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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A EL/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 1 [X ]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 1 [X ]
(Check appropriate box or boxes)
EAI SELECT MANAGERS EQUITY FUND
(Exact Name of Registrant as Specified in Charter)
200 Connecticut Avenue, Suite 700
Norwalk, Connecticut 06854-1958
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (203) 855-2200
William C. Crerend copy to:
Senior Vice President and General Counsel Paula Lacey Herman
Evaluation Associates Capital Markets, Incorporated Day Berry & Howard
200 Connecticut Avenue, Suite 700 CityPlace
Norwalk, Connecticut 06854-1958 Hartford,
Connecticut 06103-3499
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check appropriate box)
<square>immediately upon filing pursuant to paragraph (b)
<square>on (date) pursuant to paragraph (b)
<square>60 days after filing pursuant to paragraph (a)(1)
<square>on (date) pursuant to paragraph (a)(1)
<square>75 days after filing pursuant to paragraph (a)(2)
<square>on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box
<square>this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
The proposed public offering will occur as soon as practicable after the
effective date of this registration statement. The registrant hereby amends
this amendment to its registration statement on such date or dates as may be
necessary to delay its effective date until the registrant shall file a further
amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to section 8(a), may
determine.
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
Title of Amount being Proposed Proposed Amount of
securities registered maximum maximum registration
being registered offering aggregate fee
price per offering
unit price
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the
Registrant elects to register an indefinite amount of shares of beneficial
interest.
<PAGE>
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EAI SELECT MANAGERS EQUITY FUND
REGISTRATION STATEMENT
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 481(A))
Form N-1A Item Location
Part A - Prospectus
Item 1. Cover Page Cover Page
Item 2. Synopsis Introduction; Fund
Expenses
Item 3. Condensed Financial Not Applicable
Information
Item 4. General Description of Organization of the Fund,
Investment
Registrant Objectives and Policies;
Investment Techniques and
Associated Risks
Item 5. Management of the Fund Management of the Fund;
Distribution of
the Fund's Shares;
Portfolio Transactions
and Brokerage
Item 5A. Management's Discussion Performance
Advertisements;
Performance
of Fund Performance Information
Item 6. Capital Stock and Description of Shares,
Voting Rights
Other Securities and Liabilities; Dividends
and Distributions; Tax
Information
Item 7. Purchase of Securities Purchase of Shares;
Valuation of Shares
Being Offered
Item 8. Redemption or Repurchase Redemption of Shares
Item 9. Pending Legal Proceedings Not Applicable
<PAGE>
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Part B - Statement of Additional Information
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information Prior Existence of the
Fund
and History
Item 13. Investment Objectives Investment Objectives and
Operating
and Policies Policies; Portfolio
Turnover
Item 14. Management of the Fund Trustees and Officers
Item 15. Control Persons and Trustees and Officers;
Control of the Fund
Principal Holders of
Securities
Item 16. Investment Advisory and Investment Advisory and
Other Services
Other Services
Item 17. Brokerage Allocation and Transactions in Portfolio
Securities
Other Practices
Item 18. Capital Stock and Shares of the Fund
Other Securities
Item 19. Purchase, Redemption and Purchase and Pricing
Pricing of Securities
Being Offered
Item 20. Tax Status Tax Status
Item 21. Underwriters Principal Underwriters
Item 22. Calculation of Performance Data
Performance Data
Item 23. Financial Statements Financial Statements
<PAGE>
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Part C - Other Information
Item 24. Financial Statements Financial Statements and
Exhibits
and Exhibits
Item 25. Persons Controlled by Persons Controlled by or
Under Common
or Under Common Control Control with the Fund
with Registrant
Item 26. Number of Holders of Number of Holders of
Securities
Securities
Item 27. Indemnification Indemnification
Item 28. Business and Other Business and Other
Connections of
Connections of Investment Investment Advisers
Adviser
Item 29. Principal Underwriters Principal Underwriter
Item 30. Location of Accounts Location of Accounts and
Records
and Records
Item 31. Management Services Management Services
Item 32. Undertakings Undertakings
<PAGE>
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SUBJECT TO COMPLETION
NOVEMBER 22, 1995
EAI SELECT MANAGERS EQUITY FUND
PROSPECTUS
___________, 1995
200 Connecticut Avenue, Suite 700, Norwalk, Connecticut 06854
(203) 855-2200
Shareholder Services: (800) 798-8055
The EAI Select Managers Equity Fund (the "Fund") is a diversified,
open-end management investment company with a diversified equity portfolio.
The primary investment objective of the Fund is to achieve long-term capital
appreciation. The assets of the Fund are invested primarily in common stocks,
but may also be invested in convertible securities and fixed income securities.
Fund assets are managed by multiple subadvisers, which provides for a
diversified approach to the management of those assets. There can be
no assurance that the Fund can achieve its investment
objective .
The Fund is authorized to offer its common shares (the "Shares") which
may be purchased at a price equal to their net asset value per share on a
continuous basis. Each Share represents an identical interest in the
investment portfolio of the Fund and has the same rights.
This prospectus sets forth concisely the information concerning the
Fund that a prospective investor ought to know before investing. It should be
read and retained for future reference. The Fund has filed with the Securities
and Exchange Commission a Statement of Additional Information, dated
____________, 1995, which contains more detailed information about the Fund and
is incorporated into this Prospectus by reference. A copy of the Statement of
Additional Information may be obtained without charge by contacting EAI
Securities Inc. at 200 Connecticut Avenue, Suite 700, Norwalk, Connecticut
06854, (203) 855-2200.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
INTRODUCTION
This Prospectus describes the shares offered by and operations of the
Fund. The Fund is a diversified, open-end management investment company which
was established in 1995. This Prospectus offers Shares of the Fund. See
"Description of Shares, Voting Rights and Liabilities" on page
14 .
Investment Objective
The primary investment objective of the Fund is to achieve long-term
capital appreciation. The Fund attempts to achieve this objective by utilizing
subadvisers (the "Subadvisers") which have investment philosophies consistent
with this basic objective. The Subadvisers invest the assets of the Fund
primarily in a variety of equity securities, including common stocks, but may
also invest in convertible securities and fixed income securities with a
maximum remaining maturity of 15 years. The principal risks associated
with an investment in the Fund relate to the risks associated generally with
equity securities. See "Investment Objectives and Policies" on page 6 and
"Investment Techniques and Associated Risks" on page 7.
The Investment Adviser
The Fund is managed by Evaluation Associates Capital Markets,
Incorporated (the "Manager"), a registered investment adviser, commodity pool
operator and commodity trading adviser located in Norwalk, Connecticut. For
its services to the Fund, the Manager is entitled to a fee, payable quarterly,
at the rate of 0.92% per annum of the average daily net asset values of the
Fund. See "Management of the Fund" on page 10 for a
description of the Management Agreement.
The Subadvisers
The Manager is responsible, subject to the oversight of the Fund's
Board of Trustees, for the selection and supervision of the Subadvisers. When
originally selected by the Manager , the Subadvisers are generally small
(less than $750 million in total assets under management) and have only one or
two key investment professionals, although the Subadvisers may grow beyond
these parameters after their selection by the Manager (as several of the
current Subadvisers already have). The Fund presently has five Subadvisers,
which are listed in the remainder of this paragraph. Dietche & Field Advisers,
Inc. invests primarily in securities issued by medium to large-sized companies
and focuses on value and an "eclectic" mix (i.e. a selection of securities that
appear to be superior using various methods). Liberty
Investment Management invests primarily in securities issued by medium-sized
companies and focuses on growth and value. Hudson Capital Advisors invests
primarily in securities issued by medium to large-sized companies and focuses
on growth and an eclectic mix. Stonehill Capital Management, Inc. invests
primarily in securities issued by medium to large-sized companies and focuses
on growth and an eclectic mix. Equinox Capital Management, Inc. invests
primarily in securities issued by large-sized companies and focuses on value.
The Subadvisers are each entitled to a fee, payable quarterly by the
Manager . See "Management of the Fund" on page 10 and the
Statement of Additional Information for a description of the Manager and the
Subadvisers.
Currently, the Investment Company Act of 1940 (the "1940 Act") requires
that the Shareholders of the Fund approve the sub-advisory agreements between
the Manager and the Subadvisers. The Fund has applied to the SEC for
permission for the Manager to enter into sub-advisory agreements with the
Subadvisers with the approval of the Trustees but without shareholder approval.
The Shareholders of the Fund would, however, have to approve this change in
approval arrangements for the sub-advisory agreements. If the SEC grants the
Fund's application, the Manager will be able, subject to the approval of the
Trustees, to engage and to terminate Subadvisers, to change the terms of
specific sub-advisory agreements, or to continue the engagement of particular
Subadvisers after events which would otherwise require their automatic
termination under the 1940 Act. Moreover, while Shareholder approval would not
be required for the Manager to terminate a sub-advisory agreement, the
Shareholders would still have the ability to terminate such an agreement on
their own at any time by a vote of a majority of the outstanding Shares.
The Distributor
EAI Securities Inc. (the "Distributor") , an affiliate of the
Manager, serves as distributor of the Fund's shares. See "Distribution of
the Fund's Shares" on page 12 and the Statement of Additional
Information.
Offering and Redemption Price
Shares of the Fund may be purchased through the Distributor, which
offers the Fund's shares on a continuous basis. The Shares are sold at the net
asset value per share next computed after the purchase order is received by
DST Systems, Inc. (the "Transfer Agent"). The minimum initial
investment is $500,000, and the minimum subsequent investment is $1,000, which
minimums may be waived by the Fund. See "Purchase of Shares" on page
15 and "Valuation of Shares" on page 17 .
Shares of the Fund may be redeemed at any time at the net asset value
per share next computed after receipt of a redemption request in proper form by
the Transfer Agent. See "Redemption of Shares" on page 18 .
Risk Factors
There can be no assurance that the Fund will achieve its investment
objective . The Fund will invest primarily in a variety of
equity securities, and there are risks generally associated with such
investments. These risks include (i) ordinary market risks as a result
of changing economic and market conditions, (ii) the risks that result from
investing in small to medium sized companies, the securities of which (or the
financial instruments related to such securities) have a limited market, and
(iii) the risk that during the start-up phase of the Fund's operations, the
Fund's expenses may constitute a disproportionate percentage of the Fund's
average net assets due to a relatively low level of net assets. In addition,
the specific types of securities in which the Fund will invest also present
risks that are peculiar to those securities. For example, investments in
foreign securities are exposed to political and economic risks not associated
with domestic securities, as well as the possibility of the imposition of
withholding taxes and government restrictions on the sales of such securities.
Investments in illiquid securities are subject to greater risk of loss because
they are not readily marketable. Repurchase agreements involve certain risks
in the event of a default or insolvency by the other party. Warrants are
generally considered more speculative investments and are therefore subject to
a greater risk of loss. Investments in other investment companies investing in
the securities described above are subject to the same risks as a direct
investment in those securities. See "Investment Techniques and Associated
Risks" on page 7 for a more detailed discussion of these risk factors .
FUND EXPENSES
The following table provides the investor with information concerning
annual operating expenses of the Fund. The expenses and fees set forth in the
table are projected for the Fund's initial fiscal year, on a pro forma basis.
The Fund has no operating history on which to base a historical disclosure of
fees:
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load on Purchases
None
(as a percentage of offering price)
Maximum Sales Load Imposed on Reinvested Dividends
None
(as a percentage of offering price)
Deferred Sales Load
None
(as a percentage of either original purchase
price or redemption proceeds)
Redemption Fee
None
(as a percentage of amount received)
ANNUAL FUND OPERATING EXPENSES
Management Fees*
0.92%
Other Expenses
0.48%
Total Fund Operating Expenses+
1.40%
_____________________
*The Management Fees reflect the aggregate fees paid to the Manager and
each Subadviser. For a description of such fees, see "Management of the Fund"
on page 10 and the Statement of Additional Information.
+The Manager has committed to waive a portion of its fee for the first
year of operation of the Fund to the extent necessary to cap overall Fund
expenses at 1.15%. Thereafter, the Manager's fee may not be
capped, and, if not, the total Fund operating expenses are expected to be
approximately 1.40%, assuming a net asset value for the Fund of at least $75
million. The table above reflects projected fees without giving effect to the
Manager's fee cap in that first year of the Fund's operation.
Example 1 year 3 years
Assuming a hypothetical $1,000 investment and assuming (1) a
5% annual rate of return and (2) redemption at the end of each
time period, an investor would pay the following expenses:
$12 $44
An investor would pay the following expenses on the same
$1,000 investment assuming no redemption at the end of each
time period:
$12 $44
The purpose of the table above is to help the investor understand the
various costs and expenses that the investor will bear directly or indirectly.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The
expenses set forth in this table are based on total Fund operating expenses of
1.15% in the Fund's first year (as a result of the Manager's fee cap
described above) and total Fund operating expenses of 1.40% each year
thereafter, assuming a net asset value for the Fund of at least $75 million.
For more complete descriptions of the various costs and expenses, see
"Management of the Fund" on page 10 .
Payments of fees are stated as a percentage of net assets of the Fund.
"Other Expenses" is based on projected amounts for the initial fiscal year.
In certain instances, the Fund may enter into directed brokerage
arrangements in which it will direct the brokerage for certain securities
transactions to be entered into by its Subadvisers to a certain broker-dealer
in exchange for that broker-dealer's agreement to pay a portion of the
custodian, transfer agent or other administrative fees incurred by the Fund.
Such arrangements are discussed further herein. In addition, the Manager may
from time to time, but is not required to, waive all or a portion of the
management fee due to it under the Management Agreement. Any voluntary fee
waiver by the Manager may be terminated or reduced at any time in the sole
discretion of the Manager. Shareholders will be notified of any changes in
such fee waivers at the time they become effective. Directed brokerage
arrangements will not be effected at any time that the Manager has waived all
or a portion of the management fee due to it under the Management Agreement, in
accordance with the requirements of the 1940 Act and the rules thereunder.
The Manager has committed to waive a portion of its fee for the first
year of operation of the Fund to the extent necessary to cap overall Fund
expenses at 1.15% of the average of the daily net asset value
of the Fund.
PERFORMANCE ADVERTISEMENTS
From time to time, the Fund may include performance data in
advertisements, sales literature or reports to current or prospective
shareholders. Performance data about the Fund is based on the Fund's past
performance only and is not an indication of future performance. Performance
data may be expressed in various measures, including total return for the
Fund's Shares or as a statistical reference to the Fund's volatility. Average
annual total return figures as prescribed by the Securities and Exchange
Commission represent the average annual percentage change in value of a $1,000
investment in the Fund for one-, five-, and ten-year periods, or any portion
thereof, to the extent applicable, through the end of the most recent fiscal
quarter, assuming reinvestment of all distributions. The Fund may also furnish
total return quotations for other periods, or based on investments of other
amounts. For such purposes, total return equals the total of all income and
capital gains paid to holders of Shares of the Fund, assuming reinvestment of
all distributions, plus (or minus) the change in value of the original
investment, expressed as a percentage of the purchase price. Volatility will
be measured as the standard deviation of the Fund's past performance. The Fund
may also include in advertisements, sales literature or reports a comparison of
Fund performance to the performance of other mutual funds or various
unmanaged indices. Unmanaged indices may assume the reinvestment of dividends,
but generally do not reflect deductions for administrative and management costs
and expenses.
Advertisements, sales literature and communications may also contain
information about the Fund's, the Manager's or the Subadvisers' current
investment strategies and management style. Current strategies and style may
change to allow the Fund to respond quickly to a changing market and economic
environment. From time to time, the Fund may discuss specific portfolio
holdings or industries in such communications.
Performance information for the Fund reflects only the performance of a
hypothetical investment in the shares of the Fund during the particular time
period on which the calculations are based. Performance information should be
considered in light of the Fund's investment objectives and policies,
characteristics and qualities of the Fund's portfolio, and the market
conditions during the given time period, and should not be considered as a
representation of what may be achieved in the future. For a description of the
methods used to determine total return and volatility, see the Statement of
Additional Information.
ORGANIZATION OF THE FUND
The Fund was organized on September 27, 1995 as a Massachusetts
business trust. The Fund is categorized as an open-end management company
under Sections 4 and 5 of the 1940 Act.
INVESTMENT OBJECTIVES AND POLICIES
The primary investment objective of the Fund is to achieve long-term
capital appreciation. There can be no assurance that the Fund will achieve its
objective. The Fund's investment objective is a fundamental policy and may not
be changed without majority shareholder approval. In addition, the Fund's
policy is to invest at least 65% of its total assets in equity securities, and
this is also a fundamental policy that may not be changed without majority
shareholder approval; provided however that the Fund may at times for defensive
purposes temporarily place all or a portion of its assets in cash, short-
term commercial paper, U.S. government securities, high quality debt securities
and obligations of banks when, in the judgment of the Manager or a Subadviser,
such investments are appropriate in light of economic or market conditions.
The Fund attempts to achieve its investment objective by utilizing
Subadvisers which have investment philosophies consistent with this basic
objective. The Subadvisers invest the assets of the Fund primarily in a
variety of equity securities, including common stocks, but may also invest in
convertible securities and fixed income securities with a maximum remaining
maturity of fifteen years. The Fund presently has five Subadvisers. Dietche &
Field Advisers, Inc. invests primarily in securities issued by medium to large-
sized companies and focuses on value and an "eclectic" mix (i.e., a selection
of securities that appear to be superior using various methods).
Liberty Investment Management invests primarily in securities issued by medium-
sized companies and focuses on growth and value. Hudson Capital Advisers
invests primarily in securities issued by medium to large-sized companies and
focuses on growth and an eclectic mix. Stonehill Capital Management, Inc.
invests primarily in securities issued by medium to large-sized companies and
focuses on growth and an eclectic mix. Equinox Capital Management, Inc.
invests primarily in securities issued by large-sized companies and focuses on
value.
The Fund does not propose to concentrate 25% or more of its total
assets in a particular industry or group of industries.
The Fund is subject to certain investment restrictions which may not be
changed without majority shareholder approval.
The Fund pursues its investment objectives primarily by investing in
equity or equity-related securities, which consist primarily of common stock,
American Depositary Receipts and convertible securities (including bonds).
To the extent consistent with its investment objectives and policies,
the Fund may also invest in fixed income securities for current income and
capital preservation. Such fixed income securities will have a maximum
remaining maturity of 15 years. The Fund will invest in fixed income
securities issued by the U.S. government and certain of its agencies and
instrumentalities, or corporate bonds or debentures that are rated not less
than Aa by Moody's or AA by Standard and Poor's or, in the case of debt
securities not rated by Moody's or Standard and Poor's, of comparable quality
as determined by the appropriate Subadviser (provided that the rating of
certain convertible fixed income securities may be lower). The Fund may also
invest in fixed income securities for capital appreciation. Fixed income
securities may have fixed or variable rates. The Fund may at times for
defensive purposes temporarily place all or a portion of its assets in cash,
short-term commercial paper, U.S. government securities, high quality debt
securities and obligations of banks when, in the judgment of the Manager or a
Subadviser, such investments are appropriate in light of economic or market
conditions.
INVESTMENT TECHNIQUES AND ASSOCIATED RISKS
The following are descriptions of certain types of securities invested
in by the Fund, certain investment techniques employed by the Fund, and risks
associated with using either those securities or those investment techniques.
General Risks Associated with the Fund
The Fund is subject to ordinary market risks as a result of changing
economic and market conditions which might affect the profitability and
financial condition of the companies in whose securities the Fund assets are
invested. In an attempt to mitigate the risk of loss of principal due to
market fluctuation for individual securities, the Fund invests primarily in a
diversified portfolio of equity securities. Moreover, the use of several
Subadvisers provides further diversification in the investments of the Fund.
Such diversification does not eliminate all risks and investors should expect
the net asset value of their shares in the Fund to fluctuate based on market
conditions or a variety of other factors, as discussed herein.
The securities of small to medium-sized (by market capitalization)
companies, or financial instruments related to such securities, may have a more
limited market than the securities of larger companies. Accordingly, it may be
more difficult to effect sales of such securities at an advantageous time or
without a substantial drop in price than it would be with securities of a
company with a larger market capitalization and broader trading market.
In addition, securities of a small to medium-sized company may have greater
price volatility as they are generally more vulnerable to adverse market
factors such as unfavorable economic reports.
The Fund is a newly organized investment company. During the start-up
phase of the Fund, Fund expenses may constitute a disproportionate percentage
of average Fund net assets due to a relatively low level of net assets.
Other Securities
In addition to the general risks associated with the Fund, certain
types of securities in which the Fund will invest present more specific risks.
Foreign Securities. While the Fund will not directly invest in foreign
securities, it may invest to a limited extent in sponsored or unsponsored
American Depository Receipts ("ADRs") or other investment companies that invest
in foreign securities, so the performance of these investments will depend upon
the performance of the underlying foreign securities. ADRs are dollar-
denominated receipts issued generally by U.S. banks and which represent a
deposit with the bank of a foreign company's securities. Unsponsored ADRs
differ from sponsored ADRs in that the establishment of unsponsored ADRs is not
approved by the issuer of the underlying foreign securities. Ownership of
unsponsored ADRs may not entitle the Fund to financial or other reports of the
issuer, to which it would be entitled as the owner of sponsored ADRs.
Investments in foreign securities involve risks that differ from investments in
securities of domestic issuers. Such risks may include political and economic
developments, the possible imposition of withholding taxes, possible seizure or
nationalization of assets, the possible establishment of exchange controls or
the adoption of other foreign governmental restrictions which might adversely
affect the Fund's investments. In addition, foreign countries may have less
well-developed securities markets as well as less regulation of stock exchanges
and brokers and different auditing and financial reporting standards. Not all
foreign branches of United States banks are supervised or examined by
regulatory authorities as are United States banks, and such branches may not be
subject to reserve requirements. Investing in the fixed-income markets of
developing countries involves exposure to economies that are generally less
diverse and mature, and to political systems which may be less stable, than
those of developed countries. Foreign securities often trade with less
frequency and volume than domestic securities and therefore may exhibit greater
price volatility. Changes in foreign exchange rates will affect the value of
those securities which are denominated or quoted in currencies other than the
U.S. dollar.
Illiquid Securities. The Fund may invest up to 15% of its net
assets in securities that are not readily marketable ("illiquid securities").
These securities, which may be subject to legal or contractual restrictions on
their resale, may involve a greater risk of loss. Securities that are not
registered for sale under the Securities Act of 1933, as amended (the "1933
Act"), but are eligible for resale pursuant to Rule 144A under the 1933 Act,
will not be considered illiquid for purposes of this restriction if the
appropriate Subadviser determines, subject to the review of the Trustees, that
such securities have a readily available market.
Repurchase Agreements. In a repurchase transaction, the Fund purchases
a security from a bank or a broker-dealer and simultaneously agrees to resell
that security to the bank or broker-dealer at an agreed upon price on an
agreed-upon date. The resale price reflects the purchase price plus an agreed
upon rate of interest. In effect, the obligation of the seller to repay the
agreed-upon price is secured by the value of the underlying security.
Repurchase agreements could involve certain risks in the event of default or
insolvency of the other party, including possible delays or restrictions upon
the Fund's ability to dispose of the underlying securities, and the value
received upon disposal being less than the amounts due the Fund. The Fund may
not invest in repurchase agreements with a maturity of more than seven days if
the aggregate of such investments, along with other illiquid securities,
exceeds 15% of the value of the Fund's net assets.
Warrants. The holder of a warrant has the right to purchase a given
number of shares of a particular issuer at a specified price until expiration
of the warrant. Such investments can provide a greater potential for profit or
loss than an equivalent investment in the underlying security, and are
considered speculative investments. For example, if a warrant were not
exercised by the date of its expiration, the Fund would lose its entire
investment. The Fund's investments in warrants will not exceed 5% of the value
of its net assets (calculated at market value at the time of each investment),
and not more than 2% of its net assets will be invested in warrants or rights
not listed on the New York Stock Exchange.
Investment Companies. The Fund may invest in other registered
investment companies which in turn invest in the types of securities discussed
in the preceding paragraphs. As such, the performance of the Funds's
investments in those other investment companies will be subject to the sorts of
risks described in the preceding paragraphs. Pursuant to the 1940 Act, the
Fund may acquire no more than 3% of the outstanding voting stock of any single
investment company, and it may invest no more than 5% of its assets in
any one investment company and no more than 10% of its assets (in each case
taken at market value and measured immediately after giving effect to such
investment) in all of the investment companies whose securities it owns.
When the Fund invests in the securities of other registered investment
companies, certain expenses, such as management fees, will be duplicated.
Portfolio Turnover
In carrying out the investment policies described in this Prospectus,
the Fund expects to engage in a substantial number of securities portfolio
transactions, and the rate of portfolio turnover will not be a limiting factor
when a Subadviser deems it appropriate to purchase or sell securities for the
Fund. The Fund estimates that its annual turnover rate will not
exceed 200%. High portfolio turnover involves correspondingly greater
brokerage commissions for the Fund and other transaction costs that are borne
directly by the Fund. In addition, high portfolio turnover may also result in
increased short-term capital gains which, when distributed to shareholders, are
treated for federal income tax purpose as ordinary income. See "Portfolio
Transactions and Brokerage" on page 12 and "Tax Information" on
page 15 .
MANAGEMENT OF THE FUND
Board of Trustees
The Board of Trustees of the Fund (the "Trustees") is responsible for
the overall supervision of the operations of the Fund. The Trustees perform
the duties imposed on them by the 1940 Act and the Massachusetts General Laws.
In addition to their other duties, the Trustees appoint the officers of the
Fund annually and approve the selection and termination of the Subadvisers.
More information on the Trustees is set forth in the Statement of Additional
Information.
The Manager
Pursuant to a Management Agreement (the "Management Agreement"), the
Manager acts as investment adviser for the Fund. In this capacity, the
Manager, subject to the authority of the Trustees, is responsible for the
overall management of the Fund's business affairs. This responsibility
includes the selection and termination of the Subadvisers and the allocation of
portfolio assets among the Subadvisers, subject in each case to the oversight
of the Trustees.
EAI Partners, L.P., the Manager's direct parent (the "Parent"), and its
predecessors together have more than 19 years of experience in the investment
consulting business. The Parent is presently owned by certain employees and
certain non-employee investors. Equity interests in the Parent are owned by a
total of 29 entities, and no single equity holder holds more than 25% of the
outstanding equity interests of the Parent. The Parent and its subsidiaries
together currently have more than 100 employees, approximately 55 of which
are professional staff. The Parent, directly and through the Manager, offers
services which are generally divided between investment consulting services,
including manager evaluation and performance evaluation services, and the
management of multi-adviser funds for a number of institutional and high net
worth individual clients. The Manager's address is 200 Connecticut Avenue,
Suite 700, Norwalk, Connecticut 06854-1958.
The Subadvisers
Dietche & Field Advisers, Inc. was formed in November, 1984 and is
currently owned by its employees. As of December 31, 1994, it had $3.2 billion
of assets under management. Its address is 437 Madison Avenue, New York, New
York 10022.
Liberty Investment Management (formerly Eagle Asset Management) was
originally formed in January, 1976 and is currently wholly owned by Herbert E.
Ehlers. As of December 31, 1994, it had $4.4 billion of assets under
management. Its address is 2502 Rocky Point Drive, Tampa, Florida 33607.
Hudson Capital Advisers was formed in January, 1987. The firm is a
division of Fahnestock & Co., Inc., which is wholly owned subsidiary of
Fahnestock Viner Holdings Inc., a publicly held Canadian Company. As of
December 31, 1994, assets under management totalled $788 million. Its address
is 805 Third Avenue, New York, New York 10022.
Stonehill Capital Management was formed in April, 1989. The firm is
owned by Robert Emerson. As of December 31, 1994, assets under management
totalled $163 million. Its address is 277 Park Avenue, New York, New York
10052.
Equinox Capital Management, Inc. was formed in May, 1989. The firm is
owned by its employees. As of December 31, 1994, assets under management
totalled $3.3 billion. Its address is 399 Park Avenue, New York, New York
10022.
Compensation
As compensation for its services, the Manager is entitled to a fee,
payable quarterly, at the annual rate of 0.92% of the average of the daily net
asset value of the Fund. This fee is higher than the management fee paid by
most investment companies. The Management Agreement also provides that the
Fund will reimburse the Manager on a cost basis in the event that the Manager
provides any services involved in maintaining registrations of the Fund and its
shares with the Securities and Exchange Commission or involved in the
preparation of shareholder reports and further provides that the Manager will
reimburse the Fund for the amount, if any, of the expenses of the Fund
(including the Manager's compensation but excluding interest, brokerage costs,
taxes and extraordinary expenses) for any fiscal year which exceeds the level
of expenses which the Fund is permitted to bear under the most restrictive
expense limitation imposed (and not waived) on the Fund by any state in which
the shares of the Fund are then qualified for sale. The Manager has committed
to waive a portion of its fees for the first year of operation of the
Fund to the extent necessary to cap overall Fund expenses at
1.15% .
The Manager pays a portion of its management fees to the Subadvisers
pursuant to the Sub-advisory Agreements between the Manager and each
Subadviser. The following are the amounts paid to each Subadviser (expressed
as a per annum percentage of the average of the monthly net
asset value of the assets of the Fund managed by such Subadvisor):
Dietche & Field Advisers, Inc. - .375%
Liberty Investment Management - .375%
Hudson Capital Advisers - .375%
Stonehill Capital Management, Inc. - .375%
Equinox Capital Management, Inc. - .375%
The amount of the management fee that will be retained by the Manager
may vary according to the allocation of Fund assets among the Subadvisers. It
is presently estimated that, in the first fiscal year of the Fund, the Manager
will pay approximately 41% of the management fee it receives under the
Management Agreement to the Subadvisers and will retain approximately 59% of
that fee for itself, assuming the Manager's cap on its management fees in the
first year of the Fund's operation does not impact these percentages.
The Portfolio Manager
Mr. Keith Stransky will serve as portfolio manager of the Fund. Mr.
Stransky is Senior Vice President and Director of Traditional Funds Management
and Research for the Manager. Mr. Stransky joined the Parent in 1983, and
prior to that he was the Technical Director for Hamilton, Johnston & Co., Inc.
Mr. Stransky has 20 years of consulting-related investment experience. Mr.
Stransky is a Chartered Financial Analyst.
The Fund will retain Van Eck Associates Corporation to
perform administrative and accounting functions for it. These
functions will include legal, accounting, regulatory and compliance
services, state registration services, corporate secretary and board
of trustees administration, tax compliance services and reporting.
Van Eck Associates Corporation receives an annual fee, payable
monthly, at a per annum percentage of the average daily net asset value of the
assets of the Fund. The annual fee is graduated, beginning at .20% of the
average daily net assets of the Fund if such assets during the month the fee is
calculated are less than $100 million and ending at .12% of the average
daily net assets of the Fund if such assets during the month the fee is
calculated are equal to or more than $260 million. There is a minimum annual
fee of $100,000 payable to Van Eck Associates Corporation.
Certain financial institutions that are not affiliated with the Fund or
the Distributor have agreed to provide certain services to Shareholders. If
and to the extent that those financial institutions provide assistance in
marketing the Shares of the Fund, Van Eck Associates Corporation will
compensate those institutions for that assistance from its own resources.
The Custodian and the Transfer Agent
Boston Safe Deposit and Trust Company will serve as the
Fund's Custodian pursuant to a Custody Agreement.
Its address is One Boston Place, Boston, Massachusetts 02108.
DST Systems, Inc. will serve as the Fund's transfer, dividend
disbursing and shareholder servicing agent pursuant to an Agency Agreement.
Its address is 1004 Baltimore, Kansas City, Missouri 64105-1802 .
DISTRIBUTION OF THE FUND'S SHARES
The Distributor
The Distributor will serve as the distributor of the shares of the
Fund. Its address is 200 Connecticut Avenue, Norwalk, Connecticut 06854-1958.
The Distributor will distribute the shares of the Fund solely on a subscription
basis.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Each Subadviser is responsible for decisions to buy and sell securities
using the Fund assets allocated to it, as well as for broker-dealer selection
in connection with the portfolio managed by such Subadviser. Each Subadviser
will adhere to the Fund's policy of seeking the best execution and price (which
in some instances may include paying higher brokerage commissions for brokerage
and research services provided to the Fund and may include the directed
brokerage arrangements described in the next paragraph).
In certain instances, the Fund may enter into directed brokerage
arrangements in which it will direct the brokerage for certain securities
transactions to be entered into by its Subadvisers to a certain broker-dealer
in exchange for that broker-dealer's agreement to pay a portion of the
custodian, transfer agent or other administrative fees incurred by the Fund.
Directed brokerage transactions will only be executed if, in light of the
offsetting reduction in administrative fees to be incurred by the Fund, they
represent the best execution and price for that transaction or as good
execution and price as would otherwise be available to the Fund. As stated
above, directed brokerage arrangements will not be effected at any time that
the Manager has waived all or a portion of its management fee.
The Manager and/or one or more of the Subadvisers may use an affiliated
broker/dealer to execute transactions on behalf of the Fund. In addition, the
Manager may participate in the directed brokerage arrangement described above
with an affiliated broker/dealer.
PERFORMANCE INFORMATION
As stated above, the Manager, the Parent and their predecessors
together have more than 19 years of experience in the investment consulting and
management business. Among the assets under the management of the Parent and
the Manager are, respectively, The EAI Small Managers Equity Fund Trust (the
"SMEF Trust") and the W.R. Long Fund (collectively with the SMEF Trust, the
"EAI Funds"), two collective investment funds with investment objectives and
styles that are similar to those of the Fund. The following data relate to the
historic composite performance of the EAI Funds, comparing that performance
to the Standard & Poor's 500 Stock Index (the "S&P 500"). The figures for the
EAI Funds represent the dollar weighted total rate of return, which
approximates the performance of the two funds if their assets were combined,
and include the impact of capital appreciation as well as the reinvestment of
interest and dividends. THE FOLLOWING TABLE REPRESENTS ONLY THE HISTORIC
PERFORMANCE OF THE TWO FUNDS MENTIONED ABOVE, AND SHOULD NOT BE CONSIDERED
AS AN INDICATION OF THE FUTURE PERFORMANCE OF THE FUND.
<TABLE>
<CAPTION>
Time Period EAI Funds(1) S&P 500(2)
<S> <C> <C> <C>
10 years 1985-1994 16.40% 14.36%
5 years 1990-1994 11.19 8.67
3 years 1992-1994 10.09 6.25
1 year 1994 -1.90 1.28
</TABLE>
(1) The returns for the EAI Funds are a dollar-weighted composite of two
equity-oriented, fully discretionary, separately managed collective
investment funds, each of which had a net asset value of more than
$48,000,000 as of December 31, 1994 and each of which had been managed
by the Manager or the Parent for at least two years prior to that date.
The combined net asset value of the EAI Funds on December 31,
1994 was approximately $265,000,000. The return for the EAI Funds was
calculated as a time-weighted rate of return (i.e., cash flows are
included on the date on which they are received) in accordance with
standards set by the Association for Investment Management and
Research. The composite does not reflect all of the assets under the
management of the Manager, the Parent and their affiliates and may not
accurately reflect the performance of all accounts managed by them.
(2) The S&P 500 is a market weighted index composed of 500 companies with
market capitalizations over $5,000,000,000. The index is unmanaged and
reflects the reinvestment of dividends.
The performance figures set forth above for the EAI Funds include fees
and expenses paid by the EAI Funds which, on a weighted net basis, were
approximately 1.05% to 1.07% per year, which is less than the estimated fees to
be incurred by the Fund either during its first year of operations, when the
cap on the management fee to be paid to the Manager will be in effect, or
thereafter.
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Fund offers one class of Shares. The Shares have no par value, and
the Fund may increase the number of Shares without the approval of the existing
Shareholders, provided that any such increase may not decrease the net asset
value of the existing Shares. Shares of the Fund are entitled to one vote per
share. Shareholders have the right to vote on the election of the Trustees and
on all other matters on which, by law or by the Fund's Declaration of Trust,
they may be entitled to vote.
The Fund is not required, and does not intend, to hold annual meetings
of Shareholders under normal circumstances. The Trustees or the Shareholders
may call special meetings of the Shareholders for action by Shareholder vote,
including the removal of any or all of the Trustees. Trustees will call a
special meeting of Shareholders of the Fund upon written request of the holders
of at least 10% of the outstanding Shares.
Under Massachusetts law, the shareholder and trustees of a business
trust like the Fund may, in certain circumstances, be personally liable for the
trust's obligations to third parties. However, the Fund's Declaration of Trust
provides, in substance, that no Shareholder or Trustee shall be personally
liable for the Fund's obligations to third parties and that every written
contract made by the Fund shall contain a provision to that effect. The Fund's
Declaration of Trust also requires the Fund to indemnify Trustees against such
liabilities and any related claims and expenses. The Fund will not indemnify a
Trustee when the loss is due to willful misconduct, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of the Trustee's
office.
The Fund is presently wholly owned by the Manager as a result of the
Manager's initial capital investment of $100,000 in the Fund. The Manager will
sell its interest in the Fund when the organization costs of
the Fund are fully amortized .
Organization expenses will be capitalized by the Fund and amortized
over 60 months.
Shareholder inquiries should be made to the Fund at 200 Connecticut
Avenue, Suite 700, Norwalk, Connecticut 06854, (203) 855-2200.
DIVIDENDS AND DISTRIBUTIONS
Income dividends will normally be paid by the Fund on
at least an annual basis . Income dividends will normally be
declared on the fourth business day prior to the end of the dividend period,
payable on the following business day, to Shareholders of record on the day
prior to the declaration date. Distributions of any capital gains will
normally be paid at least annually . Unless a Shareholder has
elected to receive dividends and distributions in cash, all dividends and
distributions will be reinvested in additional shares of the Fund (at net asset
value at the time of reinvestment) . Any election may be
changed at any time by delivering written notice to the Fund at least ten
business days prior to the payment date.
TAX INFORMATION
The Fund intends to qualify as a regulated investment company under the
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), that
relieve such investment companies which distribute substantially all of their
net income (both net investment income and net capital gains) from Federal
income tax on the amounts distributed.
All income dividends and distributions designated as capital gains are
generally taxable to Shareholders for Federal income tax purposes whether
received in cash or additional shares. Shareholders exempt from
or otherwise not required to pay Federal income tax will not be required to
pay that tax on such amounts distributed to them except to the extent that the
Shares with respect to which such amounts were distributed were acquired with
outstanding debt. The Fund will inform Shareholders of the amount and
nature of dividends, distributions and capital gains.
In addition, depending upon whether certain participant directed
account plans (within the meaning of Section 404(c) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) that currently invest in the
SMEF Trust choose to invest in the Fund and depending upon their level of
investment, it is possible that the Fund will be a personal holding company
under the Code . This would result in the Fund being subject to
Federal income tax at the maximum rate applicable to corporations for the tax
year involved on any amount by which the Fund failed or was unable to make
distributions to Shareholders sufficient in amount to avoid that tax entirely.
In addition, it would result in the Fund being subject to personal holding
company tax, at the rate of 39.6%, on any amount by which the Fund failed or
was unable to make distributions to Shareholders sufficient in amount to avoid
personal holding company tax entirely .
Shareholders should consult with their own tax advisers for more
information regarding the Federal, foreign, state and local tax rules
applicable to ownership and disposition of Shares of the Fund by them. See
"Federal Income Tax Status" in the Statement of Additional Information.
PURCHASE OF SHARES
The Shares are offered on a continuous basis and are sold at the net
asset value per share next computed after the purchase order is received by the
Fund's Transfer Agent. The Shares are sold without any sales loads or charges.
There is a minimum purchase requirement of $500,000 for initial purchases of
the Shares and of $1,000 for additional purchases of the Shares, which minimums
may be waived by the Fund. It is contemplated that employees of the Parent and
its affiliates may purchase Shares, and such minimums may be waived for such
purchases.
Purchases of Shares directly from the Trust may be made by check by
sending an account application and a check (payable to EAI Select Managers
Equity Fund) to EAI Select Managers Equity Fund, c/o DST
Systems, Inc., P.O. Box 419563, Kansas City, Missouri 64141-9563. Overnight
deliveries may be sent to 1004 Baltimore, Kansas City, Missouri 64105-1802.
Purchases may also be made directly by Federal Funds or bank wire
; please call the Transfer Agent at 800-798-8055 to obtain an
account number and bank wire instructions in advance of purchase.
Certain states may require registered investment advisers that purchase
Shares for customers in those states to register as broker-dealers. From time
to time the Distributor may supply material to Registered Investment Advisers
and other investment professionals to assist them in formulating an investment
program using the Fund for their clients. Such materials are designed to be
used and evaluated by investment professionals, do not contain investment
advice and are not available for distribution to the general public.
Certain investors may purchase or sell Shares through broker-dealers or
through other processing organizations that may impose transaction fees or
other charges in connection with providing this service, which fees and charges
the Fund believes will be disclosed to such investors. Shares purchased in
this manner may be treated by the Fund as a single account for purposes of the
minimum initial investment. Investors are not required to utilize the services
of a broker-dealer or other processing organization and may purchase
Shares directly from the Fund.
Shares are offered and orders accepted on each business day (i.e. a day
on which the New York Stock Exchange ("NYSE") is open for trading). The Fund
may limit or suspend the offering of Shares at any time and may refuse, in
whole or in part, any order for the purchase of Shares. Orders received by the
Fund or the Transfer Agent prior to 4:00 p.m. New York time on any business day
will receive the offering price computed for that day. Orders received after
4:00 p.m. New York time shall receive the offering price for the next
business day.
Wire transfers of funds used to pay for purchases of Shares must be
received by 3:00 p.m. New York time on the business day following the purchase.
Purchases paid for by check are effected when the check is received but are
subject to collection at full face value in U.S. funds and must be drawn in
U.S. dollars on a bank chartered by the United States or a state thereof. If a
check used to purchase Shares does not clear, the transaction will be
canceled and the investor will be responsible for any loss the Fund incurs. In
addition, the Fund may prohibit the future purchase of Shares by any investor
that fails to pay for a purchase of Shares. To ensure that checks are
collected by the Trust, redemptions of Shares purchased by check will not be
effected until the check clears, which could take as long as 15 days
after the date of purchase.
Shares of the Fund may also be purchased in exchange for securities
held by an investor which are acceptable to the Fund. Investors interested in
exchanging securities must first telephone the Manager at (203) 855-2200 for
instructions regarding submission of a written description of the securities
the investor wishes to exchange. Within five business days of the receipt of
the written description, the Manager will advise the investor by telephone
whether the securities to be exchanged are acceptable to the Fund and will
instruct the investor regarding delivery of the securities. There is no charge
for this review by the Manager.
Securities accepted by the Fund are valued in the manner and on the
days described in the section entitled "Valuation of Shares" as of the close
of business on the NYSE, generally 4:00 p.m. New York time. Acceptance may
occur on any day during the five-day period afforded the Manager to review the
acceptability of the securities. Securities which have been accepted by the
Fund must be delivered within five days following acceptance. Delivery
instructions will be provided at the time of acceptance.
The value of the securities to be exchanged and of the Shares of the
Fund may be higher or lower on the day Fund Shares are offered than on the date
of receipt by the Manager of the written description of the securities to be
exchanged. The number of Shares of the Fund received in exchange for such
securities will depend on the value of the securities and the net asset value
of Fund Shares next determined following acceptance on the day Fund Shares are
offered. Securities to be exchanged must be accompanied by a transmittal form
which is available from the Manager.
A gain or loss for federal income tax purposes may be realized by the
investor upon the securities exchange, computed by reference to the
tax basis of the securities tendered, depending upon various
factors relating to the timing of other such in-kind purchases of the Fund's
Shares and the make-up of the securities exchanged therefor. (See "Federal
Income Tax Status" in the Statement of Additional Information.) All interest,
dividends, and subscription or other rights with respect to accepted securities
which go "ex" after the time of valuation become the property of the Fund and
must be delivered to the Fund by the investor forthwith upon receipt from the
issuer. Further, the investor may be required to represent and agree that all
securities offered to the Fund are not subject to any restrictions upon their
sale by the Fund under the Securities Act of 1933, or otherwise.
In order to avoid unnecessary expenses and administrative
complications, certificates for the Shares will not be issued. All share
purchases will be confirmed to the record holder and credited to such holder's
account on the Fund's books maintained by the Transfer Agent.
It is presently expected that, in order to comply with a recent release
by the staff of the Securities and Exchange Commission regarding the treatment
of investment vehicles used by certain employee pension and benefit plans for
purposes of the 1940 Act, certain participant directed account plans with the
meaning of Section 404(c) of ERISA investing in the SMEF Trust will be asked to
withdraw their investments from that Trust. Those plans will be offered,
through this Prospectus, the opportunity to invest in the Fund the securities
that they receive from that Trust upon their withdrawal. If those plans choose
to invest in the Fund, it is anticipated that much of the Fund's initial
portfolio of assets will be comprised of securities obtained from those plans.
VALUATION OF SHARES
As stated above, the Shares are sold at net asset value per share for
the date of determination. Net asset value per share is determined as of the
close of business on the NYSE, generally 4:00 p.m. New York time on each
business day. Net asset value per share is equal to the net worth of the Fund
(assets minus liabilities) divided by the number of shares outstanding. Assets
and liabilities are determined in accordance with generally accepted accounting
principles and applicable rules and regulations of the Securities and
Exchange Commission.
Securities held by the Fund which are traded on a national exchange are
valued based on the last quoted sales price on such exchange on or recently
before the valuation date (or if the securities are traded on more than one
exchange on or recently before the valuation date, the principal exchange that
such securities are traded on, as determined by the appropriate Subadviser) or,
if there has been no recent sale of securities, at the last bid price. Over-
the-counter securities for which market quotations are readily available are
valued on the basis of the last sale price or, lacking any sales, at the last
quoted bid price. Securities and other investments for which market quotations
are not readily available are valued at fair value, as determined in good faith
and pursuant to procedures established by the Trustees.
REDEMPTION OF SHARES
Any Shareholder may require the Fund to redeem its shares at any time
at their net asset value next computed after receipt of the redemption order by
the Transfer Agent. The Fund may, however, refuse to effect such a redemption
if factors beyond the control of the Fund or the Manager, such as an unexpected
closing of the applicable securities exchange or a natural disaster, make such
a redemption impracticable. In addition, redemption of purchases made by check
are restricted as described above.
Any redemption orders received as indicated below before 4:00 p.m. New
York time on any business day will receive the net asset value determined on
that date. Any redemption orders received after 4:00 p.m. New York time will
receive the net asset value determined on the following business day. The Fund
cannot accept redemption orders transmitted to it at the address indicated on
the cover page of the Prospectus, but will use its best efforts to promptly
forward such orders to the Transfer Agent for receipt by the next business day.
An investor's investment professional is responsible for promptly transmitting
orders. There is no redemption charge.
Due to the relatively high cost of maintaining small accounts, the Fund
reserves the right to redeem a Shareholder account (after 60 days' notice) when
the value of the Shares in that account falls below $500,000
due to redemptions. Whether the Fund will exercise its right to redeem a
specific Shareholder account in these circumstances will be determined by the
Fund on a case-by-case basis.
Redemption orders should be mailed or telephoned to the
Transfer Agent. The Transfer Agent's mailing address is P.O. Box 419563,
Kansas City, Missouri 64141-9563. Overnight deliveries may be sent to 1004
Baltimore, Kansas City, Missouri 64105-1802. The Transfer Agent's telephone
number is 800-798-8055 . A redemption order should include the name of the
Fund, the Shareholder's account name and number, and the number of shares to be
redeemed. In addition, redemption orders which are submitted in writing
must be signed by the Shareholder. For telephone redemption orders, address
and bank account information will be verified, telephone redemption
instructions will be recorded on tape, and all redemptions will be confirmed in
writing to the Shareholder. If there has been a change of address in the past
60 days, a telephone redemption will not be authorized. The Fund and the
Transfer Agent will employ reasonable procedures to confirm that redemption
orders placed by telephone are genuine, and failure to do so or to follow
such procedures could result in the Fund and/or the Transfer Agent being
held liable for losses resulting from unauthorized or fraudulent instructions.
Telephone redemption orders must be received by the close of trading on the
New York Stock Exchange on a day when the Transfer Agent is open for
business.
If the amount of a redemption is greater than $1,000, the proceeds will
be wired to a designated U.S. commercial bank account. If the amount of the
redemption is less than $1,000, the proceeds will be sent via U.S. Mail to the
address of record on the Shareholder's account. As stated above, any
redemption of Shares purchased by check will not be effected until 15 days
after the date of purchase.
To the extent consistent with state and Federal law, the Fund may make
payment of the redemption price either in cash or in kind. However, the Fund
has elected, pursuant to Rule 18f-1 under the 1940 Act, to pay in cash all
redemptions requested by any Shareholder of record, limited in amount with
respect to each Shareholder during any 90-day period to the lesser of (i)
$250,000 or (ii) 1% of the net asset value of the Fund at the beginning of
such period. This election is irrevocable while Rule 18f-1 is in effect unless
the Securities and Exchange Commission, by order, permits the withdrawal
thereof. In the case of a redemption in kind, securities delivered in payment
for Shares would be valued at the same value assigned to them in computing the
net asset value of the Fund. A Shareholder receiving such securities would
incur brokerage costs when he sold the securities.
A complete description of redemption procedures is included in the
Statement of Additional Information.
PENDING LITIGATION
Affiliates of the Manager have been subject to certain
claims and litigation in connection with consulting services provided to the
investment manager of a certain mutual fund group. These claims have been
asserted with respect to certain fixed income funds, and relate primarily to
issues concerning their performance in 1994, investment techniques used and
disclosure made.
OTHER INFORMATION
Inquiries and requests for the Statement of Additional Information
should be directed to EAI Securities Inc., 200 Connecticut Avenue, Suite 700,
Norwalk, Connecticut 06854-1958 or (203) 855-2200.
<PAGE>
-1-
SUBJECT TO COMPLETION
NOVEMBER 22, 1995
EAI SELECT MANAGERS EQUITY FUND
STATEMENT OF ADDITIONAL INFORMATION
___________, 1995
200 Connecticut Avenue, Suite 700, Norwalk, Connecticut
06854
(203) 855-2200
Shareholder Services (800) 798-8055
This Statement of Additional Information relates to the EAI Select
Managers Equity Fund (the "Fund"). This Statement of Additional Information is
not a prospectus; it should be read in conjunction with the Prospectus of the
Fund dated _____________, 1995, copies of which may be obtained without charge
by contacting EAI Securities Inc. at 200 Connecticut Avenue, Suite 700,
Norwalk, Connecticut 06854, (203) 855-2200.
This Statement of Additional Information is authorized for distribution
to prospective investors only if preceded or accompanied by an effective
prospectus.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
ANY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT
CONSTITUTE A PROSPECTUS.
<PAGE>
-1-
TABLE OF CONTENTS
INVESTMENT RESTRICTIONS AND OPERATING POLICIES ................1
PORTFOLIO TURNOVER ............................................3
TRUSTEES AND OFFICERS .........................................3
CONTROL OF THE FUND .................................... 5
INVESTMENT ADVISORY AND OTHER SERVICES ................. 5
TRANSACTIONS IN PORTFOLIO SECURITIES ................... 9
SHARES OF THE FUND .................................... 10
PURCHASE AND PRICING .................................. 11
FEDERAL INCOME TAX STATUS ............................. 11
PERFORMANCE DATA ...................................... 14
FINANCIAL STATEMENTS .................................. 14
<PAGE>
-1-
INVESTMENT RESTRICTIONS AND OPERATING POLICIES
Except as described below, the following investment restrictions are
fundamental and may not be changed without the approval of a majority of the
outstanding voting securities of the Fund, as such terms are defined in the
Investment Company Act of 1940, as amended (the "1940 Act"). The Fund may not:
1. Invest in securities of any one issuer (other than securities
issued by the U.S. Government, its agencies and instrumentalities), if
immediately after and as a result of such investment the current market value
of the holdings of its securities of such issuer exceeds 5% of its total
assets.
2. Invest more than 25% of the value of its total assets in the
securities of companies primarily engaged in any one industry (other than the
United States Government, its agencies and instrumentalities). Such
concentration may occur incidentally as a result of changes in the market value
of portfolio securities, but such concentration may not result from investment.
Neither finance companies as a group nor utility companies as a group
are considered a single industry for purposes of this restriction. (Unless
otherwise provided, for purposes of this restriction, the term "industry" shall
be defined by reference to the Securities and Exchange Commission ("SEC")
Industry Codes set forth in the Directory of Companies Required to File Annual
Reports with the Securities and Exchange Commission.)
3. Acquire more than 10% of the outstanding voting securities of
any one issuer.
4. Borrow amounts in excess of 33 1/3% of its total assets taken at
cost or at market value, whichever is lower. It may borrow only from banks as
a temporary measure for extraordinary or emergency purposes. It will not
mortgage, pledge or in any other manner transfer any of its assets as security
for any indebtedness.
5. Invest more than 15% of the value of its net assets in illiquid
instruments including, but not limited to, securities for which there are no
readily available market quotations, dealer (OTC) options, assets used to cover
dealer options written by it, repurchase agreements which mature in more than 7
days, variable rate industrial development bonds which are not redeemable on 7
days demand and investments in time deposits which are non-negotiable and/or
which impose a penalty for early withdrawal.
6. Invest in companies for the purpose of exercising control or
management.
7. Purchase or sell real estate; provided, however, that it may
invest in securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein.
8. Purchase or sell physical commodities, except that the Fund may
purchase or sell options and futures contracts thereon (subject to Board of
Trustees approval) .
9. Engage in the business of underwriting securities issued by
others.
10. Participate on a joint or a joint and several basis in any
trading account in securities. The "bunching" of orders for the sale or
purchase of marketable portfolio securities with other accounts under the
management of any Subadviser in order to save brokerage costs or to average
prices shall not be considered a joint securities trading account.
11. Make loans to any person or firm; provided, however, that the
making of a loan shall not be construed to include (i) the acquisition for
investment of bonds, debentures, notes or other evidences or indebtedness of
any corporation or government entity which are publicly distributed or of a
type customarily purchased by institutional investors (which are debt
securities, generally rated not less than Baa by Moody's or BBB by Standard &
Poor's (although convertible securities may have lower ratings), privately
issued and purchased by such entities as banks, insurance companies and
investment companies), or (ii) the entry into "repurchase agreements."
12. Purchase the securities of other investment companies except
where no underwriter or dealer's commission or profit, other than customary
broker's commission, is involved and only if immediately thereafter not more
than (a) 3% of such company's total outstanding voting stock is owned by the
Fund, (b) 5% of the Fund's total assets, taken at market value, would be
invested in any one such company or (c) 10% of the Fund's total assets, taken
at market value, would be invested in all such securities (except for
mergers of investment companies) .
13. Purchase from or sell portfolio securities to its officers,
Trustees or other "interested persons" (as defined in the 1940 Act) of the
Fund, including the Subadvisers and their affiliates, except as permitted by
the 1940 Act and except for the purchase of the Fund's initial assets from
certain investors in The EAI Small Managers Equity Fund Trust.
14. Purchase or retain the securities of an issuer if, to the Fund's
knowledge, one or more of the Trustees or officers of the Fund, or the Manager
or a Subadviser or their directors or officers, individually own beneficially
more than 1/2 of 1% of the securities of such issuer and together own
beneficially more than 5% of such securities.
15. Issue senior securities.
16. Invest more than 35% of its total assets in securities which are
not equity securities; provided, however, that the Fund may at times for
defensive purposes temporarily place all or a portion of its assets in cash,
short-term commercial paper, U.S. government securities, high quality debt
securities and obligations of banks when, in the judgment of the Manager or a
Subadviser, such investments are appropriate in light of economic or market
conditions.
In addition to the foregoing investment restrictions which may not be
changed without Shareholder approval, the Fund is subject to the following
operating policies which may be amended by the Fund's Board of Trustees (the
"Trustees"). Pursuant to these operating policies, the Fund may not:
1. Invest in real estate limited partnership interests.
2. Invest in oil, gas or mineral leases.
3. Invest more than 5% of its net assets in warrants or rights,
valued at the lower of cost or market, or invest more than 2% of its net assets
in warrants or rights (valued on the same basis) which are not listed on the
New York or American Stock Exchanges.
4. Purchase or sell a futures contract or an option thereon.
5. Purchase securities on margin, except for such short-term
credits as are necessary for clearance of portfolio transactions.
6. Effect short sales of securities.
7. Purchase or sell put or call options.
8. Purchase or sell mortgage-backed debt securities.
9. Borrow cash in amounts in excess of 5% of its total assets
taken at cost or at market value, whichever is lower , except for temporary
purposes .
PORTFOLIO TURNOVER
Generally, the Fund will purchase securities for investment purposes
and not for short-term trading profits. However, the Fund expects to engage in
a substantial number of portfolio transactions and may dispose of securities
without regard to the timing of such a disposition if, for defensive or other
purposes, such a disposition is, in the opinion of the Subadvisers, in the best
interest of the Fund. It is estimated that the Fund's portfolio turnover rate
will not exceed 200% in any year.
TRUSTEES AND OFFICERS
The Fund is governed by the Trustees, who make broad policy decisions
and exercise general supervision over the operation of the Fund. The Trustees
and officers of the Fund are listed below, together with any family
relationships between such Trustees and officers (Trustees and officers who are
"interested" persons of the Fund are indicated by an asterisk (*)):
<TABLE>
<CAPTION>
(1) (2) (3)
Name, Address Position with Principal Occupation During
and Age Fund Past Five Years
<S> <C> <C>
Phillip N. Maisano * Trustee and Chief Executive Officer and President,
200 Connecticut Avenue, President Evaluation Associates, Inc., an investment
Suite 700 consulting and management company (1990-
Norwalk, CT 06851 1991); Chief Executive Officer,
48 years of age President and Director of Evaluation
Associates Holding Corporation
("Holding"), which is the general partner of
EAI Partners, L.P., an investment consulting
and management company and
parent of the Manager, as defined below (the
"Parent"); Vice Chairman, Chief
Executive Officer and Director of Evaluation
Associates Capital Markets,
Incorporated (the "Manager"), an investment
management and consulting
company and investment adviser to the Fund;
Chairman and Director of EAI
Securities Inc. (the "Distributor"), a
registered broker/dealer and the distributor
for the Fund.
Keith Stransky * Trustee and Senior Senior Vice President, Evaluation Associates,
200 Connecticut Avenue, Vice Inc. (1990-1991); Senior Vice
Suite 700 President President of Holding; Senior Vice President
Norwalk, CT 06851 of the Manager.
44 years of age
[Trustee] Trustee [To be completed]
[Trustee] Trustee [To be completed]
[Trustee] Trustee [To be completed]
Peter Gwiazdowski * Treasurer Employed in Corporate Treasury and Corporate
200 Connecticut Avenue Accounting by FKI Industries,
Suite 700 Inc. (1978-1993); Self-employed as Certified
Norwalk, CT 06851 Public Accountant (1993-1994);
42 years of age Employed in Corporate Treasury by Dunhill
Temporary Systems (1994); Vice
President and Treasurer of the Manager.
William C. Crerend * Vice President Lawyer with Hughes Hubbard & Reed (1988-
200 Connecticut Avenue 1993); Self-employed as Consultant (1993-
Suite 700 1994); Consultant for the Manager (1994);
Norwalk, CT 06851 Senior Vice President and General Counsel of
33 years of age the Manager; Vice President
and General Counsel of the Parent; Senior
Vice President and General Counsel of and
Agent for the Distributor.
Elke Bartel * Secretary Secretary of the Manager and the Distributor;
200 Connecticut Avenue Senior Vice President,
Suite 700 Secretary and Treasurer of the Parent.
Norwalk, CT 06851
53 years of age
</TABLE>
As indicated above, certain of the Trustees and officers of the Fund hold
positions with the Distributor, the Manager and the Parent, the direct parent
of the Manager. All Trustees and officers as a group own less than 1% of the
outstanding shares of the Fund on the date of this Statement of Additional
Information.
The Trustees of the Fund who are not "interested" persons of the Fund
(as defined in the 1940 Act) each receive an annual retainer of
$5,000 . No Trustee or executive officer of the Fund or any affiliated
person of the Fund will receive annual compensation from the Fund in excess of
$60,000.
The following table sets forth the compensation received from the
Fund by each Trustee in his role as Trustee:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name of Aggregate Pension or Estimated Annual Total Compensation
Person, Compensation Retirement Benefits Benefits Upon From the Fund and
Position From the Accrued as Part Retirement Fund Complex PaidFundof Fund Expenses to Trustees
<S> <C> <C> <C>
P.N. Maisano $0 $0 $0 $0
Trustee and
President
K. Stransky $0 $0 $0 $0
Trustee and
Senior Vice
President
[Name] $5,000 $0 $0 $5,000
Trustee
[Name] $5,000 $0 $0 $5,000
Trustee
[Name] $5,000 $0 $0 $5,000
Trustee
</TABLE>
The information set forth in the above table is estimated for the
Fund's first year of operation.
CONTROL OF THE FUND
As of the date of this Statement of Additional Information, all of the
Fund's outstanding Shares (as hereinafter defined) were owned by the Manager,
200 Connecticut Avenue, Suite 700, Norwalk, Connecticut 06854, as a result of
the Manager's investment of $100,000 of "seed capital" in the Fund.
All Trustees and officers as a group owned less than 1% of the
outstanding Shares of the Fund on the date of this Statement of Additional
Information.
INVESTMENT ADVISORY AND OTHER SERVICES
Background
The Fund is governed by the Trustees, who are generally responsible for
the broad supervision and overall direction of the Fund. The Fund has engaged
the Manager, as the investment adviser and administrative manager of the Fund.
The assets of the Fund are managed by asset managers (the "Subadvisers"), who
are selected by the Manager, subject to the oversight of the Trustees. The
Manager also handles the day-to-day administration of the Fund, which function
will, in part, be contracted out to a third party administrator, as discussed
herein.
The Manager selects the Subadvisers and allocates assets of the Fund to
the Subadvisers based on its continuing qualitative and quantitative assessment
of the Subadvisers' skills in managing assets. Unlike many other mutual funds,
the Fund does not depend upon the talents of one investment advisor. Rather,
the Manager selects multiple portfolio managers to manage the assets of the
Fund and allocates the assets among those managers, thereby achieving a
diversity in expertise and investment style that would not be possible if the
Fund had only one investment manager.
The Parent and its predecessors together have more than nineteen years
of experience in evaluating investment advisers for individual and
institutional investors.
The Manager allocates the assets of the Fund to the specific
Subadvisers. Each Subadviser has discretion, subject to oversight by the Board
of Trustees and the Manager, to purchase and sell portfolio assets consistent
with the objectives and policies set forth in its particular sub-advisory
agreement and established for it by the Manager. The Manager is paid a
management fee by the Fund for its services, and a certain portion of that
management fee (as set forth below) is forwarded to the Subadvisers
as compensation for their services .
While the Subadvisers are required to make investment decisions for the
Fund independent of any decisions being made for their other clients, those
Subadvisers are likely at times to make similar investment decisions for both
the Fund and their other clients. When a Subadviser makes simultaneous
purchases or sales of securities for both the Fund and one or more of its other
clients, the transactions are, to the extent practicable, averaged as to price
and allocated as to amount between the Fund and the other clients. In some
cases, this averaging and allocation could have a y
detrimental effect on the price or volume of a security in a particular
transaction as far as the Fund is concerned , but the Trustees believe that,
over time, the ability of the Fund to participate in large volume transactions
should be advantageous to the Fund.
None of the Subadvisers provide any services to the Fund other than
pursuant to their sub-advisory agreements and except that a Subadviser or its
affiliated broker-dealer may execute transactions for the Fund and receive a
brokerage commission in connection therewith. In addition, a Subadviser may
serve as a discretionary or non-discretionary investment adviser to one or more
clients of the Manager and its affiliates and to accounts that are not related
to the Manager or its affiliates. Each sub-advisory agreement requires
the Subadviser to act fairly and equitably in selecting investments and
allocating investment opportunities, but no Subadviser is required to provide
the Fund with preferential treatment.
The Manager and the Subadvisers
The Manager is a wholly owned subsidiary of the Parent, which in turn
is owned by its employees and certain non-employee investors. Holding is the
general partner of the Parent. No entity owns more than 25% of the equity in
the Parent. As a whole, the employees of the Parent and its subsidiaries own
in excess of 25% of the equity in the Parent. The following persons are
affiliated with both the Manager and the Fund: Messrs. Maisano, Stransky,
Crerend and Gwiazdowski and Ms. Bartel.
Dietche & Field Advisers, Inc. is currently owned by its employees,
none of whom exercises control over that firm.
Liberty Investment Management (formerly Eagle Asset Management) is
currently controlled by Herbert E. Ehlers, the owner of that firm.
Hudson Capital Advisers is a division of Fahnestock & Co., Inc., which
is a wholly owned subsidiary of Fahnestock Viner Holdings Inc., a publicly held
Canadian company, and is controlled by that company.
Stonehill Asset Management is controlled by Robert Emerson, its owner.
Equinox Capital Management, Inc. is controlled by Ronald J. Ulrich, the
majority owner of that firm.
The Management Agreement
The Fund has entered into a Management Agreement (the
"Management Agreement") with the Manager, and the Manager has entered into Sub-
advisory Agreements with each of the Subadvisers. Under the Management
Agreement, the Manager (i) selects, evaluates and terminates the Subadvisers
and allocates the assets of the Fund among the Subadvisers, (ii) supervises the
general investment of Fund assets, (iii) establishes the broad investment
strategies for the Fund and (iv) provides the Fund with certain financial,
accounting and statistical information for the Fund's prospectuses and
registration statements.
Under the Management Agreement, the Manager receives 0.92% per annum of
the average of the daily net asset value of the Fund. From this amount, the
Manager pays the following amounts to each of the Subadvisers (expressed as a
per annum percentage of the average of the monthly net asset
value of the assets of the Fund managed by such Subadvisor):
Dietche & Field Advisers, Inc. - .375%
Liberty Investment Management - .375%
Hudson Capital Advisers - .375%
Stonehill Capital Management, Inc. - .375%
Equinox Capital Management, Inc. - .375%
The amount of the management fee that will be retained by the Manager
may vary according to the allocation of Fund assets among the Subadvisers. It
is presently estimated that, in the first fiscal year of the Fund, the Manager
will pay approximately 41% of the management fee it receives under the
Management Agreement to the Subadvisers and will retain approximately 59% of
that fee for itself, assuming the Manager's cap on its management fee in the
first year of the Fund's operations does not impact these percentages.
The Management Agreement has a one-year term, with successive one-year
extensions if approved by the Trustees or the holders of a majority of the
outstanding Shares and by a majority of the Trustees who are not "interested
persons" of the Manager under the 1940 Act. Any amendment to the Management
Agreement requires the approval of the holders of a majority of the outstanding
Shares and of the Trustees. The Management Agreement may be terminated at any
time, without penalty, by the Trustees or the holders of a majority of the
outstanding Shares upon not more than 60 days written notice to the Manager.
The Management Agreement will terminate automatically if it is assigned by the
Manager.
Each Sub-advisory Agreement also has a one-year term, with successive
one-year extensions if approved by the Manager, the Trustees, and a majority of
the Trustees who are not "interested persons" of the appropriate Subadviser.
Any amendment to a Sub-advisory Agreement requires the approval of the Manager
and the Trustees. The Manager may terminate any Sub-advisory Agreement without
penalty at any time, subject to the approval of the Trustees. Each Sub-
advisory Agreement will also terminate automatically if it is assigned unless
the Manager and the Trustees agree to continue such agreement.
Voluntary Fee Waivers and Expense Limitations
The Manager may from time to time, but is not required to, waive all or
a portion of the management fee due to it under the Management Agreement. Any
voluntary fee waiver by the Manager may be terminated or reduced at any time in
the sole discretion of the Manager. Shareholders will be notified of any
changes in such fee waivers at the time they become effective. The Manager has
committed to waive a portion of its fee for the first year of operation of the
Fund to the extent necessary to cap overall annual Fund expenses at
1.15% of the average of the daily net asset value of the Fund.
Administrative Services and Distribution Arrangements
The Fund will retain Van Eck Associates Corporation to
perform administrative and accounting functions for it. These
functions will include legal, accounting, regulatory and compliance
services, state registration services, corporate secretary and board
of trustees administration, tax compliance services and reporting.
Van Eck Associates Corporation receives an annual fee, payable
monthly, at a per annum percentage of the average daily net asset value of the
assets of the Fund. The annual fee is graduated, beginning at .20% of the
average daily net assets of the Fund if such assets during the month the fee is
calculated are less than $100 million and ending at .12% of the average daily
net assets of the Fund if such assets during the month the fee is calculated
are equal to or more than $260 million. There is a minimum annual fee of
$100,000 payable to Van Eck Associates Corporation.
The Distributor, a wholly owned subsidiary of the Parent, serves as
distributor in connection with the offering of the Shares and acts
as agent in arranging the sale of the Shares. The Distributor or its affiliates
(other than the Fund) bear the expenses associated with the distribution of the
Shares, including all advertising and promotion expenses.
Custodian, Transfer Agent and Independent Public Accountant
Boston Safe Deposit and Trust Company, One Boston Place, Boston,
Massachusetts 02108, (the "Custodian") acts as custodian for the Fund
and is responsible for (i) holding all cash assets and portfolio securities of
the Fund, (ii) releasing and delivering the Fund's securities as directed by
the Fund or the Subadvisers, (ii) collecting all dividends, distributions and
other payments due to the Fund, and (iv) making all payments due from the Fund.
The Custodian is authorized to deposit securities in securities depositories or
to use the services of sub-custodians to the extent permitted by and subject to
the regulations of the Securities and Exchange Commission.
DST Systems, Inc., 1004 Baltimore, Kansas City, Missouri
64105-1802, serves as transfer, dividend disbursing and shareholder
servicing agent for the Fund.
Price Waterhouse LLP , 1177 Avenue of the Americas, New
York, New York 10036, are the independent accountants for the Fund.
As stated in the Prospectus, the Fund may from time to time enter into
directed brokerage arrangements in which it will direct the brokerage for
certain securities transactions to be entered into by its Subadvisers to a
certain broker-dealer in exchange for that broker-dealer's agreement to pay a
portion of the custodian, transfer agent or other administrative fees incurred
by the Fund. Such directed brokerage arrangements shall not be effected at any
time that the Manager has waived all or a portion of its management fee
under the Management Agreement, in accordance with the requirements of the 1940
Act and the rules thereunder.
TRANSACTIONS IN PORTFOLIO SECURITIES
Each Sub-advisory Agreement provides that the principal objective of
each Subadviser in executing portfolio transactions is to achieve the best
price and execution available. Most portfolio transactions are expected to be
effected in the primary markets, and in assessing best price and execution, the
Subadvisers are expected to evaluate a number of considerations, including the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer selected to
execute the transaction and the reasonableness of any commission paid to that
broker or dealer.
As stated in the Prospectus accompanying this Statement of Additional
Information, in certain instances, the Fund may enter into directed brokerage
arrangements in which it will direct the brokerage for certain securities
transactions to be entered into by its Subadvisers to a certain broker-dealer
in exchange for that broker-dealer's agreement to pay a portion of the
custodian, transfer agent or other administrative fees incurred by the Fund.
Directed brokerage transactions will only be executed if, in light of the
offsetting reduction in administrative fees to be incurred by the Fund, they
represent the best execution and price for that transaction or as good
execution and price as would otherwise be available. As stated above, no
directed brokerage arrangement will be effected at any time that the
Manager has waived all or a portion of its management fee.
In addition to the directed brokerage arrangements described above, the
Subadvisers, in assessing best price and execution, are authorized to consider
the "brokerage and research services" (as defined in Section 28(e) of the
Securities Exchange Act of 1934, as amended), statistical quotations
(particularly the quotations necessary to calculate the Fund's net asset
value) and other information provided to the Fund, the Manager or a Subadviser
by a specific broker-dealer. Moreover, the Subadvisers are authorized to
direct the Fund to pay a commission to a broker-dealer that is greater than the
commission which would be paid to another dealer executing the same portfolio
transaction if the Trustees, the Manager or such Subadviser determines in good
faith that the higher commission is reasonable in light of the brokerage and
research services provided by that broker-dealer. Assuming a net asset value
of $50,000,000 in the Fund's first year of operations, it is estimated that in
that first year of operations, 80% to 85% of portfolio transactions for the
Fund (with an aggregate value of $75,000,000) will be directed to broker-
dealers providing brokerage and research services and that $140,000 in
brokerage commissions shall be paid as a result of those transactions.
Approximately 15% to 20% of portfolio transactions for the Fund in its first
year are expected to be directed to brokers who do not provide brokerage and
research services.
The Trustees will from time to time review the brokerage commissions
paid by the Fund to determine whether such commissions are reasonable in light
of the directed brokerage arrangements described above or in light of the
brokerage and research services provided to the Fund by the applicable broker-
dealers.
The Subadvisers may receive brokerage and research services from
broker-dealers executing Fund portfolio transactions which primarily benefit
one or more other accounts for which the Subadviser exercises investment
discretion. The fees of the Subadvisers are not reduced by reason of their
receipt of those services.
The Subadvisers generally will not provide services other than
investment management services to the Fund. However, a Subadviser or its
affiliated broker-dealer may execute portfolio transactions for the Fund
(either for transactions managed by it or for transactions managed by another
Subadviser) and may receive a brokerage commission for such transactions in
accordance with Section 17(e) of the 1940 Act and procedures adopted
for such transactions by the Trustees pursuant to rules thereunder. Neither a
Subadviser nor its affiliated broker-dealer may act as a principal in a
transaction involving the Fund.
In allocating portfolio transactions among broker-dealers, a Subadviser
may, but is not required to, consider any sales of Shares of the Fund by a
particular broker-dealer or its affiliate.
Assuming a net asset value of $50,000,000 in the Fund's first year of
operations, it is estimated that brokerage commissions will be approximately
$170,000 in that first year of operation. It is estimated that of that amount,
some amount may be paid to EAI Securities Inc. ("EAISI"), an affiliate of the
Manager.
The Fund may purchase securities of its regular broker-dealers or their
parents.
SHARES OF THE FUND
The Fund offers one class of shares of Common Shares (the "Shares").
The Fund does not have any securities other than its Common Shares.
Income dividends will normally be paid on the Shares on an annual basis
in each December. Income dividends will normally be declared on the fourth
business day prior to the end of the dividend period, payable on the following
business day, to Shareholders of record on the day prior to the declaration
date. Distributions of any capital gains will normally be paid annually in
December. Unless a Shareholder has elected to receive dividends and
distributions in cash, all dividends and distributions will be reinvested in
additional shares of the Fund (at net asset value at the time of
reinvestment) . Any election may be changed at any time by delivering written
notice to the Fund at least ten business days prior to the payment date.
Shares of the Fund are entitled to one vote per share. Shareholders
have the right to vote on the election of the Trustees and on all other matters
on which, by law or by the Fund's Declaration of Trust, they may be entitled to
vote. There are no cumulative voting rights; accordingly, the holders of more
than 50% of the outstanding Shares could elect all of the Trustees. The Fund
is not required, and does not intend, to hold annual meetings of Shareholders
under normal circumstances. The Trustees or the Shareholders may call
special meetings of the Shareholders for action by Shareholder vote, including
the removal of any or all of the Trustees. Trustees will call a special
meeting of Shareholders of the Fund upon written request of the holders of at
least 10% of the outstanding Shares.
The Shares do not have liquidation rights, preemptive rights or the
right to convert to another security. The Shares are not subject to further
calls or to assessments by the Fund.
PURCHASE AND PRICING
Shares in the Fund are offered through the Distributor on a continuous
basis with a minimum initial investment in the Fund of $500,000 and a minimum
additional investment of $1,000, which minimums may be waived by the Fund. The
Shares in the Fund are sold at the net asset value per share next computed
after the purchase order is received in proper form by the Transfer
Agent.
As stated above, the Shares are sold at net asset value per Share for
the date of determination. Net asset value per share is determined as of the
close of business on the New York Stock Exchange, generally 4:00 p.m. New
York time , on each business day. Net asset value per share is equal to
the net worth of the Fund (assets minus liabilities) divided by the number of
shares outstanding. Assets and liabilities are determined in accordance with
generally accepted accounting principles and applicable rules and regulations
of the Securities and Exchange Commission.
Securities held by the Fund which are traded on a national exchange are
valued based on the last quoted sales price on such exchange on or recently
before the valuation date (or if the securities are traded on more than one
exchange on or recently before the valuation date, the principal exchange that
such securities are traded on, as determined by the appropriate Subadviser) or,
if there has been no recent sale of securities, at the last bid price. Over-
the-counter securities for which market quotations are readily available are
valued on the basis of the last sale price or, lacking any sales, at the last
quoted bid price. Securities and other investments for which market quotations
are not readily available are valued at fair value, as determined in good faith
by the appropriate Subadviser and pursuant to procedures established by the
Trustees.
FEDERAL INCOME TAX STATUS
The Fund intends to elect and to qualify each year to be treated as a
regulated investment company ("RIC") under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"). In order to qualify as a RIC for any
taxable year, the Code requires that: (i) at least 90% of the Fund's gross
income be derived from dividends, interest, payments with respect to securities
loans, gains from the disposition of stock, securities and foreign currencies
and other income derived from the Fund's business of investing in stock,
securities and currencies; (ii) less than 30% of the Fund's gross income be
derived from gains from the disposition of stock, securities, options, futures,
forward contracts and certain investments in foreign currencies held for less
than three months; (iii) the Fund distribute at least 90% of its dividend,
interest and certain other taxable income ("Investment Company Taxable Income")
and 90% of its net tax-exempt interest income; (iv) at the end of each fiscal
quarter, at least 50% of the value of the Fund's total assets be maintained in
cash, Government securities, securities of other regulated investment companies
and stock or other securities that represent, with respect to any one issuer,
no more than 5% of the value of the Fund's total assets or 10% of the
outstanding voting securities of such issuer; and (v) at the end of each fiscal
quarter, no more than 25% of the value of the Fund's total assets be invested
in the securities (other than those of the Government or other
RICs) of any one issuer, or of two or more issuers which the Fund controls and
which are engaged in the same, similar or related trades and businesses.
The Fund will be subject to federal income tax as a corporation, but
for any year in which the Fund qualifies as a RIC, it will be allowed a
deduction based on dividends paid to Shareholders (other than capital gain
dividends and exempt-interest dividends). If for any year the Fund does not
qualify as a RIC, all of its taxable income (including its net capital
gain) for the year will be subject to federal income tax without a deduction
for dividends paid to Shareholders, and such distributions will be includable
in gross income by the Shareholders entitled to payment thereof to the extent
of the Fund's current and accumulated earnings and profits. The Fund intends
to pay sufficient dividends to avoid liability for federal income tax and
accordingly does not expect to incur federal income tax. It may not,
however, be possible for the Fund to avoid this tax in all instances.
Depending upon whether certain participant directed account plans
(within the meaning of Section 404(c) of the Employee Retirement Income
Security Act of 1974, as amended) that presently invest in The EAI Small
Managers Equity Fund Trust choose to invest in the Fund and depending upon
their level of investment, it is possible that, at least initially, the Fund
may also be a personal holding company ("PHC") under Subchapter G of
the Code because more than 50 percent of the Shares of the Fund may be owned by
or for five or fewer individuals, defined to include qualified
pension or profit-sharing plans. For any year that the Fund is a PHC and
incurs federal income tax, the Fund will be liable for federal income tax at
the highest rate applicable to corporations. If the Fund does not make
sufficient distributions, the Fund will also be subject to a 39.6% tax (in
addition to any other taxes to which it may be subject) on any undistributed
personal holding company income. The Fund intends to make sufficient
distributions to avoid liability for personal holding company tax and
accordingly does not expect to incur this tax. It may not, however, be
possible for the Fund to avoid this tax in all instances.
If the Fund qualifies as a RIC but does not meet certain distribution
requirements, the Fund will be liable for a 4% non-deductible excise tax on
certain undistributed amounts. The Fund intends to comply with those
distribution requirements and accordingly does not expect to incur this excise
tax. It may not, however, be possible for the Fund to avoid this tax in all
instances.
The Fund may invest in obligations (such as zero coupon bonds) that are
issued with original issue discount ("OID"). OID income is accrued and
included in Investment Company Taxable Income even if the Fund does not receive
any cash from such obligations. Accordingly, the Fund may need to sell some of
its assets in order to satisfy the distribution requirements applicable to
RICs. The Fund may also invest in other investment vehicles, including RICs,
that in turn invest in stock and other securities issued by foreign issuers.
Dividends and other income derived from such foreign issuers may be subject to
withholding of foreign taxes, which would reduce the amount ultimately received
by the Fund.
Dividends (other than capital gain dividends and tax-exempt dividends)
and distributions by the Fund of net short-term capital gains to Shareholders
subject to federal income tax thereon will be taxable as ordinary dividend
income. Distributions of net long-term capital gains to Shareholders subject
to federal income tax thereon will be taxable as long-term capital gains
regardless of how long such Shareholders have held their Shares. These
provisions apply regardless of whether dividends are distributed in cash or
Shares. Any loss realized upon the redemption of Shares within six months from
the date of purchase will be treated as a long-term capital loss to the extent
of any distribution of net long-term capital gains during such six-month
period. No loss will be allowed on the sale of Shares of the Fund to the
extent the Shareholder acquires, or enters into a contract or option to
acquire, other Shares or substantially identical stock or securities within 30
days before or after the sale of the loss Shares.
If for any taxable year the Fund complies with certain requirements,
corporate Shareholders may be entitled to a dividends-received deduction for
all, or a portion of, dividends paid by the Fund (other than capital gain
dividends) that are attributable to dividends received by the Fund from
domestic corporations.
Within 60 days of the end of the Fund's taxable year, the Fund will
notify Shareholders of the amounts and tax status of dividends and
distributions from the Fund. Under federal income tax laws, the Fund must
report to the Internal Revenue Service (the "IRS") all distributions of taxable
income, capital gains and gross proceeds from redemptions received by all
shareholders not exempt from that requirement . If a
Shareholder required to provide the Fund with its correct taxpayer
identification number or required certification does not do so, or if the IRS
notifies the Fund that a Shareholder may not be in compliance with the backup
withholding rules, the Fund will be required to withhold from such
Shareholder's distributions and redemption proceeds federal income tax
at a rate of 31%, and amounts paid to the Shareholder will be reduced
accordingly.
Dividends and other distributions from the Fund may also be subject to
state and local taxes. Shareholders should consult with their tax advisers
concerning the state and local tax consequences of investing in the Fund.
As stated in the Prospectus, Shares of the Fund may be acquired in
exchange for securities held by an investor which are acceptable to the Fund.
If such an in-kind purchase of Shares were to occur in connection with the
initial distribution of the Fund's Shares or if one or more investors were
later to effect such an in-kind purchase in exchange for 80% or more of the
Fund's Shares, the Fund's basis for the securities it accepts from an investor
could be that investor's basis therefor, and the investor's basis for the
Fund's Shares acquired in the exchange could be the investor's basis in the
securities exchanged therefor. If that basis is less than the fair market
value of such securities at the time of the exchange, the potential tax
liability of the investor with respect to the sale or other disposition of the
Fund's Shares acquired in the exchange would be increased as would the
potential tax liability of the Fund or its Shareholders with respect to capital
gains realized by the Fund in connection with such securities.
The foregoing is a general and abbreviated discussion of U.S. federal
income tax consequences of investing in the Fund. Non-U.S. investors should
consult with their tax advisers concerning the tax consequences of owning
shares of the Fund, including the possibility that distributions may be subject
to withholding of federal income tax at a rate of 30% (or a reduced rate if
provided by treaty). All investors, including any subject to special income
tax treatment applicable to entities of their type, are encouraged to consult
with their tax advisers for more information concerning the federal, foreign,
state and local tax rules applicable to ownership and disposition of Shares of
the Fund by them.
PERFORMANCE DATA
Total Return Computations
The Fund may include in advertisements or sales
literature certain total return information. For such purposes,
total return equals the total of all income and capital gains paid to holders
of Shares of the Fund, assuming reinvestment of all distributions, plus
(or minus) the change in value of the original investment, expressed as a
percentage of the purchase price .
Volatility Computations
As stated in the Prospectus, the Fund may include in advertisements and
sales
literature certain quantifications of the historical volatility of the
performance of the Fund as the standard deviation of such performance.
Standard deviation is calculated using a typical standard deviation formula.
Performance Comparisons
As described in the Prospectus, the Fund may include in advertisements
or sales literature comparisons of Fund performance to the performance of other
mutual funds having similar structures and/or objectives. Such comparisons may
be expressed as a ranking prepared by independent services or publications. In
addition, the Fund's performance may be compared to that of various unmanaged
indices, including the S&P 500 and the NASDAQ Composite.
FINANCIAL STATEMENTS
An audited Statement of Assets and Liabilities and
footnotes thereto for the Fund, reflecting the $100,000 investment by the
Manager, is filed herewith.
<PAGE>
-2-
EAI SELECT MANAGERS EQUITY FUND
___________, 1995
200 Connecticut Avenue, Suite 700, Norwalk, Connecticut
06854
(203) 855-2200
PART C
OTHER INFORMATION
Financial Statements and Exhibits
(asterisked (*) items were filed with the original
registration statement)
(a) Financial Statements
Part A:
None
Part B:
Statement of Assets and Liabilities for the Fund as of
November 20, 1995, and related footnotes to such Statement of Assets and
Liabilities, and the Report of Independent Accountants on such Statement.
(b) Exhibits
* 1. Declaration of Trust of the Fund dated September 27, 1995
* 2. By-Laws of the Fund
3. Not Applicable
4. Not Applicable
5. a. Form of Management Agreement between the Fund and
Evaluation Associates Capital Markets, Incorporated, as
Manager (the "Manager")
b. Form of Sub-advisory Agreement among the Fund, the
Manager and each of Dietche & Field Advisers, Inc.,
Liberty Investment Management, Hudson Capital Advisers,
Stonehill Capital Management, Inc., and Equinox Capital
Management, Inc.
* 6. Form of Distribution Agreement between the Fund and EAI
Securities Inc., as Distributor
7. Not Applicable.
8. Form of Custody Agreement between the Fund and
Boston Safe Deposit and Trust Company, as
Custodian
9 .a. Form of Transfer Agency Agreement between the
Fund and DST Systems, Inc., as
Transfer Agent
b. Form of Portfolio Accounting and
Administrative Services Agreement between the Fund and
Van Eck Associates Corporation.
10 .Opinion and Consent of Day, Berry & Howard
11. Consent of Price Waterhouse LLP
12. Not Applicable
13. Not Applicable
14. Not Applicable
15. Not Applicable
16 .Computation of Performance Quotations
17. Financial Data Schedule
18 .Powers of Attorney for:
Phillip N. Maisano
Keith Stransky
Peter Gwiazdowski
(see signature page)
Persons Controlled by or Under Common Control with the Fund
None
Number of Holders of Securities
As of November 20 , 1995, the Shares of the Fund were
held of record by the number of holders indicated below
(1)
Title of Class
EAI Select Managers Equity Fund Common Shares
(2)
Number of Record Holders
1
Indemnification
Under Section 4.3 of the Fund's Declaration of Trust, the Fund will
indemnify its Trustees and officers against and hold them harmless from all
liability and expenses reasonably incurred in connection with any claim,
action, suit or proceeding in which they became involved by virtue of having
been a Trustee or officer and all amounts paid or incurred in settlement
thereof. The Fund will not indemnify a Trustee or officer when the loss is due
to willful misconduct, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Trustee's or officer's office.
Under Section 4.3 of the Fund's Declaration of Trust, the Fund has the
power to purchase liability insurance for Shareholders, Trustees, officers,
employees, agents, investment advisers, distributors, selected dealers or
independent contractors of the Trust. The Fund and/or the Manager has
purchased such liability insurance for such persons.
Section 4.1 of the Fund's Declaration of Trust provides, in substance,
that no Shareholder or Trustee shall be personally liable for the Fund's
obligations to third parties.
Business and Other Connections of Investment Advisers
The business and other connections of the officers and directors of
Evaluation Associates Capital Markets, Incorporated (the Fund's Manager) and
each of the Subadvisers are listed in schedules A and D of their respective ADV
Forms as currently on file with the Commission, the texts of which schedules
are incorporated herein by reference. The file numbers of such ADV Forms are
as follows:
Evaluation Associates Capital Markets, Incorporated -- File No. 801-
41771
Dietche & Field Advisers, Inc. -- File No. 801-20033
Liberty Investment Management -- File No. 801-47681
Hudson Capital Advisors -- File No. 801-31427
Stonehill Capital Management, Inc. -- File No. 801-39824
Equinox Capital Management, Inc. -- File No. 801-34524
Location of Accounts and Records
All accounts and records required to be maintained under Section 31(a)
of the 1940 Act and Rules 31a-1 to 31a-3 promulgated thereunder are maintained
in the following locations;
(a) Records forming the basis for financial statements of the Fund are kept
at the principal offices of the Manager at 200 Connecticut Avenue, Suite 700,
Norwalk, Connecticut 06854-1958.
(b) (1) Journals containing an itemized daily record of all securities
transactions, receipts and disbursements of cash and all other
debits and credits are kept at the principal offices of the
Manager at 200 Connecticut Avenue, Suite 700, Norwalk,
Connecticut 06854-1958 or at the principal offices of the
Custodian at One Boston Place, Boston, Massachusetts 02108 .
(2) General and auxiliary ledgers are kept at the principal offices
of the Manager at 200 Connecticut Avenue, Suite 700, Norwalk,
Connecticut 06854-1958.
(3) A securities record or ledger reflecting separately for each
portfolio security as of trade date all "long" and "short"
positions carried by the Fund for its own account and showing
the location of all securities long and the off-setting position
to all securities short is kept at the principal offices of the
Manager at 200 Connecticut Avenue, Suite 700, Norwalk,
Connecticut 06854-1958 or at the principal offices of the
Custodian at One Boston Place, Boston, Massachusetts 02108 .
(4) The Fund's Declaration of Trust, By-laws, and minute books are
kept at the principal offices of the Manager at 200 Connecticut
Avenue, Suite 700, Norwalk, Connecticut 06854-1958.
(5) The records of brokerage orders are kept at the principal
offices of the Subadvisers at the addresses listed for them in
the Prospectus.
(6) A record of all other portfolio purchases and sales is kept at
the principal offices of the Manager at 200 Connecticut Avenue,
Suite 700, Norwalk, Connecticut 06854-1958 or at the principal
offices of the Custodian at One Boston Place, Boston,
Massachusetts 02108 .
(7) A record of the proof of money balances is kept at the principal
offices of the Manager at 200 Connecticut Avenue, Suite 700,
Norwalk, Connecticut 06854-1958.
(8) A record of the basis for the allocation of brokerage
transactions and brokerage commissions is kept at the principal
offices of the Manager at 200 Connecticut Avenue, Suite 700,
Norwalk, Connecticut 06854-1958 or at the offices of the
Subadvisers at the addresses listed for them in the Prospectus.
(9) A record of the persons authorizing the purchase or sale of
portfolio securities is kept at the principal offices of the
Subadvisers at the addresses listed for them in the Prospectus.
(10) Copies of all advisory materials received from the Manager and
the Subadvisers are kept at the principal offices of the Manager
at 200 Connecticut Avenue, Suite 700, Norwalk, Connecticut
06854-1958 or at the offices of the Subadvisers at the addresses
listed for them in the Prospectus.
(c) Not applicable
(d) The Fund believes that each depositor of the Fund maintains the records
required by Rule 31a-1(d) under the 1940 Act.
(e) Not applicable
(f) The Fund believes that the Manager and each Subadviser maintains the
records required by Rule 31a-1(f) under the 1940 Act.
Management Services
All management related service contracts entered into by or for the
Fund are described in Parts A and B of this Registration Statement.
Undertakings
(a) Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to Trustees, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a Trustee, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such Trustee, officer or controlling person in
connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue. In addition, no
indemnification shall occur as a result of actions which constitute willful
misfeasance, bad faith, gross negligence or reckless disregard of duty.
(b) The Fund will file a post-effective amendment, using financial
statements which may not be certified, within four to six months following the
commencement of operation of the Fund.
(c) The Fund will call a meeting of Shareholders, if requested to do so by
holders of at least 10% of the Fund's outstanding Shares, for the purpose of
voting upon the question of removal of a Trustee or Trustees and to assist in
communications with other Shareholders as required by Section 16(c) of the
Act.
<PAGE>
-2-
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Norwalk and State of Connecticut on the
22nd day of November , 1995.
EAI SELECT MANAGERS EQUITY FUND
By:/s/ William C. Crerend
William C. Crerend
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears
below hereby constitutes William C. Crerend such person's true and lawful
attorney, with full power to him to sign for such person and in such person's
name and capacity indicated below, and any and all amendments to this
Registration Statement, hereby ratifying and confirming such person's
signature as it may be signed by said attorney to any and all amendments.
* Trustee and November 22 , 1995
Phillip N. Maisano President
* Trustee and Senior November 22 , 1995
Keith Stransky Vice President
* Treasurer November 22 , 1995
Peter Gwiazdowski
*By/s/ William C. Crerend
Name: William C. Crerend
Title: Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Financial Statement of Assets and Liabilities as of November
20, 1995, and related footnotes to such Statement
of Assets and Liabilities, and the Report of
Independent Accountants on such Statement.
Statement 1
Exhibit 5.a Form of Management Agreement between the Fund and
Evaluation Associates Capital Markets,
Incorporated
Exhibit 5.b Form of Sub-advisory Agreement among the Fund, the
Manager , and each of Dietche & Field
Advisers, Inc., Liberty Investment Management, Hudson
Capital Advisers, Stonehill Capital Management,
Inc. and Equinox Capital Management, Inc.
Exhibit 8 Form of Custody Agreement between
the Fund and Boston Safe Deposit and
Trust Company, as Custodian
Exhibit 9.a Form of Agency Agreement between the Fund and DST
Systems, Inc., as Transfer Agent
Exhibit 9.b Form of Portfolio Accounting and Administrative Services
Agreement between the Fund and Van Eck Associates
Corporation
Exhibit 10 Opinion and Consent of Day, Berry & Howard
Exhibit 11 Consent of Price Waterhouse LLP
Exhibit 16 Computation of Performance Quotations
Exhibit 17 Financial Data Schedule
EAI SELECT MANAGERS EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES AT NOVEMBER 20, 1995
<TABLE>
<S> <C>
ASSETS:
Cash $ 100,000
Deferred organizational costs (Note 1) 211,500
Total Assets 311,500
LIABILITIES:
Organizational costs payable (Note 1) 211,500
$ 100,000
Net Assets
Net Asset Value Per Share (10,000 shares of beneficial interest outstanding, $ 10.00
unlimited authorized shares of beneficial interest with no par value)
</TABLE>
NOTE 1 - EAI Select Managers Equity Fund (the "Fund") was organized as a
Massachusetts business trust on September 27, 1995. To date, the Fund has had
no transactions other than those relating to organizational matters and the
sale of 10,000 shares of beneficial interest for $100,000 to Evaluation
Associates Capital Markets, Incorporated (the "Investment Manager"). The Fund
is in the process of registering under the Investment Company Act of 1940, as
amended (the "Act"), as a diversified, open-end management investment company.
Organizational costs of the Fund approximating $211,500 will initially
be paid by the Investment Manager. These costs will be deferred and amortized
by the Fund on the straight-line method over a period of five years from the
date of commencement of the Fund's operations. In the event that, at any time
during the five year period beginning with the date of the commencement of
operations, the initial shares acquired by the Investment Manager prior to such
date are redeemed by any holder thereof, the redemption proceeds payable in
respect of such shares will be reduced by the pro rata share (based on the
proportionate share of the initial shares redeemed to the total number of
original shares outstanding at the time of redemption) of the then unamortized
deferred organizational costs as of the date of such redemption. In the event
that the Fund liquidates before the deferred organizational costs are fully
amortized, the Investment Manager shall bear such unamortized deferred
organizational costs.
NOTE 2 - The Fund will enter into an investment management agreement
with the Investment Manager. Certain officers and/or trustees of the Fund are
officers and/or directors of the Investment Manager. The Fund will retain the
Investment Manager to supervise the investment of the Fund's assets. Under the
terms of the Investment Management Agreement, the Investment Manager will
maintain certain of the Fund's books and records and furnish, at its own
expense, such office space, facilities, equipment, supplies, clerical
help and bookkeeping as the Fund may reasonably require in the conduct of its
business. In addition, the Investment Manager will pay the salaries of all
personnel, including officers of the Fund, who are employees of the Investment
Manager. The Investment Manager will also bear the cost of the Fund's
telephone service, heat, light, power and other utilities.
As full compensation for the services and facilities furnished to the
Fund and expenses of the Fund assumed by the Investment Manager, the Fund will
pay the Investment Manager quarterly compensation calculated daily by applying
the annual rate of .92% to the Fund's average daily net assets.
Shares of the Fund will be distributed by EAI Securities Inc. (the
"Distributor"), an affiliate of the Investment Manager. The Distributor will
bear all costs associated with the distribution of the shares, including all
advertising and promotion expenses.
<PAGE>
Report of Independent Accountants
To the Shareholder and Trustees of
EAI Select Managers Equity Fund
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of EAI Select Managers
Equity Fund (the "Fund") at November 20, 1995, in conformity with generally
accepted accounting principles. This financial statement is the responsibility
of the Fund's management; our responsibility is to express an opinion on this
financial statement based on our audit. We conducted our audit of this
financial statement in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statement is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statement, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
November 21, 1995
-1-
EXHIBIT 5.A
November 20, 1995
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made this ______ day of ___________,
1995, between EAI Select Managers Equity Fund, a business trust organized under
the laws of the Commonwealth of Massachusetts ("Company") and Evaluation
Associates Capital Markets, Incorporated, a corporation organized under the
laws of the State of Delaware ("Manager"). This Agreement shall not become
effective unless the shareholders of the Company approve this Agreement.
WHEREAS, the Company has been organized and will operate as an
investment company registered under the Investment Company Act of 1940, as
amended (the "Investment Company Act"), for the purpose of investing and
reinvesting its assets in securities pursuant to investment objectives and
policies as set forth more fully in its Declaration of Trust, its By-Laws and
its Registration Statement under the Investment Company Act and the Securities
Act of 1933, as amended, all as amended and supplemented from time to time; and
the Company desires to avail itself of the services, information, advice,
assistance and facilities of a fund manager and to have a fund manager provide
or perform for it various administrative, management, statistical, research,
sub-advisor selection, allocation and other services; and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and has, together with its
affiliates and predecessors, been engaged in the business of rendering
investment manager recommendations and certain other investment advisory
services to clients for an extended period; and
WHEREAS, the Manager has undertaken the initiative of organizing the
Company in order to have a means to invest the assets of certain clients and
desires to provide services to the Company in consideration of and on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, the Company and the Manager agree as follows:
1. Employment of the Manager. The Company hereby employs the
Manager to manage the investment and reinvestment of the assets of the Company
in the manner set forth in Section 2(B) of this Agreement and to administer its
business and administrative operations, subject to the direction of the
Trustees and the officers of the Company, for the period, in the manner, and on
the terms hereinafter set forth. The Manager hereby accepts such employment
and agrees during such period to render the services and to assume the
obligations herein set forth. The Manager shall for all purposes herein be
deemed to be an independent contractor and shall, except as expressly provided
or authorized (whether herein or otherwise), have no authority to act for or
represent the Company in any way or otherwise be deemed an agent of the
Company.
2. Obligation of and Services to be Provided by the Manager. The
Manager undertakes to provide the services hereinafter set forth and to assume
the following obligations:
A. Corporate Management and Administrative Services.
(a) The Manager shall furnish to the Company adequate
(i) office space, which may be space within the
offices of the Manager or in such other place as
may be agreed upon from time to time, and (ii)
office furnishings, facilities and equipment as
may be reasonably required for managing and
administering the operations and conducting the
business of the Company, including complying with
the securities, tax and other reporting
requirements of the United States and the various
states in which the Company does business,
conducting correspondence and other
communications with the shareholders of the
Company, and maintaining or supervising the
maintenance of all internal bookkeeping,
accounting and auditing services and records in
connection with the Company's investment and
business activities. The Company agrees that its
shareholder recordkeeping services, its
accounting and auditing, the computing of net
asset value, the preparation of certain of its
records required by Section 31 of the Investment
Company Act and the Rules promulgated thereunder
and certain other functions may be performed by
the Company's transfer agent, custodian or
subadvisors or a third party servicing agent, and
that with respect to these services Manager's
obligations under this Section 2(A) are
supervisory in nature only.
(b) The Manager shall employ or provide and
compensate the executive, administrative,
secretarial and clerical personnel necessary to
supervise the provision of the services set forth
in subparagraph 2(A)(a) above, and shall bear the
expense of providing such services, except as may
otherwise be provided in Section 4 of this
Agreement. The Manager shall also compensate all
officers and employees of the Company who are
officers or employees of the Manager.
B. Investment Management Services.
(a) The Manager shall have overall supervisory
responsibility for the general management and
investment of the assets and securities portfolio
of the Company subject to and in accordance
with the investment objectives, policies and
restrictions of the Company and any directions
which the Company's Trustees may issue to the
Manager from time to time.
(b) The Manager shall provide overall investment
programs and strategies for the Company, shall
modify such programs from time to time as
necessary and shall monitor and report
periodically to the Trustees concerning the
implementation of such programs.
(c) The Company intends, and is hereby authorized, to
appoint one or more persons or companies
("Subadvisors") subject to the approval of the
Company's Trustees, and each Subadvisor shall
have full investment discretion and shall make
all determinations with respect to the investment
of the portion of the Company's assets allocated
to that Subadvisor and the purchase and sale of
portfolio securities with those assets, and
take such steps as may be necessary to implement
such appointments. The Manager shall not be
responsible or liable for the investment merits
of any decision by a Subadvisor to purchase, hold
or sell a security for the portion of the
Company's portfolio for which it acts as
Subadvisor.
(d) The Manager shall evaluate the Subadvisors and
shall advise the Trustees of the Company of the
Subadvisors which the Manager believes are best
suited to invest the assets of the Company;
shall monitor and evaluate the investment
performance of each Subadvisor employed by the
Company; shall allocate the portion of the
Company's assets to be managed by each
Subadvisor; shall recommend changes of or
additional Subadvisors when appropriate; shall
coordinate the investment activities of the
Subadvisors and shall compensate the Subadvisors.
(e) The Manager shall render regular reports to the
Company, at regular meetings of the Trustees, of,
among other things, the decisions which it has
made with respect to the allocation of
assets among Subadvisors.
C. Provision of Information Necessary for Preparation of
Securities Registration Statements, Amendments and Other
Materials.
The Manager will make available and provide financial,
accounting and statistical information required by the
Company in the preparation of registration statements,
reports and other documents required by federal and
state securities laws, and such information as the
Company may reasonably request for use in the
preparation of registration statements, reports and
other documents required by federal and state
securities laws and such information as the Company may
reasonably request for use in the preparation of such
documents or of other materials necessary or helpful for
the underwriting and distribution of the Company's
shares.
D. Other Obligations and Services.
The Manager shall make available its officers and
employees to the Trustees and officers of the Company
for consultation and discussions regarding the
administration and management of the Company and its
investment activities.
3. Execution and Allocation of Portfolio Brokerage Commissions.
The Subadvisors (and sometimes the Manager), subject to and in accordance with
any directions the Company's Trustees may issue from time to time, shall place,
in the name of the Company, orders for the execution of the Company's portfolio
transactions. When placing such orders, the primary objective of the Manager
and Subadvisors shall be to obtain the best net price and execution for the
Company, but this requirement shall not be deemed to obligate the Manager or a
Subadvisor to place any order solely on the basis of obtaining the lowest
commission rate if the other standards set forth in this section have been
satisfied. The Company recognizes that there are likely to be many cases in
which different brokers are equally able to provide such best price and
execution and that, in the selection among such brokers with respect to
particular trades, it is desirable to choose those brokers who furnish
"brokerage and research services" (as defined in Section 28(e)(3) of the
Securities Exchange Act of 1934) or statistical quotations and other
information to the Company, the Manager and/or the Subadvisors in accordance
with the standards set forth below. In addition, the Company recognizes that,
in many instances, it is desireable for the Manager and/or the Subadvisors to
enter into "directed brokerage" arrangements in which they will direct the
brokerage for certain of the Company's securities transactions to a certain
broker in exchange for that broker's agreement to pay a portion of the
custodian, transfer agent or other administrative fees incurred by the Company.
Moreover, to the extent that it continues to be lawful to do so and so long as
the Trustees determine as a matter of general policy that the Company will
benefit, directly or indirectly, by doing so, the Manager or a Subadvisor may
place orders with a broker who charges a commission for that transaction
which is in excess of the amount of commission that another broker would have
charged for effecting that transaction, provided that the excess commission is
reasonable in relation to (i) the value of brokerage and research services
provided by that broker or (ii) the custodian, transfer agent or other
administrative fees of the Company paid by that broker. Accordingly, the
Company and the Manager agree that the Manager and the Subadvisors may select
brokers for the execution of the Company's portfolio transactions from among:
A. Those brokers and dealers who provide brokerage and
research services, or statistical quotations and other
information to the Company, specifically including the
quotations necessary to determine the value of the
Company's net assets, in such amount of total
brokerage as may reasonably be required in light of such
services;
B. Those brokers and dealers who supply brokerage and
research services to the Manager or the Subadvisors
which relate directly to portfolio securities, actual or
potential, of the Company, or which place the
Manager or Subadvisors in a better position to make
decisions in connection with the management of the
Company's assets and portfolio, whether or not such data
may also be useful to the Manager and its affiliates, or
the Subadvisors and their affiliates, in managing
other portfolios or advising other clients, in such
amount of total brokerage as may reasonably be required;
and
C. Those brokers and dealers who pay a portion of the
custodian, transfer agent or other administrative fees
incurred by the Company, in such amount as may
reasonably be required in light of such payments.
The Manager shall render regular reports to the Company of the total
brokerage business placed and the manner in which the allocation has been
accomplished.
The Manager agrees and each Subadvisor will be required to agree that
no investment decision will be made or influenced by a desire to provide
brokerage for allocation in accordance with the foregoing, and that the right
to make such allocation of brokerage shall not interfere with the Manager's or
Subadvisors' primary duty to obtain the best net price and execution for the
Company.
4. Expenses of the Company. It is understood that the Company will
pay all its expenses other than those expressly assumed by the Manager herein,
which expenses payable by the Company shall include, without limitation:
A. Expenses of all audits by independent public
accountants;
B. Expenses of transfer agent, registrar, dividend
disbursing agent, shareholder recordkeeping services and
administrative services;
C. Expenses of custodial services including recordkeeping
services provided by the Custodian;
D. Expenses of obtaining quotations for calculating the
value of the Company's net assets;
E. Salaries and other compensation of any of its executive
officers and employees, if any, who are not officers,
directors, stockholders or employees of the Manager;
F. Taxes levied against the Company;
G. Brokerage fees and commissions in connection with the
purchase and sale of portfolio securities for the
Company;
H. Costs, including the interest expense, of borrowing
money;
I. Costs and/or fees incident to Trustee and shareholder
meetings of the Company, the preparation and mailing of
prospectuses and reports of the Company to its
shareholders, the filing of reports with regulatory
bodies, the maintenance of the Company's corporate
existence, and the registration of shares with federal
and state securities authorities;
J. Legal fees, including the legal fees related to the
registration and continued qualification of the
Company's shares for sale;
K. Costs of printing certificates representing shares of
beneficial interests in the Company;
L. Trustees' fees and expenses of Trustees who are not
directors, officers, employees or stockholders of the
Manager or any of its affiliates; and
M. Its pro rata portion of the fidelity bond required by
Section 17(g) of the Investment Company Act, or other
insurance premiums.
Any amounts paid by the Manager in connection with the costs set forth
above shall be reimbursed to the Manager by the Company.
5. Activities and Affiliates of the Manager.
A. The services of the Manager to the Company hereunder are
not to be deemed exclusive, and the Manager and any of
its affiliates shall be free to render similar services
to others. The Manager shall use the same skill and
care in the management of the Company's assets as it
uses in the administration of other accounts to which it
provides asset management, consulting and subadvisor
selection services, but shall not be obligated to give
the Company more favorable or preferential treatment
vis-a-vis its other clients.
B. Subject to and in accordance with the Declaration of
Trust and By-Laws of the Company and to Section 10(a) of
the Investment Company Act, it is understood that
Trustees, officers, agents and shareholders of the
Company are or may be interested in the Manager
or its affiliates as directors, officers, agents or
stockholders of the Manager or its affiliates; that
directors, officers, agents and stockholders of the
Manager or its affiliates are or may be interested in
the Company as trustees, officers, agents, shareholders
or otherwise; that the Manager or its affiliates may be
interested in the Company as shareholders or otherwise;
and that the effect of any such interests shall be
governed by said Declaration of Trust, By-Laws and the
Investment Company Act.
6. Compensation of the Manager. As compensation for the services
it provides hereunder, the Manager will be paid a fee at the end of each
calendar quarter equal to an annual rate of 0.92% of the Company's average
daily net assets. Average daily net assets shall be determined using the net
assets of the Fund on each business day during the calendar quarter. This fee
shall be pro-rated for any calendar quarter during which the Agreement is in
effect for only a portion of that quarter. From such fee, the Manager will
pay each Subadvisor all amounts due to it in connection with the services
rendered by such Subadvisor to the Company. The Manager may, but is not
required to, waive all or any portion of the fee due to it hereunder, and any
such waiver may be terminated or reduced at any time by the Manager in its sole
discretion. Notwithstanding anything herein to the contrary, the Manager
shall, for the first year of the term hereof, waive that portion of its
fee that, when combined with all other expenses incurred by the Fund, is in
excess of 1.15%.
7. Liabilities of the Manager.
A. In the absence of willful misfeasance, bad faith,
negligence, or reckless disregard of obligations or
duties hereunder on the part of the Manager, the Manager
shall not be subject to liability to the Company
or to any shareholder of the Company for any act or
omission in the course of, or connected with, rendering
services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any
security.
B. No provision of this Agreement shall be construed to
protect any Trustee or officer of the Company, or the
Manager, from liability in violation of Sections 17(h)
and (i) of the Investment Company Act.
C. The Manager will reimburse the Company for the amount,
if any, of the expenses of the Company (including the
Manager's compensation but excluding interest, brokerage
costs, taxes and expenses not incurred in the ordinary
course of the Company's business) for any fiscal year of
the Company which exceeds the level of expenses which
the Company is permitted to bear under the most
restrictive expense limitation imposed (and not waived)
on the Company by any state in which the shares of the
Company are then qualified for sale.
8. Renewal and Termination.
A. This Agreement shall become effective on the date
written above and shall continue in effect until the
earlier of __________, 1996 [one year after execution]
or the first special meeting of the shareholders of the
Company. This Agreement may be continued annually
thereafter for successive one-year periods (a) by a vote
of a majority of the outstanding shares of beneficial
interest of the Company or (b) by a vote of a majority
of the Trustees of the Company, and in either case
by a majority of the Trustees who are not parties to the
Agreement or interested persons of any parties to the
Agreement (other than as Trustees of the Company) cast
in person at a meeting called for the purpose of voting
on the Agreement. The aforesaid provision that this
Agreement may be continued "annually" shall be construed
in a manner consistent with the Investment Company Act
and the Rules and Regulations promulgated thereunder.
B. This Agreement
(a) may at any time be terminated without the payment
of any penalty by (i) vote of the Trustees of the
Company; or (ii) by vote of a majority of the
outstanding voting securities of the Company, in
each case on sixty (60) days' written notice to
the Manager;
(b) shall immediately terminate in the event of its
assignment; and
(c) may be terminated by the Manager on sixty (60)
days' written notice to the Company.
C. As used in this Section 8, the terms "assignment," "interested
person" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the Investment
Company Act.
D. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed postpaid, to the other party
to this Agreement at its principal place of business.
9. Severability. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
10. Governing Law. To the extent that state law has not been
preempted by the provisions of any law of the United States heretofore or
hereafter enacted, as the same may be amended from time to time, this Agreement
shall be administered, construed and enforced according to the laws of the
State of Connecticut.
11. Amendments. This Agreement may be amended by an instrument in
writing signed by the parties, subject to the Company obtaining such approvals
as may be required by the Investment Company Act.
12. Limitation of Liability. No shareholder, Trustee, officer,
employee or agent of the Company shall be subject to any personal liability
whatsoever to the Manager or any officer, employee or agent thereof solely in
connection with the provisions of this Agreement, and the Manager and each
officer, employee and agent thereof shall look solely to the Company and its
property for satisfaction of claims of any nature arising in connection
herewith.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the day and year first written above.
ATTEST EAI SELECT MANAGERS EQUITY FUND
By:
Name: Name:
ATTEST EVALUATION ASSOCIATES CAPITAL
MARKETS, INCORPORATED
By:
Name: Name:
Exhibit 5.b
November 21, 1995
SUB-ADVISORY AGREEMENT
Attention: [SUBADVISOR]
RE: Sub-Advisory Agreement
Ladies and Gentlemen:
EAI Select Managers Equity Fund (the "Fund") is a diversified open-end
management investment company registered as an investment company under the
Investment Company Act of 1940, as amended (the "Act"), and subject to the
rules and regulations promulgated thereunder.
Evaluation Associates Capital Markets, Incorporated (the "Manager")
acts as the fund manager and administrator of the Fund pursuant to the terms of
a Management Agreement dated ____________, 1995 with the Fund. Manager is
responsible for certain aspects of the day-to-day management and administration
of the Fund and the coordination of investment of the Fund's assets in
portfolio securities. However, specific portfolio purchases and sales for
the Fund's investment portfolio, or a portion thereof, are to be made by the
advisory organizations recommended by Manager and approved by the Trustees of
the Fund.
1. Appointment as Subadvisor. The Manager being duly authorized
hereby appoints and employs [Subadvisor] (the "Subadvisor") as a discretionary
portfolio manager, on the terms and conditions set forth herein, of those
assets of the Fund which the Manager determines to allocate to the Subadvisor
(those assets being referred to as the "Fund Account"). The Manager
may, from time to time, with the consent of the Subadvisor, make additions to
the Fund Account and may, from time to time, make withdrawals from the Fund
Account.
2. Acceptance of Appointment; Standard of Performance. The
Subadvisor accepts the appointment as a discretionary portfolio manager and
agrees to use its best professional judgment to make timely investment
decisions for the Fund with respect to the investments of the Fund Account in
accordance with the provisions of this Agreement.
3. Portfolio Management Services of Subadvisor. The Subadvisor is
hereby employed and authorized to select portfolio securities for investment by
the Fund Account, to purchase and sell securities of the Fund Account, and upon
making any purchase or sale decision, to place orders for the execution of such
portfolio transactions in accordance with paragraph 5 and 6 hereof and Schedule
A hereto (as amended from time to time). In providing portfolio management
services to the Fund Account, the Subadvisor shall be subject to such
investment restrictions as are set forth in the Act and the Rules thereunder,
the supervision and control of the Trustees of the Fund, such specific
instructions as the Trustees may adopt and communicate to the Subadvisor, the
investment objectives, policies and restrictions of the Fund furnished pursuant
to paragraph 4, and instructions from the Manager. The Subadvisor shall
maintain on behalf of the Fund the records listed in Schedule B hereto (as
amended from time to time). At the Fund's request, the Subadvisor will consult
with the Fund or with the Manager with respect to any decisions made by it with
respect to the investments of the Fund Account. The Subadvisor will give the
Manager prompt notice of any and all changes in its investment policies and
strategies which may affect its investment decisions with respect to the Fund
Account.
4. Investment Objectives, Policies, and Restrictions. The Fund
shall provide the Subadvisor with a statement of the investment objectives and
policies of the Fund and any specific investment restrictions applicable
thereto as established by the Fund and as set forth in the Fund's then-current
Prospectus and Statement of Additional Information, and the Subadvisor shall
conduct its activities hereunder in accordance with such objectives, policies
and restrictions. The Fund has the right, on written notice to the Manager,
which notice the Manager will pass on to the Subadvisor, to modify any such
objectives, policies or restrictions in any manner at any time provided any
such amendment is consistent with the Fund's Declaration of Trust, By-Laws and
the Act and the Rules promulgated thereunder.
5. Transaction Procedures. All transactions will be consummated by
payment to or delivery by [custodian] (the "Custodian"), or such depositories
or agents as may be designated by the Custodian, as custodian for the Fund, of
all cash and/or securities due to or from the Fund Account, and the Subadvisor
shall not have possession or custody thereof. The Subadvisor shall advise
Custodian and confirm in writing to the Fund all investment orders for
the Fund Account placed by it with brokers and dealers at the time and in the
manner as set forth in Schedule A hereto (as amended from time to time). The
Fund shall issue to the Custodian such instructions as may be appropriate in
connection with the settlement of any transaction initiated by the Subadvisor.
The Fund shall be responsible for all custodial arrangements and the payment of
all custodial charges and fees, and, upon giving proper instructions to the
Custodian, the Subadvisor shall have no responsibility or liability with
respect to custodial arrangements or the acts, omissions or other conduct of
the Custodian which are not undertaken at the direction of the Subadvisor.
6. Allocation of Brokerage. The Subadvisor shall have authority
and discretion to select brokers and dealers to execute portfolio transactions
initiated by the Subadvisor, and for the selection of the markets on or in
which the transaction will be executed.
A. In doing so, the Subadvisor's primary responsibility
shall be to obtain the best net price and execution for the Fund. However,
this responsibility shall not be deemed to obligate the Subadvisor to solicit
competitive bids for each transaction, and the Subadvisor shall have no
obligation to seek the lowest available commission cost to the Fund, so long as
the Subadvisor determines that the broker or dealer is able to obtain the best
price on a particular transaction or as good a price on that transaction as is
otherwise available and that the commission cost is reasonable in relation to
the total quality and reliability of the brokerage and research services made
available by the broker to the Subadvisor viewed in terms of either that
particular transaction or of the Subadvisor's overall responsibilities with
respect to its clients, including the Fund, as to which the Subadvisor
exercises investment discretion, notwithstanding that the Fund may not be the
direct or exclusive beneficiary of any such services or that another broker may
be willing to charge the Fund a lower commission on the particular transaction.
B. The Manager shall have the right to request that
specified transactions giving rise to brokerage commissions, in an amount to be
agreed upon by the Manager and the Subadvisor, shall be executed (x) by brokers
and dealers that provide brokerage or research services to the Fund or the
Manager, (y) by brokers and dealers that agree to pay a portion of the
custodian, transfer agent or other administrative fees incurred by the Fund, or
(z) by brokers and dealers as to which an on-going relationship will be of
value to the Fund in the management of its assets, which services and
relationship may, but need not, be of direct benefit to the Fund Account, so
long as (i) the Fund and the Manager determine that the broker or dealer is
able to obtain the best price on a particular transaction or as good a price on
that transaction as is otherwise available and (ii) the Fund and the Manager
determine that the commission cost is reasonable in relation to (a) the total
quality and reliability of the brokerage and research services made available
to the Fund or to the Manager for the benefit of its clients for which it
exercises investment discretion, notwithstanding that the Fund Account may not
be the direct or exclusive beneficiary of any such service or that another
broker may be willing to charge the Fund a lower commission on the particular
transaction or (b) the total amount of custodian, transfer agent or other
administrative fees paid by that broker for the Fund.
C. The Subadvisor agrees that it will not knowingly execute
any portfolio transactions with a broker or dealer which is an "affiliated
person" (as defined in the Act) of the Fund or of the Manager or of any other
subadvisor for the Fund without the prior written approval of the Fund. The
Fund agrees that it will provide the Subadvisor with a list of brokers and
dealers which are "affiliated persons" of the Fund, the Manager or the Fund's
subadvisors. The Subadvisor agrees that it will provide the Fund and the
Manager with a list of brokers and dealers which are "affiliated persons" of
the Subadvisor.
D. As used in this paragraph 6, "brokerage and research
services" shall have the meaning set forth in Section 28(e)(3) of the
Securities Exchange Act of 1934.
7. Proxies. The Fund shall have sole voting power of all proxies
solicited by or with respect to the issuers of securities in which assets of
the Fund Account may be invested from time to time. At the request of the
Fund, the Subadvisor shall provide the Fund with its recommendations as to the
voting of such proxies. Except with the agreement or on the specific
instructions of the Fund and except as permitted by applicable law and the
rules of any self-regulating organization to which the Subadvisor belongs, the
Subadvisor shall not exercise any voting rights attaching to the investments of
the Fund.
8. Reports to Subadvisor. The Fund shall provide the Subadvisor
with such periodic reports concerning the status of the Fund Account as the
Subadvisor may reasonably request.
9. Fees for Services. The compensation of the Subadvisor for its
services under this Agreement shall be calculated and paid by the Manager in
accordance with the attached Schedule C. Pursuant to the provisions of the
Management Agreement between the Fund and the Manager, the Manager is solely
responsible for the payment of fees to the Subadvisor, and the Subadvisor
agrees to seek payment of the Subadvisor's fees solely from the Manager.
10. Other Investment Activities of Subadvisor. The Fund
acknowledges that the Subadvisor or one or more of its affiliates may have
investment responsibilities or render investment advice to or perform other
investment advisory services for other individuals or entities ("Other
Accounts"). Subject to the provisions of paragraph 2 hereof, the Fund agrees
that the Subadvisor or its affiliates may give advice or exercise investment
responsibility and take such other action with respect to other Other Accounts
which may differ from the advice given or the timing or nature of action taken
with respect to the Fund Account, provided that the Subadvisor acts in good
faith and provided further that it is the Subadvisor's policy to allocate,
within its reasonable discretion, investment opportunities to the Fund Account
over a period of time on a fair and equitable basis relative to the Other
Accounts, taking into account the investment objectives and policies of the
Fund and any specific investment restrictions applicable thereto. The Fund
acknowledges that one or more of the Other Accounts may at any time hold,
acquire, increase, decrease, dispose of or otherwise deal with positions in
investments in which the Fund Account may have an interest from time to time,
whether in transactions which involve the Fund Account or otherwise; provided,
however, that all such transactions shall comply with the requirements of the
Act and the rules thereunder. The Subadvisor will exercise the discretion
granted by the Fund to make investment decisions in the interests of the Fund
alone and will have regard to the interests of its other clients only so far
as may be required to comply with the requirements of applicable law.
11. Certificate of Authority. The Fund, the Manager and the
Subadvisor shall furnish to each other from time to time certified copies of
the resolutions of their Trustees or Boards of Directors or executive
committees, as the case may be, evidencing the authority of officers
and employees who are authorized to act on behalf of the Fund, a Fund Account,
the Manager and/or the Subadvisor.
12. Limitation of Liability. (a) The Subadvisor shall not be
liable for any action taken, omitted or suffered to be taken by it in its
reasonable judgement, in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement,
or in accordance with (or in the absence of) specific directions or
instructions from the Fund; provided, however, that such acts or omissions
shall not have resulted from the Subadvisor's willful misfeasance, bad faith or
gross negligence, a violation of the standard of care established by and
applicable to the Subadvisor in its actions under this Agreement or breach of
its duty or of its obligations hereunder. The Subadvisor shall not be
liable for any act or failure to act by any broker or other person with whom
the Subadvisor, the Fund or the Manager may deal in connection with this
Agreement.
(b) No shareholder, Trustee, officer, employee or agent of
the Fund shall be subject to any personal liability whatsoever to the Manager
or the Subadvisor or any officer, employee or agent thereof solely in
connection with the provisions of this Agreement, and the Manager, the
Subadvisor and each officer, employee and agent thereof shall look solely to
the Fund and its property for satisfaction of claims of any nature against the
Fund arising in connection herewith.
13. Confidentiality. Subject to the duty of the Subadvisor and the
Fund to comply with applicable law, including any demand of any regulatory or
taxing authority having jurisdiction, the Subadvisor shall treat as
confidential all information pertaining to the Fund Account and the actions of
the Subadvisor and the Fund in respect thereof.
14. Assignment. No assignment, as that term is defined in Section
2(a)(4) of the Act, of this Agreement shall be made by the Subadvisor, and this
Agreement shall terminate automatically in the event of such assignment unless
the Trustees of the Fund and the Manager agree to continue this Agreement. The
Subadvisor shall notify the Fund in writing sufficiently in advance of any
proposed change of control, as defined in Section 2(a)(9) of the Act, as will
enable the Fund to consider whether an assignment as defined in Section 2(a)(4)
of the Act will occur.
15. Representations, Warranties, and Agreements of the Fund. The
Fund represents, warrants, and agrees that:
A. The Subadvisor has been duly appointed by the Trustees
of the Fund to provide investment advice to the Fund Account as contemplated
hereby.
B. The Fund will deliver to the Subadvisor a true and
complete copy of its then current prospectus as effective from time to time and
such other documents or instruments governing the investment of the Fund
Account and such other information as is necessary for the Subadvisor to carry
out its obligations under this Agreement.
C. The Fund is currently in material compliance and shall
at all times materially comply with the requirements imposed upon the Fund by
applicable law and regulation.
16. Representations, Warranties, and Agreements of the Subadvisor.
The Subadvisor represents, warrants, and agrees that:
A. The Subadvisor is registered as an "Investment Adviser"
under the Investment Advisers Act of 1940, as amended ("Advisers Act"); is a
"bank" or a "bank holding company" as defined in Section 202(a) of the Advisers
Act; or is otherwise permitted to act as an "investment adviser" as defined in
Section 2(a)(20) of the Act.
B. The Subadvisor will maintain, keep current and preserve,
on behalf of the Fund, in the manner required or permitted by the Act, the
records identified in Schedule B. The Subadvisor agrees that such records
(other than those required by No. 4 of Schedule B) are the property of the
Fund, and will be surrendered to the Fund promptly upon request.
C. The Subadvisor will adopt a written code of ethics
complying with the requirements of Rule 17j-1 under the Act, will provide the
Fund with a copy of the code of ethics and evidence of its adoption, will
comply with such code of ethics, and will make such reports to the Fund as are
required to be made to the Fund by Rule 17j-1 under the Act or are otherwise
reasonably required by the Fund or the Manager.
D. The Subadvisor will comply in all material respects with
the Act and the Advisers Act and all regulations promulgated thereunder.
E. The Subadvisor will make and maintain all state
securities registrations as are necessary or appropriate to perform its
obligations hereunder.
F. The Subadvisor shall furnish the Fund and the Manager
with copies of its current ADV forms, which forms shall be complete and correct
in all material respects.
17. Amendment. This Agreement may be amended at any time, but only
by written agreement among the Subadvisor, the Manager and the Fund, which
amendment, other than amendments to Schedules A and B, is subject to the
approval of the Trustees of the Fund in the manner required by the Act and the
Rules and orders issued thereunder.
18. Effective Date; Term. This Agreement shall become effective on
____________, 1995 and shall continue in effect for successive annual periods
only so long as its continuance has been specifically approved at least
annually by the Manager and the Trustees of the Fund, including a majority of
the Trustees who are not "interested parties" of the Subadvisor under
the Act, in the manner required by the Act. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least annually"
shall be construed in a manner consistent with the Act and the Rules and
Regulations thereunder.
19. Termination. This Agreement may be terminated by any party
hereto, without the payment of any penalty, immediately upon written notice to
the other parties hereto in the event of a breach of any provision hereof by a
party so notified, or otherwise by the Subadvisor upon sixty (60) days' written
notice to the Fund and the Manager, or by the Fund or the Manager immediately
upon written notice to the Subadvisor, but any such termination shall not
affect the status, obligations, or liabilities of any party hereto to any other
party hereto.
20. Severability. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule, or otherwise, the remainder
of this Agreement shall not be affected thereby but shall continue in full
force and effect.
21. Applicable Law. To the extent that state law is not preempted
by the provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement shall be
administered, construed, and enforced according to the laws of the State of
Connecticut.
EAI SELECT MANAGERS EQUITY FUND
BY:
Its:
DATE:
ACCEPTED: EVALUATION ASSOCIATES CAPITAL
MARKETS, INCORPORATED
[SUBADVISOR]
BY: BY:
Its: Its:
DATE: DATE:
<PAGE>
-2-
SCHEDULES: A. Operational Procedures.
B. Record Keeping Requirements.
C. Fee Schedule.
<PAGE>
-1-
SCHEDULE A
The Subadvisor must abide by certain rules and procedures in order to
minimize operational problems. The Subadvisor must maintain various records
and files (as required by regulatory agencies) at its office (see Schedule B).
In addition, it will be necessary for a flow of information to be supplied to
[custodian], the Custodian for the Fund.
The Subadvisor must furnish [custodian] with daily information as to
executed trades no later than the morning following the day of the trade. The
necessary information can be transmitted via facsimile machine to [custodian]
(the direct line to the machine is _______________). Upon receipt of brokers'
confirmations, the Subadvisor or [custodian] must notify the other party if any
differences exist. The reporting of trades by the Subadvisor to [custodian]
shall include the following information:
1 - Purchase or sale;
2 - Security name;
3 - CUSIP #;
4 - Number of shares;
5 - Commission rate per share or if a net trade;
6 - Executing broker;
7 - Trade date;
8 - Settlement date, if other than normal; and
9 - If security is not eligible for DTC.
When opening accounts with brokers for the Fund, the account must be a
cash account. No margin accounts in the name of the Fund are to be maintained.
The broker should be advised to use [custodian's] ID system number (no. ______)
to facilitate the receipt of information by [custodian]. In addition, the
Subadvisor should arrange to have copies of all account documentation and
duplicate confirmations sent as follows:
EAI Select Managers Equity Fund
c/o Evaluation Associates Capital Markets, Incorporated
200 Connecticut Avenue, Suite 700
Norwalk, Connecticut 06854-1958
[custodian address]
Delivery Instructions are as follows:
All DTC eligible securities;
Depository Trust Company (DTC)
#997 Custodian Services
All Commercial Paper and ineligible DTC securities:
[custodian address]
"vs payment" (Federal Funds on commercial paper only)
Account: EAI Select Managers Equity Fund
All Government issues delivered through book entry:
Delivery through area Federal Reserve Bank to:
[custodian]
EAI Select Managers Equity Fund
or account number
"vs payment" Federal Funds
Wire Instructions:
Into [custodian] (use Federal Reserve wires)
[Account information]
Attention: EAI Select Managers Equity Fund
Amount: $_________________________
The Subadvisor must submit to [custodian] a trade authorization form
signed by two authorized individuals prior to settlement date. The list of
authorized persons with specimen signatures must be kept current at
[custodian].
The Subadvisor shall make available for [custodian] appropriate names
of individuals at executing brokers with whom [custodian] may discuss and
resolve problems that may occur.
[Custodian] will supply the Subadvisor daily with a cash availability
report. This will normally be done by telephone so that the Subadvisor may
know the amount available for investment purposes.
<PAGE>
-1-
SCHEDULE B
RECORDS TO BE MAINTAINED BY SUBADVISOR:
1. A record of each brokerage order, and all other portfolio
purchases and sales, given by the Subadvisor on behalf of the
Fund for, or in connection with, the purchase or sale of
securities, whether executed or unexecuted. Such records
shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any
modifications or cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. Quantity of securities bought or sold;
F. The time of receipt of execution; and
G. The name of the person who placed the order on behalf of
the Fund.
2.* A record for each fiscal quarter, completed within ten (10) days
after the end of the quarter, showing specifically the basis or
bases upon which the allocation of orders for the purchase and
sale of portfolio securities to brokers or dealers was
effected, and the division of brokerage commissions or other
compensation on such purchase and sale orders.
Such record:
A. Shall include the consideration given to:
(i) the sale of shares of the Fund
(ii) the supplying of services or benefits by
brokers or dealers to:
(a) The Fund
(b) The Manager (Evaluation Associates
Capital Markets, Incorporated)
(c) The Subadvisor and
(d) Any person other than the foregoing.
(iii) Any other consideration other than the
technical qualifications of the brokers and
dealers.
B. Shall show the nature of the services or benefits made
available.
C. Shall describe in detail the application of any general
or specific formula or other determinant used in
arriving at such allocation of purchase and sale orders
and such division of brokerage commissions or other
compensation.
D. The name of the person responsible for making the
determination of such allocation and such division of
brokerage commissions or other compensation.
3. A record in the form of an appropriate memorandum identifying
the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an
authorization is made by a committee or group, a record
shall be kept of the names of its members who participate in the
authorization.
There shall be retained as part of this record: any memorandum,
recommendation or instruction supporting or authorizing the
purchase or sale of portfolio securities and such other
information as is appropriate to support the authorization.**
4. Such accounts, books and other documents as are required to be
maintained by registered investment advisors by rule adopted
under Section 204 of the Investment Advisors Act of 1940, as
amended, to the extent such records are necessary or appropriate
to record the Subadvisor's transactions with the Fund.
* Maintained as property of the Fund pursuant to 1940 Act, Rule 31a-3(a).
** Such information might include: the current Form 10-K, annual and
quarterly reports, press releases, reports by analysts and from
brokerage firms (including their recommendation; i.e., buy, sell, hold)
or any internal reports or Subadvisor reviews.
<PAGE>
-1-
SCHEDULE C
SUBADVISOR FEE
For services provided to the Fund Account, Evaluation Associates
Capital Markets, Incorporated will pay a base quarterly fee at the end of each
calendar quarter at an annual rate of 0.375% of average MONTHLY
net assets in the Fund Account during the quarter. Average
MONTHLY net assets shall be determined using net assets in the Fund Account on
THE LAST business day OF EACH MONTH during the calendar
quarter. The fee shall be pro-rated for any calendar quarter during which the
contract is in effect for only a portion of the quarter.
The Subadvisor may waive all or a portion of the fee due to it
hereunder at any time. Any voluntary fee waiver by the Subadvisor may be
terminated or reduced at any time in the sole discretion of the Subadvisor,
unless contractually committed to for a specified period.
<PAGE>
DRAFT
CUSTODY AGREEMENT
AGREEMENT dated as of XXXXXXXXXXX, 199X, between the EAI SELECT MANAGERS
EQUITY FUND, a business trust organized under the laws of the Commonwealth of
Massachusetts (the "Fund"), having its principal office and place of business
at 200 Connecticut Avenue, Norwalk, Connecticut 06854, and BOSTON SAFE DEPOSIT
AND TRUST COMPANY (the "Custodian"), a Massachusetts trust company with its
principal place of business at One Boston Place, Boston, Massachusetts 02108.
W I T N E S S E T H:
That for and in consideration of the mutual promises hereinafter set
forth, the Fund and the Custodian agree as follows:
1. Definitions.
Whenever used in this Agreement or in any Schedules to this Agreement,
the following words and phrases, unless the context otherwise requires, shall
have the following meanings:
(a) "Affiliated Person" shall have the meaning of the term within
Section 2(a)3 of the 1940 Act.
(b) "Authorized Person" shall be deemed to include the Chairman of
the Board of Trustees, the President, and any Vice President, the
Secretary, the Treasurer or any other person, whether or not any such
person is an officer or employee of the Fund, duly authorized by the
Board of Trustees of the Fund to give Oral Instructions and Written
Instructions on behalf of the Fund and listed in the certification
annexed hereto as Appendix A or such other certification as may be
received by the Custodian from time to time.
(c) "Book-Entry System" shall mean the Federal Reserve/Treasury book-
entry system for United States and federal agency Securities, its
successor or successors and its nominee or nominees.
(d) "Business Day" shall mean any day on which the Fund, the
Custodian, the Book-Entry System and appropriate clearing corporation(s)
are open for business.
(e) "Certificate" shall mean any notice, instruction or other
instrument in writing, authorized or required by this Agreement to be
given to the Custodian, which is actually received by the Custodian and
signed on behalf of the Fund by any two Authorized Persons or any two
officers thereof.
(f) " Declaration of Trust " shall mean the Trust of the Fund dated
September 27, 1995 as the same may be amended from time to time.
(g) "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission
under Section 17(a) of the Securities Exchange Act of 1934, as amended,
its successor or successors and its nominee or nominees, in which the
Custodian is hereby specifically authorized to make deposits. The term
"Depository" shall further mean and include any other person to be named
in a Certificate authorized to act as a depository under the 1940 Act,
its successor or successors and its nominee or nominees.
(h) "Money Market Security" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to interest and
principal by the government of the United States or agencies or
instrumentalities thereof ("U.S. government securities"), commercial
paper, bank certificates of deposit, bankers' acceptances and short-term
corporate obligations, where the purchase or sale of such securities
normally requires settlement in federal funds on the same day as such
purchase or sale, and repurchase and reverse repurchase agreements with
respect to any of the foregoing types of securities.
(i) "Oral Instructions" shall mean verbal instructions actually
received by the Custodian from a person reasonably believed by the
Custodian to be an Authorized Person.
(j) "Prospectus" shall mean the Fund's current prospectus and
statement of additional information relating to the registration of the
Fund's Shares under the Securities Act of 1933, as amended.
(k) "Shares" refers to shares of common stock, $___ par value per
share, of the Fund.
(l) "Security" or "Securities" shall be deemed to include bonds,
debentures, notes, stocks, shares, evidences of indebtedness, and other
securities, commodities interests and investments from time to time
owned by the Fund.
(m) "Transfer Agent" shall mean the person which performs the
transfer agent, dividend disbursing agent and shareholder servicing agent
functions for the Fund.
(n) "Written Instructions" shall mean a written communication
actually received by the Custodian from a person reasonably believed by
the Custodian to be an Authorized Person by any system, including,
without limitation, electronic transmissions, facsimile and telex.
(o) The "1940 Act" refers to the Investment Company Act of 1940, and
the Rules and Regulations thereunder, all as amended from time to time.
2. Appointment of Custodian.
(a) The Fund hereby constitutes and appoints the Custodian as
custodian of all the Securities and monies at the time owned by or in the
possession of the Fund during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
1
<PAGE>
DRAFT
3. Compensation.
(a) The Fund will compensate the Custodian for its services rendered
under this Agreement in accordance with the fees set forth in the Fee
Schedule annexed hereto as Schedule A and incorporated herein. Such Fee
Schedule does not include out-of-pocket disbursements of the Custodian
for which the Custodian shall be entitled to bill separately. Out-of-
pocket disbursements shall include, but shall not be limited to, the
items specified in the Schedule of Out-of-Pocket charges annexed hereto
as Schedule B and incorporated herein, which schedule may be modified by
the Custodian upon not less than thirty days prior written notice to the
Fund.
(b) Any compensation agreed to hereunder may be adjusted from time to
time by attaching to Schedule A of this Agreement a revised Fee Schedule,
dated and signed by an Authorized Officer or authorized representative of
each party hereto.
(c) The Custodian will bill the Fund as soon as practicable after the
end of each calendar month, and said billings will be detailed in
accordance with Schedule A, as amended from time to time. The Fund will
promptly pay to the Custodian the amount of such billing.
4. Custody of Cash and Securities.
(a) Receipt and Holding of Assets.
The Fund will deliver or cause to be delivered to the Custodian all
Securities and monies owned by it at any time during the period of this
Agreement. The Custodian will not be responsible for such Securities and
monies until actually received by it. The Fund shall instruct the
Custodian from time to time in its sole discretion, by means of Written
Instructions, or, in connection with the purchase or sale of Money Market
Securities, by means of Oral Instructions confirmed in writing in
accordance with Section 11(i) hereof or Written Instructions, as to the
manner in which and in what amounts Securities and monies are to be
deposited on behalf of the Fund in the Book-Entry System or the
Depository; provided, however, that prior to the deposit of Securities of
the Fund in the Book-Entry System or the Depository, including a deposit
in connection with the settlement of a purchase or sale, the Custodian
shall have received a Certificate specifically approving such deposits by
the Custodian in the Book-Entry System or the Depository. Securities and
monies of the Fund deposited in the Book-Entry System or the Depository
will be represented in accounts which include only assets held by the
Custodian for customers, including but not limited to accounts for which
the Custodian acts in a fiduciary or representative capacity.
(b) Accounts and Disbursements. The Custodian shall establish and
maintain a separate account for the Fund and shall credit to the separate
account all monies received by it for the account of such Fund and shall
disburse the same only:
1. In payment for Securities purchased for the Fund, as
provided in Section 5 hereof;
2. In payment of dividends or distributions with respect to
the Shares, as provided in Section 7 hereof;
3. In payment of original issue or other taxes with respect
to the Shares, as provided in Section 8 hereof;
4. In payment for Shares which have been redeemed by the
Fund, as provided in Section 8 hereof;
5. Pursuant to Written Instructions setting forth the name
and address of the person to whom the payment is to be made, the
amount to be paid and the purpose for which payment is to be
made, provided that in the event of disbursements pursuant to
this sub-section 4(b)(5), the Fund shall indemnify and hold the
Custodian harmless from any claims or losses arising out of such
disbursements in reliance on such Written Instructions which it,
in good faith, believes to be received from duly Authorized
Persons; or
6. In payment of fees and in reimbursement of the expenses
and liabilities of the Custodian attributable to the Fund, as
provided in Sections 11(h) and 11(j).
(c) Confirmation and Statements. Promptly after the close of
business on each day, the Custodian shall furnish the Fund with
confirmations and a summary of all transfers to or from the account of
the Fund during said day. Where securities purchased by the Fund are in
a fungible bulk of securities registered in the name of the Custodian (or
its nominee) or shown on the Custodian's account on the books of the
Depository or the Book-Entry System, the Custodian shall by book entry or
otherwise identify the quantity of those securities belonging to the
Fund. At least weekly, the Custodian shall furnish the Fund with a
detailed statement of the Securities and monies held for the Fund under
this Agreement.
(d) Registration of Securities and Physical Separation. All
Securities held for the Fund which are issued or issuable only in bearer
form, except such Securities as are held in the Book-Entry System, shall
be held by the Custodian in that form; all other Securities held for the
Fund may be registered in the name of the Fund, in the name of the
Custodian, in the name of any duly appointed registered nominee of the
Custodian as the Custodian may from time to time determine, or in the
name of the Book-Entry System or the Depository or their successor or
successors, or their nominee or nominees. The Fund reserves the right to
instruct the Custodian as to the method of registration and safekeeping
of the Securities. The Fund agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold or deliver in
proper form for transfer, or to register in the name of its registered
nominee or in the name of the Book-Entry System or the Depository, any
Securities which it may hold for the account of the Fund and which may
from time to time be registered in the name of the Fund. The Custodian
shall hold all such Securities specifically allocated to the Fund which
are not held in the Book-Entry System or the Depository in a separate
account for the Fund in the name of the Fund physically segregated at all
times from those of any other person or persons.
(e) Segregated Accounts. Upon receipt of a Written Instruction the
Custodian will establish segregated accounts on behalf of the Fund to
hold liquid or other assets as it shall be directed by a Written
Instruction and shall increase or decrease the assets in such segregated
accounts only as it shall be directed by subsequent Written Instruction.
(f) Collection of Income and Other Matters Affecting Securities.
Unless otherwise instructed to the contrary by a Written Instruction, the
Custodian by itself, or through the use of the Book-Entry System or the
Depository with respect to Securities therein deposited, shall with
respect to all Securities held for the Fund in accordance with this
Agreement:
1. Collect all income due or payable;
2. Present for payment and collect the amount payable upon
all Securities which may mature or be called, redeemed, retired
or otherwise become payable. Notwithstanding the foregoing, the
Custodian shall have no responsibility to the Fund for monitoring
or ascertaining any call, redemption or retirement dates with
respect to put bonds which are owned by the Fund and held by the
Custodian or its nominees. Nor shall the Custodian have any
responsibility or liability to the Fund for any loss by the Fund
for any missed payments or other defaults resulting therefrom;
unless the Custodian received timely notification from the Fund
specifying the time, place and manner for the presentment of any
such put bond owned by the Fund and held by the Custodian or its
nominee. The Custodian shall not be responsible and assumes no
liability to the Fund for the accuracy or completeness of any
notification the Custodian may furnish to the Fund with respect
to put bonds;
3. Surrender Securities in temporary form for definitive
Securities;
4. Execute any necessary declarations or certificates of
ownership under the Federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in
effect; and
5. Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the
account of the Fund all rights and similar Securities issued with
respect to any Securities held by the Custodian hereunder for the
Fund.
(g) Delivery of Securities and Evidence of Authority. Upon receipt
of a Written Instruction and not otherwise, except for subparagraphs 5,
6, 7, and 8 of this section 4(g) which may be effected by Oral or Written
Instructions, the Custodian, directly or through the use of the Book-
Entry System or the Depository, shall:
1. Execute and deliver or cause to be executed and delivered
to such persons as may be designated in such Written
Instructions, proxies, consents, authorizations, and any other
instruments whereby the authority of the Fund as owner of any
Securities may be exercised;
2. Deliver or cause to be delivered any Securities held for
the Fund in exchange for other Securities or cash issued or paid
in connection with the liquidation, reorganization, refinancing,
merger, consolidation or recapitalization of any corporation, or
the exercise of any conversion privilege;
3. Deliver or cause to be delivered any Securities held for
the Fund to any protective committee, reorganization committee or
other person in connection with the reorganization, refinancing,
merger, consolidation or recapitalization or sale of assets of
any corporation, and receive and hold under the terms of this
Agreement in the separate account for the Fund such certificates
of deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
4. Make or cause to be made such transfers or exchanges of
the assets specifically allocated to the separate account of the
Fund and take such other steps as shall be stated in Written
Instructions to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund;
5. Deliver Securities upon sale of such Securities for the
account of the Fund pursuant to Section 5;
6. Deliver Securities upon the receipt of payment in
connection with any repurchase agreement related to such
Securities entered into by the Fund;
7. Deliver Securities owned by the Fund to the issuer thereof
or its agent when such Securities are called, redeemed, retired
or otherwise become payable; provided, however, that in any such
case the cash or other consideration is to be delivered to the
Custodian. Notwithstanding the foregoing, the Custodian shall
have no responsibility to the Fund for monitoring or ascertaining
any call, redemption or retirement dates with respect to the put
bonds which are owned by the Fund and held by the Custodian or
its nominee. Nor shall the Custodian have any responsibility or
liability to the Fund for any loss by the Fund for any missed
payment or other default resulting therefrom; unless the
Custodian received timely notification from the Fund specifying
the time, place and manner for the presentment of any such put
bond owned by the Fund and held by the Custodian or its nominee.
The Custodian shall not be responsible and assumes no liability
to the Fund for the accuracy or completeness of any notification
the Custodian may furnish to the Fund with respect to put bonds;
8. Deliver Securities for delivery in connection with any
loans of Securities made by the Fund but only against receipt of
adequate collateral as agreed upon from time to time by the
Custodian and the Fund which may be in the form of cash or U.S.
government securities or a letter of credit;
9. Deliver Securities for delivery as security in connection
with any borrowings by the Fund requiring a pledge of Fund
assets, but only against receipt of amounts borrowed;
10. Deliver Securities upon receipt of Written Instructions
from the Fund for delivery to the Transfer Agent or to the
holders of Shares in connection with distributions in kind, as
may be described from time to time in the Fund's Prospectus, in
satisfaction of requests by holders of Shares for repurchase or
redemption;
11. Deliver Securities as collateral in connection with short
sales by the Fund of common stock for which the Fund owns the
stock or owns preferred stocks or debt securities convertible or
exchangeable, without payment or further consideration, into
shares of the common stock sold short;
12. Deliver Securities for any purpose expressly permitted by
and in accordance with procedures described in the Fund's
Prospectus; and
13. Deliver Securities for any other proper business purpose,
but only upon receipt of, in addition to Written Instructions, a
certified copy of a resolution of the Board of Trustees signed by
an Authorized Person and certified by the Secretary of the Fund,
specifying the Securities to be delivered, setting forth the
purpose for which such delivery is to be made, declaring such
purpose to be a proper business purpose, and naming the person or
persons to whom delivery of such Securities shall be made.
(h) Endorsement and Collection of Checks, Etc. The Custodian is
hereby authorized to endorse and collect all checks, drafts or other
orders for the payment of money received by the Custodian for the account
of the Fund.
5. Purchase and Sale of Investments of the Fund.
(a) Promptly after each purchase of Securities for the Fund, the Fund
shall deliver to the Custodian (i) with respect to each purchase of
Securities which are not Money Market Securities, a Written Instruction,
and (ii) with respect to each purchase of Money Market Securities, either
a Written Instruction or Oral Instruction, in either case specifying with
respect to each purchase: (1) the name of the issuer and the title of
the Securities; (2) the number of shares or the principal amount
purchased and accrued interest, if any; (3) the date of purchase and
settlement; (4) the purchase price per unit; (5) the total amount payable
upon such purchase; (6) the name of the person from whom or the broker
through whom the purchase was made, if any; (7) whether or not such
purchase is to be settled through the Book-Entry System or the
Depository; and (8) whether the Securities purchased are to be deposited
in the Book-Entry System or the Depository. The Custodian shall receive
the Securities purchased by or for the Fund and upon receipt of
Securities shall pay out of the monies held for the account of the Fund
the total amount payable upon such purchase, provided that the same
conforms to the total amount payable as set forth in such Written or Oral
Instruction.
(b) Promptly after each sale of Securities of the Fund, the Fund
shall deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, a Written Instruction,
and (ii) with respect to each sale of Money Market Securities, either
Written Instruction or Oral Instructions, in either case specifying with
respect to such sale: (1) the name of the issuer and the title of the
Securities; (2) the number of shares or principal amount sold, and
accrued interest, if any; (3) the date of sale; (4) the sale price per
unit; (5) the total amount payable to the Fund upon such sale; (6) the
name of the broker through whom or the person to whom the sale was made;
and (7) whether or not such sale is to be settled through the Book-Entry
System or the Depository. The Custodian shall deliver or cause to be
delivered the Securities to the broker or other person designated by the
Fund upon receipt of the total amount payable to the Fund upon such sale,
provided that the same conforms to the total amount payable to the Fund
as set forth in such Written or Oral Instruction. Subject to the
foregoing, the Custodian may accept payment in such form as shall be
satisfactory to it, and may deliver Securities and arrange for payment in
accordance with the customs prevailing among dealers in Securities.
6. Lending of Securities.
If the Fund is permitted by the terms of the Declaration of Trust
and as disclosed in its Prospectus to lend securities, within 24 hours
after each loan of Securities, the Fund shall deliver to the Custodian a
Written Instruction specifying with respect to each such loan: (a) the
name of the issuer and the title of the Securities; (b) the number of
shares or the principal amount loaned; (c) the date of loan and delivery;
(d) the total amount to be delivered to the Custodian, and specifically
allocated against the loan of the Securities, including the amount of
cash collateral and the premium, if any, separately identified; (e) the
name of the broker, dealer or financial institution to which the loan was
made; and (f) whether the Securities loaned are to be delivered through
the Book-Entry System or the Depository.
Promptly after each termination of a loan of Securities, the Fund
shall deliver to the Custodian a Written Instruction specifying with
respect to each such loan termination and return of Securities: (a) the
name of the issuer and the title of the Securities to be returned; (b)
the number of shares or the principal amount to be returned; (c) the date
of termination; (d) the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus any offsetting
credits as described in said Written Instruction); (e) the name of the
broker, dealer or financial institution from which the Securities will be
returned; and (f) whether such return is to be effected through the Book-
Entry System or the Depository. The Custodian shall receive all
Securities returned from the broker, dealer or financial institution to
which such Securities were loaned and upon receipt thereof shall pay the
total amount payable upon such return of Securities as set forth in the
Written Instruction. Securities returned to the Custodian shall be held
as they were prior to such loan.
7. Payment of Dividends or Distributions.
(a) The Fund shall furnish to the Custodian the vote of the Board of
Trustees of the Fund certified by the Secretary (i) authorizing the
declaration of distributions on a specified periodic basis and
authorizing the Custodian to rely on Oral or Written Instructions
specifying the date of the declaration of such distribution, the date of
payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per share to the
shareholders of record as of the record date and the total amount payable
to the Transfer Agent on the payment date, or (ii) setting forth the date
of declaration of any distribution by the Fund, the date of payment
thereof, the record date as of which shareholders entitled to payment
shall be determined, the amount payable per share to the shareholders of
record as of the record date and the total amount payable to the Transfer
Agent on the payment date.
(b) Upon the payment date specified in such vote, Oral Instructions
or Written Instructions, as the case may be, the Custodian shall pay out
the total amount payable to the Transfer Agent of the Fund.
8. Sale and Redemption of Shares of the Fund.
(a) Whenever the Fund shall sell any Shares, the Fund shall deliver
or cause to be delivered to the Custodian a Written Instruction duly
specifying:
1. The number of Shares sold, trade date, and price; and
2. The amount of money to be received by the Custodian for
the sale of such Shares.
The Custodian understands and agrees that Written Instructions
may be furnished subsequent to the purchase of Shares and that the
information contained therein will be derived from the sales of Shares as
reported to the Fund by the Transfer Agent.
(b) Upon receipt of money from the Transfer Agent, the Custodian
shall credit such money to the separate account of the Fund.
(c) Upon issuance of any Shares in accordance with the foregoing
provisions of this Section 8, the Custodian shall pay all original issue
or other taxes required to be paid in connection with such issuance upon
the receipt of a Written Instruction specifying the amount to be paid.
(d) Except as provided hereafter, whenever any Shares are redeemed,
the Fund shall cause the Transfer Agent to promptly furnish to the
Custodian Written Instructions, specifying:
1. The number of Shares redeemed; and
2. The amount to be paid for the Shares redeemed.
The Custodian further understands that the information contained
in such Written Instructions will be derived from the redemption of
Shares as reported to the Fund by the Transfer Agent.
(e) Upon receipt from the Transfer Agent of advice setting forth the
number of Shares received by the Transfer Agent for redemption and that
such Shares are valid and in good form for redemption, the Custodian
shall make payment to the Transfer Agent of the total amount specified in
a Written Instruction issued pursuant to paragraph (d) of this Section 8.
(f) Notwithstanding the above provisions regarding the redemption of
Shares, whenever such Shares are redeemed pursuant to any check
redemption privilege which may from time to time be offered by the Fund,
the Custodian, unless otherwise instructed by a Written Instruction
shall, upon receipt of advice from the Fund or its agent stating that the
redemption is in good form for redemption in accordance with the check
redemption procedure, honor the check presented as part of such check
redemption privilege out of the monies specifically allocated to the Fund
in such advice for such purpose.
9. Indebtedness.
(a) The Fund will cause to be delivered to the Custodian by any bank
(excluding the Custodian) from which the Fund borrows money for temporary
administrative or emergency purposes using Securities as collateral for
such borrowings, a notice or undertaking in the form currently employed
by any such bank setting forth the amount which such bank will loan to
the Fund against delivery of a stated amount of collateral. The Fund
shall promptly deliver to the Custodian Written Instructions stating with
respect to each such borrowing: (1) the name of the bank; (2) the amount
and terms of the borrowing, which may be set forth by incorporating by
reference an attached promissory note, duly endorsed by the Fund, or
other loan agreement; (3) the time and date, if known, on which the loan
is to be entered into (the "borrowing date"); (4) the date on which the
loan becomes due and payable; (5) the total amount payable to the Fund on
the borrowing date; (6) the market value of Securities to be delivered as
collateral for such loan, including the name of the issuer, the title and
the number of shares or the principal amount of any particular
Securities; (7) whether the Custodian is to deliver such collateral
through the Book-Entry System or the Depository; and (8) a statement that
such loan is in conformance with the 1940 Act and the Fund's Prospectus.
(b) Upon receipt of the Written Instruction referred to in
subparagraph (a) above, the Custodian shall deliver on the borrowing date
the specified collateral and the executed promissory note, if any,
against delivery by the lending bank of the total amount of the loan
payable, provided that the same conforms to the total amount payable as
set forth in the Written Instruction. The Custodian may, at the option
of the lending bank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the lending bank
by virtue of any promissory note or loan agreement. The Custodian shall
deliver as additional collateral in the manner directed by the Fund from
time to time such Securities as may be specified in Written Instruction
to collateralize further any transaction described in this Section 9.
The Fund shall cause all Securities released from collateral status to be
returned directly to the Custodian, and the Custodian shall receive from
time to time such return of collateral as may be tendered to it. In the
event that the Fund fails to specify in Written Instruction all of the
information required by this Section 9, the Custodian shall not be under
any obligation to deliver any Securities. Collateral returned to the
Custodian shall be held hereunder as it was prior to being used as
collateral.
10. Persons Having Access to Assets of the Fund.
(a) No trustee or agent of the Fund, and no officer, director,
employee or agent of the Fund's investment adviser, of any sub-investment
adviser of the Fund, or of the Fund's administrator, shall have physical
access to the assets of the Fund held by the Custodian or be authorized
or permitted to withdraw any investments of the Fund, nor shall the
Custodian deliver any assets of the Fund to any such person. No officer,
director, employee or agent of the Custodian who holds any similar
position with the Fund's investment adviser, with any sub-investment
adviser of the Fund or with the Fund's administrator shall have access to
the assets of the Fund.
(b) Nothing in this Section 10 shall prohibit any duly authorized
officer, employee or agent of the Fund, or any duly authorized officer,
director, employee or agent of the investment adviser, of any sub-
investment adviser of the Fund or of the Fund's administrator, from
giving Oral Instructions or Written Instructions to the Custodian or
executing a Certificate so long as it does not result in delivery of or
access to assets of the Fund prohibited by paragraph (a) of this Section
10.
11. Concerning the Custodian.
(a) Standard of Conduct. Notwithstanding any other provision of this
Agreement, neither the Custodian nor its nominee shall be liable for any
loss or damage, including counsel fees, resulting from its action or
omission to act or otherwise, except for any such loss or damage arising
out of the gross negligence or willful misconduct of the Custodian or any
of its employees, sub-custodians or agents. The Custodian may, after
obtaining the Fund's permission, with respect to questions of law, apply
for and obtain the advice and opinion of counsel to the Fund or of its
own counsel, at the expense of the Fund, and shall be fully protected
with respect to anything done or omitted by it in good faith in
conformity with such advice or opinion. The Custodian shall not be
liable to the Fund for any loss or damage resulting from the use of the
Book-Entry System or the Depository.
(b) Limit of Duties. Without limiting the generality of the
foregoing, the Custodian shall be under no duty or obligation to inquire
into, and shall not be liable for:
1. The validity of the issue of any Securities purchased by
the Fund, the legality of the purchase thereof, or the propriety
of the amount paid therefor;
2. The legality of the sale of any Securities by the Fund or
the propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any Shares, or the
sufficiency of the amount to be received therefor;
4. The legality of the redemption of any Shares, or the
propriety of the amount to be paid therefor;
5. The legality of the declaration or payment of any
distribution of the Fund;
6. The legality of any borrowing for temporary or emergency
administrative purposes.
(c) No Liability Until Receipt. The Custodian shall not be liable
for, or considered to be the Custodian of, any money, whether or not
represented by any check, draft, or other instrument for the payment of
money, received by it on behalf of the Fund until the Custodian actually
receives and collects such money directly or by the final crediting of
the account representing the Fund's interest in the Book-Entry System or
the Depository.
(d) Amounts Due from Transfer Agent. The Custodian shall not be
under any duty or obligation to take action to effect collection of any
amount due to the Fund from the Transfer Agent nor to take any action to
effect payment or distribution by the Transfer Agent of any amount paid
by the Custodian to the Transfer Agent in accordance with this Agreement.
(e) Collection Where Payment Refused. The Custodian shall not be
under any duty or obligation to take action to effect collection of any
amount, if the Securities upon which such amount is payable are in
default, or if payment is refused after due demand or presentation,
unless and until (a) it shall be directed to take such action by a
Certificate and (b) it shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection with any such
action.
(f) Appointment of Agents and Sub-Custodians. The Custodian may,
after obtaining the Fund's consent, appoint one or more banking
institutions, including but not limited to banking institutions located
in foreign countries, to act as Depository or Depositories or as sub-
custodian or as sub-custodians of Securities and monies at any time owned
by the Fund. The Custodian shall use reasonable care in selecting a
Depository and/or sub-custodian located in a country other than the
United States ("Foreign Sub-Custodian"), and shall oversee the
maintenance of any Securities or monies of the Fund by any Foreign Sub-
Custodian. In addition, the Custodian shall hold the Fund harmless from,
and indemnify the Fund against, any loss that occurs as a result of the
failure of any Foreign Sub-Custodian to exercise reasonable care with
respect to the safekeeping of Securities and monies of the Fund.
Notwithstanding the generality of the foregoing, however, the Custodian
shall not be liable for any losses resulting from or caused by events or
circumstances beyond its reasonable control, including, but not limited
to, losses resulting from nationalization, expropriation, devaluation,
revaluation, confiscation, seizure, cancellation, destruction or similar
action by any governmental authority, de facto or de jure; or enactment,
promulgation, imposition or enforcement by any such governmental
authority of currency restrictions, exchange controls, taxes, levies or
other charges affecting the Fund's property; or acts of war, terrorism,
insurrection or revolution; or any other similar act or event beyond the
Custodian's control.
(g) No Duty to Ascertain Authority. The Custodian shall not be under
any duty or obligation to ascertain whether any Securities at any time
delivered to or held by it for the Fund are such as may properly be held
by the Fund under the provisions of the Declaration of Trust and the
Prospectus.
(h) Compensation of the Custodian. The Custodian shall be entitled
to receive, and the Fund agrees to pay to the Custodian, such
compensation as may be agreed upon from time to time between the
Custodian and the Fund. The Custodian may, after presentation to and
approval by the Fund, charge against any monies held on behalf of the
Fund pursuant to this Agreement such compensation and any expenses
incurred by the Custodian in the performance of its duties pursuant to
this Agreement. The Custodian may, after presentation to and approval by
the Fund, charge against any money held on behalf of the Fund pursuant to
this Agreement the amount of any loss, damage, liability or expense
incurred with respect to the Fund, including counsel fees, for which it
shall be entitled to reimbursement under the provisions of this
Agreement.
The expenses which the Custodian may charge against such account
include, but are not limited to, the expenses of sub-custodians and
foreign branches of the Custodian incurred in settling transactions
outside of Boston, Massachusetts or New York City, New York involving the
purchase and sale of Securities.
(i) Reliance on Certificates and Instructions. The Custodian shall
be entitled to rely upon any Certificate, notice or other instrument in
writing received by the Custodian and reasonably believed by the
Custodian to be genuine and to be signed by an officer or Authorized
Person of the Fund. The Custodian shall be entitled to rely upon any
Written Instructions or Oral Instructions actually received by the
Custodian pursuant to the applicable Sections of this Agreement and
reasonably believed by the Custodian to be genuine and to be given by an
Authorized Person. The Fund agrees to forward to the Custodian Written
Instructions from an Authorized Person confirming such Oral Instructions
in such manner so that such Written Instructions are received by the
Custodian, whether by hand delivery, telex or otherwise, by the close of
business on the same day that such Oral Instructions are given to the
Custodian. The Fund agrees that the fact that such confirming
instructions are not received by the Custodian shall in no way affect the
validity of the transactions or enforceability of the transactions hereby
authorized by the Fund. The Fund agrees that the Custodian shall incur
no liability to the Fund in acting upon Oral Instructions given to the
Custodian hereunder concerning such transactions provided such
instructions reasonably appear to have been received from a duly
Authorized Person.
(j) Overdraft Facility and Security for Payment. In the event that
the Custodian is directed by Written Instruction (or Oral Instructions
confirmed in writing in accordance with Section 11(i) hereof) to make any
payment or transfer of monies on behalf of the Fund for which there would
be, at the close of business on the date of such payment or transfer,
insufficient monies held by the Custodian on behalf of the Fund, the
Custodian may, after obtaining the Fund's agreement, provide an overdraft
(an "Overdraft") to the Fund in an amount sufficient to allow the
completion of such payment or transfer. Any Overdraft provided
hereunder: (a) shall be payable on the next Business Day, unless
otherwise agreed by the Fund and the Custodian; and (b) shall accrue
interest from the date of the Overdraft to the date of payment in full by
the Fund at a rate agreed upon in writing, from time to time, by the
Custodian and the Fund. The Custodian and the Fund acknowledge that the
purpose of such Overdraft is to temporarily finance the purchase of
Securities for prompt delivery in accordance with the terms hereof, to
meet unanticipated or unusual redemption, to allow the settlement of
foreign exchange contracts or to meet other emergency expenses not
reasonably foreseeable by the Fund. The Custodian shall promptly notify
the Fund in writing (an "Overdraft Notice") of any Overdraft by facsimile
transmission or in such other manner as the Fund and the Custodian may
agree in writing. Solely to secure payment of any Overdraft, the Fund
hereby grants to the Custodian a continuing security interest in and
right of setoff against the Securities and cash in the Fund's account
from time to time in the full amount of such Overdraft. Should the Fund
fail to pay promptly any amounts owed hereunder, the Custodian shall be
entitled to use available cash in the Fund's account and to liquidate
Securities in the account as is necessary to meet the Fund's obligations
under the Overdraft. In any such case, and without limiting the
foregoing, the Custodian shall be entitled to take such other actions(s)
or exercise such other options, powers and rights as the Custodian now or
hereafter has as a secured creditor under the Massachusetts Uniform
Commercial Code or any other applicable law.
(k) Inspection of Books and Records. The books and records of the
Custodian shall be open to inspection and audit at reasonable times by
officers and auditors employed by the Fund and by the appropriate
employees of the Securities and Exchange Commission.
The Custodian shall provide the Fund with any report obtained by
the Custodian on the system of internal accounting control of the Book-
Entry System or the Depository and with such reports on its own systems
of internal accounting control as the Fund may reasonably request from
time to time.
12. Term and Termination.
(a) This Agreement shall become effective on the date first set forth
above (the "Effective Date") and shall continue in effect thereafter
until such time as this Agreement may be terminated in accordance with
the provisions hereof.
(b) Either of the parties hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than 60 days after the date of
receipt of such notice. In the event such notice is given by the Fund,
it shall be accompanied by a certified vote of the Board of Trustees of
the Fund, electing to terminate this Agreement and designating a
successor custodian or custodians, which shall be a person qualified to
so act under the 1940 Act.
In the event such notice is given by the Custodian, the Fund
shall, on or before the termination date, deliver to the Custodian a
certified vote of the Board of Trustees of the Fund, designating a
successor custodian or custodians. If the Fund fails to designate a
successor custodian, the Fund shall upon the date specified in the notice
of termination of this Agreement and upon the delivery by the Custodian
of all Securities (other than Securities held in the Book-Entry System
which cannot be delivered to the Fund) and monies then owned by the Fund,
be deemed to be its own custodian and the Custodian shall thereby be
relieved of all duties and responsibilities pursuant to this Agreement,
other than the duty with respect to Securities held in the Book-Entry
System which cannot be delivered to the Fund.
(c) Upon the date set forth in such notice under paragraph (b) of
this Section 12, this Agreement shall terminate to the extent specified
in such notice, and the Custodian shall upon receipt of a notice of
acceptance by the successor custodian on that date deliver directly to
the successor custodian all Securities and monies then held by the
Custodian on behalf of the Fund, after deducting all fees, expenses and
other amounts , subject to Section 11 (h), for the payment or
reimbursement of which it shall then be entitled.
13. Limitation of Liability.
The Fund and the Custodian agree that the obligations of the Fund
under this Agreement shall not be binding upon any of the Trustees,
shareholders, nominees, officers, employees or agents, whether past,
present or future, of the Fund, individually, but are binding only upon
the assets and property of the Fund, as provided in the Declaration of
Trust. The execution and delivery of this Agreement have been authorized
by the Trustees of the Fund, and signed by an authorized officer of the
Fund, acting as such, and neither such authorization by such Trustees nor
such execution and delivery by such officer shall be deemed to have been
made by any of them or any shareholder of the Fund individually or to
impose any liability on any of them or any shareholder of the Fund
personally, but shall bind only the assets and property of the Fund as
provided in the Declaration of Trust.
14. Miscellaneous.
(a) Annexed hereto as Appendix A is a certification signed by the
Secretary of the Fund setting forth the names and the signatures of the
present Authorized Persons. The Fund agrees to furnish to the Custodian
a new certification in similar form in the event that any such present
Authorized Person ceases to be such an Authorized Person or in the event
that other or additional Authorized Persons are elected or appointed.
Until such new certification shall be received, the Custodian shall be
fully protected in acting under the provisions of this Agreement upon
Oral Instructions or signatures of the present Authorized Persons as set
forth in the last delivered certification.
(b) Annexed hereto as Appendix B is a certification signed by the
Secretary of the Fund setting forth the names and the signatures of the
present officers of the Fund. The Fund agrees to furnish to the
Custodian a new certification in similar form in the event any such
present officer ceases to be an officer of the Fund or in the event that
other or additional officers are elected or appointed. Until such new
certification shall be received, the Custodian shall be fully protected
in acting under the provisions of this Agreement upon the signature of an
officer as set forth in the last delivered certification.
(c) Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Custodian, shall be sufficiently
given if addressed to the Custodian and mailed or delivered to it at its
offices at One Boston Place, Boston, Massachusetts 02108 or at such
other place as the Custodian may from time to time designate in writing.
(d) Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Fund, shall be sufficiently given if
addressed to the Fund and mailed or delivered to it at its offices at 200
Connecticut Avenue, Norwalk, Connecticut 06854 or at such other place as
the Fund may from time to time designate in writing.
(e) This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties with the same
formality as this Agreement, (i) authorized, or ratified and approved by
a vote of the Board of Trustees of the Fund, including a majority of the
members of the Board of Trustees of the Fund who are not "interested
persons" of the Fund (as defined in the 1940 Act), or (ii) authorized, or
ratified and approved by such other procedures as may be permitted or
required by the 1940 Act.
(f) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Fund without
the written consent of the Custodian, or by the Custodian without the
written consent of the Fund authorized or approved by a vote of the Board
of Trustees of the Fund and any attempted assignment without such written
consent shall be null and void. Nothing in this Agreement shall give or
be construed to give or confer upon any third party any rights hereunder.
(g) The Fund represents that a copy of the Declaration of Trust is on
file with the Secretary of the Commonwealth of Massachusetts and with the
Boston City Clerk.
(h) This Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts.
(i) The captions of the Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect.
(j) This agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts
shall, together, constitute only one instrument.
2
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective representatives duly authorized as of the
day and year first above written.
EAI SELECT MANAGERS EQUITY FUND
By:
Name:
Title:
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:
Name:
Title:
3
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APPENDIX A
XXXXXXXXXXXX, the Secretary, of the EAI Select Managers Equity Fund, a
business trust organized under the laws of the Commonwealth of Massachusetts
(the "Fund"), do hereby certify that:
The following individuals have been duly authorized as Authorized Persons
to give Oral Instructions and Written Instructions on behalf of the Fund and
the specimen signatures set forth opposite there respective names are their
true and correct signatures:
Name Signature
Secretary
Dated:
4
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APPENDIX B
XXXXXXXXXXXXXXXX, the Secretary of the EAI Select Managers Equity Fund, a
business trust organized under the laws of the Commonwealth of Massachusetts
(the "Fund"), do hereby certify that:
The following individuals serve in the following positions with the Fund
and each individual has been duly elected or appointed to each such position
and qualified therefor in conformity with the Fund's Declaration of Trust and
the specimen signatures set forth opposite their respective names are their
true and correct signatures:
Name Position Signature
Chairman of the Board
President
Treasurer
Secretary
Vice President and
Investment Officer
Vice President and
Investment Officer
Secretary
Dated:
5
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SCHEDULE A
BOSTON SAFE DEPOSIT AND TRUST COMPANY
CUSTODY FEE SCHEDULE
OUR PROPOSAL INCLUDES:
Safekeeping of Assets held by the Funds
Settlement of Portfolio Transactions
Corporate Action Processing
Income Collection
Daily, Weekly, and Monthly Reporting
1. ACCOUNT MANAGEMENT CHARGES
$650 per account, per month
Plus a per security holding charge of $1.00, per month.
II. TRANSACTION CHARGES
DTC and Fed book Entry $8.00 per trade
PTC $12.50 per trade
U.S. Physical $30.00 per trade
Paydowns $5.00 per paydown
Futures Transactions $25.00 per trade
Margin Variation Wire $15.00 per wire
Options round-trip$40.00
Wire Transfer $5.00 per wire
III. OUT-OF-POCKET EXPENSES
All reasonable Out-of-Pocket expenses to include, but not limited
to, such items as telephone, wire charges, courier services, etc.
IV. MINIMUM FEE
A minimum fee of $10,000 per account per annum.
6
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SCHEDULE B
The Fund will pay to the Custodian as soon as possible after the end of
each month all out-of-pocket expenses reasonably incurred in connection with
the assets of the Fund.
AGENCY AGREEMENT
THIS AGREEMENT made the ________ day of ________________, 19____,
by and between EAI SELECT MANAGERS EQUITY FUND, a Massachusetts business trust
having its principal place of business at 200 Connecticut Avenue, Suite 700,
Norwalk, Connecticut 06854-1955 ("Fund"), and DST SYSTEMS, INC., a corporation
existing under the laws of the State of Delaware, having its principal place of
business at 1055 Broadway, Kansas City, Missouri 64105 ("DST"):
WITNESSETH:
WHEREAS, Fund desires to appoint DST as Transfer Agent and Dividend
Disbursing Agent, and DST desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Documents to be Filed with Appointment.
In connection with the appointment of DST as Transfer Agent and
Dividend Disbursing Agent for Fund, there will be filed with DST
the following documents:
A. A certified copy of the resolutions of the Board of
Directors/Trustees of Fund appointing DST as Transfer Agent
and Dividend Disbursing Agent, approving the form of this
Agreement, and designating certain persons to sign stock
certificates, if any, and give written instructions and
requests on behalf of Fund;
B. A certified copy of the Articles of Incorporation of Fund
and all amendments thereto;
C. A certified copy of the Bylaws of Fund;
D. Copies of Registration Statements and amendments thereto,
filed with the Securities and Exchange Commission.
E. Specimens of all forms of outstanding stock certificates,
in the forms approved by the Board of Directors of Fund,
with a certificate of the Secretary of Fund, as to such
approval;
F. Specimens of the signatures of the officers of the Fund
authorized to sign stock certificates and individuals
authorized to sign written instructions and requests;
G. An opinion of counsel for Fund with respect to:
1. Fund's organization and existence under the laws of its
state of organization,
2. The status of all shares of stock of Fund covered by
the appointment under the Securities Act of 1933, as
amended, and any other applicable federal or state
statute, and
3. That all issued shares are, and all unissued shares
will be, when issued, validly issued, fully paid and
nonassessable.
2. Certain Representations and Warranties of DST. DST represents and
warrants to Fund that:
A. It is a corporation duly organized and existing and in good
standing under the laws of Delaware.
B. It is duly qualified to carry on its business in the State
of Missouri.
C. It is empowered under applicable laws and by its Articles
of Incorporation and bylaws to enter into and perform the
services contemplated in this Agreement.
D. It is registered as a transfer agent to the extent required
under the Securities Exchange Act of 1934.
E. All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
F. It has and will continue to have and maintain the necessary
facilities, equipment and personnel to perform its duties
and obligations under this Agreement.
3. Certain Representations and Warranties of Fund.
Fund represents and warrants to DST that:
A. It is a business trust duly organized and existing and in
good standing under the laws of the State of Massachusetts.
B. It is an open-end management investment company registered
under the Investment Company Act of 1940, as amended.
C. A registration statement under the Securities Act of 1933
has been filed and will be effective with respect to all
shares of Fund being offered for sale.
D. All requisite steps have been and will continue to be taken
to register Fund's shares for sale in all applicable states
and such registration will be effective at all times shares
are offered for sale in such state.
E. Fund is empowered under applicable laws and by its charter
and bylaws to enter into and perform this Agreement.
4. Scope of Appointment.
A. Subject to the conditions set forth in this Agreement, Fund
hereby appoints DST as Transfer Agent and Dividend Disbursing
Agent.
B. DST hereby accepts such appointment and agrees that it will
act as Fund's Transfer Agent and Dividend Disbursing Agent.
DST agrees that it will also act as agent in connection
with Fund's periodic withdrawal payment accounts and
other open accounts or similar plans for shareholders,
if any.
C. Fund agrees to use its best efforts to deliver to DST in
Kansas City, Missouri, as soon as they are available, all
of its shareholder account records.
D. DST, utilizing TA2000{TM}, DST's computerized data processing
system for securityholder accounting (the "TA2000{TM} System"),
will perform the following services as transfer, dividend
disbursing and shareholders' servicing agent for the Fund,
and as agent of the Fund for shareholder accounts thereof,
in a timely manner: issuing (including countersigning),
transferring and canceling share certificates; maintaining
all shareholder accounts; providing transaction journals;
preparing shareholder meeting lists, mailing proxies and proxy
materials, receiving and tabulating proxies, certifying the
shareholder votes in the Fund; mailing shareholder reports and
prospectuses; withholding, as required by Federal law, taxes on
shareholder accounts, disbursing income dividends and capital
gains distributions to shareholders, preparing, filing and
mailing U.S. Treasury Department Forms 1099, 1042, and 1042S and
performing and paying backup withholding as required for all
shareholders; preparing and mailing confirmation forms to
shareholders and dealers, as instructed, for all purchases and
liquidations of shares of the Fund and other confirmable
transactions in shareholders' accounts; recording reinvestment
of dividends and distributions in shares of the Fund; providing
or making available on-line daily and monthly reports as
provided by the TA2000{TM} System and as requested by the Fund
or its management company; maintaining those records necessary
to carry out DST's duties hereunder, including all information
reasonably required by the Fund to account for all transactions
in Fund shares, calculating the appropriate sales charge with
respect to each purchase of Fund shares as set forth in the
prospectus for the Fund, determining the portion of each sales
charge payable to the dealer participating in a sale in
accordance with schedules delivered to DST by the Fund's
principal underwriter or distributor (hereinafter "principal
underwriter") from time to time, disbursing dealer commissions
collected to such dealers, determining the portion of each sales
charge payable to such principal underwriter and disbursing such
commissions to the principal underwriter; receiving
correspondence pertaining to any former, existing or new
shareholder account, processing such correspondence for
proper recordkeeping, and responding promptly to shareholder
correspondence; mailing to dealers confirmations of wire order
trades; mailing copies of shareholder statements to
shareholders and registered representatives of dealers in
accordance with the Fund's instructions; and processing,
generally on the date of receipt, purchases or redemptions or
instructions to settle any mail or wire order purchases or
redemptions received in proper order as set forth in the
prospectus, rejecting promptly any requests not received in
proper order (as defined by the Fund or its agents), and causing
exchanges of shares to be executed in accordance with the Fund's
instructions and prospectus and the general exchange privilege
application.
F. Fund shall have the right to add new series to the TA2OOO{TM}
System upon at least thirty (30) days' prior written notice
to DST provided that the requirements of the new series are
generally consistent with services then being provided by
DST under this Agreement. Rates or charges for additional
series shall be as set forth in Exhibit B, as hereinafter
defined, for the remainder of the contract term except as
such series use functions, features or characteristics for
which DST has imposed an additional charge as part of its
standard pricing schedule. In the latter event, rates and
charges shall be in accordance with DST's then-standard
pricing schedule.
G. DST shall use reasonable efforts to provide, reasonably
promptly under the circumstances, the same services with
respect to any new, additional functions or features or any
changes or improvements to existing functions or features
as provided for in Fund's instructions, prospectus or
application as amended from time to time, for the Fund
provided (i) DST is advised in advance by the Fund of any
changes therein and (ii) the TA2000{TM} System and the mode of
operations utilized by DST as then constituted supports
such additional functions and features. If any addition to,
improvement of or change in the features and functions
currently provided by the TA2000{TM} System or the operations
as requested by the Fund requires an enhancement or modification
to the TA2000{TM} System or to operations as presently conducted
by DST, DST shall not be liable therefore until such
modification or enhancement is installed on the TA2000{TM}
System or new mode of operation is instituted. If any new,
additional function or feature or change or improvement to
existing functions or features or new service or mode of
operation measurably increases DST's cost of performing the
services required hereunder at the current level of service, DST
shall advise the Fund of the amount of such increase and if the
Fund elects to utilize such function, feature or service, DST
shall be entitled to increase its fees by the amount of the
increase in costs. In no event shall DST be responsible for or
liable to provide any additional function, feature, improvement
or change in method of operation until it has consented thereto
in writing.
5. Limit of Authority.
Unless otherwise expressly limited by the resolution of appointment or
by subsequent action by the Fund, the appointment of DST as Transfer
Agent will be construed to cover the full amount of authorized stock of
the class or classes for which DST is appointed as the same will, from
time to time, be constituted, and any subsequent increases in such
authorized amount.
In case of such increase Fund will file with DST:
A. If the appointment of DST was theretofore expressly limited,
a certified copy of a resolution of the Board of Directors
of Fund increasing the authority of DST;
B. A certified copy of the amendment to the Articles of
Incorporation of Fund authorizing the increase of stock;
C. A certified copy of the order or consent of each governmental or
regulatory authority required by law to consent to the issuance
of the increased stock, and an opinion of counsel that the order
or consent of no other governmental or regulatory authority is
required;
D. Opinion of counsel for Fund stating:
1. The status of the additional shares of stock of Fund
under the Securities Act of 1933, as amended, and any
other applicable federal or state statute; and
2. That the additional shares are, or when issued will be,
validly issued, fully paid and nonassessable.
6. Compensation and Expenses.
A. In consideration for its services hereunder as Transfer
Agent and Dividend Disbursing Agent, Fund will pay to DST
from time to time a reasonable compensation for all services
rendered as Agent, and also, all its reasonable out-of-pocket
expenses, charges, counsel fees, and other disbursements
(Compensation and Expenses) incurred in connection with the
agency. Such compensation is set forth in a separate schedule
to be agreed to by Fund and DST, a copy of which is attached
hereto as Exhibit A. If the Fund has not paid such
Compensation and Expenses to DST within a reasonable time, DST
may charge against any monies held under this Agreement, the
amount of any Compensation and/or Expenses for which it shall be
entitled to reimbursement under this Agreement.
B. The Fund also agrees promptly to reimburse DST for all
reasonable out-of-pocket expenses or disbursements incurred
by DST in connection with the performance of services under
this Agreement including, but not limited to, expenses for
postage, express delivery services, freight charges, envelopes,
checks, drafts, forms (continuous or otherwise), specially
requested reports and statements, telephone calls, telegraphs,
stationery supplies, counsel fees, outside printing and mailing
firms (including Output Technology, Inc. and Support Resources,
Inc.), magnetic tapes, reels or cartridges (if sent to a Fund or
to third party at the Fund's request) and magnetic tape handling
charges, off-site record storage, media for storage of
records (e.g., microfilm, microfiche, optical platters,
computer tapes), computer equipment installed at the Fund's
request at the Fund's or a third party's premises,
telecommunications equipment, telephone/telecommunication
lines between Fund and its agents, on one hand, and DST on
the other, proxy soliciting, processing and/or tabulating
costs, second-site backup computer facility, transmission
of statement data for remote printing or processing, and
NSCC transaction fees to the extent any of the foregoing are
paid by DST. The Fund agrees to pay postage expenses at
least one day in advance if so requested. In addition, any
other expenses incurred by DST at the request or with the
consent of the Fund will be promptly reimbursed by the Fund.
C. Amounts due hereunder shall be due and paid on or before the
thirtieth (30th) business day after receipt of the statement
therefor by the Fund (the "Due Date"). The Fund is aware
that its failure to pay all amounts in a timely fashion so
that they will be received by DST on or before the Due Date
will give rise to costs to DST not contemplated by this
Agreement, including but not limited to carrying, processing
and accounting charges. Accordingly, subject to Section
6.D. hereof, in the event that any amounts due hereunder are
not received by DST by the Due Date, the Fund shall pay a
late charge equal to the lesser of the maximum amount
permitted by applicable law or the product of that rate
announced from time to time by State Street Bank and Trust
Company as its "Prime Rate" plus three (3) percentage points
times the amount overdue, times the number of days from the
Due Date up to and including the day on which payment is
received by DST divided by 365. The parties hereby agree
that such late charge represents a fair and reasonable
computation of the costs incurred by reason of late payment
or payment of amounts not properly due. Acceptance of such
late charge shall in no event constitute a waiver of the
Fund's or DST's default or prevent the non-defaulting party
from exercising any other rights and remedies available to
it.
D. In the event that any charges are disputed, the Fund shall,
on or before the Due Date, pay all undisputed amounts due
hereunder and notify DST in writing of any disputed charges
for out-of-pocket expenses which it is disputing in good
faith. Payment for such disputed charges shall be due on
or before the close of the fifth (5th) business day after
the day on which DST provides to the Fund documentation
which an objective observer would agree reasonably supports
the disputed charges (the "Revised Due Date"). Late charges
shall not begin to accrue as to charges disputed in good
faith until the first day after the Revised Due Date.
E. The fees and charges set forth on Exhibit A shall increase
or may be increased as follows:
(1) On the first day of each new term, in accordance with
the "Fee Increases" provision in Exhibit A.
(2) DST may increase the fees and charges set forth on
Exhibit A upon at least ninety (90) days prior written
notice, if changes in existing laws, rules or
regulations: (i) require substantial system
modifications or (ii) materially increase cost of
performance hereunder.
(3) DST may charge for additional features of TA2000 used
by the Fund which features are not consistent with the
Fund's current processing requirements.
If DST notifies Fund of an increase in fees or charges
pursuant to subparagraph (2) of this Section 6.E., the parties
shall confer, diligently and in good faith and agree upon a new
fee to cover the amount necessary, but not more than such amount,
to reimburse DST for the Fund's aliquot portion of the cost of
developing the new software to comply with regulatory charges and
for the increased cost of operation.
If DST notifies Fund of an increase in fees or charges under
subparagraph (3) of this Section 6.E., the parties shall confer,
diligently and in good faith, and agree upon a new fee to cover
such new fund feature.
7. Operation of DST System.
In connection with the performance of its services under this
Agreement, DST is responsible for such items as:
A. That entries in DST's records and in the Fund's records on
the TA2000{TM} System created by DST reflect the orders,
instructions, and other information received by DST from
broker-dealers, shareholders, the Fund, the Fund's principal
underwriter or Fund's investment adviser;
B. That shareholder lists, shareholder account verifications,
confirmations and other shareholder account information to
be produced from its records or data be available and
accurately reflect the data in the Fund's records on the
TA2000{TM} System;
C. The accurate and timely issuance of dividend and distribution
checks in accordance with instructions received from the Fund
and the data in the Fund's records on the TA2000{TM} System;
D. That redemption transactions and payments be effected
timely, under normal circumstances on the day of receipt,
and accurately in accordance with redemption instructions
received by DST from dealers, shareholders, the Fund or the
Fund's principal underwriter and the data in the Fund's
records on the TA2OOO{TM} System;
E. The deposit daily in the Fund's appropriate special bank
account of all checks and payments received by DST from
NSCC, broker-dealers or shareholders for investment in
shares;
F. Notwithstanding anything herein to the contrary, with
respect to "as of" adjustments, DST will not assume one
hundred percent (100%) responsibility for losses resulting
from "as of's" due to clerical errors or misinterpretations
of shareholder instructions, but DST will discuss with the
Fund DST's accepting liability for an "as of" on a case-by-case
basis and may accept financial responsibility for a particular
situation resulting in a financial loss to the Fund where DST in
its discretion deems that to be appropriate;
G. The requiring of proper forms of instructions, signatures
and signature guarantees and any necessary documents supporting
the opening of shareholder accounts transfers, redemptions and
other shareholder account transactions, all in conformance with
DST's present procedures as set forth in its Legal Manual, Third
Party Check Procedures, Checkwriting Draft Procedures, and
Signature Guarantee Procedures with such changes or deviations
therefrom as may be from time to time required or approved by
the Fund, its investment adviser or principal underwriter, or
their or DST's counsel (the "Procedures") and the rejection of
orders or instructions not in good order in accordance with
the applicable prospectus or the Procedures;
H. The maintenance of customary records in connection with its
agency, and particularly those records required to be
maintained pursuant to subparagraph (2)(iv) of paragraph (b)
of Rule 31a-1 under the Investment Company Act of 1940, if
any; and
I. The maintenance of a current, duplicate set of the Fund's
essential records at a secure separate location, in a form
available and usable forthwith in the event of any breakdown
or disaster disrupting its main operation.
8. Indemnification.
A. DST shall at all times use reasonable care, due diligence
and act in good faith in performing its duties under this
Agreement. DST shall provide its services as transfer agent
in accordance with Section 17A of the Exchange Act, and the
rules and regulations thereunder. In the absence of bad
faith, willful misconduct, knowing violations of applicable
law pertaining to the manner in which transfer agency
services are to be performed by DST (excluding any violations
arising directly or indirectly out of the actions of DST-
unaffiliated third parties), reckless disregard of the
performance of its duties, or negligence on its part, DST shall
not be liable for any action taken, suffered, or omitted by it
or for any error of judgment made by it in the performance of
its duties under this Agreement. For those activities or
actions delineated in the Procedures, DST shall be presumed to
have used reasonable care, due diligence and acted in good faith
if it has acted in accordance with the Procedures, copies of
which have been provided to the Fund and reviewed and
approved by Fund counsel, as amended from time to time with
approval of counsel, or for any deviation therefrom approved
by Fund or DST counsel. DST shall not be responsible for,
and the Fund shall indemnify and hold DST harmless from and
against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability which may be
asserted against DST or for which DST may be held to be
liable, arising out of or attributable to:
(1) All actions of DST required to be taken by DST pursuant
to this Agreement, provided that DST has acted in good
faith and with due diligence and reasonable care;
(2) The Fund's refusal or failure to comply with the terms
of this Agreement, the Fund's negligence or willful
misconduct, or the breach of any representation or
warranty of the Fund hereunder;
(3) The good faith reliance on, or the carrying out of,
any written or oral instructions or requests of persons
designated by the Fund in writing (see Exhibit B) from
time to time as authorized to give instructions on
its behalf or representatives of the Fund's investment
advisor, sponsor or principal underwriter or DST's good
faith reliance on, or use of, information, data,
records and documents received from, or which have been
prepared and/or maintained by the Fund, its investment
advisor, its sponsor or its principal underwriter;
(4) Defaults by dealers or shareowners with respect to
payment for share orders previously entered;
(5) The offer or sale of the Fund's shares in violation
of any requirement under federal securities laws or
regulations or the securities laws or regulations of
any state or in violation of any stop order or other
determination or ruling by any federal agency or state
with respect to the offer or sale of such shares in
such state (unless such violation results from DST's
failure to comply with written instructions of the
Fund or of any officer of the Fund that no offers or
sales be input into the Funds securityholder records
in or to residents of such state);
(6) The Fund's errors and mistakes in the use of the
TA2000{TM} System, the data center, computer and
related equipment used to access the TA2000{TM} System
(the "DST Facilities"), and control procedures relating
thereto in the verification of output and in the remote
input of data;
(7) Errors, inaccuracies, and omissions in, or errors,
inaccuracies or omissions of DST arising out of or
resulting from such errors, inaccuracies and omissions
in, the Fund's records, shareholder and other records,
delivered to DST hereunder by the Fund or its prior
agent(s); and
(8) Actions or omissions to act by the Fund or agents
designated by the Fund with respect to duties assumed
thereby as provided for in Section 21 hereof.
B. Except where DST is entitled to indemnification under
Section 8.A. hereof and with respect to "as of s" set forth
in Section 7.F., DST shall indemnify and hold the Fund
harmless from and against any and all losses, damages,
costs, charges, counsel fees, payments, expenses and liability
arising out of DST's failure to comply with the terms of this
Agreement or arising out of or attributable to DST's negligence
or willful misconduct or breach of any representation or
warranty of DST hereunder.
C. EXCEPT FOR VIOLATIONS OF SECTIONS 23, IN NO EVENT AND UNDER
NO CIRCUMSTANCES SHALL EITHER PARTY TO THIS AGREEMENT BE
LIABLE TO ANYONE, INCLUDING, WITHOUT LIMITATION TO THE OTHER
PARTY, FOR CONSEQUENTIAL DAMAGES FOR ANY ACT OR FAILURE TO
ACT UNDER ANY PROVISION OF THIS AGREEMENT EVEN IF ADVISED
OF THE POSSIBILITY THEREOF.
D. Promptly after receipt by an indemnified person of notice
of the commencement of any action, such indemnified person
will, if a claim in respect thereto is to be made against
an indemnifying party hereunder, notify the indemnifying
party in writing of the commencement thereof) but the
failure so to notify the indemnifying party will not relieve
an indemnifying party from any liability that it may have
to any indemnified person for contribution or otherwise
under the indemnity agreement contained herein except to the
extent it is prejudiced as a proximate result of such
failure to timely notify. In case any such action is
brought against any indemnified person and such indemnified
person seeks or intends to seek indemnity from an indemnifying
party, the indemnifying party will be entitled to participate
in, and, to the extent that it may wish, assume the defense
thereof (in its own name or in the name and on behalf of any
indemnified party or both with counsel reasonably satisfactory
to such indemnified person); provided, however, if the
defendants in any such action include both the indemnified
person and an indemnifying party and the indemnified person
shall have reasonably concluded that there may be a conflict
between the positions of the indemnified person and an
indemnifying party in conducting the defense of any such action
or that there may be legal defenses available to it and/or other
indemnified persons which are inconsistent with those available
to an indemnifying party, the indemnified person or indemnified
persons shall have the right to select one separate counsel
(in addition to local counsel) to assume such legal defense
and to otherwise participate in the defense of such action
on behalf of such indemnified person or indemnified persons
at such indemnified party's sole expense. Upon receipt of
notice from an indemnifying party to such indemnified person
of its election so to assume the defense of such action and
approval by the indemnified person of counsel, which approval
shall not be unreasonably withheld (and any disapproval shall be
accompanied by a written statement of the reasons there for),
the indemnifying party will not be liable to such indemnified
person hereunder for any legal or other expenses subsequently
incurred by such indemnified person in connection with the
defense thereof. An indemnifying party will not settle or
compromise or consent to the entry of any judgment with respect
to any pending or threatened claim, action, suit or proceeding
in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified persons are
actual or potential parties to such claim, action, suit or
proceeding) unless such settlement, compromise or consent
includes an unconditional release of each indemnified person
from all liability arising out of such claim, action, suit
or proceeding. An indemnified party will not, without the
prior written consent of the indemnifying party settle or
compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit
or proceeding in respect of which indemnification or
contribution may be sought hereunder. If it does so, it
waives its right to indemnification therefor.
9. Certain Covenants of DST and Fund.
A. All requisite steps will be taken by Fund from time to time
when and as necessary to register the Fund's shares for
sale in all states in which Fund's shares shall at the time
be offered for sale and require registration. If at any
time Fund will receive notice of any stop order or other
proceeding in any such state affecting such registration or
the sale of Fund's shares, or of any stop order or other
proceeding under the federal securities laws affecting the
sale of Fund's shares, Fund will give prompt notice thereof
to DST.
B. DST hereby agrees to perform such transfer agency functions
as are set forth in Section 4.E. above and establish and
maintain facilities and procedures reasonably acceptable to
Fund for safekeeping of stock certificates, check forms,
and facsimile signature imprinting devices, if any; and for
the preparation or use, and for keeping account of, such
certificates, forms and devices, and to carry such insurance
as it considers adequate and reasonably available.
C. To the extent required by Section 31 of the Investment
Company Act of 1940 as amended and Rules thereunder, DST
agrees that all records maintained by DST relating to the
services to be performed by DST under this Agreement are the
property of Fund and will be preserved and will be surrendered
promptly to Fund on request.
D. DST agrees to furnish Fund annual reports of its parent's
financial condition, consisting of a balance sheet, earnings
statement and any other financial information reasonably
requested by Fund. The annual financial statements will
be certified by DST's certified public accountants.
E. DST represents and agrees that it will use its best efforts
to keep current on the trends of the investment company
industry relating to shareholder services and will use its
best efforts to continue to modernize and improve.
F. DST will permit Fund and its authorized representatives to
make periodic inspections of its operations as such would
involve the Fund at reasonable times during business hours.
G. DST agrees to use its best efforts to provide in Kansas
City at the Fund's expense two (2) man weeks of training
for the Fund's personnel in connection with use and operation of
the TA2000{TM} System. All travel and reimbursable expenses
incurred by the Fund's personnel in connection with and during
training at DST's Facility shall be borne by the Fund. At the
Fund's option and expense, DST also agrees to use its best
efforts to provide an additional two (2) man weeks of training
at the Fund's facility for the Fund's personnel in connection
with the conversion to the TA2OOO{TM} System. Reasonable
travel, per diem and reimbursable expenses incurred by DST
personnel in connection with and during training at the Fund's
facility or in connection with the conversion shall be borne by
the Fund.
10. Recapitalization or Readjustment.
In case of any recapitalization, readjustment or other change in
the capital structure of Fund requiring a change in the form of
stock certificates, DST will issue or register certificates in
the new form in exchange for, or in transfer of, the outstanding
certificates in the old form, upon receiving:
A. Written instructions from an officer of Fund;
B. Certified copy of the amendment to the Articles of Incorporation
or other document effecting the change;
C. Certified copy of the order or consent of each governmental
or regulatory authority, required by law to the issuance of
the stock in the new form, and an opinion of counsel that
the order or consent of no other government or regulatory
authority is required;
D. Specimens of the new certificates in the form approved by
the Board of Directors of Fund, with a certificate of the
Secretary of Fund as to such approval;
E. Opinion of counsel for Fund stating:
(1) The status of the shares of stock of Fund in the new
form under the Securities Act of 1933, as amended and
any other applicable federal or state statute; and
(2) That the issued shares in the new form are, and all
unissued shares will be, when issued, validly issued,
fully paid and nonassessable.
11. Stock Certificates. [STRIKE IF THE FUND WILL NOT ISSUE STOCK
CERTIFICATES]
Fund will furnish DST with a sufficient supply of blank stock
certificates and from time to time will renew such supply upon
the request of DST. Such certificates will be signed manually or
by facsimile signatures of the officers of Fund authorized by law
and by bylaws to sign stock certificates, and if required, will
bear the corporate seal or facsimile thereof.
12. Death, Resignation or Removal of Signing Officer.
Fund will file promptly with DST written notice of any change in
the officers authorized to sign stock certificates, written
instructions or requests, together with two signature cards bearing the
specimen signature of each newly authorized officer. In case any
officer of Fund who will have signed manually or whose facsimile
signature will have been affixed to blank stock certificates will die,
resign, or be removed prior to the issuance of such certificates, DST
may issue or register such stock certificates as the stock certificates
of Fund notwithstanding such death, resignation, or removal, until
specifically directed to the contrary by Fund in writing. In
the absence of such direction, Fund will file promptly with DST
such approval, adoption, or ratification as may be required by
law.
13. Future Amendments of Charter and Bylaws.
Fund will promptly file with DST copies of all material amendments to
its Articles of Incorporation or bylaws made after the date of this
Agreement.
14. Instructions, Opinion of Counsel and Signatures.
At any time DST may apply to any person authorized by the Fund
to give instructions to DST, and may with the approval of a Fund
officer consult with legal counsel for Fund or its own legal
counsel at the expense of Fund, with respect to any matter arising in
connection with the agency and it will not be liable for any action
taken or omitted by it in good faith in reliance upon such instructions
or upon the opinion of such counsel. DST will be protected in acting
upon any paper or document reasonably believed by it to be genuine and
to have been signed by the proper person or persons and will not be
held to have notice of any change of authority of any person, until
receipt of written notice thereof from Fund. It will also be protected
in recognizing stock certificates which it reasonably believes to
bear the proper manual or facsimile signatures of the officers of
Fund, and the proper countersignature of any former Transfer
Agent or Registrar, or of a co-Transfer Agent or co-Registrar.
15. Force Majeure and Disaster Recovery Plans.
A. DST shall not be responsible or liable for its failure or
delay in performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by
circumstances beyond its reasonable control, including,
without limitation: any interruption, loss or malfunction
or any utility, transportation, computer (hardware or
software) or communication service; inability to obtain
labor, material, equipment or transportation, or a delay in
mails; governmental or exchange action, statute, ordinance,
rulings, regulations or direction; war, strike, riot,
emergency, civil disturbance, terrorism, vandalism, explosions,
labor disputes, freezes, floods, fires, tornados, acts of God or
public enemy, revolutions, or insurrection; or any other cause,
contingency, circumstance or delay not subject to DST's
reasonable control which prevents or hinders DST's performance
hereunder.
B. DST currently maintains an agreement with a third party
whereby DST is to be permitted to use on a "shared use"
basis a "hot site" (the "Recovery Facility") maintained by
such party in event of a disaster rendering the DST Facilities
inoperable. DST has developed and is continually revising a
Business Contingency Plan detailing which, how, when, and by
whom data maintained by DST at the DST Facilities will be
installed and operated at the Recovery Facility. Provided Fund
is paying its pro rata portion of the charge therefor, DST
would, in event of a disaster rendering the DST Facilities
inoperable, convert the TA2000{TM} System containing the
designated Fund data to the computers at the Recovery Facility
in accordance with the then current Business Contingency Plan.
D. DST also currently maintains, separate from the area in
which the operations which provides the services to the
Fund hereunder are located, a Crisis Management Center
consisting of phones, computers and the other equipment
necessary to operate a full service transfer agency business
in the event one of its operations areas is rendered inoperable.
The transfer of operations to other operating areas or to the
Crisis Management Center is also covered in DST's Business
Contingency Plan.
16. Certification of Documents.
The required copy of the Articles of Incorporation of Fund and
copies of all amendments thereto will be certified by the Secretary of
State (or other appropriate official) of the State of Incorporation,
and if such Articles of Incorporation and amendments are required by
law to be also filed with a county, city or other officer of official
body, a certificate of such filing will appear on the certified copy
submitted to DST. A copy of the order or consent of each governmental
or regulatory authority required by law to the issuance of the stock
will be certified by the Secretary or Clerk of such governmental or
regulatory authority, under proper seal of such authority. The copy of
the Bylaws and copies of all amendments thereto, and copies of
resolutions of the Board of Directors of Fund, will be certified by the
Secretary or an Assistant Secretary of Fund under the Fund's seal.
17. Records.
DST will maintain customary records in connection with its agency, and
particularly will maintain those records required to be maintained
pursuant to subparagraph (2)(iv) of paragraph (b) of Rule 31a-1 under
the Investment Company Act of 1940, if any.
18. Disposition of Books, Records and Canceled Certificates
DST may send periodically to Fund, or to where designated by the
Secretary or an Assistant Secretary of Fund, all books, documents, and
all records no longer deemed needed for current purposes and stock
certificates which have been canceled in transfer or in exchange, upon
the understanding that such books, documents, records, and stock
certificates will be maintained by the Fund under and in accordance
with the requirements of Section l7Ad-7 adopted under the Securities
Exchange Act of 1934. Such materials will not be destroyed by Fund
without the consent of DST (which consent will not be unreasonably
withheld), but will be safely stored for possible future reference.
19. Provisions Relating to DST as Transfer Agent.
A. DST will make original issues of stock certificates upon
written request of an officer of Fund and upon being furnished
with a certified copy of a resolution of the Board of Directors
authorizing such original issue, an opinion of counsel as
outlined in paragraphs 1.D. and G. of this Agreement, any
documents required by paragraphs 5. or 10. of this Agreement,
and necessary funds for the payment of any original issue tax.
B. Before making any original issue of certificates Fund will
furnish DST with sufficient funds to pay all required taxes
on the original issue of the stock, if any. Fund will
furnish DST such evidence as may be required by DST to show
the actual value of the stock. If no taxes are payable DST
will be furnished with an opinion of outside counsel to that
effect.
C. Shares of stock will be transferred and new certificates
issued in transfer, or shares of stock accepted for redemption
and funds remitted therefor, or book entry transfer be effected,
upon surrender of the old certificates in form or receipt by DST
of instructions deemed by DST properly endorsed for transfer or
redemption accompanied by such documents as DST may deem
necessary to evidence the authority of the person making the
transfer or redemption. DST reserves the right to refuse to
transfer or redeem shares until it is satisfied that the
endorsement or signature on the certificate or any other
document is valid and genuine, and for that purpose it may
require a guaranty of signature in accordance with the Signature
Guarantee Procedures. DST also reserves the right to refuse to
transfer or redeem shares until it is satisfied that the
requested transfer or redemption is legally authorized, and
it will incur no liability for the refusal in good faith to
make transfers or redemptions which, in its judgment, are
improper or unauthorized. DST may, in effecting transfers
or redemptions, rely upon Simplification Acts or other
statutes which protect it and Fund in not requiring complete
fiduciary documentation. In cases in which DST is not
directed or otherwise required to maintain the consolidated
records of shareholder's accounts, DST will not be liable
for any loss which may arise by reason of not having such
records.
D. When mail is used for delivery of stock certificates, DST
will forward stock certificates in "nonnegotiable" form by
first class or registered mail and stock certificates in
"negotiable" form by registered mail, all such mail deliveries
to be covered while in transit to the addressee by insurance
arranged for by DST.
E. DST will issue and mail subscription warrants,
certificates representing stock dividends, exchanges or
split ups, or act as Conversion Agent upon receiving written
instructions from any officer of Fund and such other
documents as DST deems necessary.
F. DST will issue, transfer, and split up certificates and
will issue certificates of stock representing full shares
upon surrender of scrip certificates aggregating one full
share or more when presented to DST for that purpose upon
receiving written instructions from an officer of Fund and
such other documents as DST may deem necessary.
G. DST may issue new certificates in place of certificates
represented to have been lost, destroyed, stolen or otherwise
wrongfully taken upon receiving instructions from Fund and
indemnity satisfactory to DST and Fund, and may issue new
certificates in exchange for, and upon surrender of, mutilated
certificates. Such instructions from Fund will be in such form
as will be approved by the Board of Directors of Fund and will
be in accordance with the provisions of law and the bylaws of
Fund governing such matter.
H. DST will supply a shareholder's list to Fund for its annual
meeting upon receiving a request from an officer of Fund.
It will also, at the expense of the Fund, supply lists at
such other times as may be requested by an officer of Fund.
I. Upon receipt of written instructions of an officer of Fund,
DST will, at the expense of the Fund, address and mail
notices to shareholders.
J. In case of any request or demand for the inspection of the
stock books of Fund or any other books in the possession
of DST, DST will endeavor to notify Fund and to secure
instructions as to permitting or refusing such inspection.
DST reserves the right, however, to exhibit the stock books
or other books to any person in case it is advised by its
counsel that it may be held responsible for the failure to
exhibit the stock books or other books to such person.
20. Provisions Relating to Dividend Disbursing Agency.
A. DST will, at the expense of Fund, provide a special form
of check containing the imprint of any device or other
matter desired by Fund. Said checks must, however, be of
a form and size convenient for use by DST.
B. If Fund desires to include additional printed matter,
financial statements, etc., with the dividend checks, the
same will be furnished DST within a reasonable time prior
to the date of mailing of the dividend checks, at the
expense of Fund.
C. If Fund desires its distributions mailed in any special
form of envelopes, sufficient supply of the same will be
furnished to DST but the size and form of said envelopes
will be subject to the approval of DST. If stamped envelopes
are used, they must be furnished by Fund; or if postage stamps
are to be affixed to the envelopes, the stamps or the cash
necessary for such stamps must be furnished by Fund.
D. DST shall establish and maintain on behalf of the Fund one
or more deposit accounts as Agent for Fund, into which DST
shall deposit the funds DST receives for payment of dividends,
distributions, redemptions or other disbursements provided for
hereunder and to draw checks against such accounts.
E. DST is authorized and directed to stop payment of checks
theretofore issued hereunder, but not presented for payment,
when the payees thereof allege either that they have not
received the checks or that such checks have been mislaid,
lost, stolen, destroyed or through no fault of theirs, are
otherwise beyond their control, and cannot be produced by
them for presentation and collection, and, to issue and
deliver duplicate checks in replacement thereof.
21. Assumption of Duties By the Fund or Agents Designated By the
Fund.
A. The Fund or its designated agents other than DST may assume
certain duties and responsibilities of DST or those services of
Transfer Agent and Dividend Disbursement Agent as those terms
are referred to in Section 4.E. of this Agreement including but
not limited to answering and responding to telephone inquiries
from shareholders and brokers, accepting shareholder and broker
instructions (either or both oral and written) and transmitting
orders based on such instructions to DST, preparing and mailing
confirmations, obtaining certified TIN numbers, classifying
the status of shareholders and shareholder accounts under
applicable tax law, establishing shareholder accounts on
the TA2OOO{TM} system and assigning social codes and Taxpayer
Identification Number codes thereof, and disbursing monies
of the Fund, said assumption to be embodied in writing to
be signed by both parties.
B. To the extent the Fund or its agent or affiliate assumes such
duties and responsibilities, DST shall be relieved from
all responsibility and liability therefor and is hereby
indemnified and held harmless against any liability therefrom
and in the same manner and degree as provided for in Section 8
hereof.
C. Initially the Fund or its designees shall be responsible for
the following: [LIST RESPONSIBILITIES OR DELETE AS
APPROPRIATE.] (i) answer and respond to phone calls from
shareholders and broker-dealers, and (ii) scan items into
DST's AWD{TM} System as such calls or items are received by the
Fund, and (iii) enter and confirm wire order trades.
22. Termination of Agreement.
A. This Agreement shall be in effect for an initial period of
____ years and thereafter may be terminated by either party
upon receipt of one (1) year's written notice from the other
party, provided, however, that the effective date of any
termination shall not occur during the period from December
15 through March 30 of any year to avoid adversely impacting
year end.
B. Each party, in addition to any other rights and remedies,
shall have the right to terminate this Agreement forthwith
upon the occurrence at any time of any of the following
events with respect to the other party:
(1) Any interruption or cessation of operations by the
other party or its assigns which materially interferes
with the business operation of the first party;
(2) The bankruptcy of the other party or its assigns or the
appointment of a receiver for the other party or its
assigns;
(3) Any merger, consolidation or sale of substantially all
the assets of the other party or its assigns; or
(4) Failure by the other party or its assigns to perform
its duties in accordance with the Agreement, which
failure materially adversely affects the business
operations of the first party and which failure
continues for thirty (30) days after receipt of written
notice from the first party.
C. In the event of termination, Fund will promptly pay DST all
amounts due to DST hereunder. In addition, if this Agreement is
terminated by the Fund for any reason other than those set forth
in Sections 22.B. or 22.C. hereof, then the Fund shall pay to
DST a termination fee equal to the lesser of (i) the aggregate
of the fees charged to the Fund during the previous six (6)
calendar months preceding receipt of the notice or (ii) the
average monthly fee over the preceding six (6) months times the
number of months remaining in the then current term after
termination. If the Fund shall not have been billed for six (6)
months before termination, the average monthly fee shall be
calculated by dividing the aggregate fees charged to the
Fund during whatever period it was billed by the number of
months in that period and that average monthly fee shall be
multiplied by six (6) in order to determine the aggregate
fees in subparagraph 22.C.(i). In any event, the effective date
of any deconversion as a result of termination hereof
shall not occur during the period from December 15th through
March 30th of any year to avoid adversely impacting year
end.
C. In the event of termination, DST will use its best efforts
to transfer the records of the Fund to the designated
successor transfer agent, to provide reasonable assistance
to the Fund and its designated successor transfer agent,
and to provide other information relating to its service
provided hereunder (subject to the recompense of DST for
such assistance at its standard rates and fees for personnel
then in effect at that time); provided, however, as used
herein "reasonable assistance" and "other information" shall
not include assisting any new service or system provider to
modify, alter, enhance, or improve its system or to improve,
enhance, or alter its current, or to provide any new,
functionality or to require DST to disclose any DST Confidential
Information or any information which is otherwise confidential
to DST.
23. Confidentiality.
A. DST agrees that, except as provided in the last sentence of
Section 19.J hereof, or as otherwise required by law, DST
will keep confidential all records of and information in its
possession relating to Fund or its shareholders or shareholder
accounts and will not disclose the same to any person except at
the request or with the consent of Fund.
B. Fund agrees to keep confidential all financial statements
and other financial records (other than statements and
records relating solely to Fund's business dealings with
DST) and all manuals, systems and other technical information
and data, not publicly disclosed, relating to DST's operations
and programs furnished to it by DST pursuant to this Agreement
and will not disclose the same to any person except at the
request or with the consent of DST.
C. (1) The Fund acknowledges that DST has proprietary rights
in and to the TA2OOO{TM} System used to perform services
hereunder including, but not limited to the maintenance
of shareholder accounts and records, processing of
related information and generation of output,
including, without limitation any changes or
modifications of the TA2000{TM} System and any other DST
programs, data bases, supporting documentation, or
procedures (collectively "DST Confidential Information")
which the Fund's access to the TA2OOO{TM} System or
computer hardware or software may permit the Fund or its
employees or agents to become aware of or to access and
that the DST Confidential Information constitutes
confidential material and trade secrets of DST. The
Fund agrees to maintain the confidentiality of the DST
Confidential Information.
(2) The Fund acknowledges that any unauthorized use,
misuse, disclosure or taking of DST Confidential
Information which is confidential as provided by law, or
which is a trade secret, residing or existing
internal or external to a computer, computer system,
or computer network, or the knowing and unauthorized
accessing or causing to be accessed of any computer,
computer system, or computer network, may be subject
to civil liabilities and criminal penalties under
applicable state law. The Fund will advise all of its
employees and agents who have access to any DST
Confidential Information or to any computer equipment
capable of accessing DST or DST hardware or software
of the foregoing. DST is intended to be, and shall be,
a third party beneficiary of the Fund's obligations
and undertakings contained in this Section.
(3) Fund acknowledges that disclosure of the DST
Confidential Information may give rise to an irreparable
injury to DST inadequately compensable in damages.
Accordingly, DST may seek (without the posting of any
bond or other security) injunctive relief against the
breach of the foregoing undertaking of confidentiality
and nondisclosure, in addition to any other legal
remedies which may be available, and Fund consents to
the obtaining of such injunctive relief. All of the
undertakings and obligations relating to confidentiality
and nondisclosure, whether contained in this Section or
elsewhere in this Agreement shall survive the
termination or expiration of this Agreement for a period
of ten (10) years.
24. Changes and Modifications.
A. During the term of this Agreement DST will use on behalf of
the Fund without additional cost all modifications,
enhancements, or changes which DST may make to the TA2OOO{TM}
System in the normal course of its business and which are
applicable to functions and features offered by the Fund,
unless substantially all DST clients are charged separately
for such modifications, enhancements or changes, including,
without limitation, substantial system revisions or
modifications necessitated by changes in existing laws,
rules or regulations. The Fund agrees to pay DST promptly
for modifications and improvements which are charged for
separately at the rate provided for in DST's standard
pricing schedule which shall be identical for substantially
all clients, if a standard pricing schedule shall exist.
If there is no standard pricing schedule, the parties shall
mutually agree upon the rates to be charged.
B. DST shall have the right, at any time and from time to time,
to alter and modify any systems, programs, procedures or
facilities used or employed in performing its duties and
obligations hereunder; provided that the Fund will be
notified as promptly as possible prior to implementation of
such alterations and modifications and that no such alteration
or modification or deletion shall materially adversely change or
affect the operations and procedures of the Fund in using or
employing the TA2000{TM} System or DST Facilities hereunder or
the reports to be generated by such system and facilities
hereunder, unless the Fund is given thirty (30) days prior
notice to allow the Fund to change its procedures and DST
provides the Fund with revised operating procedures and
controls.
C. All enhancements, improvements, changes, modifications or
new features added to the TA2OOO{TM} System however developed
or paid for shall be, and shall remain, the confidential and
exclusive property of, and proprietary to, DST.
25. Subcontractors.
Nothing herein shall impose any duty upon DST in connection with
or make DST liable for the actions or omissions to act of unaffiliated
third parties such as, by way of example and not limitation, Airborne
Services, the U.S. mails and telecommunication companies, provided, if
DST selected such company, DST shall have exercised due care in
selecting the same.
26. Limitations on Liability.
A. If Fund is comprised of more than one Portfolio, each
Portfolio shall be regarded for all purposes hereunder as
a separate party apart from each other Portfolio. Unless
the context otherwise requires, with respect to every
transaction covered by this Agreement, every reference
herein to the Fund shall be deemed to relate solely to the
particular Portfolio to which such transaction relates.
Under no circumstances shall the rights, obligations or
remedies with respect to a particular Portfolio constitute
a right, obligation or remedy applicable to any other
Portfolio. The use of this single document to memorialize
the separate agreement of each Portfolio is understood to
be for clerical convenience only and shall not constitute
any basis for joining the Portfolios for any reason. [DELETE IF
NOT APPLICABLE)
B. Notice is hereby given that a copy of Fund's Trust Agreement
and all amendments thereto is on file with the Secretary of
State of the state of its organization; that this Agreement
has been executed on behalf of Fund by the undersigned duly
authorized representative of Fund in his/her capacity as
such and not individually; and that the obligations of this
Agreement shall only be binding upon the assets and property
of Fund and shall not be binding upon any trustee, officer
or shareholder of Fund individually. [DELETE IF NOT
APPLICABLE]
27. Miscellaneous.
A. This Agreement shall be construed according to, and the
rights and liabilities of the parties hereto shall be
governed by, the laws of the State of Missouri, excluding
that body of law applicable to choice of law.
B. All terms and provisions of this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the
parties hereto and their respective successors and permitted
assigns.
C. The representations and warranties, and the indemnification
extended hereunder, if any, are intended to and shall
continue after and survive the expiration, termination or
cancellation of this Agreement.
D. No provisions of the Agreement may be amended or modified
in any manner except by a written agreement properly authorized
and executed each party hereto.
E. The captions in the Agreement are included for convenience
of reference only, and in no way define or delimit any of
the provisions hereof or otherwise affect their construction
or effect.
F. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
G. If any part, term or provision of this Agreement is by the
courts held to be illegal, in conflict with any law or
otherwise invalid, the remaining portion or portions shall
be considered severable and not be affected, and the rights
and obligations of the parties shall be construed and
enforced as if the Agreement did not contain the particular
part, term or provision held to be illegal or invalid.
H. This Agreement may not be assigned by the Fund or DST
without prior written consent of the other.
I. Neither the execution nor performance of this Agreement
shall be deemed to create a partnership or joint venture by
and between Fund and DST. It is understood and agreed that
all services performed hereunder by DST shall be as an
independent contractor and not as an employee of the Fund.
This Agreement is between DST and the Fund and neither this
Agreement nor the performance of services under it shall
create any rights in any third parties. There are no third
party beneficiaries hereto.
J. Except as specifically provided herein, this Agreement does
not in any way affect any other agreements entered into
among the parties hereto and any actions taken or omitted
by any party hereunder shall not affect any rights or
obligations of any other party hereunder.
K. The failure of either party to insist upon the performance
of any terms or conditions of this Agreement or to enforce
any rights resulting from any breach of any of the terms or
conditions of this Agreement, including the payment of
damages, shall not be construed as a continuing or permanent
waiver of any such terms, conditions, rights or privileges,
but the same shall continue and remain in full force and
effect as if no such forbearance or waiver had occurred.
L. This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement, draft
or agreement or proposal with respect to the subject matter
hereof, whether oral or written, and this Agreement may not
be modified except by written instrument executed by both
parties.
M. All notices to be given hereunder shall be deemed properly
given if delivered in person or if sent by U.S. mail, first
class, postage prepaid, or if sent by facsimile and thereafter
confirmed by mail as follows:
If to DST:
DST Systems, Inc.
1055 Broadway, 7th Fl.
Kansas City, Missouri 64105
Attn: Senior Vice President-Full Service
Facsimile No.: 816-435-3455
Telephone No.: 816-435-8200
With a copy of non-operational notices to:
DST Systems, Inc.
1055 Broadway, 9th F.
Kansas City, Missouri 64105
Attn: Legal Department
Facsimile No. : 816-435-8630
Telephone No.: 816-435-8688
If to Fund:
Van Eck Associates Corp.
99 Park Ave., 8th Floor
New York, New York 10018
Attn: _______________________
Facsimile No.: _______________
Telephone No. _______________
With a copy of non-operational notices to:
Evaluation Associates Capital Markets, Incorporated ___
200 Connecticut Ave., Suite 700
Norwalk, CT 06854-1958
Attn: William C. Crerend
Sr. Vice President and General Counsel
Facsimile No.: ________________
Telephone No.: 203-855-2200
or to such other address as shall have been specified in writing by the
party to whom such notice is to be given.
N. The representations and warranties contained herein shall
survive the execution of this Agreement. The representations and
warranties contained herein and the provisions of Section 8
hereof shall survive the termination of the Agreement and the
performance of services hereunder until any statute of
limitations applicable to the matter at issues shall have
expired.
WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized officers, to be effective as of
the day and year first above written.
DST SYSTEMS, INC.
By:
Title:
EAL SELECT MANAGERS EQUITY
FUND
By:
Title:
<PAGE>
EXHIBIT A, p. 1
REMOTE SERVICE
FEE SCHEDULE
Fee Increases
The fees and charges set forth in this Exhibit B shall increase annually upon
each anniversary of this Agreement over the fees and charges during the prior
12 months in an amount equal to the annual percentage of change in the Consumer
Price Index in the Kansas City, Missouri-Kansas Standard Metropolitan
Statistical Area, All Items, Base 1982-1984=100, as last reported by the U.S.
Bureau of Labor Statistics for the 12 calendar months immediately preceding
such anniversary. In the event that this Agreement was not signed as of
the first day of the month, the fees and charges increase shall be effective as
of the first day of the month immediately following the month during which the
anniversary occurred.
OPEN AND CLOSED ACCOUNTS FEES
The monthly fee for an open account shall be charged in the month during which
an account is opened through the month in which such account is closed. The
monthly fee for a closed account shall be charged in the month following the
month during which such account is closed and shall cease to be charged in the
month following the Purge Date, as hereinafter defined. The "Purge Date" for
any year shall be any day after June 1st of that year, as selected by Fund,
provided that written notification is presented to DST at least forty-five (45)
days prior to the Purge Date.
REIMBURSABLE EXPENSES
Forms
Postage (to be paid in advance if so requested)
Outside Mailing Services
Computer Hardware
Telecommunications Equipment
Magnetic Tapes, Reels or Cartridges
Magnetic Tape Handling Charges
Microfiche/Microfilm
Freight Charges
Proxy Processing - per proxy mailed not including postage
Includes: Proxy Card
Printing
Outgoing Envelope
Return Envelope
Tabulation
T.I.N. Certification (W-8 & W-9)
(Postage associated with the return
envelope is included)
N.S.C.C. Communications Charge Currently $1,200.00
(Fund/Serv and Networking) per Fund per Year
Off-site Record Storage
SunGard Second Site Disaster Currently between $.06
Backup Fee (per account) and $.08 (guaranteed
not to exceed $.11
through 12/31/94)
Transmission of Statement Data for Currently $.035/per
Remote Processing record
Travel, Per Diem and other Out-of-Pockets
Incurred by DST personnel traveling to,
at and from Fund at the request of Fund
<PAGE>
DST SYSTEMS, INC.
EVALUATION ASSOCIATES CAPITAL MARKETS, INCORPORATED (EAI)
TRANSFER AGENCY FEE PROPOSAL
EFFECTIVE THROUGH DECEMBER 31, 1998
A. MINIMUM FEE
Conversion through 12/31/96 - $18,000 per cusip per year
1/1/97 through 12/31/97 - $21,000 per cusip per year
1/1/98 through 12/31/98 - $24,000 per cusip per year
Note: Minimum applies unless charges included in Section B exceed
the minimum.
B. ACCOUNT MAINTENANCE AND PROCESSING FEES
Open Accounts - $12.00 per account per year
Manual Transaction - $2.00
Correspondence - $4.00
Shareholder Related Calls (inbound and outbound) - $2.00
C. FEDERAL FUNDS WIRES
Federal Funds Wires received or delivered - $6.00
D. OPTIONAL SERVICES
Asset Allocation - $2.40 per nucleus account per year
Asset Reallocation - $.25 per nucleus account per cycle
12b-1 Processing - $.20 per open and closed account per cycle
Trail Accounting Sub-System (TASS) - $1.00 per account per year
(in addition to 12b-1 fees)
Investor Facility - $2.40 per year per master account with
multiple accounts
*Sales and Management information System (PC based remote SAMIS)
- $1,500 per month for the relationship
*Computer/Technical Personnel:
Business Analyst/Tester:
Dedicated - $65,000 per year
On Request:
Senior Staff Support - $60 per hour
Staff Support - $40 per hour
Clerical Support - $30 per hour
Technical/Programming
Dedicated - $102,000 per year
On Request - $80 per hour
Technical/C Programming:
Dedicated - $130,000 per year
On Request - $105 per hour
Financial Intermediary Interface:
Automated:
First Four Funds - $17,000 per intermediary per
year
Each Additional Fund - $3,000 per intermediary
per
year
Manual/Partially Automated:
First Four Funds - $34,000 per intermediary per
year
Each Additional Fund - $6,000 per intermediary
per
year
Average Cost System:
$5,000 per year of history converted
$.25 per account per year
*Auto Response{TM} System - see Exhibit A
*NSCC - see Exhibit B
Escheatment Costs - as incurred
Conversion Costs - Out of pocket expenses including but not
limited to travel and accommodations, programming, training,
equipment installation, etc.
NOTES TO THE ABOVE FEE SCHEDULE
A. The above schedule does not include reimbursable expenses that
are incurred on the Fund's behalf. Examples of reimbursable
expenses include but are not limited to forms postage, mailing
services, telephone line/long distance charges, remote client
hardware, disaster recovery, proxy processing, magnetic tapes,
printing, microfilm/microfiche, ACH bank charges, NSCC charges,
etc. Reimbursable expenses are billed separately from service
fees on a monthly basis.
B. Any fees or reimbursable expenses not paid within 30 days of the
date of the original invoice will be charged a late payment fee
of 1.5% per month until payment is received.
C. The above fees, except for those indicated by an "*", are guaranteed
through December 31, 1998 subject to an annual increase in an amount
not less than the annual percentage change in the Consumer Price Index
(CPI) of the Kansas City Metropolitan Area. Those items marked by an
"*" are subject to change with a 60 day notice. The minimum fee per
cusip is stepped up each succeeding year and therefore is not subject
to annual CPI adjustment.
D. This fee schedule will remain in effect as long as the nature of
the Fund remains institutional. If at any time during the duration of
this agreement it is determined that the Fund has become retail in
nature, a new fee schedule will be implemented. A key indicator will
be determined which would signal this change from institutional to
retail.
Fees Accepted By:
____________________________ ____________________________
DST Systems, Inc. Evaluation
Associates
Capital Markets,
Incorporated
____________________________ __________________________
Date Date
PORTFOLIO ACCOUNTING AND ADMINISTRATIVE SERVICES AGREEMENT
THIS AGREEMENT is made as of the ___day ___of by and between EAI SELECT
MANAGERS EQUITY FUND, a Massachusetts business trust having its principal place
of business in Norwalk, Connecticut (the "Trust") and VAN ECK ASSOCIATES
CORPORATION ("the Administrator"), a Delaware corporation having its principal
place of business in New York, New York.
W I T N E S S E T H :
WHEREAS, the Trust is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust wishes to retain the Administrator to provide certain
accounting and administrative services, and the Administrator is willing to
furnish such services;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
The Trust hereby appoints the Administrator to provide certain accounting and
administrative services to the Trust with respect to its investment portfolio
for the period and on the terms set forth in this Agreement. The Administrator
accepts such appointment and agrees to furnish the services herein set forth.
The Administrator agrees to comply with all relevant provisions of the 1940 Act
and applicable rules and regulations thereunder. The Trust currently offers
one series and one class of shares, but may, from time to time, issue separate
series or classes or classify and reclassify shares of such series or class.
The Administrator shall identify to each such Series or class of shares
property belonging to such series or class and shall prepare such reports,
confirmations and notices to the series called for under this Agreement and
shall identify the series or class of shares to which such report, confirmation
or notice pertains in the event it is engaged by the series to perform the
services herein contained respecting such series or class of shares.
2. Delivery of Documents.
The Trust will furnish the Administrator with properly certified or
authenticated copies of such documents, resolutions and agreements and any
amendments or supplements thereto, as the Administrator may, from time to time,
request.
3. Services on a Continuing Basis.
(a) The Administrator will perform the following accounting functions on an
ongoing basis:
(i) Journalize the Trust's investment, capital share and income and
expense activities;
(ii) Maintain individual ledgers for investment securities; record
all Trust security
transactions and corporate actions;
(iii) Reconcile cash and investment balances of the Trust with the
Trust's custodian, and provide the Trust with the beginning cash
balance available for investment purposes;
(iv) Post to and prepare the Trust's Statement of Assets and
Liabilities and the Statement of Operations;
(v) Calculate various contractual expenses (e.g., transfer agency
fees of the Trust);
(vi) Control all disbursements from the Trust and authorize such
disbursements upon written instructions from authorized Trust
officers and agents;
(vii) Calculate the Trust's capital gains and losses; recommend
capital gain distributions;
(viii) Determine the Trust's net income; recommend dividend
distributions;
(ix) Compute the net asset value on each business day of the Trust
utilizing security market quotes, obtained at the Trust's
expense and risk from commercially available pricing services
or, if such quotes are unavailable, obtain such prices from the
Trust's investment advisor, sub-advisor or from brokers or
market-makers in such securities; proof net asset value
calculations and security pricing daily;
(x) Deliver a copy of the daily portfolio valuation to the Trust;
(xi) Compute the Trust's yields, total return, expense ratios and
portfolio turnover rate;
(xii) Monitor the expense accruals and notify the Trust of any
proposed adjustments; and
(xiii) Prepare periodic unaudited financial statements.
(b) In addition to the accounting services described in the foregoing
Paragraph 3(a), the Administrator will provide, assist third-parties in
providing or arrange for the following services:
(i) Preparation of periodic audited financial statements;
(ii) Supplying various statistical data as requested by the Board of
Trustees of the Trust on an ongoing basis;
(iii) Preparation for execution and filing of the Trust's Federal and
state tax returns;
preparation of form 1099-MISC to independent contractors and
Trustees, as
required;
(iv) Preparation and filing the Trust's Semi-Annual Reports with the
Securities and Exchange Commission ("SEC") on Form N-SAR;
(v) Preparation and filing with the SEC the Trust's annual,
semi-annual, and quarterly shareholder reports;
(vi) Filing registration statements on Form N-1A and other filings
relating to the registration of Shares and maintenance of
federal and state registrations;
(vii) Monitoring the Trust's status as a regulated investment company
under Sub-Chapter M of the Internal Revenue Code of 1986, as
amended;
(viii) Reviewing periodically the Trust's fidelity bond and errors and
omission insurance coverage as required by the 1940 Act;
(ix) Preparation of materials for and recording the proceedings of,
in conjunction with the officers of the Trust, the meetings of
the Trust's Board of Trustees and the Trust's shareholders;
(x) Maintaining the Trust's existence and good standing under state
law;
(xi) Review and negotiate on behalf of the Trust normal course of
business contracts and agreements;
(xii) Assist the Trust in developing and maintaining a compliance
program; provide periodic reviews of compliance program,
potential regulatory issues, and brokerage allocation;
(xiii) Coordinate purchase and redemption orders with the Trust's
transfer agent;
(xiv) Furnishing the office space in the offices of the Administrator
and office facilities, simple business equipment, supplies,
utilities, and telephone service for administering the affairs
and investments of the Trust. These services are exclusive of
the necessary services and records of any dividend disbursing
agent, transfer agent, registrar or custodian, and accounting
and bookkeeping services which may be provided by the custodian;
<PAGE>
(xv) Providing executive and clerical personnel for
administering the affairs of the Trust, and compensating
officers and Trustees of the Trust if such persons are also
employees of the Administrator or its affiliates, except as
provided in Paragraph 3(a);
(xvi) Preparation of any other regulatory reports to and for any
federal, local, state or foreign governmental agency or
regulatory body as may be required; and
(xvii) Monitor Trust holdings for compliance with prospectus and SAI
investment restrictions and assist in preparation of periodic
compliance reports (i.e., 12 d-3 procedures).
(c) The Administrator shall provide such other services and assistance
relating to the affairs of the Trust as the Trust or the Trust's
investment advisor may, from time to time, reasonably request.
(d) In carrying out its duties hereunder, as well as any other activities
undertaken on behalf of the Trust pursuant to this Agreement, the
Administrator shall at all times be subject to the control and
direction of the Board of Trustees of the Trust.
4. Expenses of the Administrator and the Trust.
(a) Expenses of the Administrator.
The Administrator shall bear the ordinary and usual expenses of
providing the services set forth in Paragraph 3(a), 5 (except to the
extent provided otherwise therein) of this Agreement (except such
expenses which are expressly excluded) and in Paragraph 3(b) (iv) -
(xi), (xiii) -(xv), (xvii), which shall include the salary costs and
related expenses of the Administrator's employees, but shall exclude
all reasonable out-of-pocket expenses incurred by or on behalf of the
Administrator for the benefit of the Trust. All costs and expenses not
expressly assumed by the Administrator and all extraordinary expenses
associated with the services hereunder shall be borne by the Trust or
series thereof.
(b) Expenses of the Trust.
The Administrator shall be responsible for providing or arranging for a
third party to provide the services set forth herein. Unless expressly
set forth in this Agreement the Administrator shall not bear the
responsibility for, or expenses associated with, operational,
accounting or administrative services on behalf of the Trust, which
expenses are to be borne by the Trust such expenses include, without
limitation:
(i) The charges and expenses of any registrar, stock, transfer or
dividend disbursing agent, custodian, depository or other agent
appointed by the Trust for the safekeeping of its cash,
portfolio securities and other property;
<PAGE>
(ii) Except as provided in Section 4(a) hereof,
general operational, administrative and accounting costs, such
as the costs incident in calculating the Trust's net asset
value, the preparation of the Trust's tax filings with relevant
authorities and of compliance with any and all regulatory
authorities;
(iii) The charges and expenses of auditors and outside accountants;
(iv) Brokerage commissions for transactions in the portfolio
securities of the Trust;
(v) All taxes, including issuance and transfer taxes, and corporate
fees payable by the Trust to federal, state or other U.S. or
foreign governmental agencies;
(vi) The cost of the Trust's stock certificates representing shares;
(vii) Expenses involved in registering and maintaining registrations
of the Trust and of its shares with the SEC and various states
and other jurisdictions, if applicable;
(viii) All expenses of shareholders' and Trustees' meetings, including
meetings of committees, and of preparing, setting in type,
printing and mailing proxy statements, quarterly reports,
semi-annual reports, annual reports and other communications to
shareholders;
(ix) All expenses of preparing and setting in type offering
documents, and expenses of printing and mailing the same to
shareholders;
(x) Compensation and travel expenses of Trustees who are not
"interested persons" of the Administrator within the meaning of
the 1940 Act and travel expenses of Trustees who are "interested
persons" of the Administrator and officers and employees of the
Administrator when traveling on Trust business, such as
attending shareholders' or Trustees' meetings, beyond one
hundred miles from such person's principal place of business;
(xi) The expense of furnishing, or causing to be furnished, to each
shareholder, statements of account;
(xii) Charges and expenses of legal counsel in connection with matters
relating to the Trust, including, without limitation, legal
services rendered in connection with the Trust's corporate and
financial structure, day-to-day legal affairs of the Trust and
relations with its shareholders, issuance of Trust shares, and
registration and qualification of securities under federal,
state and other laws;
(xiii) The expenses of attendance at meetings of professional and trade
organizations, such as the Investment Company Institute and
regulatory agencies by officers and Trustees of the Trust, and
the membership or association dues of such organizations;
(xiv) The cost and expense of maintaining the books and records of the
Trust, except those costs and expenses expressly assumed by the
Administrator under this Agreement;
(xv) The expense of the Trust's obtaining and maintaining a fidelity
bond as required by Section 17(g) of the 1940 Act, the expense
of the Trust's obtaining and maintaining an errors and omissions
policy and other insurance as may be appropriate;
(xvi) Interest payable on Trust borrowing;
(xvii) Postage; and
(xviii)Any other reasonable costs and expenses incurred by the
Administrator for Trust operations and activities.
5. Records.
The books and records pertaining to the Trust which are in the possession of
the Administrator shall be the property of the Trust. Such books and records
shall be prepared and maintained as required by the 1940 Act and other
applicable securities laws, rules and regulations. The Trust, or the Trust's
authorized representatives, shall have access to such books and records at all
times during the Administrator's normal business hours. Upon the reasonable
request of the Trust, copies of any such books and records shall be provided by
the Administrator to the Trust or its authorized representative at the Trust's
expense.
6. Liaison With Accountants.
The Administrator shall, at its own expense, act as liaison with the Trust's
independent public accountants and shall provide account analyses, fiscal year
summaries, and other audit related schedules. The Administrator shall take all
reasonable action in the performance of its obligations under this Agreement to
assure that the necessary information is made available to such accountants for
the expression of their opinion, as such may be required by the Trust from time
to time.
7. Right to Receive Advice.
(a) Advice of Trust. If the Administrator shall be in doubt as to any
action to be taken or omitted by it, it may request, and shall receive,
from the Trust directions or advice.
(b) Advice of Counsel. If the Administrator or the Trust shall be in doubt
as to question of law involved in any action to be taken or omitted by
the Administrator, it may request advice at the Trust' cost from
counsel of its own choosing (who may be counsel for the Trust or, after
consultation with the Trust's officers, counsel to the Administrator).
<PAGE>
(c) Protection of the Administrator. The Administrator shall be
protected in any action or inaction which it takes in reliance on any
directions or advice received pursuant to subsections (a) or (b) of
this paragraph, provided that, in the case of subsection (b), it has
chosen counsel prudently, which the Administrator, after receipt of any
such directions or advice, in good faith believes to be consistent with
such directions or advice as the case may be. However, nothing in this
paragraph shall be construed as imposing upon the Administrator any
obligation (i) to seek such directions, or advice or (ii) to act in
accordance with such directions or advice when received. Nothing in
this subsection shall excuse the Administrator when an action or
omission on the part of the Administrator constitutes willful
misfeasance, bad faith, gross negligence or reckless disregard by the
Administrator of its duties under this Agreement.
8. Compliance with Governmental Rules and Regulations.
The Trust assumes full responsibility for insuring that it complies with all
applicable requirements of the Securities Act of 1933 ( the "1933 Act"), the
Securities Exchange Act of 1934 (" the 1934 Act"), the 1940 Act, and any
applicable laws, rules and regulations of governmental authorities having
jurisdiction.
9. Compensation
As compensation for the services rendered by the Administrator during the term
of this Agreement, the Trust will pay to the Administrator a fee, calculated
and payable monthly, at an annual rate of .20% of average daily net assets if
average daily assets during such month are less than $100 million; .19% if such
assets are $100 million or greater but less than $120 million, or a fixed
amount, payable monthly, based on the preceding fee level maximum fee, if
greater; .18% if such assets are $120 million or greater but less than $140
million, or a fixed amount, payable monthly, based on the preceding fee level
maximum fee, if greater; .17% if such assets are $140 million or greater but
less than $160 million, or a fixed amount, payable monthly, based on the
preceding fee level maximum fee, if greater; .16% if such assets are $160
million or greater but less than $180 million or a fixed amount, payable
monthly, based on the preceding fee level maximum fee, if greater; .15% if such
assets are $180 million or greater but less than $200 million, or a fixed
amount, payable monthly, based on the preceding fee level maximum fee, if
greater; .14% if such assets are $200 million or greater but less than $220
million, or a fixed amount, payable monthly, based on the preceding fee level
maximum fee, if greater; .13% if such assets are $220 million or greater but
less than $260 million, or a fixed amount, payable monthly, based on the
preceding fee level maximum fee, if greater; and .12% on average daily net
assets of $260 million or more, or a fixed amount, payable monthly, based on
the preceding fee level maximum fee, if greater; or a fixed annual amount,
payable monthly, of $100,000, if greater.
<PAGE>
10. Indemnification.
The Trust agrees to indemnify and hold harmless the Administrator and its
employees, agents and nominees from all taxes, charges, expenses, assessments,
claims and liabilities (including, without limitation, liabilities arising
under the 1933 Act, the 1934 Act, the 1940 Act, and any state and foreign
securities laws, all as or to be amended from time to time) and expenses,
including (without limitation) attorneys' fees and disbursements, arising
directly or indirectly from any action or thing which the Administrator takes
or does or omits to take or do (i) at the request or on the direction of or in
reliance on the advice of the Trust, (ii) upon oral or written instruction from
an authorized agent, or (III) otherwise in connection with this Agreement,
provided, that neither the Administrator nor any of its employees, agents or
nominees shall be indemnified against any liability arising out of the
Administrator's own willful misfeasance, bad faith, gross negligence or
reckless disregard of its duties and obligations under this Agreement.
11. Liability of the Administrator.
The Administrator shall be under no duty to take any action on behalf of the
Trust except as specifically set forth herein or as may be specifically agreed
to by the Administrator in writing. In the performance of its duties
hereunder, the Administrator shall be obligated to exercise care and diligence
and to act in good faith and to use its best efforts within reasonable limits
in performing services provided for under this Agreement, but the Administrator
shall not be liable for any act or omission which does not constitute willful
misfeasance, bad faith or gross negligence on the part of the Administrator or
reckless disregard by the Administrator of its duties under this Agreement.
Without limiting the generality of the foregoing or of any other provision of
this Agreement, the Administrator in connection with its duties under this
Agreement shall not be under any duty or obligation to inquire into and shall
not be liable for or in respect of (a) the validity or invalidity or authority
or lack thereof of any oral or written instruction, notice or other instrument
which conforms to the applicable requirements of this Agreement, and which the
Administrator reasonably believes to be genuine; (b) delays or errors or loss
of data occurring by reason of circumstances beyond the Administrator's
control, including acts of civil or military authority, national emergencies,
labor difficulties, fire, mechanical breakdown, flood or catastrophe, acts of
God, insurrection, war, riots or failure of the mails, transportation,
communication or power supply. In the event of equipment failures beyond the
Administrator's control, the Administrator shall, at no additional expense to
the Trust, take reasonable steps to minimize service interruptions but shall
have no liability with respect thereto.
12. Duration and Termination.
This Agreement shall continue until termination by either party on 90 days
written notice to the other; provided that this Agreement may be terminated by
either party on 7 days written notice in the event of a material breach by the
other party which remains uncured for 30 days following written notice thereof,
which notice shall specify in reasonable detail the factual and/or legal basis
for the breach.
<PAGE>
13. Further Action.
Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof.
14. Amendments.
This Agreement or any part hereof may be changed or waived only by an
instrument in writing signed by the party against which enforcement of such
change or waiver is sought.
15. Miscellaneous.
This Agreement embodies the entire agreement and understanding between the
parties thereto, and supersedes all prior agreements and understandings,
relating to the subject matter hereof, provided that the parties hereto may
embody in one or more separate documents their agreement, if any, with respect
to delegation and/or oral instructions. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect.
This Agreement shall be deemed to be a contract made in New York and governed
by New York law. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be binding and
shall inure to the benefit of the parties hereto and their respective
successors.
16. Limitation of Liability
It is expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Trust, personally but bind only the assets and property of the
Trust, as provided in the Declaration of Trust. The execution and delivery of
this Agreement have been authorized by the Trustees and signed by an authorized
officer of the Trust, acting as such, and neither such authorization of the
Trustees nor such execution and delivery by such officer 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 assets and property of the Trust as
provided in its Declaration of Trust. The execution and delivery of this
Agreement has been authorized by the Administrator and signed by an authorized
officer of the Administrator.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
[SEAL] EAI SELECT MANAGERS EQUITY FUND
Attest: By:
President
[SEAL] VAN ECK ASSOCIATES CORPORATION
Attest: By:
President
g:\marg\acct&adm.per
c:\wpwin\jmgfiles\trustees\aiforgan\acct&adm
Securities and Exchange Commission
November 22, 1995
Page 1
Exhibit 10
November 22, 1995
Securities and Exchange Commission
Judiciary Plaza, 450 Fifth Street, N.W.
Washington, D.C. 20549
Re: EAI Select Managers Equity Fund
File No. 33-98164
Ladies and Gentlemen:
We have acted as counsel to EAI Select Managers Equity Fund, a
Massachusetts business trust (the "Fund"), in connection with its organization
and the preparation and filing of the Registration Statement on Form N-1A filed
in the above-referenced file (the "Registration Statement"). All capitalized
terms not otherwise defined herein have the meanings given them in the
Registration Statement. This opinion is provided to you pursuant to the
requirement of Item 24 of Form N-1A.
In rendering our opinion, we have reviewed such documents as we have
deemed necessary and, in connection therewith, we have examined originals or
copies, certified or otherwise authenticated to our satisfaction, of the
following: (i) the Declaration of Trust for the Fund filed with the
Massachusetts Secretary of State on September 27, 1995; (ii) the By-laws of the
Fund; (iii) the Registration Statement; and (iv) such other documents and
instruments as we have deemed necessary for the purposes of this opinion. In
our examination, we have assumed the genuineness of all signatures, the legal
capacity of natural persons, the authenticity of documents submitted to us as
originals, and the conformity to originals of all documents submitted to us as
copies. As to any facts material to this opinion which we did not
independently establish or verify, we have relied upon statements and
representations of officers and other representatives of the Fund and
Evaluation Associates Capital Markets, Incorporated. In addition, we have
assumed that all statements in the Registration Statement are accurate and that
all transactions described therein will be consummated as contemplated in the
Registration Statement.
In rendering this opinion, we have assumed that the Fund's Board of
Trustees will authorize the issuance of any Shares before such Shares are
issued, that the Shares will be purchased at the net asset value per Share of
the Fund at the time of purchase, that no Shares will be issued to any person
or entity other than the Manager prior to the time that the Registration
Statement becomes effective, and that all Shares will be issued in compliance
with the Board's Declaration of Trust and Bylaws. The opinions set forth
herein are based on the laws of the Commonwealth of Massachusetts and the
Federal laws of the United States, and we express no opinion as to the laws of
any other jurisdiction.
Based on and subject to the foregoing, we are of the opinion that when
issued, the Shares of the Fund will be legally issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not thereby admit that
we are in the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Day, Berry & Howard
PLH:PNB
DBH805
/usr3/id38/work/smef.opi
Consent of Independent Accountants
We hereby consent to the use in the Statement of Additional Information
constituting part of this Pre-Effective Amendment No.1 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
November 21, 1995, relating to the statement of assets and liabilities of EAI
Select Managers Equity Fund, which appears in such Statement of Additional
Information, and to the incorporation by reference of our report into the
Prospectus which constitutes part of this Registration Statement. We also
consent to the reference to us under the heading "Custodian, Transfer Agent and
Independent Accountants" in such Statement of Additional Information.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
November 21, 1995
EXHIBIT 16
Computation of Performance Quotations
<TABLE>
Monthly Returns (Gross of Fees) RETURNS UNIT VALUE SERIES
EAI SMEF WR LONG weighted avg weighted avg
<S> <C> <C> <C> <C> <C> <C> <C>
Apr-84 7,681,757 1.0000 1.0000
May-84 -3.77 7,419,338 -3.77 -3.77 0.9623 0.9623
Jun-84 2.65 7,620,981 2.65 2.65 0.9878 0.9878
Jul-84 -0.33 7,985,155 -0.33 -0.33 0.9845 0.9845
Aug-84 5.87 8,454,072 5.87 5.87 1.0423 1.0423
Sep-84 -0.79 8,481,185 -0.79 -0.79 1.0341 1.0341
Oct-84 0.87 8,306,008 0.87 0.87 1.0431 1.0431
Nov-84 -0.83 8,217,982 -0.83 -0.83 1.0344 1.0344
Dec-84 1.42 8,334,498 1.42 1.42 1.0491 1.0491
Jan-85 10.88 9,213,575 10.88 10.88 1.1633 1.1633
Feb-85 2.15 9,487,763 2.15 2.15 1.1883 1.1883
Mar-85 0.32 9,512,007 0.32 0.32 1.1921 1.1921
Apr-85 -0.15 9,551,018 -0.15 -0.15 1.1903 1.1903
May-85 4.76 9,981,834 4.76 4.76 1.2470 1.2470
Jun-85 2.34 10,221,107 2.34 2.34 1.2761 1.2761
Jul-85 -0.09 10,214,440 -0.09 -0.09 1.2750 1.2750
Aug-85 -1.07 10,134,343 -1.07 -1.07 1.2613 1.2613
Sep-85 -3.34 9,777,425 -3.34 -3.34 1.2192 1.2192
Oct-85 5.34 10,299,938 5.34 5.34 1.2843 1.2843
Nov-85 6.05 10,922,579 6.05 6.05 1.3620 1.3620
Dec-85 4.6 11,420,903 4.60 4.6 1.4247 1.4247
Jan-86 0.59 11,491,342 0.59 0.59 1.4331 1.4331
Feb-86 8.99 12,660,126 8.99 8.99 1.5619 1.5619
Mar-86 6.01 13,416,669 6.01 6.01 1.6558 1.6558
Apr-86 -0.22 13,389,455 -0.22 -0.22 1.6521 1.6521
May-86 5.28 24,605,539 5.28 5.28 1.7394 1.7394
Jun-86 0.46 24,684,765 0.46 0.46 1.7474 1.7474
Jul-86 -5.73 23,301,968 -5.73 -5.73 1.6473 1.6473
Aug-86 4.3 24,361,612 4.30 4.3 1.7181 1.7181
Sep-86 -6.35 22,774,762 -6.35 -6.35 1.6090 1.6090
Oct-86 4.73 23,874,448 4.73 4.73 1.6851 1.6851
Nov-86 1.01 24,136,436 1.01 1.01 1.7021 1.7021
Dec-86 -1.63 23,648,368 -1.63 -1.63 1.6744 1.6744
Jan-87 10.12 25,978,846 10.12 10.12 1.8438 1.8438
Feb-87 6.74 27,949,586 6.74 6.74 1.9681 1.9681
Mar-87 0.9 28,186,815 0.90 0.9 1.9858 1.9858
Apr-87 -0.23 28,056,191 -0.23 -0.23 1.9812 1.9812
May-87 2 46,558,487 2.00 2 2.0209 2.0209
Jun-87 4.37 48,601,184 4.37 4.37 2.1092 2.1092
Jul-87 6.03 52,891,861 6.03 6.03 2.2363 2.2363
Aug-87 2.87 54,151,144 2.87 2.87 2.3005 2.3005
Sep-87 -1.69 53,134,698 -1.69 -1.69 2.2617 2.2617
Oct-87 -20.04 44,725,348 -20.04 -20.04 1.8084 1.8084
Nov-87 -5.07 42,108,033 -5.07 -5.07 1.7167 1.7167
Dec-87 7.8 45,382,176 7.80 7.8 1.8506 1.8506
Jan-88 3.61 45,364,236 3.61 3.61 1.9174 1.9174
Feb-88 6.23 51,406,025 6.23 6.23 2.0369 2.0369
Mar-88 0.09 51,466,126 0.09 0.09 2.0387 2.0387
Apr-88 0.74 54,871,221 0.74 0.74 2.0538 2.0538
May-88 -0.22 53,505,187 -0.22 -0.22 2.0493 2.0493
Jun-88 5.59 52,969,647 5.59 5.59 2.1639 2.1639
Jul-88 -0.43 52,716,621 -0.43 -0.43 2.1546 2.1546
Aug-88 -1.8 51,770,821 -1.80 -1.8 2.1158 2.1158
Sep-88 3.8 53,611,683 3.80 3.8 2.1962 2.1962
Oct-88 0.92 54,080,172 0.92 0.92 2.2164 2.2164
Nov-88 -1.68 52,952,025 -1.68 -1.68 2.1791 2.1791
Dec-88 3.37 53,038,075 3.37 3.37 2.2526 2.2526
Jan-89 7.78 56,782,136 7.78 7.78 2.4278 2.4278
Feb-89 0.19 56,786,837 0.19 0.19 2.4324 2.4324
Mar-89 2.93 58,870,368 2.93 2.93 2.5037 2.5037
Apr-89 4.76 67,142,366 4.76 4.76 2.6229 2.6229
May-89 4.11 70,160,531 4.11 4.11 2.7307 2.7307
Jun-89 0.84 70,741,118 0.84 0.84 2.7536 2.7536
Jul-89 6.48 75,556,160 6.48 6.48 2.9321 2.9321
Aug-89 3.03 78,122,547 3.03 3.03 3.0209 3.0209
Sep-89 -0.23 77,836,319 -0.23 -0.23 3.0140 3.0140
Oct-89 -4.2 73,457,132 -4.20 -4.2 2.8874 2.8874
Nov-89 1.41 74,387,438 1.41 1.41 2.9281 2.9281
Dec-89 0.56 79,061,331 0.56 0.56 2.9445 2.9445
Jan-90 -6.36 73,957,400 -6.36 -6.36 2.7572 2.7572
Feb-90 2.13 85,278,558 2.13 2.13 2.8159 2.8159
Mar-90 2.32 87,312,798 2.32 2.32 2.8813 2.8813
Apr-90 -2.36 86,197,550 -2.36 -2.36 2.8133 2.8133
May-90 7.79 97,529,899 7.79 7.79 3.0324 3.0324
Jun-90 0.1 97,671,069 0.10 0.1 3.0355 3.0355
Jul-90 -2.47 95,671,827 -2.47 -2.47 2.9605 2.9605
Aug-90 -8.12 88,370,022 -8.12 -8.12 2.7201 2.7201
Sep-90 -4.81 85,453,150 -4.81 -4.81 2.5893 2.5893
Oct-90 -2.05 83,346,610 -2.05 -2.05 2.5362 2.5362
Nov-90 6.34 89,242,713 6.34 6.34 2.6970 2.6970
Dec-90 3.44 89,645,462 3.44 3.44 2.7897 2.7897
Jan-91 6.28 95,019,039 6.28 6.28 2.9649 2.9649
Feb-91 7.18 101,472,005 7.18 7.18 3.1778 3.1778
Mar-91 3.26 107,241,965 3.26 3.26 3.2814 3.2814
Apr-91 0.31 105,880,162 0.31 0.31 3.2916 3.2916
May-91 4.73 108,221,034 4.73 4.73 3.4473 3.4473
Jun-91 -5.32 102,459,445 -5.32 -5.32 3.2639 3.2639
Jul-91 5.48 109,130,153 5.48 5.48 3.4427 3.4427
Aug-91 3.47 112,518,565 3.47 3.47 3.5622 3.5622
Sep-91 -0.61 111,810,831 -0.61 -0.61 3.5405 3.5405
Oct-91 3.41 115,657,871 3.41 3.41 3.6612 3.6612
Nov-91 -5.59 111,281,049 -5.59 -5.59 3.4565 3.4565
Dec-91 10.6 116,314,352 10.60 10.6 3.8229 3.8229
Jan-92 2.16 121,721,629 2.16 2.16 3.9055 3.9055
Feb-92 4.32 128,895,759 4.32 4.32 4.0742 4.0742
Mar-92 -2.65 122,381,673 -2.65 -2.65 3.9663 3.9663
Apr-92 -0.45 125,858,800 -0.45 -0.45 3.9484 3.9484
May-92 0.07 157,475,915 0.07 0.07 3.9512 3.9512
Jun-92 -2.78 154,431,665 -2.78 -2.78 3.8413 3.8413
Jul-92 2.42 161,045,120 2.42 2.42 3.9343 3.9343
Aug-92 -2.63 150,139,585 -2.63 -2.63 3.8308 3.8308
Sep-92 2.02 154,623,537 2.02 2.02 3.9082 3.9082
Oct-92 3.04 146,002,831 3.04 3.04 4.0270 4.0270
Nov-92 7.24 155,133,801 7.24 7.24 4.3186 4.3186
Dec-92 2.82 159,443,794 2.82 2.82 4.4404 4.4404
Jan-93 1.4 166,498,515 1.40 1.4 4.5025 4.5025
Feb-93 -0.28 166,767,086 25,204,045 -0.28 -0.28 4.4899 4.4899
Mar-93 3.37 180,016,129 2.82 25,872,859 3.30 3.10 4.6380 4.6289
Apr-93 -2.63 180,086,646 -2.39 26,584,001 -2.60 -2.51 4.5174 4.5127
May-93 3.77 186,615,327 3.80 27,584,661 3.77 3.79 4.6879 4.6835
Jun-93 1.4 185,728,973 0.97 27,841,664 1.34 1.19 4.7509 4.7390
Jul-93 0.77 191,059,024 0.02 30,184,764 0.67 0.40 4.7829 4.7577
Aug-93 5.64 200,033,964 5.63 31,859,173 5.64 5.64 5.0526 5.0258
Sep-93 1.59 204,326,742 1.50 32,322,797 1.58 1.55 5.1323 5.1035
Oct-93 2.27 208,437,803 2.84 31,654,438 2.35 2.56 5.2528 5.2339
Nov-93 -2.19 197,333,471 -2.00 29,049,008 -2.16 -2.10 5.1390 5.1242
Dec-93 3.02 204,368,959 2.70 32,500,416 2.98 2.86 5.2921 5.2708
Jan-94 3.77 215,520,197 3.65 37,275,281 3.75 3.71 5.4908 5.4663
Feb-94 -1.19 215,088,822 -1.08 38,833,200 -1.17 -1.14 5.4263 5.4043
Mar-94 -4.6 204,793,308 -4.16 40,305,010 -4.53 -4.38 5.1804 5.1676
Apr-94 1.02 207,862,920 1.26 41,459,967 1.06 1.14 5.2352 5.2265
May-94 -0.58 208,652,028 -0.13 41,289,124 -0.51 -0.36 5.2088 5.2079
Jun-94 -3.15 202,622,379 -2.81 40,351,410 -3.09 -2.98 5.0476 5.0527
Jul-94 3.05 211,456,569 2.61 41,900,958 2.98 2.83 5.1979 5.1957
Aug-94 4.92 219,293,927 5.02 43,883,049 4.94 4.97 5.4545 5.4539
Sep-94 -2 215,452,099 -1.85 47,247,993 -1.97 -1.93 5.3468 5.3490
Oct-94 0.74 213,726,086 0.69 46,949,625 0.73 0.72 5.3859 5.3872
Nov-94 -4.01 213,894,729 -3.61 47,363,980 -3.94 -3.81 5.1738 5.1819
Dec-94 1.44 217,167,222 1.37 48,511,761 1.43 1.41 5.2476 5.2548
</TABLE>
<PAGE>
<TABLE>
WR LONG** (equals gross return minus net to limited return
FEES
SMEF* WR LONG**
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jan-94 0.1
Dec-84 8,334,498 fees Feb-94 0.11
Dec-85 1.18 11,420,903 Mar-93 0.13 Mar-94 0.1
Dec-86 1.20 23,648,368 Apr-93 0.11 Apr-94 0.1
Dec-87 1.14 45,382,176 May-93 0.11 May-94 0.1
Dec-88 1.13 53,038,075 Jun-93 0.11 Jun-94 0.11
Dec-89 1.12 79,061,331 Jul-93 0.11 Jul-94 0.21
Dec-90 1.06 89,645,462 Aug-93 0.09 Aug-94 0.1
Dec-91 1.11 116,314,352 Sep-93 0.11 Sep-94 0.1
Dec-92 1.05 159,443,794 25,204,045 Oct-93 0.1 Oct-94 0.1
Dec-93 1.02 204,368,959 1.09 32,500,416 Nov-93 0.11 Nov-94 0.1
Dec-94 1.02 217,167,222 1.33 48,511,761 Dec-93 0.11 Dec-94 0.1
1993 1.09 1994 1.33
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jan-95 0.08 217,577,565 returns fees
Feb-95 4.08 226,270,958 gross wtd net avg net wtd net avg net*
Mar-95 3.23 232,683,986 10 years 17.47 16.40 16.35 1.07 1.12
Apr-95 2.02 235,192,662 5 years 12.25 11.19 11.15 1.06 1.10
May-95 3.84 244,674,852 3 years 11.14 10.09 10.03 1.05 1.10
Jun-95 4.79 256,999,204 1 year -0.84 -1.90 -2.02 1.06 1.18
Jul-95 5.02 271,224,027
Aug-95 1.37 213,683,548
</TABLE>
*(from Financial Highlights page)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> NOV-20-1995
<PERIOD-END> NOV-22-1995
<INVESTMENTS-AT-COST> [BLANK]
<INVESTMENTS-AT-VALUE> [BLANK]
<RECEIVABLES> [BLANK]
<ASSETS-OTHER> [BLANK]
<OTHER-ITEMS-ASSETS> [BLANK]
<TOTAL-ASSETS> [BLANK]
<PAYABLE-FOR-SECURITIES> [BLANK]
<SENIOR-LONG-TERM-DEBT> [BLANK]
<OTHER-ITEMS-LIABILITIES> [BLANK]
<TOTAL-LIABILITIES> [BLANK]
<SENIOR-EQUITY> [BLANK]
<PAID-IN-CAPITAL-COMMON> [BLANK]
<SHARES-COMMON-STOCK> [BLANK]
<SHARES-COMMON-PRIOR> [BLANK]
<ACCUMULATED-NII-CURRENT> [BLANK]
<OVERDISTRIBUTION-NII> [BLANK]
<ACCUMULATED-NET-GAINS> [BLANK]
<OVERDISTRIBUTION-GAINS> [BLANK]
<ACCUM-APPREC-OR-DEPREC> [BLANK]
<NET-ASSETS> [BLANK]
<DIVIDEND-INCOME> [BLANK]
<INTEREST-INCOME> [BLANK]
<OTHER-INCOME> [BLANK]
<EXPENSES-NET> [BLANK]
<NET-INVESTMENT-INCOME> [BLANK]
<REALIZED-GAINS-CURRENT> [BLANK]
<APPREC-INCREASE-CURRENT> [BLANK]
<NET-CHANGE-FROM-OPS> [BLANK]
<EQUALIZATION> [BLANK]
<DISTRIBUTIONS-OF-INCOME> [BLANK]
<DISTRIBUTIONS-OF-GAINS> [BLANK]
<DISTRIBUTIONS-OTHER> [BLANK]
<NUMBER-OF-SHARES-SOLD> [BLANK]
<NUMBER-OF-SHARES-REDEEMED> [BLANK]
<SHARES-REINVESTED> [BLANK]
<NET-CHANGE-IN-ASSETS> [BLANK]
<ACCUMULATED-NII-PRIOR> [BLANK]
<ACCUMULATED-GAINS-PRIOR> [BLANK]
<OVERDISTRIB-NII-PRIOR> [BLANK]
<OVERDIST-NET-GAINS-PRIOR> [BLANK]
<GROSS-ADVISORY-FEES> [BLANK]
<INTEREST-EXPENSE> [BLANK]
<GROSS-EXPENSE> [BLANK]
<AVERAGE-NET-ASSETS> [BLANK]
<PER-SHARE-NAV-BEGIN> 10
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10
<EXPENSE-RATIO> N/A
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
