AGREEMENT AND PLAN OF REORGANIZATION (▇▇ ▇▇)
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement")
is made as of the 1st day of December, 2006, by and among
Principal Investors Fund, Inc. ("PIF"), a Maryland corporation,
on behalf of its separate series listed below (the "Acquiring
Funds") and WM Trust II ("▇▇ ▇▇"), a Massachusetts business
trust, on behalf of its separate series listed below (the
"Acquired Funds"), and for purposes of Section 7 of this
Agreement only, by Principal Management Corporation ("PMC"), an
Iowa corporation, and New American Capital, Inc. ("NAC"), a
Delaware corporation.
Acquired Funds Corresponding PIF Acquiring Funds
California Insured -- California Insured Intermediate
Intermediate Municipal Fund Municipal Fund*
California Municipal Fund -- California Municipal Fund*
Growth Fund -- LargeCap Growth Fund
International Growth Fund -- Diversified International Fund
Short Term Income Fund -- Short Term Income Fund*
Small Cap Growth Fund -- SmallCap Growth Fund
This Agreement shall be deemed to be a separate agreement
between ▇▇ ▇▇, on behalf of each Acquired Fund, and PIF, on
behalf of the corresponding Acquiring Fund. As used herein,
unless the context otherwise requires, each Acquired Fund and
its corresponding Acquiring Fund are, respectively, the
"Acquired Fund" and the "Acquiring Fund." Certain Acquiring
Funds are new series of PIF that are being organized in
connection with the transactions contemplated by this
Agreement. These Acquiring Funds are indicated above by an
asterisk. They will not commence operations until the Closing.
The provisions of this Agreement that apply to such an Acquiring
Fund are to be read with that understanding. The remaining
Acquiring Funds are referred to herein as the "Existing
Acquiring Funds."
This Agreement is intended to be and is adopted as a plan
of reorganization and liquidation within the meaning of Section
368(a) of the United States Internal Revenue Code of 1986, as
amended (the "Code"), and the Treasury Regulations promulgated
thereunder. The reorganization with respect to each Acquired
Fund and its corresponding Acquiring Fund will consist of: (i)
the transfer of all of the assets of the Acquired Fund to the
Acquiring Fund and the assumption by the Acquiring Fund of the
Stated Liabilities of the Acquired Fund (as defined in Section
1.3) in exchange solely for Class A, Class B, Class C and Class
I voting shares of capital stock of the Acquiring Fund (the
"Acquiring Fund Shares"); (ii) the distribution of the Acquiring
Fund Shares to the shareholders of the Acquired Fund according
to their respective interests; and (iii) the termination,
dissolution and complete liquidation of the Acquired Fund as
soon as practicable thereafter, all upon the terms and
conditions hereinafter set forth (the "Reorganization").
WHEREAS, each of the Acquired Fund and the corresponding
Acquiring Fund is a separate series of an open-end, management
investment company registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), and the Acquired Fund owns
securities and other investments which generally are assets of
the character in which the Acquiring Fund is permitted to
invest;
WHEREAS, the Board of Directors of PIF has determined that
the Reorganization is in the best interests of the Acquiring
Fund; and
WHEREAS, the Board of Trustees of ▇▇ ▇▇ has determined that
the Reorganization is in the best interests of the Acquired
Fund;
NOW, THEREFORE, in consideration of the premises and of the
covenants and agreements hereinafter set forth, the parties
agree as follows:
1. TRANSFER OF ACQUIRED FUND ASSETS IN EXCHANGE FOR ACQUIRING
FUND SHARES AND ASSUMPTION OF STATED LIABILITIES AND LIQUIDATION
OF ACQUIRED FUND
1.1. The Exchange. Subject to the terms and conditions
herein set forth and on the basis of the representations and
warranties contained herein:
(a) The Acquired Fund will transfer and deliver to the
Acquiring Fund, and the Acquiring Fund will acquire, all the
assets of the Acquired Fund as set forth in Section 1.2;
(b) The Acquiring fund will assume the Stated Liabilities
of the Acquired Fund as set forth in Section 1.3; and
(c) the Acquiring Fund will issue and deliver to the
Acquired Fund, the number of full and fractional shares of each
corresponding class of Acquiring Fund Shares determined by
dividing the aggregate value of the Acquired Fund's assets, net
of certain stated liabilities of the Acquired Fund, attributable
to each class of Acquired Fund Shares (as set forth below),
computed in the manner and as of the time and date set forth in
Section 2.1, by the net asset value of one Acquiring Fund Share
of the corresponding class (as set forth below), computed in the
manner and as of the time and date set forth in Section 2.2.
Such transactions shall take place at the closing provided
for in Section 3.1 (the "Closing").
The classes of shares of the Acquiring Fund correspond to
the classes of shares of the Acquired Fund (the "Acquired Fund
Shares") as follows: Class A shares of the Acquiring Fund
correspond to Class A shares of the Acquired Fund; Class B
shares of the Acquiring Fund correspond to Class B shares of the
Acquired Fund; Class C shares of the Acquiring Fund correspond
to Class C shares of the Acquired Fund; and Institutional Class
("Class I") shares of the Acquiring Fund correspond to Class I
shares of the Acquired Fund.
1.2. Assets to Be Acquired. The assets of the Acquired
Fund to be acquired by the Acquiring Fund shall consist of all
property owned by the Acquired Fund, including, without
limitation, all cash, securities, commodities, interests in
futures and other financial instruments, claims, (whether
absolute or contingent, known or unknown), receivables
(including dividends, interest, principal, subscriptions and
other receivables), goodwill and other intangible property, all
books and records belonging to the Acquired Fund, any deferred
or prepaid expenses shown as an asset on the books of the
Acquired Fund on the closing date provided for in Section 3.1
(the "Closing Date"), and all interests, rights, privileges and
powers, other than cash in an amount necessary to pay dividends
and distributions as provided in Section 6.2 (c) and other than
the Acquired Fund's rights under this Agreement (collectively,
"Assets").
The Acquired Fund will, at least 7 days prior to the
Closing Date, furnish the Acquiring Fund with (a) a list of the
Acquired Fund's portfolio securities and other investments and
(b) a list of the Acquired Fund's "historic business assets,"
which are defined for this purpose as (i) those assets that were
acquired by the Acquired Fund prior to the date of the approval
of the Reorganization by the Board of Trustees of ▇▇ ▇▇, and
(ii) those assets that were acquired subsequent to such Board
approval but in accordance with the Acquired Fund's investment
objectives and not with a view to, or in anticipation or as part
of, the Reorganization. The Acquiring Fund will, at least 3
days prior to the Closing Date, furnish the Acquired Fund with a
list of the securities and other instruments, if any, on the
Acquired Fund's list referred to above that do not conform to
the Acquiring Fund's investment objectives, policies and
restrictions. If requested by the Acquiring Fund, the Acquired
Fund will dispose of securities and other instruments on the
Acquiring Fund's list before the Closing Date. In addition, if
it is determined that the portfolios of the Acquired Fund and
the Acquiring Fund, when aggregated, would contain investments
exceeding certain percentage limitations imposed upon the
Acquiring Fund with respect to such investments, the Acquired
Fund, if requested by the Acquiring Fund, will dispose of a
sufficient amount of such investments as may be necessary to
avoid violating such limitations as of the Closing Date. After
the Acquired Fund furnishes the Acquiring Fund with the list
described above, the Acquired Fund will not, without the prior
approval of the Acquiring Fund, acquire any additional
securities other than securities which the Acquiring Fund is
permitted to purchase, pursuant to its investment objectives,
policies and restrictions or otherwise (taking into
consideration its own portfolio composition as of such date).
Notwithstanding the foregoing, (a) nothing herein will require
the Acquired Fund to dispose of any portfolio securities or
other investments, if, in the reasonable judgment of the
Acquired Fund's trustees or investment adviser, such disposition
would adversely affect the tax-free nature of the Reorganization
for federal income tax purposes or would otherwise not be in the
best interests of the Acquired Fund and (b) nothing will permit
the Acquired Fund to dispose of any portfolio securities or
other investments if, in the reasonable judgment of the
Acquiring Fund's directors or investment adviser, such
disposition would adversely affect the tax-free nature of the
Reorganization for federal income tax purposes or would
otherwise not be in the best interests of the Acquired Fund.
1.3. Liabilities to Be Assumed. The Acquired Fund will
endeavor to identify and discharge, to the extent practicable,
all of its liabilities and obligations, including all
liabilities relating to operations, prior to the Closing Date.
The Acquiring Fund shall assume only those accrued and unpaid
liabilities of the Acquired Fund set forth in the Acquired
Fund's statement of assets and liabilities as of the Closing
Date delivered by the Acquired Fund to the Acquiring Fund
pursuant to Section 3.2 (the "Stated Liabilities"). The
Acquiring Fund shall assume only the Stated Liabilities and
shall not assume any other debts, liabilities or obligations of
the Acquired Fund. Notwithstanding the foregoing, the Acquiring
Fund agrees that all rights to indemnification and all
limitations of liability existing in favor of the Acquired
Fund's current and former Trustees and officers, acting in their
capacities as such, under the Acquired Fund's Declaration of
Trust and Bylaws as in effect as of the date of this Agreement
shall survive the Reorganization as obligations of the Acquiring
Fund and shall continue in full force and effect, without any
amendment thereto, and shall constitute rights which may be
asserted against the Acquired Fund, its successors or assigns.
1.4. Liquidation and Distribution. Immediately after the
transfer of Assets provided for in Section 1.1, the Acquired
Fund will distribute in complete liquidation of the Acquired
Fund to the shareholders of record of each class of Acquired
Fund Shares, determined as of the close of regular trading on
the New York Stock Exchange ("NYSE") on the Closing Date (the
"Acquired Fund Shareholders"), on a pro rata basis, all the
Acquiring Fund Shares of the corresponding class received by the
Acquired Fund pursuant to Section 1.1. Such distribution and
liquidation will be accomplished by the transfer of the
Acquiring Fund Shares then credited to the account of the
Acquired Fund on the books of the Acquiring Fund to open
accounts on the share records of the Acquiring Fund in the names
of the Acquired Fund Shareholders, and representing the
respective pro rata number of each class of Acquiring Fund
Shares due Acquired Fund Shareholders holding the corresponding
class of Acquired Fund Shares. All issued and outstanding
shares of the Acquired Fund will simultaneously be redeemed and
cancelled on the books of the Acquired Fund and will be null and
void. The Acquiring Fund shall not issue certificates
representing Acquiring Fund Shares in connection with such
exchange.
1.5. Ownership of Shares. Ownership of Acquiring Fund
Shares will be shown on the books of the Acquiring Fund's
transfer agent.
1.6 Surrender of Certificates. With respect to
Acquiring Fund Shares distributable pursuant to Section 1.4 to
an Acquired Fund Shareholder holding a certificate or
certificates for Acquired Fund Shares, if any, on the Closing
Date, the Acquiring Fund will not permit such shareholder to
receive Acquiring Fund Share certificates therefor, exchange
such Acquiring Fund Shares for shares of other investment
companies, effect an account transfer of such Acquiring Fund
Shares, or pledge or redeem such Acquiring Fund Shares until the
Acquiring Fund has been notified by the Acquired Fund or its
agent that such Acquired Fund Shareholder has surrendered all
his or her outstanding certificates for Acquired Fund Shares or,
in the event of lost certificates, posted adequate bond.
1.7. Transfer Taxes. Any transfer taxes payable upon the
issuance of Acquiring Fund Shares in a name other than the
registered holder of the Acquired Fund Shares on the books of
the Acquired Fund as of that time shall, as a condition of such
transfer, be paid by the person to whom such Acquiring Fund
Shares are to be issued and transferred.
1.8. Reporting Responsibility. Any reporting
responsibility of or with respect to an Acquired Fund,
including, but not limited to, the responsibility for filing of
regulatory reports, tax returns, or other documents with the
Securities and Exchange Commission (the "SEC"), any state
securities commission, and any federal, state or local tax
authorities or any other relevant regulatory authority, is and
shall remain the responsibility of the Acquired Fund.
1.9 Termination and Dissolution. As soon as practicable
after the Closing Date, ▇▇ ▇▇ shall make all filings and take
all other necessary steps to effect the complete dissolution of
the Acquired Fund, and after the dissolution of all the Acquired
Funds, to effect its complete dissolution and to terminate its
registration under the 1940 Act.
1.10 Books and Records. Immediately after the Closing
Date, the share transfer books relating to the Acquired Fund
shall be closed, and no transfer of shares shall thereafter be
made on such books. All books and records of ▇▇ ▇▇ relating to
the Acquired Fund, including without limitation all books and
records required to be maintained under the 1940 Act and the
rules and regulations thereunder, shall be available to PIF from
and after the Closing Date and shall be turned over to PIF as
soon as practicable after the Closing Date. After delivery of
such books and records to PIF, PIF shall be responsible for the
maintenance of such books and records in accordance with the
1940 Act and the rules and regulations thereunder.
1.11 Action by PIF and ▇▇ ▇▇. PIF shall take on behalf of
the Acquiring Fund all actions expressed herein as being the
obligations of the Acquiring Fund. ▇▇ ▇▇ shall take on behalf
of the Acquired Fund all actions expressed herein as being the
obligations of the Acquired Fund.
2. VALUATION
2.1. Valuation of Assets. The value of the Assets to be
transferred to the Acquiring Fund shall be computed as of the
close of regular trading on the NYSE, and after the declaration
of any dividends pursuant to Section 6.2 (c), on the Closing
Date, using the valuation procedures set forth in the Articles
of Incorporation and Bylaws of the Acquiring Fund and the then
current prospectus or prospectuses or statement or statements of
additional information of the Acquiring Fund (collectively, as
amended or supplemented from time to time, the "Acquiring Fund
Prospectus"), and shall be certified by the Acquired Fund.
2.2. Valuation of Shares. The net asset value of a share
of each class of Acquiring Fund Shares shall be the net asset
value per share computed with respect to that class as of the
close of regular trading on the NYSE on the Closing Date, using
the valuation procedures set forth in the Articles of
Incorporation and the Bylaws of the Acquiring Fund and the
Acquiring Fund Prospectus.
3. CLOSING AND CLOSING DATE
3.1. Closing Date. The Closing shall be held on January
12, 2007 (the "Closing Date"), at the offices of Principal
Management Corporation, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
or at such other time and place as PIF and ▇▇ ▇▇ may agree.
Unless otherwise provided, all acts taking place at the Closing
shall be deemed to take place simultaneously as of the close of
regular trading on the NYSE on the Closing Date (the "Effective
Time").
3.2 Statement of Assets and Stated Liabilities. ▇▇ ▇▇
will prepare and deliver to the Acquiring Fund on the second
business day prior to the Closing Date a statement of the Assets
and Stated Liabilities of the Acquired Fund as of such date for
review and agreement by the parties to determine that the Assets
and Stated Liabilities of the Acquired Fund are being correctly
determined in accordance with the terms of this Agreement. ▇▇
▇▇ will deliver at the Closing (i) an updated statement of
Assets and Stated Liabilities of the Acquired Fund and (ii) a
list of the Acquired Fund's portfolio assets showing the tax
costs of each of its assets by lot and the holding periods of
such assets, each of (i) and (ii) as of the Closing Date, and
certified by the principal accounting officer of ▇▇ ▇▇.
3.3. Custodian's Certificate. The Acquired Fund shall
instruct its custodian to deliver, at the Closing, a certificate
of an authorized officer stating that (i) the Assets have been
delivered in proper form to the custodian for the Acquiring Fund
on the Closing Date, and (ii) all necessary taxes in connection
with the delivery of the Assets, including all applicable
federal and state stock transfer stamps, if any, have been paid
or provision for payment has been made. The Acquired Fund's
portfolio securities represented by a certificate or other
written instrument shall be presented by the custodian for the
Acquired Fund to the custodian for the Acquiring Fund for
examination no later than five business days preceding the
Closing Date, and shall be transferred and delivered by the
Acquired Fund as of the Closing Date for the account of the
Acquiring Fund duly endorsed in proper form for transfer in such
condition as to constitute good delivery thereof free and clear
of all liens, encumbrances and claims whatsoever. The Acquired
Fund's portfolio securities and instruments deposited with a
securities depository, as defined in Rule 17f-4 under the 1940
Act, or other permitted counterparties or a futures commission
merchant, as defined in Rule 17f-6 under the 1940 Act, shall be
delivered as of the Closing Date by book entry, in accordance
with the customary practices of such depositories and future
commission merchants and the custodian for the Acquiring Fund.
The cash to be transferred by the Acquired Fund shall be
delivered in the manner specified by the Acquiring Fund.
3.4. Transfer Agent's Certificate. The Acquired Fund shall
instruct its transfer agent to deliver at the Closing a
certificate of an authorized officer stating that its records
contain the names and addresses of the Acquired Fund
Shareholders as of the Closing Date and the number and
percentage ownership (to four decimal places) of outstanding
shares of each class of the Acquired Fund owned by each such
shareholder immediately prior to the Closing. The Acquiring
Fund shall issue and deliver, or instruct its transfer agent to
issue and deliver, a confirmation evidencing the Acquiring Fund
Shares to be credited on the Closing Date to the Acquired Fund,
or provide evidence reasonably satisfactory to the Acquired Fund
that such Acquiring Fund Shares have been credited to the
Acquired Fund's account on the books of the Acquiring Fund.
3.5 Failure to Deliver Assets. If the Acquired Fund is
unable to make delivery pursuant to Section 3.2 to the custodian
for the Acquiring Fund of any of the Assets of the Acquired Fund
for the reason that any of such Assets have not yet been
delivered to it by the Acquired Fund's broker, dealer or other
counterparty, then, in lieu of such delivery, the Acquired Fund
shall deliver, with respect to those Assets, executed copies of
an agreement of assignment and due bills executed on behalf of
the broker, dealer or other counterparty, or such other
documentation in lieu thereof as may be acceptable to the
Acquiring Fund, together with such other documents as may be
required by the Acquiring Fund or its custodian.
3.6 Delivery of Additional Items. At the Closing each
party shall deliver to the other such bills of sale, instruments
of assumptions of liabilities, checks, assignments, share
certificates, receipts and other documents, as such other party
or its counsel may reasonably request in connection with the
transfer of assets, assumption of liabilities and liquidation
contemplated by Section 1.
3.7. Effect of Suspension in Trading. In the event that on
the Closing Date (a) the NYSE or another primary trading market
for portfolio securities of the Acquiring Fund or the Acquired
Fund shall be closed to trading or trading thereupon shall be
restricted, or (b) trading or the reporting of trading on the
NYSE or elsewhere shall be disrupted so that accurate appraisal
of the value of the net assets of the Acquired Fund or the
Acquiring Fund is impracticable, the Closing Date shall be
postponed until the first business day after the day when
trading shall have been fully resumed and reporting shall have
been restored or such other date to which PIF and ▇▇ ▇▇ may
agree.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Acquired Fund. ▇▇ ▇▇ on behalf of the Acquired
Fund represents and warrants to PIF and the Acquiring Fund as
follows:
(a) Organization, Existence, etc. ▇▇ ▇▇ is a voluntary
association with transferable shares commonly referred to as a
Massachusetts business trust that is duly organized, validly
existing and in good standing under the laws of the Commonwealth
of Massachusetts and has power to own all of its properties and
assets and to carry on its business as presently conducted. ▇▇
▇▇ is duly authorized to transact business in Massachusetts and
is qualified to do business in all jurisdictions in which it is
required to be so qualified, except jurisdictions in which the
failure to so qualify would not have a material adverse effect
on the Acquired Fund. The Acquired Fund is a legally
designated, validly existing series of shares of ▇▇ ▇▇
representing interests in a separate portfolio thereof under the
laws of Massachusetts. Each of ▇▇ ▇▇ and the Acquired Fund has
all necessary federal, state and local authorizations to own all
of its properties and assets and to carry on its business as now
conducted, except authorizations which the failure to so obtain
would not have a material adverse effect on the Acquired Fund.
(b) Registration as Investment Company. ▇▇ ▇▇ is duly
registered under the 1940 Act as an open-end investment company
of the management type; such registration has not been revoked
or rescinded and is in full force and effect. Each of ▇▇ ▇▇ and
the Acquired Fund is compliance in all material respects with
the 1940 Act and the rules and regulations thereunder.
(c) Form N-14. The Registration Statement on N-14 and the
Combined Prospectus/Proxy Statement contained therein relating
to the transactions contemplated by this Agreement as amended or
supplemented from time to time (the "Registration Statement"),
as of the effective date of the Registration Statement and at
all times subsequent thereto up to and including the Closing
Date, conforms and will conform, as it relates to ▇▇ ▇▇ and the
Acquired Fund, in all material respects to the requirements of
federal and state securities laws and the rules and regulations
thereunder and does not and will not include, as it relates to
▇▇ ▇▇ and the Acquired Fund, any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Any written information furnished by ▇▇ ▇▇ with respect to ▇▇ ▇▇
or the Acquired Fund for use in the Registration Statement or
any other materials provided in connection with the
Reorganization, as of the effective date of the Registration and
at all times subsequent thereto up to and including the Closing
Date, does not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated or necessary to make the statements, in light of the
circumstances under which such statements were made, not
misleading.
(d) Current Offering Documents. The prospectus, statement
of additional information and shareholder reports of ▇▇ ▇▇
relating to the Acquired Fund, each to the extent incorporated
by reference in the Registration Statement, comply in all
material respects with the requirements of the Securities Act of
1933, as amended (the "1933 Act"), and the 1940 Act, are and
will be accurate in all material respects and do not and will
not contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
(e) No Violation. Each of ▇▇ ▇▇ and the Acquired Fund is
not in violation of Massachusetts law or in any material respect
of any provision of WM II's Declaration of Trust or bylaws or of
any agreement, indenture, note, mortgage, instrument, contract,
lease or other undertaking to which ▇▇ ▇▇ or the Acquired Fund
is a party or by which it is bound, and the execution, delivery
and performance of this Agreement will not result in any such
violation or in the acceleration of any obligation, or the
imposition or any penalty, under any material agreement,
indenture, instrument, contract, lease or other undertaking to
which ▇▇ ▇▇ or the Acquired Fund is a party or by which it is
bound.
(f) Contracts. Each of ▇▇ ▇▇ and the Acquired Fund has no
material contracts, agreements or other commitments (other than
this Agreement) that will not be terminated without liability to
it before the Closing Date, other than liabilities, if any, to
be discharged prior to the Closing Date or reflected as Stated
Liabilities in the Statement of Assets and Stated Liabilities as
provided in Section 3.2 and other than contracts that may be
terminated without liability to it following the Closing Date.
(g) Litigation. To the knowledge of ▇▇ ▇▇ and the Acquired
Fund, except as has been disclosed in writing to PIF, no
litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or
threatened as to the Acquired Fund, any of its properties or
assets, or any person whom ▇▇ ▇▇ or the Acquired Fund may be
obligated to indemnify in connection with such litigation,
proceeding or investigation, there are no facts which form the
basis for the institution of any such litigation, proceeding or
investigation, and each of ▇▇ ▇▇ and the Acquired Fund is not a
party to or subject to the provisions of any order, decree or
judgment of any court of governmental body, which materially and
adversely affects its business or its ability to consummate the
transactions contemplated hereby.
(h) Financial Statements. The audited financial statements
of the Acquired Fund for the fiscal year ended October 31, 2005,
have been prepared in accordance with accounting principles
generally accepted in the United States of America consistently
applied and have been audited by Deloitte & Touche LLP . True
and complete copies of such statements have been furnished to
PIF. Such statements fairly reflect the financial condition and
the results of operations of the Acquired Fund as of such date
and the results of operations and changes in net assets for the
periods indicated, and there are no liabilities of or the
Acquired Fund whether actual or contingent and whether or not
determined or determinable as of such date that are required to
be disclosed but are not disclosed in such statements. The
unaudited financial statements of the Acquired Fund for the six
months ended April 30, 2006 have been prepared in accordance
with accounting principles generally accepted in the United
States of America consistently applied by ▇▇ ▇▇. True and
complete copies of such statements have been furnished to PIF.
Such statements fairly reflect the financial condition and the
results of operations of the Acquired Fund as of such date and
the results of operations and changes in net assets for the
periods indicated, and there are no liabilities of the Acquired
Fund whether actual or contingent and whether or not determined
or determinable as of such date that are required to be
disclosed but are not disclosed in such statements. There are
no liabilities of any Acquired Fund, whether actual or
contingent and whether or not determined or determinable, other
than liabilities disclosed or provided for in the financial
statements of the Acquired Fund referred to above, liabilities
incurred in the ordinary course of business subsequent to
October 31, 2005, liabilities previously disclosed to and
accepted by PIF and liabilities which in the aggregate have not
been and will not be materially adverse to the financial
condition, results of operations, business or assets of the
Acquired Fund.
(i) No Material Adverse Change. Since October 31, 2005,
there has been no material adverse change in the financial
condition, assets, liabilities or business of the Acquired Fund
(other than changes occurring in the ordinary course of
business) or any incurrence by the Acquired Fund of
indebtedness, except as disclosed to PIF. For the purposes of
this Section, distributions of net investment income and net
realized capital gains, changes in portfolio securities, changes
in the market value of portfolio securities or net redemptions
shall be deemed to be in the ordinary course of business.
(j) Taxes. Each of ▇▇ ▇▇ and the Acquired Fund has duly
filed all federal, state, local and foreign tax returns which
are required to have been filed, and all taxes of ▇▇ ▇▇ and the
Acquired Fund which are due and payable have been paid except
for amounts that alone or in the aggregate would not reasonably
be expected to have a material adverse effect. As of the
Closing Date, all federal and other tax returns and reports of
▇▇ ▇▇ and the Acquired Fund required by law to have been filed
by such date (giving effect to extensions) shall have been
filed, and all federal and other taxes shown to be due on such
returns and reports or on any assessment received shall have
been paid, or provisions shall have been made for the payment
thereof. All of the Acquired Fund's tax liabilities will have
been adequately provided for on its books. To the best of the
knowledge of ▇▇ ▇▇ and the Acquired Fund, each of them will not
have had any tax deficiency or liability asserted against it or
question with respect thereto raised, and it will not be under
audit by the Internal Revenue Service or by any state or local
tax authority for taxes in excess of those already paid.
(k) Regulated Investment Company. Each of ▇▇ ▇▇ and the
Acquired Fund has met the requirements of subchapter M of the
Code for treatment as a "regulated investment company" within
the meaning of Section 851 of the Code in respect of each
taxable year since it commenced operations and will continue to
meet such requirements at all times through the Closing Date.
Each of ▇▇ ▇▇ and the Acquired Fund has not at any time since
its inception been liable for nor is now liable for any material
income or excise tax pursuant to Section 852 or 4982 of the
Code. The Acquired Fund is in compliance in all material
respects with applicable regulations of the Internal Revenue
Service pertaining to the reporting of dividends and other
distributions on and redemptions of its capital stock and to
withholding in respect of dividends and other distributions to
shareholders and is not liable for any material penalties which
could be imposed thereunder.
(l) Capitalization. The authorized capital of ▇▇ ▇▇
consists of an unlimited number of shares of beneficial
interest, of such number of different series as the Board of
Trustees may authorize from time to time. All issued and
outstanding shares of beneficial interest of the Acquired Fund
are, and on the Closing Date will be, duly authorized and
validly issued and outstanding, fully paid and non-assessable
(except as described in the prospectus of ▇▇ ▇▇) by ▇▇ ▇▇ and
will have been issued in compliance with all applicable
registration or qualification requirements of federal and state
securities laws. No options, warrants or other rights to
subscribe for or purchase, or securities convertible into, any
shares of beneficial interest of the Acquired Fund are
outstanding and none will be outstanding on the Closing Date.
The shares of beneficial interest are not subject to preemptive
or dissenter's rights. At the Effective Time, all issued and
outstanding shares of beneficial interest in the Acquired Fund
will be held in book-entry form by shareholders of record of the
Acquired Fund as set forth on the books and records of ▇▇ ▇▇ in
the amounts set forth therein, and as set forth in any list of
shareholders of record provided to PIF or the corresponding
Acquiring Fund for purposes of the Reorganization.
(m) Investment Operations. The Acquired Fund's investment
operations from inception to the date of this Agreement have
been in compliance in all material respects with the investment
policies and investment restrictions set forth in its prospectus
or prospectuses and statement or statements of additional
information as in effect from time to time, except as previously
disclosed in writing to PIF.
(n) Authority Relative to this Agreement. ▇▇ ▇▇, on behalf
of the Acquired Fund, has the power to enter into this Agreement
and to carry out its obligations hereunder. The execution,
delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby have been duly
authorized by Board of Trustees of ▇▇ ▇▇, and, subject to
approval by the required majority of the shareholders of the
Acquired Fund, this Agreement constitutes the valid and binding
obligation of ▇▇ ▇▇ and the Acquired Fund, enforceable in
accordance with its terms except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights generally and other
equitable principles.
(o) No Distribution. The Acquiring Fund Shares to be
issued to the Acquired Fund pursuant to Section 1.1(c) will not
be acquired for the purpose of making any distribution thereof
other than to the shareholders of the Acquired Fund as provided
in Section 1.4.
(p) Information. The information provided by the Acquired
Fund for use in the Registration Statement referred to in
Section 4.1(c) or in no-action letters, applications for orders
or other documents that may be necessary in connection with the
transactions contemplated by this Agreement shall be accurate
and complete in all material respects and shall comply in all
material respects with federal securities and other laws and
regulations as applicable thereto.
(q) Regulatory Approvals. No consent, approval,
authorization or order of any court or governmental authority is
required for the consummation by ▇▇ ▇▇ on behalf of the Acquired
Fund of the transactions contemplated by this Agreement, except
such as may be required under the 1933 Act, the Securities
Exchange Act of 1934 (the "1934 Act"), the 1940 Act and state
securities or "Blue Sky" laws (which terms as used herein shall
include the laws of the District of Columbia and of Puerto
Rico).
(r) The Assets. At the Closing Date, ▇▇ ▇▇, on behalf of
the Acquired Fund, will have good and marketable title to the
Assets of the Acquired Fund to be transferred to the
corresponding Acquiring Fund pursuant to Section 1.1(a) and will
have full right, power and authority to sell, assign, transfer
and deliver such Assets hereunder. At the Closing Date, subject
only to the delivery of the Assets and the Stated Liabilities
and payment therefor as contemplated by this Agreement, the
Acquiring Fund will acquire good and marketable title to the
Assets of the Acquired Fund, subject to no encumbrances, liens
or security interests whatsoever and without any restrictions on
their transfer, except as previously disclosed to and accepted
by the Acquiring Fund.
(s) Diversification. At the Closing Date, the Acquired
Fund will have sold such of its assets, if any, as are necessary
to assure that, after giving effect to the acquisition of the
Assets of the Acquired Fund pursuant to this Agreement, the
Acquiring Fund, if it is a "diversified company" within the
meaning of Section 5(b)(1) of the 1940 Act, will remain such a
"diversified company" and in any event will remain in compliance
with such other mandatory investment restrictions as are set
forth in the Acquiring Fund Prospectus, as amended through the
Closing Date.
(t) Restricted Securities. No registration of any of the
Assets of the Acquired Fund would be required if they were, as
of the time of such transfer, the subject of a public
distribution by either of the Acquiring Fund or the Acquired
Fund, except as previously disclosed by the Acquired Fund to the
Acquiring Fund.
4.2 Acquiring Fund. PIF on behalf of the Acquiring Fund
represents and warrants to ▇▇ ▇▇ and the Acquired Fund as
follows:
(a) Organization, Existence, etc. PIF is a corporation
that is duly organized, validly existing and in good standing
under the laws of the State of Maryland and has power to own all
of its properties and assets and to carry on its business as
presently conducted. PIF is duly authorized to transact
business in Maryland and is qualified to do business in all
jurisdictions in which it is required to be so qualified, except
jurisdictions in which the failure to so qualify would not have
a material adverse effect on the Acquiring Fund. The Acquiring
Fund is a legally designated, validly existing series of shares
of PIF representing interests in a separate portfolio thereof
under the laws of Maryland. Each of PIF and the Acquiring Fund
has all necessary federal, state and local authorizations to own
all of its properties and assets and to carry on its business as
now, or in the case of a New Acquiring Fund, as then, being
conducted, except authorizations which the failure to so obtain
would not have a material adverse effect on the Acquiring Fund.
(b) Registration as Investment Company. PIF is duly
registered under the 1940 Act as an open-end investment company
of the management type; such registration has not been revoked
or rescinded and is in full force and effect. Each of PIF and
the Acquiring Fund is in compliance in all material respects
with the 1940 Act and the rules and regulations thereunder.
(c) Form N-14. The Registration Statement as of its
effective date and at all times subsequent thereto up to and
including the Closing Date, conforms and will conform, as it
relates to PIF and the Acquiring Fund, in all material respects
to the requirements of federal and state securities laws and
the rules and regulations thereunder and does not and will not
include, as it relates to PIF and the Acquiring Fund, any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading, except that no representations
and warranties in this Section 4.2(c) apply to statements or
omissions made in reliance upon and in conformity with written
information concerning ▇▇ ▇▇ and the Acquired Fund furnished to
the Acquiring Fund by ▇▇ ▇▇ or the Acquired Fund. From the
effective date of the Registration Statement through the time of
the meeting of the Acquired Fund Shareholders and on the Closing
Date, any written information furnished by PIF with respect to
PIF and the Acquiring Fund for use in the Registration Statement
or any other materials provided in connection with the
Reorganization, as of the effective date of the Registration and
at all times subsequent thereto up to and including the Closing
Date, does not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated or necessary to make the statements, in light of the
circumstances under which such statements were made, not
misleading.
(d) Current Offering Documents. The Acquiring Fund
Prospectus and shareholder reports of PIF relating to the
Acquiring Fund, each to the extent incorporated by reference in
the Registration Statement, comply in all material respects with
the requirements of the 1933 Act and the 1940 Act, are and will
be accurate in all material respects and do not and will not
contain an untrue statement of a material fact or omit to state
a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
(e) Acquiring Fund Assets. At the Closing Date, PIF, on
behalf of the Acquiring Fund, will have good and marketable
title to the assets attributable to the Acquiring Fund.
(f) No Violation. Each of PIF and the Acquiring Fund is
not in violation of Maryland law or in any material respect of
any provision of PIF's Articles of Incorporation or bylaws or of
any agreement, indenture, note, mortgage, instrument, contract,
lease or other undertaking to which PIF or the Acquiring Fund is
a party or by which it is bound, and the execution, delivery and
performance of this Agreement will not result in any such
violation or in the acceleration of any obligation, or the
imposition or any penalty, under any material agreement,
indenture, instrument, contract, lease or other undertaking to
which PIF or the Acquiring Fund is a party or by which it is
bound.
(g) Litigation. To the knowledge of PIF and the Acquiring
Fund, except as has been disclosed in writing to ▇▇ ▇▇, no
litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or
threatened as to the Acquiring Fund, any of its properties or
assets, or any person whom PIF or the Acquiring Fund may be
obligated to indemnify in connection with such litigation,
proceeding or investigation, there are no facts which form the
basis for the institution of any such litigation, proceeding or
investigation, and each of PIF and the Acquiring Fund is not a
party to or subject to the provisions of any order, decree or
judgment of any court of governmental body, which materially and
adversely affects its business or its ability to consummate the
transactions contemplated hereby.
(h) Financial Statements. The audited financial statements
of the Acquiring Fund for the fiscal year ended October 31,
2005, have been prepared in accordance with accounting
principles generally accepted in the United States of America
consistently applied and have been audited by Ernst & Young LLP.
True and complete copies of such statements have been furnished
to ▇▇ ▇▇. Such statements fairly reflect the financial
condition and the results of operations of the Acquiring Fund as
of such date and the results of operations and changes in net
assets for the periods indicated, and there are no liabilities
of the Acquiring Fund whether actual or contingent and whether
or not determined or determinable as of such date that are
required to be disclosed but are not disclosed in such
statements. The unaudited financial statements of Acquiring
Fund for the six months ended April 30, 2006 have been prepared
in accordance with accounting principles generally accepted in
the United States of America consistently applied by PIF. True
and complete copies of such statements have been furnished to ▇▇
▇▇. Such statements fairly reflect the financial condition and
the results of operations of the Acquiring Fund as of such date
and the results of operations and changes in net assets for the
periods indicated, and there are no liabilities of the Acquiring
Fund whether actual or contingent and whether or not determined
or determinable as of such date that are required to be
disclosed but are not disclosed in such statements. There are no
liabilities of any Acquiring Fund, whether actual or contingent
and whether or not determined or determinable, other than
liabilities disclosed or provided for in the financial
statements of the Acquiring Fund referred to above, liabilities
incurred in the ordinary course of business subsequent to
October 31, 2005, liabilities previously disclosed to and
accepted by ▇▇ ▇▇ and liabilities which in the aggregate have
not been and will not be materially adverse to the financial
condition, results of operations, business or assets of the
Acquiring Fund.
(i) No Material Adverse Change. Since October 31, 2005,
there has been no material adverse change in the financial
condition, assets, liabilities or business of the Acquiring Fund
(other than changes occurring in the ordinary course of
business) or any incurrence by the Acquiring Fund of
indebtedness, except as disclosed to ▇▇ ▇▇. For the purposes of
this Section, distributions of net investment income and net
realized capital gains, changes in portfolio securities, changes
in the market value of portfolio securities or net redemptions
shall be deemed to be in the ordinary course of business.
(j) Taxes. Each of PIF and the Acquiring Fund has duly
filed all federal, state, local and foreign tax returns which
are required to have been filed, and all taxes of PIF and the
Acquiring Fund which are due and payable have been paid except
for amounts that alone or in the aggregate would not reasonably
be expected to have a material adverse effect. As of the
Closing Date, all federal and other tax returns and reports of
PIF and the Acquiring Fund required by law to have been filed by
such date (giving effect to extensions) shall have been filed,
and all federal and other taxes shown to be due on such returns
and reports or on any assessment received shall have been paid,
or provisions shall have been made for the payment thereof. All
of the Acquiring Fund's tax liabilities will have been
adequately provided for on its books. To the best of the
knowledge of PIF and the Acquiring Fund, each of them will not
have had any tax deficiency or liability asserted against it or
question with respect thereto raised, and it will not be under
audit by the Internal Revenue Service or by any state or local
tax authority for taxes in excess of those already paid.
(k) Regulated Investment Company. Each of PIF and the
Acquiring Fund has met the requirements of subchapter M of the
Code for treatment as a "regulated investment company" within
the meaning of Section 851 of the Code in respect of each
taxable year since it commenced operations and will continue to
meet such requirements at all times through the Closing Date.
Each of PIF and the Acquiring Fund has not at any time since its
inception been liable for nor is now liable for any material
income or excise tax pursuant to Section 852 or 4982 of the
Code. The Acquiring Fund is in compliance in all material
respects with applicable regulations of the Internal Revenue
Service pertaining to the reporting of dividends and other
distributions on and redemptions of its capital stock and to
withholding in respect of dividends and other distributions to
shareholders and is not liable for any material penalties which
could be imposed thereunder.
(l) Capitalization. The authorized capital of PIF consists
of 40,230,000,000 shares of capital stock of such number of
different series as the Board of Directors may authorize from
time to time. All issued and outstanding shares of the
Acquiring Fund are, and on the Closing Date will be, duly
authorized and validly issued and outstanding, fully paid and
non-assessable (except as described in the prospectus of PIF) by
PIF and will have been issued in compliance with all applicable
registration or qualification requirements of federal and state
securities laws. No options, warrants or other rights to
subscribe for or purchase, or securities convertible into, any
shares of the Acquiring Fund are outstanding and none will be
outstanding on the Closing Date. The shares are not subject to
preemptive or dissenter's rights.
(m) Investment Operations. The Acquiring Fund's
investment operations from inception to the date of this
Agreement have been in compliance in all material respects with
the investment policies and investment restrictions set forth in
its prospectus or prospectuses and statement or statements of
additional information as in effect from time to time, except as
previously disclosed in writing to ▇▇ ▇▇.
(n) Authority Relative to this Agreement. PIF, on behalf
of the Acquiring Fund, has the power to enter into this
Agreement and to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized by Board of Directors of PIF, and this Agreement
constitutes the valid and binding obligation of PIF and the
Acquiring Fund, enforceable in accordance with its terms except
as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting
creditors' rights generally and other equitable principles.
(o) Information. The information provided by the
Acquiring Fund for use in the Registration Statement referred to
in Section 4.1(c) or in no-action letters, applications for
orders or other documents that may be necessary in connection
with the transactions contemplated by this Agreement shall be
accurate and complete in all material respects and shall comply
in all material respects with federal securities and other laws
and regulations as applicable thereto.
(p) Regulatory Approvals. No consent, approval,
authorization or order of any court or governmental authority is
required for the consummation by the Acquiring Fund of the
transactions contemplated by this Agreement, except such as may
be required under the 1933 Act, the 1934 Act, the 1940 Act and
state securities or "Blue Sky" laws (which terms as used herein
shall include the laws of the District of Columbia and of Puerto
Rico).
5. COVENANTS
5.1 The Acquired Fund. ▇▇ ▇▇ on behalf of the Acquired
Fund covenants and agrees as follows:
(a) Operations in the Ordinary Course. Except as otherwise
contemplated by this Agreement, ▇▇ ▇▇ with respect to the
Acquired Fund shall conduct its business in the ordinary course
between the date of this Agreement and the Closing Date, it
being understood that such ordinary course of business will
include the regular and customary periodic dividends and
distributions.
(b) Meeting of the Acquired Fund's Shareholders. ▇▇ ▇▇
will call and hold a meeting of the shareholders of the Acquired
Funds to consider and act upon this Agreement and the
transactions contemplated herein and take all other reasonable
action necessary to obtain the required shareholder approval of
the transactions contemplated hereby. The meeting shall be
scheduled for December 15, 2006 or such other date to which ▇▇
▇▇ and PIF may agree.
(c) Registration Statement. In connection with the
preparation of the Registration Statement, ▇▇ ▇▇ will cooperate
with PIF and will furnish to PIF the information relating to the
Acquired Funds required to be included in the Registration
Statement.
(d) Cooperation in Effecting Reorganization. The Acquired
Fund agrees to take, or cause to be taken, all action, and do or
cause to be done, all things reasonably necessary, proper or
advisable to cause the conditions to the obligations of PIF and
the corresponding Acquiring Fund to consummate the transactions
contemplated hereby to be met or fulfilled and otherwise to
consummate and make effective such transactions.
(e) Statement of Earnings and Profits. As promptly as
practicable, but in any case within 30 days after the Closing
Date, the Acquired Fund shall furnish to the Acquiring Fund, in
such form as is reasonably satisfactory to the Acquiring Fund, a
statement of the earnings and profits of the Acquired Fund for
federal income tax purposes, and of any capital loss carryovers
and other items that the corresponding Acquiring Fund will
succeed to and take into account as a result of Sections 381
through 384 of the Code. Such statement will be certified by
the principal accounting officer of ▇▇ ▇▇.
5.2 The Acquiring Fund. PIF on behalf of the Acquiring
Fund covenants and agrees as follows:
(a) Operations in the Ordinary Course. Except as otherwise
contemplated by this Agreement, PIF with respect to the
Acquiring Fund shall conduct its business in the ordinary course
between the date of this Agreement and the Closing Date, it
being understood that such ordinary course of business will
include the regular and customary periodic dividends and
distributions.
(b) Registration Statement. PIF will prepare and file the
Registration Statement and include therein the Prospectus/Proxy
Statement to be used in connection with the shareholders meeting
referred to in Section 5.1(b).
(c) Cooperation in Effecting Reorganization. The Acquiring
Fund agrees to take, or cause to be taken, all action, and do or
cause to be done, all things reasonably necessary, proper or
advisable to cause the conditions to the obligations of ▇▇ ▇▇
and the Acquired Fund to consummate the transactions
contemplated hereby to be met or fulfilled and otherwise to
consummate and make effective such transactions.
(d) Continued Operations. PIF will use all reasonable
efforts to obtain the approvals and authorizations required by
the 1933 Act, the 1940 Act and such of the state securities or
"Blue Sky" laws as it may deem appropriate in order to continue
the operations of the Acquiring Fund after the Closing Date.
6. CONDITIONS PRECEDENT
6.1 The Acquired Fund. The obligations of ▇▇ ▇▇ on behalf
of the Acquired Fund to consummate the transactions provided for
herein shall be subject, at its election, to the performance by
PIF and the Acquiring Fund of all the obligations to be
performed by them hereunder on or before the Closing Date and,
in addition thereto, to the following further conditions:
(a) Officers Certificate. PIF on behalf of the Acquiring
Fund shall have delivered to ▇▇ ▇▇ on behalf of the Acquired
Fund a certificate executed in its name by its President or Vice
President and its Chief Financial Officer, in form and substance
satisfactory to ▇▇ ▇▇ and dated as of the Closing Date, to the
effect that the representations and warranties of PIF on behalf
of the Acquiring Fund made in this Agreement are true and
correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement, and
that PIF and the Acquiring Fund have complied with all the
covenants and agreements and satisfied all of the conditions on
their parts to be performed or satisfied under this Agreement at
or prior to the Closing Date.
(b) Opinion of Counsel. ▇▇ ▇▇ on behalf of the Acquired
Fund shall have received a favorable opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
PLLC, counsel to the Acquiring Fund for the transactions
contemplated hereby, dated the Closing Date and in a form
satisfactory to ▇▇ ▇▇, to the following effect:
(i) PIF is a corporation organized and validly existing under
the laws of the State of Maryland and has power to own all
of its properties and assets and to carry on its business
as presently conducted and described in the registration
statement on Form N-1A of PIF, and the Acquiring Fund is a
separate series of PIF constituted in accordance with the
applicable provisions of the 1940 Act and the Articles of
Incorporation and Bylaws of PIF;
(ii) This Agreement has been authorized, executed and delivered
by the Acquiring Fund and, assuming the Registration
Statement referred to in Section 5.2(b) and the
Prospectus/Proxy Statement included therein comply with
applicable federal securities laws and assuming the
authorization, execution and delivery of this Agreement by
▇▇ ▇▇ and the Acquired Fund, is the valid and binding
obligation of PIF and the Acquiring Fund enforceable
against PIF and the Acquiring Fund in accordance with its
terms, except as the same may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights generally and other
equitable principles;
(iii) The Acquiring Fund has the power to assume the liabilities
to be assumed by it hereunder and upon consummation of the
transactions contemplated hereby the Acquiring Fund will
have assumed such liabilities;
(iv) The Acquiring Fund Shares to be issued for transfer to the
Acquired Fund Shareholders as provided by this Agreement
are authorized and upon such transfer and delivery will be
validly issued and outstanding and fully paid and non-
assessable Class A, Class B, Class C and Class I shares of
capital stock in the Acquiring Fund, and no shareholder of
the Acquiring Fund has any preemptive right of subscription
or purchase in respect thereof;
(v) The execution and delivery of this Agreement did not, and
the performance by PIF and the Acquiring Fund of their
obligations hereunder will not, violate the PIF Articles of
Incorporation or Bylaws, or any provision of any material
agreement known to such counsel to which PIF or the
Acquiring Fund is a party or by which it is bound or, to
the knowledge of such counsel, result in the acceleration
of any obligation or the imposition of any penalty under
any material agreement or any judgment or decree to which
PIF or the Acquiring Fund is a party or by which it is
bound;
(vi) To the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental
authority is required for the consummation by PIF and the
Acquiring Fund of the transactions contemplated by this
Agreement except such as may be required under state
securities or "Blue Sky" laws or such as have been
obtained;
(vii) Such counsel does not know of any legal or governmental
proceedings relating to PIF or the Acquiring Fund existing
on or before the date of mailing of the Prospectus/Proxy
Statement included in the Registration Statement referred
to in Section 5.2(b) or the Closing Date required to be
described in the Registration Statement which are not
described as required;
(viii) PIF is registered with the SEC as an investment
company under the 1940 Act; and
(ix) To the knowledge of such counsel, except as has been
disclosed in writing to ▇▇ ▇▇, no litigation or
administrative proceeding or investigation of or before any
court or governmental body is presently pending or
threatened as to PIF or the Acquiring Fund or any of their
properties or assets or any person whom PIF or the
Acquiring Fund may be obligated to indemnify in connection
with such litigation, proceeding or investigation, and each
of PIF and the Acquiring Fund is not a party to or subject
to the provisions of any order, decree or judgment of any
court or governmental body, which materially and adversely
affects its business or its ability to consummate the
transactions contemplated hereby.
6.2 The Acquiring Fund. The obligations of PIF on behalf
of the Acquiring Fund to complete the transactions provided for
herein shall be subject, at its election, to the performance by
▇▇ ▇▇ and the Acquired Fund of all the obligations to be
performed by them hereunder on or before the Closing Date and,
in addition thereto, to the following further conditions:
(a) Officers Certificate. ▇▇ ▇▇ on behalf of the Acquired
Fund shall have delivered to PIF on behalf of the Acquiring Fund
a certificate executed in its name by its President or Vice
President and its Treasurer or Assistant Treasurer, in form and
substance satisfactory to PIF and dated as of the Closing Date,
to the effect that the representations and warranties of ▇▇ ▇▇
on behalf of the Acquired Fund made in this Agreement are true
and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement, and
that ▇▇ ▇▇ and the Acquired Fund have complied with all the
covenants and agreements and satisfied all of the conditions on
their parts to be performed or satisfied under this Agreement at
or prior to the Closing Date.
(b) Opinion of Counsel. PIF on behalf of the Acquiring
Fund shall have received a favorable opinion of Ropes & ▇▇▇▇
LLP, counsel to the Acquired Fund for the transactions
contemplated hereby, dated the Closing Date and in a form
satisfactory to the Acquiring Fund, to the following effect:
(i) ▇▇ ▇▇ is a business trust organized and validly existing
under the laws of the Commonwealth of Massachusetts and has
power to own all of its properties and assets and to carry
on its business as presently conducted and described in the
registration statement on Form N-1A of ▇▇ ▇▇, and the
Acquired Fund is a separate series of ▇▇ ▇▇ constituted in
accordance with the applicable provisions of the 1940 Act
and the Declaration of Trust and Bylaws of ▇▇ ▇▇;
(ii) This Agreement has been authorized, executed and delivered
on behalf of ▇▇ ▇▇ and the Acquired Fund and, assuming the
Registration Statement referred to in Section 5.2(b) and
the Prospectus/Proxy Statement included therein comply with
applicable federal securities laws and assuming the
authorization, execution and delivery of this Agreement by
PIF and the Acquiring Fund, is the valid and binding
obligation of ▇▇ ▇▇ and the Acquired Fund enforceable
against ▇▇ ▇▇ and the Acquired Fund in accordance with its
terms, except as the same may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights generally and other
equitable principles;
(iii) The Acquired Fund has the power to sell, assign, transfer
and deliver the Assets to be transferred by it hereunder,
and, upon consummation of the transactions contemplated
hereby, the Acquired Fund will have transferred such Assets
to the Acquiring Fund;
(iv) The execution and delivery of this Agreement did not, and
the performance by ▇▇ ▇▇ and the Acquired Fund of their
obligations hereunder will not, violate the ▇▇ ▇▇
Declaration of Trust or Bylaws, or any provision of any
material agreement known to such counsel to which ▇▇ ▇▇ or
the Acquired Fund is a party or by which it is bound or, to
the knowledge of such counsel, result in the acceleration
of any obligation or the imposition of any penalty under
any material agreement or any judgment or decree to which
▇▇ ▇▇ or the Acquired Fund is a party or by which it is
bound;
(v) To the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental
authority is required for the consummation by ▇▇ ▇▇ and the
Acquired Fund of the transactions contemplated by this
Agreement, except such as have been obtained;
(vi) Such counsel does not know of any legal or governmental
proceedings relating to ▇▇ ▇▇ or the Acquired Fund existing
on or before the date of mailing of the Prospectus/ Proxy
Statement included in the Registration Statement referred
to in Section 5.2(b) or the Closing Date required to be
described in the Registration Statement which are not
described as required;
(vii) ▇▇ ▇▇ is registered with the SEC as an investment company
under the 1940 Act; and
(viii) To the knowledge of such counsel, except as has been
disclosed in writing to PIF, no litigation or
administrative proceeding or investigation of or before any
court or governmental body is presently pending or
threatened as to ▇▇ ▇▇ or the Acquired Fund or any of their
properties or assets or any person whom ▇▇ ▇▇ or the
Acquired Fund may be obligated to indemnify in connection
with such litigation, proceeding or investigation, and each
of ▇▇ ▇▇ and the Acquired Fund is not a party to or subject
to the provisions of any order, decree or judgment of any
court or governmental body, which materially and adversely
affects its business or its ability to consummate the
transactions contemplated hereby.
(c) Distributions. Prior to the Closing Date, ▇▇ ▇▇ on
behalf of the Acquired Fund (if it is a corresponding Fund to an
Existing Acquiring Fund) shall have declared a dividend or
dividends, with a record and ex-dividend date prior to the
Effective Time, which, together with all previous dividends,
shall have the effect of distributing all of the Acquired Fund's
investment company taxable income for all its taxable periods
ending on or prior to the Closing Date (computed without regard
to any deduction for dividends paid), plus the excess of its
interest income, if any, excludable from gross income under
Section 103(a) of the Code over its deductions disallowed under
Sections 265 and 171(a)(2) of the Code for all taxable periods
ending on or before the Closing Date and all of its net capital
gains realized in all its taxable periods ending on or prior to
the Closing Date (after reduction for any capital loss carry
forward).
(d) Tax Certificate. The Acquired Fund shall have
furnished to the Acquiring Fund a certificate, signed by the
President (or any Vice President) and the Treasurer of ▇▇ ▇▇, as
to the adjusted tax basis in the hands of the Acquired Fund of
the securities delivered to the Acquiring Fund pursuant to this
Agreement.
(e) Custodian Certificate. The custodian of the Acquired
Fund shall have delivered to the Acquiring Fund a certificate
identifying all of the assets of the Acquired Fund held by such
custodian as of the Closing Date.
6.3 Further Conditions Precedent. The respective
obligations of ▇▇ ▇▇ on behalf of the Acquired Fund and PIF on
behalf of the Acquiring Fund hereunder are subject to the
further conditions that on or before the Closing Date:
(a) Shareholder Approval. This Agreement and the
transactions contemplated herein shall have received all
necessary shareholder approvals at the meeting of shareholders
of the Acquired Fund referred to in Section 5.1(b).
(b) Closing under Stock Purchase Agreement. The closing
under the Stock Purchase Agreement dated as of July 25, 2006
among Washington Mutual, Inc., New American Capital, Inc.,
Principal Financial Group, Inc. and Principal Management
Corporation shall have occurred.
(c) Proceedings. On the Closing Date no action, suit or
other proceeding shall be pending before any court or
governmental agency in which it is sought to restrain or
prohibit, or obtain damages or other relief in connection with,
this Agreement or the transactions contemplated hereby.
(d) Consents. All consents of other parties and all other
consents, orders and permits of federal, state and local
regulatory authorities (including those of the SEC and of state
"Blue Sky" and securities authorities) deemed necessary by ▇▇ ▇▇
and PIF to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit
would not involve a risk of a material adverse effect on the
assets or properties of the Acquiring Fund or the Acquired Fund.
(d) Registration Statement. The Registration Statement
shall have become effective under the 1933 Act and no stop order
suspending the effectiveness thereof shall have been issued and,
to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the 1933 Act.
(f) Tax Opinion. ▇▇ ▇▇ on behalf of the Acquired Fund and
PIF on behalf of the Acquiring Fund shall have received a
favorable opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PLLC dated on the Closing
Date (which opinion will be subject to certain qualifications)
satisfactory to both parties substantially to the effect that,
on the basis of the existing provisions of the Code, Treasury
regulations promulgated thereunder, current administrative
rules, and court decisions, generally for federal income tax
purposes:
(i) The acquisition by the Acquiring Fund of the Assets of the
Acquired Fund in exchange for the Acquiring Fund's
assumption of the Stated Liabilities of the Acquired Fund
and issuance of the Acquiring Fund Shares, followed by the
distribution by the Acquired Fund of such Acquiring Fund
Shares to the shareholders of the Acquired Fund in exchange
for their shares of the Acquired Fund, all as provided in
Section 1 hereof, will constitute a reorganization within
the meaning of Section 368(a) of the Code, and the Acquired
Fund and the Acquiring Fund will each be "a party to a
reorganization" within the meaning of Section 368(b) of the
Code;
(ii) No gain or loss will be recognized by the Acquired Fund (i)
upon the transfer of its assets to the Acquiring Fund in
exchange for the Acquiring Fund Shares and the assumption
by the Acquiring Fund of the Stated Liabilities of the
Acquired Fund or (ii) upon the distribution of the
Acquiring Fund Shares by the Acquired Fund to its
shareholders in liquidation, as contemplated in Section 1
hereof;
(iii) No gain or loss will be recognized by the Acquiring Fund
upon the receipt of the assets of the Acquired Fund in
exchange for the assumption of the Stated Liabilities of
the Acquired Fund and issuance of the Acquiring Fund Shares
as contemplated in Section 1 hereof;
(iv) The tax basis of the Assets of the Acquired Fund acquired
by the Acquiring Fund will be the same as the tax basis of
such Assets in the hands of the Acquired Fund immediately
prior to the transfer;
(v) The holding periods of the Assets of the Acquired Fund in
the hands of the Acquiring Fund will include the periods
during which such Assets were held by the Acquired Fund;
(vi) No gain or loss will be recognized by the Acquired Fund
Shareholders upon the exchange of all of their Acquired
Fund Shares for the Acquiring Fund Shares;
(vii) The aggregate tax basis of the Acquiring Fund Shares to be
received by each shareholder of the Acquired Fund will be
the same as the aggregate tax basis of the Acquired Fund
Shares exchanged therefor;
(viii) An Acquired Fund shareholder's holding period for the
Acquiring Fund Shares to be received will include the
period during which the Acquired Fund Shares exchanged
therefor were held, provided that the shareholder held the
Acquired Fund Shares as a capital asset on the date of the
exchange; and
(ix) The Acquiring Fund will succeed to and take into account
the items of the Acquired Fund described in Section 381(c)
of the Code, subject to the conditions and limitations
specified in Sections 381, 382, 383 and 384 of the Code and
the regulations thereunder.
The opinion will be qualified to reflect that the Code
requires that certain contracts or securities (including, in
particular, futures contracts, certain foreign currency
contracts, "non-equity" options and investments in "passive
foreign investment companies") be marked-to-market (treated as
sold for their fair market value) at the end of a taxable year
(or upon their termination or transfer).
The opinion will be based on certain factual certifications
made by officers of ▇▇ ▇▇ and PIF and will also be based on
customary assumptions. The opinion is not a guarantee that the
tax consequences of the Reorganization will be as described
above. The opinion will note and distinguish certain published
precedent. There is no assurance that the Internal Revenue
Service or a court would agree with the opinion.
7. FEES AND EXPENSES
Except as set forth in Section 1.7, whether or not the
transactions contemplated hereby are consummated, all fees and
expenses in connection with this Agreement, and the transactions
contemplated hereby, incurred (a) by ▇▇ ▇▇, the Acquired Fund
and NAC shall be paid by NAC and (b) by PIF, the Acquiring Fund
and PMC shall be paid by PMC; provided, however, that each of
NAC and PMC shall pay 50% of the document preparation (including
reasonable attorneys' fees), printing, mailing and other costs
and expenses associated with the board approvals and proxy
solicitations contemplated by this Agreement, including amounts
reimbursed to the Acquired Funds and the Acquiring Funds.
Notwithstanding the foregoing, expenses will in any event be
paid by the party directly incurring such expenses if and to the
extent that the payment by another person of such expenses would
result in the disqualification of such party as a "regulated
investment company" within the meaning of Section 851 of the
Code.
8. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
8.1 Entire Agreement. The Acquired Fund and the Acquiring
Fund, agree that neither party has made any representation,
warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties.
8.2 Survival. The representations, warranties and
covenants contained in this Agreement or in any document
delivered pursuant hereto or in connection herewith shall not
survive the consummation of the transactions contemplated
hereunder except Sections 1.1, 1.4, 1.6 through 1.11, 4.1(c) and
(d), 4.2(c) and (d), 7, 8, 11 and 12.
9. TERMINATION
9.1 This Agreement may be terminated by the mutual
agreement of the Acquired Fund and the Acquiring Fund. In
addition, either the Acquired Fund or the Acquiring Fund may at
its option terminate this Agreement at or prior to the Closing
Date because:
(a) Of a material breach by the other of any
representation, warranty, covenant or agreement contained herein
to be performed by the other party at or prior to the Closing
Date;
(b) A condition herein expressed to be precedent to the
obligations of the terminating party has not been met and it
reasonably appears that it will not or cannot be met; or
(c) Any governmental authority of competent jurisdiction
shall have issued any judgment, injunction, order, ruling or
decree or taken any other action restraining, enjoining or
otherwise prohibiting this Agreement or the consummation of any
of the transactions contemplated herein and such judgment,
injunction, order, ruling, decree or other action becomes final
and non-appealable; provided that the party seeking to terminate
this Agreement pursuant to this Section 9.1(c) shall have used
its reasonable best efforts to have such judgment, injunction,
order, ruling, decree or other action lifted, vacated or denied.
9.2 If the transactions contemplated by this Agreement have
not been substantially completed by June 30, 2007, this
Agreement shall automatically terminate on that date unless a
later date is agreed to by both the Acquired Fund and the
Acquiring Fund.
9.3 If for any reason the transactions contemplated by this
Agreement are not consummated, no party shall be liable to any
other party for any damages resulting therefrom, including
without limitation consequential damages, in the absence of
willful default. In the event of willful default, all remedies
at law or in equity of the party adversely effected shall
survive.
10. AMENDMENTS
This Agreement may be amended, modified or supplemented in
such manner as may be mutually agreed upon in writing by the
authorized officers of ▇▇ ▇▇ on behalf of the Acquired Fund and
PIF on behalf of the Acquiring Fund; provided, however, that
following the shareholders' meeting called by the Acquired Fund
pursuant to Section 5.2(b) no such amendment may have the effect
of changing the provisions for determining the number of
Acquiring Fund Shares to be issued to shareholders of the
Acquired Fund under this Agreement to the detriment of such
shareholders without their further approval.
11. NOTICES
All notices and other communications required or permitted
to be given hereunder shall be in writing and shall be deemed
given if delivered personally, transmitted by facsimile (and
telephonically confirmed), mailed by registered or certified
mail with postage prepaid and return receipt requested, or sent
by commercial overnight courier, courier fees prepaid (if
available; otherwise, by the next best class of service
available), to the parties at the following address:
(a) if to PIF or the Acquiring Fund, to it at:
Principal Financial Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PLLC
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to ▇▇ ▇▇ or the Acquired Fund, to it at:
WM Trust II
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Ropes & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as any party shall specify by
notice in writing to the other parties in accordance with this
Section. All such notices or other communications shall be
deemed to have been received on the date of the personal
delivery or on the third business day after the mailing or
dispatch thereof; provided that notice of change of address
shall be effective only upon receipt.
12. GENERAL
12.1 Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
12.2 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an
original.
12.3 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Maryland, without giving affect to any choice or conflicts of
law rule or provision that would result in the application of
the laws of any other jurisdiction.
12.4 Assignment. This Agreement shall bind and inure to
the benefit of the parties hereto and their respective
successors and assigns, but no assignment or transfer hereof or
of any rights or obligations hereunder shall be made by any
party without the written consent of the other parties. Nothing
herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm or corporation, other than
the parties hereto and their respective successors and assigns,
any rights or remedies under or by reason of this Agreement.
12.5 Waivers. At any time prior to the Effective Time of
the Reorganization, each of ▇▇ ▇▇, on behalf of the Acquired
Fund, and PIF, on behalf of the Acquiring Fund, may by written
instrument signed by it (i) waive any inaccuracies in the
representations and warranties made to it and such Fund
contained herein and (ii) waive compliance with any of the
covenants or conditions made for its benefit and the benefit of
such Fund contained herein, except that conditions set forth in
Sections 6.3(c) and (d) may not be waived and except that any
such waiver that would have a material adverse effect on the
interests or rights of any Acquired Fund (or its shareholders)
or any Acquiring Fund (or its shareholders) shall be made only
with the consent of the Board of ▇▇ ▇▇ or PIF, respectively.
12.6 Reliance. All covenants and agreements made under
this Agreement shall be deemed to have been material and relied
upon by ▇▇ ▇▇ on behalf of the Acquired Fund and PIF on behalf
of the Acquiring Fund notwithstanding any investigation made by
such party or on its behalf.
12.7 Limitation of Liability. It is expressly agreed that
the obligations of ▇▇ ▇▇ hereunder shall not be binding upon any
of the trustees, shareholders, nominees, officers, agents or
employees of ▇▇ ▇▇ personally, but shall bind only the property
of the Acquired Funds, as provided in the Declaration of Trust
of ▇▇ ▇▇. Moreover, no Acquired Fund shall be responsible for
the obligations of another Acquired Fund hereunder, and all
persons shall look only to the assets of each Acquired Fund to
satisfy the obligations of that Acquired Fund hereunder. The
execution and delivery of this Agreement have been authorized by
the Board of Trustees of ▇▇ ▇▇ on behalf of it and each of the
Acquired Funds and signed by authorized officers of ▇▇ ▇▇,
acting as such. Neither the authorization by such Board of
Trustees nor the execution and delivery by such officers shall
be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind
only the property of ▇▇ ▇▇ and each Acquired Fund as provided in
the Declaration of Trust of ▇▇ ▇▇.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed by its President or Vice President
as of the date first written above.
WM TRUST II PRINCIPAL INVESTORS FUND, INC.
on behalf of each of the on behalf of each of the
following Acquired Funds: following Acquiring Funds:
California Insured California Insured Intermediate
Intermediate Municipal Fund MunicipalFund
California Municipal Fund California Municipal Fund
Growth Fund LargeCap Growth Fund
International Growth Fund Diversified International
Fund
Short Term Income Fund Short Term Income Fund
Small Cap Growth Fund SmallCap Growth Fund
By: By:
____________________________ _________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief President and Chief
Executive Officer Executive Officer
NEW AMERICAN CAPITAL, INC. PRINCIPAL MANAGEMENT CORPORATION
By: By:
_________________________________ ______________________________
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President President
[Page Break]
DISCLOSURE SCHEDULE
January 12, 2007
The following Disclosure Schedule is provided by WM
Trust II (the "Trust") pursuant to that certain Agreement
and Plan of Reorganization dated as of December 1, 2006 by
and among Principal Investors Fund Inc. ("PIF"), WM Trust
II, Principal Management Corporation and New American
Capital, Inc. (the "Merger Agreement"). Capitalized terms
used herein and not otherwise defined herein shall have the
meanings ascribed to such terms in the Merger Agreement.
This Disclosure Schedule qualifies the representations
and warranties made by the Trust in the Merger Agreement.
Inclusion of information in this Disclosure Schedule is not
intended to be, and shall not be construed as, an admission
of liability, or any fact pertaining to such liability,
with respect to any matter whatsoever. Any summary or
description of any law, regulation, contract, plan or other
document contained in this Disclosure Schedule is for
convenience only and reference should be made to such law,
regulation, contract, plan or other document for a full
explanation thereof. Disclosures contained in any
documents referenced in this Disclosure Schedule shall be
deemed to have been made in writing by the Trust to PIF for
purposes of the Merger Agreement. If an item is disclosed
in any part of this Disclosure Schedule and the existence
of such item or its contents are relevant to any other
Schedule, then such item will be deemed to be disclosed in
such other Schedule to the extent such item or its contents
would be reasonably understood to apply to the information
called for by such other Schedule.
[Page Break]
Section 4.1(g)
Litigation
1. By letter dated February 26, 2004, the SEC requested
documents and information regarding WM Shareholder
Services, Inc. in connection with its services as transfer
agent. WM Shareholder Services, Inc. responded to the
request and additional requests for information based on
the initial inquiry. The SEC has not provided any notice
of any failure by WM Shareholder Services, Inc. to comply
with any applicable laws or regulation.
[Page Break]
Section 4.1(r)
The Assets
The WM California Insured Intermediate Municipal Fund holds
14 future contracts of U.S. 10 Year Treasury Note Futures,
March 2007. The basic margin requirement for these
security futures is 0.01% of the underlying value of the
contract. The collateral is 1,000,000 of cusip ▇▇▇▇▇▇▇▇▇.
The WM California Municipal Fund holds 134 future contracts
of U.S. 30 Year Treasury Bond Futures, March 2007. The
basic margin requirement for these security futures is
0.01% of the underlying value of the contract. The
collateral is 1,000,000 of cusip ▇▇▇▇▇▇▇▇▇.
The ▇▇ ▇▇▇▇▇ Term Income Fund holds ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇
▇.▇. ▇ Year Treasury Note Futures, March 2007. The basic
margin requirement for these security futures is 1.5% of
the underlying value of the contract. The collateral is
175,0000 of U.S. Treasury Note 3.25% 8/15/08 cusip
▇▇▇▇▇▇▇▇▇.
[Page Break]
Section 4.1(t)
Restricted Securities
International Growth Fund
Developed Markets:
FR 4002121 BOUYGUES
JP B1FF8P7 IDEMITSU KOSAN CO LTD
SG B02PY22 SINGAPORE TELECOMMUNICATIONS
HK 6859927 SUN HUNG KAI PROPERTIES
CH 7110753 HOLCIM LTD-REG
Emerging Markets:
OM B0LMH69 BANK MUSCAT SAOG-GDR REG S
CA 2714019 BANRO CORPORATION
SG ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇ 6425663 CATHAY FINANCIAL HOLDING CO LT
TR B058ZV4 COCA-COLA ICECEK URETIM AS
CN B0LMTQ3 CHINA CONSTRUCTION BANK
NL ▇▇▇▇▇▇▇▇▇ EFES BREWERIES INTERNATIONAL
TW 438090201 HON HAI PRECISION INDUSTRY
KR B0ZPRC0 MACQUARIE KOREA INFRASTRUC
PK ▇▇▇▇▇▇▇▇▇ OIL & GAS DEVELOP-GDR 144A
EG ▇▇▇▇▇▇▇▇▇ ORASCOM CONSTRUCT GDR
TH B15F664 THAI BEVERAGE PCL
SG B17KMY7 YANLORD LAND GROUP
Short Term Income Fund
US ▇▇▇▇▇▇▇▇▇ Cendant Mortgage Corp. 03-3P A1 5.500%
4/25/30 ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ Enterprises 4.375% 05/01/08 144A
US ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 1999-CTL1 A 7.151% 2/15/08
US ▇▇▇▇▇▇▇▇▇ ▇▇ Treasury Co. LLC 9.40% 12/29/49 144A