein.
(b). The Fund's fundamental investment A majority of the outstanding shares of each Fund
restriction relating to the Fund's portfolio (as of March 17, 2006)
diversification as described herein.
(c). The Fund's fundamental investment A majority of the outstanding shares of each Fund
restriction relating to the Fund's portfolio (as of March 17, 2006)
concentration of assets as described herein.
(d). The Fund's fundamental investment A majority of the outstanding shares of each Fund
restriction relating to the Fund's under- (as of March 17, 2006)
writing of securities as described herein.
(e). The Fund's fundamental investment to the A majority of the outstanding shares of each Fund
Fund's real estate investments as described (as of March 17, 2006)
herein.
(f). The Fund's fundamental investment A majority of the outstanding shares of each Fund
restriction relating to the Fund's investments (as of March 17, 2006)
in commodities as described herein.
(g). The Fund's fundamental investment A majority of the outstanding shares of each Fund
restriction relating to the Fund's lending (as of March 17, 2006)
of portfolio securities as described herein.
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COMMONWEALTH INTERNATIONAL SERIES TRUST DEF14A
Preliminary Proxy Statement - Date Filed: 03/17/2006
II. Approve such other business as shall be properly A majority of the outstanding shares of each Fund
presented at the meeting or any adjournment thereof. (as of March 17, 2006)
Under rules applicable to broker-dealers, if your broker holds your shares
in its name, the broker is not allowed to vote your shares on proposals herein
stated unless it has received voting instructions from you. If your broker does
not vote your shares on one or more proposals because it has not received
instructions from you, those shares will be considered broker non-votes.
Broker non-votes and abstentions with respect to a proposal count as
present for purposes of establishing a quorum.
WHAT IS THE VOTE NECESSARY TO APPROVE EACH PROPOSAL?
The following table describes the votes needed to approve each proposal:
PROPOSAL NUMBER OF SHARES REQUIRED TO APPROVE;
I. Approve the modification or restatement of
(a). The Fund's fundamental investment The affirmative vote of a majority of the shares
restriction relating to the Fund's entitled to vote of each Fund are required to
borrowing as described herein. approve this Proposal.
(b). The Fund's fundamental investment The affirmative vote of a majority of the shares
restriction relating the Fund's portfolio entitled to vote of each Fund are required to
diversification as described herein approve this Proposal.
(c). The Fund's fundamental investment The affirmative vote of a majority of the shares
restriction relating to the Fund's portfolio entitled to vote of each Fund are required to
Concentration of Assets as described herein. approve this Proposal.
(d). The Fund's fundamental investment The affirmative vote of a majority of the shares
restriction relating to the Fund's underwriting entitled to vote of each Fund are required to
of securities as described herein. approve this Proposal.
(e). The Fund's fundamental investment The affirmative vote of a majority of the shares
restriction relating to the Fund's real estate entitled to vote of each Fund are required to
nvestments as described herein approve this Proposal.
(f). The Fund's fundamental investment The affirmative vote of a majority of the shares
restriction relating to the Fund's investments entitled to vote of each Fund are required to
in commodities as described herein. approve this Proposal.
(g). The Fund's fundamental investment The affirmative vote of a majority of the shares
restriction relating to the Fund's lending entitled to vote of each Fund are required to
of portfolio securities as described herein. approve this Proposal.
II. Approve such other business as shall be The affirmative vote of a majority of the shares
properly presented at the meeting or any entitled to vote of each Fund are required to
adjournment thereof. approve this Proposal.
Page 8
COMMONWEALTH INTERNATIONAL SERIES TRUST DEF14A
Preliminary Proxy Statement - Date Filed: 03/17/2006
The Act defines a "majority" of the outstanding voting securities of each
Fund as the lesser of (a) the vote of holders of at least 67% of the voting
securities of each Fund present in person or by proxy, if more than 50% of such
shares are present in person or by proxy; or (b) the vote of holders of more
than 50% of the outstanding voting securities of the Fund.
Broker non-votes will not count as votes cast and will have the effect of
votes against each proposal herein set forth.
CAN THE MEETING BE ADJOURNED?
The appointed proxies may propose to adjourn the meeting, either in order
to solicit additional proxies or for other purposes. If there is a proposal to
adjourn the meeting, the affirmative vote of a majority of the outstanding
shares present at the meeting, in person or by proxy, is required to approve
such proposal.
WHO IS PAYING THE COST OF THE SHAREHOLDER MEETING AND THIS PROXY SOLICITATION?
Each Fund will pay its own allocable share of the cost of preparing,
printing and mailing the enclosed Proxy Card and Proxy Statement and all other
costs incurred in connection with the solicitation of proxies, including any
additional solicitation made by letter, telephone or telegraph (all such costs
are referred to as the "Proxy Costs"). The amount borne by each Fund amounts to
approximately the percentage of the net asset value of each Fund in relationship
to the entire value of the Trust as of March 17, 2006.
WHO DO I CALL IF I HAVE QUESTIONS?
PLEASE CALL THE TRUST AT 1-888-345-1898 WITH ANY QUESTIONS YOU MAY HAVE
RELATING TO THIS PROXY STATEMENT. ALSO, AT YOUR REQUEST, THE FUND WILL FURNISH,
WITHOUT CHARGE, A COPY OF THE MOST RECENT ANNUAL REPORT AND/OR SEMI-ANNUAL
REPORT , BY FIRST CLASS MAIL, OR OTHER MEANS DESIGNED TO ASSURE PROMPT DELIVERY,
WITHIN THREE BUSINESS DAYS OF YOUR REQUEST. [GRAPHIC OMITTED][GRAPHIC OMITTED]
WHICH SHAREHOLDERS MAY VOTE FOR THESE PROPOSALS?
All shareholders of record as of March 17, 2006 of each Fund may vote
their shares of that particular Fund for these proposals.
WHAT IS HAPPENING?
The Act requires mutual funds to adopt "fundamental investment
restrictions" covering certain types of investment practices. The Board of
Trustees has determined that it is in the best interest of the Funds that these
restrictions be described in conformity with the terms of the Act as interpreted
or modified from time to time.
In Proposal I(a) the Advisor to the Funds and the Board of Trustees
recommend that each Fund's fundamental investment restriction relating to the
permitted borrowing limits be conformed to the Act as interpreted or modified
from time to time. The Funds' current borrowing restriction is more restrictive
than the Act and unnecessarily complicates management of the Funds. As disclosed
in the SAI and the Prospectus, each dated February 27, 2006, as amended, the
Trust has received from the SEC a formal notice of investigation relating to
certain activities of the Funds including alleged use of the Funds' line of
credit in violation of current restrictions. Specifically, each Fund's current
restriction is limited to borrowing as a temporary measure for extraordinary or
emergency purposes with a further limit to the lesser of 1/3 of the value of its
net assets taken at market value, at the time of borrowing, including the amount
borrowed or 10% of its total assets, valued at cost, excluding the amount
borrowed. Proposal I(a) is asking the shareholders of each Fund to amend the
Fund's borrowing limit by increasing it to 33 1/3 of its total assets valued at
the time of the borrowing. It is proposed that the ten percent (10%) of total
assets valued at cost, excluding the amount borrowed limit, be deleted.
Moreover, the requirement that borrowings be a temporary measure for
extraordinary or emergency purposes is proposed to be deleted. The revised
borrowing limit permits the Fund to borrow to the full extent permitted by the
Act.
Page 9
COMMONWEALTH INTERNATIONAL SERIES TRUST DEF14A
Preliminary Proxy Statement - Date Filed: 03/17/2006
In Proposals I(b)-(g) the Advisor and the Funds' Board of Trustees seek
shareholder approval to modify or restate the remaining fundamental investment
restrictions to conform each to the language of the Act. These proposals are
intended to simplify compliance with the Act as interpreted or modified from
time to time.
The Advisor expects the shareholders of the Funds will benefit from the
proposed modifications or restatements. The Funds would have borrowing authority
to the full extent authorized by the Act comparable to other similar mutual
funds enabling the Advisor to maximize the portfolio holdings. The proposed
modifications or restatements of the Funds' remaining investment restrictions
are also designed to produce a clearer and more concise set of restrictions
tailored to conform to the language of the Act as interpreted or modified from
time to time.
It is also anticipated that these modified or restated restrictions will
simplify compliance by the Advisor and the Funds as interpreted or modified from
time to time by the Act. Due to these factors, the Board of Trustees is
recommending that each Fund's shareholders approve the proposals.
Each current investment restriction, the corresponding proposed
restriction or amendment, and the Funds' rationale for the change are set forth
below.
The Board of Trustees believes that it is in the best interest of the
Funds that such fundamental restrictions apply to all the Funds under the Trust
and seeks approval thereof by all Funds. These proposed amendments are intended
to provide the Advisor with greater flexibility in managing the Funds'
portfolio. Should shareholders of each Fund approve the proposals, the Funds
will continue to be managed subject to the limitations imposed by the Act and
the rules and interpretive guidance provided thereunder, as well as the
investment objective, strategies, and policies expressed in the Funds'
prospectus and statement of additional information, as amended from time to
time.
Should a particular Fund's shareholders not approve a proposal to modify
or clarify, a particular fundamental investment restriction, the Fund's current
fundamental investment restriction, as set forth in the table, would continue to
apply unchanged.
PROPOSAL I
Proposal I(a) - Borrowing Money / Issuing Senior Securities.
Funds to which this Proposal applies: Each Fund
Each Fund's current restriction reads as follows:
"The Fund may not borrow money, except that as a temporary measure
for extraordinary or emergency purposes it may borrow from banks in
an amount not to exceed the lesser of 1/3 of the value of its net
assets taken at market value, at the time of the borrowing,
including the amount borrowed, or 10% of its total assets, valued at
cost, excluding the amount borrowed."
"The Fund may not issue any senior securities, except as appropriate
to evidence indebtedness which it is permitted to incur, and
provided that collateral arrangements with respect to forward
contracts, futures contracts or options, including deposits of
initial and variation margin, are not considered to be the issuance
of a senior security for purposes of this restriction."
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COMMONWEALTH INTERNATIONAL SERIES TRUST DEF14A
Preliminary Proxy Statement - Date Filed: 03/17/2006
If shareholders of a Fund approve Proposal I(a), the Fund's current
fundamental investment restrictions on borrowing and issuing senior securities
would be modified to read as follows:
"The Fund may not issue senior securities or borrow money except, as
permitted under the Act and as interpreted or modified from time to
time."
Discussion of Proposed Modifications. Each Fund is permitted, consistent
with the Act, to borrow, and pledge its shares to secure such borrowing,
provided, that immediately thereafter there is asset coverage of at least 300%
for all borrowings by the Fund from a bank. The Act also permits a Fund to
borrow for temporary purposes only in an amount not exceeding 5% of the value of
its total assets at the time when the loan is made. A loan shall be presumed to
be for temporary purposes if it is repaid within 60 days and is not extended or
renewed. The SEC has indicated, however, that certain types of transactions,
which could be deemed "borrowings" (such as firm commitment agreements and
reverse repurchase agreements), are permissible if a Fund "covers" the
agreements by establishing and maintaining segregated accounts.
With respect to senior securities, the Act and regulatory interpretations
of relevant provisions of the Act establish the following general limits:
Open-end registered investment companies such as the Funds are not permitted to
issue any class of senior security or to sell any senior security of which they
are the issuers. The Trust is, however, permitted to issue separate series of
shares (each Fund is a series of the Trust) and to divide those series into
separate classes. Individual class and institutional class are separate classes.
The Funds have no intention of issuing senior securities, except that the Trust
has issued its shares in separate series and may divide those series into
classes of shares. Collateral arrangements with respect to forward contracts,
futures contracts or options, including deposits of initial and variation
margin, are not considered to be the issuance of a senior security for purposes
of this restriction.
Proposal I(b) - Portfolio Diversification.
Funds to which this Proposal applies: Each Fund
Each Fund's current restriction reads as follows:
"The Fund may not with respect to 75% of its total assets, taken at
market value at the time of investment, purchase more than 10% of
the voting securities of any one issuer or invest more than 5% of
the value of such assets in the securities or instruments of any one
issuer, except securities or instruments issued or guaranteed by the
U.S. Government or its agencies or instrumentalities."
If shareholders of a Fund approve Proposal I(b), the Fund's current
fundamental investment restriction relating to portfolio diversification would
be modified to read as follows:
"The Fund may not make any investment that is inconsistent with its
classification as a "diversified" investment company under the Act
as interpreted or modified from time to time."
Discussion of Proposed Modifications. Each Fund is a "diversified" fund
under the Act and, accordingly, must have fundamental restrictions or policies
establishing the percentage limitations with respect to investments in
individual issuers that it will follow in order to qualify as "diversified." The
proposed restriction would modify the Funds' fundamental investment restrictions
regarding the Fund's classification as a "diversified" fund under the Act to
rely on the definition of the term "diversified" in the Act and as interpreted
or modified from time to time rather than stating the relevant limitations
expressed under current law. Currently, to remain classified as a "diversified"
investment company under the Act, each Fund must conform with the following:
With respect to 75% of its total assets, a fund may not invest more than 5% of
the fund's total assets, determined at market or other fair value at the time of
purchase, in the securities of any one issuer, or invest in more than 10% of the
outstanding voting securities of any one issuer, determined at the time of
purchase. These limitations do not apply to (1) a Fund's assets represented by
cash or cash equivalents, (2) investments in securities issued or guaranteed by
the United States (U.S.) government or its agencies or instrumentalities, and
(3) shares of other investment companies.
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COMMONWEALTH INTERNATIONAL SERIES TRUST DEF14A
Preliminary Proxy Statement - Date Filed: 03/17/2006
Proposal I(c) - Concentration of Assets.
Funds to which this Proposal applies: Each Fund
Each Fund's current restriction reads as follows:
"The Fund may not purchase securities or instruments which would
cause 25% or more of the market value of the Fund's total assets at
the time of such purchase to be invested in securities or
instruments of one or more issuers having their principal business
activities in the same industry or in securities or instruments
issued or guaranteed by a single government or its agencies or
instrumentalities, or with respect to repurchase agreements secured
by such securities or instruments, provided that there is no limit
with respect to investments in the U.S. Government, its agencies and
instrumentalities."
If shareholders of a Fund approve Proposal I(c), the Fund's current
fundamental investment restriction relating to the concentration of assets would
be modified to read as follows:
"The Fund may not concentrate its investments in a particular
industry, as that term is used in the Act, as interpreted or
modified from time to time."
Discussion of Proposed Modifications. Each Fund may not invest more than
25% of its total assets, taken at market value, in the securities of issuers
primarily engaged in any particular industry (other than securities issued or
guaranteed by the US). This restriction shall not prevent the Fund from
purchasing the securities of an issuer pursuant to the exercise of rights
distributed to the Fund by the issuer, except that no such purchase may be made
if, as a result, the Fund would no longer be a diversified investment company as
defined in the Act and as interpreted or modified from time to time.
Proposal I(d) - Underwriting of Securities.
Funds to which this Proposal applies: Each Fund
Each Fund's current restriction reads as follows:
"The Fund may not underwrite securities issued by other persons
except to the extent that in connection with the purchase of
portfolio securities and their later disposition it may be deemed to
be an underwriter under the Federal securities laws."
If shareholders of a Fund approve Proposal I(d), the Fund's current
fundamental investment restriction relating to the underwriting of securities
would be modified to read as follows:
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COMMONWEALTH INTERNATIONAL SERIES TRUST DEF14A
Preliminary Proxy Statement - Date Filed: 03/17/2006
"The Fund may not engage in the business of underwriting securities
issued by others, except to the extent that a Fund may be deemed to
be an underwriter in connection with the disposition of portfolio
securities and as permitted under the Act as interpreted or modified
from time to time."
Discussion of Proposed Modifications. The proposed new restriction would
restate the current restriction without making any material changes except to
incorporate interpretations or modifications of the Act from time to time.
Proposal I(e) - Real Estate Investments.
Funds to which this Proposal applies: Each Fund
Each Fund's current restriction reads as follows:
"The Fund may not purchase or sell real estate including limited
partnership interests, except the Fund may invest in securities of
companies which deal in real estate and securities secured by real
estate or interests therein and the Fund reserves the freedom of
action to hold and sell real estate acquired as a result of the
Fund's ownership of securities."
If shareholders of a Fund approve Proposal I(e), the Fund's current
fundamental investment restriction relating to investments in real estate would
be modified to read as follows:
"The Fund may not purchase or sell real estate including limited
partnership interests (except the at the Fund may invest in
securities of companies which deal in real estate and securities
secured by real estate or interests therein and the Fund reserves
the right to hold and sell real estate acquired as a result of the
Fund's ownership of securities and except as otherwise permitted by
the Act as modified or interpreted from time to time)."
Discussion of Proposed Modifications. The proposed new restriction would
restate the current restriction without any material changes except to
incorporate interpretations or modifications of the Act from time to time. The
Act requires every mutual fund to set forth a fundamental investment restriction
indicating the extent to which the fund may engage in the purchase and sale of
real estate. Most funds' current fundamental investment restrictions generally
prohibit the purchasing or selling of real estate, but except securities secured
by real estate or interests therein. Most of the funds also explicitly prohibit
the holding or selling of real estate except for real estate acquired as a
result of the fund's ownership of securities.
The proposed restriction would preserve the ability to invest in all real
estate-related securities and companies whose business consists in whole or in
part of investing in real estate. As a result of exercising its rights attached
to real estate-related securities, a Fund could eventually own an interest in
real property. If this occurs, the Fund would consider the appropriate action to
take with respect to the property, including disposing of the property,
consistent with the Fund's best interests.
Proposal I(f) - Commodities.
Funds to which this Proposal applies: Each Fund
Each Fund's current restriction reads as follows:
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COMMONWEALTH INTERNATIONAL SERIES TRUST DEF14A
Preliminary Proxy Statement - Date Filed: 03/17/2006
"The Fund may not, purchase or sell commodities or commodity
contracts [for purposes of this restriction, interest-rate, index
and currency futures contracts, options on such contracts and on
stock indices and currencies, and forward foreign currency exchange
contracts are not deemed to be commodities or commodity contracts.]"
If shareholders of a Fund approve Proposal I(f), the Fund's current
fundamental investment restriction relating to investing in commodities would be
modified to read as follows:
"The Fund may not purchase or sell commodities, except as permitted
by the Act, as interpreted or modified from time to time."
Discussion of Proposed Modifications. Under the proposed policy, each Fund
would be permitted to purchase or sell commodities as permitted by the Act, as
amended, and as interpreted or modified by regulatory authority having
jurisdiction. For purposes of this restriction, interest-rate, index and
currency futures contracts options on such contracts and on stock indices and
currencies, and forward foreign currency exchange contracts are not currently
deemed to be commodities or commodity contracts.
Proposal I(g) - Lending.
Funds to which this Proposal applies: Each Fund
Each Fund's current restriction reads as follows:
"The Fund may not make loans to other persons except (a) through the
lending of securities held by it and (b) by the purchase of debt
securities in accordance with its policies."
If shareholders of a Fund approve Proposal I(g), the Fund's current
fundamental investment restriction relating to the lending of portfolio
securities would be modified to read as follows:
"The Fund may not make loans to other persons, except (i) loans of
portfolio securities; (ii) to the extent that entry into repurchase
agreements and the purchase of debt investment instruments or
interests in indebtedness in accordance with a Fund's investment
objective and policies may be deemed to be loans; and, (iii) as
otherwise permitted by the Act as interpreted and modified from time
to time."
Discussion of Proposed Modifications. To generate income and offset
expenses, a Fund may lend portfolio securities to broker-dealers and other
financial institutions in an amount up to 33 1/3% of its total assets, taken at
market value. While securities are on loan, the borrower will pay the Fund any
income accruing on the security. The Fund may invest any collateral it receives
in additional portfolio securities, such as U.S. Treasury notes, certificates of
deposit, other high-grade, short-term obligations or interest bearing cash
equivalents. Increases or decreases in the market value of a security lent will
affect the Fund and its shareholders.
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COMMONWEALTH INTERNATIONAL SERIES TRUST DEF14A
Preliminary Proxy Statement - Date Filed: 03/17/2006
"PROXY CARD"
ABOUT THE BALLOT
Shown below is the ballot that you will use to vote on the matters described
above and hereafter in these proxy materials.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES
COMMONWEALTH INTERNATIONAL SERIES TRUST
ON BEHALF OF ITS FUNDS
COMMONWEALTH AUSTRALIA/NEW ZEALAND FUND
COMMONWEALTH JAPAN FUND
COMMONWEALTH GLOBAL FUND
COMMONWEALTH REAL ESTATE SECURITIES FUND
SPECIAL MEETING OF SHAREHOLDERS
May 19, 2006 - 10:00 A.M. CENTRAL TIME
The undersigned hereby revokes all previous proxies for his or her shares
and appoints David Ganley and Bonnie Scott and each of them, with full power of
substitution, as proxies, and hereby authorizes them to vote as designated
below, as effectively as the undersigned could do if personally present, all the
shares of Commonwealth International Series Trust ("Trust") held of record by
the undersigned on March 17, 2006, at the Special Meeting of Shareholders, or
any adjournment thereof, to be held at 10:00 a.m. Central Time on May 19, 2006
at 5847 San Felipe, Suite 850, Houston, Texas 77057.
I AM A SHAREHOLDER OF THE FOLLOWING FUND AND VOTE MY SHARES OF THAT FUND AS
MARKED BELOW: (Check all Funds that apply)
/_/ Commonwealth Australia/ New Zealand Fund - Number of Shares voted:
/_/ Commonwealth Japan Fund - Number of Shares voted:
/_/ Commonwealth Global Fund - Number of Shares voted:
/_/ Commonwealth Real Estate Securities Fund - Number of Shares voted:
SHAREHOLDERS OF ALL COMMONWEALTH FUNDS VOTE ON PROPOSALS I(a)-(g):
CHOOSE ONE OF THE FOLLOWING:
1. Approval of ALL the Fundamental Restrictions as set FOR /_/
forth under Proposals I(a) -(g) (Shareholders of
each Fund vote on this item.)
OR
2. As to the modification or restatement of each Fundamental Restriction as
follows:
(a). The Fund's fundamental investment restriction relating to borrowing as
described in the Funds' proxy statement. (Shareholders of each Fund vote
on this item.)
/_/ FOR /_/ AGAINST /_/ ABSTAIN
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COMMONWEALTH INTERNATIONAL SERIES TRUST DEF14A
Preliminary Proxy Statement - Date Filed: 03/17/2006
(b). The Fund's fundamental investment restriction relating to the Fund's
Portfolio Diversification as described in the Funds' proxy statement.
(Shareholders of each Fund vote on this item.)
/_/ FOR /_/ AGAINST /_/ ABSTAIN
(c). The Fund's fundamental investment restriction relating to Fund's
concentration of assets as described in the Funds' proxy statement.
(Shareholders of each Fund vote on this item.)
/_/ FOR /_/ AGAINST /_/ ABSTAIN
(d). The Fund's fundamental investment restriction relating to the Fund's
underwriting of securities as described in the Funds' proxy statement.
(Shareholders of each Fund vote on this item.)
/_/ FOR /_/ AGAINST /_/ ABSTAIN
(e). The Fund's fundamental investment restriction relating to he Fund's real
estate investments as described in the Funds' proxy statement.
(Shareholders of each Fund vote on this item.)
/_/ FOR /_/ AGAINST /_/ ABSTAIN
(f). The Fund's fundamental investment restriction relating to the Fund's
investments in commodities as described in the Funds' proxy statement.
(Shareholders of each Fund vote on this item.)
/_/ FOR /_/ AGAINST /_/ ABSTAIN
(g). The Fund's fundamental investment restriction relating to the Fund's
lending as described in the Funds' proxy statement. (Shareholders of each
Fund vote on this item.)
/_/ FOR /_/ AGAINST /_/ ABSTAIN
II. Approve such other business as shall be properly presented at the meeting
or any adjournment thereof.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY IMMEDIATELY
IN THE POSTAGE-PAID ENVELOPE PROVIDED.
This Proxy is solicited on behalf of the Board of Trustees, and when
properly executed, will be voted as specified. If no specification is made, the
undersigned's vote will be cast FOR the revision of the Fund's fundamental
investment restriction relating to the Fund's as described in the Funds proxy
statement attached and noted thereunder as Proposals I(a)-(g) (all shareholders
of the Fund only). The undersigned acknowledges receipt of the Notice of Meeting
and Proxy Statement dated March 31, 2006.
Please sign exactly as your name or names appear below. When shares are
held by joint tenants, both should sign. If signing as Attorney, Executor,
Trustee or in any other representative capacity, or as a corporate officer,
please give full title. Please date the proxy.
Page 16
COMMONWEALTH INTERNATIONAL SERIES TRUST DEF14A
Preliminary Proxy Statement - Date Filed: 03/17/2006
Signature: __________________________________
Dated: __________, 2006
/_/ Check here if you plan to attend the Meeting. _______ persons will attend.
Page 17