U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/
Pre-Effective Amendment No.
Post-Effective Amendment No.
and/or
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No.
(Check appropriate box or boxes)
PRAGMA INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
7150 Greenville Avenue, Suite 101 - LB 340
Dallas, Texas 75231
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (214) 373-3585
John H. Alban, III
PRAGMA, Inc.
7150 Greenville Avenue, Suite 101 - LB 340
Dallas, Texas 75231
(Name and Address of Agent for Service)
Copies to:
Tina D. Hosking
MGF Service Corp.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Approximate Date of Proposed Public Offering: As soon as practicable after
this Registration Statement becomes effective.
Registrant hereby declares its intention to register an indefinite number
of shares of beneficial interest pursuant to Rule 24f-2 under the Investment
Company Act of 1940.
The Registrant hereby amends this 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 said Section 8(a) may determine.
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PRAGMA INVESTMENT TRUST
Cross Reference Sheet
Pursuant to Rule 481(a)
Under the Securities Act of 1933
PART A
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Item No. Registration Statement Caption Caption in Prospectus
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1. Cover Page Cover Page
2. Synopsis Expense Information
3. Condensed Financial Information Performance Information
4. General Description of Registrant Operation of the Fund;
Investment Objective,
Investment Policies and Risk
Considerations
5. Management of the Fund Operation of the Fund
6. Capital Stock and Other Securities Cover Page; Operation of the
Fund; Dividends and
Distributions; Taxes
7. Purchase of Securities Being Offered How to Purchase Shares;
Calculation of Share Price;
Application
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings Inapplicable
PART B
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of Additional
Item No. Registration Statement Caption Information
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10. Cover Page Cover Page
11. Table of Contents Table of Contents
(i)
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12. General Information and History Inapplicable
13. Investment Objectives and Policies Definitions, Policies and
Risk Considerations;
Investment Limitations;
Securities Transactions;
Portfolio Turnover
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal Holders Inapplicable
of Securities
16. Investment Advisory and Other Services The Investment Adviser;
Custodian; Auditors; MGF
Service Corp.; Securities
Transactions
17. Brokerage Allocation and Other Securities Transactions
Practices
18. Capital Stock and Other Securities The Fund
19. Purchase, Redemption and Pricing of Calculation of Share
Securities Being Offered Price; Redemption in
Kind
20. Tax Status Taxes
21. Underwriters Inapplicable
22. Calculation of Performance Data Historical Performance
Information
23. Financial Statements Statement of Assets and
Liabilities
PART C
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The information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C to this Registration Statement.
(ii)
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PRAGMA PROVIDENCE FUND
PROSPECTUS
, 1996
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PROSPECTUS
, 1996
PRAGMA INVESTMENT TRUST
7150 Greenville Avenue
Suite 101 - LB 340
Dallas, Texas 75231
(214)373-3585
_________________________________________________________________
The PRAGMA Providence Fund (the "Fund"), a separate series of
PRAGMA Investment Trust, is an aggressive equity mutual fund which
seeks long-term capital appreciation through investment in common
stocks. Dividend income is only an incidental consideration to the
Fund's investment objective.
PRAGMA, Inc. (the "Adviser"), 7150 Greenville Avenue, Suite
101-LB 340, Dallas, Texas 75231, manages the Fund's investments. The
Adviser uses fundamental security analysis to identify and purchase
shares of companies which it believes have the potential for
significant earnings growth.
This Prospectus sets forth concisely the information about the
Fund that you should know before investing. Please retain this
Prospectus for future reference. A Statement of Additional
Information dated , 1996 has been filed with the Securities and
Exchange Commission and is hereby incorporated by reference in its
entirety. A copy of the Statement of Additional Information can be
obtained at no charge by calling the number listed below.
_________________________________________________________________
For Information or Assistance in Opening An Account, Please Call:
Nationwide (Toll-Free). . . . . . . . . . . . . . . .800-___-____
____________________________________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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EXPENSE INFORMATION
Shareholder Transaction Expenses
Sales Load Imposed on Purchases . . . . . . . . . . . . . None
Sales Load Imposed on Reinvested Dividends. . . . . . . . None
Redemption Fee. . . . . . . . . . . . . . . . . . . . . . None*
* A wire transfer fee is charged by the Fund's Custodian in the
case of redemptions made by wire. Such fee is subject to change
and is currently $8. See "How to Redeem Shares."
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees . . . . . . . . . . . . . . 1.50%
12b-1 Fees. . . . . . . . . . . . . . . . . None
Other Expenses. . . . . . . . . . . . . . . .00%**
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Total Fund Operating Expenses . . . . . . . 1.50%
** Does not include fees and expenses of the non-interested
Trustees. The Adviser is contractually required to reduce its
management fee in an amount equal to such fees and expenses,
which are estimated to be .01% of the Fund's net assets. The
Adviser undertakes that the expenses of the Fund will not, in
any event, exceed 1.50% of the Fund's average net assets. See
"Operation of the Fund."
Example
You would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual
return and (2) redemption at the end of
each time period:
1 Year $ 15
3 Years 47
The purpose of this table is to assist the investor in
understanding the various costs and expenses that an investor in
the Fund will bear directly or indirectly. The percentages
expressing annual fund operating expenses are based on estimated
amounts for the current fiscal year. The Example should not be
considered a representation of past or future expenses and actual
expenses may be greater or less than those shown.
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INVESTMENT OBJECTIVE, INVESTMENT POLICIES AND RISK CONSIDERATIONS
The investment objective of the Fund is to seek long-term
capital appreciation through investment in common stocks.
Dividend income is only an incidental consideration to the Fund's
investment objective. The Fund is not intended to be a complete
investment program, and there is no assurance that its investment
objective can be achieved. The Fund's investment objective may
be changed by the Board of Trustees without shareholder approval,
but only after notification has been given to shareholders and
after this Prospectus has been revised accordingly. If there is
a change in the Fund's investment objective, shareholders should
consider whether the Fund remains an appropriate investment in
light of their then current financial position and needs. Unless
otherwise indicated, all investment practices and limitations of
the Fund are nonfundamental policies which may be changed by the
Board of Trustees without shareholder approval.
Investments in common stocks are subject to inherent market
risks and fluctuations in value due to earnings, economic
conditions and other factors beyond the control of the Adviser.
As a result, the return and net asset value of the Fund will
fluctuate. In selecting securities for the Fund, the Adviser
will generally purchase common stocks of companies which it
believes meet one of the following criteria:
1. companies, often relatively small or new, with new or
appealing products or services;
2. companies whose products or services have the potential
for significant growth in sales; and
3. "special situations" that may cause a company's
earnings to grow significantly because of changes in
products, services, applicability, or strategy.
The Adviser will seek to identify these companies using a
mix of techniques. Market sectors will be analyzed "top down."
Individual securities will be evaluated "bottom up."
The Fund may from time to time invest a substantial portion
of its assets in small, unseasoned companies. While smaller
companies generally have potential for rapid growth, they often
involve higher risks because they lack the management experience,
financial resources, product diversification and competitive
strengths of larger corporations. In addition, in many
instances, the securities of smaller companies are traded only
over-the-counter or on a regional securities exchange, and the
frequency and volume of their trading is substantially less than
is typical of larger companies. Therefore, the securities of
smaller companies may be subject to wider price fluctuations.
When making large sales, the Fund may have to sell portfolio
holdings at discounts from quoted prices or may have to make a
series of small sales over an extended period of time.
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The Fund may invest in foreign companies through the
purchase of sponsored American Depository Receipts (certificates
of ownership issued by an American bank or trust company as a
convenience to investors in lieu of the underlying shares which
it holds in custody) or other securities of foreign issuers that
are publicly traded in the United States. When selecting foreign
investments, the Adviser will seek to invest in securities that
have investment characteristics and qualities comparable to the
kinds of domestic securities in which the Fund invests. The Fund
does not currently intend to invest more than 15% of its net
assets in American Depository Receipts and other foreign
securities. Foreign investments may be subject to special risks,
including future political and economic developments and the
possibility of seizure or nationalization of companies,
imposition of withholding taxes on income, establishment of
exchange controls or adoption of other restrictions, that might
affect an investment adversely.
For defensive purposes, the Fund may temporarily hold all or
a portion of its assets in money market instruments. The money
market instruments which the Fund may own from time to time
include U.S. Government obligations having a maturity of less
than one year, commercial paper rated A-1 by Standard & Poor's
Ratings Group or Prime-1 by Moody's Investors Service, Inc.,
repurchase agreements, bank debt instruments (certificates of
deposit, time deposits and bankers' acceptances) and other short-
term instruments issued by domestic branches of U.S. financial
institutions that are insured by the Federal Deposit Insurance
Corporation and have assets exceeding $10 billion.
Repurchase agreements are transactions by which the Fund
purchases a security and simultaneously commits to resell that
security to the seller at an agreed upon time and price, thereby
determining the yield during the term of the agreement. In the
event of a bankruptcy or other default of the seller of a
repurchase agreement, the Fund could experience both delays in
liquidating the underlying security and losses. To minimize
these possibilities, the Fund intends to enter into repurchase
agreements only with its Custodian, banks having assets in excess
of $10 billion and the largest and, in the Adviser's judgment,
most creditworthy primary U.S. Government securities dealers.
Repurchase agreements entered into by the Fund will be
collateralized by high-grade debt obligations. Collateral for
repurchase agreements is held in safekeeping in the customer-only
account of the Fund's Custodian at the Federal Reserve Bank. At
the time the Fund enters into a repurchase agreement, the value
of the collateral, including accrued interest, will equal or
exceed the value of the repurchase agreement and, in the case of
a repurchase agreement exceeding one day, the seller agrees to
maintain sufficient collateral so that the value of the
collateral, including accrued interest, will at all times equal
or exceed the value of the repurchase agreement. The Fund will
not enter into a repurchase agreement not terminable within seven
days if, as a result thereof, more than 15% of the value of the
net assets of the Fund would be invested in such securities and
other illiquid securities.
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The Fund may make short-term loans of its portfolio
securities to banks, brokers and dealers, although the Fund has
no present intention to do so.
The Fund may borrow money from banks or as may be necessary
for the clearance of securities transactions but only for
emergency or extraordinary purposes in an amount not exceeding 5%
of the Fund's total assets. The Fund's policy on borrowing is a
fundamental policy which may not be changed without the
affirmative vote of a majority of its outstanding shares.
The Fund does not intend to use short-term trading as a
primary means of achieving its investment objective. However,
the Fund's rate of portfolio turnover will depend upon market and
other conditions, and it will not be a limiting factor when
portfolio changes are deemed necessary or appropriate by the
Adviser. Although the annual portfolio turnover rate of the Fund
cannot be accurately predicted, it is not expected to exceed 50%,
but may be either higher or lower. High turnover involves
correspondingly greater commission expenses and transaction costs
and increases the possibility that the Fund would not qualify as
a regulated investment company under Subchapter M of the Internal
Revenue Code. The Fund will not qualify as a regulated
investment company if it derives more than 30% or more of its
gross income from gains (without offset for losses) from the sale
or other disposition of securities held for less than three
months. High turnover may result in the Fund recognizing greater
amounts of income and capital gains, which would increase the
amount of income and capital gains which the Fund must distribute
to its shareholders in order to maintain its status as a
regulated investment company and to avoid the imposition of
federal income or excise taxes (see "Taxes").
HOW TO PURCHASE SHARES
Your initial investment in the Fund must be at least $1,000.
Shares of the Fund are sold on a continuous basis at the net
asset value next determined after receipt of a purchase order by
the Fund. Purchase orders received by dealers prior to 4:00
p.m., Eastern time, on any business day and transmitted to the
Fund's transfer agent, MGF Service Corp., by 5:00 p.m., Eastern
time, that day are confirmed at the net asset value determined as
of the close of the regular session of trading on the New York
Stock Exchange on that day. It is the responsibility of dealers
to transmit properly completed orders so that they will be
received by MGF Service Corp. by 5:00 p.m., Eastern time.
Dealers may charge a fee for effecting purchase orders. Direct
purchase orders received by MGF Service Corp. by 4:00 p.m.,
Eastern time, are confirmed at that day's net asset value.
Direct investments received by MGF Service Corp. after 4:00 p.m.,
Eastern time, and orders received from dealers after 5:00 p.m.,
Eastern time, are confirmed at the net asset value next
determined on the following business day.
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You may open an account and make an initial investment in
the Fund by sending a check and a completed account application
form to MGF Service Corp., P.O. Box 5354, Cincinnati, Ohio 45201-
5354. Checks should be made payable to the " PRAGMA Providence
Fund." An account application is included in this Prospectus.
The Fund mails you confirmations of all purchases or
redemptions of Fund shares. Certificates representing shares are
not issued. The Fund reserves the rights to limit the amount of
investments and to refuse to sell to any person.
Investors should be aware that the Fund's account
application contains provisions in favor of the Fund, MGF Service
Corp. and certain of their affiliates, excluding such entities
from certain liabilities (including, among others, losses
resulting from unauthorized shareholder transactions) relating to
the various services made available to investors.
Should an order to purchase shares be canceled because your
check does not clear, you will be responsible for any resulting
losses or fees incurred by the Fund or MGF Service Corp. in the
transaction.
You may also purchase shares of the Fund by wire. Please
telephone MGF Service Corp. (Nationwide call toll-free
800-545-0103) for instructions. You should be prepared to give
the name in which the account is to be established, the address,
telephone number and taxpayer identification number for the
account, and the name of the bank which will wire the money.
Your investment will be made at the next determined net
asset value after your wire is received together with the account
information indicated above. If the Fund does not receive timely
and complete account information, there may be a delay in the
investment of your money and any accrual of dividends. To make
your initial wire purchase, you are required to mail a completed
account application to MGF Service Corp. Your bank may impose a
charge for sending your wire. There is presently no fee for
receipt of wired funds, but MGF Service Corp. reserves the right
to charge shareholders for this service upon thirty days' prior
notice to shareholders.
You may purchase and add shares to your account by mail or
by bank wire. Checks should be sent to MGF Service Corp., P.O.
Box 5354, Cincinnati, Ohio 45201-5354. Checks should be made
payable or endorsed to the "PRAGMA Providence Fund." Bank wires
should be sent as outlined above. You may also make additional
investments at the Fund's offices at 7150 Greenville Avenue,
Suite 101-LB 340, Dallas, Texas 75231. Each additional purchase
request must contain the name of your account and your account
number to permit proper crediting to your account. While there
is no minimum amount required for subsequent investments, the
Fund reserves the right to impose such requirement.
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HOW TO REDEEM SHARES
You may redeem shares of the Fund on each day that the Fund
is open for business by sending a written request to the Fund.
The request must state the number of shares or the dollar amount
to be redeemed and your account number. The request must be
signed exactly as your name appears on the Fund's account
records. If the shares to be redeemed have a value of $25,000 or
more, your signature must be guaranteed by any eligible guarantor
institution, including banks, brokers and dealers, municipal
securities brokers and dealers, government securities brokers and
dealers, credit unions, national securities exchanges, registered
securities associations, clearing agencies and savings
associations.
Redemption requests may direct that the proceeds be wired
directly to your existing account in any commercial bank or
brokerage firm in the United States. If your instructions
request a redemption by wire, you will be charged an $8
processing fee by the Fund's Custodian. The Fund reserves the
right, upon thirty days' written notice, to change the processing
fee. All charges will be deducted from your account by
redemption of shares in your account. Your bank or brokerage
firm may also impose a charge for processing the wire. In the
event that wire transfer of funds is impossible or impractical,
the redemption proceeds will be sent by mail to the designated
account.
You may also redeem shares by placing a wire redemption
through a securities broker or dealer. Unaffiliated broker-
dealers may impose a fee on the shareholder for this service.
You will receive the net asset value per share next determined
after receipt by the Fund or its agent of your wire redemption
request. It is the responsibility of broker-dealers to properly
transmit wire redemption orders.
You will receive the net asset value per share next
determined after receipt by MGF Service Corp. of your redemption
request in the form described above. Payment is made within
three business days after tender in such form, provided that
payment in redemption of shares purchased by check will be
effected only after the check has been collected, which may take
up to fifteen days from the purchase date. To eliminate this
delay, you may purchase shares of the Fund by certified check or
wire.
At the discretion of the Fund or MGF Service Corp.,
corporate investors and other associations may be required to
furnish an appropriate certification authorizing redemptions to
ensure proper authorization. The Fund reserves the right to
require you to close your account if at any time the value of
your shares is less than $1,000 (based on actual amounts
invested, unaffected by market fluctuations), or such other
minimum amount as the Fund may determine from time to time.
After notification to you of the Fund's intention to close your
account, you will be given sixty days to increase the value of
your account to the minimum amount.
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The Fund reserves the right to suspend the right of
redemption or to postpone the date of payment for more than three
business days under unusual circumstances as determined by the
Securities and Exchange Commission.
DIVIDENDS AND DISTRIBUTIONS
The Fund expects to distribute substantially all of its net
investment income and net realized capital gains, if any, on an
annual basis. Distributions are paid according to one of the
following options:
Share Option - income distributions and capital gains
distributions reinvested in additional
shares.
Income Option - income distributions and short-term
capital gains distributions paid in
cash; long-term capital gains
distributions reinvested in additional
shares.
Cash Option - income distributions and capital gains
distributions paid in cash.
You should indicate your choice of option on your
application. If no option is specified on your application,
distributions will automatically be reinvested in additional
shares. All distributions will be based on the net asset value
in effect on the payable date.
If you select the Income Option or the Cash Option and the
U.S. Postal Service cannot deliver your checks or if your checks
remain uncashed for six months, your dividends may be reinvested
in your account at the then-current net asset value and your
account will be converted to the Share Option.
TAXES
The Fund intends to continue to qualify for the special tax
treatment afforded a "regulated investment company" under
Subchapter M of the Internal Revenue Code so that it does not pay
federal taxes on income and capital gains distributed to
shareholders. The Fund intends to distribute substantially all
of its net investment income and any net realized capital gains
to its shareholders. Distributions of net investment income as
well as net realized short-term capital gains, if any, are
taxable to investors as ordinary income. Dividends distributed
by the Fund from net investment income may be eligible, in whole
or in part, for the dividends received deduction available to
corporations. Distributions of net realized long-term capital
gains are taxable as long-term capital gains regardless of how
long you have held your Fund shares.
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The Fund will mail to each of its shareholders a statement
indicating the amount and federal income tax status of all
distributions made during the year. In addition to federal
taxes, shareholders of the Fund may be subject to state and local
taxes on distributions. Shareholders should consult their tax
advisors about the tax effect of distributions and withdrawals
from the Fund. The tax consequences described in this section
apply whether distributions are taken in cash or reinvested in
additional shares.
OPERATION OF THE FUND
The Fund is a diversified series of PRAGMA Investment Trust,
an open-end management investment company organized as an Ohio
business trust on January, 1996. The Board of Trustees supervises
the business activities of the Fund. Like other mutual funds,
various organizations are retained to perform specialized
services for the Fund.
The Fund retains PRAGMA, Inc. (the "Adviser"), 7150
Greenville Avenue, Suite 101-LB 340, Dallas, Texas, to manage the
Fund's investments. The Adviser was organized in 1981 and has
approximately $12 million of assets under management as of
December 31, 1995. John H. Alban, jr., the controlling
shareholder and President of the Adviser and Chairman of the
Board of the Trust, is primarily responsible for overseeing the
management of the Fund's portfolio. The Fund pays the Adviser a
fee at the annual rate of 1.50% of the average value of its daily
net assets. The rate of the advisory fee paid by the Fund is
higher than that paid by most other mutual funds; however, unlike
most mutual funds, the advisory fee paid by the Fund includes
transfer agency, pricing, custodial, auditing and legal services,
and general administrative and other operating expenses of the
Fund except brokerage commissions, taxes, interest, fees and
expenses of non-interested Trustees and extraordinary expenses.
The Adviser has not previously provided investment advisory services
to a regulated investment company.
As of the date of this Prospectus, the Adviser is the sole
shareholder of the Fund.
The Adviser has retained MGF Service Corp., P.O. Box 5354,
Cincinnati, Ohio 45201-5354, to serve as the Fund's transfer
agent, dividend paying agent and shareholder service agent. MGF
Service Corp. is a subsidiary of Leshner Financial, Inc., of
which Robert H. Leshner is the controlling shareholder. Certain
of the Fund's officers are also officers of MGF Service Corp.
MGF Service Corp. also provides accounting and pricing
services to the Fund. For its services to the Fund, MGF Service
Corp. receives a monthly fee from the Adviser, out of the
investment advisory fee paid by the Fund to the Adviser, for
calculating daily net asset value per share and maintaining such
books and records as are necessary to enable MGF Service Corp. to
perform its duties.
MGF Service Corp. has also been retained to provide
administrative services to the Fund. In this capacity, MGF
Service Corp. supplies executive, administrative and regulatory
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services, supervises the preparation of the Fund's tax returns,
and coordinates the preparation of reports to shareholders and
reports to and filings with the Securities and Exchange
Commission and state securities authorities. The Adviser pays
MGF Service Corp. monthly, out of the investment advisory fee the
Adviser receives from the Fund, a fee for these administrative
services at the annual rate of 0.15% of the average value of the
Fund's daily net assets up to $25 million, 0.125% of such assets
between $25 million and $50 million and 0.10% of such assets in
excess of $50 million.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to its
objective of seeking best execution of portfolio transactions,
the Adviser may give consideration to sales of shares of the Fund
as a factor in the selection of brokers and dealers to execute
portfolio transactions of the Fund.
Shares of the Fund have equal voting rights and liquidation
rights. When matters are submitted to shareholders for a vote,
each shareholder is entitled to one vote for each full share
owned and fractional votes for fractional shares owned. The Fund
is not required to hold annual meetings of shareholders. The
Trustees shall promptly call and give notice of a meeting of
shareholders for the purpose of voting upon removal of any
Trustee when requested to do so in writing by shareholders
holding 10% or more of the Fund's outstanding shares. The Fund
will comply with the provisions of Section 16(c) of the
Investment Company Act of 1940 in order to facilitate
communications among shareholders.
CALCULATION OF SHARE PRICE
On each day that the Fund is open for business, the share
price (net asset value) of the Fund's shares is determined as of
the close of the regular session of trading on the New York Stock
Exchange, currently 4:00 p.m., Eastern time. The Fund is open
for business on each day the New York Stock Exchange is open for
business and on any other day when there is sufficient trading in
the Fund's investments that its net asset value might be
materially affected. The net asset value per share of the Fund
is calculated by dividing the sum of the value of the securities
held by the Fund plus cash or other assets minus all liabilities
(including estimated accrued expenses) by the total number of
shares outstanding of the Fund, rounded to the nearest cent.
Portfolio securities are valued as follows: (i) securities
which are traded on stock exchanges or are quoted by NASDAQ are
valued at the last reported sale price as of the close of the
regular session of trading on the New York Stock Exchange on the
day the securities are being valued, or, if not traded on a
particular day, at the average of the highest current independent
bid and lowest current independent offer, (ii) securities traded
in the over-the-counter market, and which are not quoted by
NASDAQ, are valued at the average of the highest current
independent bid and lowest current independent offer as of the
close of the regular session of trading on the New York Stock
Exchange on the day the securities are being valued, (iii)
securities which are traded both in the over-the-counter market
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and on a stock exchange are valued according to the broadest and
most representative market, and (iv) securities (and other
assets) for which market quotations are not readily available are
valued at their fair value as determined in good faith in
accordance with consistently applied procedures established by
and under the general supervision of the Board of Trustees. The
net asset value per share of the Fund will fluctuate with the
value of the securities it holds.
PERFORMANCE INFORMATION
From time to time, the Fund may advertise its "average
annual total return." Average annual total return figures are
based on historical earnings and are not intended to indicate
future performance.
The "average annual total return" of the Fund refers to the
average annual compounded rates of return over the most recent 1,
5 and 10 year periods (which periods will be stated in the
advertisement) that would equate an initial amount invested at
the beginning of a stated period to the ending redeemable value
of the investment. The calculation of "average annual total
return" assumes the reinvestment of all dividends and
distributions. The Fund may also advertise total return (a
"nonstandardized quotation") which is calculated differently
from "average annual total return." A nonstandardized quotation
of total return may be a cumulative return which measures the
percentage change in the value of an account between the
beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains
distributions. A nonstandardized quotation of total return may
also indicate average annual compounded rates of return over
periods other than those specified for "average annual total
return." A nonstandardized quotation of total return will always
be accompanied by the Fund's "average annual total return" as
described above.
From time to time, the Fund may advertise its performance
rankings as published by recognized independent mutual fund
statistical services such as Lipper Analytical Services, Inc.
("Lipper"), or by publications of general interest such as
Forbes, Money, The Wall Street Journal, Business Week, Barron's,
Fortune or Morningstar Mutual Fund Values. The Fund may also
compare its performance to that of other selected mutual funds,
averages of the other mutual funds within its category as
determined by Lipper, or recognized indicators such as the Dow
Jones Industrial Average, the Standard & Poor's 500 Stock Index,
the Value Line Composite Index, the NASDAQ Composite Index and
the Russell 2000 Index. In connection with a ranking, the Fund
may provide additional information, such as the particular
category of funds to which the ranking relates, the number of
funds in the category, the criteria upon which the ranking is
based, and the effect of fee waivers and/or expense
reimbursements, if any. The Fund may also present its
performance and other investment characteristics, such as
volatility or a temporary defensive posture, in light of the
Adviser's view of current or past market conditions or historical
trends.
PAGE
<PAGE>
PRAGMA FUND
Account Application
Please mail completed account application to:
MGF Service Corp.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
ACCOUNT NO.__________________________
(For Fund Use Only)
FOR BROKER/DEALER USE ONLY
Firm Name:
Home Office Address:______________________________
Branch Address:___________________________________
Rep Name & No.:___________________________________
Rep. Signature:___________________________________
Initial Investment of $ __________________ ($1,000 minimum)
o Check or draft enclosed payable to the PRAGMA Fund.
o Bank Wire From:
Account Name_________________________________ S.S. #/Tax l.D.#
Name of Individual, Corporation, Organization, or Minor, etc.
(In case of custodial account please list minor's S.S.#)
______________________________________________ Citizenship:
Name of Joint Tenant, Partner, Custodian o U.S.
Address o Other
______________________________________________ Phone
______________________________________________ ( )________________
Street or P.O. Box Business Phone
______________________________________________ ( )________________
City State Zip Home Phone
Check Appropriate Box: o Individual o Joint Tenant (Right of survivorship
presumed) o Corporation o Trust o Custodial o Other
Occupation and Employer Name/Address:_____________________________________
Are you an associated person of an NASD member? o Yes o No
TAXPAYER IDENTIFICATION NUMBER -- Under penalties of perjury I certify that
the Taxpayer Identification Number listed above is my correct number. Check
box if appropriate:
o I am exempt from backup withholding under the provisions of section
3406(a)(1)(c) of the Internal Revenue Code; or I am not subject to backup
withholding because I have not been notified that I am subject to backup
withholding as a result of a failure to report all interest or dividends; or
the Internal Revenue Service has notified me that I am no longer subject to
backup withholding.
<PAGE>
o I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me and I have mailed or delivered an application to
receive a Taxpayer Identification Number to the Internal Revenue Service
Center or Social Security Administration Office. I understand that if I do not
provide a Taxpayer Identification Number within 60 days that 31% of all
reportable payments will be withheld until I provide a number.
DISTRIBUTIONS (If no election is checked the SHARE OPTION will be assigned.)
o Share Option -- Income distributions and capital gains distributions
automatically reinvested in additional shares.
o Income Option -- Income distributions and short-term capital gains
distributions paid in cash, long-term capital gains distributions reinvested
in additional shares.
o Cash Option -- Income distributions and capital gains distributions
paid in cash.
Signatures
By signature below each investor certifies that he has received a copy of the
Fund's current Prospectus, that he is of legal age, and that he has full
authority and legal capacity for himself or the organization named below, to
make this investment and to use the options selected above. The investor
appoints MGF Service Corp. as his agent to enter orders for shares, to receive
dividends and distributions for automatic reinvestment in additional shares of
the Fund for credit to the investor's account and to surrender for redemption
shares held in the investor's account in accordance with any of the procedures
elected above or for payment of service charges incurred by the investor. The
investor further agrees that MGF Service Corp. can cease to act as such agent
upon ten days' notice in writing to the investor at the address contained in
this Application. The investor hereby ratifies any instructions given pursuant
to this Application and for himself and his successors and assigns does hereby
release PRAGMA Investment Trust, PRAGMA, Inc., MGF Service Corp. and their
respective officers, employees, agents and affiliates from any and all
liability in the performance of the acts instructed herein.
By:______________________________ ______________________________
Signature & Title Date
By:______________________________ ______________________________
Signature & Title Date
NOTE: Corporations, trusts and other organizations must complete the
resolution form on the reverse side.
Unless otherwise specified, each joint owner shall have full authority to act
on behalf of the account.
RESOLUTIONS
(This Section to be completed by Corporations, Trusts, and Other
Organizations)
RESOLVED: That this corporation or organization become a shareholder of the
PRAGMA Fund (the Fund) and that
____________________________________________________________________________
is (are) hereby authorized to complete and execute the Application on behalf
of the corporation or organization and to take any action for it as may be
necessary or appropriate with respect to its shareholder account with the
Fund, and it is
<PAGE>
FURTHER RESOLVED: That any one of the above noted officers is authorized to
sign any documents necessary or appropriate to appoint MGF Service Corp. as
redemption agent of the corporation or organization for shares of the Fund, to
establish or acknowledge terms and conditions governing the redemption of said
shares and to otherwise implement the privileges elected on the Application.
Certificate
I hereby certify that the foregoing resolutions are in conformity with the
Charter and By-Laws or other empowering documents of the
________________________________________________________________________
(Name of Organization)
incorporated or formed under the laws of (State)
and were adopted at a meeting of the Board of Directors or Trustees of the
organization or corporation duly called and held on __________ at which a
quorum was present and acting throughout, and that the same are now in full
force and effect.
I further certify that the following is (are) duly elected officer(s) of the
corporation or organization, authorized to act in accordance with the
foregoing resolutions.
Name Title
______________________________ ______________________________
______________________________ ______________________________
______________________________ ______________________________
Witness my hand and seal of the corporation or organization this _______ day
of __________, 19_______
______________________________ ______________________________
*Secretary-Clerk Other Authorized Officer (if required)
*If the Secretary or other recording officer is authorized to act by the above
resolutions, this certificate must also be signed by another officer.
PAGE
<PAGE>
PRAGMA INVESTMENT TRUST
7150 Greenville Avenue
Suite 101-LB 340
Dallas, Texas 75231
Board of Trustees
John H. Alban, jr.
John H. Alban, III
Officers
John H. Alban, jr., Chairman of the Board
John H. Alban, III, President
Robert G. Dorsey, Vice President
John F. Splain, Secretary
Mark J. Seger, Treasurer
Investment Adviser
PRAGMA, INC.
7150 Greenville Avenue
Suite 101-LB 340
Dallas, Texas 75231
214-373-3585
Transfer Agent
MGF SERVICE CORP.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
Shareholder Service
Nationwide: (Toll-Free) 800-
Cincinnati: 513-629-2070
Rate Line
Nationwide: (Toll-Free) 800-852-4052
TABLE OF CONTENTS
Expense Information. . . . . . . . . . . . . . . . . . . . . .
Investment Objective, Investment Policies and
Risk Considerations. . . . . . . . . . . . . . . . . . . . .
How to Purchase Shares . . . . . . . . . . . . . . . . . . . .
How to Redeem Shares . . . . . . . . . . . . . . . . . . . . .
Dividends and Distributions. . . . . . . . . . . . . . . . . .
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operation of the Fund. . . . . . . . . . . . . . . . . . . . .
Calculation of Share Price . . . . . . . . . . . . . . . . . .
Performance Information. . . . . . . . . . . . . . . . . . . .
Application. . . . . . . . . . . . . . . . . . . . . . . . . .
_________________________________________________________________
PAGE
<PAGE>
No person has been authorized to give any information or to
make any representations, other than those contained in this
Prospectus, in connection with the offering contained in this
Prospectus, and if given or made, such information or
representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the
Fund to sell shares in any State to any person to whom it is
unlawful for the Fund to make such offer in such State.
PAGE
<PAGE>
PRAGMA INVESTMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
, 1996
The PRAGMA Providence Fund
This Statement of Additional Information is not a
prospectus. It should be read in conjunction with the Prospectus
of The PRAGMA Providence Fund dated , 1996. A
copy of the Fund's Prospectus can be obtained by writing the Fund
at 7150 Greenville Avenue, Suite 101-LB 340, Dallas, Texas 75231,
or by calling the Fund nationwide toll-free 800- .
PAGE
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PRAGMA Investment Trust
7150 Greenville Avenue, Suite 101 - LB 340
Dallas, Texas 75231
TABLE OF CONTENTS
PAGE
THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS. . . . . . . . . . . . . . .
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . .
TRUSTEES AND OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . .
THE INVESTMENT ADVISER . . . . . . . . . . . . . . . . . . . . .
SECURITIES TRANSACTIONS . . . . . . . . . . . . . . . . . . .
PORTFOLIO TURNOVER . . . . . . . . . . . . . . . . . . . . .
CALCULATION OF SHARE PRICE . . . . . . . . . . . . . . . . .
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . .
REDEMPTION IN KIND . . . . . . . . . . . . . . . . . . . . .
HISTORICAL PERFORMANCE INFORMATION . . . . . . . . . . . . .
CUSTODIAN . . . . . . . . . . . . . .. . . . . . . . . . . .
AUDITORS. . . . . . . . . . . . . . . . . . . . . . . . . . .
MGF SERVICE CORP. . . . . . . . . . . . . . . . . . . . . . .
STATEMENT OF ASSETS AND LIABILITIES . . . . . . . . . . . . .
PAGE
<PAGE>
THE FUND
PRAGMA Investment Trust (the "Trust") was organized as an
Ohio business trust on January ___, 1996. The Trust currently
offers one series of shares to investors, The PRAGMA Providence
Fund (the "Fund").
Each share of the Fund represents an equal proportionate
interest in the assets and liabilities belonging to the Fund with
each other share of the Fund and is entitled to such dividends
and distributions out of the income belonging to the Fund as are
declared by the Trustees. The shares do not have cumulative
voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or
combine the shares of the Fund into a greater or lesser number of
shares of the Fund so long as the proportionate beneficial
interest in the assets belonging to the Fund are in no way
affected. In case of any liquidation of the Fund, the holders of
shares of the Fund will be entitled to receive as a class a
distribution out of the assets, net of the liabilities, belonging
to the Fund. No shareholder is liable to further calls or to
assessment by the Fund without his express consent.
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS
A more detailed discussion of some of the terms used and
investment policies described in the Prospectus (see "Investment
Objective, Investment Policies and Risk Considerations") appears
below:
Majority. As used in the Prospectus and this Statement of
Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the
outstanding shares of the Fund present at a meeting, if the
holders of more than 50% of the outstanding shares of the Fund
are present or represented at such meeting or (2) more than 50%
of the outstanding shares of the Fund.
Commercial Paper. Commercial paper consists of short-term
(usually from one to two hundred seventy days) unsecured
promissory notes issued by corporations in order to finance their
current operations. The Fund will only invest in commercial
paper rated A-1 by Standard & Poor's Ratings Group ("Standard &
Poor's") or Prime-1 by Moody's Investors Service, Inc.
("Moody's") or unrated paper of issuers who have outstanding
unsecured debt rated AA or better by Standard & Poor's or Aa or
better by Moody's. Certain notes may have floating or variable
rates. Variable and floating rate notes with a demand notice
period exceeding seven days will be subject to the Fund's
restriction on illiquid investments (see "Investment
Limitations") unless, in the judgment of the Adviser, such note
is liquid.
The rating of Prime-1 is the highest commercial paper rating
assigned by Moody's Investors Service, Inc. Among the factors
considered by Moody's in assigning ratings are the following:
valuation of the management of the issuer; economic evaluation of
the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas;
<PAGE>
evaluation of the issuer's products in relation to competition
and customer acceptance; liquidity; amount and quality of long-
term debt; trend of earnings over a period of 10 years; financial
strength of the parent company and the relationships which exist
with the issuer; and recognition by the management of obligations
which may be present or may arise as a result of public interest
questions and preparations to meet such obligations. These
factors are all considered in determining whether the commercial
paper is rated Prime-1. Commercial paper rated A-1 (highest
quality) by Standard & Poor's Ratings Group has the following
characteristics: liquidity ratios are adequate to meet cash
requirements; long-term senior debt is rated "A" or better,
although in some cases "BBB" credits may be allowed; the issuer
has access to at least two additional channels of borrowing;
basic earnings and cash flow have an upward trend with allowance
made for unusual circumstances; typically, the issuer's industry
is well established and the issuer has a strong position within
the industry; and the reliability and quality of management are
unquestioned. The relative strength or weakness of the above
factors determines whether the issuer's commercial paper is rated
A-1.
Bank Debt Instruments. Bank debt instruments in which the
Fund may invest consist of certificates of deposit, bankers'
acceptances and time deposits issued by national banks and state
banks, by trust companies and mutual savings banks, or by banks
or institutions the accounts of which are insured by the Federal
Deposit Insurance Corporation or the Federal Savings and Loan
Insurance Corporation. Certificates of deposit are negotiable
certificates evidencing the indebtedness of a commercial bank to
repay funds deposited with it for a definite period of time
(usually from fourteen days to one year) at a stated or variable
interest rate. Bankers' acceptances are credit instruments
evidencing the obligation of a bank to pay a draft which has been
drawn on it by a customer, which instruments reflect the
obligation both of the bank and of the drawer to pay the face
amount of the instrument upon maturity. The Fund will only
invest in bankers' acceptances of banks having a short-term
rating of A-1 by Standard & Poor's Ratings Group or Prime-1 by
Moody's Investors Service, Inc. Time deposits are non-negotiable
deposits maintained in a banking institution for a specified
period of time at a stated interest rate. The Fund will not
invest in time deposits maturing in more than seven days if, as a
result thereof, more than 15% of the value of its net assets
would be invested in such securities and other illiquid
securities.
Repurchase Agreements. Repurchase agreements are
transactions by which the Fund purchases a security and
simultaneously commits to resell that security to the seller at
an agreed upon time and price, thereby determining the yield
during the term of the agreement. In the event of a bankruptcy
or other default by the seller of a repurchase agreement, the
Fund could experience both delays in liquidating the underlying
security and losses. To minimize these possibilities, the Fund
intends to enter into repurchase agreements only with its
Custodian, with banks having assets in excess of $10 billion and
with broker-dealers who are recognized as primary dealers in U.S.
Government obligations by the Federal Reserve Bank of New York.
<PAGE>
Collateral for repurchase agreements is held in safekeeping in
the customer-only account of the Fund's Custodian at the Federal
Reserve Bank. The Fund will not enter into a repurchase
agreement not terminable within seven days if, as a result
thereof, more than 15% of the value of its net assets would be
invested in such securities and other illiquid securities.
Although the securities subject to a repurchase agreement
might bear maturities exceeding one year, settlement for the
repurchase would never be more than one year after the Fund's
acquisition of the securities and normally would be within a
shorter period of time. The resale price will be in excess of
the purchase price, reflecting an agreed upon market rate
effective for the period of time the Fund's money will be
invested in the securities, and will not be related to the coupon
rate of the purchased security. At the time the Fund enters into
a repurchase agreement, the value of the underlying security,
including accrued interest, will equal or exceed the value of the
repurchase agreement, and, in the case of a repurchase agreement
exceeding one day, the seller will agree that the value of the
underlying security, including accrued interest, will at all
times equal or exceed the value of the repurchase agreement. The
collateral securing the seller's obligation must be of a credit
quality at least equal to the Fund's investment criteria for
portfolio securities and will be held by the Custodian or in the
Federal Reserve Book Entry System.
For purposes of the Investment Company Act of 1940, a
repurchase agreement is deemed to be a loan from the Fund to the
seller subject to the repurchase agreement and is therefore
subject to the Fund's investment restriction applicable to loans.
It is not clear whether a court would consider the securities
purchased by the Fund subject to a repurchase agreement as being
owned by the Fund or as being collateral for a loan by the Fund
to the seller. In the event of the commencement of bankruptcy or
insolvency proceedings with respect to the seller of the
securities before repurchase of the security under a repurchase
agreement, the Fund may encounter delay and incur costs before
being able to sell the security. Delays may involve loss of
interest or decline in price of the security. If a court
characterized the transaction as a loan and the Fund has not
perfected a security interest in the security, the Fund may be
required to return the security to the seller's estate and be
treated as an unsecured creditor of the seller. As an unsecured
creditor, the Fund would be at the risk of losing some or all of
the principal and income involved in the transaction. As with
any unsecured debt obligation purchased for the Fund, the Adviser
seeks to minimize the risk of loss through repurchase agreements
by analyzing the creditworthiness of the obligor, in this case,
the seller. Apart from the risk of bankruptcy or insolvency
proceedings, there is also the risk that the seller may fail to
repurchase the security, in which case the Fund may incur a loss
if the proceeds to the Fund of the sale of the security to a
third party are less than the repurchase price. However, if the
market value of the securities subject to the repurchase
agreement becomes less than the repurchase price (including
interest), the Fund will direct the seller of the security to
deliver additional securities so that the market value of all
securities subject to the repurchase agreement will equal or
<PAGE>
exceed the repurchase price. It is possible that the Fund will
be unsuccessful in seeking to enforce the seller's contractual
obligation to deliver additional securities.
Loans of Portfolio Securities. The Fund may make short-term
loans of its portfolio securities to banks, brokers and dealers.
Lending portfolio securities exposes the Fund to the risk that
the borrower may fail to return the loaned securities or may not
be able to provide additional collateral or that the Fund may
experience delays in recovery of the loaned securities or loss of
rights in the collateral if the borrower fails financially. To
minimize these risks, the borrower must agree to maintain
collateral marked to market daily, in the form of cash or U.S.
Government obligations, with the Fund's Custodian in an amount at
least equal to the market value of the loaned securities. It is
the Fund's policy, which may not be changed without the
affirmative vote of a majority of its outstanding shares, that
such loans will not be made if as a result the aggregate of all
outstanding loans exceeds 25% of the value of the Fund's total
assets.
Under applicable regulatory requirements (which are subject
to change), the loan collateral must, on each business day, at
least equal the value of the loaned securities. To be acceptable
as collateral, letters of credit must obligate a bank to pay
amounts demanded by the Fund if the demand meets the terms of the
letter. Such terms and the issuing bank must be satisfactory to
the Fund. The Fund receives amounts equal to the dividends or
interest on loaned securities and also receives one or more of
(a) negotiated loan fees, (b) interest on securities used as
collateral, or (c) interest on short-term debt securities
purchased with such collateral; either type of interest may be
shared with the borrower. The Fund may also pay fees to placing
brokers as well as custodian and administrative fees in
connection with loans. Fees may only be paid to a placing broker
provided that the Trustees determine that the fee paid to the
placing broker is reasonable and based solely upon services
rendered, that the Trustees separately consider the propriety of
any fee shared by the placing broker with the borrower, and that
the fees are not used to compensate the Adviser or any affiliated
person of the Fund or an affiliated person of the Adviser or
other affiliated person. The terms of the Fund's loans must meet
applicable tests under the Internal Revenue Code and permit the
Fund to reacquire loaned securities on five days' notice or in
time to vote on any important matter.
Foreign Securities. Subject to the Fund's investment
policies and quality standards, the Fund may invest in the
securities (payable in U.S. dollars) of foreign issuers. Because
the Fund may invest in foreign securities, investment in the Fund
involves risks that are different in some respects from an
investment in a fund which invests only in securities of U.S.
domestic issuers. Foreign investments may be affected favorably
or unfavorably by changes in currency rates and exchange control
regulations. There may be less publicly available information
about a foreign company than about a U.S. company, and foreign
companies may not be subject to accounting, auditing and
financial reporting standards and requirements comparable to
those applicable to U.S. companies. There may be less
<PAGE>
governmental supervision of securities markets, brokers and
issuers of securities. Securities of some foreign companies are
less liquid or more volatile than securities of U.S. companies,
and foreign brokerage commissions and custodian fees are
generally higher than in the United States. Settlement practices
may include delays and may differ from those customary in United
States markets. Investments in foreign securities may also be
subject to other risks different from those affecting U.S.
investments, including local political or economic developments,
expropriation or nationalization of assets, restrictions on
foreign investment and repatriation of capital, imposition of
withholding taxes on dividend or interest payments, currency
blockage (which would prevent cash from being brought back to the
United States), and difficulty in enforcing legal rights outside
the United States.
Warrants and Rights. Warrants are options to purchase
equity securities at a specified price and are valid for a
specific time period. Rights are similar to warrants, but
normally have a short duration and are distributed by the issuer
to its shareholders. The Fund may purchase warrants and rights,
provided that the Fund does not invest more than 5% of its net
assets at the time of purchase in warrants and rights other than
those that have been acquired in units or attached to other
securities. Of such 5%, no more than 2% of the Fund's assets at
the time of purchase may be invested in warrants which are not
listed on either the New York Stock Exchange or the American
Stock Exchange.
INVESTMENT LIMITATIONS
The Fund has adopted certain fundamental investment
limitations designed to reduce the risk of an investment in the
Fund. These limitations may not be changed without the
affirmative vote of a majority of the outstanding shares of the
Fund. The Fund may not:
1. Invest in securities of any one issuer if immediately
after and as a result of such investment more than 5% of the
total assets of the Fund, at market value, would be invested in
the securities of such issuer. This restriction does not apply
to investment in securities of the United States Government, its
agencies or instrumentalities.
2. Purchase more than 10% of the outstanding voting
securities, or any class of securities, of any one issuer. This
restriction does not apply to investment in securities of the
United States Government, its agencies or instrumentalities.
3. Invest more than 25% of its total assets in the
securities of issuers in any particular industry. This
restriction does not apply to investment in securities of the
United States Government, its agencies or instrumentalities.
4. Invest for the purpose of exercising control or
management.
PAGE
<PAGE>
5. Purchase or sell commodities or real estate. However,
the Fund may invest in publicly traded securities secured by real
estate or issued by companies which invest in real estate or real
estate interests.
6. Purchase securities on margin, make short sales of
securities or maintain a short position, except that the Fund may
obtain such short-term credit as may be necessary for the
clearance of purchases and sales of portfolio securities. This
restriction on short sales does not apply to short sales "against
the box" (i.e., when the Fund owns or is long on the securities
sold short).
7. Lend money, except by engaging in repurchase agreements
or by purchasing publicly distributed or privately placed debt
obligations in which the Fund may invest consistent with its
investment objectives and policies. The Fund may make loans of
its portfolio securities in an aggregate amount not exceeding 25%
of its total assets, provided that such loans are collateralized
by cash or cash equivalents or U.S. Government obligations in an
amount equal to the market value of the securities loaned, marked
to market on a daily basis.
8. Borrow money, except for i) temporary bank borrowings
not in excess of 5% of the value of the Fund's total assets for
emergency or extraordinary purposes or ii) short-term credits not
in excess of 5% of the value of the Fund's total assets as may be
necessary for the clearance of securities transactions.
9. Issue senior securities as defined in the Investment
Company Act of 1940, as amended, or mortgage, pledge, hypothecate
or in any way transfer as security for indebtedness any
securities owned or held by the Fund except as may be necessary
in connection with borrowings described in (8) above, and then
not exceeding 5% of the Fund's total assets, taken at the lesser
of cost or market value.
10. Underwrite securities of other issuers except to the
extent the Fund may be deemed an underwriter under the Securities
Act of 1933, as amended, in selling portfolio securities.
11. Invest more than 15% of its net assets in securities
which are illiquid.
12. Invest in oil, gas or other mineral leases.
13. Invest more than 5% of its net assets in warrants and
will not invest more than 2% of its net assets in warrants which
are not listed on the New York or American Stock Exchange. This
restriction does not apply to investment in warrants acquired in
units or attached to securities.
With respect to the percentages adopted by the Fund as
maximum limitations on the Fund's investment policies and
restrictions, an excess above the fixed percentage (except for
the percentage limitations relative to the borrowing of money)
will not be a violation of the policy or restriction unless the
excess results immediately and directly from the acquisition of
any security or the action taken.
<PAGE>
The Fund does not intend to pledge, mortgage or hypothecate
the assets of the Fund. The Fund does not intend to make short
sales of securities "against the box" as described in investment
limitation 6. The Fund does not intend to make loans of its
portfolio securities. The statements of intention in this
paragraph reflect nonfundamental policies which may be changed by
the Board of Trustees without shareholder approval.
TRUSTEES AND OFFICERS
The following is a list of the Trustees and executive
officers of the Fund. Each Trustee who is an "interested person"
of the Fund, as defined by the Investment Company Act of 1940, is
indicated by an asterisk.
NAME AGE POSITION HELD
*John H. Alban, jr. 61 Chairman of the Board/Trustee
*John H. Alban, III 32 President/Trustee
+ Trustee
+ Trustee
+ Trustee
Robert G. Dorsey 38 Vice President
John F. Splain 39 Secretary
Mark J. Seger 34 Treasurer
* John H. Alban, jr. and John H. Alban, III, as affiliated
persons of PRAGMA, Inc., the Fund's investment adviser, are
"interested persons" of the Fund within the meaning of Section
2(a)(19) of the Investment Company Act of 1940.
+ Member of Audit Committee
The principal occupations of the Trustees and executive
officers of the Fund during the past five years are set forth
below:
JOHN H. ALBAN, JR., 7150 Greenville Avenue, Suite 101 - LB
340, Dallas, Texas, is President of PRAGMA, Inc.
JOHN H. ALBAN, III, 7150 Greenville Avenue, Suite 101 - LB
340, Dallas, Texas, is Treasurer and Vice President of PRAGMA,
Inc.
[Information regarding Independent Trustees to be inserted.]
ROBERT G. DORSEY, 312 Walnut Street, Cincinnati, Ohio, is
President and Treasurer of MGF Service Corp. (a registered
transfer agent) and Treasurer of Midwest Group Financial
Services, Inc. (a registered broker-dealer and investment
adviser) and Leshner Financial, Inc. (a financial services
company and parent of MGF Service Corp. and Midwest Group
Financial Services, Inc.). He is also Vice President of
Brundage, Story and Rose Investment Trust, Leeb Personal
FinanceTM Investment Trust and Markman MultiFund Trust and
Assistant Vice President of Fremont Mutual Funds, Inc., Schwartz
Investment Trust, The Tuscarora Investment Trust and Williamsburg
Investment Trust (all of which are registered investment
companies).
<PAGE>
JOHN F. SPLAIN, 312 Walnut Street, Cincinnati, Ohio, is
Secretary and General Counsel of MGF Service Corp., Midwest Group
Financial Services, Inc. and Leshner Financial, Inc. He is also
Secretary of Midwest Trust, Midwest Group Tax Free Trust, Midwest
Strategic Trust, Brundage, Story and Rose Investment Trust, Leeb
Personal FinanceTM Investment Trust, Markman MultiFund Trust, The
Tuscarora Investment Trust and Williamsburg Investment Trust and
Assistant Secretary of Schwartz Investment Trust and Fremont
Mutual Funds, Inc. (all of which are registered investment
companies).
MARK J. SEGER, C.P.A., 312 Walnut Street, Cincinnati, Ohio,
is Vice President of Leshner Financial, Inc. and MGF Service
Corp. He is also Treasurer of Midwest Trust, Midwest Group Tax
Free Trust, Midwest Strategic Trust, Brundage, Story and Rose
Investment Trust, Leeb Personal FinanceTM Investment Trust,
Markman MultiFund Trust and Williamsburg Investment Trust,
Assistant Treasurer of Schwartz Investment Trust and The
Tuscarora Investment Trust and Assistant Secretary of Fremont
Mutual Funds, Inc.
[Description of Trustee compensation to be inserted.]
THE INVESTMENT ADVISER
PRAGMA, Inc. (the "Adviser") is the Fund's investment
manager. John H. Alban, jr. and John H. Alban, III, as employees
of the Adviser, may directly or indirectly receive benefits from
the advisory fees paid to the Adviser. John H. Alban, jr. is the
controlling shareholder of the Adviser by virtue of his ownership
of 81% of its outstanding shares.
Under the terms of the investment advisory agreement between
the Fund and the Adviser, the Adviser manages the Fund's
investments. The Fund pays the Adviser a fee computed and
accrued daily and paid monthly at an annual rate of 1.5% of its
average daily net assets. The rate of this fee is higher than
that paid by most mutual funds.
The Adviser pays, out of the investment advisory fees it
receives from the Fund, all the expenses of the Funds except
brokerage commissions, taxes, interest, fees and expenses of the
non-interested Trustees of the Trust and extraordinary expenses.
The Fund may have an obligation to indemnify the Fund's officers
and Trustees with respect to litigation to which the Fund may be
a party, except in instances of willful misfeasance, bad faith,
gross negligence or reckless disregard by such officers and
Trustees in the performance of their duties.
By its terms, the Fund's investment advisory agreement will
remain in force until , 1998 and from year to year
thereafter, subject to annual approval by (a) the Board of
Trustees or (b) a vote of the majority of the Fund's outstanding
voting securities; provided that in either event continuance is
also approved by a majority of the Trustees who are not
interested persons of the Fund, by a vote cast in person at a
meeting called for the purpose of voting such approval. The
Fund's investment advisory agreement may be terminated at any
time, on sixty days' written notice, without the payment of any
<PAGE>
penalty, by the Board of Trustees, by a vote of the majority of
the Fund's outstanding voting securities, or by the Adviser. The
investment advisory agreement automatically terminates in the
event of its assignment, as defined by the Investment Company Act
of 1940 and the rules thereunder.
The Adviser will reimburse the Fund to the extent that the
expenses of the Fund for any fiscal year exceed the applicable
expense limitations imposed by state securities administrators,
as such limitations may be lowered or raised from time to time.
The most restrictive limitation is presently 2.5% of the first
$30 million of average daily net assets, 2% of the next $70
million of average daily net assets and 1.5% of average daily net
assets in excess of $100 million. If any such reimbursement is
required, the payment of the advisory fee at the end of any month
will be reduced or postponed or, if necessary, a refund will be
made to the Fund at the end of such month. Certain expenses such
as brokerage commissions, if any, taxes, interest, extraordinary
items and other expenses subject to approval of state securities
administrators are excluded from such limitations. If the
expenses of the Fund approach the applicable limitation in any
state, the Fund will consider the various actions that are
available to it, including suspension of sales to residents of
that state.
The name "PRAGMA" is a property right of the Adviser and may
be used by the Adviser in other connections and for other
purposes, including in the name of other investment companies.
The Fund has agreed to discontinue any use of the name "PRAGMA"
if the Adviser ceases to be employed as the Fund's investment
manager.
SECURITIES TRANSACTIONS
Decisions to buy and sell securities for the Fund and the
placing of the Fund's securities transactions and negotiation of
commission rates where applicable are made by the Adviser and are
subject to review by the Board of Trustees of the Fund. In the
purchase and sale of portfolio securities, the Adviser seeks best
execution for the Fund, taking into account such factors as price
(including the applicable brokerage commission or dealer spread),
the execution capability, financial responsibility and
responsiveness of the broker or dealer and the brokerage and
research services provided by the broker or dealer. The Adviser
generally seeks favorable prices and commission rates that are
reasonable in relation to the benefits received.
Generally, the Fund attempts to deal directly with the
dealers who make a market in the securities involved unless
better prices and execution are available elsewhere. Such
dealers usually act as principals for their own account. On
occasion, portfolio securities for the Fund may be purchased
directly from the issuer.
The Adviser is specifically authorized to select brokers who
also provide brokerage and research services to the Fund and/or
other accounts over which the Adviser exercises investment
discretion and to pay such brokers a commission in excess of the
commission another broker would charge if the Adviser determines
<PAGE>
in good faith that the commission is reasonable in relation to
the value of the brokerage and research services provided. The
determination may be viewed in terms of a particular transaction
or the Adviser's overall responsibilities with respect to the
Fund and to accounts over which it exercises investment
discretion.
Research services include securities and economic analyses,
reports on issuers' financial conditions and future business
prospects, newsletters and opinions relating to interest trends,
general advice on the relative merits of possible investment
securities for the Fund and statistical services and information
with respect to the availability of securities or purchasers or
sellers of securities. Although this information is useful to
the Fund and the Adviser, it is not possible to place a dollar
value on it. Research services furnished by brokers through whom
the Fund effects securities transactions may be used by the
Adviser in servicing all of its accounts and not all such
services may be used by the Adviser in connection with the Fund.
The Fund has no obligation to deal with any broker or dealer
in the execution of securities transactions. Over-the-counter
transactions will be placed either directly with principal market
makers or with broker-dealers. Although the Fund does not
anticipate any ongoing arrangements with other brokerage firms,
brokerage business may be transacted from time to time with other
firms. Neither the Adviser nor affiliates of the Fund or the
Adviser will receive reciprocal brokerage business as a result of
the brokerage business transacted by the Fund with other brokers.
Code of Ethics. The Fund and the Adviser have each adopted a
Code of Ethics under Rule 17j-1 of the Investment Company Act of
1940. The code significantly restricts the personal investing
activities of all employees of the Adviser and, as described
below, imposes additional, more onerous, restrictions on
investment personnel of the Adviser. The Code requires that all
employees of the Adviser preclear any personal securities
investment (with limited exceptions, such as U.S. Government
obligations). The preclearance requirement and associated
procedures are designed to identify any substantive prohibition
or limitation applicable to the proposed investment. In
addition, no employee may purchase or sell any security which at
the time is being purchased or sold (as the case may be), or to
the knowledge of the employee is being considered for purchase or
sale, by the Fund. The substantive restrictions applicable to
investment personnel of the Adviser include a ban on acquiring
any securities in an initial public offering and a prohibition
from profiting on short-term trading in securities. Furthermore,
the Code provides for trading "blackout periods" which prohibit
trading by investment personnel of the Adviser within periods of
trading by the Fund in the same (or equivalent) security.
PORTFOLIO TURNOVER
The Fund's portfolio turnover rate is calculated by dividing
the lesser of purchases or sales of portfolio securities for the
fiscal year by the monthly average of the value of the portfolio
securities owned by the Fund during the fiscal year. High
portfolio turnover involves correspondingly greater brokerage
<PAGE>
commissions and other transaction costs, which will be borne
directly by the Fund. A 100% turnover rate would occur if all of
the Fund's portfolio securities were replaced once within a one
year period.
Generally, the Fund intends to invest for long-term
purposes. However, the rate of portfolio turnover will depend
upon market and other conditions, and it will not be a limiting
factor when the Adviser believes that portfolio changes are
appropriate.
CALCULATION OF SHARE PRICE
The share price (net asset value) of the shares of the Fund
is determined as of the close of the regular session of trading
on the New York Stock Exchange (currently 4:00 p.m., Eastern
time), on each day the Fund is open for business. The Fund is
open for business on every day except Saturdays, Sundays and the
following holidays: New Year's Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
and Christmas. The Fund may also be open for business on other
days in which there is sufficient trading in the Fund's portfolio
securities that its net asset value might be materially affected.
For a description of the methods used to determine the share
price, see "Calculation of Share Price" in the Prospectus.
TAXES
The Prospectus describes generally the tax treatment of
distributions by the Fund. This section of the Statement of
Additional Information includes additional information concerning
federal taxes.
The Fund has qualified and intends to qualify annually for
the special tax treatment afforded a "regulated investment
company" under Subchapter M of the Internal Revenue Code so that
it does not pay federal taxes on income and capital gains
distributed to shareholders. To so qualify the Fund must, among
other things, (i) derive at least 90% of its gross income in each
taxable year from dividends, interest, payments with respect to
securities loans, gains from the sale or other disposition of
stock, securities or foreign currency, or certain other income
(including but not limited to gains from options, futures and
forward contracts) derived with respect to its business of
investing in stock, securities or currencies; (ii) derive less
than 30% of its gross income in each taxable year from the sale
or other disposition of the following assets held for less than
three months: (a) stock or securities, (b) options, futures or
forward contracts not directly related to its principal business
of investing in stock or securities; and (iii) diversify its
holdings so that at the end of each quarter of its taxable year
the following two conditions are met: (a) at least 50% of the
value of the Fund's total assets is represented by cash, U.S.
Government securities, securities of other regulated investment
companies and other securities (for this purpose such other
securities will qualify only if the Fund's investment is limited
in respect to any issuer to an amount not greater than 5% of the
Fund's assets and 10% of the outstanding voting securities of
PAGE
<PAGE>
such issuer) and (b) not more than 25% of the value of the Fund's
assets is invested in securities of any one issuer (other than
U.S. Government securities or securities of other regulated
investment companies).
The Fund's net realized capital gains from securities
transactions will be distributed only after reducing such gains
by the amount of any available capital loss carryforwards.
Capital losses may be carried forward to offset any capital gains
for eight years, after which any undeducted capital loss
remaining is lost as a deduction.
A federal excise tax at the rate of 4% will be imposed on
the excess, if any, of the Fund's "required distribution" over
actual distributions in any calendar year. Generally, the
"required distribution" is 98% of the Fund's ordinary income for
the calendar year plus 98% of its net capital gains recognized
during the one year period ending on October 31 of the calendar
year plus undistributed amounts from prior years. The Fund
intends to make distributions sufficient to avoid imposition of
the excise tax.
The Fund is required to withhold and remit to the U.S.
Treasury a portion (31%) of dividend income on any account unless
the shareholder provides a taxpayer identification number and
certifies that such number is correct and that the shareholder is
not subject to backup withholding.
REDEMPTION IN KIND
Under unusual circumstances, when the Board of Trustees
deems it in the best interests of the Fund's shareholders, the
Fund may make payment for shares repurchased or redeemed in whole
or in part in securities of the Fund taken at current value. If
any such redemption in kind is to be made, the Fund intends to
make an election pursuant to Rule 18f-1 under the Investment
Company Act of 1940. This election will require the Fund to
redeem shares solely in cash up to the lesser of $250,000 or 1%
of the net asset value of the Fund during any 90 day period for
any one shareholder. Should payment be made in securities, the
redeeming shareholder will generally incur brokerage costs in
converting such securities to cash. Portfolio securities which
are issued in an in-kind redemption will be readily marketable.
HISTORICAL PERFORMANCE INFORMATION
From time to time, the Fund may advertise average annual
total return. Average annual total return quotations will be
computed by finding the average annual compounded rates of return
over 1, 5 and 10 year periods that would equate the initial
amount invested to the ending redeemable value, according to the
following formula:
P (1 + T)n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
<PAGE>
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5 and 10 year
periods at the end of the 1, 5 or 10 year periods (or
fractional portion thereof)
The calculation of average annual total return assumes the
reinvestment of all dividends and distributions. If the Fund has
been in existence less than one, five or ten years, the time
period since the date of the initial public offering of shares
will be substituted for the periods stated.
The Fund may also advertise total return (a "nonstandardized
quotation") which is calculated differently from average annual
total return. A nonstandardized quotation of total return may be
a cumulative return which measures the percentage change in the
value of an account between the beginning and end of a period,
assuming no activity in the account other than reinvestment of
dividends and capital gains distributions. A nonstandardized
quotation may also indicate average annual compounded rates of
return over periods other than those specified for average annual
total return. A nonstandardized quotation of total return will
always be accompanied by the Fund's average annual total return
as described above.
The performance quotations described above are based on
historical earnings and are not intended to indicate future
performance.
To help investors better evaluate how an investment in the
Fund might satisfy their investment objective, advertisements
regarding the Fund may discuss various measures of Fund
performance, including current performance ratings and/or
rankings appearing in financial magazines, newspapers and
publications which track mutual fund performance. Advertisements
may also compare performance (using the calculation methods set
forth in the Prospectus) to performance as reported by other
investments, indices and averages. When advertising current
ratings or rankings, the Fund may use the following publications
or indices to discuss or compare Fund performance:
Lipper Mutual Fund Performance Analysis measures total
return and average current yield for the mutual fund industry and
ranks individual mutual fund performance over specified time
periods assuming reinvestment of all distributions, exclusive of
sales loads. The Fund may provide comparative performance
information appearing in the Growth Funds category. In addition,
the Fund may use comparative performance information of relevant
indices, including the S&P 500 Index, the Dow Jones Industrial
Average, the Russell 2000 Index, the NASDAQ Composite Index and
the Value Line Composite Index. The S&P 500 Index is an
unmanaged index of 500 stocks, the purpose of which is to portray
the pattern of common stock price movement. The Dow Jones
Industrial Average is a measurement of general market price
movement for 30 widely held stocks listed on the New York Stock
Exchange. The Russell 2000 Index, representing approximately 11%
of the U.S. equity market, is an unmanaged index comprised of the
2,000 smallest U.S. domiciled publicly-traded common stocks in
the Russell 3000 Index (an unmanaged index of the 3,000 largest
U.S. domiciled publicly-traded common stocks by market
<PAGE>
capitalization representing approximately 98% of the U.S.
publicly-traded equity market). The NASDAQ Composite Index is an
unmanaged index which averages the trading prices of more than
3,000 domestic over-the-counter companies. The Value Line
Composite Index is an unmanaged index comprised of approximately
1,700 stocks, the purpose of which is to portray the pattern of
common stock price movement.
In assessing such comparisons of performance an investor
should keep in mind that the composition of the investments in
the reported indices and averages is not identical to the Fund's
portfolio, that the averages are generally unmanaged and that the
items included in the calculations of such averages may not be
identical to the formula used by the Fund to calculate its
performance. In addition, there can be no assurance that the
Fund will continue this performance as compared to such other
averages.
CUSTODIAN
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio, has
been retained to act as Custodian for the Fund's investments.
Star Bank, N.A. acts as the Fund's depository, safekeeps its
portfolio securities, collects all income and other payments with
respect thereto, disburses funds as instructed and maintains
records in connection with its duties.
AUDITORS
The firm of Arthur Andersen LLP has been selected as
independent auditors for the Fund for the fiscal year ending
, 1996. Arthur Andersen LLP, 425 Walnut Street,
Cincinnati, Ohio, performs an annual audit of the Fund's
financial statements and advises the Fund as to certain
accounting matters.
MGF SERVICE CORP.
The Fund's transfer agent, MGF Service Corp. ("MGF"),
maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes
purchases and redemptions of the Fund's shares, acts as dividend
and distribution disbursing agent and performs other shareholder
service functions. MGF receives for its services as transfer
agent a fee payable monthly at an annual rate of $17 per account,
provided, however, that the minimum fee is $1,000 per month.
This fee is paid by the Adviser out of the investment advisory
fee paid to the Adviser by the Fund. In addition, the Adviser
reimburses MGF for its out-of-pocket expenses, including but not
limited to, postage, envelopes, checks, drafts, forms, reports,
record storage and communication lines.
MGF also provides accounting and pricing services to the
Fund. For calculating daily net asset value per share and
maintaining such books and records as are necessary to enable MGF
to perform its duties, MGF receives, from the Adviser, $2,000 per
month when the Fund's average daily net assets are less than $50
million, $2,500 per month when the Fund's average daily net
assets are between $50 million and $100 million, $3,000 per month
<PAGE>
when such assets are between $100 million and $200 million and
$4,000 per month when the Fund's average daily net assets are $200
million or more.
In addition, MGF is retained to provide administrative
services to the Fund. In this capacity, MGF supplies non-
investment related statistical and research data, internal
regulatory compliance services and executive and administrative
services. MGF supervises the preparation of tax returns, reports
to shareholders of the Fund, reports to and filings with the
Securities and Exchange Commission and state securities
commissions, and materials for meetings of the Board of Trustees.
For the performance of these administrative services, the Adviser
(not the Fund) pays MGF a fee at the annual rate of .15% of the
average value of its daily net assets up to $25,000,000, .125% of
such assets from $25,000,000 to $50,000,000 and .10% of such
assets in excess of $50,000,000; provided, however, that the
minimum fee is $1,000 per month.
PAGE
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
The Fund's Statement of Assets and Liabilities as of
, 1996 is attached to this Statement of Additional
Information.
<PAGE>
<PAGE>
PRAGMA INVESTMENT TRUST
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) (i) Financial Statements included in Part
A:
None
(ii) Financial Statements included in Part B:
Statement of Assets and Liabilities, _______,
1996*
Notes to Financial Statements*
Report of Independent Accountants*
(b) Exhibits
(1) Agreement and Declaration of Trust
(2) Bylaws
(3) Inapplicable
(4) Inapplicable
(5) Form of Investment Advisory Agreement with
PRAGMA, Inc.
(6) Inapplicable
(7) Inapplicable
(8) Form of Custody Agreement with Star Bank,
N.A.
PAGE
<PAGE>
(9) (i) Form of Administrative Services Agreement
with MGF Service Corp.
(ii) Form of Accounting Services Agreement with
MGF Service Corp.
(iii) Form of Transfer, Dividend Disbursing,
Shareholder Service and Plan Agency Agreement
with MGF Service Corp.
(10) Opinion and Consent of Counsel*
(11) Consent of Independent Public Accountants*
(12) Inapplicable
(13) Form of Agreement Relating to Initial Capital
(14) Inapplicable
(15) Inapplicable
(16) Inapplicable
(17) Financial Data Schedule*
(18) Inapplicable
______________________________________
* To be filed by Amendment
<PAGE>
<PAGE>
Item 25. Persons Controlled by or Under Common Control with
Registrant.
After commencement of the public offering of the
Registrant's shares, the Registrant expects that no person will
be directly or indirectly controlled by or under common control
with the Registrant.
Item 26. Number of Holders of Securities.
As of January 2, 1996, there are no holders of the
shares of beneficial interest of the Registrant.
Item 27. Indemnification
Article VI of the Registrant's Agreement and
Declaration of Trust provides for indemnification of
officers and Trustees as follows:
"Section 6.4 Indemnification of Trustees,
Officers, etc. Subject to and except as otherwise
provided in the Securities Act of 1933, as
amended, and the 1940 Act, the Trust shall
indemnify each of its Trustees and officers,
including persons who serve at the Trust's request
as directors, officers or trustees of another
organization in which the Trust has any interest
as a shareholder, creditor or otherwise
(hereinafter referred to as a "Covered Person")
against all liabilities, including but not limited
to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and
expenses, including reasonable accountants' and
counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any
action, suit or other proceeding, whether civil or
criminal, before any court or administrative or
legislative body, in which such Covered Person may
be or may have been involved as a party or
otherwise or with which such person may be or may
have been threatened, while in office or
thereafter, by reason of being or having been such
a Trustee or officer, director or trustee, and
except that no Covered Person shall be indemnified
against any liability to the Trust or its
Shareholders to which such Covered Person would
otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the
conduct of such Covered Person's office.
<PAGE>
<PAGE>
Section 6.5 Advances of Expenses. The Trust
shall advance attorneys' fees or other expenses
incurred by a Covered Person in defending a
proceeding to the full extent permitted by the
Securities Act of 1933, as amended, the 1940 Act,
and Ohio Revised Code Chapter 1707, as amended.
In the event any of these laws conflict with Ohio
Revised Code Section 1701.13(E), as amended, these
laws, and not Ohio Revised Code Section
1701.13(E), shall govern.
Section 6.6 Indemnification Not Exclusive, etc.
The right of indemnification provided by this
Article VI shall not be exclusive of or affect any
other rights to which any such Covered Person may
be entitled. As used in this Article VI, "Covered
Person" shall include such person's heirs,
executors and administrators. Nothing contained
in this article shall affect any rights to
indemnification to which personnel of the Trust,
other than Trustees and officers, and other
persons may be entitled by contract or otherwise
under law, nor the power of the Trust to purchase
and maintain liability insurance on behalf of any
such person."
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.
The Registrant expects to maintain a standard mutual
fund and investment advisory professional and directors
and officers liability policy. The policy will provide
coverage to the Registrant, its Trustees and officers
and PRAGMA, Inc. (the "Adviser"). Coverage under the
policy will include losses by reason of any act, error,
omission, misstatement, misleading statement, neglect
or breach of duty.
PAGE
<PAGE>
The Investment Advisory Agreement with the Adviser
provides that the Adviser shall not be liable for any
error of judgment or mistake of law or for any loss
suffered by the Registrant in connection with any
investment policy or the purchase, sale, or retention
of any investment on the recommendation of the Adviser;
provided, however, that nothing therein contained shall
be construed to protect the Adviser against any
liability to the Registrant by reason of willful
misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless
disregard of its obligations and duties under the
Investment Advisory Agreement.
Item 28. Business and Other Connections of the Investment
Adviser
(a) The Adviser is a Texas corporation organized in
1981. In addition to its investment advisory
activities the Adviser is also registered as a
Commodity Trading Advisor (CTA) and a Commodity
Pool Operator (CPO). The Adviser's CTA
registration has been effective since July 1981
while its Commodity Pool Operator registration has
been effective since July 1984. The Adviser is
the general partner and trading advisor for The
PRAGMA Beta Futures Fund I, a limited partnership
that speculates in the futures markets. As an
investment adviser, the Adviser does not provide
advice regarding investment in commodity pools or
commodity limited partnerships.
(b) The directors and officers of the Adviser and any
other business, profession, vocation or employment
of a substantial nature engaged in at any time
during the past two years:
(i) John H. Alban, jr. - President of the
Adviser.
Chairman of the Board of the Registrant.
(ii) B. David Cranfill - Senior Vice President and
Secretary of the Adviser.
(iii) John H. Alban, III - Vice President and
Treasurer of the Adviser.
President of the Registrant.
(iv) Elizabeth A. Dunn - Vice President of the
Adviser.
PAGE
<PAGE>
Item 29. Principal Underwriters
(a) Inapplicable
(b) Inapplicable
(c) Inapplicable
Item 30. Location of Accounts and Records
Accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940
and the Rules promulgated thereunder will be maintained by the
Registrant at its offices located at 7150 Greenville Avenue,
Suite 101 - LB 340, Dallas, Texas 75231 as well as at the offices
of the Registrant's transfer agent located at 312 Walnut Street,
21st Floor, Cincinnati, Ohio 45202.
Item 31. Management Services Not Discussed in Parts A or B
Inapplicable
Item 32. Undertakings
(a) Inapplicable
(b) The Registrant undertakes to file a post-effective
amendment, using financial statements which need
not be certified, within four to six months from
the effective date of this Registration Statement.
(c) Inapplicable
<PAGE>
<PAGE>
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 below on its
behalf by the undersigned, thereunto duly authorized, in the City
of Dallas and State of Texas, on the 4th day of January, 1996.
PRAGMA INVESTMENT TRUST
By:/s/ John H. Alban, jr.
John H. Alban, jr.
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ John H. Alban, jr. Chairman January 4, 1996
John H. Alban, jr. of the Board
and Trustee
/s/ John H. Alban, III President January 4, 1996
John H. Alban, III and Trustee
/s/ Mark J. Seger Treasurer January 4, 1996
Mark J. Seger
INDEX TO EXHIBITS
(1) Agreement and Declaration of Trust .
(2) Bylaws
(3) Inapplicable
(4) Inapplicable
(5) Form of Investment Advisory Agreement
(6) Inapplicable
(7) Inapplicable
(8) Form of Custody Agreement
(9)(i) Form of Administrative Services Agreement
(9)(ii) Form of Accounting Services Agreement
(9)(iii) Form of Transfer, Dividend Disbursing, Shareholder
Service and Plan Agency Agreement
(10) Opinion and Consent of Counsel*
(11) Consent of Independent Public Accountants*
(12) Inapplicable
(13) Form of Agreement Relating to Initial Capital
(14) Inapplicable
(15) Inapplicable
(16) Inapplicable
(17) Financial Data Schedule*
(18) Inapplicable
____________________________
* To be filed by Amendment.
PAGE
<PAGE>
PRAGMA INVESTMENT TRUST
AGREEMENT AND DECLARATION OF TRUST
January 4, 1996
PAGE
<PAGE>
PRAGMA INVESTMENT TRUST
AGREEMENT AND DECLARATION OF TRUST
PAGE
ARTICLE I. NAME AND DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) "Trust" . . . . . . . . . . . . . . . . . . . . . . . . . 1
(b) "Trustees". . . . . . . . . . . . . . . . . . . . . . . . 1
(c) "Shares". . . . . . . . . . . . . . . . . . . . . . . . . 1
(d) "Series". . . . . . . . . . . . . . . . . . . . . . . . . 1
(e) "Shareholder" . . . . . . . . . . . . . . . . . . . . . . 2
(f) "1940 Act". . . . . . . . . . . . . . . . . . . . . . . . 2
(g) "Commission". . . . . . . . . . . . . . . . . . . . . . . 2
(h) "Declaration of Trust". . . . . . . . . . . . . . . . . . 2
(i) "Bylaws". . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II. PURPOSE OF TRUST . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III. THE TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 3.1 Number, Designation, Election, Term, etc . . . . . . . . . . . 2
(a) Initial Trustees. . . . . . . . . . . . . . . . . . . . . 2
(b) Number. . . . . . . . . . . . . . . . . . . . . . . . . . 2
(c) Term. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(d) Resignation and Retirement. . . . . . . . . . . . . . . . 3
(e) Removal . . . . . . . . . . . . . . . . . . . . . . . . . 3
(f) Vacancies . . . . . . . . . . . . . . . . . . . . . . . . 3
(g) Effect of Death, Resignation, etc . . . . . . . . . . . . 4
(h) No Accounting . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.2 Powers of the Trustees . . . . . . . . . . . . . . . . . . . . 4
(a) Investments . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Disposition of Assets . . . . . . . . . . . . . . . . . . 5
(c) Ownership Powers. . . . . . . . . . . . . . . . . . . . . 5
(d) Subscription. . . . . . . . . . . . . . . . . . . . . . . 5
(e) Form of Holding . . . . . . . . . . . . . . . . . . . . . 6
(f) Reorganization, etc.. . . . . . . . . . . . . . . . . . . 6
(g) Voting Trusts, etc. . . . . . . . . . . . . . . . . . . . 6
(h) Compromise. . . . . . . . . . . . . . . . . . . . . . . . 6
(i) Partnerships, etc.. . . . . . . . . . . . . . . . . . . . 6
- i -
<PAGE>
<PAGE>
(j) Borrowing and Security. . . . . . . . . . . . . . . . . . 6
(k) Guarantees, etc . . . . . . . . . . . . . . . . . . . . . 6
(l) Insurance . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.3 Certain Contracts. . . . . . . . . . . . . . . . . . . . . . . 7
(a) Advisory. . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Administration. . . . . . . . . . . . . . . . . . . . . . 8
(c) Distribution. . . . . . . . . . . . . . . . . . . . . . . 8
(d) Custodian and Depository. . . . . . . . . . . . . . . . . 8
(e) Transfer and Dividend Disbursing Agency . . . . . . . . . 8
(f) Shareholder Servicing . . . . . . . . . . . . . . . . . . 8
(g) Legal, Accounting, Taxes and Other . . . . . . . . . . . 8
Section 3.4 Payment of Trust Expenses and Compensation
of Trustees. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.5 Ownership of Assets of the Trust . . . . . . . . . . . . . . .10
ARTICLE IV. SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Section 4.1 Description of Shares. . . . . . . . . . . . . . . . . . . . .11
Section 4.2 Establishment and Designation of Series. . . . . . . . . . . .13
(a) Assets Belonging to Series. . . . . . . . . . . . . . . .13
(b) Liabilities Belonging to Series . . . . . . . . . . . . .14
(c) Dividends . . . . . . . . . . . . . . . . . . . . . . . .14
(d) Liquidation . . . . . . . . . . . . . . . . . . . . . . .15
(e) Voting. . . . . . . . . . . . . . . . . . . . . . . . . .15
(f) Redemption by Shareholder . . . . . . . . . . . . . . . .16
(g) Redemption by Trust . . . . . . . . . . . . . . . . . . .16
(h) Net Asset Value . . . . . . . . . . . . . . . . . . . . .17
(i) Transfer. . . . . . . . . . . . . . . . . . . . . . . . .17
(j) Equality. . . . . . . . . . . . . . . . . . . . . . . . .17
(k) Fractions . . . . . . . . . . . . . . . . . . . . . . . .17
(l) Conversion Rights . . . . . . . . . . . . . . . . . . . .18
Section 4.3 Ownership of Shares. . . . . . . . . . . . . . . . . . . . . .18
Section 4.4 Investments in the Trust . . . . . . . . . . . . . . . . . . .18
Section 4.5 No Preemptive Rights . . . . . . . . . . . . . . . . . . . . .18
Section 4.6 Status of Shares and Limitation of Personal
Liability. . . . . . . . . . . . . . . . . . . . . . . . . . .18
- ii -
<PAGE>
<PAGE>
ARTICLE V. SHAREHOLDERS' VOTING POWERS AND MEETINGS . . . . . . . . . . .19
Section 5.1 Voting Powers. . . . . . . . . . . . . . . . . . . . . . . . .19
Section 5.2 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Section 5.3 Record Dates . . . . . . . . . . . . . . . . . . . . . . . . .20
Section 5.4 Quorum and Required Vote . . . . . . . . . . . . . . . . . . .20
Section 5.5 Action by Written Consent. . . . . . . . . . . . . . . . . . .21
Section 5.6 Inspection of Records. . . . . . . . . . . . . . . . . . . . .21
Section 5.7 Additional Provisions. . . . . . . . . . . . . . . . . . . . .21
ARTICLE VI. LIMITATION OF LIABILITY; INDEMNIFICATION . . . . . . . . . . .21
Section 6.1 Trustees, Shareholders, etc. Not Personally
Liable; Notice . . . . . . . . . . . . . . . . . . . . . . . .21
Section 6.2 Trustee's Good Faith Action; Expert Advice;
No Bond or Surety. . . . . . . . . . . . . . . . . . . . . . .22
Section 6.3 Indemnification of Shareholders. . . . . . . . . . . . . . . .22
Section 6.4 Indemnification of Trustees, Officers, etc . . . . . . . . . .23
Section 6.5 Advances of Expenses . . . . . . . . . . . . . . . . . . . . .23
Section 6.6 Indemnification Not Exclusive, etc . . . . . . . . . . . . . .23
Section 6.7 Liability of Third Persons Dealing with
Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . .24
ARTICLE VII. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . .24
Section 7.1 Duration and Termination of Trust. . . . . . . . . . . . . . .24
Section 7.2 Reorganization . . . . . . . . . . . . . . . . . . . . . . . .24
Section 7.3 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . .25
Section 7.4 Filing of Copies; References; Headings . . . . . . . . . . . .25
Section 7.5 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . .26
- iii -
<PAGE>
<PAGE>
PRAGMA INVESTMENT TRUST
AGREEMENT AND DECLARATION OF TRUST
AGREEMENT AND DECLARATION OF TRUST made this 4th day of January,
1996, by the Trustees hereunder, and by the holders of Shares of
beneficial interest to be issued hereunder as hereinafter provided.
WITNESSETH:
WHEREAS, this Trust is being formed to carry on the business of
an investment company; and
WHEREAS, the Trustees have agreed to manage all property coming
into their hands as trustees of an Ohio business trust in accordance
with the provisions hereinafter set forth;
NOW, THEREFORE, the Trustees hereby declare that they will hold
all cash, securities and other assets which they may from time to time
acquire in any manner as Trustees hereunder IN TRUST to manage and
dispose of the same upon the following terms and conditions for the
benefit of the holders from time to time of shares of beneficial
interest in this Trust as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 Name. This Trust shall be known as "PRAGMA
Investment Trust" and the Trustees shall conduct the business of the
Trust under that name or any other name as they may from time to time
determine.
Section 1.2 Definitions. Whenever used herein, unless
otherwise required by the context or specifically provided:
(a) The "Trust" refers to the Ohio business trust established by
this Agreement and Declaration of Trust, as amended from
time to time;
(b) "Trustees" refers to the Trustees of the Trust named herein
or elected in accordance with Article III;
(c) "Shares" refers to the transferable units of interest into
which the beneficial interest in the Trust or any Series of
the Trust (as the context may require) shall be divided from
time to time;
(d) "Series" refers to Series of Shares established and
designated under or in accordance with the provisions of
Article IV;
(e) "Shareholder" means a record owner of Shares;
(f) The "1940 Act" refers to the Investment Company Act of 1940
and the Rules and Regulations thereunder, all as amended
from time to time;
<PAGE>
(g) "Commission" shall have the meaning given it in the 1940
Act;
(h) "Declaration of Trust" shall mean this Agreement and
Declaration of Trust as amended or restated from time to
time; and
(i) "Bylaws" shall mean the Bylaws of the Trust as amended from
time to time.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to operate as an investment company,
to offer Shareholders one or more investment programs primarily in
securities and debt instruments and to engage in any and all lawful
acts or activities for which business trusts may be formed under
Chapter 1746.01 through 1746.99 of the Ohio Revised Code. Until the
Trustees determine otherwise, the principal office of the Trust is to
be located at 312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202.
ARTICLE III
THE TRUSTEES
Section 3.1 Number, Designation, Election, Term, etc.
(a) Initial Trustees. Upon execution of this Declaration of
Trust or a counterpart hereof or some other writing in which
he accepts such Trusteeship and agrees to the provisions
hereof, John H. Alban, Jr. and John H. Alban, III shall
become Trustees hereof.
(b) Number. The Trustees serving as such, whether named above
or hereafter becoming a Trustee, may increase or decrease
the number of Trustees to a number other than the number
theretofore determined. No decrease in the number of
Trustees shall have the effect of removing any Trustee from
office prior to the expiration of his term, but the number
of Trustees may be decreased in conjunction with the removal
of a Trustee pursuant to subsection (e) of this Section 3.1.
(c) Term. Each Trustee shall serve as a Trustee during the
lifetime of the Trust and until its termination as
hereinafter provided or until such Trustee sooner dies,
resigns, retires or is removed. The Trustees may elect
their own successors and may, pursuant to Section 3.1(f)
hereof, appoint Trustees to fill vacancies; provided that,
immediately after filling a vacancy, at least two-thirds of
the Trustees then holding office shall have been elected to
such office by the Shareholders at an annual or special
meeting. If at any time less than a majority of the
Trustees then holding office were so elected, the Trustees
shall forthwith cause to be held as promptly as possible,
and in any event within 60 days, a meeting of Shareholders
for the purpose of electing Trustees to fill any existing
vacancies.
<PAGE>
(d) Resignation and Retirement. Any Trustee may resign his
trust or retire as a Trustee, by written instrument signed
by him and delivered to the other Trustees or to any officer
of the Trust, and such resignation or retirement shall take
effect upon such delivery or upon such later date as is
specified in such instrument.
(e) Removal. Any Trustee may be removed with or without cause
at any time: (i) by written instrument, signed by at least
two-thirds of the number of Trustees prior to such removal,
specifying the date upon which such removal shall become
effective, (ii) by vote of the Shareholders holding not less
than two-thirds of the Shares then outstanding, cast in
person or by proxy at any meeting called for the purpose, or
(iii) by a declaration in writing signed by Shareholders
holding not less than two-thirds of the Shares then
outstanding and filed with the Trust's Custodian.
(f) Vacancies. Any vacancy or anticipated vacancy resulting
from any reason, including without limitation, the death,
resignation, retirement, removal or incapacity of any of the
Trustees or resulting from an increase in the number of
Trustees by the Trustees, may (but so long as there are at
least three remaining Trustees, need not unless required by
the 1940 Act) be filled either by a majority of the
remaining Trustees through the appointment in writing of
such other person as such remaining Trustees in their
discretion shall determine (unless a shareholder election is
required by the 1940 Act) or by the election by the
Shareholders, at a meeting called for the purpose, of a
person to fill such vacancy, and such appointment or
election shall be effective upon the written acceptance of
the person named therein to serve as a Trustee and agreement
by such person to be bound by the provisions of this
Declaration of Trust, except that any such appointment or
election in anticipation of a vacancy to occur by reason of
retirement, resignation, or increase in number of Trustees
to be effective at a later date shall become effective only
at or after the effective date of said retirement,
resignation, or increase in number of Trustees. As soon as
any Trustee so appointed or elected shall have accepted such
appointment or election and shall have agreed in writing to
be bound by this Declaration of Trust and the appointment or
election is effective, the Trust estate shall vest in the
new Trustee, together with the continuing Trustees, without
any further act or conveyance.
(g) Effect of Death, Resignation, etc. The death, resignation,
retirement, removal, or incapacity of the Trustees, or any
one of them, shall not operate to annul or terminate the
Trust or to revoke or terminate any existing agency or
contract created or entered into pursuant to the terms of
this Declaration of Trust.
<PAGE>
(h) No Accounting. Except to the extent required by the 1940
Act or under circumstances which would justify his removal
for cause, no person ceasing to be a Trustee as a result of
his death, resignation, retirement, removal or incapacity
(nor the estate of any such person) shall be required to
make an accounting to the Shareholders or remaining Trustees
upon such cessation.
Section 3.2 Powers of the Trustees. Subject to the provisions
of this Declaration of Trust, the business of the Trust shall be
managed by the Trustees, and they shall have all powers necessary or
convenient to carry out that responsibility and the purpose of the
Trust. Without limiting the foregoing, the Trustees may adopt Bylaws
not inconsistent with this Declaration of Trust providing for the
conduct of the business and affairs of the Trust and may amend and
repeal them to the extent that such Bylaws do not reserve that right
to the Shareholders; they may as they consider appropriate elect and
remove officers and appoint and terminate agents and consultants and
hire and terminate employees, any one or more of the foregoing of whom
may be a Trustee, and may provide for the compensation of all of the
foregoing; they may appoint from their own number, and terminate, any
one or more committees consisting of two or more Trustees, including
without implied limitation an executive committee, which may, when the
Trustees are not in session and subject to the 1940 Act, exercise some
or all of the power and authority of the Trustees as the Trustees may
determine; in accordance with Section 3.3 they may employ one or more
advisers, administrators, depositories and custodians and may
authorize any depository or custodian to employ subcustodians or
agents and to deposit all or any part of such assets in a system or
systems for the central handling of securities and debt instruments,
retain transfer, dividend, accounting or Shareholder servicing agents
or any of the foregoing, provide for the distribution of Shares by the
Trust through one or more distributors, principal underwriters or
otherwise, set record dates or times for the determination of
Shareholders or various of them with respect to various matters; they
may compensate or provide for the compensation of the Trustees,
officers, advisers, administrators, custodians, other agents,
consultants and employees of the Trust or the Trustees on such terms
as they deem appropriate; and in general they may delegate to any
officer of the Trust, to any committee of the Trustees and to any
employee, adviser, administrator, distributor, principal underwriter,
depository, custodian, transfer and dividend disbursing agent, or any
other agent or consultant of the Trust such authority, powers,
functions and duties as they consider desirable or appropriate for the
conduct of the business and affairs of the Trust, including without
implied limitation the power and authority to act in the name of the
Trust and of the Trustees, to sign documents and to act as attorney-
in-fact for the Trustees.
Without limiting the foregoing and to the extent not inconsistent
with the 1940 Act or other applicable law, the Trustees shall have
power and authority:
(a) Investments. To invest and reinvest cash and other
property, and to hold cash or other property uninvested
without in any event being bound or limited by any present
or future law or custom in regard to investments by
trustees;
<PAGE>
(b) Disposition of Assets. To sell, exchange, lend, pledge,
mortgage, hypothecate, write options on and lease any or all
of the assets of the Trust;
(c) Ownership Powers. To vote or give assent, or exercise any
rights of ownership, with respect to stock or other
securities, debt instruments or property; and to execute and
deliver proxies or powers of attorney to such person or
persons as the Trustees shall deem proper, granting to such
person or persons such power and discretion with relation to
securities, debt instruments or property as the Trustees
shall deem proper;
(d) Subscription. To exercise powers and rights of subscription
or otherwise which in any manner arise out of ownership of
securities or debt instruments;
(e) Form of Holding. To hold any security, debt instrument or
property in a form not indicating any trust, whether in
bearer, unregistered or other negotiable form, or in the
name of the Trustees or of the Trust or in the name of a
custodian, subcustodian or other depository or a nominee or
nominees or otherwise;
(f) Reorganization, etc. To consent to or participate in any
plan for the reorganization, consolidation or merger of any
corporation or issuer, any security or debt instrument of
which is or was held in the Trust; to consent to any
contract, lease, mortgage, purchase or sale of property by
such corporation or issuer, and to pay calls or
subscriptions with respect to any security or debt
instrument held in the Trust;
(g) Voting Trusts, etc. To join with other holders of any
securities or debt instruments in acting through a
committee, depository, voting trustee or otherwise, and in
that connection to deposit any security or debt instrument
with, or transfer any security or debt instrument to, any
such committee, depository or trustee, and to delegate to
them such power and authority with relation to any security
or debt instrument (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree
to pay, and to pay, such portion of the expenses and
compensation of such committee, depository or trustee as the
Trustees shall deem proper;
(h) Compromise. To compromise, arbitrate or otherwise adjust
claims in favor of or against the Trust or any matter in
controversy, including but not limited to claims for taxes;
(i) Partnerships, etc. To enter into joint ventures, general or
limited partnerships and any other combinations or
associations;
(j) Borrowing and Security. To borrow funds and to mortgage and
pledge the assets of the Trust or any part thereof to secure
obligations arising in connection with such borrowing;
<PAGE>
(k) Guarantees, etc. To endorse or guarantee the payment of any
notes or other obligations of any person; to make contracts
of guaranty or suretyship, or otherwise assume liability for
payment thereof; and to mortgage and pledge the Trust
property or any part thereof to secure any of or all such
obligations; and
(l) Insurance. To purchase and pay for entirely out of Trust
property such insurance as they may deem necessary or
appropriate for the conduct of the business, including,
without limitation, insurance policies insuring the assets
of the Trust and payment of distributions and principal on
its portfolio investments, and insurance policies insuring
the Shareholders, Trustees, officers, employees, agents,
consultants, investment advisers, managers, administrators,
distributors, principal underwriters, or independent
contractors, or any thereof (or any person connected
therewith), of the Trust individually against all claims and
liabilities of every nature arising by reason of holding,
being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted
by any such person in any such capacity, including any
action taken or omitted that may be determined to constitute
negligence; provided, however, that insurance which protects
the Trustees and officers against liabilities rising from
action involving willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in
the conduct of their offices may not be purchased;
Except as otherwise provided by the 1940 Act or other applicable
law, this Declaration of Trust or the Bylaws, any action to be taken
by the Trustees may be taken by a majority of the Trustees present at
a meeting of Trustees (a quorum, consisting of at least a majority of
the Trustees then in office, being present), within or without Ohio,
including any meeting held by means of a conference telephone or other
communications equipment by means of which all persons participating
in the meeting can hear each other at the same time and participation
by such means shall constitute presence in person at a meeting, or by
written consents of a majority of the Trustees then in office (or such
larger or different number as may be required by the 1940 Act or other
applicable law).
Section 3.3 Certain Contracts. Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations of
present and future law or custom in regard to delegation of powers by
trustees generally, the Trustees may, at any time and from time to
time and without limiting the generality of their powers and authority
otherwise set forth herein, enter into one or more contracts with any
one or more corporations, trusts, associations, partnerships, limited
partnerships, other type of organizations, or individuals
("Contracting Party") to provide for the performance and assumption of
some or all of the following services, duties and responsibilities to,
for or of the Trust and/or the Trustees, and to provide for the
performance and assumption of such other services, duties and
responsibilities in addition to those set forth below as the Trustees
may determine appropriate:
PAGE
<PAGE>
(a) Advisory. Subject to the general supervision of the
Trustees and in conformity with the stated policy of the
Trustees with respect to the investments of the Trust or of
the assets belonging to any Series of Shares of the Trust
(as that phrase is defined in subsection (a) of Section
4.2), to manage such investments and assets, make investment
decisions with respect thereto, and to place purchase and
sale orders for portfolio transactions relating to such
investments and assets;
(b) Administration. Subject to the general supervision of the
Trustees and in conformity with any policies of the Trustees
with respect to the operations of the Trust, to supervise
all or any part of the operations of the Trust, and to
provide all or any part of the administrative and clerical
personnel, office space and office equipment and services
appropriate for the efficient administration and operations
of the Trust;
(c) Distribution. To distribute the Shares of the Trust, to be
principal underwriter of such Shares, and/or to act as agent
of the Trust in the sale of Shares and the acceptance or
rejection of orders for the purchase of Shares;
(d) Custodian and Depository. To act as depository for and to
maintain custody of the property of the Trust and accounting
records in connection therewith;
(e) Transfer and Dividend Disbursing Agency. To maintain
records of the ownership of outstanding Shares, the issuance
and redemption and the transfer thereof, and to disburse any
dividends declared by the Trustees and in accordance with
the policies of the Trustees and/or the instructions of any
particular Shareholder to reinvest any such dividends;
(f) Shareholder Servicing. To provide service with respect to
the relationship of the Trust and its Shareholders, records
with respect to Shareholders and their Shares, and similar
matters; and
(g) Legal, Accounting, Taxes and Other. To handle all or any
part of the legal, accounting, tax or other
responsibilities, whether with respect to the Trust's
properties, Shareholders or otherwise.
The same person may be the Contracting Party for some or all of the
services, duties and responsibilities to, for and of the Trust and/or
the Trustees, and the contracts with respect thereto may contain such
terms interpretive of or in addition to the delineation of the
services, duties and responsibilities provided for, including
provisions that are not inconsistent with the 1940 Act relating to the
standard of duty of and the rights to indemnification of the
Contracting Party and others, as the Trustees may determine. Nothing
herein shall preclude, prevent or limit the Trust or a Contracting
Party from entering into subcontractual arrangements relative to any
of the matters referred to in Sections 3.3(a) through (g) hereof.
Subject to the provisions of the 1940 Act, the fact that:
<PAGE>
(i) any of the Shareholders, Trustees or officers of the
Trust is a shareholder, director, officer, partner, trustee,
employee, manager, adviser, principal underwriter or distributor
or agent of or for any Contracting Party, or of or for any parent
or affiliate of any Contracting Party or that the Contracting
Party or any parent or affiliate thereof is a Shareholder or has
an interest in the Trust, or that
(ii) any Contracting Party may have a contract providing for
the rendering of any similar services to one or more other
corporations, trusts, associations, partnerships, limited
partnerships or other organizations, or has other business or
interests,
shall not affect the validity of any contract for the performance and
assumption of services, duties and responsibilities to, for or of the
Trust and/or the Trustees or disqualify any Shareholder, Trustee or
officer of the Trust from voting upon or executing the same or create
any liability or accountability to the Trust or its Shareholders,
provided that in the case of any relationship or interest referred to
in the preceding clause (i) on the part of any Trustee or officer of
the Trust either (1) the material facts as to such relationship or
interest have been disclosed to or are known by the Trustees not
having any such relationship or interest and the contract involved is
approved in good faith reasonably justified by such facts by a
majority of such Trustees not having any such relationship or interest
(even though such unrelated or disinterested Trustees are less than a
quorum of all of the Trustees), or (2) the specific contract involved
is fair to the Trust as of the time it is authorized, approved or
ratified by the Trustees or by the Shareholders.
Section 3.4 Payment of Trust Expenses and Compensation of
Trustees. The Trustees are authorized to pay or to cause to be paid
out of the principal or income of the Trust, or partly out of
principal and partly out of income, and to charge or allocate the same
to, between or among such one or more of the Series that may be
established and designated pursuant to Article IV, as the Trustees
deem fair, all expenses, fees, charges, taxes and liabilities incurred
or arising in connection with the Trust, or in connection with the
management thereof, including, but not limited to, the Trustees'
compensation and such expenses and charges for the services of the
Trust's officers, employees, investment adviser, administrator,
distributor, principal underwriter, auditor, counsel, depository,
custodian, transfer agent, dividend disbursing agent, accounting
agent, Shareholder servicing agent, and such other agents,
consultants, and independent contractors and such other expenses and
charges as the Trustees may deem necessary or proper to incur.
Without limiting the generality of any other provision hereof, the
Trustees shall be entitled to reasonable compensation from the Trust
for their services as Trustees and may fix the amount of such
compensation.
Section 3.5 Ownership of Assets of the Trust. Title to all of
the assets of the Trust shall at all times be considered as vested in
the Trustees.
<PAGE>
<PAGE>
ARTICLE IV
SHARES
Section 4.1 Description of Shares. The beneficial interest in
the Trust shall be divided into Shares, all without par value, but the
Trustees shall have the authority from time to time to divide the
Shares into two or more Series of Shares, as they deem necessary or
desirable, to establish and designate such Series, and to fix and
determine the relative rights and preferences as between the different
Series of Shares as to right of redemption and the price, terms and
manner of redemption, special and relative rights as to dividends and
other distributions and on liquidation, sinking or purchase fund
provisions, conversion rights, and conditions under which the several
Series shall have separate voting rights or no voting rights. Except
as aforesaid all Shares of the different Series shall be identical.
The Shares of each Series may be issued or reissued from time to
time in one or more classes ("Classes"), as determined by the Board of
Trustees pursuant to resolution. Each Class shall be appropriately
designated, prior to the issuance of any shares thereof, by some
distinguishing letter, number or title. All Shares within a Class
shall be alike in every particular. All Shares of each Series shall
be of equal rank and have the same powers, preferences and rights, and
shall be subject to the same qualifications, limitations and
restrictions without distinction between the shares of different
Classes thereof, except with respect to such differences among such
Classes, as the Board of Trustees shall from time to time determine to
be necessary or desirable, including differences in the rate or rates
of dividends or distributions. The Board of Trustees may from time to
time increase the number of Shares allocated to any Class already
created by providing that any unissued Shares of the applicable Series
shall constitute part of such Class, or may decrease the number of
Shares allocated to any Class already created by providing that any
unissued Shares previously assigned to such Class shall no longer
constitute part thereof. The Board of Trustees is hereby empowered to
classify or reclassify from time to time any unissued Shares of each
Series by fixing or altering the terms thereof and by assigning such
unissued shares to an existing or newly created Class.
Notwithstanding anything to the contrary in this paragraph the Board
of Trustees is hereby empowered (i) to redesignate any issued Shares
of any Series by assigning a distinguishing letter, number or title to
such shares and (ii) to reclassify all or any part of the issued
Shares of any Series to make them part of an existing or newly created
Class.
PAGE
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The number of authorized Shares and the number of Shares of each
Series that may be issued is unlimited, and the Trustees may issue
Shares of any Series for such consideration and on such terms as they
may determine (or for no consideration if pursuant to a Share dividend
or split-up), all without action or approval of the Shareholders. All
Shares when so issued on the terms determined by the Trustees shall be
fully paid and non-assessable (but may be subject to mandatory
contribution back to the Trust as provided in subsection (g) of
Section 4.2). The Trustees may classify or reclassify any unissued
Shares or any Shares previously issued and reacquired of any Series
into one or more Series that may be established and designated from
time to time. The Trustees may hold as treasury Shares (of the same
or some other Series), reissue for such consideration and on such
terms as they may determine, or cancel, at their discretion from time
to time, any Shares of any Series reacquired by the Trust.
The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining the
holders of Shares entitled to be treated as such, to the extent
provided or referred to in Section 5.3.
The establishment and designation of any Series of Shares in
addition to that established and designated in Section 4.2, or of any
Class of Shares, shall be effective upon the execution by a majority
of the then Trustees of an instrument setting forth such establishment
and designation and the relative rights and preferences of such Series
or Class, or as otherwise provided in such instrument. At any time
that there are no Shares outstanding of any particular Series or Class
previously established and designated the Trustees may by an
instrument executed by a majority of their number abolish that Series
or Class and the establishment and designation thereof. Each
instrument referred to in this paragraph shall have the status of an
amendment to this Declaration of Trust.
Any Trustee, officer or other agent of the Trust, and any
organization in which any such person is interested may acquire, own,
hold and dispose of Shares of any Series of the Trust to the same
extent as if such person were not a Trustee, officer or other agent of
the Trust; and the Trust may issue and sell or cause to be issued and
sold and may purchase Shares of any Series from any such person or any
such organization subject only to the general limitations,
restrictions or other provisions applicable to the sale or purchase of
Shares of such Series generally.
Section 4.2 Establishment and Designation of Series. Without
limiting the authority of the Trustees set forth in Section 4.1 to
establish and designate any further Series, the Trustees hereby
establish and designate one Series of Shares: " Fund". The
Shares of this Series and any Shares of any further Series that may
from time to time be established and designated by the Trustees shall
(unless the Trustees otherwise determine with respect to some further
Series or Class at the time of establishing and designating the same)
have the following relative rights and preferences:
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(a) Assets Belonging to Series. All consideration received by
the Trust for the issue or sale of Shares of a particular
Series, together with all assets in which such consideration
is invested or reinvested, all income, earnings, profits,
and proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall irrevocably
belong to that Series for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books
of account of the Trust. Such consideration, assets,
income, earnings, profits and proceeds thereof, including
any proceeds derived from the sale, exchange or liquidation
of such assets, and any funds or payments derived from any
reinvestment of such proceeds, in whatever form the same may
be, together with any General Items allocated to that Series
as provided in the following sentence, are herein referred
to as "assets belonging to" that Series. In the event that
there are any assets, incomes, earnings, profits, and
proceeds thereof, funds, or payments which are not readily
identifiable as belonging to any particular Series
(collectively "General Items"), the Trustees shall allocate
such General Items to and among any one or more of the
Series established and designated from time to time in such
manner and on such basis as they, in their sole discretion,
deem fair and equitable; and any General Items so allocated
to a particular Series shall belong to that Series. Each
such allocation by the Trustees shall be conclusive and
binding upon the Shareholders of all Series for all
purposes.
The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items
shall be treated as income and which items as capital; and
each such determination and allocation shall be conclusive
and binding upon the Shareholders.
(b) Liabilities Belonging to Series. The assets belonging to
each particular Series shall be charged with the liabilities
of the Trust in respect of that Series and all expenses,
costs, charges and reserves attributable to that Series, and
any general liabilities, expenses, costs, charges or
reserves of the Trust which are not readily identifiable as
belonging to any particular Series shall be allocated and
charged by the Trustees to and among any one or more of the
Series established and designated from time to time in such
manner and on such basis as the Trustees in their sole
discretion deem fair and equitable. The liabilities,
expenses, costs, charges and reserves allocated and so
charged to a Series are herein referred to as "liabilities
belonging to" that Series. Each allocation of liabilities,
expenses, costs, charges and reserves by the Trustees shall
be conclusive and binding upon the holders of all Series for
all purposes.
<PAGE>
(c) Dividends. Dividends and distributions on Shares of a
particular Series may be paid with such frequency as the
Trustees may determine, which may be daily or otherwise
pursuant to a standing resolution or resolutions adopted
only once or with such frequency as the Trustees may
determine, to the holders of Shares of that Series, from
such of the estimated income and capital gains, accrued or
realized, from the assets belonging to that Series, as the
Trustees may determine, after providing for actual and
accrued liabilities belonging to that Series. All dividends
and distributions on Shares of a particular Series shall be
distributed pro rata to the holders of that Series in
proportion to the number of Shares of that Series held by
such holders at the date and time of record established for
the payment of such dividends or distributions, except that
in connection with any dividend or distribution program or
procedure the Trustees may determine that no dividend or
distribution shall be payable on Shares as to which the
Shareholder's purchase order and/or payment have not been
received by the time or times established by the Trustees
under such program or procedure, and except that if Classes
have been established for any Series, the rate of dividends
or distributions may vary among such Classes pursuant to
resolution, which may be a standing resolution, of the Board
of Trustees. Such dividends and distributions may be made
in cash or Shares or a combination thereof as determined by
the Trustees or pursuant to any program that the Trustees
may have in effect at the time for the election by each
Shareholder of the mode of the making of such dividend or
distribution to that Shareholder. Any such dividend or
distribution paid in Shares will be paid at the net asset
value thereof as determined in accordance with subsection
(h) of Section 4.2.
The Trust intends to qualify each Series as a "regulated
investment company" under the Internal Revenue Code of 1986,
as amended, or any successor or comparable statute thereto,
and regulations promulgated thereunder. Inasmuch as the
computation of net income and gains for federal income tax
purposes may vary from the computation thereof on the books
of the Trust, the Board of Trustees shall have the power, in
its sole discretion, to distribute in any fiscal year as
dividends, including dividends designated in whole or in
part as capital gains distributions, amounts sufficient, in
the opinion of the Board of Trustees, to enable each Series
to qualify as a regulated investment company and to avoid
liability of the Series for federal income tax in respect of
that year. However, nothing in the foregoing shall limit
the authority of the Board of Trustees to make distributions
greater than or less than the amount necessary to qualify as
a regulated investment company and to avoid liability of
each Series for such tax.
PAGE
<PAGE>
(d) Liquidation. In event of the liquidation or dissolution of
the Trust, the Shareholders of each Series that has been
established and designated shall be entitled to receive, as
a Series, when and as declared by the Trustees, the excess
of the assets belonging to that Series over the liabilities
belonging to that Series. The assets so distributable to
the Shareholders of any particular Series shall be
distributed among such Shareholders in proportion to the
number of Shares of that Series held by them and recorded on
the books of the Trust. The liquidation of any particular
Series may be authorized by vote of a majority of the
Trustees then in office subject to the approval of a
majority of the outstanding voting Shares of that Series, as
defined in the 1940 Act.
(e) Voting. All shares of all Series shall have "equal voting
rights" as such term is defined in the Investment Company
Act of 1940 and except as otherwise provided by that Act or
rules, regulations or orders promulgated thereunder. On
each matter submitted to a vote of the Shareholders, all
Shares of all Series shall vote as a single class ("Single
Class Voting"); provided, however, that (a) as to any matter
with respect to which a separate vote of any Series is
required by the 1940 Act or rules and regulations
promulgated thereunder, or would be required under the Ohio
General Corporation Law if the Trust were an Ohio
corporation, such requirements as to a separate vote by that
Series shall apply in lieu of Single Class Voting as
described above; (b) in the event that the separate vote
requirements referred to in (a) above apply with respect to
one or more Series, then, subject to (c) below, the Shares
of all other Series shall vote as a single class; and (c) as
to any matter which does not affect the interest of a
particular Series, only the holders of Shares of the one or
more affected Series shall be entitled to vote.
(f) Redemption by Shareholder. Each holder of Shares of a
particular Series shall have the right at such times as may
be permitted by the Trust, but no less frequently than once
each week, to require the Trust to redeem all or any part of
his Shares of that Series at a redemption price equal to the
net asset value per Share of that Series next determined in
accordance with subsection (h) of this Section 4.2 after the
Shares are properly tendered for redemption. Payment of the
redemption price shall be in cash; provided, however, that
if the Trustees determine, which determination shall be
conclusive, that conditions exist which make payment wholly
in cash unwise or undesirable, the Trust may make payment
wholly or partly in securities or other assets belonging to
the Series of which the Shares being redeemed are part at
the value of such securities or assets used in such
determination of net asset value.
<PAGE>
Notwithstanding the foregoing, the Trust may postpone
payment of the redemption price and may suspend the right of
the holders of Shares of any Series to require the Trust to
redeem Shares of that Series during any period or at any
time when and to the extent permissible under the 1940 Act,
and such redemption is conditioned upon the Trust having
funds or property legally available therefor.
(g) Redemption by Trust. Each Share of each Series that has
been established and designated is subject to redemption by
the Trust at the redemption price which would be applicable
if such Share was then being redeemed by the Shareholder
pursuant to subsection (f) of this Section 4.2: (a) at any
time, if the Trustees determine in their sole discretion
that failure to so redeem may have materially adverse
consequences to all or any of the holders of the Shares, or
any Series thereof, of the Trust, or (b) upon such other
conditions as may from time to time be determined by the
Trustees and set forth in the then current Prospectus of the
Trust with respect to maintenance of Shareholder accounts of
a minimum amount. Upon such redemption the holders of the
Shares so redeemed shall have no further right with respect
thereto other than to receive payment of such redemption
price.
(h) Net Asset Value. The net asset value per Share of any
Series shall be the quotient obtained by dividing the value
of the net assets of that Series (being the value of the
assets belonging to that Series less the liabilities
belonging to that Series) by the total number of Shares of
that Series outstanding, all determined in accordance with
the methods and procedures, including without limitation
those with respect to rounding, established by the Trustees
from time to time.
(i) Transfer. All Shares of each particular Series shall be
transferable, but transfers of Shares of a particular Series
will be recorded on the Share transfer records of the Trust
applicable to that Series only at such times as Shareholders
shall have the right to require the Trust to redeem Shares
of that Series and at such other times as may be permitted
by the Trustees.
(j) Equality. All Shares of each particular Series shall
represent an equal proportionate interest in the assets
belonging to that Series (subject to the liabilities
belonging to that Series), and each Share of any particular
Series shall be equal to each other Share of that Series;
but the provisions of this sentence shall not restrict any
distinctions permissible under subsection (c) of this
Section 4.2 that may exist with respect to dividends and
distributions on Shares of the same Series. The Trustees
may from time to time divide or combine the Shares of any
particular Series into a greater or lesser number of Shares
of that Series without thereby changing the proportionate
beneficial interest in the assets belonging to that Series
or in any way affecting the rights of Shares of any other
Series.
<PAGE>
(k) Fractions. Any fractional Share of any Series or Class, if
any such fractional Share is outstanding, shall carry
proportionately all the rights and obligations of a whole
Share of that Series or Class, including with respect to
voting, receipt of dividends and distributions, redemption
of Shares, and liquidation of the Trust.
(l) Conversion Rights. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the
authority to provide that holders of Shares of any Series
shall have the right to convert said Shares into Shares of
one or more other Series of Shares in accordance with such
requirements and procedures as may be established by the
Trustees.
Section 4.3 Ownership of Shares. The ownership of Shares
shall be recorded on the books of the Trust or of a transfer or
similar agent for the Trust, which books shall be maintained
separately for the Shares of each Series that has been established and
designated. No certificates certifying the ownership of Shares need
be issued except as the Trustees may otherwise determine from time to
time. The Trustees may make such rules as they consider appropriate
for the issuance of Share certificates, the use of facsimile
signatures, the transfer of Shares and similar matters. The record
books of the Trust as kept by the Trust or any transfer or similar
agent, as the case may be, shall be conclusive as to who are the
Shareholders and as to the number of Shares of each Series and Class
held from time to time by each such Shareholder.
Section 4.4 Investments in the Trust. The Trustees may accept
investments in the Trust from such persons and on such terms and for
such consideration, not inconsistent with the provisions of the 1940
Act, as they from time to time authorize. The Trustees may authorize
any distributor, principal underwriter, custodian, transfer agent or
other person to accept orders for the purchase of Shares that conform
to such authorized terms and to reject any purchase orders for Shares
whether or not conforming to such authorized terms.
Section 4.5 No Preemptive Rights. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares or
other securities issued by the Trust.
Section 4.6 Status of Shares and Limitation of Personal
Liability. Shares shall be deemed to be personal property giving only
the rights provided in this instrument. Every Shareholder by virtue
of having become a Shareholder shall be held to have expressly
assented and agreed to the terms hereof and to have become a party
hereto. The death of a Shareholder during the continuance of the
Trust shall not operate to terminate the Trust nor entitle the
representative of any deceased Shareholder to an accounting or to take
any action in court or elsewhere against the Trust or the Trustees,
but only to the rights of said decedent under this Trust. Ownership
of Shares shall not entitle the Shareholder to any title in or to the
whole or any part of the Trust property or right to call for a
partition or division of the same or for an accounting, nor shall the
ownership of Shares constitute the Shareholders as partners. Neither
the Trust nor the Trustees, nor any officer, employee or agent of the
Trust shall have any power to bind personally any Shareholder, nor
except as specifically provided herein to call upon any Shareholder
for the payment of any sum of money or assessment whatsoever other
than such as the Shareholder may at any time personally agree to pay.
PAGE
<PAGE>
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 Voting Powers. The Shareholders shall have power
to vote only (i) for the election or removal of Trustees as provided
in Section 3.1, (ii) with respect to any contract with a Contracting
Party as provided in Section 3.3 as to which Shareholder approval is
required by the 1940 Act, (iii) with respect to any termination or
reorganization of the Trust or any Series to the extent and as
provided in Sections 7.1 and 7.2, (iv) with respect to any amendment
of this Declaration of Trust to the extent and as provided in Section
7.3, (v) to the same extent as the stockholders of an Ohio business
corporation as to whether or not a court action, proceeding or claim
should or should not be brought or maintained derivatively or as a
class action on behalf of the Trust or the Shareholders, and (vi) with
respect to such additional matters relating to the Trust as may be
required by the 1940 Act, this Declaration of Trust, the Bylaws or any
registration of the Trust with the Commission (or any successor
agency) or any state, or as the Trustees may consider necessary or
desirable. There shall be no cumulative voting in the election of any
Trustee or Trustees. Shares may be voted in person or by proxy. A
proxy with respect to Shares held in the name of two or more persons
shall be valid if executed by any one of them unless at or prior to
exercise of the proxy the Trust receives a specific written notice to
the contrary from any one of them. A proxy purporting to be executed
by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any
action required by law, this Declaration of Trust or the Bylaws to be
taken by Shareholders.
Section 5.2 Meetings. Meetings (including meetings involving
only the holders of Shares of one or more but less than all Series) of
Shareholders may be called by the Trustees from time to time for the
purpose of taking action upon any matter requiring the vote or
authority of the Shareholders as herein provided or upon any other
matter deemed by the Trustees to be necessary or desirable. Written
notice of any meeting of Shareholders shall be given or caused to be
given by the Trustees by mailing such notice at least seven days
before such meeting, postage prepaid, stating the time, place and
purpose of the meeting, to each Shareholder at the Shareholder's
address as it appears on the records of the Trust. The Trustees shall
promptly call and give notice of a meeting of Shareholders for the
purpose of voting upon removal of any Trustee of the Trust when
requested to do so in writing by Shareholders holding not less than
10% of the Shares then outstanding. If the Trustees shall fail to
call or give notice of any meeting of Shareholders (including a
meeting involving only the holders of Shares of one or more but less
than all Series) for a period of 30 days after written application by
Shareholders holding at least 25% of the Shares then outstanding
requesting a meeting be called for any other purpose requiring action
by the Shareholders as provided herein or in the Bylaws, then
Shareholders holding at least 25% of the Shares then outstanding may
call and give notice of such meeting, and thereupon the meeting shall
be held in the manner provided for herein in case of call thereof by
the Trustees.
PAGE
<PAGE>
Section 5.3 Record Dates. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any
adjournment thereof, or who are entitled to participate in any
dividend or distribution, or for the purpose of any other action, the
Trustees may from time to time close the transfer books for such
period, not exceeding 30 days (except at or in connection with the
termination of the Trust), as the Trustees may determine; or without
closing the transfer books the Trustees may fix a date and time not
more than 60 days prior to the date of any meeting of Shareholders or
other action as the date and time of record for the determination of
Shareholders entitled to vote at such meeting or any adjournment
thereof or to be treated as Shareholders of record for purposes of
such other action, and any Shareholder who was a Shareholder at the
date and time so fixed shall be entitled to vote at such meeting or
any adjournment thereof or (subject to any provisions permissible
under subsection (c) of Section 4.2 with respect to dividends or
distributions on Shares that have not been ordered and/or paid for by
the time or times established by the Trustees under the applicable
dividend or distribution program or procedure then in effect) to be
treated as a Shareholder of record for purposes of such other action,
even though he has since that date and time disposed of his Shares,
and no Shareholder becoming such after that date and time shall be so
entitled to vote at such meeting or any adjournment thereof or to be
treated as a Shareholder of record for purposes of such other action.
Section 5.4 Quorum and Required Vote. A majority of the
Shares entitled to vote shall be a quorum for the transaction of
business at a Shareholders' meeting, but any lesser number shall be
sufficient for adjournments. Any adjourned session or sessions may be
held, within a reasonable time after the date set for the original
meeting without the necessity of further notice. A majority of the
Shares voted, at a meeting of which a quorum is present, shall decide
any questions and a plurality shall elect a Trustee, except when a
different vote is required or permitted by any provision of the 1940
Act or other applicable law or by this Declaration of Trust or the
Bylaws.
Section 5.5 Action by Written Consent. Subject to the
provisions of the 1940 Act and other applicable law, any action taken
by Shareholders may be taken without a meeting if a majority of
Shareholders entitled to vote on the matter (or such other proportion
thereof as shall be required by the 1940 Act or by any express
provision of this Declaration of Trust or the Bylaws) consent to the
action in writing and such written consents are filed with the records
of the meetings of Shareholders. Such consent shall be treated for
all purposes as a vote taken at a meeting of Shareholders.
Section 5.6 Inspection of Records. The records of the Trust
shall be open to inspection by Shareholders to the same extent as is
permitted stockholders of an Ohio corporation under the Ohio General
Corporation Law.
Section 5.7 Additional Provisions. The Bylaws may include
further provisions for Shareholders' votes and meetings and related
matters not inconsistent with the provisions hereof.
PAGE
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ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 6.1 Trustees, Shareholders, etc. Not Personally
Liable; Notice. All persons extending credit to, contracting with or
having any claim against the Trust shall look only to the assets of
the Trust for payment under such credit, contract or claim; and
neither the Shareholders nor the Trustees, nor any of the Trust's
officers, employees or agents, whether past, present or future, shall
be personally liable therefor. Every note, bond, contract,
instrument, certificate or undertaking and every other act or thing
whatsoever executed or done by or on behalf of the Trust or the
Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been executed or done only by or for the
Trust or the Trustees and not personally. Nothing in this Declaration
of Trust shall protect any Trustee or officer against any liability to
the Trust or the Shareholders to which such Trustee or officer would
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee or of such officer.
Every note, bond, contract, instrument, certificate or
undertaking made or issued by the Trustees or by any officers or
officer shall give notice that this Declaration of Trust is on file
with the Secretary of the State of Ohio and shall recite to the effect
that the same was executed or made by or on behalf of the Trust or by
them as Trustees or Trustee or as officers or officer and not
individually and that the obligations of such instrument are not
binding upon any of them or the Shareholders individually but are
binding only upon the assets and property of the Trust, but the
omission thereof shall not operate to bind any Trustees or Trustee or
officers or officer or Shareholders or Shareholder individually.
Section 6.2 Trustee's Good Faith Action; Expert Advice; No
Bond or Surety. The exercise by the Trustees of their powers and
discretions hereunder shall be binding upon everyone interested. A
Trustee shall be liable for his own willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee, and for nothing else, and shall not
be liable for errors of judgment or mistakes of fact or law. Subject
to the foregoing, (a) the Trustees shall not be responsible or liable
in any event for any neglect or wrongdoing of any officer, agent,
employee, consultant, adviser, administrator, distributor or principal
underwriter, custodian or transfer, dividend disbursing, Shareholder
servicing or accounting agent of the Trust, nor shall any Trustee be
responsible for the act or omission of any other Trustee; (b) the
Trustees may take advice of counsel or other experts with respect to
the meaning and operation of this Declaration of Trust and their
duties as Trustees, and shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such
advice; and (c) in discharging their duties, the Trustees, when acting
in good faith, shall be entitled to rely upon the books of account of
the Trust and upon written reports made to the Trustees by any officer
appointed by them, any independent public accountant, and (with
respect to the subject matter of the contract involved) any officer,
partner or responsible employee of a Contracting Party appointed by
the Trustees pursuant to Section 3.3. The Trustees as such shall not
be required to give any bond or surety or any other security for the
<PAGE>
performance of their duties. Nothing stated herein is intended to
detract from the protection accorded to Trustees by Ohio Revised Code
Sections 1746.08 and 1701.59, as amended from time to time.
Section 6.3 Indemnification of Shareholders. In case any
Shareholder or former Shareholder shall be charged or held to be
personally liable for any obligation or liability of the Trust solely
by reason of being or having been a Shareholder and not because of
such Shareholder's acts or omissions or for some other reason, the
Trust (upon proper and timely request by the Shareholder) shall assume
the defense against such charge and satisfy any judgment thereon, and
the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general successor)
shall be entitled out of the assets of the Trust estate to be held
harmless from and indemnified against all loss and expense arising
from such liability.
Section 6.4 Indemnification of Trustees, Officers, etc.
Subject to and except as otherwise provided in the Securities Act of
1933, as amended, and the 1940 Act, the Trust shall indemnify each of
its Trustees and officers, including persons who serve at the Trust's
request as directors, officers or trustees of another organization in
which the Trust has any interest as a shareholder, creditor or
otherwise (hereinafter referred to as a "Covered Person") against all
liabilities, including but not limited to amounts paid in satisfaction
of judgments, in compromise or as fines and penalties, and expenses,
including reasonable accountants' and counsel fees, incurred by any
Covered Person in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, before
any court or administrative or legislative body, in which such Covered
Person may be or may have been involved as a party or otherwise or
with which such person may be or may have been threatened, while in
office or thereafter, by reason of being or having been such a Trustee
or officer, director or trustee, and except that no Covered Person
shall be indemnified against any liability to the Trust or its
Shareholders to which such Covered Person would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such
Covered Person's office.
Section 6.5 Advances of Expenses. The Trust shall advance
attorneys' fees or other expenses incurred by a Covered Person in
defending a proceeding to the full extent permitted by the Securities
Act of 1933, as amended, the 1940 Act, and Ohio Revised Code Chapter
1707, as amended. In the event any of these laws conflict with Ohio
Revised Code Section 1701.13(E), as amended, these laws, and not Ohio
Revised Code Section 1701.13(E), shall govern.
Section 6.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article VI shall not be exclusive of
or affect any other rights to which any such Covered Person may be
entitled. As used in this Article VI, "Covered Person" shall include
such person's heirs, executors and administrators. Nothing contained
in this article shall affect any rights to indemnification to which
personnel of the Trust, other than Trustees and officers, and other
persons may be entitled by contract or otherwise under law, nor the
power of the Trust to purchase and maintain liability insurance on
behalf of any such person.
<PAGE>
Section 6.7 Liability of Third Persons Dealing with Trustees.
No person dealing with the Trustees shall be bound to make any inquiry
concerning the validity of any transaction made or to be made by the
Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Duration and Termination of Trust. Unless
terminated as provided herein, the Trust shall continue without
limitation of time. The Trust may be terminated at any time by a
majority of the Trustees then in office subject to a favorable vote of
a majority of the outstanding voting Shares, as defined in the 1940
Act, of each Series voting separately by Series.
Upon termination, after paying or otherwise providing for all
charges, taxes, expenses and liabilities, whether due or accrued or
anticipated as may be determined by the Trustees, the Trust shall in
accordance with such procedures as the Trustees consider appropriate
reduce the remaining assets to distributable form in cash, securities
or other property, or any combination thereof, and distribute the
proceeds to the Shareholders, in conformity with the provisions of
subsection (d) of Section 4.2.
Section 7.2 Reorganization. The Trustees may sell, convey and
transfer the assets of the Trust, or the assets belonging to any one
or more Series, to another trust, partnership, association or
corporation organized under the laws of any state of the United
States, or to the Trust to be held as assets belonging to another
Series of the Trust, in exchange for cash, shares or other securities
(including, in the case of a transfer to another Series of the Trust,
Shares of such other Series) with such transfer being made subject to,
or with the assumption by the transferee of, the liabilities belonging
to each Series the assets of which are so transferred; provided,
however, that if shareholder approval is required by the 1940 Act, no
assets belonging to any particular Series shall be so transferred
unless the terms of such transfer shall have first been approved at a
meeting called for the purpose by the affirmative vote of the holders
of a majority of the outstanding voting Shares, as defined in the 1940
Act, of that Series. Following such transfer, the Trustees shall
distribute such cash, shares or other securities (giving due effect to
the assets and liabilities belonging to and any other differences
among the various Series the assets belonging to which have so been
transferred) among the Shareholders of the Series the assets belonging
to which have been so transferred; and if all of the assets of the
Trust have been so transferred, the Trust shall be terminated.
Section 7.3 Amendments. All rights granted to the
Shareholders under this Declaration of Trust are granted subject to
the reservation of the right to amend this Declaration of Trust as
herein provided, except that no amendment shall repeal the limitations
on personal liability of any Shareholder or Trustee or repeal the
prohibition of assessment upon the Shareholders without the express
consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not
related to the rights of Shareholders) may be amended at any time by
<PAGE>
an instrument in writing signed by a majority of the then Trustees (or
by an officer of the Trust pursuant to the vote of a majority of such
Trustees), when authorized so to do by the vote in accordance with
subsection (e) of Section 4.2 of Shareholders holding a majority of
the Shares entitled to vote, except that amendments either (a)
establishing and designating any new Series of Shares not established
and designated in Section 4.2, or any Class or (b) having the purpose
of changing the name of the Trust or the name of any Shares
theretofore established and designated or of supplying any omission,
curing any ambiguity or curing, correcting or supplementing any
provision hereof which is internally inconsistent with any other
provision hereof or which is defective or inconsistent with the 1940
Act or with the requirements of the Internal Revenue Code and
applicable regulations for the Trust's obtaining the most favorable
treatment thereunder available to regulated investment companies,
shall not require authorization by Shareholder vote. Subject to the
foregoing, any such amendment shall be effective as provided in the
instrument containing the terms of such amendment or, if there is no
provision therein with respect to effectiveness, upon the execution of
such instrument and of a certificate (which may be a part of such
instrument) executed by a Trustee or officer of the Trust to the
effect that such amendment has been duly adopted.
Section 7.4 Filing of Copies; References; Headings. The
original or a copy of this instrument and of each amendment hereto
shall be kept at the office of the Trust where it may be inspected by
any Shareholder. A copy of this instrument and of each amendment
hereto shall be filed by the Trust with the Secretary of the State of
Ohio, as well as any other governmental office where such filing may
from time to time be required, but the failure to make any such filing
shall not impair the effectiveness of this instrument or any such
amendment. Anyone dealing with the Trust may rely on a certificate by
an officer of the Trust as to whether or not any such amendments have
been made, as to the identities of the Trustees and officers, and as
to any matters in connection with the Trust hereunder; and, with the
same effect as if it were the original, may rely on a copy certified
by an officer of the Trust to be a copy of this instrument or of any
such amendments. In this instrument and in any such amendment,
references to this instrument, and all expressions like "herein,"
"hereof" and "hereunder" shall be deemed to refer to this instrument
as a whole as the same may be amended or affected by any such
amendments. The masculine gender shall include the feminine and
neuter genders. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or control or
affect the meaning, construction or effect of this instrument. This
instrument may be executed in any number of counterparts each of which
shall be deemed an original.
Section 7.5 Applicable Law. This Declaration of Trust is
created under and is to be governed by and construed and administered
according to the laws of the State of Ohio, including the Ohio General
Corporation Law as the same may be amended from time to time, but the
reference to said Corporation Law is not intended to give the Trust,
the Trustees, the Shareholders or any other person any right, power,
authority or responsibility available only to or in connection with an
entity organized in corporate form. The Trust shall be of the type
referred to in Section 1746.01 of the Ohio Revised Code, and without
limiting the provisions hereof, the Trust may exercise all powers
which are ordinarily exercised by such a trust.
PAGE
<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto set their hands
for themselves and their assigns, as of the day and year first above
written.
/s/ John H. Alban, jr.
John H. Alban, jr.
/s/ John H. Alban, III
John H. Alban, III
STATE OF TEXAS )
) ss:
COUNTY OF DALLAS)
Before me, a Notary Public in and for said county and state,
personally appeared the above named John H. Alban, Jr. and John H.
Alban, III, who acknowledged that they did sign the foregoing
instrument and that the same is their free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal on this 4th day of January, 1996.
/s/ Kelly M. Roberts
Notary Public
My Commission Expires: March 16, 1996
<PAGE>
BYLAWS
OF
PRAGMA INVESTMENT TRUST
ARTICLE 1
Agreement and Declaration of Trust and Offices
1.1 Agreement and Declaration of Trust. These Bylaws shall be
subject to the Agreement and Declaration of Trust, as from time to
time in effect (the "Declaration of Trust"), of PRAGMA Investment
Trust, the Ohio business trust established by the Declaration of Trust
(the "Trust").
1.2 Offices. The Trust may maintain one or more other offices,
including its principal office, in or outside of Ohio, in such cities
as the Trustees may determine from time to time. Unless the Trustees
otherwise determine, the principal office of the Trust shall be
located in Cincinnati, Ohio.
ARTICLE 2
Meetings of Trustees
2.1 Regular Meetings. Regular meetings of the Trustees may be
held without call or notice at such places and at such times as the
Trustees may from time to time determine, provided that notice of the
first regular meeting following any such determination shall be given
to absent Trustees. A regular meeting of the Trustees may be held
without call or notice immediately after and at the same place as any
meeting of the shareholders.
2.2 Special Meetings. Special meetings of the Trustees may be
held at any time and at any place designated in the call of the
meeting when called by the Chairman of the Board or the Treasurer or
by two or more Trustees, sufficient notice thereof being given to each
Trustee by the Secretary or an Assistant Secretary or by the officer
or the Trustees calling the meeting.
2.3 Notice. It shall be sufficient notice to a Trustee of a
special meeting to send notice by mail at least forty-eight hours or
by telegram at least twenty-four hours before the meeting addressed to
the Trustee at his or her usual or last known business or residence
address or to give notice to him or her in person or by telephone at
least twenty-four hours before the meeting. Notice of a meeting need
not be given to any
PAGE
<PAGE>
Trustee if a written waiver of notice, executed by him or her before
or after the meeting, is filed with the records of the meeting, or to
any Trustee who attends the meeting without protesting, prior thereto
or at its commencement, the lack of notice to him or her. Neither
notice of a meeting nor a waiver of a notice need specify the purposes
of the meeting.
2.4 Quorum. At any meeting of the Trustees a majority of the
Trustees then in office shall constitute a quorum. Any meeting may be
adjourned from time to time by a majority of the votes cast upon the
question, whether or not a quorum is present, and the meeting may be
held as adjourned without further notice.
2.5 Participation by Telephone. One or more of the Trustees or
of any committee of the Trustees may participate in a meeting thereof
by means of a conference telephone or similar communications equipment
allowing all persons participating in the meeting to hear each other
at the same time. Participation by such means shall constitute
presence in person at a meeting except as otherwise provided by the
Investment Company Act of 1940.
2.6 Action by Consent. Any action required or permitted to be
taken at any meeting of the Trustees or any committee thereof may be
taken without a meeting, if a written consent of such action is signed
by a majority of the Trustees then in office or a majority of the
members of such committee, as the case may be, and such written
consent is filed with the minutes of the proceedings of the Trustees
or such committee.
ARTICLE 3
Officers
3.1 Enumeration; Qualification. The officers of the Trust shall
be a Chairman of the Board, a President, a Treasurer, a Secretary and
such other officers, including Vice Presidents, if any, as the
Trustees from time to time may in their discretion elect. The Trust
may also have such agents as the Trustees from time to time may in
their discretion appoint. The Chairman of the Board of the Trust
shall be a Trustee and may but need not be a shareholder; and any
other officer may be but none need be a Trustee or shareholder. Any
two or more offices may be held by the same person.
3.2 Election. The Chairman of the Board, the President, the
Treasurer and the Secretary shall be elected annually by the Trustees.
Other officers, if any, may be elected or appointed by the Trustees at
any time. Vacancies in any office may be filled at any time.
3.3 Tenure. The Chairman of the Board, the President, the
Treasurer and the Secretary shall hold office for one year and until
their respective successors are chosen and qualified, or in each case
until he or she sooner dies, resigns, is removed or becomes
disqualified. Each other officer shall hold office and each agent
shall retain authority at the pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these Bylaws,
each officer shall have, in addition to the duties and powers herein
and in the Declaration of Trust set forth, such duties and powers as
are commonly incident to the office occupied by him or her as if the
<PAGE>
Trust were organized as an Ohio business corporation and such other
duties and powers as the Trustees may from time to time designate.
3.5 Chairman of the Board and President. Unless the Trustees
otherwise provide, the Chairman of the Board, or in the absence of the
Chairman of the Board, the President, or in the absence of the
President, any other Trustee chosen by the Trustees, shall preside at
all meetings of the shareholders and of the Trustees. The Chairman of
the Board shall be the chief executive officer of the Trust.
3.6 Treasurer. The Treasurer shall be the chief financial and
accounting officer of the Trust, and shall, subject to the provisions
of the Declaration of Trust and to any arrangement made by the
Trustees with a custodian, investment adviser or manager, or transfer,
shareholder servicing or similar agent, be in charge of the valuable
papers, books of account and accounting records of the Trust, and
shall have such other duties and powers as may be designated from time
to time by the Trustees or by the Chairman of the Board.
3.7 Secretary. The Secretary shall record all proceedings of
the shareholders and the Trustees in books to be kept therefor, which
books or a copy thereof shall be kept at the principal office of the
Trust. In the absence of the Secretary from any meeting of the
shareholders or Trustees, an assistant secretary, or if there be none
or if he or she is absent, a temporary secretary chosen at such
meeting shall record the proceedings thereof in the aforesaid books.
3.8 Resignations and Removals. Any Trustee or officer may
resign at any time by written instrument signed by him or her and
delivered to the Chairman of the Board or the Secretary or to a
meeting of the Trustees. Such resignation shall be effective upon
receipt unless specified to be effective at some other time. The
Trustees may remove any officer elected by them with or without cause.
Except to the extent expressly provided in a written agreement with
the Trust, no Trustee or officer resigning and no officer removed
shall have any right to any compensation for any period following his
or her resignation or removal, or any right to damages on account of
such removal.
ARTICLE 4
Committees
4.1 General. The Trustees, by vote of a majority of the
Trustees then in office, may elect from their number an Executive
Committee or other committees and may delegate thereto some or all of
their powers except those which by law, by the Declaration of Trust,
or by these Bylaws may not be delegated. Except as the Trustees may
otherwise determine, any such committee may make rules for the conduct
of its business, but unless otherwise provided by the Trustees or in
such rules, its business shall be conducted so far as possible in the
same manner as is provided by these Bylaws for the Trustees
themselves. All members of such committees shall hold such offices at
the pleasure of the Trustees. The Trustees may abolish any such
committee at any time. Any committee to which the Trustees delegate
any of their powers or duties shall keep records of its meetings and
shall report its action to the Trustees. The Trustees shall have
power to rescind any action of any committee, but no such rescission
shall have retroactive effect.
<PAGE>
ARTICLE 5
Reports
5.1 General. The Trustees and officers shall render reports at
the time and in the manner required by the Declaration of Trust or any
applicable law. Officers and committees shall render such additional
reports as they may deem desirable or as may from time to time be
required by the Trustees.
ARTICLE 6
Fiscal Year
6.1 General. The fiscal year of the Trust shall be fixed, and
shall be subject to change by the Trustees.
ARTICLE 7
Seal
7.1 General. If required by applicable law, the seal of the
Trust shall consist of a flat-faced die with the word "Ohio", together
with the name of the Trust and the year of its organization cut or
engraved thereon, but, unless otherwise required by the Trustees, the
seal shall not be necessary to be placed on, and its absence shall not
impair the validity of, any document, instrument or other paper
executed and delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
8.1 General. Except as the Trustees may generally or in
particular cases authorize the execution thereof in some other manner,
all deeds, leases, contracts, notes and other obligations made by the
Trustees shall be signed by the Chairman of the Board, the President,
any Vice President, the Secretary or the Treasurer and need not bear
the seal of the Trust, but shall state the substance of or make
reference to the provisions of Section 6.1 of the Declaration of
Trust.
ARTICLE 9
Issuance of Share Certificates
9.1 Share Certificates. In lieu of issuing certificates for
shares, the Trustees or the transfer agent may either issue receipts
therefor or may keep accounts upon the books of the Trust for the
record holders of such shares, who shall in either case be deemed, for
all purposes hereunder, to be the holders of certificates for such
shares as if they had accepted such certificates and shall be held to
have expressly assented and agreed to the terms hereof.
The Trustees may at any time authorize the issuance of share
certificates. In that event, each shareholder shall be entitled to a
certificate stating the number of shares owned by him, in such form as
shall be prescribed from time to time by the Trustees. Such
certificate shall be signed by the Chairman of the Board or the
<PAGE>
President and by the Treasurer or Assistant Treasurer. Such
signatures may be facsimiles if the certificate is signed by a
transfer agent, or by a registrar, other than a Trustee, officer or
employee of the Trust. In case any officer who has signed or whose
facsimile signature has been placed on such certificate shall cease to
be such officer before such certificate is issued, it may be issued by
the Trust with the same effect as if he were such officer at the time
of its issue.
9.2 Loss of Certificates. In case of the alleged loss or
destruction or the mutilation of a share certificate, a duplicate
certificate may be issued in place thereof, upon such terms as the
Trustees shall prescribe.
9.3 Issuance of New Certificate to Pledgee. In the event
certificates have been issued, a pledgee of shares transferred as
collateral security shall be entitled to a new certificate if the
instrument of transfer substantially describes the debt or duty that
is intended to be secured thereby. Such new certificate shall express
on its face that it is held as collateral security, and the name of
the pledgor shall be stated thereon, who alone shall be liable as a
shareholder, and entitled to vote thereon.
9.4 Discontinuance of Issuance of Certificates. The Trustees
may at any time discontinue the issuance of share certificates and
may, by written notice to each shareholder, require the surrender of
share certificates to the Trust for cancellation. Such surrender and
cancellation shall not affect the ownership of shares in the Trust.
ARTICLE 10
Custodian
10.1 General. The Trust shall at all times employ a bank or
trust company having a capital, surplus and undivided profits of at
least Five Hundred Thousand ($500,000) Dollars as Custodian of the
capital assets of the Trust. The Custodian shall be compensated for
its services by the Trust and upon such basis as shall be agreed upon
from time to time between the Trust and the Custodian.
ARTICLE 11
Dealings with Trustees and Officers
11.1 General. Any Trustee, officer or other agent of the Trust
may acquire, own and dispose of shares of the Trust to the same extent
as if he were not a Trustee, officer or agent; and the Trustees may
accept subscriptions to shares or repurchase shares from any firm or
company in which he is interested.
ARTICLE 12
Shareholders
12.1 Meetings. A meeting of the shareholders of the Trust shall
be held whenever called by the Trustees, whenever election of a
Trustee or Trustees by shareholders is required by the provisions of
Section 16(a) of the Investment Company Act of 1940 for that purpose
or whenever otherwise required pursuant to the Declaration of Trust.
<PAGE>
Any meeting shall be held on such day and at such time as the Chairman
of the Board or the Trustees may fix in the notice of the meeting.
12.2 Record Dates. For the purpose of determining the
shareholders who are entitled to vote or act at any meeting or any
adjournment thereof, or who are entitled to receive payment of any
dividend or of any other distribution, the Trustees may from time to
time fix a time, which shall be not more than 60 days before the date
of any meeting of shareholders or the date for the payment of any
dividend or of any other distribution, as the record date for
determining the shareholders having the right to notice of and to vote
at such meeting and any adjournment thereof or the right to receive
such dividend or distribution, and in such case, only shareholders of
record on such record date shall have such right, notwithstanding any
transfer of shares on the books of the Trust after the record date; or
without fixing such record date the Trustees may for any such purposes
close the register or transfer books for all or any part of such
period.
ARTICLE 13
Amendments to the Bylaws
13.1 General. These Bylaws may be amended or repealed, in whole
or in part, by a majority of the Trustees then in office at any
meeting of the Trustees, or by one or more writings signed by such a
majority.
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this day of , 1996, by and between
PRAGMA INVESTMENT TRUST (the "Trust"), an unincorporated business
trust organized under the laws of the State of Ohio, and PRAGMA, INC.
(the "Adviser"), a corporation organized under the laws of the State
of Texas.
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end
management investment company and is so registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust currently consists of one series portfolio,
the PRAGMA Providence Fund (the "Fund"), and the Trustees have the power
to create additional series;
WHEREAS, the Adviser is engaged in the business of rendering
investment advisory and management services and is registered as an
investment adviser under the Investment Advisers Act of 1940, as
amended; and
WHEREAS, the Trust desires to retain the Adviser to furnish
investment advisory services to the Trust and the Fund and the Adviser
is willing to furnish such services to the Trust and the Fund;
NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:
1. Appointment of Adviser. The Trust hereby appoints the
Adviser to act as investment manager of the Fund for the period and on
the terms herein set forth. The Adviser accepts such appointment and
agrees to render the services herein set forth, for the compensation
herein provided.
2. Investment Advisory Services. The Adviser shall supervise
the investments of the Fund. In such capacity, the Adviser shall
maintain a continuous investment program for the Fund, determine what
securities shall be purchased or sold by the fund, secure and evaluate
such information as it deems proper and take whatever action is
necessary or convenient to perform its functions, including the
placing of purchase and sale orders.
The Adviser shall also provide or arrange for and supervise the
provision by third parties to the Fund of custody, transfer agency,
administrative, accounting, legal, audit and similar services.
In executing portfolio transactions and selecting brokers or
dealers, the Adviser will use its best efforts to seek on behalf of
the Fund the best overall terms available. In assessing the best
overall terms available for any transaction, the Adviser shall
consider all factors it deems relevant, including the breadth of the
market in the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the
commission, if any (for the specific transaction and on a continuing
basis). In evaluating the best overall terms available and in
<PAGE>
selecting the broker or dealer to execute a particular transaction,
the Adviser may also consider the brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange
Act of 1934, as amended) provided by such broker or dealer to the Fund
or other accounts over which the Adviser or any affiliate of the
Adviser exercised investment discretion. The Adviser may cause the
Fund to pay to a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio transaction
for the Fund which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if,
but only if, the Adviser determines in good faith that such commission
is reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either
that particular transaction or in terms of all of the accounts over
which the Adviser or any affiliate of the Adviser exercises investment
discretion.
3. Compliance with Laws. All functions undertaken by the
Adviser hereunder shall at all times conform to, and be in accordance
with, any requirements imposed by: (1) the 1940 Act, and any rules and
regulations promulgated thereunder; (2) any other applicable
provisions of law; (3) the Declaration of Trust of the Trust as
amended from time to time; (4) the Bylaws of the Trust as amended from
time to time; and (5) the registration statements of the Trust as
amended from time to time, filed under the Securities Act of 1933, as
amended and the 1940 Act.
4. Board Supervision. All of the functions undertaken by the
Adviser hereunder shall at all times be subject to the direction of
the Board of Trustees of the Trust, or any committee thereof or
officers of the Trust acting under the authority of the Board of
Trustees.
5. Payment of Expenses. The Adviser will pay all of the
expenses of the Fund (including the fees and charges of third-party
service providers engaged pursuant to paragraph (2) above) except the
following: interest; taxes; brokerage commissions; extraordinary
expenses; and the fees and expenses, including ordinary counsel fees,
of those Trustees who are not "interested persons" as defined in the
1940 Act (hereinafter referred to as the "Independent Trustees"). The
Adviser will provide the Trust with such facilities and personnel as
may, from time to time, be required to carry on the business of the
Fund including but not limited to office space, office furniture,
fixtures and equipment, office supplies, computer hardware and
software and salaried and hourly paid personnel. The Adviser may at
its expense employ others to provide all or any part of such
facilities and personnel.
6. Account Fees. The Trust, by resolution of the Board of
Trustees, including a majority of the Independent Trustees, may from
time to time authorize the imposition of a fee as a direct charge
against shareholder accounts of the Fund, such fee to be retained by
the Trust or to be paid to the Adviser to defray expenses which would
otherwise be paid by the Adviser in accordance with the provisions of
paragraph 5 of this Agreement. At least sixty (60) days' prior
written notice of the intent to impose such fee must be given to the
shareholders of the Fund.
<PAGE>
<PAGE>
7. Compensation of Adviser. (a) As full compensation for the
services and such facilities as may from time to time be furnished by
the Adviser under this Agreement, the Fund agrees to pay to the
Adviser a fee at the annual rate of 1.50% of the Fund's average daily
net asset value less the accrued fees and expenses, including ordinary
counsel fees, of the Independent Trustees of the Trust. Such fee
shall be accrued daily and payable monthly. For purposes of
calculating such fee, such net asset value shall be determined by
taking the average of all determinations of net asset value made in
the manner provided in the Fund's current Prospectus and Statement of
Additional Information.
(b) For any period less than a full month during which this
Agreement is in effect the compensation payable to the Adviser
hereunder shall be prorated according to the proportion which such
period bears to a full month.
(c) The Adviser agrees that if total expenses of the Fund for
any fiscal year exceed the permissible limits applicable to the Fund
in any state in which the Fund's shares are then qualified for sale,
the compensation due the Adviser for such fiscal year shall be reduced
by the amount of such excess by a reduction or refund thereof at the
time such compensation is payable after the end of each calendar month
during such fiscal year of the Fund, subject to readjustment during
the Fund's fiscal year.
8. Limitation of Liability of Adviser. The Adviser shall not
be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with any investment policy or the
purchase, sale, or retention of any investment on the recommendation
of the Adviser; provided, however, that nothing herein contained shall
be construed to protect the Adviser against any liability to the Fund
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its
obligations and duties under this Agreement.
9. Term and Termination. (a) This Agreement shall become
effective on the date hereof. Unless terminated as herein provided,
this Agreement shall remain in full force and effect for two years
from the date hereof and shall continue in full force and effect for
successive periods of one year thereafter, but only so long as each
such continuance is approved (i) by either the Trustees of the Trust
or by vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund, and, in either event, (ii) by
vote of a majority of the Trustees of the Trust who are not parties to
this Agreement or interested persons (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of
voting on such approval.
(b) This Agreement may be terminated at any time without the
payment of any penalty by vote of the Trustees of the Trust or by vote
of the holders of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund or by the Adviser, on sixty days'
written notice to the other party.
(c) This Agreement shall automatically and immediately terminate
in the event of its assignment (as defined in the 1940 Act).
PAGE
<PAGE>
10. Limitation of Liability of Trustees and Shareholders. A
copy of the Declaration of Trust of the Trust is on file with the
Secretary of State of the State of Ohio and notice is hereby given
that this Agreement is executed on behalf of the Trustees of the Trust
as trustees and not individually and that the obligations of this
instrument are not binding upon the Trustees or holders of shares of
the Trust individually but are binding only upon the assets and
property of the Trust.
11. Use of Name. The name "PRAGMA" is a property right of the
Adviser and may be used by the Adviser in other connections and for
other purposes, including in the name of other investment companies.
The Fund will discontinue any use of the name "PRAGMA" if the Adviser
ceases to be employed as the Fund's investment manager.
IN WITNESS WHEREOF the parties hereto have caused this Agreement
to be duly executed as of the date first written above.
PRAGMA INVESTMENT TRUST
ATTEST:
____________________
By:___________________________
President
PRAGMA, INC.
ATTEST:
____________________
By:___________________________
President
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CUSTODY AGREEMENT
This AGREEMENT, dated as of ________, 1996, by and between
PRAGMA INVESTMENT TRUST (the "Trust"), a business trust organized
under the laws of the State of Ohio, acting with respect to the
PRAGMA PROVIDENCE FUND (the "Fund"), a series of the Trust operated
and administered by the Trust, PRAGMA, INC. ("PRAGMA"), a
corporation organized under the laws of the State of Texas and
STAR BANK, N.A. (the "Custodian"), a national banking association.
W I T N E S S E T H:
WHEREAS, the Trust is an open-end management investment
company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, PRAGMA is registered as an investment adviser under
the Investment Advisers Act of 1940 and provides advisory services
to the Trust pursuant to an Investment Advisory Agreement; and
WHEREAS, under the Investment Advisory Agreement, PRAGMA is
responsible for retaining and compensating agents to provide non-
advisory services to the Trust; and
WHEREAS, PRAGMA and the Trust desire that the Fund's
Securities and cash be held and administered by the Custodian
pursuant to this Agreement; and
WHEREAS, the Custodian represents that it is a bank having
the qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements
herein made, the Trust, PRAGMA and the Custodian hereby agree as
follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the
following meanings:
1.1 "Authorized Person" means any Officer or other person
duly authorized by resolution of the Board of Trustees to give
Oral Instructions and Written Instructions on behalf of the Fund
and named in Exhibit A hereto or in such resolutions of the Board
of Trustees, certified by an Officer, as may be received by the
Custodian from time to time.
1.2 "Board of Trustees" shall mean the Trustees from time to
time serving under the Trust's Agreement and Declaration of Trust,
as from time to time amended.
1.3 "Book-Entry System" shall mean a federal book-entry
system as provided in Subpart O of Treasury Circular No. 300, 31
CFR 306, in Subpart B of 31 CFR Part 350, or in such book-entry
regulations of federal agencies as are substantially in the form
of such Subpart O.
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1.4 "Business Day" shall mean any day recognized as a
settlement day by The New York Stock Exchange, Inc. and any other
day for which the Trust computes the net asset value of Shares of
the Fund.
1.5 "NASD" shall mean The National Association of
Securities Dealers, Inc.
1.6 "Officer" shall mean the Chairman of the Board, the
President, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer, or any Assistant Treasurer of the Trust.
1.7 "Oral Instructions" shall mean instructions orally
transmitted to and accepted by the Custodian because such
instructions are: (i) reasonably believed by the Custodian to
have been given by an Authorized Person, (ii) recorded and kept
among the records of the Custodian made in the ordinary course of
business and (iii) orally confirmed by the Custodian. The Trust
shall cause all Oral Instructions to be confirmed by Written
Instructions prior to the end of the next Business Day. If such
Written Instructions confirming Oral Instructions are not received
by the Custodian prior to a transaction, it shall in no way affect
the validity of the transaction or the authorization thereof by
the Trust. If Oral Instructions vary from the Written
Instructions which purport to confirm them, the Custodian shall
notify the Trust of such variance but such Oral Instructions will
govern unless the Custodian has not yet acted.
1.8 "Fund Custody Account" shall mean the account in the
name of the Trust, which is provided for in Section 3.2 below.
1.9 "Proper Instructions" shall mean Oral Instructions or
Written Instructions. Proper Instructions may be continuing
Written Instructions when deemed appropriate by both parties.
1.10 "Securities Depository" shall mean The Depository Trust
Company and (provided that Custodian shall have received a copy of
a resolution of the Board of Trustees, certified by an Officer,
specifically approving the use of such clearing agency as a
depository for the Fund) any other clearing agency registered with
the Securities and Exchange Commission under Section 17A of the
Securities and Exchange Act of 1934, as amended (the "1934 Act"),
which acts as a system for the central handling of Securities
where all Securities of any particular class or series of an
issuer deposited within the system are treated as fungible and may
be transferred or pledged by bookkeeping entry without physical
delivery of the Securities.
1.11 "Securities" shall include, without limitation, common
and preferred stocks, bonds, call options, put options,
debentures, notes, bank certificates of deposit, bankers'
acceptances, mortgage-backed securities or other obligations, and
any certificates, receipts, warrants or other instruments or
documents representing rights to receive, purchase or subscribe
for the same, or evidencing or representing any other rights or
interests therein, or any similar property or assets that the
Custodian has the facilities to clear and to service.
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1.12 "Shares" shall mean the units of beneficial interest
issued by the Trust on account of the Fund.
1.13 "Written Instructions" shall mean (i) written
communications actually received by the Custodian and signed by an
Authorized Person, or (ii) communications by telex or any other
such system from one or more persons reasonably believed by the
Custodian to be Authorized Persons, or (iii) communications
between electro-mechanical or electronic devices provided that the
use of such devices and the procedures for the use thereof shall
have been approved by resolutions of the Board of Trustees, a copy
of which, certified by an Officer, shall have been delivered to
the Custodian.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Trust and PRAGMA hereby
constitute and appoint the Custodian as custodian of all
Securities and cash owned by or in the possession of the Fund at
any time during the period of this Agreement.
2.2 Acceptance. The Custodian hereby accepts appointment as
such custodian and agrees to perform the duties thereof as
hereinafter set forth.
2.3 Documents to be Furnished. The following documents,
including any amendments thereto, will be provided
contemporaneously with the execution of the Agreement to the
Custodian by the Trust:
a. A copy of the Declaration of Trust of the Trust
certified by the Secretary;
b. A copy of the Bylaws of the Trust certified by the
Secretary;
c. A copy of the resolution of the Board of Trustees
of the Trust appointing the Custodian, certified by
the Secretary;
d. A copy of the then current Prospectus of the Fund;
and
e. A certification of the President and Secretary of
the Trust setting forth the names and signatures of
the current Officers of the Trust and other
Authorized Persons.
2.4 Notice of Appointment of Dividend and Transfer Agent.
The Trust and PRAGMA agree to notify the Custodian in writing of
the appointment, termination or change in appointment of any
Dividend and Transfer Agent of the Fund.
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ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 Segregation. All Securities and non-cash property held
by the Custodian for the account of the Fund (other than
Securities maintained in a Securities Depository or Book-Entry
System) shall be physically segregated from other Securities and
non-cash property in the possession of the Custodian and shall be
identified as subject to this Agreement.
3.2 Fund Custody Account. The Custodian shall open and
maintain in its trust department a custody account in the name of
the Trust coupled with the name of the Fund, subject only to draft
or order of the Custodian, in which the Custodian shall enter and
carry all Securities, cash and other assets of the Fund which are
delivered to it.
3.3 Appointment of Agents. In its discretion, the Custodian
may appoint, and at any time remove, any domestic bank or trust company,
which has been approved by the Board of Trustees and is qualified to
act as custodian under 1940 Act, as sub-custodians to hold Securities
and cash of the Fund and to carry out such other provisions of
this Agreement as it may determine, provided, however, that the
appointment of any such agents and maintenance of any Securities
and cash of the Fund shall be at the Custodian's expense and shall
not relieve the Custodian of any of its obligations or liabilities
under this Agreement.
3.4 Delivery of Assets to Custodian. The Trust shall
deliver, or cause to be delivered, to the Custodian all of the
Fund's Securities, cash and other assets, including (a) all
payments of income, payments of principal and capital
distributions received by the Fund with respect to such
Securities, cash or other assets owned by the Fund at any time
during the period of this Agreement, and (b) all cash received by
the Fund for the issuance, at any time during such period, of
Shares. The Custodian shall not be responsible for such
Securities, cash or other assets until actually received by it.
3.5 Securities Depositories and Book-Entry Systems. The
Custodian may deposit and/or maintain Securities of the Fund in a
Securities Depository or in a Book-Entry System, subject to the
following provisions:
(a) Prior to a deposit of Securities of the Fund in any
Securities Depository or Book-Entry System, the Trust
shall deliver to the Custodian a resolution of the Board
of Trustees, certified by an Officer, authorizing and
instructing the Custodian on an on-going basis to
deposit in such Securities Depository or Book-Entry
System all Securities eligible for deposit therein and
to make use of such Securities Depository or Book-Entry
System to the extent possible and practical in
connection with its performance hereunder, including,
without limitation, in connection with settlements of
purchases and sales of Securities, loans of Securities,
and deliveries and returns of collateral consisting of
Securities.
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(b) Securities of the Fund kept in a Book-Entry System or
Securities Depository shall be kept in an account
("Depository Account") of the Custodian in such Book-
Entry System or Securities Depository which includes
only assets held by the Custodian as a fiduciary,
custodian or otherwise for customers.
(c) The records of the Custodian with respect to Securities
of the Fund maintained in a Book-Entry System or
Securities Depository shall, by book-entry, identify
such Securities as belonging to the Fund.
(d) If Securities purchased by the Fund are to be held in a
Book-Entry System or Securities Depository, the
Custodian shall pay for such Securities upon (i) receipt
of advice from the Book-Entry System or Securities
Depository that such Securities have been transferred to
the Depository Account, and (ii) the making of an entry
on the records of the Custodian to reflect such payment
and transfer for the account of the Fund. If Securities
sold by the Fund are held in a Book-Entry System or
Securities Depository, the Custodian shall transfer such
Securities upon (i) receipt of advice from the Book-
Entry System or Securities Depository that payment for
such Securities has been transferred to the Depository
Account, and (ii) the making of an entry on the records
of the Custodian to reflect such transfer and payment
for the account of the Fund.
(e) The Custodian shall provide the Trust with copies of any
report (obtained by the Custodian from a Book-Entry
System or Securities Depository in which Securities of
the Fund are kept) on the internal accounting controls
and procedures for safeguarding Securities deposited in
such Book-Entry System or Securities Depository.
(f) Anything to the contrary in this Agreement
notwithstanding, the Custodian shall be liable to the
Trust for any loss or damage to the Fund resulting (i)
from the use of a Book-Entry System or Securities
Depository by reason of any negligence or willful
misconduct on the part of Custodian or any Sub-Custodian
appointed pursuant to Section 3.3 above or any of its or
their employees, or (ii) from failure of Custodian or
any such Sub-Custodian to enforce effectively such
rights as it may have against a Book-Entry System or
Securities Depository. At its election, the Trust shall
be subrogated to the rights of the Custodian with
respect to any claim against a Book-Entry System or
Securities Depository or any other person from any loss
or damage to the Fund arising from the use of such Book-
Entry System or Securities Depository, if and to the
extent that the Fund has not been made whole for any
such loss or damage.
3.6 Disbursement of Moneys from Fund Custody Account. Upon
receipt of Proper Instructions, the Custodian shall disburse
moneys from the Fund Custody Account but only in the following
cases:
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(a) For the purchase of Securities for the Fund but only in
accordance with Section 4.1 of this Agreement and only
(i) in the case of Securities (other than options on
Securities, futures contracts and options on futures
contracts), against the delivery to the Custodian (or
any Sub-Custodian appointed pursuant to Section 3.3
above) of such Securities registered as provided in
Section 3.9 below or in proper form for transfer, or if
the purchase of such Securities is effected through a
Book-Entry System or Securities Depository, in
accordance with the conditions set forth in Section 3.5
above; (ii) in the case of options on Securities,
against delivery to the Custodian (or such Sub-
Custodian) of such receipts as are required by the
customs prevailing among dealers in such options; (iii)
in the case of futures contracts and options on futures
contracts, against delivery to the Custodian (or such
Sub-Custodian) of evidence of title thereto in favor of
the Fund or any nominee referred to in Section 3.9
below; and (iv) in the case of repurchase or reverse
repurchase agreements entered into between the Trust and
a bank which is a member of the Federal Reserve System
or between the Trust and a primary dealer in U.S.
Government securities, against delivery of the purchased
Securities either in certificate form or through an
entry crediting the Custodian's account at a Book-Entry
System or Securities Depository with such Securities;
(b) In connection with the conversion, exchange or
surrender, as set forth in Section 3.7(f) below, of
Securities owned by the Fund;
(c) For the payment of any dividends or capital gain
distributions declared by the Fund;
(d) In payment of the redemption price of Shares as provided
in Section 5.1 below;
(e) For the payment of any expense or liability incurred by
the Fund, including but not limited to the following
payments for the account of the Fund: interest; taxes;
investment advisory fees; trustee fees and expenses; and
other operating expenses of the Fund; in all cases,
whether or not such expenses are to be in whole or in
part capitalized or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any
agreement among the Trust, the Custodian and a broker-
dealer registered under the 1934 Act and a member of the
NASD, relating to compliance with rules of The Options
Clearing Corporation and of any registered national
securities exchange (or of any similar organization or
organizations) regarding escrow or other arrangements in
connection with transactions by the Fund;
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(g) For transfer in accordance with the provision of any
agreement among the Trust, the Custodian, and a futures
commission merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of
the Commodity Futures Trading Commission and/or any
contract market (or any similar organization or
organizations) regarding account deposits in connection
with transactions by the Fund;
(h) For the funding of any uncertificated time deposit or
other interest-bearing account with any banking
institution (including the Custodian), which deposit or
account has a term of one year or less; and
(i) For any other proper purpose, but only upon receipt, in
addition to Proper Instructions, of a copy of a
resolution of the Board of Trustees, certified by an
Officer, specifying the amount and purpose of such
payment, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom such
payment is to be made.
3.7 Delivery of Securities from Fund Custody Account. Upon
receipt of Proper Instructions, the Custodian shall release and
deliver Securities from the Fund Custody Account but only in the
following cases:
(a) Upon the sale of Securities for the account of the Fund
but only against receipt of payment therefor in cash, by
certified or cashiers check or bank credit;
(b) In the case of a sale effected through a Book-Entry
System or Securities Depository, in accordance with the
provisions of Section 3.5 above;
(c) To an offeror's depository agent in connection with
tender or other similar offers for Securities of the
Fund; provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
(d) To the issuer thereof or its agent (i) for transfer into
the name of the Fund, the Custodian or any Sub-Custodian
appointed pursuant to Section 3.3 above, or of any
nominee or nominees of any of the foregoing, or (ii) for
exchange for a different number of certificates or other
evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the
new Securities are to be delivered to the Custodian;
(e) To the broker selling Securities, for examination in
accordance with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan or
merger, consolidation, recapitalization, reorganization
or readjustment of the issuer of such Securities, or
pursuant to provisions for conversion contained in such
Securities, or pursuant to any deposit agreement,
including surrender or receipt of underlying Securities
in connection with the issuance or cancellation of
<PAGE>
depository receipts; provided that, in any such case,
the new Securities and cash, if any, are to be delivered
to the Custodian;
(g) Upon receipt of payment therefor pursuant to any
repurchase or reverse repurchase agreement entered into
by the Fund;
(h) In the case of warrants, rights or similar Securities,
upon the exercise thereof, provided that, in any such
case, the new Securities and cash, if any, are to be
delivered to the Custodian;
(i) For delivery in connection with any loans of Securities
of the Fund, but only against receipt of such collateral
as the Trust shall have specified to the Custodian in
Proper Instructions;
(j) For delivery as security in connection with any
borrowings by the Fund requiring a pledge of assets by
the Trust, but only against receipt by the Custodian of
the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation,
reorganization, merger, consolidation or
recapitalization of the Trust;
(l) For delivery in accordance with the provisions of any
agreement among the Trust, the Custodian and a broker-
dealer registered under the 1934 Act and a member of the
NASD, relating to compliance with the rules of The
Options Clearing Corporation and of any registered
national securities exchange (or of any similar
organization or organizations) regarding escrow or other
arrangements in connection with transactions by the
Fund;
(m) For delivery in accordance with the provisions of any
agreement among the Trust, the Custodian, and a futures
commission merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of
the Commodity Futures Trading Commission and/or any
contract market (or any similar organization or
organizations) regarding account deposits in connection
with transactions by the Fund; or
(n) For any other proper corporate purpose, but only upon
receipt, in addition to Proper Instructions, of a copy
of a resolution of the Board of Trustees, certified by
an Officer, 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 corporate
purpose, and naming the person or persons to whom
delivery of such Securities shall be made.
3.8 Actions Not Requiring Proper Instructions. Unless
otherwise instructed by the Trust, the Custodian shall with
respect to all Securities held for the Fund:
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(a) Subject to Section 7.4 below, collect on a timely basis
all income and other payments to which the Fund is
entitled either by law or pursuant to custom in the
securities business;
(b) Present for payment and, subject to Section 7.4 below,
collect on a timely basis the amount payable upon all
Securities which may mature or be called, redeemed, or
retired, or otherwise become payable;
(c) Endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary
form for Securities in definitive form;
(e) Execute, as custodian, 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 prepare and
submit reports to the Internal Revenue Service ("IRS")
and to the Trust at such time, in such manner and
containing such information as is prescribed by the IRS;
(f) Hold for the Fund, either directly or, with respect to
Securities held therein, through a Book-Entry System or
Securities Depository, all rights and similar securities
issued with respect to Securities of the Fund; and
(g) In general, and except as otherwise directed in Proper
Instructions, attend to all non-discretionary details in
connection with the sale, exchange, substitution,
purchase, transfer and other dealings with Securities
and assets of the Fund.
3.9 Registration and Transfer of Securities. All Securities
held for the Fund that are issued or issuable only in bearer form
shall be held by the Custodian in that form, provided that any
such Securities shall be held in a Book-Entry System if eligible
therefor. All other Securities held for the Fund may be
registered in the name of the Fund, the Custodian, or any Sub-
Custodian appointed pursuant to Section 3.3 above, or in the name
of any nominee of any of them, or in the name of a Book-Entry
System, Securities Depository or any nominee of either thereof.
The Trust shall 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 any of the nominees
hereinabove referred to or in the name of a Book-Entry System or
Securities Depository, any Securities registered in the name of
the Fund.
3.10 Records. (a) The Custodian shall maintain complete and
accurate records with respect to Securities, cash or other
property held for the Fund, including (i) journals or other
records of original entry containing an itemized daily record in
detail of all receipts and deliveries of Securities and all
receipts and disbursements of cash; (ii) ledgers (or other
records) reflecting (A) Securities in transfer, (B) Securities in
physical possession, (C) monies and Securities borrowed and monies
<PAGE>
and Securities loaned (together with a record of the collateral
therefor and substitutions of such collateral), (D) dividends and
interest received, and (E) dividends receivable and interest
receivable; and (iii) canceled checks and bank records related
thereto. The Custodian shall keep such other books and records of
the Fund as the Trust shall reasonably request, or as may be
required by the 1940 Act, including, but not limited to, Section
31 of the 1940 Act and Rule 31a-2 promulgated thereunder.
(b) All such books and records maintained by the Custodian
shall (i) be maintained in a form acceptable to the Trust and in
compliance with rules and regulations of the Securities and
Exchange Commission, (ii) be the property of the Trust and at all
times during the regular business hours of the Custodian be made
available upon request for inspection by duly authorized officers,
employees or agents of the Trust and employees or agents of the
Securities and Exchange Commission, and (iii) if required to be
maintained by Rule 31a-1 under the 1940 Act, be preserved for the
periods prescribed in Rule 31a-2 under the 1940 Act.
3.11 Fund Reports by Custodian. The Custodian shall furnish
the Trust with a daily activity statement and a summary of all
transfers to or from the Fund Custody Account on the day following
such transfers. At least monthly and from time to time, the
Custodian shall furnish the Trust with a detailed statement of the
Securities and moneys held by the Custodian and the Sub-Custodians
for the Fund under this Agreement.
3.12 Other Reports by Custodian. The Custodian shall
provide the Trust with such reports, as the Trust may reasonably
request from time to time, on the internal accounting controls and
procedures for safeguarding Securities, which are employed by the
Custodian or any Sub-Custodian appointed pursuant to Section 3.3
above.
3.13 Proxies and Other Materials. The Custodian shall cause
all proxies relating to Securities which are not registered in the
name of the Fund, to be promptly executed by the registered holder
of such Securities, without indication of the manner in which such
proxies are to be voted, and shall promptly deliver to the Trust
such proxies, all proxy soliciting materials and all notices
relating to such Securities.
3.14 Information on Corporate Actions. The Custodian shall
promptly deliver to the Trust all information received by the
Custodian and pertaining to Securities being held by the Fund
with respect to optional tender or exchange offers, calls for
redemption or purchase, or expiration of rights as described in
the Standards of Service Guide attached as Exhibit B. If the
Trust desires to take action with respect to any tender offer,
exchange offer or other similar transaction, the Trust shall
notify the Custodian at least five Business Days prior to the date
on which the Custodian is to take such action. The Trust will
provide or cause to be provided to the Custodian all relevant
information for any Security which has unique put/option
provisions at least five Business Days prior to the beginning date
of the tender period.
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ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.1 Purchase of Securities. Promptly upon each purchase of
Securities for the Fund, Written Instructions shall be delivered
to the Custodian, specifying (a) the name of the issuer or writer
of such Securities, and the title or other description thereof,
(b) the number of shares, principal amount (and accrued interest,
if any) or other units purchased, (c) the date of purchase and
settlement, (d) the purchase price per unit, (e) the total amount
payable upon such purchase, and (f) the name of the person to whom
such amount is payable. The Custodian shall upon receipt of such
Securities purchased by the Fund pay out of the moneys held for
the account of the Fund the total amount specified in such Written
Instructions to the person named therein. The Custodian shall not
be under any obligation to pay out moneys to cover the cost of a
purchase of Securities for the Fund, if in the Fund Custody
Account there is insufficient cash available to the Fund for which
such purchase was made.
4.2 Liability for Payment in Advance of Receipt of
Securities Purchased. In any and every case where payment for the
purchase of Securities for the Fund is made by the Custodian in
advance of receipt of the Securities purchased but in the absence
of specified Written Instructions to so pay in advance, the
Custodian shall be liable to the Fund for such Securities to the
same extent as if the Securities had been received by the
Custodian.
4.3 Sale of Securities. Promptly upon each sale of
Securities by the Fund, Written Instructions shall be delivered to
the Custodian, specifying (a) the name of the issuer or writer of
such Securities, and the title or other description thereof, (b)
the number of shares, principal amount (and accrued interest, if
any), or other units sold, (c) the date of sale and settlement,
(d) the sale price per unit, (e) the total amount payable upon
such sale, and (f) the person to whom such Securities are to be
delivered. Upon receipt of the total amount payable to the Fund
as specified in such Written Instructions, the Custodian shall
deliver such Securities to the person specified in such Written
Instructions. 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.
4.4 Delivery of Securities Sold. Notwithstanding Section
4.3 above or any other provision of this Agreement, the Custodian,
when instructed to deliver Securities against payment, shall be
entitled, if in accordance with generally accepted market
practice, to deliver such Securities prior to actual receipt of
final payment therefor. In any such case, the Fund shall bear the
risk that final payment for such Securities may not be made or
that such Securities may be returned or otherwise held or disposed
of by or through the person to whom they were delivered, and the
Custodian shall have no liability for any for the foregoing.
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4.5 Payment for Securities Sold, etc. In its sole
discretion and from time to time, the Custodian may credit the
Fund Custody Account, prior to actual receipt of final payment
thereof, with (i) proceeds from the sale of Securities which it
has been instructed to deliver against payment, (ii) proceeds from
the redemption of Securities or other assets of the Fund, and
(iii) income from cash, Securities or other assets of the Fund.
Any such credit shall be conditional upon actual receipt by
Custodian of final payment and may be reversed if final payment is
not actually received in full. The Custodian may, in its sole
discretion and from time to time, permit the Fund to use funds so
credited to the Fund Custody Account in anticipation of actual
receipt of final payment. Any such funds shall be repayable
immediately upon demand made by the Custodian at any time prior to
the actual receipt of all final payments in anticipation of which
funds were credited to the Fund Custody Account.
4.6 Advances by Custodian for Settlement. The Custodian
may, in its sole discretion and from time to time, advance funds
to the Trust to facilitate the settlement of the Fund's
transactions in the Fund Custody Account. Any such advance shall
be repayable immediately upon demand made by Custodian.
ARTICLE V
REDEMPTION OF FUND SHARES
5.1 Transfer of Funds. From such funds as may be available
for the purpose in the Fund Custody Account, and upon receipt of
Proper Instructions specifying that the funds are required to
redeem Shares of the Fund, the Custodian shall wire each amount
specified in such Proper Instructions to or through such bank as
the Trust may designate with respect to such amount in such Proper
Instructions.
5.2 No Duty Regarding Paying Banks. The Custodian shall not
be under any obligation to effect payment or distribution by any
bank designated in Proper Instructions given pursuant to Section
5.1 above of any amount paid by the Custodian to such bank in
accordance with such Proper Instructions.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall
establish and maintain a segregated account or accounts for and on
behalf of the Fund, into which account or accounts may be
transferred cash and/or Securities, including Securities
maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among
the Trust, the Custodian and a broker-dealer registered
under the 1934 Act and a member of the NASD (or any
futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with the
rules of The Options Clearing Corporation and of any
registered national securities exchange (or the
Commodity Futures Trading Commission or any registered
<PAGE>
contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in
connection with transactions by the Fund,
(b) for purposes of segregating cash or Securities in
connection with securities options purchased or written
by the Fund or in connection with financial futures
contracts (or options thereon) purchased or sold by the
Fund,
(c) which constitute collateral for loans of Securities made
by the Fund,
(d) for purposes of compliance by the Fund with requirements
under the 1940 Act for the maintenance of segregated
accounts by registered investment companies in
connection with reverse repurchase agreements and when-
issued, delayed delivery and firm commitment
transactions, and
(e) for other proper corporate purposes, but only upon
receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board of Trustees,
certified by an Officer, setting forth the purpose or
purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 Standard of Care. The Custodian shall be held to the
exercise of reasonable care in carrying out its obligations under
this Agreement, and shall be without liability to the Trust or the
Fund for any loss, damage, cost, expense (including attorneys'
fees and disbursements), liability or claim unless such loss,
damage, cost, expense, liability or claim arises from negligence,
bad faith or willful misconduct on its part or on the part of any
Sub-Custodian appointed pursuant to Section 3.3 above. The
Custodian shall be entitled to rely on and may act upon advice of
counsel on all matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such advice. The
Custodian shall promptly notify the Trust of any action taken or
omitted by the Custodian pursuant to advice of counsel. The
Custodian shall not be under any obligation at any time to
ascertain whether the Trust or the Fund is in compliance with the
1940 Act, the regulations thereunder, the provisions of the
Trust's charter documents or by-laws, or its investment objectives
and policies as then in effect.
7.2 Actual Collection Required. The Custodian shall not be
liable for, or considered to be the custodian of, any cash
belonging to the Fund or any money represented by a check, draft
or other instrument for the payment of money, until the Custodian
or its agents actually receive such cash or collect on such
instrument.
7.3 No Responsibility for Title, etc. So long as and to the
extent that it is in the exercise of reasonable care, the
<PAGE>
Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received
or delivered by it pursuant to this Agreement.
7.4 Limitation on Duty to Collect. Custodian shall not be
required to enforce collection, by legal means or otherwise, of
any money or property due and payable with respect to Securities
held for the Fund if such Securities are in default or payment is
not made after due demand or presentation.
7.5 Reliance Upon Documents and Instructions. The Custodian
shall be entitled to rely upon any certificate, notice or other
instrument in writing received by it and reasonably believed by it
to be genuine. The Custodian shall be entitled to rely upon any
Oral Instructions and any Written Instructions actually received
by it pursuant to this Agreement.
7.6 Express Duties Only. The Custodian shall have no duties
or obligations whatsoever except such duties and obligations as
are specifically set forth in this Agreement, and no covenant or
obligation shall be implied in this Agreement against the
Custodian.
7.7 Co-operation. The Custodian shall cooperate with and
supply necessary information to the entity or entities appointed
by the Trust to keep the books of account of the Fund and/or
compute the value of the assets of the Fund. The Custodian shall
take all such reasonable actions as the Trust may from time to
time request to enable the Trust to obtain, from year to year,
favorable opinions from the Trust's independent accountants with
respect to the Custodian's activities hereunder in connection with
(a) the preparation of the Trust's reports on Form N-1A and Form
N-SAR and any other reports required by the Securities and
Exchange Commission, and (b) the fulfillment by the Trust of any
other requirements of the Securities and Exchange Commission.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Trust. The Trust and PRAGMA shall
indemnify and hold harmless the Custodian and any Sub-Custodian
appointed pursuant to Section 3.3 above, and any nominee of the
Custodian or of such Sub-Custodian, from and against any loss,
damage, cost, expense (including attorneys' fees and
disbursements), liability (including, without limitation,
liability arising under the Securities Act of 1933, the 1934 Act,
the 1940 Act, and any state or foreign securities and/or banking
laws) or claim arising directly or indirectly (a) from the fact
that Securities are registered in the name of any such nominee, or
(b) from any action or inaction by the Custodian or such Sub-
Custodian (i) at the request or direction of or in reliance on the
advice of the Trust, or (ii) upon Proper Instructions, or (c)
generally, from the performance of its obligations under this
Agreement or any sub-custody agreement with a Sub-Custodian
appointed pursuant to Section 3.3 above, provided that neither the
Custodian nor any such Sub-Custodian shall be indemnified and held
harmless from and against any such loss, damage, cost, expense,
<PAGE>
liability or claim arising from the Custodian's or such Sub-
Custodian's negligence, bad faith or willful misconduct.
8.2 Indemnification by Custodian. The Custodian shall
indemnify and hold harmless the Trust and PRAGMA from and against
any loss, damage, cost, expense (including attorneys' fees and
disbursements), liability (including without limitation, liability
arising under the Securities Act of 1933, the 1934 Act, the 1940
Act, and any state or foreign securities and/or banking laws) or
claim arising from the negligence, bad faith or willful misconduct
of the Custodian or any Sub-Custodian appointed pursuant to
Section 3.3 above, or any nominee of the Custodian or of such Sub-
Custodian.
8.3 Indemnity to be Provided. If the Trust requests the
Custodian to take any action with respect to Securities, which
may, in the opinion of the Custodian, result in the Custodian or
its nominee becoming liable for the payment of money or incurring
liability of some other form, the Custodian shall not be required
to take such action until the Trust shall have provided indemnity
therefor to the Custodian in an amount and form satisfactory to
the Custodian.
8.4 Security. If the Custodian advances cash or Securities
to the Fund for any purpose, either at the Trust's request or as
otherwise contemplated in this Agreement, or in the event that the
Custodian or its nominee incurs, in connection with its
performance under this Agreement, any loss, damage, cost, expense
(including attorneys' fees and disbursements), liability or claim
(except such as may arise from its or its nominee's negligence,
bad faith or willful misconduct), then, in any such event, any
property at any time held for the account of the Fund shall be
security therefor, and should the Trust or PRAGMA fail promptly to
repay or indemnify the Custodian, the Custodian shall be entitled
to utilize available cash of the Fund and to dispose of other
assets of the Fund to the extent necessary to obtain reimbursement
or indemnification.
ARTICLE IX
FORCE MAJEURE
Neither the Custodian, the Trust nor PRAGMA shall be liable
for any 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, acts of God; earthquakes; fires; floods; wars; civil
or military disturbances; sabotage; strikes; epidemics; riots;
power failures; computer failure and any such circumstances beyond
its reasonable control as may cause interruption, loss or
malfunction of utility, transportation, computer (hardware or
software) or telephone communication service; accidents; labor
disputes; acts of civil or military authority; governmental
actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that the Custodian in the event
of a failure or delay (i) shall not discriminate against the Fund
in favor of any other customer of the Custodian in making computer
time and personnel available to input or process the transactions
PAGE
<PAGE>
contemplated by this Agreement and (ii) shall use its best efforts
to ameliorate the effects of any such failure or delay.
ARTICLE X
EFFECTIVE PERIOD; TERMINATION
10.1 Effective Period. This Agreement shall become
effective as of its execution and shall continue in full force and
effect until terminated as hereinafter provided.
10.2 Termination. Any party hereto may terminate this
Agreement by giving to the other parties a notice in writing
specifying the date of such termination, which shall be not less
than sixty (60) days after the date of the giving of such notice.
If a successor custodian shall have been appointed by the Board of
Trustees, the Custodian shall, upon receipt of a notice of
acceptance by the successor custodian, on such specified date of
termination (a) deliver directly to the successor custodian all
Securities (other than Securities held in a Book-Entry System or
Securities Depository) and cash then owned by the Fund and held by
the Custodian as custodian, and (b) transfer any Securities held
in a Book-Entry System or Securities Depository to an account of
or for the benefit of the Fund at the successor custodian,
provided that PRAGMA shall have paid to the Custodian, on behalf
of the Trust, all fees, expenses and other amounts to the payment
or reimbursement of which it shall then be entitled. Upon such
delivery and transfer, the Custodian shall be relieved of all
obligations under this Agreement. The Trust may at any time
immediately terminate this Agreement in the event of the
appointment of a conservator or receiver for the Custodian by
regulatory authorities or upon the happening of a like event at
the direction of an appropriate regulatory agency or court of
competent jurisdiction.
10.3 Failure to Appoint Successor Custodian. If a successor
custodian is not designated by the Trust on or before the date of
termination specified pursuant to Section 10.1 above, then the
Custodian shall have the right to deliver to a bank or trust
company of its own selection, which (a) is a "bank" as defined in
the 1940 Act and (b) has aggregate capital, surplus and undivided
profits as shown on its then most recent published report of not
less than $25 million, all Securities, cash and other property
held by Custodian under this Agreement and to transfer to an
account of or for the Fund at such bank or trust company all
Securities of the Fund held in a Book-Entry System or Securities
Depository. Upon such delivery and transfer, such bank or trust
company shall be the successor custodian under this Agreement and
the Custodian shall be relieved of all obligations under this
Agreement.
ARTICLE XI
COMPENSATION OF CUSTODIAN
PRAGMA shall compensate the Custodian as agreed upon from
time to time by the parties. The fees and other charges in effect
on the date hereof and applicable to the Fund are set forth in
Exhibit C attached hereto.
<PAGE>
ARTICLE XII
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 shall bind only the trust property of the Trust as
provided in the Trust's Agreement and Declaration of Trust, as
from time to time amended. The execution and delivery of this
Agreement have been authorized by the Trustees, and this Agreement
has been signed and delivered by an authorized officer of the
Trust, acting as such, and neither such authorization by 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
trust property of the Trust as provided in the above-mentioned
Agreement and Declaration of Trust.
ARTICLE XIII
NOTICES
Unless otherwise specified herein, all demands, notices,
instructions, and other communications to be given hereunder shall
be in writing and shall be sent or delivered to the recipient at
the address set forth after its name hereinbelow:
To the Trust or to PRAGMA:
--------------------------
PRAGMA Investment Trust
7150 Greenville Avenue, Suite 101 - LB 340
Dallas, Texas 75231
Telephone: (214) 373-3585
Facsimile: (214) 987-1728
To Custodian:
-------------
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
Attention: Mutual Fund-Operations
Telephone: (513) 632-5536
Facsimile: (513) 632-4448
or at such other address as any party shall have provided to any
other by notice given in accordance with this Article XIII.
Writing shall include transmissions by or through teletype,
facsimile, central processing unit connection, on-line terminal
and magnetic tape.
PAGE
<PAGE>
ARTICLE XIV
MISCELLANEOUS
14.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio.
14.2 References to Custodian. The Trust shall not circulate
any printed matter which contains any reference to Custodian
without the prior written approval of Custodian, excepting printed
matter contained in the prospectus or statement of additional
information for the Fund and such other printed matter as merely
identifies Custodian as custodian for the Fund. The Trust shall
submit printed matter requiring approval to Custodian in draft
form, allowing sufficient time for review by Custodian and its
counsel prior to any deadline for printing.
14.3 No Waiver. No failure by any party hereto to exercise,
and no delay by such party in exercising, any right hereunder
shall operate as a waiver thereof. The exercise by any party
hereto of any right hereunder shall not preclude the exercise of
any other right, and the remedies provided herein are cumulative
and not exclusive of any remedies provided at law or in equity.
14.4 Amendments. This Agreement cannot be changed orally
and no amendment to this Agreement shall be effective unless
evidenced by an instrument in writing executed by the parties
hereto.
14.5 Counterparts. This Agreement may be executed in one or
more counterparts, and by the parties hereto on separate
counterparts, each of which shall be deemed an original but all of
which together shall constitute but one and the same instrument.
14.6 Severability. If any provision of this Agreement shall
be invalid, illegal or unenforceable in any respect under any
applicable law, the validity, legality and enforceability of the
remaining provisions shall not be affected or impaired thereby.
14.7 Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by any party hereto
without the written consent of the other parties hereto.
14.8 Headings. The headings of sections in this Agreement
are for convenience of reference only and shall not affect the
meaning or construction of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed and delivered in its name and on its
behalf by its representatives thereunto duly authorized, all as of
the day and year first above written.
PAGE
<PAGE>
ATTEST: PRAGMA INVESTMENT TRUST
______________________________ By:_____________________________
President
ATTEST: PRAGMA, INC.
______________________________ By:_____________________________
President
ATTEST: STAR BANK, N.A.
______________________________ By:____________________________
PAGE
<PAGE>
EXHIBIT A
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the
persons authorized by the Trust to administer the Fund Custody
Account.
Name Signature
John H. Alban, jr. ______________________________
John H. Alban, III ______________________________
John F. Splain ______________________________
Robert G. Dorsey ______________________________
Mark J. Seger ______________________________
M. Kathleen Leugers ______________________________
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT dated as of , 1996 between PRAGMA
INVESTMENT TRUST (the "Trust"), an Ohio business trust, PRAGMA,
INC. ("PRAGMA"), a Texas corporation, and MGF SERVICE CORP.
("MGF"), an Ohio corporation.
WHEREAS, the Trust has been organized to operate as an
open-end management investment company registered under the
Investment Company Act of 1940; and
WHEREAS, PRAGMA is registered as an investment adviser under
the Investment Advisers Act of 1940 and provides advisory services
to the Trust pursuant to an Investment Advisory Agreement; and
WHEREAS, under the Investment Advisory Agreement, PRAGMA is
responsible for retaining and compensating agents to provide non-
advisory services to the Trust; and
WHEREAS, PRAGMA wishes to avail itself of the information,
advice, assistance and facilities of MGF to perform on behalf of
the Trust the services as hereinafter described; and
WHEREAS, MGF wishes to provide such services to the Trust
under the conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained in this Agreement, the Trust, PRAGMA and MGF
agree as follows:
1. Employment. PRAGMA, being duly authorized, hereby
employs MGF to perform those services described in this Agreement.
MGF shall perform the obligations thereof upon the terms and
conditions hereinafter set forth.
2. Trust Administration. Subject to the direction and
control of PRAGMA and the Trust, MGF shall supervise the Trust's
business affairs not otherwise supervised by other agents of the
Trust. To the extent not otherwise the primary responsibility of,
or provided by, other agents of PRAGMA or the Trust, MGF shall
supply (i) non-investment related statistical and research data,
(ii) internal regulatory compliance services, and (iii) executive
and administrative services. MGF shall supervise the preparation
of (i) tax returns, (ii) reports to shareholders of
the Trust, (iii) reports to and filings with the Securities and
Exchange Commission, state securities commissions and Blue Sky
authorities including preliminary and definitive proxy materials
and post-effective amendments to the Trust's registration
PAGE
<PAGE>
statement, and (iv) necessary materials for meetings of the
Trust's Board of Trustees unless prepared by other parties under
agreement with PRAGMA or the Trust. MGF shall provide personnel
to serve as officers of the Trust if so elected by the Board of
Trustees; provided, however, that PRAGMA shall reimburse MGF for
the expenses incurred by such personnel in attending Board of
Trustees' meetings and shareholders' meetings of the Trust.
3. Record Keeping and Other Information. MGF shall create
and maintain all necessary records in accordance with all
applicable laws, rules and regulations, including but not limited
to records required by Section 31(a) of the Investment Company Act
of 1940 and the rules thereunder, as the same may be amended from
time to time, pertaining to the various functions performed by it
and not otherwise created and maintained by another party pursuant
to contract with PRAGMA or the Trust. Where applicable, such
records shall be maintained by MGF for the periods and in the
places required by Rule 31a-2 under the Investment Company Act of
1940.
4. Audit, Inspection and Visitation. MGF shall make
available to PRAGMA and the Trust during regular business hours
all records and other data created and maintained pursuant to the
foregoing provisions of this Agreement for reasonable audit and
inspection by PRAGMA, and the Trust or their agents, or any
regulatory agency having authority over the Trust.
5. Compensation. For the performance of MGF's obligations
under this Agreement, PRAGMA shall pay MGF, on the first business
day following the end of each month, a fee with respect to each
series of the Trust equal to the annual rate of .15% of the
average value during such month of daily net assets up to
$25,000,000; .125% of such assets from $25,000,000 to $50,000,000;
and .10% of such assets in excess of $50,000,000; provided,
however, that the minimum fee shall be $1,000 per month for each
series. MGF shall not be required to reimburse the Trust or
PRAGMA for (or have deducted from its fees) any expenses in excess
of expense limitations imposed by certain state securities
commissions having jurisdiction over the Trust.
6. Indemnification of MGF. MGF may rely on information
reasonably believed by it to be accurate and reliable. Except as
may otherwise be required by the 1940 Act and the rules
thereunder, neither MGF nor its shareholders, officers, directors,
employees, agents, control persons or affiliates of any thereof
shall be subject to any liability for, or any damages, expenses or
losses incurred by the Trust or PRAGMA in connection with, any
error of judgment, mistake of law, any act or omission connected
with or arising out of any services rendered under or payments
made pursuant to this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad
faith or gross negligence on the part of any such persons in the
performance of the duties of MGF under this Agreement or by reason
of reckless disregard by any of such persons of the obligations
and duties of MGF under this Agreement.
Any person, even though also a director, officer,
employee, shareholder or agent of MGF, or any of its affiliates,
who may be or become an officer, trustee, employee or agent of the
<PAGE>
Trust, shall be deemed, when rendering services to the Trust or
acting on any business of the Trust, to be rendering such services
to or acting solely as an officer, trustee, employee or agent of
the Trust and not as a director, officer, employee, shareholder or
agent of or one under the control or direction of MGF or any of
its affiliates, even though paid by one of those entities.
Notwithstanding any other provision of this Agreement,
the Trust and PRAGMA shall each indemnify and hold harmless MGF,
its directors, officers, employees, shareholders, agents, control
persons and affiliates, from and against any and all claims,
demands, expenses and liabilities (whether with or without basis
in fact or law) of any and every nature which MGF may sustain or
incur or which may be asserted against MGF by any person, by
reason of, or as a result of: (i) any action taken or omitted to
be taken by MGF in good faith in reliance upon any certificate,
instrument, order or stock certificate believed by it to be
genuine and to be signed, countersigned or executed by any duly
authorized person, upon the oral instructions or written
instructions of an authorized person of the Trust or upon the
opinion of legal counsel for the Trust or its own counsel; or (ii)
any action taken or omitted to be taken by MGF in connection with
its appointment in good faith in reliance upon any law, act,
regulation or interpretation of the same even though the same may
thereafter have been altered, changed, amended or repealed.
However, indemnification under this subparagraph shall not apply
to actions or omissions of MGF or its directors, officers,
employees, shareholders or agents in cases of its or their own
gross negligence, willful misconduct, bad faith, or reckless
disregard of its or their own duties hereunder.
7. Services for Others. Nothing in this Agreement shall
prevent MGF or any affiliated person of MGF from providing
services for any other person, firm or corporation, including
other investment companies; provided, however, that MGF expressly
represents that it will undertake no activities which, in its
judgment, will adversely affect the performance of its obligations
under this Agreement.
8. Compliance with Government Rules and Regulations. The
parties hereto acknowledge and agree that nothing contained herein
shall be construed to require MGF to perform any services for
PRAGMA or the Trust which services could cause MGF to be deemed an
"investment adviser" of the Trust within the meaning of Section
2(a)(20) of the Investment Company Act of 1940 or to supersede or
contravene the Prospectus or Statement of Additional Information
of the Trust or any provisions of the Investment Company Act of
1940 and the rules thereunder.
9. Renewal and Termination. This Agreement shall become
effective on the date first above written and shall remain in
force for a period of two (2) years from such date, and from year
to year thereafter, but only so long as such continuance is
specifically approved at least annually by the vote of a majority
of the Trustees who are not interested persons of the Trust or
MGF, cast in person at a meeting called for the purpose of voting
on such approval and by a vote of the Board of Trustees or of a
majority of the Trust's outstanding voting securities. This
Agreement may be terminated without the payment of any penalty by
<PAGE>
any party upon sixty (60) days' written notice to the other
parties. Upon the termination of this Agreement, PRAGMA shall pay
MGF such compensation as may be payable for the period prior to
the effective date of such termination.
10. Limitation of Liability. The term "PRAGMA Investment
Trust" means and refers to the trustees from time to time serving
under the Trust's Agreement and Declaration of Trust as the same
may subsequently thereto have been, or subsequently hereto may be,
amended. 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 trust property of the Trust.
The execution and delivery of this Agreement have been authorized
by the trustees of the Trust and signed by an officer of the
Trust, 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 individually or to impose
any liability on any of them personally, but shall bind only the
trust property of the Trust.
11. Severability. In the event any provision of this
Agreement is determined to be void or unenforceable, such
determination shall not affect the remainder of this Agreement,
which shall continue to be in force.
12. Questions of Interpretation. This Agreement shall be
governed by the laws of the State of Ohio. Any question of
interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of
the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretations thereof, if any,
by the United States Courts or in the absence of any controlling
decision of any such court, by rules, regulations or orders of the
Securities and Exchange Commission issued pursuant to said 1940
Act. In addition, where the effect of a requirement of the 1940
Act, reflected in any provision of this Agreement, is revised by
rule, regulation or order of the Securities and Exchange
Commission, such provision shall be deemed to incorporate the
effect of such rule, regulation or order.
13. Representations Of MGF. MGF represents and warrants
that no legal proceedings or regulatory investigations are pending
against MGF which could have a material impact on MGF. MGF also
represents and warrants that it currently maintains all registrations
and meets all capital requirements under applicabile laws in order to
provide the services contemplated herein, and will continue to do so for
the duration of this Agreement. MGF agrees that it will notify PRAGMA
and the Trust immediately should it become a party to any legal
proceeding, regulatory investigation or enforcement action that could
have a material impact on the operations or financial condition of MGF.
MGF further agrees that it will immediately notify PRAGMA and the Trust
of any material change in the ownership or control of MGF.
14. Notices. Any notices under this Agreement shall be in
writing, addressed and delivered or mailed postage paid to the
other party at such address as such other party may designate for
the receipt of such notice. Until further notice to the other
party, it is agreed that the address of the Trust and of PRAGMA
<PAGE>
for this purpose shall be 7150 Greenville Avenue, Suite 101,
Dallas, Texas 75231 and that the address of MGF for this purpose
shall be 312 Walnut Street, Cincinnati, Ohio 45202.
15. Binding Effect. Each of the undersigned expressly
warrants and represents that he has the full power and authority
to sign this Agreement on behalf of the party indicated, and that
his signature will operate to bind the party indicated to the
foregoing terms.
16. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year first above written.
PRAGMA INVESTMENT TRUST
By:___________________________
Its: President
PRAGMA, INC.
By:_____________________________
Its: President
MGF SERVICE CORP.
By:___________________________
Its: President
<PAGE>
ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT effective as of , 1996 by and
between PRAGMA INVESTMENT TRUST (the "Trust"), an Ohio business
trust, PRAGMA, INC. ("PRAGMA"), a Texas corporation, and MGF
SERVICE CORP. ("MGF"), an Ohio corporation.
WITNESSETH THAT:
WHEREAS, the Trust has been organized to operate as an open-
end management investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, PRAGMA is registered as an investment adviser under
the Investment Advisers Act of 1940 and provides advisory
services to the Trust pursuant to an Investment Advisory
Agreement; and
WHEREAS, under the Investment Advisory Agreement, PRAGMA is
responsible for retaining and compensating agents to provide non-
advisory services to the Trust; and
WHEREAS, PRAGMA desires to hire MGF to provide the Trust
with certain accounting and pricing services, and MGF is willing
to provide such services upon the terms and conditions herein set
forth;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties hereto, intending
to be legally bound, hereby agree as follows:
1. APPOINTMENT.
MGF is hereby appointed to provide the Trust with
certain accounting and pricing services, and MGF accepts such
appointment and agrees to provide such services under the terms
and conditions set forth herein.
2. CALCULATION OF NET ASSET VALUE.
MGF will calculate the net asset value of each series
of the Trust and the per share net asset value of each series of
the Trust, in accordance with the Trust's current prospectus and
statement of additional information, once daily as of the time
selected by the Trust's Board of Trustees. MGF will prepare and
maintain a daily valuation of all securities and other assets of
the Trust in accordance with instructions from a designated
officer of the Trust or PRAGMA and in the manner set forth in
the current prospectus and statement of additional information.
In valuing securities of the Trust, MGF may contract with, and
rely upon market quotations provided by, outside services.
3. BOOKS AND RECORDS.
MGF will maintain and keep current the general ledger
for each series of the Trust, recording all income and expenses,
capital share activity and security transactions of the Trust.
MGF will maintain such further books and records as are necessary
<PAGE>
to enable it to perform its duties under this Agreement, and will
periodically provide reports to the Trust and its authorized
agents regarding share purchases and redemptions and trial
balances of each series of the Trust. MGF will prepare and
maintain complete, accurate and current all records with respect
to the Trust required to be maintained by the Trust under the
Internal Revenue Code of 1986, as amended (the "Code"), and under
the rules and regulations of the 1940 Act, and will preserve said
records in the manner and for the periods prescribed in the Code
and the 1940 Act. The retention of such records shall be at the
expense of PRAGMA.
All of the records prepared and maintained by MGF
pursuant to this Section 3 which are required to be maintained by
the Trust under the Code and the 1940 Act will be the property of
the Trust. In the event this Agreement is terminated, all such
records shall be delivered to the Trust or to PRAGMA at PRAGMA's
expense, and MGF shall be relieved of responsibility for the
preparation and maintenance of any such records delivered to the
Trust or PRAGMA.
4. PAYMENT OF TRUST EXPENSES.
MGF shall process each request received from the Trust
or its authorized agents for payment of the Trust's expenses.
Upon receipt of written instructions signed by an officer or
other authorized agent of the Trust, MGF shall prepare checks in
the appropriate amounts which shall be signed by an authorized
officer of MGF and mailed to the appropriate party.
5. FORM N-SAR.
MGF shall maintain such records within its control and
as shall be requested by the Trust to assist the Trust in
fulfilling the requirements of Form N-SAR.
6. COOPERATION WITH ACCOUNTANTS.
MGF shall cooperate with the Trust's independent public
accountants and 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 unqualified opinion where
required for any document for the Trust.
7. FURTHER ACTIONS.
Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the
purposes hereof.
8. FEES.
For performing its services under this Agreement,
PRAGMA shall pay MGF a monthly fee with respect to each series of
the Trust in accordance with the schedule attached hereto as
Schedule A. The fees with respect to any month shall be paid to
MGF on the last business day of such month. PRAGMA shall also
<PAGE>
promptly reimburse MGF for the cost of external pricing services
utilized by MGF.
9. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
The parties hereto acknowledge and agree that nothing
contained herein shall be construed to require MGF to perform any
services for PRAGMA or the Trust which services could cause MGF
to be deemed an "investment adviser" of the Trust within the
meaning of Section 2(a)(20) of the 1940 Act or to supersede or
contravene the prospectus or statement of additional information
of the Trust or any provisions of the 1940 Act and the rules
thereunder. Except as otherwise provided in this Agreement and
except for the accuracy of information furnished to it by MGF,
the Trust assumes full responsibility for complying with all
applicable requirements of the 1940 Act, the Securities Act of
1933, as amended, and any laws, rules and regulations of
governmental authorities having jurisdiction, it being
acknowledged that the Trust is relying on the best efforts of
MGF.
10. REFERENCES TO MGF, PRAGMA AND THE TRUST.
The Trust or PRAGMA shall not circulate any printed
matter which contains any reference to MGF without the prior
written approval of MGF, excepting solely such printed matter as
merely identifies MGF as Administrative Services Agent, Transfer,
Shareholder Servicing and Dividend Disbursing Agent and
Accounting Services Agent. The Trust or PRAGMA will submit
printed matter requiring approval to MGF in draft form, allowing
sufficient time for review by MGF and its counsel prior to any
deadline for printing.
MGF shall not circulate any printed matter which
contains any reference to the Trust or PRAGMA without the
prior written approval of the Trust or PRAGMA, excepting solely
such printed matter as merely identifies PRAGMA amd the Trust as
clients of MGF. MGF will submit printed matter requiring approval
to PRAGMA and/or the Trust in draft form, allowing sufficient time
for review by PRAGMA and/or the Trust and its counsel prior to
any deadline for printing.
11. EQUIPMENT FAILURES.
In the event of equipment failures beyond MGF's
control, MGF shall take all steps necessary to minimize service
interruptions but shall have no liability with respect thereto.
MGF shall endeavor to enter into one or more agreements making
provision for emergency use of electronic data processing
equipment to the extent appropriate equipment is available.
12. INDEMNIFICATION OF MGF.
MGF may rely on information reasonably believed by it
to be accurate and reliable. Except as may otherwise be required
by the 1940 Act and the rules thereunder, neither MGF nor its
shareholders, officers, directors, employees, agents, control
persons or affiliates of any thereof shall be subject to any
liability for, or any damages, expenses or losses incurred by the
<PAGE>
Trust or PRAGMA in connection with, any error of judgment,
mistake of law, any act or omission connected with or arising out
of any services rendered under or payments made pursuant to this
Agreement or any other matter to which this Agreement relates,
except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of
the duties of MGF under this Agreement or by reason of reckless
disregard by any of such persons of the obligations and duties of
MGF under this Agreement.
Any person, even though also a director, officer,
employee, shareholder or agent of MGF, or any of its affiliates,
who may be or become an officer, trustee, employee or agent of
the Trust, shall be deemed, when rendering services to the Trust
or acting on any business of the Trust, to be rendering such
services to or acting solely as an officer, trustee, employee or
agent of the Trust and not as a director, officer, employee,
shareholder or agent of or one under the control or direction of
MGF or any of its affiliates, even though paid by one of those
entities.
Notwithstanding any other provision of this Agreement,
the Trust and PRAGMA shall each indemnify and hold harmless MGF,
its directors, officers, employees, shareholders, agents, control
persons and affiliates, from and against any and all claims,
demands, expenses and liabilities (whether with or without basis
in fact or law) of any and every nature which MGF may sustain or
incur or which may be asserted against MGF by any person, by
reason of, or as a result of: (i) any action taken or omitted to
be taken by MGF in good faith in reliance upon any certificate,
instrument, order or stock certificate believed by it to be
genuine and to be signed, countersigned or executed by any duly
authorized person, upon the oral instructions or written
instructions of an authorized person of the Trust or upon the
opinion of legal counsel for the Trust or its own counsel; or
(ii) any action taken or omitted to be taken by MGF in connection
with its appointment in good faith in reliance upon any law, act,
regulation or interpretation of the same even though the same may
thereafter have been altered, changed, amended or repealed.
However, indemnification under this subparagraph shall not apply
to actions or omissions of MGF or its directors, officers,
employees, shareholders or agents in cases of its or their own
gross negligence, willful misconduct, bad faith, or reckless
disregard of its or their own duties hereunder.
13. TERMINATION.
The provisions of this Agreement shall be effective on
the date first above written, shall continue in effect for two
years from that date and shall continue in force from year to
year thereafter, but only so long as such continuance is approved
(1) by MGF, (2) by PRAGMA, (3) by vote, cast in person at a
meeting called for the purpose, of a majority of the Trust's
trustees who are not parties to this Agreement or interested
persons (as defined in the 1940 Act) of any such party, and (4)
by vote of a majority of the Trust's Board of Trustees or a
majority of the Trust's outstanding voting securities.
PAGE
<PAGE>
Any party may terminate this Agreement on any date by
giving the other parties at least sixty (60) days' prior written
notice of such termination specifying the date fixed therefor.
Upon termination of this Agreement, PRAGMA shall pay to MGF such
compensation as may be due as of the date of such termination.
In the event that in connection with the termination of
this Agreement a successor to any of MGF's duties or
responsibilities under this Agreement is designated by the Trust
or by PRAGMA by written notice to MGF, MGF shall, promptly upon
such termination and at the expense of PRAGMA, transfer all
records maintained by MGF under this Agreement and shall
cooperate in the transfer of such duties and responsibilities,
including provision for assistance from MGF's cognizant personnel
in the establishment of books, records and other data by such
successor.
14. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent MGF or any
affiliated person (as defined in the 1940 Act) of MGF from
providing services for any other person, firm or corporation
(including other investment companies); provided, however, that
MGF expressly represents that it will undertake no activities
which, in its judgment, will adversely affect the performance of
its obligations under this Agreement.
15. REPRESENTATIONS OF MGF.
MGF represents and warrants that no legal proceedings or regulatory
proceedings or regulatory investigations are pending against MGF which could
have a material impact on the operations or financial condition of MGF. MGF
also represents warrants that it currently maintains all registrations and
meets all capital requirements under applicable laws in order to provide the
services contemplated herein, and will continue to do so for the duration of
this Agreement. MGF agrees that it will notify PRAGMA and the Trust
regulatory investigation or enforcement action that could have a material
impact on the operations or financial condition of MGF. MGF further agrees
that it will immediately notify PRAGMA and the TRUST of any material change in
the ownership or control of MGF.
16. MISCELLANEOUS.
The captions in this Agreement are included for
convenience of reference only and in no way define or limit any
of the provisions hereof or otherwise affect their construction
or effect.
17. LIMITATION OF LIABILITY.
The term "PRAGMA Investment Trust" means and refers to
the trustees from time to time serving under the Trust's
Agreement and Declaration of Trust as the same may subsequently
thereto have been, or subsequently hereto may be, amended. 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 trust property of the Trust. The execution and
delivery of this Agreement has been authorized by the trustees of
<PAGE>
the Trust and signed by an officer of the Trust 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 individually or to impose any liability
on any of them personally, but shall bind only the trust property
of the Trust.
18. SEVERABILITY.
In the event any provision of this Agreement is
determined to be void or unenforceable, such determination shall
not affect the remainder of this Agreement, which shall continue
to be in force.
19. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the
State of Ohio. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act
and to interpretations thereof, if any, by the United States
Courts or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the Securities and
Exchange Commission issued pursuant to said 1940 Act. In
addition, where the effect of a requirement of the 1940 Act,
reflected in any provision of this Agreement, is revised by rule,
regulation or order of the Securities and Exchange Commission,
such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
20. NOTICES.
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party
at such address as such other party may designate for the receipt
of such notice. Until further notice to the other party, it is
agreed that the address of the Trust and of PRAGMA for this
purpose shall be 7150 Greenville Avenue, Suite 101, Dallas,
Texas 75231 and that the address of MGF for this purpose shall be
312 Walnut Street, Cincinnati, Ohio 45202.
21. BINDING EFFECT.
Each of the undersigned expressly warrants and
represents that he has the full power and authority to sign this
Agreement on behalf of the party indicated, and that his
signature will operate to bind the party indicated to the
foregoing terms.
22. COUNTERPARTS.
This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
<PAGE>
23. FORCE MAJEURE.
If MGF shall be delayed in its performance of services
or prevented entirely or in part from performing services due to
causes or events beyond its control, including and without
limitation, acts of God, interruption of power or other utility,
transportation or communication services, acts of civil or
military authority, sabotages, national emergencies, explosion,
flood, accident, earthquake or other catastrophe, fire, strike or
other labor problems, legal action, present or future law,
governmental order, rule or regulation, or shortages of suitable
parts, materials, labor or transportation, such delay or non-
performance shall be excused and a reasonable time for
performance in connection with this Agreement shall be extended
to include the period of such delay or non-performance.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
PRAGMA INVESTMENT TRUST
By:___________________________
Its: President
PRAGMA, INC.
By:_____________________________
Its: President
MGF SERVICE CORP.
By:___________________________
Its: President
PAGE
<PAGE>
Schedule A
Compensation
<TABLE>
For Fund Accounting and Portfolio Pricing:
PRAGMA will pay MGF a monthly fee with respect to each
series of the Trust, according to the average net assets of such
series during such month, as follows:
<CAPTION>
Monthly Fees Average Net Assets
------------ ------------------
<S> <C>
$2,000 $0 - $ 50,000,000
$2,500 $50,000,000 - $100,000,000
$3,000 $100,000,000 - $200,000,000
$4,000 $Over $200,000,000
</TABLE>
<PAGE>
TRANSFER, DIVIDEND DISBURSING, SHAREHOLDER SERVICE
AND PLAN AGENCY AGREEMENT
THIS AGREEMENT effective as of , 1996 by and
between PRAGMA INVESTMENT TRUST (the "Trust"), an Ohio business
trust, PRAGMA, INC. ("PRAGMA"), a Texas corporation, and MGF
SERVICE CORP. (the "T/A"), an Ohio corporation.
WITNESSETH THAT:
WHEREAS, the Trust has been organized to operate as an
open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, PRAGMA is registered as an investment adviser
under the Investment Advisers Act of 1940 and provides advisory
services to the Trust pursuant to an Investment Advisory
Agreement; and
WHEREAS, under the Investment Advisory Agreement, PRAGMA
is responsible for retaining and compensating agents to provide
non-advisory services to the Trust; and
WHEREAS, PRAGMA desires to appoint the T/A as the Trust's
transfer agent, dividend disbursing agent, shareholder service
agent, plan agent and shareholder purchase and redemption agent,
and the T/A is willing to act in such capacities upon the terms
and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and of
the mutual covenants herein contained, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. APPOINTMENT OF TRANSFER AGENT.
The T/A is hereby appointed transfer agent for the
shares of the Trust and dividend disbursing agent for the Trust
and shall also act as plan agent, shareholder service agent and
purchase and redemption agent for shareholders of the Trust, and
the T/A accepts such appointment and agrees to act in such
capacities under the terms and conditions set forth herein.
2. DOCUMENTATION.
The Trust will furnish from time to time the following
documents:
A. Each resolution of the Board of Trustees of the
Trust authorizing the original issue of its
shares;
B. Each Registration Statement filed with the
Securities and Exchange Commission and amendments
thereof;
C. A certified copy of each amendment to the
Agreement and Declaration of Trust and the Bylaws
of the Trust;
<PAGE>
D. Certified copies of each resolution of the Board
of Trustees authorizing officers to give
instructions to the T/A;
E. Specimens of all new forms of share certificates
accompanied by Board of Trustees' resolutions
approving such forms;
F. Such other certificates, documents or opinions
which the T/A may, in its discretion, deem
necessary or appropriate in the proper performance
of its duties;
G. Copies of all Underwriting and Dealer Agreements
in effect;
H. Copies of all Advisory Agreements in effect; and
I. Copies of all documents relating to special
investment or withdrawal plans which are offered
or may be offered in the future by the Trust and
for which the T/A is to act as plan agent.
3. T/A TO RECORD SHARES.
The T/A shall record the issuance of shares of the
Trust and maintain pursuant to applicable rules of the Securities
and Exchange Commission a record of the total number of shares of
the Trust which are authorized, issued and outstanding, based
upon data provided to it by the Trust. The T/A shall also
provide the Trust on a regular basis or upon reasonable request
the total number of shares which are authorized, issued and
outstanding, based upon data provided to it by the Trust. The
T/A shall also provide the Trust on a regular basis or upon
reasonable request the total number of shares which are
authorized, issued and outstanding, but shall have no obligation
when recording the issuance of the Trust's shares, except as
otherwise set forth herein, to monitor the issuance of such
shares or to take cognizance of any laws relating to the issue or
sale of such shares, which functions shall be the sole
responsibility of the Trust.
4. T/A TO VALIDATE TRANSFERS.
Upon receipt of a proper request for transfer and
upon surrender to the T/A of certificates, if any, in proper form
for transfer, the T/A shall approve such transfer and shall take
all necessary steps to effectuate the transfer as indicated in
the transfer request. Upon approval of the transfer, the T/A
shall notify the Trust in writing of each such transaction and
shall make appropriate entries on the shareholder records
maintained by the T/A.
5. SHARE CERTIFICATES.
If the Trust authorizes the issuance of share
certificates and an investor requests a share certificate, the
T/A will countersign and mail, by insured first class mail, a
share certificate to the investor at his address as set forth on
<PAGE>
the transfer books of the Trust, subject to any other
instructions for delivery of certificates representing newly
purchased shares and subject to the limitation that no
certificates representing newly purchased shares shall be mailed
to the investor until the cash purchase price of such shares has
been collected and credited to the account of the Trust
maintained by the Custodian. The Trust shall supply the T/A with
a sufficient supply of blank share certificates and from time to
time shall renew such supply upon request of the T/A. Such blank
share certificates shall be properly signed, manually or, if
authorized by the Trust, by facsimile; and notwithstanding the
death, resignation or removal of any officers of the Trust
authorized to sign share certificates, the T/A may continue to
countersign certificates which bear the manual or facsimile
signature of such officer until otherwise directed by the Trust.
In case of the alleged loss or destruction of any share
certificate, no new certificate shall be issued in lieu thereof,
unless there shall first be furnished an appropriate bond
satisfactory to the T/A and the Trust, and issued by a surety
company satisfactory to the T/A and the Trust.
6. RECEIPT OF FUNDS.
Upon receipt of any check or other instrument drawn
or endorsed to it as agent for, or identified as being for the
account of, the Trust, the T/A shall stamp the check or
instrument with the date of receipt and shall forthwith process
the same for collection. Upon receipt of notification of receipt
of funds eligible for share purchases in accordance with the
Trust's then current prospectus and statement of additional
information, the T/A shall notify the Trust, at the close of each
business day, in writing of the amount of said funds credited to
the Trust and deposited in its account with the Custodian.
7. PURCHASE ORDERS.
Upon receipt of a check or other order for the
purchase of shares of the Trust, accompanied by sufficient
information to enable the T/A to establish a shareholder account,
the T/A shall, as of the next determination of net asset value
after receipt of such order in accordance with the Trust's then
current prospectus and statement of additional information,
compute the number of shares due to the shareholder, credit the
share account of the shareholder, subject to collection of the
funds, with the number of shares so purchased, shall notify the
Trust in writing or by computer report at the close of each
business day of such transactions and shall mail to the
shareholder and/or dealer of record a notice of such credit when
required by applicable securities laws or regulations.
8. RETURNED CHECKS.
In the event that the T/A is notified by the Trust's
Custodian that any check or other order for the payment of money
is returned unpaid for any reason, the T/A will:
A. Give prompt notification to the Trust of the non-
payment of said check;
<PAGE>
B. In the absence of other instructions from the
Trust, take such steps as may be necessary to
redeem any shares purchased on the basis of such
returned check and cause the proceeds of such
redemption plus any dividends declared with
respect to such shares to be credited to the
account of the Trust and to request the Trust's
Custodian to forward such returned check to the
person who originally submitted the check; and
C. Notify the Trust of such actions and correct the
Trust's records maintained by the T/A pursuant to
this Agreement.
9. DIVIDENDS AND DISTRIBUTIONS.
The Trust shall furnish the T/A with appropriate
evidence of trustee action authorizing the declaration of
dividends and other distributions. The T/A shall establish
procedures in accordance with the Trust's then current prospectus
and statement of additional information and with other authorized
actions of the Trust's Board of Trustees under which it will have
available from the Custodian of the Trust or the Trust any
required information for each dividend and other distribution.
After deducting any amount required to be withheld by any
applicable laws, the T/A shall, as agent for each shareholder who
so requests, invest the dividends and other distributions in full
and fractional shares in accordance with the Trust's then current
prospectus and statement of additional information. If a
shareholder has elected to receive dividends or other
distributions in cash, then the T/A shall disburse dividends to
shareholders of record in accordance with the Trust's then
current prospectus and statement of additional information. The
T/A shall, before the mailing date of such checks, notify the
Trust and the Custodian of the estimated amount of cash required
to pay such dividend or distribution, and the Trust shall
instruct the Custodian to make available sufficient funds
therefor in the appropriate account of the Trust. The T/A shall
mail to the shareholders periodic statements, as requested by the
Trust, showing the number of full and fractional shares and the
net asset value per share of shares so credited. The T/A shall
prepare and file with the Internal Revenue Service, and when
required, shall address and mail to shareholders, such returns
and information relating to dividends and distributions paid by
the Trust as are required to be so prepared, filed and mailed by
applicable laws, rules and regulations.
10. UNCLAIMED DIVIDENDS AND UNCLAIMED REDEMPTION
PROCEEDS.
The T/A shall, at least annually, furnish in writing
to the Trust the names and addresses, as shown in the shareholder
accounts maintained by the T/A, of all shareholders for which
there are, as of the end of the calendar year, dividends,
distributions or redemption proceeds for which checks or share
certificates mailed in payment of distributions have been
returned. The T/A shall use its best efforts to contact the
shareholders affected and to follow any other written
instructions received from the Trust concerning the disposition
<PAGE>
of any such unclaimed dividends, distributions or redemption
proceeds.
11. REDEMPTIONS AND EXCHANGES.
A. The T/A shall process, in accordance with the
Trust's then current prospectus and statement of additional
information, each order for the redemption of shares accepted by
the T/A. Upon its approval of such redemption transactions, the
T/A, when required by applicable securities laws or regulations,
shall mail to the shareholder and/or dealer of record a
confirmation showing trade date, number of full and fractional
shares redeemed, the price per share and the total redemption
proceeds. For such redemption, the T/A shall either: (a)
prepare checks in the appropriate amounts for approval and
verification by the Trust and signature by an authorized officer
of the T/A and mail the checks to the appropriate person, or (b)
in the event redemption proceeds are to be wired through the
Federal Reserve Wire system or by bank wire, cause such proceeds
to be wired in federal funds to the bank account designated by
the shareholder, or (c) effectuate such other redemption
procedures which are authorized by the Trust's Board of Trustees
or its then current prospectus and statement of additional
information. The requirements as to instruments of transfer and
other documentation, the applicable redemption price and the time
of payment shall be as provided in the then current prospectus
and statement of additional information, subject to such
supplemental instructions as may be furnished by the Trust and
accepted by the T/A. If the T/A or the Trust determines that a
request for redemption does not comply with the requirements for
redemptions, the T/A shall promptly notify the shareholder and/or
dealer of record indicating the reason therefor.
B. If shares of the Trust are eligible for exchange
with shares of any other investment company, the T/A, in
accordance with the then current prospectus and statement of
additional information and exchange rules of the Trust and such
other investment company, or such other investment company's
transfer agent, shall review and approve all exchange requests
and shall, on behalf of the Trust's shareholders, process such
approved exchange requests.
C. The T/A shall notify the Trust and the Custodian
on each business day of the amount of cash required to meet
payments made pursuant to the provisions of this Paragraph 11,
and, on the basis of such notice, the Trust shall instruct the
Custodian to make available from time to time sufficient funds
therefor in the appropriate account of the Trust. Procedures for
effecting redemption orders accepted from shareholders or dealers
of record by telephone or other methods shall be established by
mutual agreement between the T/A and the Trust consistent with
the then current prospectus and statement of additional
information.
D. The authority of the T/A to perform its
responsibilities under Paragraph 7, Paragraph 9 and this
Paragraph 11 shall be suspended upon receipt of notification by
it of the suspension of the determination of the Trust's net
asset value.
<PAGE>
12. AUTOMATIC WITHDRAWAL PLANS.
The T/A will process automatic withdrawal orders
pursuant to the provisions of the withdrawal plans duly executed
by shareholders and the current prospectus and statement of
additional information of the Trust. Payments upon such
withdrawal order shall be made by the T/A from the appropriate
account maintained by the Trust with the Custodian on
approximately the last business day of each month in which a
payment has been requested, and the T/A will withdraw from a
shareholder's account and present for repurchase or redemption as
many shares as shall be sufficient to make such withdrawal
payment pursuant to the provisions of the shareholder's
withdrawal plan and the current prospectus and statement of
additional information of the Trust. From time to time on new
automatic withdrawal plans a check for payment date already past
may be issued upon request by the shareholder.
13. WIRE-ORDER PURCHASES.
The T/A will send written confirmations to the
dealers of record containing all details of the wire-order
purchases placed by each such dealer by the close of business on
the business day following receipt of such orders by the T/A.
Upon receipt of any check drawn or endorsed to the Trust (or the
T/A, as agent) or otherwise identified as being payment of an
outstanding wire-order, the T/A will stamp said check with the
date of its receipt and deposit the amount represented by such
check to the T/A's deposit accounts maintained with the
Custodian. The T/A will cause the Custodian to transfer federal
funds in an amount equal to the net asset value of the shares so
purchased to the Trust's account with the Custodian, and will
notify the Trust before noon of each business day of the total
amount deposited in the Trust's deposit accounts, and in the
event that payment for a purchase order is not received by the
T/A or the Custodian on the tenth business day following receipt
of the order, prepare an NASD "notice of failure of dealer to
make payment."
14. OTHER PLANS.
The T/A will process such group programs and other
plans or programs for investing in shares of the Trust as are now
provided for in the Trust's current prospectus and statement of
additional information and will act as plan agent for
shareholders pursuant to the terms of such plans and programs
duly executed by such shareholders.
15. RECORDKEEPING AND OTHER INFORMATION.
The T/A shall create and maintain all records
required by applicable laws, rules and regulations, including but
not limited to records required by Section 31(a) of the 1940 Act
and the rules thereunder, as the same may be amended from time to
time, pertaining to the various functions performed by it and not
otherwise created and maintained by another party pursuant to
contract with PRAGMA or the Trust. All such records shall be
the property of the Trust at all times and shall be available for
inspection and use by the Trust. Where applicable, such records
<PAGE>
shall be maintained by the T/A for the periods and in the places
required by Rule 31a-2 under the 1940 Act. The retention of such
records shall be at the expense of PRAGMA. The T/A shall make
available during regular business hours all records and other
data created for inspection by the Trust, PRAGMA, its agents, or
any regulatory agency having authority over the Trust.
16. BOOKS AND RECORDS.
The T/A shall maintain records for each shareholder
account showing the following:
A. Names, addresses and tax identifying numbers;
B. Name of the dealer of record;
C. Number of shares held of each series;
D. Historical information regarding the account of
each shareholder, including dividends and
distributions in cash or invested in shares;
E. Information with respect to the source of all
dividends and distributions allocated among
income, realized short-term gains and realized
long-term gains;
F. Any instructions from a shareholder including all
forms furnished by the Trust and executed by a
shareholder with respect to (i) dividend or
distribution elections and (ii) elections with
respect to payment options in connection with the
redemption of shares;
G. Any correspondence relating to the current
maintenance of a shareholder's account;
H. Certificate numbers and denominations for any
shareholder holding certificates;
I. Any stop or restraining order placed against a
shareholder's account;
J. Information with respect to withholding in the
case of a foreign account or any other account for
which withholding is required by the Internal
Revenue Code of 1986, as amended; and
K. Any information required in order for the T/A to
perform the calculations contemplated under this
Agreement.
17. TAX RETURNS AND REPORTS.
The T/A will prepare in the appropriate form, file
with the Internal Revenue Service and appropriate state agencies
and mail to shareholders of the Trust such returns for reporting
dividends and distributions paid by the Trust as are required to
be so prepared, filed and mailed and shall withhold such sums as
<PAGE>
are required to be withheld under applicable federal and state
income tax laws, rules and regulations.
18. OTHER INFORMATION TO THE TRUST.
Subject to such instructions, verification and
approval of the Custodian and the Trust as shall be required by
any agreement or applicable law, the T/A will also maintain such
records as shall be necessary to furnish to the Trust the
following: annual shareholder meeting lists, proxy lists and
mailing materials, shareholder reports and confirmations and
checks for disbursing redemption proceeds, dividends and other
distributions or expense disbursements.
19. ACCESS TO SHAREHOLDER INFORMATION.
Upon request, the T/A shall arrange for the Trust's
investment adviser to have direct access to shareholder
information contained in the T/A's computer system, including
account balances, performance information and such other
information which is available to the T/A with respect to
shareholder accounts.
20. COOPERATION WITH ACCOUNTANTS.
The T/A shall cooperate with the Trust's independent
public accountants and 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 unqualified opinion where
required for any document for the Trust.
21. SHAREHOLDER SERVICE AND CORRESPONDENCE.
The T/A will provide and maintain adequate personnel,
records and equipment to receive and answer all shareholder and
dealer inquiries relating to account status, share purchases,
redemptions and exchanges and other investment plans available to
Trust shareholders. The T/A will answer written correspondence
from shareholders relating to their share accounts and such other
<PAGE>
written or oral inquiries as may from time to time be mutually
agreed upon, and the T/A will notify the Trust of any
correspondence or inquiries which may require an answer from the
Trust.
22. PROXIES.
The T/A shall assist the Trust in the mailing of
proxy cards and other material in connection with shareholder
meetings of the Trust, shall receive, examine and tabulate
returned proxies and shall, if requested by the Trust, provide at
least one inspector of election to attend and participate as
required by law in shareholder meetings of the Trust.
PAGE
<PAGE>
23. FURTHER ACTIONS.
Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the
purposes hereof.
24. FEES AND CHARGES.
For performing its services under this Agreement,
PRAGMA shall pay the T/A with respect to each series of the Trust
in accordance with the schedule attached hereto as Schedule A.
Fees shall be paid monthly. PRAGMA shall promptly reimburse the
T/A for any out of pocket expenses and advances which are to be
paid by PRAGMA in accordance with Paragraph 25.
25. EXPENSES.
The T/A shall furnish, at its expense and without
cost to the Trust (i) the services of its personnel to the extent
that such services are required to carry out its obligations
under this Agreement and (ii) use of data processing equipment.
All costs and expenses not expressly assumed by the T/A under
this Paragraph 25 shall be paid by PRAGMA, including, but not
limited to costs and expenses for postage, envelopes, checks,
drafts, continuous forms, reports, communications, statements and
other materials, telephone, telegraph and remote transmission
lines, use of outside mailing firms, necessary outside record
storage, media for storage of records (e.g., microfilm,
microfiche, computer tapes), printing, confirmations and any
other shareholder correspondence and any and all assessments,
taxes or levies assessed on the T/A for services provided under
this Agreement. Postage for mailings of dividends, proxies,
reports and other mailings to all shareholders shall be advanced
to the T/A three business days prior to the mailing date of such
materials.
26. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
The parties hereto acknowledge and agree that nothing
contained herein shall be construed to require the T/A to perform
any services for the Trust or PRAGMA which services could cause
MGF to be deemed an "investment adviser" of the Trust within the
meaning of Section 2(a)(20) of the 1940 Act or to supersede or
contravene the prospectus or statement of additional information
of the Trust or any provisions of the 1940 Act and the rules
<PAGE>
thereunder. Except as otherwise provided in this Agreement and
except for the accuracy of information furnished to it by the
T/A, the Trust assumes full responsibility for complying with all
applicable requirements of the 1940 Act, the Securities Act of
1933, as amended, and any other laws, rules and regulations of
governmental authorities having jurisdiction.
PAGE
<PAGE>
27. REFERENCES TO THE T/A, PRAGMA AND THE TRUST.
A. The Trust or PRAGMA shall not circulate any printed
matter which contains any reference to the T/A without the prior
written approval of the T/A, excepting solely such printed matter
as merely identifies the T/A as Administrative Services Agent,
Transfer, Shareholder Servicing and Dividend Disbursing Agent and
Accounting Services Agent. The Trust or PRAGMA will submit
printed matter requiring approval to the T/A in draft form,
allowing sufficient time for review by the T/A and its counsel
prior to any deadline for printing.
B. MGF shall not circulate any printed matter which
contains any reference to the Trust or PRAGMA without the prior
written approval of the Trust or PRAGMA, excepting solely such
printed matter as merely identifies PRAGMA and the Trust as
clients of MGF. MGF will submit printed matter requiring
approval to PRAGMA and/or the Trust in draft form, allowing
sufficient time for review by PRAGMA and/or the Trust
and its counsel prior to any deadline for printing.
28. EQUIPMENT FAILURES.
In the event of equipment failures beyond the T/A's
control, the T/A shall take all steps necessary to minimize
service interruptions but shall have no liability with respect
thereto. The T/A shall endeavor to enter into one or more
agreements making provision for emergency use of electronic data
processing equipment to the extent appropriate equipment is
available.
29. INDEMNIFICATION OF THE T/A.
A. The T/A may rely on information reasonably
believed by it to be accurate and reliable. Except as may
otherwise be required by the 1940 Act and the rules thereunder,
neither the T/A nor its shareholders, officers, directors,
employees, agents, control persons or affiliates of any thereof
shall be subject to any liability for, or any damages, expenses
or losses incurred by the Trust or PRAGMA in connection with, any
error of judgment, mistake of law, any act or omission connected
with or arising out of any services rendered under or payments
made pursuant to this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad
faith or gross negligence on the part of any such persons in the
performance of the duties of the T/A under this Agreement or by
reason of reckless disregard by any of such persons of the
obligations and duties of the T/A under this Agreement.
B. Any person, even though also a director, officer,
employee, shareholder or agent of the T/A, or any of its
affiliates, who may be or become an officer, trustee, employee or
agent of the Trust, shall be deemed, when rendering services to
the Trust or acting on any business of the Trust, to be rendering
such services to or acting solely as an officer, trustee,
employee or agent of the Trust and not as a director, officer,
employee, shareholder or agent of or one under the control or
direction of the T/A or any of its affiliates, even though paid
by one of these entities.
PAGE
<PAGE>
C. Notwithstanding any other provision of this
Agreement, the Trust and PRAGMA shall each indemnify and hold
harmless the T/A, its directors, officers, employees,
shareholders and agents from and against any and all claims,
demands, expenses and liabilities (whether with or without basis
in fact or law) of any and every nature which the T/A may sustain
or incur or which may be asserted against the T/A by any person
by reason of, or as a result of: (i) any action taken or omitted
to be taken by the T/A in good faith in reliance upon any
certificate, instrument, order or share certificate believed by
it to be genuine and to be signed, countersigned or executed by
any duly authorized person, upon the oral instructions or written
instructions of an authorized person of the Trust or upon the
opinion of legal counsel for the Trust or its own counsel; or
(ii) any action taken or omitted to be taken by the T/A in
connection with its appointment in good faith in reliance upon
any law, act, regulation or interpretation of the same even
though the same may thereafter have been altered, changed,
amended or repealed. However, indemnification under this
subparagraph shall not apply to actions or omissions of the T/A
or its directors, officers, employees, shareholders or agents in
cases of its or their own gross negligence, willful misconduct,
bad faith, or reckless disregard of its or their own duties
hereunder.
30. TERMINATION.
A. The provisions of this Agreement shall be
effective on the date first above written, shall continue in
effect for two years from that date and shall continue in force
from year to year thereafter, but only so long as such
continuance is approved (1) by the T/A, (2) by PRAGMA, (3) by
vote, cast in person at a meeting called for the purpose, of a
majority of the Trust's trustees who are not parties to this
Agreement or interested persons (as defined in the 1940 Act) of
any such party, and (4) by vote of a majority of the Trust's
Board of Trustees or a majority of the Trust's outstanding voting
securities.
B. Any party may terminate this Agreement on any date
by giving the other parties at least sixty (60) days' prior
written notice of such termination specifying the date fixed
therefor. Upon termination of this Agreement, PRAGMA shall pay
to the T/A such compensation as may be due as of the date of such
termination, and shall likewise reimburse the T/A for any out-of-
pocket expenses and disbursements reasonably incurred by the T/A
to such date.
C. In the event that in connection with the
termination of this Agreement a successor to any of the T/A's
duties or responsibilities under this Agreement is designated by
the Trust or by PRAGMA by written notice to the T/A, the T/A
shall, promptly upon such termination and at the expense of
PRAGMA, transfer all records and unused statement stationery and
similar materials maintained by the T/A under this Agreement and
shall cooperate in the transfer of such duties and
responsibilities, including provision for assistance from the
T/A's cognizant personnel in the establishment of books, records
and other data by such successor.
<PAGE>
31. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent the T/A or
any affiliated person (as defined in the 1940 Act) of the T/A
from providing services for any other person, firm or corporation
(including other investment companies); provided, however, that
the T/A expressly represents that it will undertake no activities
which, in its judgment, will adversely affect the performance of
its obligations under this Agreement.
32. REPRESENTATIONS OF MGF
MGF represents and warrants that no legal proceedings or
regulatory investigations are pending against MGF which could have a
material impact on the operations or financial condition of MGF are
pending. MGF also represents and warrants that it currently
maintains all registrations and meets all capital requirements
under applcable laws in order to provide the services contemplated
herein, and will continue to do so for the duration of this
Agreement. MGF agrees that it will notify PRAGMA and the
Trust immediately should it become a party to any legal
proceeding, regulatory investigation or enforcement act that
could have a material impact on the operations or financial
condition of MGF. MGF further agrees that it will immediately
notify PRAGMA and the Trust of any material change in the
ownership or control of MGF.
33. MISCELLANEOUS.
The captions in this Agreement are included for
convenience of reference only and in no way define or limit any
of the provisions hereof or otherwise affect their construction
or effect.
34. LIMITATION OF LIABILITY.
The term "PRAGMA Investment Trust" means and refers
to the trustees from time to time serving under the Trust's
Agreement and Declaration of Trust as the same may subsequently
thereto have been, or subsequently hereto may be, amended. 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 trust property of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees
of the Trust and signed by an officer of the Trust, 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 individually or to impose any liability
on any of them personally, but shall bind only the trust property
of the Trust.
35. SEVERABILITY.
In the event any provision of this Agreement is
determined to be void or unenforceable, such determination shall
not affect the remainder of this Agreement, which shall continue
to be in force.
<PAGE>
36. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the
State of Ohio. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act
and to interpretations thereof, if any, by the United States
Courts or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the Securities and
Exchange Commission issued pursuant to said 1940 Act. In
addition, where the effect of a requirement of the 1940 Act,
reflected in any provision of this Agreement, is revised by rule,
regulation or order of the Securities and Exchange Commission,
such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
37. NOTICES.
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party
at such address as such other party may designate for the receipt
of such notice. Until further notice to the other party, it is
agreed that the address of the Trust and of PRAGMA for this
purpose shall be 7150 Greenville Avenue, Suite 101, Dallas, Texas
75231 and that the address of the T/A for this purpose shall be
312 Walnut Street, Cincinnati, Ohio 45202.
38. BINDING EFFECT.
Each of the undersigned expressly warrants and
represents that he has the full power and authority to sign this
Agreement on behalf of the party indicated, and that his
signature will operate to bind the party indicated to the
foregoing terms.
39. COUNTERPARTS.
This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
40. FORCE MAJEURE.
If the T/A shall be delayed in its performance of
services or prevented entirely or in part from performing
services due to causes or events beyond its control, including
and without limitation, acts of God, interruption of power or
other utility, transportation or communication services, acts of
civil or military authority, sabotages, national emergencies,
explosion, flood, accident, earthquake or other catastrophe,
fire, strike or other labor problems, legal action, present or
future law, governmental order, rule or regulation, or shortages
of suitable parts, materials, labor or transportation, such delay
or non-performance shall be excused and a reasonable time for
performance in connection with this Agreement shall be extended
to include the period of such delay or non-performance.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
PRAGMA INVESTMENT TRUST
By:___________________________
Its: President
PRAGMA, INC.
By:___________________________
Its: President
MGF SERVICE CORP.
By:___________________________
Its: President
PAGE
<PAGE>
Schedule A
Compensation
------------
As Transfer, Dividend Disbursing and
Shareholder Service Agent
payable monthly at
PRAGMA Providence Fund: rate of $17/account
per year; subject to
minimum of $1,000
per month
<PAGE>
SUBSCRIPTION AGREEMENT
January ___, 1996
PRAGMA INVESTMENT TRUST
7150 Greenville Avenue
Suite 101 - LB 340
Dallas, Texas
Ladies and Gentlemen:
PRAGMA Investment Trust (the "Trust") proposes to issue and
sell to the public its shares of beneficial interest without par value
(the "Shares") pursuant to a registration statement on Form N-1A (the
"Registration Statement") filed with the Securities and Exchange
Commission. The Trust currently issues a single series of shares, the
PRAGMA Providence Fund (the "Fund"). In order to provide the Trust
with a net worth of at least $100,000 as required by Section 14 of the
Investment Company Act of 1940, as amended, I hereby offer to purchase
10,000 Shares of the Fund at a price of $10.00 per Share prior to the
effective date of the Registration Statement (on such date as may be
mutually agreed upon).
I will make payment for the Shares by delivery of a certified
or official bank check in the amount of $100,000 payable to the order
of the Trust or by wire transfer.
I represent and warrant to the Trust that the Shares are being
acquired by me for investment and not with a view to the resale or
further distribution thereof and that I have no present intention to
redeem the Shares.
I hereby agree that, in the event that any of the Shares
referred to above are redeemed prior to the amortization in full of
the Trust's organizational expenses, the proceeds of such redemption
will be reduced by the pro rata portion of any unamortized
organizational expenses in the same proportion as the number of such
Shares redeemed bears to the number of such Shares held at the time of
redemption and that, to the extent that the proceeds of any such
redemption are less than such pro rata portion of any then-unamortized
organizational expenses, I will reimburse the Trust promptly for such
unamortized organizational expenses.
PAGE
<PAGE>
Please confirm that the foregoing correctly sets forth the
agreement with the Trust.
Very truly yours,
_____________________
John H. Alban, jr.
Confirmed, as of the date first above written.
PRAGMA INVESTMENT TRUST
By____________________________
President
<PAGE>
