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Registration Nos. 33-
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811-
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As filed with the Securities and Exchange Commission on
February 13, 1996
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 / X /
Pre-Effective Amendment No. / /
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Post-Effective Amendment No. / /
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and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. / /
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(Check appropriate box or boxes)
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The Holland Trust
(Exact Name of Registrant as Specified in Charter)
Suite 3260, 35 West Wacker Drive, Chicago, Illinois 60601
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code:
(312) 553-1000
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Louis A. Holland
c/o Holland Capital Management
Suite 3260
35 West Wacker Drive
Chicago, Illinois 60601
(Name and Address of Agent for Service)
Copies to:
Joan E. Boros
Katten Muchin & Zavis
1025 Thomas Jefferson Street, N.W.
Suite 700 - East Lobby
Washington, D.C. 20007
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Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
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.
The Registrant is registering an indefinite number of its shares of beneficial
interest under the Securities Act of 1933 pursuant to Rule 24f-2. The
Registrant intends to file a Rule 24f-2 Notice for fiscal year 1996 by
February 28, 1997.
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The Holland Trust
CROSS-REFERENCE SHEET
Form N-1A Item No. Caption In Prospectus
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1. Cover Cover Page
2. Synopsis Cover Page
3. Condensed Financial
Information Not Applicable
4. General Description of Introduction to the Holland Trust; The Growth
Registrant Fund; Risk Factors, Other Investment Practices,
and Policies of the Growth Fund
5. Management of the Fund How the Holland Trust is Managed
6. Capital Stock and Other Organization of the Holland Trust; Dividends,
Securities Distributions, and Taxes; How to Purchase Shares
7. Purchase of Securities How to Purchase Shares; Shareholder Being Offered
Service; How the Growth Fund's Net Asset Value is
Determined
8. Redemption or Repurchase Shareholder Services; How to Redeem Shares
9. Pending Legal Proceedings Not Applicable
Caption in Statement of
Form N-1A Item No. Additional Information
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10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and General Information and History
History
13. Investment Objective and Policies
Investment Restrictions;
Description of Certain
Investments
14. Management of the Fund Management of the Holland Trust
15. Control Persons and Principal Holders of
Principal Holders of Securities
Securities
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16. Investment Advisory and Investment Management and
Other Services Other Services
17. Brokerage Allocation and Brokerage Allocation and Other
Other Practices Practices
18. Capital Stock and Other Organization of the Holland Trust
Securities
19. Purchase, Redemption and Purchase and Redemption of
Pricing of Securities Securities Being Offered;
Being Offered Determination of Net Asset Value
20. Tax Status Taxes
21. Underwriters Distribution of Shares
22. Calculation of Performance Information About
Performance Data the Growth Fund
23. Financial Statements Independent Auditors
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THE HOLLAND TRUST
Suite 3260
35 West Wacker Drive
Chicago, Illinois 60601
INTRODUCTION TO THE HOLLAND TRUST
The Holland Trust (the "Trust") is a Delaware business trust registered with the
Securities and Exchange Commission ("SEC") as a no-load, open-end diversified
management investment company, commonly known as a "mutual fund." The Trust is
organized as a series company and currently consists of one series, the Growth
Fund (the "Growth Fund" or "Fund"). In the future, the Trust may establish
additional series or classes of shares of any series. The Fund is managed by
Holland Capital Management ("Investment Manager"), an investment adviser
registered with the SEC that directs the day-to-day operations of the Fund and
provides administrative services to the Trust. HCM Investments, Inc. (the
"Distributor"), a broker-dealer registered with the SEC, serves as the
distributor of the shares of the Trust.
No sales charges or redemption fees or penalties are charged by the Trust with
respect to an investment in the Growth Fund. This means that all of the money
you invest will be credited to your account(s) in the Fund and immediately go to
work for you.
The Growth Fund primarily seeks long-term growth of capital and invests
primarily in common stocks of growth companies, with the receipt of dividend
income as a secondary consideration. There can be no assurance that the
investment objective of the Fund will be realized. For general information,
please call the Trust, toll-free at 1-800-999-9999.
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ABOUT THIS PROSPECTUS
This Prospectus sets forth concisely the information about the Trust and the
Growth Fund that you should know before investing. It should be retained for
future reference. A Statement of Additional Information, dated ____________,
1996, about the Trust has been filed with the Securities and Exchange Commission
and is incorporated herein by reference. You may obtain a copy of the Statement
of Additional Information at no charge by calling the Trust at 1-800-999-9999.
PROSPECTUS
, 1996
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TABLE OF CONTENTS PAGE
Expense Summary
The Growth Fund
How to Purchase Shares
Shareholder Services
Retirement Plans
How the Growth Fund's Net Asset Value is Determined
Dividends, Distributions, and Taxes
How to Redeem Shares
How the Holland Trust is Managed
Risk Factors, Other Investment Practices, and Policies
of the Growth Fund
Portfolio Transactions and Brokerage Practices
Organization of the Holland Trust
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 SUMMARY
The Expense Summary, including the Examples below, is included to assist in
understanding of the various costs and expenses to which an investment in the
Growth Fund would be subject. The Trust commenced operations on December 20,
1995. Consequently, certain fees and expenses of the Fund stated below are
estimated. Actual fees and expenses for the Growth Fund for the current year
may be more or less than those shown below. A more complete description of all
fees and expenses is included in this prospectus under the section "How the
Holland Trust is Managed."
Shareholder Transaction Expenses Growth Fund
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None
Sales Load Imposed on Purchase None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load Imposed on Redemptions None
Redemption Fee
Annual Fund Operating Expenses
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(as a percentage of average net assets)
Investment Management Fee .85%*
12b-1 Fees -0-
Other Estimated Expenses (After Expense
Reimbursements) .50%**
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Total Fund Operating Expenses 1.35%
*The Investment Management Fee declines at specified breakpoints as assets
increase.
**The Investment Manager has agreed to reimburse the Growth Fund to the extent
that Other Estimated Expenses actually exceed .50% of the net assets of shares
of the Fund during the first year of the Fund's operations.
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EXAMPLES: An investor in the Growth Fund would pay the following expenses on a
$1,000 investment, assuming (i) a 5% annual return and (ii) redemption at the
end of each future time period:***
1 Year 3 years
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$14 $44
*** There are no charges imposed upon redemption.
THESE EXAMPLES SHOULD NOT BE CONSIDERED TO BE A REPRESENTATION OF PAST OR FUTURE
FEES OR EXPENSES FOR THE GROWTH FUND. ACTUAL FEES AND EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN ABOVE. Similarly, the annual rate of return assumed in
the Example is not an estimate or guarantee of future investment performance,
but is included for illustrative purposes.
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THE GROWTH FUND
INVESTMENT OBJECTIVE: The Growth Fund primarily seeks long-term growth of
capital by investing primarily in common stocks of growth companies, with the
receipt of dividend income as a secondary consideration.
INVESTMENT PROGRAM: The policy of the Growth Fund is to invest substantially
all of its assets in equity securities under normal market conditions. It
invests primarily in the common stocks of a diversified group of companies: (i)
that have demonstrated historical growth of earnings faster than the general
market; (ii) that have earnings growth stability; (iii) whose return on equity
is higher than the general market; and (iv) whereby the dividend growth of the
portfolio is typically greater than that of the market, while dividend yield is
typically less.
Equity securities include common stocks, securities which are convertible into
common stocks and readily marketable securities, such as rights and warrants,
which derive their value from common stock. Investments in rights and warrants
will be for the purpose of participating in particular market sectors.
The Growth Fund also may on occasion invest in various income producing
securities including, but not limited to, dividend-paying equity securities and
investment grade bonds. (SEE "Description of Certain Corporate Bond Ratings" in
the Statement of Additional Information.)
Investments in common stock in general are subject to market risks that may
cause their prices to fluctuate over time. In addition, the amount of income
generated by the Fund will fluctuate depending, among other things, on the
composition of the Fund's holdings and the level of interest and dividend income
paid on those holdings. Therefore, an investment in the Fund may be more
suitable for long-term investors who can bear the risk of these fluctuations.
The Growth Fund may also invest in common stocks of foreign issuers.
Investments in common stocks of foreign issuers will be made primarily through
the use of U.S. dollar-denominated American Depository Receipts ("ADRs"),
although direct market purchases also may be made. ADRs are issued by domestic
banks and evidence ownership of underlying foreign securities.
The Growth Fund may establish and maintain reserves for temporary, defensive
purposes or to enable it to take advantage of buying opportunities. The Fund's
reserves will be invested in high-grade domestic and foreign money market
instruments including, but not limited to, U.S. government obligations,
certificates of deposit, bankers' acceptances, commercial paper, short-term
corporate debt issues and repurchase agreements.
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To facilitate the Growth Fund's investment program, the Fund may lend portfolio
securities and purchase securities on a forward-commitment or when-issued basis.
HOW TO PURCHASE SHARES
The initial minimum investment is $2,000 for the Growth Fund. Such minimum
investment amount may, in certain cases, be waived or lowered by the Trust.
OPENING AN ACCOUNT. Shareholders may make an initial purchase of shares of the
Growth Fund by mail or by wire. Shares of the Fund may be purchased on any day
the Trust is open for business.
A COMPLETED AND SIGNED APPLICATION IS REQUIRED FOR EACH NEW ACCOUNT OPENED WITH
THE GROWTH FUND REGARDLESS OF HOW THE INITIAL PURCHASE OF SHARES IS MADE.
BY MAIL. Shares of the Growth Fund may be purchased by mailing the completed
Application, with a check made payable to the Trust, ____________________
__________________________________________.
[ADDRESS OF THE TRANSFER AGENT]
BY WIRE. Shares of the Growth Fund also may be purchased by wiring funds to the
wire bank account for the Fund. Before wiring funds, please call the Trust toll
free at 1-800-999-9999 to advise the Trust of the intention to invest in the
Growth Fund and to receive instructions as to how and where to wire the
investment. Please remember to return the completed Application to the Trust as
described in the prior paragraph. The bank that wires the funds may charge a
fee.
SUBSEQUENT INVESTMENTS. The minimum subsequent investment for the Growth Fund
is $250. Subsequent purchases of shares of the Fund may be made by mail or by
wire (see instructions above), or through means of the Telephone Investment
Privilege described below under "Shareholder Services."
SHARE PRICE. To make an initial purchase of shares of the Growth Fund, except
by wire transfer, a completed and signed Application must first be received and
accepted. Shares in the Fund will be priced at the net asset value per share of
the Fund next determined after a purchase order has been received by the Trust
in "good order," as described below.
CONDITIONS OF PURCHASE. The Trust and the Distributor each reserve the right to
reject any purchase for any reason and to cancel any purchase due to nonpayment.
Purchases are not binding on the Trust or the Investment Manager or considered
received until such purchase orders are received by the Trust in good order.
Good order requires that all purchases must be made in U.S. dollars and, to
avoid fees and delays, all checks must be drawn only on U.S.
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banks. No cash will be accepted. As a condition of this offering, if a
purchase is canceled due to nonpayment or because a check does not clear (and,
therefore, the account is required to be redeemed), the purchaser will be
responsible for any loss the Fund incurs.
SHARE CERTIFICATES. Share certificates will not be issued for shares unless the
shareholder has held them for at least thirty (30) days and has specifically
requested them. Most shareholders elect not to receive share certificates.
Certificates for full shares only will be issued. Shareholders who lose a share
certificate may incur an expense to replace it.
SHAREHOLDER SERVICES
SHAREHOLDER INQUIRIES AND SERVICES OFFERED. If there are any questions about
the following services, please call the Trust at 1-800-999-9999 or write the
Trust, [ADDRESS OF TRANSFER AGENT] The Trust reserves the right to amend the
shareholder services described below or to change their terms or conditions
upon sixty (60) days' notice to shareholders.
SHAREHOLDER STATEMENTS AND REPORTS. Each time a shareholder buys or sells
shares or reinvests a dividend or distribution in the Growth Fund, the
shareholder will receive a statement confirming such transaction and listing the
current share balance with the Fund. The Trust also will send shareholders
annual and semi-annual reports, as well as year-end tax information about the
accounts with the Fund.
TELEPHONE PRIVILEGES. For convenience, the Trust provides telephone privileges
that allow telephone authorization to (i) purchase shares in the Growth Fund,
and (ii) redeem shares in the Fund. To utilize these telephone privileges,
check the appropriate boxes on the Application and supply the Trust with the
information required. Procedures have been established by the Trust and [NAME
OF TRANSFER AGENT], that are considered to be reasonable and are designed to
confirm personal identification information prior to acting on telephone
instructions, including tape recording telephone communications and providing
written confirmation of instructions communicated by telephone. If the
Investment Manager does not employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, it may be liable for any
losses arising out of any action on its part or any failure or omission to act
as a result of its own negligence, lack of good faith, or willful misconduct.
In light of the procedures established, the Trust will not be liable for
following telephone instructions that it or [NAME OF TRANSFER AGENT], as
transfer agent, believes to be genuine. During periods of extreme economic
conditions or market changes, requests by telephone may be difficult to make due
to heavy volume. During such times, shareholders should consider placing orders
by mail.
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The telephone privileges are not available with respect to shares for which
certificates have been issued or with respect to redemptions for accounts
requiring supporting legal documents.
TELEPHONE INVESTMENT PRIVILEGE. After an account with the Trust has been
opened, additional investments in the amount of $1,000 or more may be made by
telephoning the Trust at 1-800-999-9999 between 8:30 a.m. and 4:00 p.m. Eastern
Time on any day the Trust is open. Telephone investment requests made after
4:00 p.m. Eastern Time will be processed as of the close of business on the next
business day. In accordance with a shareholder's instructions, the Trust will
electronically transfer monies from a shareholder's bank account designated on
the Application to the shareholder's account with the Trust. The designated
bank must be a member of the Automated Clearing House ("ACH") network and able
to make electronic transfers in order for a shareholder to use this privilege.
TELEPHONE REDEMPTION PRIVILEGE. The Telephone Redemption Privilege permits a
shareholder to authorize the redemption of some or all of the shares in his or
her account with the Trust by telephoning the Trust at 1-800-999-9999 between
8:30 a.m. and 4:00 p.m. Eastern Time on any day the Trust is open. In
accordance with telephone instructions, we will redeem shares of the Growth Fund
at their net asset value next determined after a telephone redemption request is
received. Telephone redemption requests made after 4:00 p.m. Eastern Time will
be processed as of the close of business on the next business day. Redemption
proceeds will, in accordance with any prior election made by a shareholder, be
mailed to the shareholder's current address or electronically transmitted to the
shareholder's designated bank account. The designated bank must be a member of
the ACH network and able to receive electronic transfers in order to use this
privilege.
RETIREMENT PLANS
Trust shares are available in connection with tax benefitted retirement plans
established under Section 401(a) or Section 403(b) of the Internal Revenue Code
of 1986, as amended ("Code"), IRAs and SEP-IRAs under Section 408 of the Code,
corporate sponsored profit-sharing plans, and deferred compensation plans of
state and local governments and tax-exempt organizations that comply with the
provisions of Section 457 of the Code. Various initial, annual maintenance and
participant fees may apply to these retirement plans. Applicable forms and
information regarding plan administration, all fees, and other plan provisions
are available from the Trust or [NAME OF TRANSFER AGENT], as transfer agent.
HOW THE GROWTH FUND'S NET ASSET VALUE IS DETERMINED
The net asset value per share of the Growth Fund is normally calculated as of
the close of regular trading on the New York Stock
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Exchange ("Exchange"), currently 4:00 p.m. Eastern Time, every day the Exchange
is open for trading. The per share net asset value, calculated as described
below, is effective for all orders received in good order (as previously
described) prior to the close of trading on the Exchange for that day. Orders
received after the close of trading on the Exchange or on a day when the
Exchange is not open for business will be priced at the per share net asset
value next computed.
The net asset value of the Growth Fund's shares is determined by adding the
value of all securities, cash and other assets of the Fund, subtracting the
liabilities (including accrued expenses and dividends payable), and dividing the
result by the total number of outstanding shares in the Fund. Portfolio
securities are valued primarily based on market quotations, or if market
quotations are not available, by a method that the Board believes accurately
reflects fair value.
DIVIDENDS, DISTRIBUTIONS, AND TAXES
The Growth Fund intends to elect to be treated and to qualify as a "regulated
investment company" under Subchapter M of the Code in which case it will not be
subject to federal income tax on any income and capital gains distributed to its
shareholders.
As a result, it is the policy of the Growth Fund to declare and distribute to
its shareholders as income dividends or capital gains distributions, at least
annually, substantially all of its ordinary income and capital gains realized
from the sale of its portfolio securities, if any.
Income dividends for the Growth Fund will be declared daily and paid monthly.
All distributions of capital gains of the Fund, if any, realized during the
fiscal year, will be declared and distributed no less frequently than annually.
Income dividends are derived from the Fund's net investment income, including
any net short-term capital gains and dividends received by the Fund, and are
taxable to shareholders as ordinary income. Distributions of capital gains by
the Fund are derived from the Fund's long-term capital gains and are taxable to
shareholders as long-term capital gains, regardless of how long the shares are
held. Income dividends and distributions of capital gains income declared in
October, November or December and paid in January are taxable in the year they
are declared. The Trust will mail shareholders a Form 1099 by the end of
January indicating the federal tax status of income dividends and capital gains
distributions.
BACKUP WITHHOLDING. The Trust is required by federal law to withhold 31% of
reportable payments (which may include income dividends, capital gains
distributions, and share redemption proceeds) paid to shareholders who have not
complied with IRS regulations. In order to avoid this backup withholding
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requirement, certification is required on the Purchase Application Form
("Application"), or on a separate W-9 Form supplied by [NAME OF TRANSFER AGENT],
as transfer agent, that the Social Security or Taxpayer Identification Number is
correct (or that the shareholder has applied for such a number and is waiting
for it to be issued), and that the shareholder is not currently subject to, or
exempt from, backup withholding.
REINVESTMENT OF INCOME DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. Unless
elected otherwise, as permitted on the Application, income dividends and
distributions of capital gains income with respect to the Growth Fund will be
reinvested in additional shares of the Fund and will be credited to the
shareholder's account with the Fund at the net asset value per share next
determined as of the ex-dividend date. Both income dividends and distributions
of capital gains income are paid by the Fund to each shareholder on the basis of
the shareholder's relative net assets. As a result, at the time of such
payment, the net asset value per share of the Fund will be reduced by the amount
of such payment. Payments from the Fund to shareholders of income dividends and
capital gains distributions are taxable to shareholders of the Fund when such
dividends and distributions are declared, regardless of whether they are taken
in cash or reinvested in shares of the Fund.
HOW TO REDEEM SHARES
Shareholders have the right to redeem (subject to the restrictions outlined
below) all or any part of their shares in the Growth Fund at a price equal to
the net asset value of such shares next computed following receipt and
acceptance of the redemption request by the Trust. Unless a shareholder has
selected the Telephone Redemption Privilege and provided the required
information, in order to redeem shares in the Fund, a written request in "proper
form" (as explained below) must be sent directly to the Trust, Suite 3260, 35
West Wacker Drive, Chicago, Illinois 60601. A shareholder cannot redeem shares
by telephone unless the shareholder are eligible to use the Telephone Redemption
Privilege. In addition, the Trust cannot accept requests which specify a
particular date for redemption or which specify any other special conditions.
PROPER FORM FOR ALL REDEMPTION REQUESTS. A redemption request must be in proper
form. To be in proper form, a redemption request must include: (i) share
certificates, if any, endorsed by all registered shareholders for the account
exactly as the shares are registered and the signature(s) must be guaranteed, as
described below; (ii) for written redemption requests, a "letter of
instruction," which is a letter specifying the Growth Fund by name, the number
of shares to be sold, the name(s) in which the account is registered, and the
account number. The letter of instruction must be signed by all registered
shareholders for the account using the exact names in which the account is
registered; (iii) other
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supporting legal documents, as may be necessary, for redemption requests by
corporations, trusts, and partnerships; and (iv) any signature guarantees that
are required as described above in (i), or required by the Trust where the value
of the shares being redeemed is $10,000 or greater, or where the redemption
proceeds are to be sent to an address other than the address of record or to a
person other than the registered shareholder(s) for the account. Signature
guarantees are required if the amount being redeemed is $10,000 or more but are
not required for redemptions made using the Telephone Redemption Privilege,
unless redemption proceeds are to be sent to a person other than the registered
shareholders for the account or to an address or account other than that of
record.
Signature guarantees, when required, can be obtained from any one of the
following institutions: (i) a bank; (ii) a securities broker or dealer,
including a Government or municipal securities broker or dealer, that is a
member of a clearing corporation or has net capital of at least $100,000; (iii)
a credit union having authority to issue signature guarantees; (iv) a savings
and loan association, a building and loan association, a cooperative bank, a
federal savings bank or association; or (v) a national securities exchange, a
registered securities exchange or a clearing agency. Notaries public are not
acceptable guarantors.
A redemption request will not be processed and will be held until it is in
proper form, as described above.
RECEIVING A REDEMPTION PAYMENT. Except under certain emergency conditions, a
redemption payment will be sent to the shareholder within seven (7) days after
receipt of the corresponding telephone or written redemption request, in proper
form, by the Trust. No charge of any kind is imposed on any redemption request.
If a redemption request is with respect to shares purchased by a personal,
corporate, or government check within ten (10) days of the purchase date, the
redemption payment will be held until the purchase check has cleared (which may
take up to ten (10) days from the purchase date), although the shares redeemed
will be priced for redemption upon receipt of the redemption request. The
inconvenience of this ten (10) day check clearing period can be avoided by
purchasing shares with a certified, treasurer's or cashier's check, or with a
federal Fund or bank wire.
MINIMUM ACCOUNT SIZE. Due to the relatively high cost of maintaining accounts,
the Trust reserves the right to redeem shares in any account if, as the result
of the redemptions, the value of that account drops below $2,000. A shareholder
is allowed at least sixty (60) days, after written notice by the Trust, to make
an additional investment to bring the account value up to at least $2,000 before
the redemption is processed.
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HOW THE HOLLAND TRUST IS MANAGED
BOARD OF TRUSTEES. The management of the Trust's business and affairs is the
responsibility of its Board. Although the Board is not involved in the day-to-
day operations of the Trust, the Board has the responsibility for establishing
broad operating policies and supervising the overall performance of the Trust.
INVESTMENT MANAGER. The Trust is managed by Holland Capital Management, a
Delaware limited partnership whose principal place of business is Suite 3260, 35
West Wacker Drive, Chicago, Illinois 60601. The Investment Manager has not
previously served as investment manager to any other registered investment
company. However, the executives and members of the investment management staff
have extensive experience in managing investments. In addition, Louis A.
Holland, the Managing Partner and Chief Investment Officer of the Investment
Manager, has served as an investment adviser for the past 25 years.
Subject to the authority of the Board, the Investment Manager supervises and
directs the day-to-day investments and operation of the Growth Fund in
accordance with the Fund's investment objective, investment program, policies,
and restrictions. The Investment Manager also supervises the overall
administration of the Trust, which includes, among other activities, preparing
and filing documents required for compliance of the Trust with applicable laws
and regulations, preparing agendas and other supporting documents for the
meetings of the Board, maintaining the corporate records and books of the Trust,
and serving as the Trust's liaison with its independent public accountant.
The persons employed by or associated with the Investment Manager who are
primarily responsible for the day-to-day management of the Growth Fund's
portfolio are: Louis A. Holland, Managing Partner and Chief Investment Officer
of the Investment Manager, and President, Treasurer and Director of Holland
Capital Management, Inc., the General Partner of the Investment Manager; and
Monica L. Walker and Laura J. Janus, each employed by the Investment Manager as
a Portfolio Manager of the Trust.
The Trust pays the Investment Manager, on a monthly basis, an investment
management fee based on the Growth Fund's average daily net assets at the
following annualized rates: with respect to the Fund, .85% of the average daily
net assets up to $500 million, .75% of the average daily net assets up to the
next $500 million, and .65% of the average daily net assets in excess of $1
billion.
The Trust bears all expenses of its operation, other than those assumed by the
Investment Manager. Such expenses include payment for distribution services,
transfer agent services, accounting services, legal fees, and payment of taxes.
In addition, the expense of organizing the Trust and registering and qualifying
its
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initial shares under federal and state securities laws will be charged to the
Trust's operations, as an expense, and amortized over a period not to exceed
five years.
DISTRIBUTOR. HCM Investments, Inc. serves as principal underwriter and the
Distributor of the shares of the Growth Fund pursuant to a Distribution
Agreement between the Distributor and the Trust. The Distributor is a Delaware
corporation whose principal place of business is Suite 3260, 35 West Wacker
Drive, Chicago, Illinois 60601. The Distributor is an affiliate of the
Investment Manager, as both the Distributor and the Investment Manager are
controlled by Louis A. Holland.
The Trust's shares are sold on a no-load basis and, therefore, the Distributor
receives no sales commission or sales load for providing services to the Trust
under the Distribution Agreement. The Trust has not currently entered into any
plan or agreement for the payment of fees pursuant to Rule 12b-1 under the
Investment Company of 1940 (the "1940 Act"), but reserves the right to do so
with respect to any future classes of shares of any series.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Pursuant to written
agreements between it and [NAME OF CUSTODIAN], [NAME OF CUSTODIAN] will serve as
custodian, transfer agent and dividend disbursing agent for the Trust. The
principal business address of [NAME OF CUSTODIAN] is [ADDRESS OF CUSTODIAN].
RISK FACTORS, OTHER INVESTMENT PRACTICES, AND POLICIES OF THE GROWTH FUND
REPURCHASE AGREEMENTS. The Growth Fund may utilize repurchase agreements
through which it may purchase a security (the "underlying security") from a well
established domestic securities dealer or bank that is a member of the Federal
Reserve System and the seller of the repurchase agreement (I.E., the securities
dealer or bank) agrees to repurchase the underlying security at a mutually
agreed upon time and price. In these repurchase transactions, the underlying
security is held in custody for the Fund through the federal book entry system
as collateral and marked-to-market on a daily basis to ensure full
collateralization of the repurchase agreement. The underlying security must be
a high-quality debt security and must be determined to present minimal credit
risks. In the event of bankruptcy or default of certain sellers of repurchase
agreements, the Fund could experience costs and delays in liquidating the
underlying security held as collateral and might incur a loss if such collateral
declines in value during this period.
SECURITIES OF FOREIGN ISSUERS. The Growth Fund may invest up to 20% of its
total assets in securities of foreign issuers. As stated above, investments in
common stocks of foreign issuers will be made primarily through the use of U.S.
dollar-denominated
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American Depository Receipts ("ADRs"), although direct market purchases also may
be made. ADRs are U.S. dollar-denominated certificates issued by a U.S. bank or
trust company and represent the right to receive securities of a foreign issuer
deposited in a domestic bank or foreign branch of a U.S. bank and traded on a
U.S. exchange or in an over-the-counter market.
Investing in securities of foreign issuers involves considerations not typically
associated with investing in securities of companies organized and operated in
the U.S. Foreign securities generally are denominated and pay dividends or
interest in foreign currencies. The Growth Fund may from time to time hold
various foreign currencies pending their investment in foreign securities or
their conversion into U.S. dollars. The value of the assets of the Fund as
measured in U.S. dollars may therefore be affected favorably or unfavorably by
changes in exchange rates. There may be less publicly available information
concerning foreign issuers than is available with respect to U.S. issuers.
Foreign securities may not be registered with the SEC, and generally, reporting
requirements comparable to those applicable to U.S. issuers.
ILLIQUID SECURITIES. The Growth Fund will not invest more than 15% of its net
assets in illiquid securities, including securities that are illiquid by virtue
of the absence of a readily available market or legal or contractual
restrictions on resale. Securities that have legal or contractual restrictions
on resale but have a readily available market are not deemed illiquid for
purposes of this limitation. The Investment Manager will monitor the liquidity
of such restricted securities under the supervision of the Board.
The Growth Fund may invest in commercial paper issued in reliance on the
exemption from registration afforded by Section 4(2) of the Securities Act of
1933 (the "1933 Act"). Commercial paper is restricted as to disposition under
federal securities law, and is generally sold to institutional investors, such
as the Fund, who agree that they are purchasing the paper for investment
purposes and not with a view to public distribution. Any resale by the
purchaser must be in an exempt transaction. Commercial paper is normally resold
to other institutional investors like the Fund through or with the assistance of
the issuer or investment dealers who make a market in commercial paper, thus
providing liquidity. The Fund believes that commercial paper and possible
certain other restricted securities which meet the criteria for liquidity
established by the Board are quite liquid. The Fund intends, therefore, to
treat the restricted securities which meet the criteria for liquidity
established by the Board, including commercial paper, as determined by the
Investment Manager, as liquid and not subject to the investment limitations
applicable to illiquid securities.
Rule 144A adopted by the SEC allows for a broader institutional trading market
for securities otherwise subject to a restriction on
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resale to the general public. Rule 144A establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. The Investment Manager anticipates that the
market for certain restricted securities such as institutional commercial paper
may expand further as a result of this regulation and use of automated systems
for the trading, clearance and settlement of unregistered securities of domestic
and foreign issuers, such as the PORTAL System sponsored by the National
Association of Securities Dealers, Inc.
OPTIONS AND FUTURES CONTRACTS. The Growth Fund may write covered call options,
buy put options, buy call options and write put options, without limitation
except as noted in this paragraph and the Statement of Additional Information.
Such options may relate to particular securities or to various indexes and may
or may not be listed on a national securities exchange and issued by the Options
Clearing Corporation. The Fund may also invest in futures contracts and options
on futures contracts (index futures contracts or interest rate futures
contracts, as applicable) for hedging purposes or for other purposes so long as
aggregate initial margins and premiums required for non-hedging positions do not
exceed 5% of its net assets, after taking into account any unrealized profits
and losses on any such contracts it has entered into. However, the Fund may not
write put options or purchase or sell futures contracts or options on futures
contracts to hedge more than its total assets unless immediately after any such
transaction the aggregate amount of premiums paid for put options and the amount
of margin deposits on its existing futures positions do not exceed 5% of its
total assets.
Options trading is highly specialized activity which entails greater than
ordinary investment risks. A call option for a particular security gives the
purchaser of the option the right to buy, and a writer the obligation to sell,
the underlying security at the stated exercise price at any time prior to the
expiration of the option, regardless of the market price of the security. The
premium paid to the writer is in consideration for undertaking the obligations
under the option contract. A put option for a particular security gives the
purchaser the right to sell the underlying security at the stated exercise price
at any time prior to the expiration date of the option, regardless of the market
price of the security. In contrast to an option on a particular security, an
option on an index provides the holder with the right to make or receive a cash
settlement upon exercise of the option. The amount of this settlement will be
equal to the difference between the closing price of the index at the time of
exercise and the exercise price of the option expressed in dollars, times a
specified multiple.
The Growth Fund may invest in unlisted over-the-counter options only with
broker-dealers deemed creditworthy by the Investment
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Manager. Closing transactions in certain options are usually effected directly
with the same broker-dealer that effected the original option transaction. The
Fund bears the risk that the broker-dealer will fail to meet its obligations.
There is no assurance that the Fund will be able to close an unlisted option
position. Furthermore, unlisted options are not subject to the protections
afforded purchasers of listed options by the Options Clearing Corporation, which
performs the obligations of its members who fail to do so in connection with the
purchase or sale of options.
To enter into a futures contract, the Growth Fund must make a deposit of an
initial margin with its custodian in a segregated account in the name of its
futures broker. Subsequent payments to or from the broker, called variation
margin, will be made on a daily basis as the price of the underlying security or
index fluctuates, making the long and short positions in the futures contracts
more or less valuable.
The risks related to the use of options and futures contracts include: (i) the
correlation between movements in the market price of a portfolio's investments
(held or intended for purchase) being hedged and in the price of the futures
contract or option may be imperfect; (ii) possible lack of a liquid secondary
market for closing out options or futures positions; (iii) the need for
additional portfolio management skills and techniques; and (iv) losses due to
unanticipated market movements.
Successful use of options and futures by the Growth Fund is subject to the
Investment Manager's ability to correctly predict movements in the direction of
the market. For example, if the Fund uses future contracts as a hedge against
the possibility of a decline in the market adversely affecting securities held
by it and securities prices increase instead, the Fund will lose part or all of
the benefit of the increased value of its securities which it has hedged because
it will have approximately equal offsetting losses in its futures positions.
The risk of loss in trading futures contracts in some strategies can be
substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in future pricing. As a result, a relatively
small price movement in a futures contract may result in immediate and
substantial loss or gain to the investor. Thus, a purchase or sale of a futures
contract may result in losses or gains in excess of the amount invested in the
contract.
WARRANTS. The Growth Fund may invest in warrants, which are certificates that
give the holder the right to buy a specific number of shares of a company's
stock at a stipulated price within a certain time limit (generally, two or more
years). Because a warrant does not carry with it the right to dividends or
voting rights with respect to the securities which it entitles a holder to
purchase, and because it does not represent any rights in the
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assets of the issuer, warrants may be considered more speculative than certain
other types of investments. Also, the value of a warrant does not necessarily
change with the value of the underlying securities, and a warrant ceases to have
value if it is not exercised prior to its expiration date.
LENDING OF PORTFOLIO SECURITIES. In order to generate income, the Growth Fund
may lend portfolio securities on a short-term or a long-term basis, up to one-
third of the value of its total assets to broker-dealers, banks, or other
institutional borrowers of securities. Since this technique may be considered a
form of leverage, the Fund will only enter into loan arrangements with broker-
dealers, banks, or other institutions which the Investment Manager for the Fund
has determined are creditworthy under guidelines established by the Trustees,
and will receive collateral in the form of cash (which may be invested in
accordance with the Fund's investment program) or U.S. Government securities,
equal to at least 100% of the value of the securities loaned at all times. The
Fund will continue to receive the equivalent of the interest or dividends paid
by the issuer of the securities lent. The Fund may also receive interest on the
investment of the collateral or a fee from the borrower as compensation for the
loan. The Fund will retain the right to call, upon notice, the securities lent.
While there may be delays in recovery, or even loss of rights in the collateral
should the borrower fail financially, the Investment Manager reviews the
creditworthiness of the entities to which loans are made to evaluate those
risks.
WHEN-ISSUED SECURITIES. The Growth Fund may utilize up to 5% of its total
assets to purchase securities on a "when-issued" basis, which normally settle
within 30 to 45 days. The Fund will enter into a when-issued transaction for
the purpose of acquiring portfolio securities and not for the purpose of
leverage, but may sell the securities before the settlement date if the
Investment Manager deems it advantageous to do so. The payment obligation and
the interest rate that will be received on when-issued securities are fixed at
the time the buyer enters into the commitment. Due to fluctuations in the value
of securities purchased or sold on a when-issued basis, the yields obtained may
be higher or lower than the yields available in the market on the dates when the
investments are actually delivered to the buyers. When the Fund agrees to
purchase when-issued securities, its custodian will set aside in a segregated
account cash, U.S. government securities or other liquid high-grade debt
obligations or other securities that are acceptable as collateral to the
appropriate regulatory authority equal to the amount of the commitment.
Normally, the custodian will set aside portfolio securities to satisfy a
purchase commitment, and in such a case the Fund may be required subsequently to
place additional assets in the segregated account in order to ensure that the
value of the account remains equal to the amount of the Fund's commitment. It
may be expected that the Fund's net assets will fluctuate to a greater degree
when it sets
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aside portfolio securities to cover such purchase commitments than when it sets
aside cash. When the Fund engages in when-issued transactions, it relies on the
other party to consummate the trade. Failure of the seller to do so may result
in the Fund's incurring a loss or missing an opportunity to obtain a price
considered to be advantageous.
OTHER INVESTMENT COMPANIES. The Growth Fund may also invest up to 10% of its
total assets in the securities of other investment companies, including closed-
end investment companies, in accordance with Section 12(d)(1)(A) of the 1940
Act. Such investment in other investment companies will take into consideration
the operating expenses and fees of these companies, including advisory fees, as
such expenses may reduce investment return.
CERTAIN POLICIES TO REDUCE RISK. The Growth Fund has adopted certain
fundamental investment policies in managing its portfolio that are designed to
maintain the portfolio's diversity and reduce risk. The Fund will (i) not
purchase the securities of any company if, as a result, the Fund's holdings of
that issue would amount to more than 5% of the value of the Fund's total assets,
or more than 25% of the value of total assets would be invested in any one
industry; and (ii) not borrow money except for temporary purposes and then only
in amounts not exceeding 15% of the value of its total assets. The Fund will
not borrow in order to increase income, but only to facilitate redemption
requests that might otherwise require untimely disposition of portfolio
securities. If the Fund borrows money, its share price may be subject to
greater fluctuation until the borrowing is paid off. If the Fund makes
additional investments while borrowings are outstanding, this may be considered
a form of leverage. Limitation (i) does not apply to obligations issued or
guaranteed by the U.S. Government, its agencies, and instrumentalities. These
investment policies are fundamental and may be changed for the Fund only by
approval of the Fund's shareholders.
In addition, it is a fundamental investment policy that the Growth Fund may
invest only up to 20% of its total assets in securities of foreign issuers.
These fundamental investment policies may be changed only with the consent of a
"majority of the outstanding voting securities" of the Growth Fund. As used in
this Prospectus and Statement of Additional Information, the term "majority of
the outstanding voting shares" means the lesser of (i) 67% of the shares of the
Fund present at a meeting where the holders if more than 50% of the outstanding
shares of the Fund are present in person or by proxy, or (ii) more than 50% of
the outstanding shares of the Fund.
FURTHER INFORMATION. The Growth Fund's investment program is subject to further
restrictions as described in the Statement of Additional Information. The
Fund's investment program, unless
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otherwise specified, is not fundamental and may be changed without shareholder
approval by the Board. The Fund's investment objective is fundamental and may
be changed only with approval of the Fund's shareholders.
INVESTMENT PERFORMANCE. The Growth Fund may illustrate in advertisements its
average annual total return, which is the rate of growth that would be necessary
to achieve the ending value of an investment kept in the Fund for the period
specified and is based on the following assumptions: (i) all dividends and
distributions by the Fund are reinvested in shares of the Fund at net asset
value, and (ii) all recurring fees are included for applicable periods.
The Growth Fund may also illustrate in advertisements its cumulative total
return for several time periods throughout the Fund's life based on an assumed
initial investment of $1,000. Any such cumulative total return will assume the
reinvestment of all income dividends and capital gains distributions for the
indicated periods and will include all recurring fees.
PORTFOLIO TRANSACTIONS AND BROKERAGE PRACTICES
The Distributor may act as a broker for the Growth Fund in conformity with the
securities laws and rules thereunder. Allocations of portfolio transactions for
the Fund, including their frequency, to various brokers is determined by the
Investment Manager in its best judgment and in a manner deemed fair and
reasonable to shareholders. The primary consideration is prompt and efficient
execution of orders in an effective manner at the most favorable price. The
Investment Manager may also consider sales of the Fund's shares as a factor in
the selection of broker-dealers, subject to the policy of obtaining best price
and execution. For further information regarding the allocation of portfolio
transactions and brokerage, see the Statement of Additional Information.
ORGANIZATION OF THE HOLLAND TRUST
The Trust, a Delaware business trust, organized on December 20, 1995, currently
consists of one portfolio, the Growth Fund. Shareholders having at least two-
thirds of the outstanding shares of the Trust may remove a Trustee from office
by a vote cast in person or by proxy at a meeting of shareholders called for
that purpose at the request of holders of 10% or more of the outstanding shares
of the Trust. The Trust has an obligation to assist in such shareholder
communications. The Trust does not routinely hold annual meetings of
shareholders. Each share of the Fund is entitled to one vote on all matters
submitted to a vote of all shareholders of the Fund. Fractional shares, when
issued, have the same rights, proportionately, as full shares. All shares are
fully
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paid and nonassessable when issued and have no preemptive, conversion or
cumulative voting rights.
As of the date of this Prospectus, the Investment Manager has provided the
initial seed capital for the Trust and owns 100% of the outstanding voting
shares of the Growth Fund. Furthermore, as ownership of more than 25% of the
outstanding voting securities of the Fund may result in a person being deemed a
controlling entity of the Fund, the Investment Manager may be initially deemed a
controlling person of the Fund. Such control by the Investment Manager will
dilute the effect of the votes of other shareholders.
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THE HOLLAND TRUST
Suite 3260
35 West Wacker Drive
Chicago, Illinois 60601
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a prospectus, but should be read
in conjunction with the Prospectus for the Trust dated ____________, 1996, which
may be obtained by telephoning the Trust at 1-800-999-9999. This Statement of
Additional Information has been incorporated by reference into the Prospectus.
The date of this Statement of Additional Information is , 1996.
-------------
TABLE OF CONTENTS
ITEM PAGE
- ---- ----
General Information and History
Investment Restrictions
Description of Certain Investments
Management of the Holland Trust
Committees of the Board of Trustees
Principal Holders of Securities
Investment Management and Other Services
Brokerage Allocation and Other Practices
Purchase and Redemption of Securities Being Offered
Determination of Net Asset Value
Taxes
Organization of the Holland Trust
Performance Information About the Growth Fund
Independent Auditors
Legal Matters
Appendix
<PAGE>
GENERAL INFORMATION AND HISTORY
The Trust is a Delaware business trust registered with the SEC as a no-load,
open-end diversified management investment company, commonly known as a "mutual
fund." The Trust is organized as a series company and currently consists of one
series, the Growth Fund. In the future, the Trust may establish additional
series, and each series.
The Growth Fund is a separate investment portfolio with a distinct investment
objective, investment programs, policies, and restrictions. The Fund is managed
by Holland Capital Management (the "Investment Manager"), which directs the day-
to-day operations of the Fund. Shares of the Fund will be initially offered
principally to the Investment Manager. The Investment Manager also provides
administrative services to the Trust. HCM Investments, Inc. (the
"Distributor"), an affiliate of the Investment Manager, serves as distributor
for the shares of the Fund.
INVESTMENT RESTRICTIONS
The following investment restrictions apply to the Growth Fund except as
indicated to the contrary. Except with respect to borrowing money, as described
in (2) below, if a percentage limitation is adhered to at the time of
investment, a later increase or decrease in that percentage amount resulting
from any change in value of the portfolio securities or the Fund's net assets
will not result in a violation of such investment restriction.
The Growth Fund will not:
(1) MARGIN AND SHORT SALES: Purchase securities on margin or sell securities
short, except that the Growth Fund may make margin deposits in connection with
permissible options and futures transactions subject to (5) and (8) below, may
make short sales against the box and may obtain short-term credits as may be
necessary for clearance of transactions.
(2) SENIOR SECURITIES AND BORROWING: Issue any class of securities senior to
any other class of securities, although the Growth Fund may borrow from a bank
for temporary, extraordinary or emergency purposes or through the use of reverse
repurchase agreements. The Fund may borrow up to 15% of the value of its total
assets in order to meet redemption requests. No securities will be purchased
when borrowed money exceeds one-third of the value of the Fund's total assets.
The Fund may enter into futures contracts subject to (5) below;
(3) REAL ESTATE: Purchase or sell real estate, or invest in real estate
limited partnerships, except the Growth Fund may, as appropriate and consistent
with its investment objective,
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investment program, policies and other investment restrictions, buy securities
of issuers that engage in real estate operations and securities that are secured
by interests in real estate (including shares of real estate mortgage investment
conduits, mortgage pass-through securities, mortgage-backed securities and
collateralized mortgage obligations) and may hold and sell real estate acquired
as a result of ownership of such securities;
(4) CONTROL OF PORTFOLIO COMPANIES: Invest in portfolio companies for the
purpose of acquiring or exercising control of such companies;
(5) COMMODITIES: Purchase or sell commodities and invest in commodities
futures contracts, except that the Growth Fund may enter into futures contracts
and options thereon where, as a result thereof, no more than 5% of the total
assets for the Fund (taken at market value at the time of entering into the
futures contracts) would be committed to margin deposits on such futures
contracts and premiums paid for unexpired options on such futures contracts;
provided that, in the case of an option that is "in-the-money" at the time of
purchase, the "in-the-money" amount, as defined under Commodity Futures Trading
Commission regulations, may be excluded in computing such 5% limit.
(6) INVESTMENT COMPANIES: Invest in the securities of other open-end
investment companies, except that the Growth Fund may purchase securities of
other open-end investment companies provided that such investment is in
connection with a merger, consolidation, reorganization, or acquisition or by
purchase in the open market of such securities where no sponsor or dealer
commission or profit, other than a customary brokerage commission, is involved
and only if immediately thereafter the Fund (i) owns no more than 3% of the
total outstanding voting securities of any one investment company and (ii)
invests no more than 10% of its total assets (taken at market value) in the
securities of any one investment company or all other investment companies in
the aggregate;
(7) UNDERWRITING: Underwrite securities issued by other persons, except to the
extent that the Growth Fund may be deemed to be an underwriter, within the
meaning of the 1933 Act, in connection with the purchase of securities directly
from an issuer in accordance with the Fund's investment objective, investment
program, policies, and restrictions;
(8) OPTIONS AND SPREADS: Invest in puts, calls, straddles, spreads or any
combination thereof, except that the Growth Fund may invest in and commit its
assets to writing and purchasing put and call options to the extent permitted by
the Prospectus and this Statement of Additional Information. In order to comply
with the securities laws of several states, the Fund (as a matter of operating
policy) will not write a covered call option if, as a result, the aggregate
market value of all portfolio securities
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covering call options or subject to put options for the Fund exceeds 25% of the
market value of the Fund's net assets. The Fund intends to invest in options
primarily to hedge against sudden fluctuations in the financial markets.
(9) OIL AND GAS PROGRAMS: Invest in interests in oil, gas, or other mineral
exploration or development programs or oil, gas and mineral leases, although
investments may be made in the securities of issuers engaged in any such
businesses;
(10) OWNERSHIP OF PORTFOLIO SECURITIES BY OFFICERS AND TRUSTEES: Purchase or
retain the securities of any issuer if the officers and Trustees or the
Investment Manager who individually own more than 1/2 of 1% of the securities of
such issuer collectively own more than 5% of the securities of such issuer;
(11) LOANS: Make loans, except that the Growth Fund in accordance with its
investment objective, investment program, policies, and restrictions may: (i)
invest in a portion of an issue of publicly issued or privately placed bonds,
debentures, notes, and other debt securities for investment purposes; (ii)
purchase money market securities and enter into repurchase agreements, provided
such repurchase agreements are fully collateralized and marked to market daily;
and (iii) lend its portfolio securities in an amount not exceeding one-third the
value of the Fund's total assets.
(12) UNSEASONED ISSUERS: Invest more than 5% of its total assets in securities
of issuers, including their predecessors and unconditional guarantors, which, at
the time of purchase, have been in operation for less than three years, other
than obligations issued or guaranteed by the U.S. Government, its agencies, and
instrumentalities;
(13) RESTRICTED SECURITIES, ILLIQUID SECURITIES AND SECURITIES NOT READILY
MARKETABLE: Knowingly purchase or otherwise acquire any security or invest in
a repurchase agreement if, as a result, more than 15% of the net assets of the
Growth Fund would be invested in securities that are illiquid or not readily
marketable, including repurchase agreements maturing in more than seven days and
non-negotiable fixed time deposits with maturities over seven days. The Fund
may invest without limitation in restricted securities provided such securities
are considered to be liquid. As a matter of operating policy, in compliance
with certain state regulations, no more than 15% of any Fund's total assets will
be invested in restricted securities;
(14) MORTGAGING: Mortgage, pledge, or hypothecate in any other manner, or
transfer as security for indebtedness any security owned by the Growth Fund,
except as may be necessary in connection with (i) permissible borrowings (in
which event such mortgaging, pledging, and hypothecating may not exceed 15% of
the Fund's total
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assets in order to secure such borrowings) and (ii) the use of options and
futures contracts.
(15) DIVERSIFICATION: Make an investment unless 75% of the value of the
Growth Fund's total assets is represented by cash, cash items, U.S. Government
securities, securities of other investment companies and other securities. For
purposes of this restriction, the purchase of "other securities" is limited so
that no more than 5% of the value of the Fund's total assets would be invested
in any one issuer. As a matter of operating policy, the Fund will not consider
repurchase agreements to be subject to the above-stated 5% limitation if all the
collateral underlying the repurchase agreements are U.S. Government securities
and such repurchase agreements are fully collateralized.
(16) CONCENTRATION: Invest 25% or more of the value of its total assets in any
one industry, except that the Growth Fund may invest 25% or more of the value of
its total assets in cash or cash items, securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities or instruments secured by
these money market instruments, such as repurchase agreements.
DESCRIPTION OF CERTAIN INVESTMENTS
The following is a description of certain types of investments which may be made
by the Growth Fund.
MONEY MARKET INSTRUMENTS
The Growth Fund may invest in high-quality money market instruments in order to
enable it to: (i) take advantage of buying opportunities; (ii) meet redemption
requests or ongoing expenses; or (iii) take defensive action as necessary, or
for other temporary purposes. The money market instruments that may be used by
the Fund include:
U.S. GOVERNMENT OBLIGATIONS: These consist of various types of marketable
securities issued by the U.S. Treasury, I.E., bills, notes and bonds. Such
securities are direct obligations of the U.S. Government and differ mainly in
the length of their maturity. Treasury bills, the most frequently issued
marketable Government security, have a maturity of up to one year and are issued
on a discount basis.
U.S. GOVERNMENT AGENCY SECURITIES: These consist of debt securities issued by
agencies and instrumentalities of the U.S. Government, including the various
types of instruments currently outstanding or which may be offered in the
future. Agencies include, among others, the Federal Housing Administration,
Government National Mortgage Association ("GNMA"), Farmer's Home Administration,
Export-Import Bank of the United States, Maritime Administration, and General
Services Administration.
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Instrumentalities include, for example, each of the Federal Home Loan Banks, the
National Bank for Cooperatives, the Federal Home Loan Mortgage Corporation
("FHLMC"), the Farm Credit Banks, the Federal National Mortgage Association
("FNMA"), and the U.S. Postal Service. These securities are either: (i) backed
by the full faith and credit of the U.S. Government (E.G., U.S. Treasury Bills);
(ii) guaranteed by the U.S. Treasury (E.G., GNMA mortgage-backed securities);
(iii) supported by the issuing agency's or instrumentality's right to borrow
from the U.S. Treasury (E.G., FNMA Discount Notes); or (iv) supported only by
the issuing agency's or instrumentality's own credit (e.g., each of the Federal
Home Loan Banks).
BANK AND SAVINGS AND LOAN OBLIGATIONS: These include, among others,
certificates of deposit, bankers' acceptances, and time deposits. Certificates
of deposit generally are short-term, interest-bearing negotiable certificates
issued by commercial banks or savings and loan associations against funds
deposited in the issuing institution. Bankers' acceptances are time drafts
drawn on a commercial bank by a borrower, usually in connection with an
international commercial transaction (E.G., to finance the import, export,
transfer, or storage of goods). With bankers' acceptances, the borrower is
liable for payment as is the bank, which unconditionally guarantees to pay the
draft at its face amount on the maturity date. Most bankers' acceptances have
maturities of six months or less and are traded in secondary markets prior to
maturity. Time deposits are generally short-term, interest-bearing negotiable
obligations issued by commercial banks against funds deposited in the issuing
institutions. In the case of domestic banks, the Growth Fund will not invest in
any security issued by a commercial bank or a savings and loan association
unless the bank or savings and loan association is a member of the Federal
Deposit Insurance Corporation ("FDIC"), or in the case of savings and loan
associations, insured by the FDIC; provided, however, that such limitation will
not prohibit investments in foreign branches of domestic banks which meet the
foregoing requirements. The Fund will not invest in time-deposits maturing in
more than seven days.
COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE DEBT INSTRUMENTS: These include
commercial paper (I.E., short-term, unsecured promissory notes issued by
corporations to finance short-term credit needs). Commercial paper is usually
sold on a discount basis and has a maturity at the time of issuance not
exceeding nine months. Also included are non-convertible corporate debt
securities (E.G., bonds and debentures). Corporate debt securities with a
remaining maturity of less than 13 months are liquid (and tend to become more
liquid as their maturities lessen) and are traded as money market securities.
The Growth Fund may purchase corporate debt securities having no more than 13
months remaining to maturity at the date of settlement.
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REPURCHASE AGREEMENTS: The Growth Fund may invest in repurchase agreements. A
repurchase agreement is an instrument under which the investor (such as the
Fund) acquires ownership of a security (known as the "underlying security") and
the seller (I.E., a bank or primary dealer) agrees, at the time of the sale, to
repurchase the underlying security at a mutually agreed upon time and price,
thereby determining the yield during the term of the agreement. This results in
a fixed rate of return insulated from market fluctuations during such period,
unless the seller defaults on its repurchase obligations. The underlying
securities will consist of high-quality debt securities and must be determined
to present minimal credit risks. Repurchase agreements are, in effect,
collateralized by such underlying securities, and, during the term of a
repurchase agreement, the seller will be required to mark to market such
securities every business day and to provide such additional collateral as is
necessary to maintain the value of all collateral at a level at least equal to
the repurchase price. Repurchase agreements usually are for short periods,
often under one week, and will not be entered into by the Fund for a duration of
more than seven days if, as a result, more than 15% of the net asset value of
the Fund would be invested in such agreements or other securities which are not
readily marketable.
The Growth Fund will assure that the amount of collateral with respect to any
repurchase agreement is adequate. As with a true extension of credit, however,
these is risk of delay in recovery or the possibility of inadequacy of the
collateral should the seller of the repurchase agreement fail financially. In
addition, the Fund could incur costs in connection with the disposition of the
collateral if the seller were to default. The Fund will enter into repurchase
agreements only with sellers deemed to be creditworthy by the Board and only
when the economic benefit to the Fund is believed to justify the attendant
risks. The Fund has adopted standards for the sellers with whom they will enter
into repurchase agreements. The Board believes these standards are designed to
reasonably assure that such sellers present no serious risk of becoming involved
in bankruptcy proceedings within the time frame contemplated by the repurchase
agreement. The Fund may enter into repurchase agreements only with member banks
of the Federal Reserve System or primary dealers in U.S. Government securities.
SECURITIES OF FOREIGN ISSUERS: As described in the Prospectus, the Growth Fund
also may purchase equity and equity-related securities of foreign issuers. Also
as described in the Prospectus, the Fund may purchase American Depositary
Receipts ("ADRs"). ADRs are U.S. dollar-denominated certificates issued by a
U.S. bank or trust company and represent the right to receive securities of a
foreign issuer deposited in a domestic bank or foreign branch of a U.S. bank and
traded on a U.S. exchange or in an over-the-counter market. Generally, ADRs are
in registered form. There are no fees imposed on the purchase or sale of ADRs
when purchased from the issuing bank or trust company in the initial
underwriting, although
B-7
<PAGE>
the issuing bank or trust company may impose charges for the collection of
dividends and the conversion of ADRs into the underlying securities. Investments
in ADRs have certain advantages over direct investment in the underlying foreign
securities since: (i) ADRs are U.S. dollar-denominated investments that are
registered domestically, easily transferable and for which market quotations are
readily available; and (ii) issuers whose securities are represented by ADRs are
subject to the same auditing, accounting, and financial reporting standards as
domestic issuers.
Investments in foreign securities involve certain risks that are not typically
associated with investing in domestic issuers, including: (i) less publicly
available information about the securities and about the foreign company or
government issuing them; (ii) less comprehensive accounting, auditing, and
financial reporting standards, practices, and requirements; (iii) stock markets
outside the U.S. may be less developed or efficient than those in the U.S. and
government supervision and regulation of those stock markets and brokers and the
issuers in those markets is less comprehensive than that in the U.S.; (iv) the
securities of some foreign issuers may be less liquid and more volatile than
securities of comparable domestic issuers; (v) settlement of transactions with
respect to foreign securities may sometimes be delayed beyond periods customary
in the U.S.; (vi) fixed brokerage commissions on certain foreign stock exchanges
and custodial costs with respect to securities of foreign issuers generally
exceed domestic costs; (vii) with respect to some countries, there is the
possibility of unfavorable changes in investment or exchange control
regulations, expropriation, or confiscatory taxation, taxation at the source of
the income payment or dividend distribution, limitations on the removal of funds
or other assets of the Fund, political or social instability, or diplomatic
developments that could adversely affect U.S. investments in those countries;
and (viii) foreign securities denominated in foreign currencies may be affected
favorably or unfavorably by changes in currency exchange rates and exchange
control regulations and the Fund may incur costs in connection with conversions
between various currencies. Specifically, to facilitate its purchase of
securities denominated in foreign currencies, the Fund may engage in currency
exchange transactions to convert currencies to or from U.S. dollars. The Fund
does not intend to hedge its foreign currency risks and will engage in currency
exchange transactions on a spot (I.E., cash) basis only at the spot rate
prevailing in the foreign exchange market.
EQUITY SECURITIES. As stated in the Prospectus, the Growth Fund invests
primarily in the common stocks of a diversified group of companies that have (i)
demonstrated historical growth of earnings faster than the general market, (ii)
earnings growth stability, (iii) a return on equity higher than the general
market, and (iv) dividend growth of the portfolio is typically greater than that
of the market, while dividend yield is typically less.
B-8
<PAGE>
MANAGEMENT OF THE HOLLAND TRUST
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust, together with information as to their
principal business occupations during the last five years, are shown below. Any
Trustee who is considered an "interested person" of the Trust (as defined in
Section 2(a)(19) of the 1940 Act) is indicated by an asterisk next to his or her
name. The address for all interested persons, unless otherwise indicated, is
Suite 3260, 35 West Wacker Drive, Chicago, Illinois 60601:
POSITION WITH THE TRUST AND
PRINCIPAL OCCUPATION WITH THE
NAME AGE PAST FIVE YEARS
*Louis A. Holland 54 PRESIDENT, TRUSTEE AND
CHAIRMAN OF THE BOARD OF
TRUSTEES. Managing Partner
and Chief Investment Officer
of Holland Capital Management.
President, Treasurer and
Director, HCM Investments,
Inc.
*Monica L. Walker 37 SECRETARY AND TRUSTEE.
Portfolio Manager, Holland
Capital Management, Inc.; Vice
President, HCM Investments,
Inc.
*Laura J. Janus 48 TREASURER. Portfolio Manager,
Holland Capital Management,
Inc.; Vice President, HCM
Investments, Inc.
Lester H. McKeever, Jr. 61 TRUSTEE. Managing Partner,
Washington, Pittman &
McKeever, Certified Public
Accountants & Management
Consultants.
Elzie L. Higginbottom 54 TRUSTEE. Chairman and Chief
Executive Officer, East Lake
Management and Development
Corporation.
[ADDITIONAL DISINTERESTED TRUSTEE] [To be provided]
Of the persons listed in the table above, the following describes any position
held with any affiliated persons or principal underwriters of registrant: Louis
A. Holland is Managing Partner and Chief Investment Officer of the Investment
Manager and President, Treasurer and Director of the Distributor; Monica L.
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<PAGE>
Walker and Laura J. Janus each is a Vice President of the Distributor and a
partner of, and member of the Investment Policy Committee of, the Investment
Manager.
COMMITTEES OF THE BOARD OF TRUSTEES
The Trust has an Audit Committee and an Executive Committee. The duties of
these two committees and their present membership are as follows:
AUDIT COMMITTEE: The members of the Audit Committee will consult with the
Trust's independent public accountants if the accountants deem it desirable, and
will meet with the Trust's independent public accountants at least once annually
to discuss the scope and results of the annual audit of the Growth Fund and such
other matters as the Audit Committee members may deem appropriate or desirable.
Lester H. McKeever, Jr., Elzie L. Higginbottom and [ADDITIONAL DISINTERESTED
TRUSTEE] are the members of the Audit Committee.
EXECUTIVE COMMITTEE: During intervals between meetings of the Board, the
Executive Committee possesses and may exercise all of the powers of the Board in
the management of the Trust except as to matters where action of the full Board
is specifically required. Included within the scope of such powers are matters
relating to valuation of securities held in the Growth Fund's portfolio and the
pricing of the Fund's shares for purchase and redemption. Louis A. Holland and
Monica L. Walker are the members of the Executive Committee.
PRINCIPAL HOLDERS OF SECURITIES
The Investment Manager held all of the outstanding voting securities of the
Trust as of the date of the Statement of Additional Information. The address of
the Investment Manager is Suite 3260, 35 West Wacker Drive, Chicago, Illinois
60601. Trustees and officers of the Trust, as a group, owned less than 1% of
the Growth Fund's outstanding voting securities as of the date of the Statement
of Additional Information.
INVESTMENT MANAGEMENT AND OTHER SERVICES
THE INVESTMENT MANAGER
Holland Capital Management, Suite 3260, 35 West Wacker Drive, Chicago, Illinois
60601, serves as Investment Manager of the Trust pursuant to an Investment
Management and Administration Agreement that has been approved by the Board,
including a majority of independent Trustees.
The controlling persons of the Investment Manager are: Holland Capital
Management, Inc., the General Partner of the Investment
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<PAGE>
Manager; Louis A. Holland, Managing Partner and Chief Investment Officer of the
Investment Manager; and Catherine E. Lavery, Chief Accounting Officer, Secretary
and Director of Holland Capital Management, Inc.
Investment management fees are paid to the Investment Manager monthly at the
following annualized rates based on a percentage of the average daily net asset
value of the Growth Fund: .85% of average daily net assets up to $500 million,
.75% of average daily net assets up to the next $500 million, and .65% of
average daily net assets in excess of $1 billion.
In addition to the duties set forth in the Prospectus, The Investment Manager,
in furtherance of such duties and responsibilities, is authorized in its
discretion to engage in the following activities: (i) buy, sell, exchange,
convert, lend, or otherwise trade in portfolio securities and other assets; (ii)
place orders and negotiate the commissions (if any) for the execution of
transactions in securities with or through broker-dealers, underwriters, or
issuers; (iii) prepare and supervise the preparation of shareholder reports and
other shareholder communications; and (iv) obtain and evaluate business and
financial information in connection with the exercise of its duties.
The Investment Manager will also furnish to or place at the disposal of the
Trust such information and reports as requested by or as the Investment Manager
believes would be helpful to the Trust. The Investment Manager has agreed to
permit individuals who are among its officers or employees to serve as Trustees,
officers, and members of any committee or advisory board of the Trust without
cost to the Trust. The Investment Manager has agreed to pay all salaries,
expenses, and fees of any Trustees or officers of the Trust who are affiliated
with the Investment Manager.
In its administration of the Trust, the Investment Manager is responsible for:
(i) maintaining the Trust's books and records; (ii) overseeing the Trust's
insurance relationships; (iii) preparing or assisting in the preparation of all
required tax returns, proxy statements and reports to the Trust's shareholders
and Trustees and reports to and filings with the SEC and any other governmental
agency; (iv) preparing such applications and reports as may be necessary to
register or maintain the registration of the Trust's shares under applicable
state securities laws; (v) responding to all inquiries or other communications
of shareholders which are directed to the Investment Manager; and (vi)
overseeing all relationships between the Trust and its agents.
THE DISTRIBUTOR AND DISTRIBUTION SERVICES
The Distributor serves as the distributor of the shares of the Growth Fund
pursuant to a Distribution Agreement between the Distributor and the Trust. The
Fund's shares are sold on a no-load
B-11
<PAGE>
basis and, therefore, the Distributor receives no sales commission or sales load
for providing such services. The Trust has not currently entered into any plan
or agreement for the payment of fees pursuant to Rule 12b-1 under the 1940 Act,
but reserves the right to do so with respect to any future classes of shares of
any series.
CUSTODIAN AND INDEPENDENT PUBLIC ACCOUNTANT. [THE CUSTODIAN] will serve as
custodian of the assets of the Trust. The Trust's independent public accountant
is [INDEPENDENT PUBLIC ACCOUNTANT].
BROKERAGE ALLOCATION AND OTHER PRACTICES
Subject to the general supervision of the Board, the Investment Manager is
responsible for making decisions with respect to the purchase and sale of
portfolio securities on behalf of the Trust, including the selection of broker-
dealers to effect portfolio transactions, the negotiation of commissions, and
the allocation of principal business and portfolio brokerage.
The purchase of any money market instruments and any other debt securities
traded in the over-the-counter market usually will be on a principal basis
directly from issuers or dealers serving as primary market makers. The price of
such money market instruments and debt securities is usually negotiated, on a
net basis, and no brokerage commissions are paid. Although no stated
commissions are paid for securities traded in the over-the-counter market,
transactions in such securities with dealers usually include the dealer's "mark-
up" or "mark-down." Money market instruments and other debt securities may also
be purchased in underwritten offerings, which include a fixed amount of
compensation to the underwriter, generally referred to as the underwriting
discount or concession.
In selecting brokers and dealers to execute transactions for the Growth Fund,
the primary consideration is to seek to obtain the best execution of the
transactions, at the most favorable overall price, and in the most effective
manner possible, considering all the circumstances. Such circumstances include:
the price of the security; the rate of the commission or broker-dealer's
"spread;" the size and difficulty of the order; the reliability, integrity,
financial condition, general execution and operational capabilities of competing
broker-dealers; and the value of research and other services provided by the
broker-dealer. The Investment Manager may also rank broker-dealers based on the
value of their research services and may use this ranking as one factor in its
selection of broker-dealers. Consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. and subject to the policy of
seeking the best price and execution as stated above, sales of shares of the
Fund by a broker-dealer may be considered by the Investment Manager in the
selection of broker-dealers to execute portfolio transactions for the Fund.
B-12
<PAGE>
Under no circumstances will the Trust deal with the Investment Manager or its
affiliates in any transaction in which the Investment Manager or its affiliates
act as a principal.
In placing orders for the Trust, the Investment Manager, subject to seeking best
execution, is authorized to cause the Trust to pay broker-dealers that furnish
brokerage and research services (as such services are defined under Section
28(e) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) a
higher commission than that which might be charged by another broker-dealer that
does not furnish such brokerage and research services or who furnishes services
of lesser value. However, such higher commissions must be deemed by the
Investment Manager as reasonable in relation to the brokerage and research
services provided by the broker-dealer, viewed in terms of either that
particular transaction or the overall decision-making responsibilities of the
Investment Manager with respect to the Trust or other accounts, as to which it
exercises investment discretion (as such term is defined under Section 3(a)(35)
of the 1934 Act).
The Investment Manager currently provides investment advice to other entities
and advisory accounts that have investment programs and an investment objective
similar to the Growth Fund. Accordingly, occasions may arise when the
Investment Manager may engage in simultaneous purchase and sale transactions of
securities that are consistent with the investment objective and programs of the
Fund, and other accounts. On those occasions, the Investment Manager will
allocate purchase and sale transactions in an equitable manner according to
written procedures approved by the Board. Specifically, such written procedures
provide that, in allocating purchase and sale transactions made on a combined
basis, the Investment Manager will seek to achieve the same average unit price
of securities for each entity and will seek to allocate, as nearly as
practicable, such transactions on a pro-rata basis substantially in proportion
to the amounts ordered to be purchased or sold by each entity. Such procedures
may, in certain instances, be either advantageous or disadvantageous to the
Fund.
It is expected that the Distributor, a registered broker-dealer, may act as
broker for the Growth Fund, in conformity with the securities laws and rules
thereunder. The Distributor is an affiliated person of the Investment Manager.
In order for the Distributor to effect any portfolio transactions for the Fund
on an exchange or board of trade, the commissions received by the Distributor
must be reasonable and fair compared to the commission paid to other brokers in
connection with comparable transactions involving similar securities or futures
being purchased or sold on an exchange of board of trade during a comparable
period of time. This standard would allow the Distributor to receive no more
than the remuneration which would be expected to be received by an unaffiliated
broker in a commensurate arm's-length transaction. The Board will approve
procedures for evaluating the reasonableness
B-13
<PAGE>
of commissions paid to the Distributor and periodically will review these
procedures. The Distributor will not act as principal in effecting any
portfolio transactions for the Fund.
PURCHASE AND REDEMPTION OF SECURITIES BEING OFFERED
The shares of the Growth Fund are offered to the public for purchase directly
through the Distributor. The offering and redemption price of the shares of the
Fund is based upon the Fund's net asset value per share next determined after a
purchase order or redemption request has been received in good order by the
Fund. See "Determination of Net Asset Value" below. The Trust intends to pay
all redemptions of the shares of the Fund in cash. However, the Trust may make
full or partial payment of any redemption request by the payment to shareholders
of portfolio securities (I.E., by redemption-in-kind), at the value of such
securities used in determining the redemption price. The Trust, nevertheless,
pursuant to Rule 18f-1 under the 1940 Act, will file a notification of election
under which the Fund will be committed to pay in cash to any shareholder of
record of the Fund, all such shareholder's requests for redemption made during
any 90-day period, up to the lesser of $250,000 or 1% of the Fund's net asset
value at the beginning of such period. The securities to be paid in-kind to any
shareholders will be readily marketable securities selected in such manner as
the Board deems fair and equitable. If shareholders were to receive
redemptions-in-kind, they would incur brokerage costs should they wish to
liquidate the portfolio securities received in such payment of their redemption
request. The Trust does not anticipate making redemptions-in-kind.
The right to redeem shares or to receive payment with respect to any redemption
of shares of the Growth Fund may only be suspended (i) for any period during
which trading on the New York Stock Exchange ("Exchange") is restricted or such
Exchange is closed, other than customary weekend and holiday closings, (ii) for
any period during which an emergency exists as a result of which disposal of
securities or determination of the net asset value of the Fund is not reasonably
practicable, or (iii) for such other periods as the SEC may by order permit for
protection of shareholders of the Fund.
DETERMINATION OF NET ASSET VALUE
The net asset value of shares of the Growth Fund is normally calculated as of
the close of trading on the Exchange on every day the Exchange is open for
trading, except (i) on days where the degree of trading in the Fund's portfolio
securities would not materially affect the net asset value of the Fund's shares
and (ii) on days during which no shares of the Fund were tendered for redemption
and no purchase orders were received. The Exchange is open Monday through
Friday except on the following national holidays: New Year's Day, Presidents'
Day, Good Friday, Memorial
B-14
<PAGE>
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The assets of the Growth Fund are valued as follows:
Equity assets are valued based on market quotations, or if market quotations are
not available, by a method that the Board believes accurately reflects fair
value.
All money market instruments held by the Growth Fund are valued on an amortized
cost basis. Amortized cost valuation involves initially valuing a security at
its cost, and thereafter, assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the security. While this method provides certainty in
valuation, it may result in periods during which value, as determined by
amortized cost, is higher or lower than the price the Fund would receive if it
sold the security.
Short-term debt instruments with a remaining maturity of more than 60 days,
intermediate and long-term bonds, convertible bonds, and other debt securities
are generally valued at prices obtained from an independent pricing service.
Where such prices are not available, valuations will be obtained from brokers
who are market makers for such securities. However, in circumstances where the
Investment Manager deems it appropriate to do so, the mean of the bid and asked
prices for over-the-counter securities or the last available sale price for
exchange-traded debt securities may be used. Where no last sale price for
exchange traded debt securities is available, the mean of the bid and asked
prices may be used.
Other securities and assets for which market quotations are not readily
available or for which valuation cannot be provided, as described above, are
valued in good faith by the Board using its best judgment.
TAXES
The Trust intends to continue to qualify as a "regulated investment company"
("RIC") under Subchapter M of the Code, and as such must certain requirements
regarding the character of investments in the Trust, investment diversification,
and distribution.
In general, to qualify as a RIC, at least 90% of the gross income of the Trust
for the taxable year must be derived from dividends, interest, and gains from
the sale or other disposition of securities, and less than 30% of its gross
income for the taxable year can be attributable to gains (without deductions for
losses) from the sale or other disposition of securities held for less than
three months.
B-15
<PAGE>
A RIC must distribute to its shareholders 90% of its ordinary income and net
short-term capital gains. Moreover, undistributed net income may be subject to
tax at the RIC level.
In addition, the Trust must declare and distribute dividends equal to at least
98% of its ordinary income (as of the twelve months ended December 31) and
distributions of at least 98% of its capital gains net income (as of the twelve
months ended October 31), in order to avoid a federal excise tax. The Trust
intends to make the required distributions, but cannot guarantee that it will do
so. Dividends attributable to the Trust's ordinary income are taxable as such
to shareholders in the year in which they are received.
A corporate shareholder may be entitled to take a deduction for income dividends
received by it that are attributable to dividends received from a domestic
corporation, provided that both the corporate shareholder retains its shares in
the Growth Fund for more than 45 days and the Trust retains its shares in the
issuer from whom it received the income dividends for more than 45 days. A
distribution of capital gains net income reflects the Trust's excess of net
long-term gains over its net short-term losses. The Trust must designate income
dividends and distributions of capital gains net income and must notify
shareholders of these designations within sixty days after the close of the
Trust's taxable year. A corporate shareholder of the Trust cannot use a
dividends-received deduction for distributions of capital gains net income.
If, in any taxable year, the Trust should not qualify as a RIC under the Code:
(i) the Trust would be taxed at normal corporate rates on the entire amount of
its taxable income without deduction for dividends or other distributions to its
shareholders, and (ii) the Trust's distributions to the extent made out of the
Trust's current or accumulated earnings and profits would be taxable to its
shareholders (other than shareholders in tax deferred accounts) as ordinary
dividends (regardless of whether they would otherwise have been considered
capital gains dividends), and may qualify for the deduction for dividends
received by corporations.
If the Trust purchases shares in certain foreign investment entities, called
"passive foreign investment companies" ("PFICs"), the Trust may be subject to
U.S. federal income tax on a portion of any "excess distribution" or gain from
the disposition of the shares even if the income is distributed as a taxable
dividend by the Trust to its shareholders. Additional charges in the nature of
interest may be imposed on either the Trust or its shareholders with respect to
deferred taxes arising from the distributions or gains. If the Trust were to
purchase shares in a PFIC and (if the PFIC made the necessary information
available) elected to treat the PFIC as a "qualified electing fund" under the
Code, in lieu of the foregoing requirements, the Trust might be required to
include in income each year a portion of the ordinary earnings and net capital
gains of the PFIC, even if not distributed to the Trust, and the
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<PAGE>
amounts would be subject to the 90% and calendar year distribution requirements
described above.
ORGANIZATION OF THE HOLLAND TRUST
As a Delaware business trust entity, the Trust need not hold regular annual
shareholder meetings and, in the normal course, does not expect to hold such
meetings. The Trust, however, must hold shareholder meetings for such purposes
as, for example: (i) electing the initial Board; (ii) approving certain
agreements as required by the 1940 Act; (iii) changing the fundamental
investment objective, policies, and restrictions of the Growth Fund; and (iv)
filling vacancies on the Board in the event that less than a majority of the
Trustees were elected by shareholders. The Trust expects that there will be no
meetings of shareholders for the purpose of electing Trustees unless and until
such time as less than a majority of the Trustees holding office have been
elected by shareholders. At such time, the Trustees then in office will call a
shareholders meeting for the election of Trustees. In addition, holders of
record of not less than two-thirds of the outstanding shares of the Trust may
remove a Trustee from office by a vote cast in person or by proxy at a
shareholder meeting called for that purpose at the request of holders of 10% or
more of the outstanding shares of the Trust. The Trust has the obligation to
assist in such shareholder communications. Except as set forth above, Trustees
will continue in office and may appoint successor Trustees.
PERFORMANCE INFORMATION ABOUT THE GROWTH FUND
TOTAL RETURN CALCULATIONS
The Growth Fund may provide average annual total return information calculated
according to a formula prescribed by the SEC. According to that formula,
average annual total return figures represent the average annual compounded rate
of return for the stated period. Average annual total return quotations reflect
the percentage change between the beginning value of a static account in the
Fund and the ending value of that account measured by then current net asset
value of the Fund, and assuming that all dividends and capital gains
distributions during the stated period were reinvested in shares of the Fund
when paid. Total return is calculated by finding the average annual compounded
rates of return of a hypothetical investment that would equate the initial
amount invested to the ending redeemable value of such investment, according to
the following formula:
1/n
T = (ERV/P) - 1
where T equals average annual total return; where ERV, the ending redeemable
value, is the value at the end of the applicable period of a hypothetical $1,000
payment made at the beginning of the
B-17
<PAGE>
applicable period; where P equals a hypothetical initial payment of $1,000; and
where n equals the number of years.
The Growth Fund, from time to time, also may advertise its cumulative total
return figures. Cumulative total return is the compound rate of return on a
hypothetical initial investment of $1,000 for a specified period. Cumulative
total return quotations reflect changes in the price of the Fund's shares and
assume that all dividends and capital gains distributions during the period were
reinvested in shares of the Fund. Cumulative total return is calculated by
finding the compound rates of a hypothetical investment over such period,
according to the following formula (cumulative total return is then expressed as
a percentage):
C = (ERV/P) - 1
Where:
C = Cumulative Total Return
P = a hypothetical initial investment of $1,000
ERV = ending redeemable value; ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 investment made at
the beginning of the applicable period.
From time to time, in reports and promotional literature, the performance of the
Growth Fund may be compared to: (i) other mutual funds or groups of mutual
funds tracked by: (A) Lipper Analytical Services, a widely-used independent
research firm which ranks mutual funds by overall performance, investment
objectives, and asset size; (B) Forbes Magazine's Annual Mutual Fund Survey and
Mutual Fund Honor Roll; or (C) other financial or business publications, such as
Business Week, Money Magazine, and Barron's, which provide similar information;
(ii) the Consumer Price Index (measure for inflation), which may be used to
assess the real rate of return from an investment in the Fund; (iii) other
Government statistics such as GNP, and net import and export figures derived
from Governmental publications, E.G., The Survey of Current Business, which may
be used to illustrate investment attributes of the Fund or the general economic,
business, investment, or financial environment in which the Fund operates; (iv)
Alexander Steele's Mutual Fund Expert, a tracking service which ranks various
mutual funds according to their performance; and (v) Morningstar, Inc. which
ranks mutual funds on the basis of historical risk and total return.
Morningstar's rankings are calculated using the mutual fund's average annual
returns for a certain period and a risk factor that reflects the mutual fund's
performance relative to three-month Treasury bill monthly returns.
Morningstar's rankings range from five star (highest) to one star (lowest) and
represent Morningstar's assessment of the historical risk level and total return
of a mutual fund as a weighted average for 3, 5, and 10-year periods. In each
category, Morningstar limits its five star
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<PAGE>
rankings to 10% of the mutual funds it follows and its four star rankings to
22.5% of the mutual funds it follows. Rankings are not absolute or necessarily
predictive of future performance.
The Trust may also illustrate the investment returns of the Growth Fund or
returns in general by graphs and charts that compare, at various points in time,
the return from an investment in the Fund (or returns in general) on a tax-
deferred basis (assuming reinvestment of capital gains and dividends and
assuming one or more tax rates) with the same return on a taxable basis.
INDEPENDENT AUDITORS
The Trust's independent auditor is [NAME AND ADDRESS OF AUDITOR].
LEGAL MATTERS
Legal advice regarding certain matters relating to the federal securities law
applicable to the offer and sale of the shares described in the Prospectus has
been provided by Katten Muchin & Zavis, 1025 Thomas Jefferson Street, N.W.,
Washington, DC 20007, which serves as Special Counsel to the Trust.
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<PAGE>
APPENDIX
DESCRIPTION OF RATINGS OF CERTAIN MONEY MARKET SECURITIES
Description of Moody's Investors Service, Inc.'s commercial paper ratings:
Prime-1 (or related institutions) have a superior capacity for repayment of
short-term promissory obligations. Prime-1 repayment capacity will normally be
evidenced by the following characteristics:
1. Leading market positions in well established industries.
High rates of return on funds employed.
2. Conservative capitalization structures with moderate reliance on debt and
ample asset protection.
3. Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
4. Well established access to a range of financial market and assured sources
of alternate liquidity.
Prime-2 (or related supporting institutions) have a strong capacity for
repayment of short term promissory obligations. This will normally be evidenced
by many of the characteristics cited above but to a lesser degree. Earnings
trends and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
Description of Standard & Poor's Corporation's commercial paper ratings:
A-1--This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics will be denoted with a plus (+) sign
designation.
A-2--Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1.
Description of Fitch Investor's Service, Inc.'s commercial paper ratings:
Fitch-1--(Highest Grade) Commercial paper assigned this rating is regarded as
having the strongest degree of assurance for timely payment.
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<PAGE>
Fitch-2--(Very Good Grade) Issues assigned this rating reflect an assurance of
timely payment only slightly less in degree than the strongest issues.
Description of Duff & Phelps Inc.'s commercial paper ratings:
Duff 1--High certainty of timely payment. Liquidity factors are excellent and
supported by strong fundamental protection factors. Risk factors are minor.
Duff 2--Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing internal funds needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
B-21
<PAGE>
DESCRIPTION OF CERTAIN CORPORATE BOND RATINGS
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S BOND RATINGS
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are not likely to impair
the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities, fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S BOND RATINGS
AAA--Debt rated "AAA" has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA-Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest-rated issues only in small degree.
B-22
<PAGE>
PART C. OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements incorporated by reference into the Prospectus:
None
Financial Statements incorporated by reference into the Statement of
Additional Information:
Statement of Assets and Liabilities
(b) Exhibits:
1. Declaration of Trust of the Holland Trust.
2. By-Laws of the Holland Trust.
3. Not applicable.
4. Specimen Certificate of Share of the Growth Fund.*
5. Form of Investment Management and Administration Agreement
by and between the Holland Trust and Holland Capital
Management.
6. Form of Distribution Agreement between the Holland Trust and
HCM Investments, Inc.
7. Not applicable.
8. Form of Custodian and Depository Agreement between the
Holland Trust and [NAME OF CUSTODIAN]*
9. Form of Transfer Agent and Dividend Paying Agreement between
the Holland Trust and [NAME OF TRANSFER AGENT]*
10. Opinion and Consent of Katten Muchin & Zavis regarding the
legality of the securities being registered.*
11. Consent of Independent Auditors.*
12. Not applicable.
13. Form of Share Subscription Agreement by and between the
Holland Trust and Holland Capital Management.
<PAGE>
14. Not applicable.
15. Not applicable.
16. Not applicable.
17. Financial Data Schedule for Electronic Filers.* [to be
supplied by accountants]
18. None.
19. Specimen Price-Mark-Up Sheet of the Growth Fund.*
* To be filed by amendment.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE TRUST.
Pursuant to a Share Subscription Agreement by and between the
Investment Manager and the Trust, on behalf of the Growth Fund, the
Investment Manager has agreed to provide the initial capitalization
for the Trust and will initially own 100% of the shares of beneficial
interest of the Fund.
Item 26. NUMBER OF HOLDERS OF SECURITIES, AS OF THE EFFECTIVE DATE OF THIS
REGISTRATION STATEMENT.
Title Of Class Number Of Record Holders
-------------- ------------------------
Growth Fund 1
Item 27. INDEMNIFICATION
Reference is made to the Registrant's By-Laws (Article VI) filed
herein as Exhibit 2 to this Registration Statement. The Trust's By-
Laws provide that the Registrant will indemnify its Trustees and
officers, employees, and other agents to the extent permitted or
required by Delaware law. The By-Laws require that either a majority
of the Trustees who are neither "interested persons" of the Trust
(within the meaning of the 1940 Act) nor parties to the proceeding, or
independent legal counsel in a written opinion, shall have determined,
based upon a review of the readily available facts (as opposed to a
trial-type inquiry or full investigation), that there is reason to
believe that such agent will be found entitled to indemnification.
Indemnification may not be made if the Trustee or officer has incurred
liability by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of
C-2
<PAGE>
duties in the conduct of his or her office ("Disabling Conduct"). The
means of determining whether indemnification shall be made are (i) a
final decision by a court or other body before whom the proceeding is
brought that the Trustee or officer was not liable by reason of
Disabling Conduct, or (ii) in the absence of such a decision, a
reasonable determination, based on a review of the facts, that the
Trustee or officer was not liable by reason of Disabling Conduct.
Such latter determination may be made either by (a) vote of a majority
of Trustees who are neither interested persons (as defined in the
Investment Company Act of 1940) nor parties to the proceeding or (b)
independent legal counsel in a written opinion. The advancement of
legal expenses may not occur unless the Trustee or officer agrees to
repay the advance (if it is determined that the Trustee or officer is
not entitled to the indemnification) and one of three other conditions
is satisfied: (i) the Trustee or officer provides security for his of
her agreement to repay; (ii) the Registrant is insured against loss by
reason of lawful advances; or (iii) the Trustees who are not
interested persons and are not parties to the proceedings, or
independent counsel in a written opinion, determine that there is
reason to believe that the Trustee or officer will be found entitled
to indemnification.
Insofar as indemnification for liability arising under the 1933 Act
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 SEC such
indemnification is against public policy as expressed in the 1933 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 1933 Act and will be
governed by the final adjudication of such issue.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT MANAGER.
Certain information pertaining to business and other connections of
the Investment Manager is hereby
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<PAGE>
incorporated by reference to the section of the Prospectus captioned
"How the Trust is Managed" and to the section of the Statement of
Additional Information captioned "Investment Management and Other
Services." Set forth below is a list of each director and officer of
the Investment Manager indicating each business, profession, vocation,
or employment of a substantial nature in which each such person has
been, at any time during the past two fiscal years, engaged for his or
her own account or in the capacity of director, officer, partner, or
trustee. The principal business address of each individual listed in
the table below is Suite 3260, 35 West Wacker Drive, Chicago, Illinois
60601.
POSITION WITH THE
NAME INVESTMENT MANAGER
Louis A. Holland MANAGING PARTNER AND CHIEF INVESTMENT
OFFICER. President, Treasurer and Director
of Holland Capital Management, Inc. (the
General Partner of the Investment Manager).
President, Treasurer and Director, HCM
Investments, Inc.
Monica L. Walker PARTNER AND PORTFOLIO MANAGER. Vice
President, HCM Investments, Inc.
Laura J. Janus PARTNER AND PORTFOLIO MANAGER. Vice
President, HCM Investments, Inc.
Maurice L. Haywood VICE PRESIDENT AND INVESTMENT ANALYST. Vice
President, HCM Investments, Inc.
Catherine E. Lavery VICE PRESIDENT. Vice President, HCM
Investments, Inc.; Chief Accounting Officer,
Secretary and Director, Holland Capital
Management, Inc.
Item 29. PRINCIPAL UNDERWRITERS.
(a) There is no investment company other than the Trust for which the
principal underwriter of the Trust also acts as principal underwriter,
depositor or investment adviser.
C-4
<PAGE>
(b) Set forth below is information concerning each director and
officer of the Distributor, as of the date of this filing.
NAME POSITIONS AND OFFICES POSITIONS AND
WITH THE TRUST OFFICES WITH
UNDERWRITER
Louis A. Holland President, Trustee and President,
Chairman of the Board Treasurer, and
of Trustees Director
Catherine E. None Chief Accounting
Lavery Officer, Vice
President,
Secretary and
Director
Monica L. Walker Secretary and Trustee Vice President
Laura J. Janus Treasurer Vice President
The principal business address of each person listed above is Suite
3260, 35 West Wacker Drive, Chicago, Illinois 60601.
Item 30. LOCATION OF ACCOUNTS AND RECORDS.
The following entities prepare, maintain and preserve the records
required by Section 31(a) of the 1940 Act for the Registrant. These
services are provided to the Registrant through written agreements
between the parties to the effect that such services will be provided
to the Registrant for such periods prescribed by the rules and
regulations of the SEC under the 1940 Act and such records are the
property of the entity required to maintain and preserve such records
and will be surrendered promptly on request.
[NAME OF CUSTODIAN/TRANSFER AGENT] will serve as the Trust's
custodian, transfer agent, and dividend paying agent, pursuant to a
written agreement or agreements between [NAME OF CUSTODIAN] and the
Trust. In these capacities, [NAME OF CUSTODIAN] provides pricing for
the Growth Fund's portfolio securities, keeps records regarding
securities and other assets in custody and in transfer, bank
statements, canceled checks, financial books and records, and keeps
records of each shareholder's account and all disbursements made to
shareholders. In addition, the Investment Manager, pursuant to its
Investment Management and Administration Agreement with respect to the
Fund, maintains all records required pursuant to such agreement.
Further, the
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<PAGE>
Distributor maintains all records required to be kept pursuant to the
Distribution Agreement with the Trust.
Item 31. MANAGEMENT SERVICES.
The Investment Manager, pursuant to its Investment Management and
Administration Agreement with the Trust, will perform administrative
services for the Trust, as described more fully in the Prospectus and
Statement of Additional Information.
Item 32. UNDERTAKINGS.
Registrant undertakes to file a post-effective amendment, using
financial statements which need not by certified, within four to six
months after the effective date of its Registration Statement under
the 1933 Act or the commencement of operations of the Growth Fund.
C-6
<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 on its behalf by the undersigned, thereto duly authorized in
Chicago, Illinois on the 13th day of February, 1996.
THE HOLLAND TRUST
By: /s/ Louis A. Holland
------------------------
Louis A. Holland
Chairman of the
Board of Trustees
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 date indicated.
Signature Title Date
- --------- ----- ----
/s/ Louis A. Holland President, Trustee, &
- --------------------------- Chairman of the Board -------------------
of Trustees
/s/ Monica L. Walker Secretary & Trustee
- --------------------------- -------------------
/s/ Laura J. Janus Treasurer
- --------------------------- -------------------
Lester H. McKeever, Jr. Trustee
- --------------------------- -------------------
/s/ Elzie L. Higginbottom Trustee
- --------------------------- -------------------
C-7
<PAGE>
EXHIBIT INDEX
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
- ------- ----------- -------------
1. Declaration of Trust of the Holland
Trust.
2. By-Laws of the Holland Trust.
5. Form of Investment Management and
Administration Agreement by and
between the Holland Trust on behalf
of the Growth Fund and Holland
Capital Management.
6. Form of Distribution Agreement
between the Holland Trust and HCM
Investments, Inc.
13. Form of Share Subscription
Agreement by and between the
Holland Trust and Holland Capital
Management.
C-8
<PAGE>
EXHIBIT 1.
DECLARATION OF TRUST OF THE HOLLAND TRUST
<PAGE>
CERTIFICATE OF TRUST
OF
THE HOLLAND TRUST
This Certificate of Trust is being executed as of December 20, 1995 for the
purpose of organizing a business trust pursuant to the Delaware Business Trust
Act, 12 DEL. C. Sections 3801 ET SEQ. (the "Act").
The undersigned hereby certify as follows:
1. NAME. The name of the business trust is The Holland Trust (the
"Trust').
2. REGISTERED INVESTMENT COMPANY. The Trust is or will become a
registered investment company under the Investment Company Act of 1940, as
amended.
3. REGISTERED OFFICE AND REGISTERED AGENT. The registered office of the
Trust in the State of Delaware is located at 1209 Orange Street, Wilmington,
Delaware 19801. The name of the registered agent of the Trust for service of
process at such location is The Corporation Trust Company. The business address
of the sole trustee, Louis A. Holland, is Suite 3260, 35 West Wacker Drive,
Chicago, Illinois 60601.
4. NOTICE OF LIMITATION OF LIABILITIES OF SERIES. Notice is hereby given
that the Trust is or may hereafter be constituted a series trust. The debts,
liabilities, obligations, and expenses incurred, contracted for or otherwise
existing with respect to any particular series of the Trust shall be enforceable
against the assets of such series only, and not against the assets of the Trust
generally.
5. The Trustees of the Trust, as set forth in its governing instrument,
reserve the right to amend, alter, change, or repeal any provisions contained in
this Certificate of Trust, in the manner now or hereafter prescribed by statute.
6. This Certificate of Trust shall become effective immediately upon
filing with the Office of the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, being the sole Trustee of the Trust,
has duly executed this Certificate of Trust as of the day and year first above
written.
____________________________________
Louis A. Holland
Trustee
<PAGE>
AGREEMENT AND DECLARATION OF TRUST
of
The Holland Trust
a Delaware Business Trust
Principal Place of Business:
Suite 3260
35 West Wacker Drive
Chicago, Illinois 60601
<PAGE>
TABLE OF CONTENTS
AGREEMENT AND DECLARATION OF TRUST
Page
ARTICLE I Name and Definitions. . . . . . . . . . . . . . . . . . . . . . 1
1. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(b) Certificate of Trust. . . . . . . . . . . . . . . . . . . . . . 1
(c) Classes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(d) Commission . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(e) Declaration of Trust. . . . . . . . . . . . . . . . . . . . . . 2
(f) Delaware Act. . . . . . . . . . . . . . . . . . . . . . . . . . 2
(g) Interested Person . . . . . . . . . . . . . . . . . . . . . . . 2
(h) Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(i) 1940 Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(j) Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(k) Principal Underwriter . . . . . . . . . . . . . . . . . . . . . 2
(l) Series. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(m) Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(n) Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(o) Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(p) Trust Property. . . . . . . . . . . . . . . . . . . . . . . . . 2
(q) Trustees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II Purpose of Trust. . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1. Division of Beneficial Interest. . . . . . . . . . . . . . . . . . . 3
2. Ownership of Shares. . . . . . . . . . . . . . . . . . . . . . . . . 4
3. Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . 4
4. Investments in the Trust . . . . . . . . . . . . . . . . . . . . . . 5
5. Status of Shares and Limitation of
Personal Liability . . . . . . . . . . . . . . . . . . . . . . 5
<PAGE>
6. Establishment and Designation of Series. . . . . . . . . . . . . . . 5
(a) Assets Held with Respect to a
Particular Series . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Liabilities Held with Respect to a
Particular Series . . . . . . . . . . . . . . . . . . . . . . . 6
(c) Dividends, Distributions, Redemptions,
and Repurchases . . . . . . . . . . . . . . . . . . . . . . . . 6
(d) Equality . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(e) Fractions . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(f) Exchange Privilege. . . . . . . . . . . . . . . . . . . . . . . 7
(g) Combination of Series . . . . . . . . . . . . . . . . . . . . . 7
(h) Elimination of Series . . . . . . . . . . . . . . . . . . . . . 7
7. Indemnification of Shareholders. . . . . . . . . . . . . . . . . . . 7
ARTICLE IV Trustees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1. Number, Election, and Tenure . . . . . . . . . . . . . . . . . . . . 8
2. Effect of Death, Resignation, etc.
of a Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . 8
3. Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4. Payment of Expenses by the Trust . . . . . . . . . . . . . . . . . .12
5. Payment of Expenses by Shareholders. . . . . . . . . . . . . . . . .12
6. Ownership of Assets of the Trust . . . . . . . . . . . . . . . . . .12
7. Service Contracts. . . . . . . . . . . . . . . . . . . . . . . . . .13
8. Trustees and Officers as Shareholders. . . . . . . . . . . . . . . .13
ARTICLE V Shareholders' Voting Powers and Meetings. . . . . . . . . . . .14
1. Voting Powers, Meetings, Notice and Record Dates . . . . . . . . . .14
2. Quorum and Required Vote . . . . . . . . . . . . . . . . . . . . . .15
3. Record Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
4. Additional Provisions. . . . . . . . . . . . . . . . . . . . . . . .16
ARTICLE VI Net Asset Value, Distributions and
Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . .16
1. Determination of Net Asset Value,
Net Income and Distributions. . . . . . . . . . . . . . . . . .16
2. Redemptions and Repurchases. . . . . . . . . . . . . . . . . . . . .16
2
<PAGE>
ARTICLE VII Compensation and Limitation of
Liability of Trustees . . . . . . . . . . . . . . . . . . . . .17
1. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
2. Indemnification and Limitation of Liability . . . . . . . . . . . .17
3. Trustees' Good Faith Act, Expert Advice,
No Bond or Surety . . . . . . . . . . . . . . . . . . . . . . .18
4. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
ARTICLE VIII Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . .18
1. Liability of Third Persons Dealing with Trustees . . . . . . . . . .18
2. Termination of Trust or Series . . . . . . . . . . . . . . . . . . .18
3. Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . .19
4. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
5. Filing of Copies, References, Headings . . . . . . . . . . . . . . .20
6. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . .20
7. Provisions in Conflict with Law or Regulations . . . . . . . . . . .21
8. Business Trust Only . . . . . . . . . . . . . . . . . . . . . . . .22
3
<PAGE>
AGREEMENT AND DECLARATION OF TRUST
OF
The Holland Trust
THIS AGREEMENT AND DECLARATION OF TRUST is made and entered into as of date
set forth below by the Trustee named hereunder for the purpose of forming a
Delaware business trust in accordance with the provisions hereinafter set forth.
NOW, THEREFORE, the Trustee hereby directs that the Certificate of Trust be
filed with the Office of the Secretary of State of the State of Delaware and
does hereby declare that the Trustee will hold IN TRUST all case, securities,
and other assets which the Trust now possesses or may hereafter acquire from
time to time in any manner and manage and dispose of the same upon the following
terms and conditions for the benefit of the holders of Shares of this Trust.
ARTICLE I
Name and Definitions
SECTION 1. NAME. This Trust shall be known as The Holland 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 2. DEFINITIONS. Whenever used herein, unless otherwise required
by the context or specifically provided:
(a) "By-Laws" shall mean the By-Laws of the Trust as amended from time to
time, which By-Laws are expressly herein incorporated by reference as part of
the "governing instrument" within the meaning of the Delaware Act;
(b) "Certificate of Trust" means the certificate of trust, as amended or
restated from time to time, filed by the Trustees in the Office of the Secretary
of State of the State of Delaware in accordance with the Delaware Act;
<PAGE>
(c) "Class" means a class of Shares of a Series of the Trust established
in accordance with the provisions of Article III hereof;
(d) "Commission" means the Securities and Exchange Commission;
(e) "Declaration of Trust" means this Agreement and Declaration of Trust,
as amended or restated from time to time;
(f) "Delaware Act" means the Delaware Business Trust Act 12 DEL. C.
Sections 3801 ET SEQ., as amended from time to time;
(g) "Interested Person" shall have the meaning given it in
Section 2(a)(19) of the 1940 Act, as defined below;
(h) "Manager" means a party furnishing services to the Trust pursuant to
any contract described in Article IV, Section 7(a) hereof;
(i) "1940 Act" means the Investment Company Act of 1940 and the rules and
regulations thereunder, all as amended from time to time;
(j) "Person" means and includes individuals, corporations, partnerships,
trusts, associations, joint ventures, estates, and other entities, whether or
not legal entities, and governments and agencies and political subdivisions
thereof, whether domestic or foreign;
(k) "Principal Underwriter" shall have the meaning given such term in the
1940 Act;
(l) "Series" means each Series of Shares established and designated under
or in accordance with the provisions of Article III hereof;
(m) "Shareholder" means a record owner of outstanding Shares;
(n) "Shares" means the shares of beneficial interest into which the
beneficial interest in the Trust shall be divided from time to time and includes
fractions of Shares as well as whole Shares;
(o) "Trust" means the Delaware Business Trust established under the
Delaware Act by this Declaration of Trust and the filing of the Certificate of
Trust in the Office of the Secretary of State of the State of Delaware;
(p) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is from time to time owned or held by or for the
account of the Trust; and
2
<PAGE>
(q) "Trustees" means the persons who have signed this Declaration of Trust
and all other Persons who may from time to time be duly elected or appointed to
serve as Trustees in accordance with the provisions hereof, in each case so long
as such Person shall continue in office in accordance with the terms of this
Declaration of Trust, and reference herein to a Trustee or the Trustees shall
refer to such Person or Persons in his or her or their capacity as Trustees
hereunder.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on the business
of a management investment company registered under the 1940 Act through one or
more Series investing primarily in securities, and to carry on such other
business as the Trustees may from time to time determine pursuant to their
authority under this Declaration of Trust.
ARTICLE III
Shares
SECTION 1. DIVISION OF BENEFICIAL INTEREST. The beneficial interest in
the Trust shall be divided into one or more Series. Each Series may be divided
into two or more Classes. Subject to the further provisions of this Article III
and any applicable requirements of the 1940 Act, the Trustees shall have full
power and authority, in their sole discretion, and without obtaining any
authorization or vote of the Shareholders of any Series or Class thereof, to (i)
divide the beneficial interest in each Series of Class thereof into Shares, with
or without par value as the Trustees shall determine, (ii) issue Shares without
limitation as to number (including fractional Shares) to such Persons and for
such amount and type of consideration, subject to any restriction set forth in
the By-Laws, including cash or securities, at such time or times and on such
terms as the Trustees may deem appropriate, (iii) establish and designate and to
change in any manner any Series or Class thereof and to fix such preferences,
voting powers, rights, duties and privileges and business purpose of each Series
or Class thereof as the Trustees may from time to time determine, which
preferences, voting powers, rights, duties and privileges may be senior or
subordinate to (or in the case of business purpose, different from) any existing
Series or Class thereof and may be limited to specified property or obligations
of the Trust or profits and losses associated with specified property or
obligations of the Trust, (iv) divide or combine the Shares of any Series or
Class thereof into a greater or lesser number without thereby materially
changing the proportionate beneficial interest of the Shares of such Series or
Class in the assets held with respect to that Series, (v) classify or reclassify
any issued Shares of any Series or Class
3
<PAGE>
thereof into shares of one or more Series or Classes thereof and (vi) take
such other action with respect to the Shares as the Trustees may deem
desirable.
Subject to the distinctions permitted among Classes of the same Series as
established by the Trustees, consistent with the requirements of the 1940 Act,
each Share of a Series of the Trust shall represent an equal beneficial interest
in the net assets of such Series, and each holder of Shares of a Series shall be
entitled to receive such holder's pro rata share of distributions of income and
capital gains, if any, made with respect to such Series. Upon redemption of the
Shares of any Series, the applicable Shareholder shall be paid solely out of the
funds and property of such Series of the Trust.
All references to Shares in this Declaration of Trust shall be deemed to be
Shares of any or all Series or Classes thereof, as the context may require. All
provisions herein relating to the Trust shall apply equally to each Series of
the Trust and each Class thereof, except as the context otherwise requires.
All Shares issued hereunder, including, without limitation, Shares issued
in connection with a dividend in Shares or a split or reverse split of Shares,
shall be fully paid and non-assessable. Except as otherwise provided by the
Trustees, Shareholders shall have no preemptive or other right to subscribe to
any additional Shares or other securities issued by the Trust.
SECTION 2. OWNERSHIP OF SHARES. The Ownership of Shares shall be recorded
on the books of the Trust or those of a transfer or similar agent for the Trust,
which books shall be maintained separately for the Shares of each Series (or
Class) of the Trust. No certificates certifying the ownership of Shares shall
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 transfer of Shares of each Series (or Class) of the
Trust 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
the identity of the Shareholders of each Series (or Class) of the Trust and as
to the number of Shares of each Series (or Class) of the Trust held from time to
time by each Shareholder.
SECTION 3. TRANSFER OF SHARES. Except as otherwise provided by the
Trustees, Shares shall be transferable on the books of the Trust only by the
record holder thereof or by his duly authorized agent upon delivery to the
Trustees or the Trust's transfer agent of a duly executed instrument of
transfer, together with a Share certificate if one is outstanding, and such
evidence of the genuineness of each such execution and authorization and of such
other matters as may be required by the Trustees. Upon such delivery, and
subject to any further requirements specified by the Trustees or contained in
the By-Laws, the transfer shall be recorded on the books of the Trust. Until a
transfer is so recorded, the Shareholder of record of Shares shall be deemed to
be the holder of such Shares for all purposes hereunder
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and neither the Trustees nor the Trust, nor any transfer agent or registrar
or any officer, employee, or agent of the Trust, shall be affected by any
notice of a proposed transfer.
SECTION 4. INVESTMENTS IN THE TRUST. Investments may be accepted by the
Trust from such Persons, at such times, on such terms, and for such
consideration as the Trustees from time to time may authorize.
SECTION 5. 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. The death,
incapacity, dissolution, termination, or bankruptcy of a Shareholder during the
existence of the Trust shall not operate to terminate the Trust, nor entitle the
representative of any such Shareholder to an accounting or to take any action
in court or elsewhere against the Trust or the Trustees, but entitles such
representative only to the rights of such Shareholder 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 participation 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 Shareholders, 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.
SECTION 6. ESTABLISHMENT AND DESIGNATION OF SERIES. The establishment and
designation of any Series (or Class) of Shares of the Trust shall be effective
upon the adoption by a majority of the then Trustees of a resolution that sets
forth such establishment and designation and the relative rights and preferences
of such Series (or Class) of the Trust, whether directly in such resolution or
by reference to another document including, without limitation, any registration
statement of Trust, or as otherwise provided in such resolution.
Shares of each Series (or Class) of the Trust established pursuant to this
Article III, unless otherwise provided in the resolution establishing such
Series, shall have the following relative rights and preferences:
(a) ASSETS HELD WITH RESPECT TO A PARTICULAR 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 from whatever source
derived, including, without limitation, 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 be held with respect to that Series for all purposes, subject only
to the rights of creditors of such Series, and shall be so recorded upon the
books of account of the Trust.
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Such consideration, assets, income, earnings, profits and proceeds thereof,
from whatever source derived, including, without limitation, 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, are herein referred to as "assets held with respect to" that
Series. In the event that there are any assets, income, earnings, profits
and proceeds thereof, funds or payments which are not readily identifiable as
assets held with respect to any particular Series (collectively, "General
Assets"), the Trustees shall allocate such General Assets to, between or
among any one or more of the Series in such manner and on such basis as the
Trustees, in their sole discretion, deem fair and equitable, and any General
Assets so allocated to a particular Series shall be held with respect to that
Series. Each such allocation by the Trustees shall be conclusive and binding
upon the Shareholders of all Series for all purposes. Separate and distinct
records shall be maintained for each Series and the assets held with respect
to each Series shall be held and accounted for separately from the assets
held with respect to all other Series and the General Assets of the Trust not
allocated to such Series.
(b) LIABILITIES HELD WITH RESPECT TO A PARTICULAR SERIES. The assets of
the Trust held with respect to each particular Series shall be charged against
the liabilities of the Trust held with respect to that Series and all expenses,
costs, charges, and reserves attributable to that Series. Any general
liabilities of the Trust which are not readily identifiable as being held with
respect to any particular Series shall be allocated and charged by the Trustees
to and among any one or more of the Series in such manner and on such basis as
the Trustees in their sole discretion deem fair and equitable. All liabilities,
expenses, costs, charges, and reserves so charged to a Series are herein
referred to as "liabilities held with respect 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. All
liabilities held with respect to a particular Series shall be enforceable
against the assets held with respect to such Series only and not against the
assets of the Trust generally or against the assets held with respect to any
other Series. Notice of this contractual limitation on the liability of each
Series shall be set forth in the Certificate of Trust or in an amendment thereto
prior to the issuance of any Shares of a Series.
(c) DIVIDENDS, DISTRIBUTIONS, REDEMPTIONS, AND REPURCHASES.
Notwithstanding any other provisions of this Declaration of Trust, including,
without limitation, Article VI, no dividend or distribution, including, without
limitation, any distribution paid upon termination of the Trust or of any Series
(or Class) with respect to, nor any redemption or repurchase of, the Shares of
any Series (or Class), shall be effected by the Trust other than from the assets
held with respect to such Series, nor shall any Shareholder or any particular
Series otherwise have any right or claim against the assets held with respect to
any other Series except to the extent that such Shareholder has such a right or
claim hereunder as a Shareholder of such other Series. 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
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which items as capital, and each such determination and allocation shall be
conclusive and binding upon the Shareholders.
(d) EQUALITY. All the Shares of each particular Series shall represent an
equal proportionate interest in the assets held with respect to that Series
(subject to the liabilities held with respect to that Series and such rights and
preferences as may have been established and designated with respect to Classes
of Shares within such Series), and each Share of any particular Series shall be
equal to each other Share of that Series.
(e) FRACTIONS. Any fractional Share of a Series shall carry
proportionately all the rights and obligations of a whole Share of that Series,
including rights with respect to voting, receipt of dividends and distributions,
redemption of Shares and termination of the Trust.
(f) EXCHANGE PRIVILEGE. The Trustees shall have the authority to provide
that the holders of Shares of any Series shall have the right to exchange said
Shares for Shares of one or more other Series of Shares in accordance with such
requirements and procedures as may be established by the Trustees.
(g) COMBINATION OF SERIES. The Trustees shall have the authority, without
the approval of the Shareholders of any Series unless otherwise required by
applicable law, to combine the assets and liabilities held with respect to any
two or more Series into assets and liabilities held with respect to a single
Series.
(h) ELIMINATION OF SERIES. At any time that there are no Shares
outstanding of any particular Series (or Class) previously established and
designated, the Trustees may by resolution of a majority of the Trustees abolish
that Series (or Class) and rescind the establishment and designation thereof.
SECTION 7. INDEMNIFICATION OF SHAREHOLDERS. If any Shareholder or former
Shareholder shall be exposed to liability by reason of a claim or demand
relating to such Person being or having been a Shareholder, and not because of
such Person's acts or omissions, the Shareholder or former Shareholder (or such
Person's 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 to be held harmless from and indemnified out of the
assets of the Trust against all loss and expense arising from such claim or
demand, but only out of the assets held with respect to the particular Series of
Shares of which such Person is or was a Shareholder and from or in relation to
which such liability arose.
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ARTICLE IV
Trustees
SECTION 1. NUMBER, ELECTION AND TENURE. The number of Trustees shall
initially be one. Hereafter, the number of Trustees shall at all times be at
least four and no more than fifteen as determined, from time to time, by the
Trustees pursuant to Section 3 of this Article IV. Each Trustee shall serve
during the lifetime of the Trust until he or she dies, resigns, is declared
bankrupt or incompetent by a court of appropriate jurisdiction, or is removed,
or, if sooner, until the next meeting of Shareholders called for the purpose of
electing Trustees and until the election and qualification of his or her
successor. In the event that less than the majority of the Trustees holding
office have been elected by the Shareholders, the Trustees then in office shall
call a Shareholders' meeting for the election of Trustees. Any Trustee may
resign at any time by written instrument signed by him or her and delivered to
any office of the Trust or to a meeting of the Trustees. Such resignation shall
be effective upon receipt unless specified to be effective at some other time.
Except to the extent expressly provided in a written agreement with the Trust,
no Trustee resigning and no Trustee 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. The Shareholders may elect
Trustees at any meeting of Shareholders called by the Trustees for that purpose.
Any Trustee may be removed at any meeting of Shareholders by a vote of two-
thirds or the outstanding Shares of the Trust.
SECTION 2. EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE. The death,
declination to serve, resignation, retirement, removal or incapacity of one or
more Trustees, or all of them, shall not operate to annul the Trust or to revoke
any existing agency created pursuant to the terms of this Declaration of Trust.
Whenever there shall be fewer than the designated number of Trustees, until
additional Trustees are elected or appointed as provided herein to bring the
total number of Trustees equal to the designated number, the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by this Declaration
of Trust. As conclusive evidence of such vacancy, a written instrument
certifying the existence of such vacancy may be executed by an officer of the
Trust or by a majority of the Trustees. In the event of the death, declination
to serve, resignation, retirement, removal, or incapacity of all the then
Trustees within a short period of time and without the opportunity for at least
one Trustee being able to appoint additional Trustees to replace those no longer
serving, the Trust's Manager(s) are empowered to appoint new Trustees subject to
the provisions of Section 16(a) of the 1940 Act.
SECTION 3. POWERS. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the Trustees, and the
Trustees shall have all powers necessary or convenient to carry out that
responsibility, including the power to engage in securities transactions of all
kinds on behalf of the Trust. Without limiting the
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foregoing, the Trustees may: adopt By-Laws not inconsistent with this
management of the affairs of the Trust and may amend and repeal such By-Laws
to the extent that such By-laws do not reserve that right to the
Shareholders; enlarge or reduce the number of Trustees; remove any Trustee
with or without cause at any time by written instrument signed by a least
two-thirds of the number of Trustees prior to such removal, specifying the
date when such removal shall become effective, and fill vacancies caused by
enlargement of their number or by the death, resignation or removal of a
Trustee; elect and remove, with or without cause, such officers and appoint
and terminate such agents as they consider appropriate; appoint from their
own number and establish and terminate one or more committees, consisting of
two or more Trustees, that may exercise the powers and authority of the Board
of Trustees to the extent that the Trustees determine; employ one or more
custodians of the assets of the Trust and may authorize such custodians to
employ subcustodians and to deposit all or any part of such assets in a
system or systems for the central handling of securities or with a Federal
Reserve Bank, retain a transfer agent or a shareholder servicing agent, or
both; provide for the issuance and distribution of Shares by the Trust
directly or through one or more Principal Underwriters or otherwise; redeem,
repurchase and transfer Shares pursuant to applicable law; set record dates
for the determination of Shareholders with respect to various matters;
declare and pay dividends and distributions to Shareholders of each Series
from the assets of such Series; and in general delegate such authority as
they consider desirable to any officer of the Trust, to any committee of the
Trustees and to any agent or employee of the Trust or to any such custodian,
transfer or shareholder servicing agent, or Principal Underwriter. Any
determination as to what is in the interests of the Trust made by the
Trustees in good faith shall be conclusive. In construing the provisions of
this Declaration of Trust, the presumption shall be in favor of a grant of
power to the Trustees. Unless otherwise specified herein or in the By-Laws
or required by law, any action by the Trustees shall be deemed effective if
approved or taken by a majority of the Trustees present at a meeting of
Trustees at which a quorum of Trustees is present, within or without the
State of Delaware.
Without limiting the foregoing, the Trustees shall have the power and
authority to cause the Trust to (or to act on behalf of the Trust to):
(a) Invest and reinvest cash, hold cash uninvested, and subscribe for,
invest in, reinvest in, purchase or otherwise acquire, own, hold, pledge, sell,
assign, transfer, exchange, distribute, write options on, lend or otherwise deal
in or dispose of contracts for the future acquisition or delivery of fixed
income or other securities, and securities of every nature and kind, including,
without limitation, all types of bonds, debentures, stocks, negotiable or non-
negotiable instruments, obligations, evidences of indebtedness, certificates of
deposit or indebtedness, commercial papers, repurchase agreements, bankers'
acceptances, and other securities of any kind, issued, created, guaranteed, or
sponsored by any and all Persons, including without limitation, states,
territories, and possessions of the United States and the District of Columbia
and any political subdivision, agency, or instrumentality thereof, and
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foreign government or any political subdivision of the U.S. Government or any
foreign government, or any international instrumentality, or by any bank or
savings institution, or by any corporation or organization organized under
the laws of the United States or of any state, territory, or possession
thereof, or by any corporation or organization organized under any foreign
law, or in "when issued" contracts for any such securities, to change the
investments of the assets of the Trust; and exercise any and all rights,
powers, and privileges of ownership or interest in respect of any and all
such investments of every kind and description, including, without
limitation, the right to consent and otherwise act with respect thereto, with
power to designate one or more Persons, to exercise any of said rights,
powers, and privileges in respect of any of said instruments;
(b) Sell, exchange, lend, pledge, mortgage, hypothecate, lease, or write
options (including options on futures contracts) with respect to or otherwise
deal in any property rights relating to any or all of the assets of the Trust or
any Series;
(c) Vote or give assent, or exercise any rights of ownership, with respect
to stock or other securities or property; and 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 or property as the Trustees shall deem proper;
(d) Exercise powers and right of subscription or otherwise which in any
manner arise out of ownership or securities;
(e) Hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form, or in its own name or
in the name of a custodian or subcustodian or a nominee or nominees or
otherwise;
(f) Consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer of any security which is
held in the Trust; consent to any contract, lease, mortgage, purchase or sale of
property by such corporation or issuer; and pay calls or subscriptions with
respect to any security held in the Trust;
(g) Join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depositary or
trustee, and delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the Trustees shall deem
proper, and agree to pay, and pay, such portion of the expenses and compensation
of such committee, depositary or trustee as the Trustees shall deem proper;
(h) 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;
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(i) Enter into joint ventures, general or limited partnerships and any
other combinations or associations;
(j) Borrow funds or other property in the name of the Trust exclusively
for Trust purposes and in connection therewith issue notes or other evidence of
indebtedness; and mortgage and pledge the Trust Property or any part thereof to
secure any or all of such indebtedness;
(k) Endorse or guarantee the payment of any notes or other obligations of
any Person; 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 of such obligations;
(l) Purchase and pay for entirely out of Trust Property such insurance as
the Trustees may deem necessary or appropriate for the conduct of the business,
including, without limitation, insurance policies insuring the assets of the
Trust or payment of distributions and principal on its portfolio investments,
and insurance polices insuring the Shareholders, Trustees, officers, employees,
agents, investment advisers, Principal Underwriters, or independent contractors
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 as Trustee, officer, employee, agent, investment adviser, principal
underwriter, or independent contractor, including any action taken or omitted
that may be determined to constitute negligence, whether or not the Trust would
have the power to indemnify such Person against liability;
(m) Adopt, establish and carry out pension, profit-sharing, share bonus,
share purchase, savings, thrift and other retirement, incentive and benefit
plans and trusts, including the purchase of life insurance and annuity contracts
as a means of providing such retirement and other benefits, for any or all of
the Trustees, officers, employees and agents of the Trust;
(n) Operate as and carry out the business of an investment company, and
exercise all the powers necessary or appropriate to the conduct of such
operations;
(o) Enter into contracts of any kind and description;
(p) Employ one or more banks, trust companies or companies that are
members of a national securities exchange or such other entities as the
Commission may permit as custodians of any assets of the Trust, subject to any
conditions set forth in this Declaration or Trust or in the By-Laws;
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(q) Interpret the investment policies, practices, or limitations of any
Series of Class; and
(r) Engage in any other lawful act or activity in which a business trust
organized under the Delaware Act may engage, subject to the provisions of the
1940 Act.
The Trust shall not be limited to investing in obligations maturing before
the possible termination of the Trust or one or more of its Series. The Trust
shall not in any way be bound or limited by any present or future law or custom
in regard to investment by fiduciaries. The Trust shall not be required to
obtain any court order to deal with any assets of the Trust or take any other
action hereunder.
SECTION 4. PAYMENT OF EXPENSES BY THE TRUST. The Trustees are authorized
to pay or cause to be paid out of the principal or income of the Trust, or
partly out of the principal and partly out of income, as they 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 or manager,
Principal Underwriter, auditors, counsel, custodian, transfer agent, shareholder
servicing agent, and such other agents or independent contractors and such other
expenses and charges as the Trustees may deem necessary or proper to incur,
which expenses, fees, charges, taxes and liabilities shall be allocated in
accordance with Article III, Section 6 hereof.
SECTION 5. PAYMENT OF EXPENSES BY SHAREHOLDERS. The Trustees shall have
the power, as frequently as they may determine, to cause each Shareholder, or
each Shareholder of any particular Series, to pay directly, in advance or
arrears, for charges of the Trust's custodian or transfer, Shareholder servicing
or similar agent, an amount fixed from time to time by the Trustees, by setting
off such charges due from such Shareholder from declared but unpaid dividends
owed such Shareholder and/or by reducing the number of Shares in the account of
such Shareholder by that number of full and/or fractional Shares which
represents the outstanding amount of such charges due from such Shareholder.
SECTION 6. 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 Trust, except
that the Trustees shall have power to cause legal title to any Trust Property to
be held by or in the name of one or more of the Trustees, or in the name of the
Trust, or in the name of any other Person as nominee, on such terms as the
Trustees may determine. The right, title and interest of the Trustees in the
Trust Property shall vest automatically in each Person who may hereafter become
a Trustee. Upon the resignation, removal or death of a Trustee, he or she shall
automatically cease to have any right, title or interest in any of the Trust
Property, and the right, title and interest of such Trustee in the Trust
Property shall vest automatically in the
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remaining Trustees. Such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered.
SECTION 7. SERVICE CONTRACTS.
(a) Subject to such requirements and restrictions as may be set forth
under federal and/or state law and in the By-Laws, including, without
limitation, the requirements of Section 15 of the 1940 Act, the Trustees may, at
any time and from time to time, contract for exclusive or nonexclusive advisory,
management and/or administrative services for the Trust or for any Series (or
Class thereof) with any corporation, trust, association, or other organization;
and any such contract may contain such other terms as the Trustees may
determine, including, without limitation, authority for the Manager or
administrator to delegate certain or all of its duties under such contracts to
qualified investment advisers and administrators and to determine from time to
time without prior consultation with the Trustees what investments shall be
purchased, held sold or exchanged and what portion, if any, of the assets of the
Trust shall be held uninvested and to make changes in the Trust's investments,
or such other activities as may specifically be delegated to such party.
(b) The Trustees may also, at any time and from time to time, contract
with any corporation, trust, association, or other organization, appointing it
exclusive or nonexclusive distributor or Principal Underwriter for the Shares of
one or more of the Series (or Classes) or other securities to be issued by the
Trust. Every such contract shall comply with such requirements and restrictions
as may be set forth under federal and/or state law and in the By-Laws,
including, without limitation, the requirements of Section 15 of the 1940 Act;
and any such contract may contain such other terms as the Trustees may
determine.
(c) The Trustees are also empowered, at any time and from time to time, to
contract with any corporations, trusts, associations or other organizations,
appointing it or them the custodian, transfer agent and/or shareholder servicing
agent for the Trust or one or more of its Series. Every such contract shall
comply with such requirements and restrictions as may be set forth under federal
and/or state law and in the By-Laws or stipulated by resolution of the Trustees.
(d) Subject to applicable law, the Trustees are further empowered, at any
time and from time to time, to contract with any entity to provide such other
services to the Trust or one or more of the Series, as the Trustees determine to
be in the best interests of the Trust and the applicable Series.
(e) The fact that:
(i) any of the Shareholders, Trustees, or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee,
Manager, adviser, Principal Underwriter, distributor, or
affiliate or agent of or
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for any corporation, trust, association, or other organization,
or for any parent or affiliate of any organization with which an
advisory, management, or administration contract, or Principal
Underwriter's or distributor's contract, or transfer agent,
shareholder servicing agent or other type of service contract may
have been or may hereafter be made, or that any such
organization, or any parent or affiliate thereof, is a
Shareholder or has an interest in the Trust; or that
(ii) any corporation, trust, association or other organization with
which an advisory, management, or administration contract or
Principal Underwriter's or distributor's contract, or transfer
agent or shareholder servicing agent contract may have been or
may hereafter be made also has an advisory, management, or
administration contract, or Principal Underwriter's or
distributor's or other service contract with one or more other
corporations, trusts, associations, or other organizations, or
has other business or interests,
shall not affect the validity of any such contract 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 approval of each such contract is made pursuant to the
requirements of the 1940 Act.
SECTION 8. TRUSTEES AND OFFICERS AS SHAREHOLDERS. Any Trustee, officer or
agent of the Trust may acquire, own and dispose of Shares to the same extent as
if he or she were not a Trustee, officer or agent; and the Trustees may issue
and sell and cause to be issued and sold Shares to, and redeem such Shares from,
any such Person or any firm or company in which such Person is interested,
subject only to the general limitations contained herein or in the By-Laws
relating to the sale and redemption of such Shares.
ARTICLE V
Shareholders' Voting Powers and Meetings
SECTION 1. VOTING POWERS, MEETINGS, NOTICE, AND RECORD DATES. The
Shareholders shall have power to vote only: (i) for the election or removal of
Trustees as provided in Article IV, Section 1 hereof, and (ii) with respect to
such additional matters relating to the Trust as may be required by applicable
law, this Declaration of Trust, the By-Laws 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. Each whole Share shall be entitled to one
vote as any matter on which it is entitled to vote and each fractional Share
shall be entitled to a proportionate fractional vote. Notwithstanding any other
provision of this Declaration of Trust, on any matters submitted to a vote of
the Shareholders, all Share of the Trust then
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entitled to vote shall be voted in aggregate, except: (i) when required by
the 1940 Act, Shares shall be voted by individual Series; (ii) when the
matter involves the termination of a Series or any other action that the
Trustees have determined will affect only the interests of one or more
Series, then only Shareholders of such Series shall be entitled to vote
thereon; and (iii) when the matter involves any action that the Trustees have
determined will affect only the interests of one or more Classes, then only
the Shareholder of such Class or Classes shall be entitled to vote thereon.
There shall be no cumulative voting in the election of Trustees. Shares may
be voted in person or by proxy. A proxy may be given in writing. The By-Laws
may provide that proxies may also, or may instead, be given by an electronic
or telecommunications device or in any other manner. Notwithstanding
anything else contained herein or in the By-Laws, in the event a proposal by
anyone other than the officers or Trustees of the Trust is submitted to a
vote of the Shareholders of one or more Series or Classes thereof or of the
Trust, or in the event of any proxy contest or proxy solicitation or proposal
in opposition to any proposal by the officers or Trustees of the Trust,
Shares may be voted only by written proxy or in person at a meeting. 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 By-Laws
to be taken by the Shareholders. Meetings of the Shareholders shall be
called and notice thereof and record dates therefor shall be given and set as
provided in the By-Laws.
SECTION 2. QUORUM AND REQUIRED VOTE. Except when a larger quorum is
required by applicable law, by the By-Laws or by this Declaration of Trust,
thirty-three and one-third percent (33-1/3%) of the Shares entitled to vote
shall constitute a quorum at a Shareholders' meeting. When any one or more
Series (or Classes) is to vote as a single Class separate from any other Shares,
thirty-three and one-third percent (33-1/3%) of the Shares of each such Series
(or Classes) entitled to vote shall constitute a quorum at a Shareholders'
meting of that Series (or Class). Except when a larger vote is required by any
provision of this Declaration of Trust or the By-Laws or by applicable law, when
a quorum is present at any meeting, a majority of the Shares voted shall decide
any questions and a plurality of the Shares voted shall elect a Trustee,
provided that where any provision of law or of this Declaration of Trust
requires that the holders of any Series shall vote as a Series (or that holders
of a Class shall vote as a Class), then a majority of the Shares of that Series
(or Class) voted on the matter (or a plurality with respect to the election of a
Trustee) shall decide that matter insofar as that Series (or Class) is
concerned.
SECTION 3. RECORD DATES. For the purpose of determining the Shareholders
of any Series (or Class) who are entitled to receive payment of any dividend or
of any other distribution, the Trustees may from time to time fix a date, which
shall be before the date for the payment of such dividend or such other payment,
as the record date for determining the Shareholders of such Series (or Class)
having the right to receive such dividend or distribution. Without fixing a
record date, the Trustees may for distribution purposes close the register or
transfer books for one or more Series (or Classes) at any time prior to the
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payment of a distribution. Nothing in this Section shall be construed as
precluding the Trustees from setting different record dates for different Series
(or Classes).
SECTION 4. ADDITIONAL PROVISIONS. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
Net Asset Value, Distributions and Redemptions
SECTION 1. DETERMINATION OF NET ASSET VALUE, NET INCOME, AND
DISTRIBUTIONS. Subject to applicable law and Article III, Section 6 hereof, the
Trustees, in their absolute discretion, may prescribe and shall set forth in the
By-Laws or in a duly adopted vote of the Trustees such bases and time for
determining the per Share or net asset value of the Shares of any Series or net
income attributable to the Shares of any Series, or the declaration and payment
of dividends and distributions on the Shares of any Series, as they may deem
necessary or desirable.
SECTION 2. REDEMPTIONS AND REPURCHASES.
(a) The Trust shall purchase such Shares as are offered by any Shareholder
for redemption, upon the presentation of a proper instrument of transfer
together with a request directed to the Trust, or a Person designated by the
Trust, that the Trust purchase such Shares or in accordance with such other
procedures for redemption as the Trustees may from time to time authorize; and
the Trust will pay the net asset value thereof as determined by the Trustees (or
on their behalf), in accordance with any applicable provisions of the By-Laws
and applicable law. Unless extraordinary circumstances exist, payment for said
Shares shall be made by the Trust to the Shareholder within seven (7) days after
the date on which the request is made in proper form. The obligation set forth
in this Section 2 is subject to the provision that, in the event that any time
the New York Stock Exchange ("Exchange") is closed for other than weekends or
holidays, or if permitted by the rules and regulations or an order of the
Commission during periods when trading on the Exchange is restricted or during
any emergency which makes it impracticable for the Trust to dispose of the
investments of the applicable Series or to determine fairly the value of the net
assets held with respect to such Series or during any other period permitted by
order of the Commission for the protection of investors, such obligation may be
suspended or postponed by the Trustees. In the case of a suspension of the
right of redemption as provided herein, a Shareholder may either withdraw the
request for redemption or receive payment based on the net asset value per share
next determined after the termination of such suspension.
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(b) The redemption price may in any case or cases be paid wholly or partly
in kind if the Trustees determine that such payment is advisable in the interest
of the remaining Shareholders of the Series for which the Shares are being
redeemed. Subject to the foregoing, the fair value, selection and quantity of
securities or other property so paid or delivered as all or part of the
redemption price may be determined by or under authority of the Trustees. In no
case shall the Trust be liable for any delay of any Manager or other Person in
transferring securities selected for delivery as all or part of any payment in
kind.
(c) If the Trustees shall, at any time and in good faith, determine that
direct or indirect ownership of Shares of any Series has or may become
concentrated in any Person to an extent that would disqualify any Series as a
regulated investment company under the Internal Revenue Code of 1986, as amended
(or any successor statute thereto), then the Trustees shall have the power (but
not the obligation) by such means as they deem equitable to (i) call for the
redemption by any such Person of a number, or principal amount, of Shares
sufficient to maintain or bring the direct or indirect ownership of Shares into
conformity with the requirements for such qualification and (ii) refuse to
transfer or issue Shares to any Person whose acquisition of the Shares in
question would result in such disqualification. Any such redemption shall be
effected at the redemption price and in the manner provided in this Article VI.
(d) The holders of Shares shall upon demand disclose to the Trustees in
writing such information with respect to direct and indirect ownership of Shares
as the Trustees deem necessary to comply with the provisions of the Internal
Revenue Code of 1986, as amended (or any successor statute thereto), or to
comply with the requirements of any other taxing authority.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
SECTION 1. COMPENSATION. The Trustees in such capacity shall be entitled
to reasonable compensation from the Trust and they may fix the amount of such
compensation. Nothing herein shall in any way prevent the employment of any
Trustee for advisory, management, legal, accounting, investment banking or other
services and payment for such services by the Trust.
SECTION 2. INDEMNIFICATION AND LIMITATION OF LIABILITY. A Trustee, when
acting in such capacity shall not be personally liable to any Person, other than
the Trust or a Shareholder to the extent provided in this Article VII, for any
act, omission or obligation of the Trust, of such Trustee or of any other
Trustee. The Trustees shall not be responsible or liable in any event for any
neglect or wrongdoing of any officer, agent, employee,
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Manager, or Principal Underwriter of the Trust. The Trust shall indemnify
each Person who is serving or has served at the Trust's request as a
director, officer, trustee, employee, or agent of another organization in
which the Trust has any interest as a shareholder, creditor, or otherwise to
the extent and in the manner provided in the By-Laws.
All persons extending credit to, contracting with or having any claim
against the Trust of the Trustees shall look only to the assets of the
appropriate Series of the Trust for payment under such credit, contract, or
claim; and neither the Trustees nor the Shareholders, 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 by any of them in connection with the Trust shall
conclusively be deemed to have been executed or done only in or with respect to
his or her or their capacity as Trustee or Trustees, and such Trustee or
Trustees shall not be personally liable thereon. At the Trustees' discretion,
any note, bond, contract, instrument, certificate or undertaking made or issued
by the Trustees or by any officer or officers may give notice that the
Certificate of Trust is on file in the Office of the Secretary of State of the
State of Delaware and that a limitation on liability of Series exists and such
note, bond, contract, instrument, certificate or undertaking may, if the
Trustees so determine, recite that the same was executed or made on behalf of
the Trust by a Trustee or Trustees in such capacity 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 on the assets and property of the
Trust or a Series thereof, and may contain such further recital as such Person
or Persons may deem appropriate. The omission of any such notice or recital
shall in no way operate to bind any Trustees, officer, or Shareholders
individually.
SECTION 3. TRUSTEES' 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 to the Trust and to
any Shareholder solely for his or her own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee, and shall not be liable for errors of judgment or mistakes of
fact or law. The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust, and shall be
under no liability for any act or omission in accordance with such advice nor
for failing to follow such advice. The Trustees shall not be required to give
any bond as such, nor any surety if a bond is required.
SECTION 4. INSURANCE. The Trustees shall be entitled and empowered to the
fullest extent permitted by law to purchase with Trust assets insurance for
liability and for all expenses reasonably incurred or paid or expected to be
paid by a Trustee, officer, employee, or agent of the Trust in connection with
any claim, action, suit, or proceeding in which he
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or she may become involved by virtue of his or her capacity or former
capacity as a Trustee of the Trust.
ARTICLE VIII
Miscellaneous
SECTION 1. LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES. No Person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
SECTION 2. TERMINATION OF TRUST OR SERIES.
(a) Unless terminated as provided herein, the Trust shall continue without
limitation of time. The Trust may be terminated at any time by vote of a
majority of the Shares of each Series entitled to vote, voting separately by
Series, or by the Trustees by written notice to the Shareholders. Any Series of
Shares or Class thereof may be terminated at any time by vote of a majority of
the Shares of such Series or Class entitled to vote or by the Trustees by
written notice to the Shareholders of such Series or Class.
(b) Upon the requisite Shareholder vote or action by the Trustees to
terminate the Trust or any one or more Series of Shares or any Class thereof,
after paying or otherwise providing for all charges, taxes, expenses, and
liabilities, whether due or accrued or anticipated, of the Trust or of the
particular Series or any Class thereof as may be determined by the Trustees, the
Trust shall in accordance with such procedures as the Trustees may consider
appropriate reduce the remaining assets of the Trust or of the affected Series
or Class to distributable form in cash or Shares (if any Series remain) or other
securities, or any combination thereof, and distribute the proceeds to the
Shareholders of the Series or Classes involved, ratably according to the number
of Shares of such Series or Class held by the Shareholders of such Series or
Class on the date of distribution. Thereupon, the Trust or any affected Series
or Class shall terminate and the Trustees and the Trust shall be discharged of
any and all further liabilities and duties relating thereto or arising
therefrom, and the right, title, and interest of all parties with respect to the
Trust or such Series or Class shall be canceled and discharged.
(c) Upon termination of the Trust, following completion of winding up of
its business, the Trustees shall cause a certificate of cancellation of the
Trust's Certificate of Trust to be filed in accordance with the Delaware Act,
which certificate of cancellation may be signed by any one Trustee.
SECTION 3. REORGANIZATION.
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(a) Notwithstanding anything else herein, the Trustees may, without
Shareholder approval unless such approval is required by applicable law, (i)
cause the Trust to merge or consolidate with or into one or more trusts (or
series thereof to the extent permitted by law), partnerships, associations,
corporations or other business entities (including trusts, partnerships,
associations, corporations or other business entities created by the Trustees to
accomplish such merger or consolidation) so long as the surviving or resulting
entity is a management investment company under the 1940 Act, or is a series
thereof, that will succeed to or assume the Trust's registration under the 1940
Act and that is formed, organized, or existing under the laws of the United
States or of a state, commonwealth, possession or colony of the United States,
(ii) cause any one or more Series (or Classes) of the Trust to merge or
consolidate with or into any one or more other Series (or Classes) of the Trust,
one or more trusts (or series or classes thereof to the extent permitted by
law), partnerships, associations, corporations, (iii) cause the Shares to be
exchanged under or pursuant to any state or federal statute to the extent
permitted by law, or (iv) cause the Trust to incorporate under the laws of
Delaware or any other state or jurisdiction. Any agreement of merger or
consolidation or exchange or certificate or merger may be signed by a majority
of the Trustees and facsimile signatures conveyed by electronic or
telecommunication means shall be valid.
(b) Pursuant to and in accordance with the provisions of Section 3815(f)
of the Delaware Act, and notwithstanding anything to the contrary contained in
this Declaration of Trust, an agreement of merger or consolidation approved by
the Trustees in accordance with this Section 3 may (i) effect any amendment to
the governing instrument of the Trust or (ii) effect the adoption of a new
governing instrument of the Trust if the Trust is the surviving or resulting
trust in the merger or consolidation.
(c) The Trustees may create one or more business trusts to which all or
any part of the assets, liabilities, profits, or losses of the Trust or any
Series of Class thereof may be transferred and may provide for the conversion of
Shares in the Trust or any Series of Class thereof into beneficial interests in
any such newly created Trust or Trusts or any Series of Classes thereof.
SECTION 4. AMENDMENTS. Except as specifically provided in this Section,
the Trustees may, without Shareholder vote, restate, amend, or otherwise
supplement this Declaration of Trust. Shareholders shall have the right to vote
on any amendment (i) that would affect their right to vote granted in Article V,
Section 1 hereof, (ii) to this Section 4 of Article VIII, (iii) that may be
required by applicable law or by the Trust's registration statement, as filed
with the Commission, and (iv) submitted to them by the Trustees. Any amendment
required or permitted to be submitted to the Shareholders that, as the Trustees
determine, shall affect the Shareholders of one or more Series shall be
authorized by a vote of the Shareholders of each Series affected and no vote of
Shareholders of a Series not affected shall be required. Notwithstanding
anything else herein, no amendment hereof shall limit the rights to insurance
provided by Article VII, Section 4 with respect to any acts or
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omissions of Persons covered thereby prior to such amendment nor shall any
such amendment limit the rights to indemnification referenced in Article VII,
Section 2 hereof as provided in the By-Laws with respect to any actions or
omissions of Persons covered thereby prior to such amendment. The Trustees
may, without Shareholder vote, restate, amend, or otherwise supplement the
Certificate of Trust as they deem necessary or desirable.
SECTION 5. FILING OF COPIES, REFERENCES, HEADINGS. The original or a copy
of this instrument and of each restatement and/or amendment hereto shall be kept
at the office of the Trust where it may be inspected by any Shareholder. Anyone
dealing with the Trust may rely on a certificate by an officer of the Trust as
to whether or not any such restatements and/or amendments have been made 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 restatements and/or
amendments. In this instrument and in any such restatements and/or amendments,
references to this instrument, and all expressions such as "herein," "hereof,"
and "hereunder," shall be deemed to refer to this instrument as amended or
affected by any such restatements and/or amendments. 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.
Whenever the singular number is used herein, the same shall include the plural;
and the neuter, masculine and feminine genders shall include each other, as
applicable. This instrument may be executed in any number of counterparts each
of which shall be deemed an original.
SECTION 6. APPLICABLE LAW.
(a) The Trust is created under, and this Declaration of Trust is to be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware. The Trust shall be of the type commonly called a business
trust, and without limiting the provisions hereof, the Trust specifically
reserves the right to exercise any of the powers or privileges afforded to
business trusts or actions that may be engaged in by business trusts under the
Delaware Act, and the absence of a specific reference herein to any such power,
privilege, or action shall not imply that the Trust may not exercise such power
or privilege or take such actions.
(b) Notwithstanding the first sentence of Section 6(a) of this Article
VIII, there shall not be applicable to the Trust, the Trustees, or this
Declaration of Trust either the provisions of Section 3540 of Title 12 of the
Delaware Code or any provisions of the laws (statutory or common) of the State
of Delaware (other than the Delaware Act) pertaining to trusts that relate to or
regulate: (i) the filing with any court or governmental body or agency of
trustee accounts or schedules of trustee fees and charges, (ii) affirmative
requirements to post bonds for trustees, officers, agents, or employees of a
trust, (iii) the necessity for obtaining a court or other governmental approval
concerning the acquisition,
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holding, or disposition of real or personal property, (iv) fees or other sums
applicable to trustees, officers, agents or employees of a trust, (v) the
allocation of receipts and expenditures to income or principal, (vi)
restrictions or limitations on the permissible nature, amount, or
concentration of trust investments or requirements relating to the titling,
storage, or other manner of holding of trust assets, or (vii) the
establishment of fiduciary or other standards or responsibilities or
limitations on the acts or powers or liabilities or authorities and powers of
Trustees that are inconsistent with the limitations or liabilities or
authorities and powers of the Trustees set forth or referenced in this
Declaration of Trust.
SECTION 7. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.
(a) The provisions of the Declaration of Trust are severable, and if the
Trustees shall determine, with the advice of counsel, that any such provision is
in conflict with the 1940 Act, the regulated investment company provisions of
the Internal Revenue Code of 1986, as amended (or any successor statute
thereto), and the regulations thereunder, the Delaware Act or with other
applicable laws and regulations, the conflicting provision shall be deemed never
to have constituted a part of the Declaration of Trust; provided, however, that
such determination shall not affect any of the remaining provisions of the
Declaration of Trust or render invalid or improper any action taken or omitted
prior to such determination.
(b) If any provision of the Declaration of Trust shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of the
Declaration of Trust in any jurisdiction.
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SECTION 8. BUSINESS TRUST ONLY. It is the intention of the Trustees to
create a business trust pursuant to the Delaware Act. It is not the intention
of the Trustees to create a general partnership, limited partnership, joint
stock association, corporation, bailment, or any form of legal relationship
other than a business trust pursuant to the Delaware Act. Nothing in this
Declaration of Trust shall be construed to make the Shareholders, either by
themselves or with the Trustees, partners, or members of a joint stock
association.
IN WITNESS WHEREOF, the Trustees named below do hereby make and enter into
this Declaration of Trust as of the 20th day of December 1995.
____________________________________
Louis A. Holland
THE PRINCIPAL PLACE OF BUSINESS OF THE TRUST IS:
Suite 3260
35 West Wacker Drive
Chicago, Illinois 60601
<PAGE>
EXHIBIT 2.
BY-LAWS OF THE HOLLAND TRUST
<PAGE>
BY-LAWS
The Holland Trust
a Delaware Business Trust
<PAGE>
TABLE OF CONTENTS
BY-LAWS
Page
Article I Offices. . . . . . . . . . . . . . . . . . . . . . . . . . 5
1. Principal Office. . . . . . . . . . . . . . . . . . . . . . . . 5
2. Delaware Office . . . . . . . . . . . . . . . . . . . . . . . . 5
3. Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . 5
Article II Meetings of Shareholders . . . . . . . . . . . . . . . . . 6
1. Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . 6
2. Call of Meetings. . . . . . . . . . . . . . . . . . . . . . . . 6
3. Notice of Meetings. . . . . . . . . . . . . . . . . . . . . . . 6
4. Manner of Giving Notice; Affidavit of Notice. . . . . . . . . . 6
5. Adjourned Meetings; Notice. . . . . . . . . . . . . . . . . . . 7
6. Voting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7. Waiver of Notice by Consent of Absent Shareholders. . . . . . . 7
8. Shareholder Action by Written Consent Without a Meeting . . . . 8
9. Record Date for Shareholder Notice, Voting and Giving Consents. 8
10. Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
11. Inspectors of Election. . . . . . . . . . . . . . . . . . . . . 9
Article III Trustees . . . . . . . . . . . . . . . . . . . . . . . . .10
1. Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
2. Number of Trustees. . . . . . . . . . . . . . . . . . . . . . .10
3. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . .10
4. Place of Meetings and Meetings by Telephone . . . . . . . . . .10
5. Regular Meetings. . . . . . . . . . . . . . . . . . . . . . . .11
6. Special Meetings. . . . . . . . . . . . . . . . . . . . . . . .11
7. Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
8. Waiver of Notice. . . . . . . . . . . . . . . . . . . . . . . .11
9. Adjournment . . . . . . . . . . . . . . . . . . . . . . . . . .12
10. Notice of Adjournment . . . . . . . . . . . . . . . . . . . . .12
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11. Action Without a Meeting. . . . . . . . . . . . . . . . . . . .12
12. Fees and Compensation of Trustees . . . . . . . . . . . . . . .12
13. Delegation of Power to Other Trustees . . . . . . . . . . . . .12
Article IV Committees . . . . . . . . . . . . . . . . . . . . . . . .13
1. Committees of Trustees. . . . . . . . . . . . . . . . . . . . .13
2. Meetings and Action of Committees . . . . . . . . . . . . . . .13
Article V Officers . . . . . . . . . . . . . . . . . . . . . . . . .14
1. Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . .14
2. Election of Officers. . . . . . . . . . . . . . . . . . . . . .14
3. Subordinate Officers. . . . . . . . . . . . . . . . . . . . . .14
4. Removal and Resignation of Officers . . . . . . . . . . . . . .14
5. Vacancies in Offices. . . . . . . . . . . . . . . . . . . . . .14
6. Chairman. . . . . . . . . . . . . . . . . . . . . . . . . . . .14
7. President . . . . . . . . . . . . . . . . . . . . . . . . . . .15
8. Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . .15
9. Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . .15
10. Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Article VI Indemnification of Trustees, Officers
Employees and Other Agents . . . . . . . . . . . . . . .16
1. Agents, Proceedings, and Expenses . . . . . . . . . . . . . . .16
2. Indemnification . . . . . . . . . . . . . . . . . . . . . . . .16
3. Limitations and Settlements . . . . . . . . . . . . . . . . . .16
4. Insurance; Rights Not Exclusive . . . . . . . . . . . . . . . .17
5. Advance of Expenses . . . . . . . . . . . . . . . . . . . . . .17
6. Fiduciaries of Employee Benefit Plan. . . . . . . . . . . . . .17
Article VII Inspection of Records and Reports. . . . . . . . . . . . .18
1. Inspection by Shareholders. . . . . . . . . . . . . . . . . . .18
2. Inspection by Trustees. . . . . . . . . . . . . . . . . . . . .18
3. Financial Statements. . . . . . . . . . . . . . . . . . . . . .18
3
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Article VIII General Matters. . . . . . . . . . . . . . . . . . . . . .18
1. Checks, Drafts, Evidence of Indebtedness. . . . . . . . . . . .18
2. Contracts and Instruments; How Executed . . . . . . . . . . . .18
3. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . .19
4. Seal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Article IX Amendments . . . . . . . . . . . . . . . . . . . . . . . .19
1. Amendment
4
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BY-LAWS
OF
The Holland Trust
A Delaware Business Trust
INTRODUCTION
A. AGREEMENT AND DECLARATION OF TRUST. These By-Laws shall be subject to
the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of The Holland Trust, a Delaware business trust (the
"Trust"). In the event of any inconsistency between the terms hereof and the
terms of the Declaration of Trust, the terms of the Declaration of Trust shall
control.
B. DEFINITIONS. Capitalized terms used herein and not herein defined are
used as defined in the Declaration of Trust.
Article I
OFFICES
Section 1. PRINCIPAL OFFICE. The Trustees shall fix and, from time to
time, may change the location of the principal executive office of the Trust at
any place within or outside the State of Delaware.
Section 2. DELAWARE OFFICE. The Trustees shall establish a registered
office in the State of Delaware and shall appoint as the Trust's registered
agent for service of process in the State of Delaware an individual who is a
resident of the State of Delaware or a Delaware corporation or a corporation
authorized to transact business in the State of Delaware; in each case the
business office of such registered agent for service of process shall be
identical with the registered Delaware office of the Trust.
Section 3. OTHER OFFICES. The Trustees may at any time establish branch
or subordinate offices at any place or places within or outside the State of
Delaware where the Trust intends to do business.
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Article II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE OF MEETINGS. Meetings of Shareholders shall be held at
any place designated by the Trustees. In the absence of any such designation,
Shareholders' meetings shall be held at the principal executive office of the
Trust.
Section 2. CALL OF MEETINGS. Meetings of the Shareholders may be called
at any time by the Trustees or by the President for the purpose of taking action
upon any matter requiring the vote or authority of the Shareholders as herein
provided or provided in the Declaration of Trust or upon any other matter as to
which such vote or authority is deemed by the Trustees or the President to be
necessary or desirable. Meetings of the Shareholders may be called for any
purpose deemed necessary or desirable upon the written request of the
Shareholders holding at least ten percent (10%) of the outstanding Shares of the
Trust entitled to vote. To the extent required by the 1940 Act, meetings of the
Shareholders for the purpose of voting on the removal of any Trustee shall be
called promptly by the Trustees upon the written request of Shareholders holding
at least ten percent (10%) of the outstanding Shares of the Trust entitled to
vote.
Section 3. NOTICE OF MEETINGS OF SHAREHOLDERS. All notices of meetings of
Shareholders shall be sent or otherwise given to Shareholders in accordance with
Section 4 of this Article II not less than ten (10) nor more than ninety (90)
days before the date of the meeting. The notice shall specify (i) the place,
date and hour of the meeting, and (ii) the general nature of the business to be
transacted. The notice of any meeting at which Trustees are to be elected also
shall include the name of any nominee or nominees whom at the time of the notice
are intended to be presented for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a Trustee has a direct or indirect financial
interest, (ii) an amendment of the Agreement and Declaration of Trust of the
Trust, (iii) a reorganization of the Trust, or (iv) a voluntary dissolution of
the Trust, the notice shall also state the general nature of that
proposed action.
Section 4. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE. Notice of any
meeting of Shareholders shall be (i) given either by hand delivery, first-class
mail, telegraphic or other written communication, charges prepaid, and (ii)
addressed to the Shareholder at the address of that Shareholder appearing on the
books of the Trust or its transfer agent or given by the Shareholder to the
Trust for the purpose of notice. If no such address appears on the Trust's
books or is not given to the Trust, notice shall be deemed to have been given if
sent to that Shareholder by first-class mail or telegraphic or other written
communication to the Trust's principal executive office, or if published at
least once in a newspaper of
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general circulation in the county where that office is located. Notice shall be
deemed to have been given at the time when delivered personally or deposited in
the mail or sent by telegram or other means of written communication or, where
notice is given by publication, on the date of publication.
If any notice addressed to a Shareholder at the address of that Shareholder
appearing on the books of the Trust is returned to the Trust by the United
States Postal Service marked to indicate that the Postal Service is unable to
deliver the notice to the Shareholder at that address, all future notices or
reports shall be deemed to have been duly given without further mailing if
such future notices or reports shall be kept available to the Shareholder, upon
written demand of the Shareholder, at the principal executive office of the
Trust for a period of one year from the date of the giving of the notice.
An affidavit of the mailing or other means of giving any notice of any
meeting of Shareholders shall be filed and maintained in the minute book of the
Trust.
Section 5. ADJOURNED MEETING; NOTICE. Any meeting of Shareholders,
whether or not a quorum is present, may be adjourned from time to time by the
vote of the majority of the Shares represented at that meeting, either in person
or by proxy.
When any meeting of Shareholders is adjourned to another time or place,
notice need not be given of the adjourned meeting at which the adjournment is
taken, unless a new record date of the adjourned meeting is fixed or unless the
adjournment is for more than sixty (60) days from the date set for the original
meeting, in which case the Trustees shall set a new record date. Notice of any
such adjourned meeting shall be given to each Shareholder of record entitled to
vote at the adjourned meeting in accordance with the provisions of Sections 3
and 4 of this Article II. At any adjourned meeting, the Trust may transact any
business which might have been transacted at the original meeting.
Section 6. VOTING. The Shareholders entitled to vote at any meeting of
Shareholders shall be determined in accordance with the provisions of the
Declaration of Trust of the Trust, as in effect at such time. The Shareholders'
vote may be by voice vote or by ballot, provided, however, that any election for
Trustees must be by ballot if demanded by any Shareholder before the voting has
begun. On any matter other than elections of Trustees, any Shareholder may vote
part of the Shares in favor of the proposal and refrain from voting the
remaining Shares or vote them against the proposal, but if the Shareholder fails
to specify the number of Shares which the Shareholder is voting affirmatively,
it will be conclusively presumed that the Shareholder's approving vote is with
respect to the total Shares that such Shareholder is entitled to vote on such
proposal.
Section 7. WAIVER OF NOTICE OF CONSENT OF ABSENT SHAREHOLDERS. The
transaction of business and any actions taken at a meeting of Shareholders,
however called and noticed
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and wherever held, shall be as valid as though taken at a meeting duly held
after regular call and notice provided a quorum is present either in person or
by proxy at the meeting of Shareholders and if either before or after the
meeting, each Shareholder entitled to vote who was not present in person or by
proxy at the meeting of the Shareholders signs a written waiver of notice or a
consent to a holding of the meeting or an approval of the minutes. The waiver
of notice or consent need not specify either the business to be transacted or
the purpose of any meeting of Shareholders.
Attendance by a Shareholder at a meeting of Shareholders shall also
constitute a waiver of notice of that meeting, except if the Shareholder objects
at the beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened and except that attendance at a
meeting of Shareholders is not a waiver of any right to object to the
consideration of matters not included in the notice of the meeting of
Shareholders if that objection is expressly made at the beginning of the
meeting.
Section 8. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
Except as provided in the Declaration of Trust, any action that may be taken at
any meeting of Shareholders may be taken without a meeting and without prior
notice if a consent in writing setting forth the action to be taken is signed by
the holders of outstanding Shares having not less than the minimum number of
votes that would be necessary to authorize or take that action at a meeting at
which all Shares entitled to vote on that action were present and voted. All
such consents shall be filed with the Secretary of the Trust and shall be
maintained in the Trust's records. Any Shareholder giving a written consent or
the Shareholder's proxy holders or a transferee of the Shares or a personal
representative of the Shareholder or their respective proxy holders may revoke
the Shareholder's written consent by a writing received by the Secretary of the
Trust before written consents of the number of Shares required to authorize the
proposed action have been filed with the Secretary.
If the consents of all Shareholders entitled to vote have not been
solicited in writing and if the unanimous written consent of all such
Shareholders shall not have been received, the Secretary shall give prompt
notice of the action approved by the Shareholders without a meeting. This
notice shall be given in the manner specified in Section 4 of this Article II.
Section 9. RECORD DATE FOR SHAREHOLDER NOTICE, VOTING AND GIVING CONSENTS.
(a) For purposes of determining the Shareholders entitled to vote or act
at any meeting or adjournment thereof, the Trustees may fix in advance a record
date which shall not be more than ninety (90) days nor less than ten (10) days
before the date of any such meeting. Without fixing a record date for a
meeting, the Trustees may for voting and notice purposes close the register or
transfer books for one or more Series (or Classes) for all or any part of the
period between the earliest date on which a record date for such meeting could
be set in accordance herewith and the date of such meeting.
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If the Trustees do not so fix a record date or close the register or
transfer books of the affected Series (or Classes): the record date for
determining Shareholders entitled to notice of or to vote at a meeting of
Shareholders shall be the close of business on the business day next preceding
the day on which notice is given or if notice is waived, at the close of
business on the business day next preceding the day on which the meeting is
held.
(b) The record date for determining Shareholders entitled to give consent
to action in writing without a meeting, (i) when no prior action of the Trustees
has been taken, shall be the day on which the first written consent is given, or
(ii) when prior action of the Trustees has been taken, shall be (a) such date as
determined for that purpose by the Trustees, which record date shall not precede
the date upon which the resolution fixing it is adopted by the Trustees and
shall not be more than 20 days after the date of such resolution, or (b) if no
record date is fixed by the Trustees, the record date shall be the close of
business on the day on which the Trustees adopt the resolution relating to that
action. Nothing in this Section shall be construed as precluding the Trustees
from setting different record dates for different Series (or Classes). Only
Shareholders of record on the record date as herein determined shall have any
right to vote or to act at any meeting or give consent to any action relating to
such record date, notwithstanding any transfer of Shares on the books of the
Trust after such record date.
Section 10. PROXIES. Subject to the provisions of the Declaration of
Trust, every Person entitled to vote for Trustees or on any other matter shall
have the right to do so either in person or by proxy, provided that either (i)
an instrument authorizing such a proxy to act is executed by the Shareholder in
writing and dated not more than eleven (11) months before the meeting, unless
the instrument specifically provides for a longer period or (ii) the Trustees
adopt an electronic, telephonic, computerized or other alternative to execution
of a written instrument authorizing the proxy to act, and such which
authorization is received not more than eleven (11) months before the meeting.
A proxy shall be deemed executed by a Shareholder if the Shareholder's name is
placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission or otherwise) by the Shareholder or the Shareholder's attorney-in-
fact. A valid proxy which does not state that it is irrevocable shall continue
in full force and effect unless (i) revoked by the Person executing it before
the vote pursuant to that proxy is taken, (a) by a writing delivered to the
Trust stating that the proxy is revoked, or (b) by a subsequent proxy executed
by such Person, or (c) attendance at the meeting and voting in person by the
Person executing that proxy, or (d) revocation by such Person using any
electronic, telephonic, computerized or other alternative means authorized by
the Trustees for authorizing the proxy to act; or (ii) written notice of the
death or incapacity of the maker of that proxy is received by the Trust before
the vote pursuant to that proxy is counted. 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 the two or more Persons. A proxy
purporting to be executed by or on behalf of a Shareholder shall
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be deemed valid unless challenged at or prior to its exercise and the burden of
proving invalidity shall rest on the challenger.
Section 11. INSPECTORS OF ELECTION. Before any meeting of Shareholders,
the Trustees may appoint any persons other than nominees for office to act as
inspectors of election at the meeting or its adjournment. If no inspectors of
election are so appointed, the Chairman of the meeting may appoint inspectors of
election at the meeting. The number of inspectors shall be two (2). If any
person appointed as inspector fails to appear or fails or refuses to act, the
Chairman of the meeting may appoint a person to fill the vacancy.
These inspectors shall:
(a) Determine the number of Shares outstanding and the voting power of
each, the Shares represented at the meeting, the existence of a quorum
and the authenticity, validity and effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any way arising in
connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election or vote
with fairness to all Shareholders.
ARTICLE III
TRUSTEES
Section 1. POWERS. Subject to the applicable provisions of the 1940 Act,
the Declaration of Trust and these By-Laws relating to action required to be
approved by the Shareholders, the business and affairs of the Trust shall be
managed and all powers shall be exercised by or under the direction of the
Trustees.
Section 2. NUMBER OF TRUSTEES. The exact number of Trustees within the
limits specified in the Declaration of Trust shall be fixed from time to time by
a resolution of the Trustees.
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Section 3. VACANCIES. Vacancies in the authorized number of Trustees may
be filled as provided in the Declaration of Trust.
Section 4. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE. All meetings of
the Trustees may be held at any place that has been designated from time to time
by resolution of the Trustees. In the absence of such a designation, regular
meetings shall be held at the principal executive office of the Trust. Subject
to any applicable requirements of the 1940 Act, any meeting, regular or special,
may be held by conference telephone or similar communication equipment, so long
as all Trustees participating in the meeting can hear one another and all such
Trustees shall be deemed to be present in person at the meeting.
Section 5. REGULAR MEETINGS. Regular meetings of the Trustees shall be
held without call at such time as shall from time to time be fixed by the
Trustees. Such regular meetings may be held without notice.
Section 6. SPECIAL MEETINGS. Special meetings of the Trustees for any
purpose or purposes may be called at any time by the President or any Vice
President or the Secretary or any two (2) Trustees.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each Trustee or sent by first-class mail, by
telegram or telecopy (or similar electronic means) or by nationally recognized
overnight courier, charges prepaid, addressed to each Trustee at that Trustee's
address as it is shown on the records of the Trust. If the notice is mailed, it
shall be deposited in the United States mail at least seven (7) calendar days
before the time of the holding of the meeting. If the notice is delivered
personally or by telephone or by telegram, telecopy, (or similar electronic
means) or overnight courier, it shall be given at least forty-eight (48) hours
before the time of the holding of the meeting. Any oral notice given personally
or by telephone may be communicated either to the Trustee or to a person at the
office of the Trustee who the person giving the notice has reason to believe
will promptly communicate it to the Trustee. The notice need not specify the
purpose of the meeting or the place of the meeting, if the meeting is to be held
at the principal executive office of the Trust. Notice of a meeting need not be
given to any Trustee if a written waiver of notice, executed by such Trustee
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 such Trustee.
Section 7. QUORUM. A third of the authorized number of Trustees shall
constitute a quorum for the transaction of business, except to adjourn as
provided in Section 9 of this Article III. Every act or decision done or made
by a majority of the Trustees present at a meeting duly held at which a quorum
is present shall be regarded as the act of the Trustees, subject to the
provisions of the Declaration of Trust. A meeting at which a quorum is
initially present may continue to transact business notwithstanding the
withdrawal of
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Trustees if any action taken is approved by at least a majority of the required
quorum for that meeting.
Section 8. WAIVER OF NOTICE. Notice of any meeting need not be given to
any Trustee who either before or after the meeting signs a written waiver of
notice, a consent to holding the meeting, or an approval of the minutes. The
waiver of notice or consent need not specify the purpose of the meeting. All
such waivers, consents, and approvals shall be filed with the records of the
Trust or made a part of the minutes of the meeting. Notice of a meeting shall
also be deemed given to any Trustee who attends the meeting without protesting,
prior to or at its commencement, the lack of notice to that Trustee.
Section 9. ADJOURNMENT. A majority of the Trustees present, whether or
not constituting a quorum, may adjourn any meeting to another time and place.
Section 10. NOTICE OF ADJOURNMENT. Notice of the time and place of
holding an adjourned meeting need not be given unless the meeting is adjourned
for more than forty-eight (48) hours, in which case notice of the time and place
shall be given before the time of the adjourned meeting in the manner specified
in Section 6 of this Article III to the Trustees who were present at the time of
the adjournment.
Section 11. ACTION WITHOUT A MEETING. Unless the 1940 Act requires that a
particular action be taken only at a meeting at which the Trustees are present
in person, any action to be taken by the Trustees at a meeting may be taken
without such meeting by the written consent of a majority of the Trustees then
in office. Any such written consent may be executed and given by telecopy or
similar electronic means. Such written consents shall be filed with the minutes
of the proceedings of the Trustees. If any action is so taken by the Trustees
by the written consent of less than all of the Trustees, prompt notice of the
taking of such action shall be furnished to each Trustee who did not execute
such written consent, provided that the effectiveness of such action shall not
be impaired by any delay or failure to furnish such notice.
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Section 12. FEES AND COMPENSATION OF TRUSTEES. Trustees and members of
committees may receive such compensation, if any, for their services and such
reimbursement of expenses as may be fixed or determined by resolution of the
Trustees. This Section 12 shall not be construed to preclude any Trustee from
serving the Trust in any other capacity as an officer, agent, employee, or
otherwise and receiving compensation for those services.
Section 13. DELEGATION OF POWER TO OTHER TRUSTEES. Any Trustee may, by
power of attorney, delegate his or her power for a period not exceeding six (6)
months at any one time to any other Trustee or Trustees; provided that in no
case shall fewer than two (2) Trustees personally exercise the powers granted to
the Trustees, except as otherwise expressly provided herein or by resolution of
the Trustees. Except where applicable law may require a Trustee to be present
in person, a Trustee represented by another Trustee pursuant to such power of
attorney shall be deemed to be present for purpose of establishing a quorum and
satisfying the required majority vote.
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ARTICLE IV
COMMITTEES
Section 1. COMMITTEES OF TRUSTEES. The Trustees may by resolution
designate one or more committees, each consisting of two (2) or more Trustees,
to serve at the pleasure of the Trustees. The Trustees may designate one or
more Trustees as alternate members of any committee who may replace any absent
member at any meeting of the committee. Any committee to the extent provided
for by resolution of the Trustee, shall have the authority of the Trustees,
except with respect to:
(a) the approval of any action which under applicable law requires
approval by a majority of the entire authorized number of Trustees or
certain Trustees;
(b) the filling of vacancies of Trustees;
(c) the fixing of compensation of the Trustees for services generally or
as a member of any committee;
(d) the amendment or termination of the Declaration of Trust or any Series
or Class or the amendment of the By-Laws or the adoption of new By-
Laws;
(e) the amendment or repeal of any resolution of the Trustees which by its
express terms is not so amendable or repealable;
(f) a distribution to the Shareholders of the Trust, except at a rate or
in a periodic amount or within a designated range determined by the
Trustees; or
(g) the appointment of any other committees of the Trustees or the members
of such new committees.
Section 2. MEETINGS AND ACTION OF COMMITTEES. Meetings and action of
committees shall be governed by, held and taken in accordance with the
provisions of Article III of these By-Laws, with such changes in the context
thereof as are necessary to substitute the committee and its members for the
Trustees generally, except that the time of regular meetings of committees may
be determined either by resolution of the Trustees or by resolution of the
committee. Special meetings of committees may also be called by resolution of
the Trustees. Alternate members shall be given notice of meetings of committees
and shall have the right to attend all meetings of committees. The Trustees may
adopt rules for the governance of any committee not inconsistent with the
provisions of these By-Laws.
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ARTICLE V
OFFICERS
Section 1. OFFICERS. The officers of the Trust shall be a President, a
Secretary, and a Treasurer. The Trust may also have, at the discretion of the
Trustees, a Chairman of the Board (Chairman), one or more Vice Presidents, one
or more Assistant Secretaries, one or more Assistant Treasurers, and such other
officers as may be appointed in accordance with the provisions of Section 3 of
this Article V. Any number of offices may be held by the same person. The
Chairman, if there be one, and the President shall each be a Trustee and may be,
but need not be, a Shareholder; and any other officer may be, but need not be, a
Trustee or Shareholder.
Section 2. ELECTION OF OFFICERS. The officers of the Trust, except such
officers as may be appointed in accordance with the provisions of Section 3 or
Section 5 of this Article V, shall be chosen by the Trustees, and each shall
serve at the pleasure of the Trustees, subject to the rights, if any, of an
officer under any contract of employment.
Section 3. SUBORDINATE OFFICERS. The Trustees may appoint and may empower
the President to appoint such other officers as the business of the Trust may
require, each of whom shall hold office for such period, have such authority and
perform such duties as are provided in these By-Laws or as the Trustees may from
time to time determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights, if
any, of an officer under any contract of employment, any officer may be removed,
either with or without cause, by the Trustees at any regular or special meeting
of the Trustees or by the principal executive officer or by such other officer
upon whom such power of removal may be conferred by the Trustees.
Any officer may resign at any time by giving written notice to the Trust.
Any resignation shall take effect at the date of the receipt of that notice or
at any later time specified in that notice; and unless otherwise specified in
that notice, the acceptance of the resignation shall not be necessary to make it
effective. Any resignation is without prejudice to the rights, if any, of the
Trust under any contract to which the officer is a party.
Section 5. VACANCIES IN OFFICES. A vacancy in any office because of
death, resignation, removal, disqualification or other cause shall be filled in
the manner prescribed in these By-Laws for regular appointment to that office.
The President may make temporary appointments to a vacant office pending action
by the Trustees.
Section 6. CHAIRMAN. The Chairman, if such an officer is elected, shall
if present, preside at meetings of the Trustees, shall be the chief executive
officer of the Trust and shall, subject to the control of the Trustees, have
general supervision, direction and control
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of the business and the officers of the Trust and exercise and perform such
other powers and duties as may be from time to time assigned to him by the
Trustees or prescribed by the Declaration of Trust or these By-Laws.
Section 7. PRESIDENT. Subject to such supervisory powers, if any, as may
be given by the Trustees to the Chairman, if there be such an officer, the
President shall be the chief operating officer of the Trust and shall, subject
to the control of the Trustees and the Chairman, have general supervision,
direction and control of the business and the officers of the Trust. He or she
shall preside at all meetings of the Shareholders and, in the absence of the
Chairman or if there be none, at all meetings of the Trustees. He or she shall
have the general powers and duties of a president of a corporation and shall
have such other powers and duties as may be prescribed by the Trustees, the
Declaration of Trust or these By-Laws.
Section 8. VICE PRESIDENTS. In the absence or disability of the
President, the Vice Presidents, if any, in order of their rank as fixed by the
Trustees or if not ranked, the Executive Vice President (who shall be considered
first ranked) and such other Vice Presidents as shall be designated by the
Trustees, shall perform all the duties of the President and when so acting shall
have all powers of and be subject to all the restrictions upon the President.
The Vice Presidents shall have such other powers and perform such other duties
as from time to time may be prescribed for them respectively by the Trustees or
the President or the Chairman or by these By-Laws.
Section 9. SECRETARY. The Secretary shall keep or cause to be kept at the
principal executive office of the Trust, or such other place as the Trustees may
direct, a book of minutes of all meetings and actions of Trustees, committees of
Trustees and Shareholders with the time and place of holding, whether regular or
special, and if special, how authorized, the notice given, the names of those
present at Trustees' meetings or committee meetings, the number of Shares
present or represented at meetings of Shareholders and the proceedings of the
meetings.
The Secretary shall keep or cause to be kept at the principal executive
office of the Trust or at the office of the Trust's transfer agent or registrar,
a share register or a duplicate share register showing the names of all
Shareholders and their addresses, the number and classes of Shares held by each,
the number and date of certificates issued for the same and the number and date
of cancellation of every certificate surrendered for cancellation.
The Secretary shall give or cause to be given notice of all meetings of the
Shareholders and of the Trustees (or committees thereof) required to be given by
these By-Laws or by applicable law and shall have such other powers and perform
such other duties as may be prescribed by the Trustees or by these By-Laws.
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Section 10. TREASURER. The Treasurer shall be the chief financial officer
and chief accounting officer of the Trust and shall keep and maintain or cause
to be kept and maintained adequate and correct books and records of accounts of
the properties and business transactions of the Trust and each Series, including
accounts of the assets, liabilities, receipts, disbursements, gains, losses,
capital and retained earnings of all Series. The books of account shall at all
reasonable times be open to inspection by any Trustee.
The Treasurer shall deposit all monies and other valuables in the name and
to the credit of the Trust with such depositaries as may be designated by the
Board of Trustees. He or she shall disburse the funds of the Trust as may be
ordered by the Trustees, shall render to the President and Trustees, whenever
they request it, an account of all of his or her transactions as chief financial
officer and of the financial condition of the Trust and shall have other powers
and perform such other duties as may be prescribed by the Trustees or these By-
Laws.
ARTICLE VI
INDEMNIFICATION OF TRUSTEES, OFFICERS,
EMPLOYEES AND OTHER AGENTS
Section 1. AGENTS, PROCEEDINGS, EXPENSES. For the purpose of this
Article, "agent" means any Person who is or was a Trustee, officer, employee or
other agent of the Trust or is or was serving at the request of the Trust as a
trustee, director, officer, employee or agent of another organization in which
the Trust has any interest as a shareholder, creditor or otherwise:
"proceeding" means any threatened, pending or completed claim, action, suit or
proceeding, whether civil, criminal, administrative or investigative (including
appeals); and "expenses" includes, without limitation, attorneys' fees, costs,
judgments, amounts paid in settlement, fines, penalties and all other
liabilities whatsoever.
Section 2. INDEMNIFICATION. Subject to the exceptions and limitations
contained in Section 3 below, every agent shall be indemnified by the Trust to
the fullest extent permitted by law against all liabilities and against all
expenses reasonably incurred or paid by him or her in connection with any
proceeding in which he or she becomes involved as a party or otherwise by virtue
of his or her being or having been an agent.
Section 3. LIMITATIONS, SETTLEMENTS. No indemnification shall be provided
hereunder to an agent:
(a) who shall have been adjudicated, by the court or other body before
which the proceeding was brought, to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard
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of the duties involved in the conduct of his or her office
(collectively, "disabling conduct"); or
(b) with respect to any proceeding disposed of (whether by settlement,
pursuant to a consent decree or otherwise) without an adjudication by
the court or other body before which the proceeding was brought that
such agent was liable to the Trust or its Shareholders by reason of
disabling conduct, unless there has been a determination that such
agent did not engage in disabling conduct;
(i) by the court or other body before which the proceeding was
brought;
(ii) by at least a majority of those Trustees who are neither
Interested Persons of the Trust nor are parties to the
proceeding based upon a review of readily available facts (as
opposed to a full trial-type inquiry); or
(iii) by written opinion of independent legal counsel based upon a
review of readily available facts (as opposed to a full trial-
type inquiry);
PROVIDED, HOWEVER, that indemnification shall be provided hereunder to an agent
with respect to any proceeding in the event of (1) a final decision on the
merits by the court or other body before which the proceeding was brought that
the agent was not liable by reason of disabling conduct, or (2) the dismissal of
the proceeding by the court or other body before which it was brought for
insufficiency of evidence of any disabling conduct with which such agent has
been charged.
Section 4. INSURANCE; RIGHTS NOT EXCLUSIVE. The rights of indemnification
herein provided (i) may be insured against by policies maintained by the Trust
on behalf of any agent, (ii) shall be severable, (iii) shall not be exclusive of
or affect any other rights to which any agent may now or hereafter be entitled
and (iv) shall inure to the benefit of the agent's heirs, executors and
administrators.
Section 5. ADVANCE OF EXPENSES. Expenses incurred by an agent in
connection with the preparation and presentation of a defense to any proceeding
may be paid by the Trust from time to time prior to final disposition thereof
upon receipt of an undertaking by, or on behalf of, such agent that such amount
will be paid over by him or her to the Trust if it is ultimately determined that
he or she is not entitled to indemnification under this Article VI; provided,
however, that (a) such agent shall have provided appropriate security for such
undertaking, (b) the Trust is insured against losses arising out of any such
advance payments, or (c) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the proceeding, or independent
legal counsel in a written opinion, shall have determined, based upon a review
of the readily available facts (as opposed to a trial-
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type inquiry or full investigation), that there is reason to believe that such
agent will be found entitled to indemnification under this Article VI.
Section 6. FIDUCIARIES OF EMPLOYEE BENEFIT PLAN. This Article does not
apply to any proceeding against any Trustee, investment manager or other
fiduciary of an employee benefit plan in that person's capacity as such, even
though that person may also be an agent of this Trust as defined in Section 1 of
this Article. Nothing contained in this Article shall limit any right to
indemnification to which such a Trustee, investment manager, or other fiduciary
may be entitled by contract or otherwise, which shall be enforceable to the
extent permitted by applicable law other than this Article VI.
ARTICLE VII
INSPECTION OF RECORDS AND REPORTS
Section 1. INSPECTION BY SHAREHOLDERS. The Trustees shall from time to
time determine whether and to what extent, and at what times and places, and
under what conditions and regulations the accounts and books of the Trust or any
of them shall be open to the inspection of the Shareholders; and no Shareholder
shall have any right to inspect any account or book or document of the Trust
except as conferred by law or otherwise by the Trustees or by resolution of the
Shareholders.
Section 2. INSPECTION BY TRUSTEES. Every Trustee shall have the absolute
right at any reasonable time to inspect all books, records, and documents of
every kind and the physical properties of the Trust. This inspection by a
Trustee may be made in person or by an agent or attorney and the right of
inspection includes the right to copy and make extracts of documents.
Section 3. FINANCIAL STATEMENTS. A copy of any financial statements and
any income statement of the Trust for each semi-annual period of each fiscal
year and accompanying balance sheet of the Trust as of the end of each such
period that has been prepared by the Trust shall be kept on file in the
principal executive office of the Trust for at least twelve (12) months and each
such statement shall be exhibited at all reasonable times to any Shareholder
demanding an examination of any such statement or a copy shall be mailed to any
such Shareholder.
The semi-annual income statements and balance sheets referred to in this
section shall be accompanied by the report, if any, of any independent
accountants engaged by the Trust or the certificate of an authorized officer of
the Trust that the financial statements were prepared without audit from the
books and records of the Trust.
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ARTICLE VIII
GENERAL MATTERS
Section 1. CHECKS, DRAFTS, EVIDENCE OF INDEBTEDNESS. All checks, drafts,
or other orders for payment of money, notes or other evidences of indebtedness
issued in the name of or payable to the Trust shall be signed or endorsed in
such manner and by such person or persons as shall be designated from time to
time in accordance with the resolution of the Board of Trustees.
Section 2. CONTRACTS AND INSTRUMENTS; HOW EXECUTED. The Trustees, except
as otherwise provided in these By-Laws, may authorize any officer or officers,
agent or agents, to enter into any contract or execute any instrument in the
name of and on behalf of the Trust and this authority may be general or confined
to specific instances; and unless so authorized or ratified by the Trustees or
within the agency power of an officer, no officer, agent, or employee shall have
any power or authority to bind the Trust by any contract or engagement or to
pledge its credit or to render it liable for any purpose or for any amount.
Section 3. FISCAL YEAR. The fiscal year of the Trust shall be fixed and
refixed or changed from time to time by the Trustees. The fiscal year of the
Trust shall be the taxable year of each Series of the Trust.
Section 4. SEAL. The seal of the Trust shall consist of a flat-faced dye
with the words "The Holland Trust, Delaware, Trust, 1995" cut or engraved
thereon. However, 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 IX
AMENDMENTS
Section 1. AMENDMENT. Except as otherwise provided by applicable law or
by the Declaration of Trust, these By-Laws may be restated, amended,
supplemented or repealed by the Trustees, provided that no restatement,
amendment, supplement or repeal hereof shall limit the rights to indemnification
or insurance provided in Article VI hereof with respect to any acts or omissions
of agents (as defined in Article VI) of the Trust prior to such amendment.
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EXHIBIT 5.
FORM OF INVESTMENT MANAGEMENT AND ADMINISTRATION
AGREEMENT BY AND BETWEEN THE HOLLAND TRUST ON
BEHALF OF THE GROWTH FUND AND HOLLAND
CAPITAL MANAGEMENT
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FORM OF
INVESTMENT MANAGEMENT AND ADMINISTRATION AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT ("Agreement") made as of the ___ day of
___________, 1996, by and between THE HOLLAND TRUST, a Delaware business trust
(the "Trust"), on its own behalf and on behalf of each series thereof, and
HOLLAND CAPITAL MANAGEMENT, L.P., a Delaware limited partnership (the
"Investment Manager").
W I T N E S S E T H:
WHEREAS, the Trust intends to engage in business as an open-end management
investment company of the series type and register as such under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Investment Manager is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Trust desires to retain the Investment Manager to provide
investment management and administrative services to the Trust and each series
thereof identified in Schedule A hereto (each a "Fund"),() in the manner and on
the terms and conditions hereinafter set forth; and
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, the parties hereto, intending to be
legally bound, do hereby agree as follows:
1. DUTIES AND RESPONSIBILITIES OF THE INVESTMENT MANAGER.
1.1. INVESTMENT MANAGEMENT SERVICES. The Investment Manager shall, subject
to the supervision of the Board of Trustees of the Trust, act as investment
manager of each Fund and, as such, shall:
1.1.1. INVESTMENT OF ASSETS. Supervise and direct the investment
of each Fund's assets in accordance with applicable law, and the investment
objectives,
_____________________________
(1) The Trust initially will offer shares of beneficial interest in a single
series, the Growth Fund, which initially will be the only Fund listed on
Schedule A hereto. The Trust may in the future offer shares in additional
series. The term "Funds" and "each Fund" as used herein shall refer to each
series of the Trust identified in Schedule A hereto, even when Schedule A
identifies only one Fund.
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investment program, policies, and restrictions set forth in the Fund's
current prospectus ("Prospectus") and Statement of Additional Information
("SAI") contained in the Trust's Registration Statement under the 1940 Act
and the Securities Act of 1933, as amended ("1933 Act"), and subject to
such further limitations as the Board of Trustees of the Trust may from
time to time impose by written notice to the Investment Manager.
1.1.2. INVESTMENT PROGRAM. The Investment Manager shall operate a
continuing program for the management of each Fund's assets and resources.
In furtherance of these duties and responsibilities, the Investment
Manager is authorized, in its discretion and without prior consultation
with the Trust to: (i) buy, sell, exchange, convert, lend, and otherwise
trade in any stocks, bonds, and other securities or assets for each Fund;
and (ii) place orders and negotiate the commissions (if any) for the
execution of transactions in securities with or through such brokers,
dealers, underwriters, or issuers as the Investment Manager may select
for a Fund.
1.2. ADMINISTRATIVE SERVICES. The Investment Manager shall oversee the
administration of the Trust's and each Fund's business and affairs as set forth
herein and shall provide certain services required for effective administration
of the Trust and the Funds. In connection therewith, the Investment Manager
shall:
1.2.1. OFFICE AND OTHER FACILITIES. Furnish, without cost to the
Trust, or provide and pay the cost of, such office facilities, furnishings,
and office equipment as are necessary for the performance of the Investment
Manager's duties to the Trust under this Agreement.
1.2.2. PERSONNEL. Provide, without additional remuneration from or
other cost to the Trust, the services of individuals competent to perform
all of the Investment Manager's duties under this Agreement.
1.2.3. AGENTS. Assist the Trust in selecting, coordinating the
activities of, supervising and acting as liaison with, any other person or
agent engaged by the Trust, including the Trust's depository agent,
custodian, consultants, transfer agent, dividend disbursing agent,
independent accountants, and independent legal counsel. The Investment
Manager shall also monitor the functions of such persons and agents to
ensure that their activities adhere to the provisions of the Trust's
current Prospectus(es) and SAI(s), and to ensure compliance with
applicable laws, including without limitation compliance of the Trust
and the Trust's custodian(s) with Rule 17f-5 under the 1940 Act, if
appropriate.
1.2.4. TRUSTEES AND OFFICERS. Authorize and permit those partners
and employees of the Investment Manager who are natural persons and who may
be elected or appointed as trustees or officers of the Trust to serve in
such capacities, without remuneration from or additional cost to the Trust.
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1.2.5. BOOKS AND RECORDS. Maintain customary records, on behalf
of the Trust, in connection with the performance of the Investment
Manager's duties under this Agreement. The Investment Manager also shall
monitor and oversee the performance of the agents specified in
Subparagraph 1.2.3. above, to ensure that all financial, accounting,
corporate, and other records required to be maintained and preserved by the
Fund or on its behalf shall be maintained in accordance with applicable
laws and regulations.
1.2.6. COST OVERSIGHT. Monitor and review activities and
procedures of the Trust and its agents identified in Subparagraph 1.2.3.
above, in order to identify and seek to obtain possible service
improvements and cost reductions.
1.2.7. ACCOUNTING AND COMPLIANCE POLICIES AND PROCEDURES. Assist in
developing, reviewing, maintaining, and monitoring the effectiveness of,
accounting and compliance policies and procedures, including valuation
procedures of each Fund's portfolio, expense allocation procedures,
personal trading procedures and the Trust's Code of Ethics. The Investment
Manager also shall assist and coordinate participation by the Trust and its
agents in any audit by its outside auditors or any examination by federal
or state regulatory authorities or any self-regulatory organization. The
Investment Manager also shall oversee and coordinate the activities of the
Trust's accountants, outside counsel, and other experts in these audits or
examinations.
1.2.8. SYSTEMS. Assist in developing, implementing, and monitoring
the Trust's use of automated systems for the purchase, sale, redemption and
transfer of shares and for recording and tracking such transactions. The
Investment Manager also shall assist in developing, implementing, and
monitoring the Trust's use of automated communications systems with
brokers, dealers, custodians, and other service providers, including
without limitation trade clearance systems.
1.2.9. REPORTS TO THE TRUST. Furnish to or place at the disposal
of the Trust such information, reports, evaluations, analyses, and opinions
relating to its administrative functions as the Trust may, at any time
or from time to time, reasonably request or as the Investment Manager may
deem helpful to the Trust. The Investment Manager also shall assist in the
preparation of agendas and other materials for meetings of the Trust's
Board of Trustees and shall attend such meetings.
1.2.10. REPORTS AND FILINGS. Provide appropriate assistance in the
development and/or preparation of all reports and communications by the
Trust to shareholders of the Trust and all reports and filings necessary to
maintain the registrations and qualifications of the Trust's shares under
federal securities law.
1.2.11. SHAREHOLDER INQUIRIES. Respond to all inquiries from
shareholders of the Trust or otherwise answer communications from
shareholders if such inquiries or communications are directed to the
Investment Manager. If any such inquiry or communication would be more
properly answered by one of the agents listed in
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Subparagraph 1.2.3. above, the Investment Manager shall coordinate, as
needed, the provision of their response.
2. ALLOCATION OF EXPENSES.
2.1. EXPENSES PAID BY THE INVESTMENT MANAGER.
2.1.1. IN GENERAL. The Investment Manager shall bear all of its
own expenses in connection with the performance of its duties under this
Agreement.
2.1.2. SALARIES AND FEES OF PARTNERS. The Investment Manager
shall pay all salaries, expenses, and fees, if any, of the partners and
employees of the Investment Manager who are trustees, officers or employees
of the Trust.
2.1.3. WAIVER OR ASSUMPTION AND REIMBURSEMENT OF TRUST EXPENSES BY
THE INVESTMENT MANAGER. The waiver or assumption and reimbursement by the
Investment Manager of any expense of the Trust that the Investment Manager
is not required by this Agreement to waive, or assume or reimburse, shall
not obligate the Investment Manager to waive, assume, or reimburse the same
or any similar expense of the Trust on any subsequent occasion, unless so
required pursuant to a separate agreement between the Trust and the
Investment Manager.
2.2. EXPENSES PAID BY THE TRUST. The Trust shall bear all expenses of its
organization, operation, and business not specifically waived, assumed, or
agreed to be paid by the Investment Manager as provided in this Agreement or any
other agreement between the Trust and the Investment Manager, and as described
in the Trust's current Prospectus(es) and SAI(s).
3. FEES.
3.1. COMPENSATION RATE. The Trust on behalf of each Fund shall
pay the Investment Manager, as compensation for all services rendered,
facilities provided, and expenses waived or assumed and reimbursed by
the Investment Manager pursuant to this Agreement, annual fees as specified
on Schedule A hereto.
3.2. METHOD OF COMPUTATION. The fees shall accrue on each calendar
day and the sum of the daily fee accruals for each Fund shall be paid
monthly to the Investment Manager on the first business day of the next
calendar month. The daily fee accruals shall be computed by multiplying
the fraction of one over the number of calendar days in the year by the
applicable annual rates for the applicable Fund, described in
Subparagraph 3.1. above, and multiplying the product by the net assets
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of the Fund in accordance with the Trust's current Prospectus as of the
close of business on the last preceding business day on which the Fund was
open for business.
3.3. PRORATION OF FEE. If this Agreement becomes effective or
terminates before the end of any month, the fee for the period from the
effective date to the end of such month or from the beginning of such month
to the date of termination, as the case may be, shall be prorated according
to the proportion which such period bears to the full month in which such
effectiveness or termination occurs.
3.4. LIMITATION OF FEE. In the event the expenses of a Fund
(including the fees of the Investment Manager and amortization of
organization expenses but excluding interest, taxes, brokerage commissions,
extraordinary expenses and sales charges and distribution fees) for any
fiscal year exceed the limits set by applicable regulations of state
securities commissions, the Investment Manager shall reduce its fee by the
amount of such excess. Any such reductions are subject to readjustment
during the year. The payment of the investment management fee at the end
of any month shall be reduced or postponed or, if necessary, a refund shall
be made to the Fund so that at no time shall there be any accrued but
unpaid liability under this expense limitation.
4. BROKERAGE.
Subject to seeking best execution, and subject to any policies or
procedures as then approved by the Board of Trustees of the Trust, the
Investment Manager, in carrying out its duties under Subparagraph 1.1. above,
may cause a Fund to pay a broker-dealer that furnishes brokerage or research
services (as such services are defined under Section 28(e) of the Securities
Exchange Act of 1934, as amended (the "1934 Act")) a higher commission than that
which might be charged by another broker-dealer that does not furnish brokerage
or research services or that furnishes brokerage or research services deemed to
be of lesser value, if the Investment Manager determines in good faith that the
amount of such commission is reasonable in relation to the value of the
brokerage and research services provided by the broker-dealer viewed in terms of
either that particular transaction or the overall responsibilities of the
Investment Manager with respect to other accounts, if any, as to which it
exercises investment discretion (as such term is defined under Section 3(a)(35)
of the 1934 Act). To demonstrate that such determinations were in good faith,
and to show the overall reasonableness of commissions paid, the Investment
Manager shall be prepared to show that commissions paid: (i) were for purposes
contemplated by this Agreement; (ii) provide lawful and appropriate assistance
to the Investment Manager in the performance of its decision-making
responsibilities; and (iii) were within a reasonable range as compared to the
rates charged by qualified brokers to other institutional investors as such
rates may become known from available information. The Trust recognizes that,
on any particular transaction, a higher than usual commission may be paid due to
the difficulty of the transaction in question. The Investment Manager is also
authorized to consider sales of
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shares as a factor in the selection of brokers to execute brokerage and
principal transactions, subject to the requirements of "best execution."
5. INVESTMENT MANAGER'S USE OF THE SERVICES OF OTHERS.
The Investment Manager may at its own cost (except as contemplated by
Paragraph 4 above) employ, retain, or otherwise avail itself of the services or
facilities of other persons or organizations for the purpose of providing the
Investment Manager or the Trust with such (i) statistical and other factual
information, (ii) advice regarding economic factors and trends, (iii) advice as
to occasional transactions in specific securities, or (iv) other information,
advice, or assistance as the Investment Manager may deem necessary, appropriate,
or convenient for the discharge of its obligations hereunder or otherwise
helpful to the Investment Manager or the Trust, or in the discharge of the
Investment Manager's overall responsibilities with respect to any accounts, if
any, for which it serves as investment manager.
6. OWNERSHIP AND CONFIDENTIALITY OF RECORDS.
All records required to be maintained and preserved by the Trust, pursuant
to the provisions of rules or regulations of the Securities and Exchange
Commission under Section 31(a) of the 1940 Act and maintained and preserved by
the Investment Manager on behalf of the Trust are the property of the Trust and
shall be surrendered by the Investment Manager promptly on request by the Trust.
The Investment Manager shall not disclose or use any records or information
obtained pursuant to this Agreement in any manner whatsoever except as expressly
authorized by this Agreement and applicable law. The Investment Manager shall
keep confidential any information obtained in connection with their duties
hereunder and shall disclose such information only if the Trust has authorized
such disclosure or if such disclosure is expressly required by applicable law or
federal or state regulatory authorities.
7. REPORTS TO THE INVESTMENT MANAGER.
The Trust shall furnish or otherwise make available to the Investment
Manager such Prospectuses, Statements of Additional Information, financial
statements, proxy statements, reports, and other information relating to the
business and affairs of the Trust, as the Investment Manager may, at any time or
from time to time, reasonably require in order to discharge its obligations
under this Agreement.
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8. SERVICES TO OTHER CLIENTS.
Nothing herein contained shall limit the freedom of the Investment Manager
or any affiliated person of the Investment Manager to render investment
management and/or administrative services to other investment companies
(including but not limited to one or more series of the Trust), to act as
investment adviser or investment counselor to other persons, firms, or
corporations, or to engage in other business activities; however, so long as
this Agreement or any extension, renewal, or amendment hereof shall remain in
effect or until the Investment Manager shall otherwise consent, the Investment
Manager shall be the only investment manager to the Trust.
9. LIMITATION OF LIABILITY OF THE INVESTMENT MANAGER AND INDEMNIFICATION BY
THE TRUST.
9.1. LIMITATION OF LIABILITY.
9.1.1. Neither the Investment Manager nor any of its partners,
employees or agents performing services for the Trust, at the direction
or request of the Investment Manager in connection with the Investment
Manager's discharge of its obligations undertaken or reasonably assumed
with respect to this Agreement, shall be liable for any act or omission
in the course of or in connection with the Investment Manager's services
hereunder, including any error of judgment or mistake of law or for any
loss suffered by the Trust, in connection with the matters to which this
Agreement relates; PROVIDED, that nothing herein contained shall be
construed to protect the Investment Manager or any such person against any
liability to the Trust or its shareholders to which the Investment Manager
or such person would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance of its or their duties on
behalf of the Trust.
9.1.2. The Investment Manager may apply to the Board of Trustees of
the Trust at any time for instructions and may consult counsel for the
Trust or its own counsel and consult with accountants and other experts
with respect to any matter arising in connection with the Investment
Manager's duties, and the Investment Manager shall not be liable or
accountable for any action taken or omitted by it in good faith in
accordance with such instruction or with the opinion of such counsel,
accountants, or other experts.
9.2. INDEMNIFICATION BY THE TRUST.
9.2.1. As long as the Investment Manager acts in good faith and
with due diligence and without gross negligence, the Trust shall
indemnify the Investment Manager and hold it harmless from and against any
and all actions, suits, and claims, whether groundless or otherwise, and
from and against any and all losses, damages, costs, charges, reasonable
counsel fees and disbursements, payments, expenses, and
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liabilities (including reasonable investigation expenses) arising directly
or indirectly out of the services rendered to the Trust hereunder. The
indemnity and defense provisions set forth herein shall indefinitely
survive the termination of this Agreement.
9.2.2. The rights hereunder shall include the right to
reasonable advances of defense expenses in the event of any pending or
threatened litigation with respect to which indemnification hereunder may
ultimately be merited. In order that the indemnification provision
contained herein shall apply, however, it is understood that if in any case
the Trust may be asked to indemnify or hold the Investment Manager
harmless, the Board of Trustees of the Trust shall be fully and promptly
advised of all pertinent facts concerning the situation in question, and it
is further understood that the Investment Manager shall use all reasonable
care to identify and notify the Board of Trustees of the Trust promptly
concerning any situation which presents or appears likely to present the
probability of such a claim for indemnification against the Trust, but
failure to do so in good faith shall not affect the rights hereunder.
10. INDEMNIFICATION BY THE INVESTMENT MANAGER.
10.1. The Investment Manager shall indemnify the Trust and its officers
and trustees, and hold them harmless from and against any and all actions,
suits, and claims, whether groundless or otherwise, and from and against any
and all losses, damages, costs, charges, reasonable counsel fees and
disbursements, payments, expenses, and liabilities (including reasonable
investigation expenses) arising directly or indirectly out of any service
rendered to the Trust hereunder and arising or based upon the willful
misfeasance, bad faith, or gross negligence of the Investment Manager, its
partners, employees, and agents in the performance of its or their duties on
behalf of the Trust. The indemnity and defense provisions set forth herein
shall indefinitely survive the termination of this Agreement.
10.2. The rights hereunder shall include the right to reasonable
advances of defense expenses in the event of any pending or threatened
litigation with respect to which indemnification hereunder may ultimately be
merited. In order that the indemnification provision contained herein shall
apply, however, it is understood that if in any case the Investment Manager may
be asked to indemnify or hold the Trust and its officers and trustees harmless,
the Investment Manager shall be fully and promptly advised of all pertinent
facts concerning the situation in question, and it is further understood that
the Trust shall use all reasonable care to identify and notify the Investment
Manager promptly concerning any situation which presents or appears likely to
present the probability of such a claim for indemnification against the
Investment Manager, but failure to do so in good faith shall not affect the
rights hereunder.
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11. TERM OF AGREEMENT.
The term of this Agreement shall begin on the day and year first above
written, and unless sooner terminated as hereinafter provided, shall continue in
effect for a period of one year. Thereafter, this Agreement shall continue in
effect from year to year, subject to the termination provisions and all other
terms and conditions hereof; PROVIDED, that such continuance is specifically
approved at least annually by the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Funds in accordance with
the requirements of the 1940 Act; and PROVIDED FURTHER, that in either event
such continuance also is approved annually by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of the
Board of Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party (hereinafter "non-interested Trustees").
Any approval of this Agreement by the holders of a majority of the outstanding
voting securities of a Fund shall be effective to continue this Agreement,
notwithstanding the fact that (i) a comparable agreement has not been approved
by the holders of a majority of the outstanding shares of any other series of
the Trust and (ii) this Agreement has not been approved by the vote of a
majority of the outstanding shares of the Trust, unless such approval shall be
required by any other applicable law or otherwise. The Investment Manager shall
furnish to the Trust, promptly upon its request, such information as may be
reasonably necessary to evaluate the terms of this Agreement or any extension,
renewal or amendment thereof.
12. AMENDMENT AND ASSIGNMENT OF AGREEMENT.
Any amendment to this Agreement shall be in writing and signed by the
parties hereto; PROVIDED, that no material amendment shall be effective unless
authorized by resolution of the Board of Trustees of the Trust or by a majority
of the outstanding voting securities of the Funds, or, in the case of an
amendment to this Agreement with respect to a particular Fund, by a resolution
of the Board of Trustees of the Trust and/or a vote of a majority of the
outstanding voting securities of such Fund, as required by applicable law. An
amendment to this Agreement with respect to a particular Fund shall include
without limitation adding a Fund to, or deleting a Fund from, Schedule A hereto,
and adding a fee schedule for a Fund on Schedule A, or modifying or deleting
such fee schedule.
13. TERMINATION OF AGREEMENT.
This Agreement may be terminated by either party hereto, without the
payment of any penalty, upon sixty (60) days' prior written notice to the other
party; PROVIDED, that in the case of termination by the Trust such action shall
have been authorized by (i) resolution of the Board of Trustees of the Trust,
including a majority of the non-interested Trustees, or (ii) a majority of the
outstanding voting securities of the Funds. In the case of termination by the
Trust with respect to a particular Fund, such action shall have been
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authorized by (i) resolution of the Board of Trustees of the Trust, including a
majority of the non-interested Trustees, or (ii) a majority of the outstanding
voting securities of such Fund. In the case of termination by the Investment
Manager, such termination shall not be effective until the Trust shall have
contracted with one or more persons to serve as successor investment manager
for the Trust and such person(s) shall have assumed such position.
14. MISCELLANEOUS.
14.1. NOTICES. Any notice under this Agreement shall be given in
writing, addressed and delivered, or mailed postpaid, (i) if to the Investment
Manager, to Holland Capital Management, L.P., Suite 3260, 35 West Wacker Drive,
Chicago, Illinois 60601, Attention: Mr. Louis A. Holland, and (ii) if to the
Trust, to The Holland Trust, Suite 3260, 35 West Wacker Drive, Chicago, Illinois
60601, Attention: Mr. Louis A. Holland.
14.2. CAPTIONS. The captions contained in this Agreement are included
for convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
14.3. INTERPRETATION. Nothing herein contained shall be deemed to
require the Trust to take any action contrary to its Declaration of Trust or By-
Laws, or any applicable statutory or regulatory requirement to which it is
subject or by which it is bound, or to relieve or deprive the Board of Trustees
of the Trust of its responsibility for and control of the conduct of the affairs
of the Trust.
14.4. DEFINITIONS. 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
validly issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
relaxed by a rule, regulation, or order of the Securities and Exchange
Commission, whether of special or of general application, such provision shall
be deemed to incorporate the effect of such rule, regulation, or order.
14.5. SEVERABILITY. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule, or otherwise, the remainder
of this Agreement shall not be affected thereby.
14.6. GOVERNING LAW. Except insofar as the 1940 Act or other federal
laws and regulations may be controlling, this Agreement shall be governed by,
and construed and enforced in accordance with, the laws of the State of
Illinois.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
ATTEST: THE HOLLAND TRUST
_________________________ By: _____________________________________________
Name: Louis A. Holland
Title: President and Chairman of the Board of
Trustees
ATTEST: HOLLAND CAPITAL MANAGEMENT, L.P.
_________________________ By: _____________________________________________
Name: Louis A. Holland
Title: Managing Partner and Chief Investment
Officer
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SCHEDULE A
SERIES OF THE HOLLAND TRUST AND SCHEDULE OF FEES
The Growth Fund
.85% of the average daily net assets up to $500 million
.75% of the average daily net assets up to the next $500 million
.65% of the average daily net assets in excess of $1 billion
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EXHIBIT 6.
FORM OF DISTRIBUTION AGREEMENT BETWEEN THE
HOLLAND TRUST AND HCM INVESTMENTS, INC.
<PAGE>
FORM OF
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT ("Agreement") made this ____ day of ___________,
1996, by and between THE HOLLAND TRUST, a Delaware Business Trust (the "Trust"),
and HCM INVESTMENTS, INC., a Delaware corporation (the "Distributor").
W I T N E S S E T H:
WHEREAS, the Trust intends to engage in business as an open-end management
investment company of the series type and register as such under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial interest
(the "Shares"), in separately designated series ("Funds") each with its own
investment objective, investment program, policies, and restrictions; and
WHEREAS, the Trust has registered the Shares of the Funds under the
Securities Act of 1933, as amended (the "1933 Act"), pursuant to a registration
statement on Form N-1A (the "Registration Statement"), including a prospectus
("Prospectus") and a statement of additional information ("Statement of
Additional Information"); and
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"); and
WHEREAS, the Trust wishes to engage the services of the Distributor as
distributor of the Shares of the Funds and the Distributor is willing to serve
in that capacity;
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. APPOINTMENT OF DISTRIBUTOR. (a) The Trust hereby appoints the
Distributor as principal underwriter and distributor of the Trust to service the
Shares of the Funds in jurisdictions wherein the Shares may be legally offered
for sale. The Distributor shall be the exclusive agent for the servicing of
Shares of the Funds; PROVIDED, HOWEVER, that the Trust in its absolute
discretion may issue Shares of the Funds otherwise than through the Distributor
in connection with (i) the payment or reinvestment of dividends or
distributions, (ii) any merger or consolidation of the Trust or a Fund with any
other investment company
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or trust or any personal holding company, or the acquisition of the assets of
any such entity or another series of the Trust, (iii) any offer of exchange
authorized by the Board of Trustees of the Trust, (iv) any sales of Shares to
Trustees and officers of the Trust or to the Distributor or such other
persons identified in the current Prospectus and Statement of Additional
Information of the Trust, or (v) the issuance of such Shares to a unit
investment trust if such unit investment trust has elected to use Shares as
an underlying investment. Notwithstanding any other provision hereof, the
Trust may terminate, suspend, or withdraw the offering of the Shares of a
Fund whenever, in its sole discretion, it deems such action to be desirable.
(b) The Distributor hereby accepts such appointment as principal
underwriter and distributor of the Trust and agrees that it will use its best
efforts to promote the Funds and to solicit orders for the purchase of Shares.
The Distributor shall service Shares of the Funds as agent for the Corporation
at prices determined as hereinafter provided and on the terms set forth herein,
all according to applicable federal and state laws and regulations and the
Declaration of Trust and By-Laws of the Trust. The Distributor may service
Shares of the Funds to or through qualified brokers, dealers or others and shall
require each such person to conform to the provisions hereof, the Registration
Statement, the current Prospectus and Statement of Additional Information, and
applicable law. Neither the Distributor nor any such person shall withhold the
placing of purchase orders for Shares so as to make a profit thereby.
(c) The Distributor shall order Shares of the Funds from the Trust only to
the extent that it shall have received purchase orders therefor. The
Distributor will not make, or authorize any brokers, dealers, or others to make,
(i) any short sales of Shares or (ii) any sales of Shares to any Trustee or
officer of the Trust, the Distributor, or any corporation or association
furnishing investment advisory, managerial, or supervisory services to the
Trust, or to any such corporation or association, unless such sales are made in
accordance with the then current Prospectus and Statement of Additional
Information.
(d) The Distributor is not authorized by the Trust to give any information
or to make any representation other than those contained in the current
Prospectus, Statement of Additional Information, and shareholder reports, or in
supplementary materials specifically approved by the Trust.
2. OFFERING PRICE OF SHARES. All Shares of each Fund serviced under this
Agreement shall be sold at the public offering price per Share in effect at the
time of the sale as described in the then current Prospectus and Statement of
Additional Information; PROVIDED, HOWEVER, that any public offering price for
the Shares shall be the net asset value per Share, as determined in the manner
described in the Trust's current Prospectus and/or Statement of Additional
Information. At no time shall the Trust receive less than the full net asset
value of the Shares, determined in the manner set forth in the then current
Prospectus and Statement of Additional Information.
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3. PAYMENT OF EXPENSES. (a) Except as otherwise provided herein, the
Distributor shall pay, or arrange for others to pay, all its expenses, including
the following: (i) payments to representatives of the Distributor and to
qualified brokers, dealers and others in respect of the servicing Shares of the
Funds; (ii) compensation and expenses of employees of the Distributor who engage
in or support the servicing of Shares of the Funds or render shareholder support
services not otherwise provided by the Corporation's transfer and shareholder
servicing agent; (iii) formulation and implementation of marketing and
promotional activities; (iv) preparation, printing, and distribution of
supplementary materials and the printing and distribution of Prospectuses,
Statements of Additional Information, and shareholder reports for recipients
other than existing shareholders of the Funds; (v) qualification of the Trust as
a broker or dealer under state law as well as qualification of the Trust as an
entity authorized to do business in certain states; and (vi) obtaining such
information, analyses, and reports with respect to marketing and promotional
activities as the Trust may from time to time reasonably request.
(b) The Trust shall pay or arrange for others to pay the following
expenses: (i) preparation, printing, and distribution to shareholders of
Prospectuses and Statements of Additional Information; (ii) preparation,
printing, and distribution of shareholder reports and other communications to
shareholders; (iii) registration of the Shares of the Funds under the federal
securities laws; (iv) qualification of the Shares of the Funds for sale in such
states as the Distributor and the Trust may approve; (v) maintaining facilities
for the issue and transfer of Shares; (vi) supplying information, prices, and
other data to be furnished by the Trust under this Agreement; and (vii) taxes
applicable to the sale or delivery of the Shares of the Funds or certificates
therefor.
4. FURNISHING OF INFORMATION. The Trust shall furnish to the Distributor
for use in connection with the servicing of Shares of the Funds such
information, financial statements, and other documents as the Distributor may
reasonably request. The Trust shall also make available such number of copies
of the current Prospectus, Statement of Additional Information, and shareholder
reports as the Distributor shall reasonably request.
5. REPURCHASE OF SHARES. The Distributor as agent and for the account of
the Trust may repurchase Shares of the Funds offered for resale to it and redeem
such Shares at their net asset value determined as set forth in the Prospectus
and Statement of Additional Information.
6. INDEMNIFICATION. (a) The Trust agrees to indemnify and hold harmless
the Distributor and each person, if any, who controls the Distributor within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any
losses, claims, damages, or liabilities to which the Distributor or such
controlling person may become
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<PAGE>
subject under the 1933 Act or otherwise, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon:
(i) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any amendment thereto or
the Prospectus (other than an omitting prospectus prepared pursuant to
Rule 482 under the 1933 Act unless such omitting prospectus has been
specifically approved by the Trust) or the Statement of Additional
Information or any amendment or supplement thereto or an annual or interim
report to shareholders; or
(ii) the omission or alleged omission to state in the Registration
Statement or any amendment thereto or the Prospectus (other than an
omitting prospectus prepared pursuant to Rule 482 under the 1933 Act unless
such omitting prospectus has been specifically approved by the Trust) or
the Statement of Additional Information or any amendment or supplement
thereto or an annual or interim report to shareholders, a material fact
required to be stated therein or necessary to make the statements therein
not misleading;
and shall reimburse, as incurred, the Distributor and each such controlling
person for any legal or other expenses reasonably incurred by the Distributor or
such controlling person in connection with investigating, defending against, or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability, or action; PROVIDED, HOWEVER, that the Trust shall not be
liable in any such case to the extent that any such loss, claim, damage, or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement or
any amendment thereto, or the Prospectus or Statement of Additional Information
or any amendment or supplement thereto, or in an annual or interim report to
shareholders, in reliance upon and in conformity with written information
furnished to the Trust by the Distributor specifically for use therein; and
PROVIDED FURTHER, that this indemnity agreement shall not protect the
Distributor or any such controlling person against any liability to which it
would otherwise be subject by reason of willful misfeasance, bad faith, or
negligence in the performance of its duties, or by reason of its failure to
exercise due care in rendering services hereunder. This indemnity agreement
shall be in addition to any liability which the Trust may otherwise have.
(b) The Distributor agrees to indemnify and hold harmless the Trust, each
of the Trust's Trustees, each of the Trust's officers who signed the
Registration Statement, and each person, if any, who controls the Trust within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against
any losses, claims, damages or liabilities to which the Trust or any such
Trustee, officer, or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon:
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(i) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any amendment thereto or
the Prospectus or Statement of Additional Information, or any amendment or
supplement thereto, or the omission or alleged omission to state in the
Registration Statement or any amendment thereto, or the Prospectus or
Statement of Additional Information or any amendment or supplement thereto,
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to the Trust by the Distributor specifically for use
therein; or
(ii) any untrue statement or alleged untrue statement of a material
fact contained in any unauthorized supplementary materials or omitting
prospectus prepared pursuant to Rule 482 under the 1933 Act, or the
omission or alleged omission to state in any such materials or prospectus,
a material fact required to be stated therein or necessary to make the
statements therein not misleading; or
(iii) any act or deed of the Distributor, its employees, or its
representatives which has not been authorized by the Trust in any
Prospectus or Statement of Additional Information or by this Agreement;
and shall reimburse, as incurred, any legal or other expenses reasonably
incurred by the Trust or any such Trustee , officer, or controlling person in
connection with investigating, defending against, or appearing as a third-party
witness in connection with any such loss, claim, damage, liability or action;
PROVIDED, HOWEVER, that this indemnity agreement shall not protect any Trustee
or officer of the Trust against any liability to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office. This
indemnity agreement shall be in addition to any liability which the Distributor
may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 6 of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 6, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 6. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it may wish, to assume the defense thereof, with counsel satisfactory to
such indemnified party; PROVIDED, HOWEVER, that if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be one or more
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnifying party shall not have the right to direct the defense of
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such action on behalf of such indemnified party or parties and such
indemnified party or parties shall have the right to select separate counsel
to defend such action on behalf of such indemnified party or parties. After
notice from the indemnifying party to such indemnified party of its election
so to assume the defense thereof and approval by such indemnified party of
counsel appointed to defend such action, the indemnifying party shall not be
liable to such indemnified party under this Section 6 for any legal or other
expense, other than reasonable costs of investigation, subsequently incurred
by such indemnified party in connection with the defense thereof, unless (i)
the indemnified party shall have employed separate counsel in accordance with
the proviso to the next preceding sentence or (ii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense
of the indemnifying party. After such notice from the indemnifying party to
such indemnified party, the indemnifying party shall not be liable for the
costs and expenses of any settlement of such action effected by such
indemnified party without the consent of the indemnifying party, unless such
indemnifying party waived its rights under this Section 6 in which case the
indemnified party may effect such a settlement without such consent.
7. TERM AND TERMINATION. (a) This Agreement shall become effective as of
the date hereof. Unless sooner terminated as herein provided, this Agreement
shall remain in full force and effect for a period of one year, and thereafter
may be continued for successive periods of one year, but only so long as each
such continuance is specifically approved at least annually (i) by the Board of
Trustees of the Trust, and (ii) by vote of a majority of the Trustees of the
Trust who are not "interested persons" of the Trust, as that term is defined in
Section 2(a)(19) of the 1940 Act (the "Disinterested Trustees"), 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 the Board of Trustees of the Trust or a majority of the
Disinterested Trustees, by vote of a majority of the outstanding voting
securities of the Trust, or by the Distributor, on not more than 60 days' nor
less than 30 days' written notice to the other party or upon such shorter notice
as may be mutually agreed upon.
(c) This Agreement shall automatically terminate in the event of its
assignment.
(d) The reimbursement and indemnification provisions contained in
Section 6 of this Agreement shall remain in full force and effect regardless of
any termination of this Agreement.
8. DEFINITION OF CERTAIN TERMS. For purposes of this Agreement the terms
"assignment," "interested person," "majority of the outstanding voting
securities," and "principal underwriter" shall have their respective meanings
defined in the 1940 Act and the rules and regulations thereunder, subject,
however, to such exemptions as may be granted
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to either the Distributor or the Trust by the Securities and Exchange
Commission, or such interpretative positions as may be taken by the
Commission or its staff under the 1940 Act.
9. NOTICE. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid (a) if to the Distributor, to HCM
Investments, Inc., Suite 3260, 35 West Wacker Drive, Chicago, Illinois 60601;
and (b) if to the Trust, to The Holland Trust, Suite 3260, 35 West Wacker Drive,
Chicago, Illinois 60601.
10. CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no other way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
11. INTERPRETATION. Nothing herein contained shall be deemed to require
the Trust to take any action contrary to its Declaration of Trust or By-Laws, or
any applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of Trustees of its
responsibility for and control of the conduct of the affairs of the Trust.
12. GOVERNING LAW. Except insofar as the 1940 Act or other federal laws
and regulations may be controlling, this Agreement shall be governed by, and
construed and enforced in accordance with the laws of the State of Illinois.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
ATTEST: THE HOLLAND TRUST
_________________________ By:____________________________________
Title: President and Chairman of the
Board of Trustees
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ATTEST: HCM INVESTMENTS, INC.
_________________________ By:____________________________________
Title: President, Treasurer and Director
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EXHIBIT 13.
FORM OF SHARE SUBSCRIPTION AGREEMENT
BY AND BETWEEN THE HOLLAND TRUST
AND HOLLAND CAPITAL MANAGEMENT
<PAGE>
FORM OF
SHARE SUBSCRIPTION AGREEMENT
THIS AGREEMENT is by and between Holland Capital Management, L.P.
("Investment Manager") and the Holland Trust (the "Trust"), a business trust
organized and existing under and by virtue of the laws of the State of Delaware.
In consideration of the mutual promises set forth herein, the parties agree
as follows:
1. The Trust agrees to sell to the Investment Manager and the Investment
Manager hereby subscribes to purchase 10,000 shares (the "Shares") of the Growth
Fund Series of the Trust's shares of beneficial interest, with a par value of
$.01 per share, at a price of ten dollars ($10.00) per Share.
2. The Investment Manager agrees to pay $100,000 for such Shares at the
time of their issuance, which shall occur upon call of the President of the
Trust at any time on or before the effective date of the Trust's Registration
Statement filed by the Trust on Form N-1A with the Securities and Exchange
Commission.
3. The Investment Manager acknowledges that the Shares have not been, and
will not be, registered under any state or federal securities laws and that,
therefore, the Trust is relying on certain exemptions therein from such
registration requirements, including exemptions dependent on the intent of the
undersigned in acquiring the Shares. The Investment Manager also understands
that any resale of the Shares, or any part thereof, may be subject to
restrictions under state and federal securities laws, and that the Investment
Manager may be required to bear the economic risk of any investment in the
Shares for an indefinite period of time.
4. The Investment Manager represents and warrants that it is acquiring
the Shares solely for its own account and solely for investment purposes and not
with a view to the resale or disposition of all or any part thereof, and that it
has no present plan or intention to sell or otherwise dispose of the Shares or
any part thereof.
5. The Investment Manager agrees that it will not sell or dispose of the
Shares or any part thereof unless the Registration Statement with respect to
such Shares is then in effect under the Securities Act of 1933 and under any
applicable state securities laws.
6. The Investment Manager further agrees to withdraw any request to
redeem any of the Shares to the extent the Trust informs the undersigned that
the effect of such redemption could be to reduce the net worth of the Trust
below $50,000.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized representatives this ___ day of ___________, 1996.
HCM INVESTMENTS, INC.
By:_________________________________________
Louis A. Holland
President, Treasurer & Director
THE HOLLAND TRUST
By:_________________________________________
Louis A. Holland
President & Chairman of the Board
