Registration Nos. 333-935
811-7533
As filed with the Securities and Exchange Commission on
October 22, 1996
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 1 / X /
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 2 / X /
(Check appropriate box or boxes)
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The Lou 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
----------------------
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
<PAGE>
Approximate Date of Proposed Public Offering: Continuous.
It is proposed that this filing will become effective (check appropriate box):
/ X / immediately upon / / on (date) pursuant to
filing pursuant to paragraph (b)
paragraph (b)
/ / 60 days after filing / / on (date) pursuant to
pursuant to paragraph (a)(1)
paragraph (a)(1)
/ / 75 days after filing / / on date pursuant to
pursuant to paragraph (a)(2) of rule
paragraph (a)(2) 485
Pursuant to the provisions of Rule 24f-2 under the Investment Company Act of
1940, as amended, an indefinite number of shares of common stock is being
registered by this Registration Statement. The Registrant intends to file a
Rule 24f-2 Notice by February 28, 1997.
<PAGE>
The Lou Holland Trust
CROSS-REFERENCE SHEET
FORM N-1A ITEM NO. CAPTION IN PROSPECTUS
1. Cover Cover Page
2. Synopsis Cover Page
3. Condensed Financial Supplement to the Prospectus
Information
4. General Description of Introduction; The Growth Fund;
Registrant Risk Factors, Other Investment
Practices, and Policies of the
Growth Fund
5. Management of the Fund How The Trust is Managed
6. Capital Stock and Other Organization of The Trust;
Securities Dividends, Distributions, and
Taxes; How to Purchase Shares
7. Purchase of Securities How to Purchase Shares;
Being Offered Shareholder Services; 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
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and General Information and
History History
13. Investment Objectives and Investment Restrictions;
Policies Description of Certain
Investments
14. Management of the Fund Management of The Trust
15. Control Persons and Principal Holders of
Principal Holders of Securities
Securities
16. Investment Advisory and Investment Management and
Other Services Other Services
17. Brokerage Allocation and Brokerage Allocation and Other
Other Practices Practices
<PAGE>
18. Capital Stock and Other Organization of The 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 Investment Management and
Other Services -- The
Distributor and Distribution
Services
22. Calculation of Performance Information About
Performance Data the Growth Fund
23. Financial Statements Independent Auditors;
Supplement to the Statement of
Additional Information
<PAGE>
<TABLE>
The Lou Holland Trust
Lou Holland Growth Fund
Supplement dated October 22, 1996
to the Prospectus dated March 29, 1996
The following information is to be inserted prior to the section entitled "The
Growth Fund" on page 3.
Lou Holland Growth Fund
Financial Highlights for the Period
April 29, 1996 (commencement of operations)
to September 30, 1996 (unaudited)
The following table includes selected data for a share outstanding
throughout the period and other performance information derived from the
unaudited financial statements.
<CAPTION>
<S> <C>
Net asset value, beginning of period................................................ $10.00
Income from investment operations:
Net investment income...................................................... 0.02
Net realized and unrealized gains on investments.......................... 0.89
-----
Total from investment operations........................................... 0.91
-----
Less distributions from net investment income....................................... 0.00
-----
Net asset value, end of period...................................................... $10.91
======
Total Return(1)..................................................................... 9.10%
Supplement data and ratios:
Net assets, end of period.................................................. $2,782,661
Ratio of expenses to average net assets(2)................................. 1.35%
Ratio of net investment income to average net assets(2).................... 0.21%
Portfolio turnover rate.................................................... 10.22%
Average commission rate paid............................................... 0.0611
<FN>
(1) Not annualized for the period April 29, 1996 through September 30, 1996.
(2) Annualized for the period April 29, 1996 through September 30, 1996.
Without expense waivers of $52,335 for the period April 29, 1996 through
September 30, 1996, the ratio of expenses to average net assets would
have been 7.20% and the ratio of net investment loss to average
net assets would have been (5.63%).
</FN>
</TABLE>
<PAGE>
LOU HOLLAND
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GROWTH FUND
PROSPECTUS
MARCH 29, 1996
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ABOUT THIS The Lou Holland Trust currently consists of one portfolio,
PROSPECTUS the Growth Fund, which 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.
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 March 29, 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 1-800-295-9779.
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<TABLE>
<S> <C> <C> <C> <C>
TABLE OF CONTENTS Introduction.................. 1 How to Redeem Shares.......... 9
How The Trust is Managed...... 11
Expense Summary............... 2 Risk Factors, Other Investment
Practices, and Policies of
The Growth Fund............... 3 the Growth
How to Purchase Shares........ 4 Fund......................... 13
Shareholder Services.......... 5 Portfolio Transactions and
Brokerage
Retirement Plans.............. 7 Practices.................... 20
How the Growth Fund's Net Organization of The Trust..... 20
Asset Value is Determined.... 8
Dividends, Distributions, and
Taxes........................ 8
</TABLE>
THE LOU HOLLAND TRUST
Suite 3260
35 West Wacker Drive
Chicago, Illinois 60601
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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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LOU HOLLAND
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GROWTH FUND
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INTRODUCTION The Lou 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
(the "Investment Manager"), an investment adviser
registered with the SEC that directs the day-to-day
operations of the Fund and provides certain adminis-
trative 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
1-800-295-9779.
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LOU HOLLAND
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GROWTH FUND
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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. 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
<PAGE>
is included in this prospectus under the section "How The
Trust is Managed."
<TABLE>
<CAPTION>
EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES Growth Fund
---------------
<S> <C>
Sales Load Imposed on Purchase.......................................... None
Sales Load Imposed on Reinvested Dividends.............................. None
Deferred Sales Load Imposed on Redemptions.............................. None
Redemption Fee.......................................................... None
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Investment Management Fee............................................... .85%*
12b-1 Fees.............................................................. -0-
Other Expenses (After Expense Reimbursements)........................... .50%**
-----
Total Fund Operating Expenses........................................... 1.35%
</TABLE>
* The Investment Management Fee declines at specified
breakpoints as assets increase.
** Other Expenses are based on estimated amounts for the
current fiscal year. The Investment Manager has agreed to
reimburse the Growth Fund to the extent that Other
Expenses actually exceed .50% of the net assets of shares
of the Fund during the first year of the Fund's
operations. The Investment Manager estimates that absent
any reimbursements Other Expenses and Total Operating
Expenses would be 1.25% and 2.10%, respectively.
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
----------- -----------
$ 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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GROWTH FUND
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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
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LOU HOLLAND
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GROWTH FUND
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.
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.
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HOW TO PURCHASE The initial minimum investment is $2,000 for the Growth
SHARES 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 PURCHASE APPLICATION FORM
("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, c/o Firstar Trust Company
("Firstar"), Post Office Box 701, Milwaukee, Wisconsin
53201-0701. Correspondence sent by overnight delivery
services should be sent to Firstar Trust Company, 3rd
Floor, 615 East Michigan Street, Milwaukee, Wisconsin
53202.
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
1-800-295-9779 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 in good order,
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LOU HOLLAND
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GROWTH FUND
as described below, 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 Firstar as transfer agent 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 Firstar 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. banks. No cash or third party checks 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. The transfer
agent charges a $15 fee against a shareholder's account
for any checks that do not clear.
Shares may be purchased by rendering payment in-kind in
the form of marketable securities, including but not
limited to shares of common stock and debt instruments,
provided the acquisition of such securities is consistent
with the Growth Fund's investment objective and otherwise
acceptable to the Investment Manager.
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.
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SHAREHOLDER SHAREHOLDER INQUIRIES AND SERVICES OFFERED. If there are
SERVICES any questions about the following services, please call
the Trust at 1-800-295-9779 or write the Trust, c/o
Firstar Trust Company, Post Office Box 701, Milwaukee,
Wisconsin 53201-0701. 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
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LOU HOLLAND
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GROWTH FUND
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. Initial purchases of shares may not be
made by telephone. 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 Firstar 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 Firstar, 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.
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 1-800-295-9779 between 9:00 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. Most electronic fund transfers are completed
within two business days after the call requesting the
transfers.
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LOU HOLLAND
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GROWTH FUND
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
1-800-295-9779 between 9:00 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 transmitted by wire to
the shareholder's designated bank account. The bank
transmitting the wire may charge a $10 fee for the
service. The designated bank must be a member of the ACH
network and able to receive electronic transfers in order
to use this privilege. Telephone redemption requests will
not be processed if the shareholder has changed his or her
address within the preceding fifteen (15) days.
After an account has been opened, a written request must
be sent to the transfer agent in order to arrange for
telephone redemptions or to make changes in the bank or
account receiving the proceeds. The request must be signed
by each shareholder of an account and the signature
guaranteed.
AUTOMATIC INVESTMENT PLAN (AIP). The Trust offers an AIP
whereby a shareholder may purchase shares on a regular
scheduled basis ($50 minimum per transaction up to four
times per month). Under the AIP, the shareholder's
designated bank account is debited a preauthorized amount
and applied to purchase shares. The financial institution
must be a member of the ACH network. There is no charge
for this service. A $15 fee will be charged by the
transfer agent if there are insufficient funds in the
account at the time of the scheduled transaction. The
program will automatically terminate upon redemption of
all shares in an account.
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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
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LOU HOLLAND
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GROWTH FUND
retirement plans. Applicable forms and information
regarding plan administration, all fees, and other plan
provisions are available from the Trust or Firstar, as
transfer agent.
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HOW THE GROWTH The net asset value per share of the Growth Fund is
FUND'S NET ASSET normally calculated as of the close of regular trading on
VALUE IS DETERMINED the New York Stock 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
of Trustees of the Trust (the "Board") believes accurately
reflects fair value.
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DIVIDENDS, The Growth Fund intends to elect to be treated and to
DISTRIBUTIONS, AND qualify as a "regulated investment company" under
TAXES 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. Distributions will be made in the form
of additional shares unless the shareholder elects to
receive them in cash.
Income dividends for the Growth Fund will be declared and
paid annually, and all distributions of capital gains of
the Fund, if any, realized during the fiscal year, will be
declared and distributed 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
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LOU HOLLAND
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GROWTH FUND
shareholders as long-term capital gains, regardless of how
long the shares are held. Income dividends and
distributions of capital gains 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 requirement, certification is required
on the Application, or on a separate W-9 Form supplied by
Firstar, 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.
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HOW TO REDEEM Shareholders have the right to redeem (subject to the
SHARES 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 to Firstar Trust
Company, Post Office Box 701, Milwaukee, Wisconsin
53201-0701. Correspondence
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LOU HOLLAND
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GROWTH FUND
sent by overnight delivery services should be sent to
Firstar Trust Company, 3rd Floor, 615 East Michigan
Street, Milwaukee, Wisconsin 53202. A shareholder cannot
redeem shares by telephone unless the shareholder is
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 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 generally are not required
for redemptions made using the Telephone Redemption
Privilege. If proceeds from a redemption made using the
Telephone Redemption Privilege 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 for a
period no less than fifteen (15) days prior to the date of
the request, then a signature guarantee would be required.
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.
- --------------------------------------------------------------------------------
10
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LOU HOLLAND
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GROWTH FUND
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.
------------------------------------------------------------
HOW THE TRUST IS BOARD OF TRUSTEES. The management of the Trust's business
MANAGED 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
- --------------------------------------------------------------------------------
11
<PAGE>
LOU HOLLAND
- --------------------------------------------------------------------------------
GROWTH FUND
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
and any service providers such as the custodian, transfer
agent, and administrator.
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, Monica L. Walker and Laura J. Janus. Their
business experience for the past five years is as follows:
Mr. Holland has served as Managing Partner and Chief
Investment Officer of the Investment Manager, and
President, Treasurer and Director of the Distributor and
of Holland Capital Management, Inc., the General Partner
of the Investment Manager; Ms. Walker has served as
portfolio manager with respect to the Investment Manager's
account clients, and as Trust Funds Administration Manager
of the retirement and thrift and savings plans of Texas
Utilities Company; and Ms. Janus has served as portfolio
manager with respect to the Investment Manager's account
clients, and as Treasurer/ Analyst for Mutual Trust Life
Insurance Company.
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, certain administrative
services, legal fees, and payment of taxes. In addition,
the expense of organizing the Trust and registering and
qualifying its 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
- ------------------------------------------------------------------------------
12
<PAGE>
LOU HOLLAND
- ------------------------------------------------------------------------------
GROWTH FUND
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 Act 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 Firstar
Trust Company ("Firstar"), Firstar will serve as
custodian, transfer agent and dividend disbursing agent
for the Trust. Firstar also will provide fund accounting
and certain administrative services to the Trust. The
principal business address of Firstar is 615 East Michigan
Street, Post Office Box 701, Milwaukee, Wisconsin
53201-0701.
-----------------------------------------------------------
RISK FACTORS, OTHER REPURCHASE AGREEMENTS. The Growth Fund may utilize
INVESTMENT repurchase agreements through which it may purchase a
PRACTICES, AND security (the "underlying security") from a well
POLICIES OF THE established domestic securities dealer or bank that is a
GROWTH FUND 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 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
- ------------------------------------------------------------------------------
13
<PAGE>
LOU HOLLAND
- ------------------------------------------------------------------------------
GROWTH FUND
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.
- ------------------------------------------------------------------------------
14
<PAGE>
LOU HOLLAND
- ------------------------------------------------------------------------------
GROWTH FUND
Rule 144A adopted by the SEC allows for a broader
institutional trading market for securities otherwise
subject to a restriction on 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
- ------------------------------------------------------------------------------
15
<PAGE>
LOU HOLLAND
- ------------------------------------------------------------------------------
GROWTH FUND
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 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
- ------------------------------------------------------------------------------
16
<PAGE>
LOU HOLLAND
- ------------------------------------------------------------------------------
GROWTH FUND
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 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. The principal
risk is the potential insolvency of the broker-dealer or
other borrower. As a result 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
- ------------------------------------------------------------------------------
17
<PAGE>
LOU HOLLAND
- ------------------------------------------------------------------------------
GROWTH FUND
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 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.
Limitation (i) does not apply to obligations issued or
guaranteed by the U.S.
- --------------------------------------------------------------------------------
18
<PAGE>
LOU HOLLAND
- --------------------------------------------------------------------------------
GROWTH FUND
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.
If the Fund makes additional investments while borrowings
are outstanding, this may be considered a form of
leverage. The 1940 Act requires the Fund to maintain
continuous asset coverage (that is, total assets including
borrowings, less liabilities exclusive of borrowings) of
300% of the amount borrowed. If the 300% asset coverage
should decline as a result of market fluctuations or other
reasons, the Fund may be required to sell some of its
portfolio holdings within three days to reduce its
borrowings and restore the 300% asset coverage, even
though it may be disadvantageous from an investment
standpoint to sell securities at that time. To avoid the
potential leveraging effects of the Fund's borrowings,
additional investments will not be made while borrowings
are in excess of 5% of the Fund's total assets.
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 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.
- --------------------------------------------------------------------------------
19
<PAGE>
LOU HOLLAND
- --------------------------------------------------------------------------------
GROWTH FUND
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 The Distributor may act as a broker for the Growth Fund in
TRANSACTIONS AND conformity with the securities laws and rules thereunder.
BROKERAGE PRACTICES 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 The Trust, a Delaware business trust, organized on
TRUST 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
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.
- ------------------------------------------------------------------------------
20
<PAGE>
The Lou Holland Trust
Lou Holland Growth Fund
Supplement dated October 22, 1996
to the Statement of Additional Information
dated March 29, 1996
The attached unaudited financial statements for the period April 29,
1996 (commencement of operations) to September 30, 1996 are to be inserted
following the "Appendix" on page B-22. These financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC") and according to generally accepted accounting principles
and reflect all adjustments consisting of normal recurring adjustments, which
in the opinion of management are necessary for a fair presentation of
investments, net assets and liabilities, results of operations, changes in net
assets and financial highlights for the period presented.
<PAGE>
<TABLE>
LOU HOLLAND
GROWTH FUND
Schedule of Investments
September 30, 1996 (Unaudited)
<CAPTION>
Shares Value
<S> <C>
COMMON STOCKS - 98.2%
Auto & Transportation - 1.1%
650 Magna International, Inc $31,363
-------
Consumer Discretionary - 17.4%
1,300 American Management Systems, Inc. # 36,400
1,325 Carnival Corporation 41,075
1,075 CUC International, Inc. # 42,866
350 Walt Disney Company 22,181
1,200 Home Depot, Inc 68,250
250 Interpublic Group of Companies, Inc 11,813
825 Kohl's Corporation # 29,700
1,050 Lowe's Companies, Inc 42,919
1,850 Service Corporation International 55,963
1,500 Sunglass Hut International, Inc. # 23,906
1,150 Viking Office Products, Inc. # 34,500
1,225 Wal-Mart Stores, Inc 32,309
1,900 Wendys International, Inc 40,850
--------
482,732
--------
Consumer Staples - 10.0%
900 Albertson's Inc 37,911
550 Coca-Cola Company 27,981
425 Colgate-Palmolive Company 36,922
1,575 Eckerd Corporation # 44,100
850 Gillette Company 61,306
275 Proctor & Gamble Company 26,813
1,175 Walgreen Company 43,475
--------
278,508
--------
Financial Services - 16.4%
475 American International Group, Inc 47,856
1,100 Automatic Data Processing, Inc 47,987
350 Chase Manhattan Corporation 28,044
475 Citicorp 43,047
1,000 Concord EFS, Inc. # 25,750
300 Federal Home Loan Mortgage Corporation 29,362
1,200 Federal National Mortgage Association 41,850
750 First Commerce Corporation 26,156
650 First Data Corporation 53,056
450 MBIA, Inc 38,588
925 Norwest Corporation 37,809
550 Reuters Holding PLC ADR 38,088
--------
457,593
--------
<PAGE>
<CAPTION>
<S> <C>
Health Care - 18.6%
550 Abbott Laboratories 27,087
1,450 Elan Corporation PLC ADR # 43,319
425 Eli Lilly & Company 27,413
1,275 Johnson & Johnson 65,344
675 Medtronic, Inc 43,284
875 Merck & Co., Inc 61,578
1,650 Nellcor Puritan Bennett Inc. # 36,300
650 Pfizer, Inc 51,431
875 Pharmacia & Upjohn, Inc 36,094
500 Schering-Plough Corporation 30,750
525 Smith/Kline Beecham PLC ADR 31,959
975 Sola International, Inc. # 36,319
400 Warner-Lambert Company 26,400
--------
517,278
--------
Integrated Oils - 3.9%
375 Amoco Corporation 26,437
1,000 Enron Corporation 40,750
100 Mobil Corporation 11,575
200 Royal Dutch Petroleum Company 31,225
--------
109,987
--------
Materials & Processing - 3.8%
575 Fluor Corporation 35,363
1,325 Jacobs Engineering Group, Inc. # 29,813
825 Valspar Corporation 40,631
--------
105,807
--------
Other - 4.2%
1,500 Federal Signal Corporation 36,187
875 General Electric Company 79,625
--------
115,812
--------
Other Energy - 0.3%
300 Input/Output, Inc. # 8,925
-----
Producer Durables - 2.9%
450 Boeing Company 42,525
550 Grainger (W.W.), Inc 38,638
--------
81,163
--------
<PAGE>
<CAPTION>
<S> <C>
Technology - 15.4%
700 CISCO Systems, Inc. # 43,444
575 Computer Associates International, Inc 34,356
1,200 Telefonaktiebolaget LM Ericsson ADR 30,450
875 Hewlett-Packard Company 42,656
825 Intel Corporation 78,736
875 Linear Technology Corporation 32,266
775 Loral Space & Communications # 12,206
1,375 LSI Logic Corporation # 31,969
325 Microsoft Corporation # 42,859
1,250 Oracle Corporation # 53,203
425 3Com Corporation # 25,527
---------
427,672
---------
Utilities - 4.2%
375 AT&T Corporation 19,594
825 Frontier Corporation 21,966
800 GTE Corporation 30,800
850 MCI Communications Corporation 21,781
1,075 WorldCom, Inc. # 22,978
----------
117,119
----------
Total common stocks (cost $2,522,219) 2,733,959
Principal
Amount
SHORT-TERM INVESTMENTS - 1.2%
Variable Rate Demand Notes* - 1.2%
$32,943 Wisconsin Electric Power Co., 5.2356% 32,943
----------
Total variable rate demand notes (cost $32,943) 32,943
----------
Total investments - 99.4% (cost $2,555,163) 2,766,902
Other assets in excess of liabilities - 0.6% 15,759
----------
TOTAL NET ASSETS - 100% $2,782,661
==========
<FN>
# Non-income producing security
* Variable rate demand notes are considered short-term obligations and
are payable on demand. Interest rates change periodically on
specified dates. The rates listed are as of September 30, 1996
</FN>
</TABLE>
LOU HOLLAND
- ------------------------------------------------------------------------------
GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments, at value
(cost $2,555,162) $2,766,902
Deferred organization charges 57,705
Dividends receivable 3,018
Interest receivable 396
Other assets 6,701
----------
Total Assets 2,834,722
----------
LIABILITIES:
Payable to adviser 28,382
Accrued expenses and other
liabilities 23,679
----------
Total Liabilities 52,061
----------
NET ASSETS $2,782,661
==========
NET ASSETS CONSIST OF:
Capital stock $2,585,904
Accumulated undistributed
net investment income 5,726
Accumulated undistributed net
realized (loss) on investments (20,709)
Net unrealized appreciation
on investments 211,740
----------
Total Net Assets $2,782,661
==========
Shares outstanding 255,063
Net Asset Value, Redemption
Price and Offering Price
Per Share $10.91
==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
APRIL 29, 1996 (1) THROUGH SEPTEMBER 30, 1996
(UNAUDITED)
<S> <C>
INVESTMENT INCOME:
Dividend income $ 12,238
Interest income 1,761
--------
Total investment income 13,999
--------
EXPENSES:
Investment advisory fee 7,564
Administration fee 10,660
Shareholder servicing and
accounting costs 18,016
Custody fees 1,066
Federal and state registration 6,562
Professional fees 5,086
Amortization of deferred
organization charges 5,446
Reports to shareholders 4,180
Trustees' fees and expenses 2,633
Other 3,207
--------
Total expenses before
reimbursement 64,420
Less: Reimbursement from
Adviser (52,335)
--------
Net Expenses 12,085
--------
NET INVESTMENT INCOME 1,914
--------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized loss on investments (20,709)
Change in unrealized appreciation
on investments 211,740
--------
Net realized and unrealized gain
on investments 191,031
--------
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS $192,945
========
<FN>
(1) Commencement of operations.
See notes to the financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOU HOLLAND
- ------------------------------------------------------------------------------
GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
APRIL 29, 1996 (1) THROUGH SEPTEMBER 30, 1996
(UNAUDITED)
<S> <C>
OPERATIONS:
Net investment income $ 1,914
Net realized (loss) on investments (20,709)
Change in unrealized
appreciation on investments 211,740
----------
Net increase in net assets
from operations 192,945
----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 2,607,229
Cost of shares redeemed (17,513)
----------
Net increase in net assets from
capital share transactions 2,589,716
----------
TOTAL INCREASE IN
NET ASSETS 2,782,661
----------
NET ASSETS:
Beginning of period 0
----------
End of period (including
undistributed net investment
income of $5,726) $2,782,661
==========
<FN>
(1) Commencement of operations.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(UNAUDITED)
APRIL 29, 1996 (1)
THROUGH
SEPTEMBER 30, 1996
------------
<S> <C>
Per Share Data:
Net asset value, beginning
of period $10.00
------
Income from investment
operation:
Net investment income 0.02
Net realized and unrealized
gains on investments 0.89
------
Total from investment
operations 0.91
------
Net asset value, end of period $ 10.91
======
Total return (2) 9.10%
Supplemental data and ratios:
Net assets, end of period $2,782,661
Ratio of expenses to average
net assets (3) 1.35%
Ratio of net investment
income to average net
assets (3) 0.21%
Portfolio turnover rate 10.22%
Average commission rate
paid $0.0611
<FN>
(1) Commencement of operations.
(2) Not annualized for the period April 29, 1996 through September 30, 1996.
(3) Annualized for the period April 29, 1996 through September 30, 1996.
Without expense waivers of $52,335 for the period April 29, 1996 through
September 30, 1996, the ratio of expenses to average net assets would
have been 7.20% and the ratio of net investment loss to average
net assets would have been (5.63)%.
See notes to the financial statements.
</FN>
</TABLE>
<PAGE>
LOU HOLLAND
- ------------------------------------------------------------------------------
GROWTH FUND
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
- ------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Lou Holland Trust (the "Trust") was organized on December 20, 1995, as a
Delaware business trust and is registered as a no-load, open-end diversified
management investment company under the Investment Company Act of 1940 (the
"1940 Act"). The Trust is organized as a series company and currently consists
of one series, the Growth Fund (the "Fund"). The principle investment
objective of the Fund is to seek long-term growth of capital by investing
primarily in common stocks of growth companies, with the receipt of dividend
income as a secondary consideration. The Fund commenced operations on April
29, 1996.
The costs incurred in connection with the organization, initial registration
and public offering of shares, aggregating $78,189, have been paid by Holland
Capital Management, L.P. (the "Investment Manager"). These costs are being
amortized over the period of benefit, but not to exceed sixty months from the
Fund's commencement of operations.
The following is a summary of significant accounting policies consistently
followed by the Fund.
a) Investment Valuation - Common stocks and other equity-type securities that
are listed on a securities exchange are valued at the last quoted sales price
on the day the valuation is made. Price information on listed stocks is taken
from the exchange where the security is primarily traded. Securities which are
listed on an exchange but which are not traded on the valuation date are
valued at the most recent bid prices. Unlisted securities for which market
quotations are readily available are valued at the latest quoted bid price.
Debt securities are valued at the latest bid prices furnished by independent
pricing services. Other assets and securities for which no quotations are
readily available are valued at fair value as determined in good faith by the
Investment Manager under the supervision of the Board of Trustees. Short-term
instruments (those with remaining maturities of 60 days or less) are valued at
amortized cost, which approximates market.
b) Federal Income Taxes - No provision for federal income taxes has been made
since the Fund intends to comply with the provisions of the Internal Revenue
Code available to regulated investment companies in the current and future
years.
c) Distributions to Shareholders - Dividends from net investment income and
distributions of net realized capital gains, if any, will be declared and paid
at least annually.
<PAGE>
LOU HOLLAND
- ------------------------------------------------------------------------------
GROWTH FUND
d) Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
e) Other - Investment and shareholder transactions are recorded no later than
the first business day after the trade date. The Fund determines the gain or
loss realized from the investment transactions by comparing the original cost
of the security lot sold with the net sales proceeds. Dividend income is
recognized on the ex-divided date or as soon as information is available to
the Fund, and interest income is recognized on an accrual basis. Generally
accepted accounting principles require that permanent financial reporting and
tax differences be reclassified to capital stock.
- ------------------------------------------------------------------------------
2. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Fund for the period April 29, 1996 through
September 30, 1996 were as follows:
Shares sold 256,839
Shares redeemed (1,776)
-------
Net increase 255,063
=======
- ------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of investments, excluding short-term
investments, by the Fund for the period April 29, 1996 through September 30,
1996, were $2,738,048 and $195,137, respectively.
At September 30, 1996, gross unrealized appreciation and depreciation of
investments for tax purposes were as follows:
Appreciation $ 501,819
(Depreciation) (67,122)
---------
Net appreciation on investments $ 434,697
==========
<PAGE>
LOU HOLLAND
- ------------------------------------------------------------------------------
GROWTH FUND
At the close of business on May 2, 1996, the partners of The Holland Fund,
L.P. transferred their assets to the Fund. As a result of the tax-free
transfer the Fund acquired $248,016 of unrealized appreciation for tax
purposes. As of September 30, 1996, the Fund realized $50,182 of the
appreciation.
At September 30, 1996, the cost of investments for federal income tax purposes
was $2,332,204.
- ------------------------------------------------------------------------------
4. AGREEMENTS
The Fund has entered into an Investment Management and Administration
Agreement with Holland Capital Management, L.P. Pursuant to its management
agreement with the Fund, the Investment Manager is entitled to receive a fee,
calculated daily and payable monthly, at the annual rate of 0.85% as applied
to the Fund's daily net assets up to $500 million. The fee declines at
specified breakpoints as assets increase.
The Investment Manager voluntarily agrees to reimburse its management fee and
other expenses to the extent that total operating expenses (exclusive of
interest, taxes, brokerage commissions and other costs incurred in connection
with the purchase or sale of portfolio securities, and extraordinary items)
exceed the annual rate of 1.35% of the net assets of the Fund, computed on a
daily basis. This voluntary reimbursement shall be in effect for a period of
one year from the Fund's commencement of operations and may be terminated
thereafter under the approval of the Board of Trustees.
HCM Investments, Inc. serves as principal underwriter and the Distributor of
the shares of the Fund pursuant to a Distribution Agreement between the
Distributor and the Trust. The Distributor is an affiliate of the Investment
Manager. The Fund'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 Fund. The Fund has not currently entered into any plan or agreement for
the payment of fees pursuant to Rule 12b-1 under the 1940 Act.
Firstar Trust Company, a subsidiary of Firstar Corporation, a publicly held
bank holding company, serves as custodian, transfer agent, administrator and
accounting services agent for the Fund.
<PAGE>
THE LOU 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 March 29, 1996,
which may be obtained by telephoning the Trust at 1-800-295-9779. This
Statement of Additional Information has been incorporated by reference into
the Prospectus.
The date of this Statement of Additional Information is March 29, 1996.
TABLE OF CONTENTS
ITEM PAGE
- ---- ----
General Information and History B-2
Investment Restrictions B-2
Description of Certain Investments B-5
Management of The Trust B-8
Committees of the Board of Trustees B-10
Principal Holders of Securities B-11
Investment Management and Other Services B-11
Brokerage Allocation and Other Practices B-12
Purchase and Redemption of Securities Being Offered B-14
Determination of Net Asset Value B-15
Taxes B-16
Organization of The Trust B-17
Performance Information About the Growth Fund B-18
Independent Auditors B-19
Legal Matters B-19
Financial Statements B-20
Appendix B-22
<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.
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 fundamental investment restrictions apply to the Growth Fund and
may be changed only by approval of the Fund's shareholders. 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, investment program, policies and other investment
restrictions, buy
B-2
<PAGE>
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 covering call options or
subject to put options for the Fund
B-3
<PAGE>
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
B-4
<PAGE>
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.
B-5
<PAGE>
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.
B-6
<PAGE>
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 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:
<TABLE>
<CAPTION>
POSITION WITH THE TRUST AND
PRINCIPAL OCCUPATION WITH THE
NAME AGE PAST FIVE YEARS
<S> <C> <C>
*Louis A. Holland 54 President, Trustee and Chairman of the Board of
Trustees. Managing Partner and Chief Investment
Officer of Holland Capital Management, L.P.
President, Treasurer and Director, HCM
Investments, Inc.
*Monica L. Walker 37 SECRETARY AND TRUSTEE. Portfolio Manager, Holland
Capital Management, L.P.; Vice President, HCM
Investments, Inc.
*Laura J. Janus 48 TREASURER. Portfolio Manager, Holland Capital
Management, L.P.; Vice President, HCM Investments,
Inc.
Lester H. McKeever, Jr. 61 TRUSTEE. Managing Partner, Washington, Pittman &
McKeever, Certified Public Accountants &
Management Consultants.
Kenneth R. Meyer 51 TRUSTEE. Executive Vice President and Managing
Director, Lincoln Capital Management Co.
John E. Mabie 64 TRUSTEE. President, Mid-Continent Capital.
</TABLE>
B-9
<PAGE>
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.
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.
The following table describes the compensation provided by the Trust:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
NAME OF PERSON, POSITION AGGREGATE COMPENSATION PENSION OR RETIREMENT ESTIMATED BENEFITS TOTAL COMPENSATION
FROM THE TRUST(*) BENEFITS ACCRUED AS PART UPON RETIREMENT FROM THE TRUST PAID
OF TRUST EXPENSES TO TRUSTEES
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lester H. McKeever,
Trustee and Member of $2,100/year 0 0 $2,100/year
Audit Committee
- --------------------------------------------------------------------------------------------------------------------------------
Kenneth R. Meyer,
Trustee and Member of $2,100/year 0 0 $2,100/year
Audit Committee
- --------------------------------------------------------------------------------------------------------------------------------
John D. Mabie,
Trustee and Member of $2,100/year 0 0 $2,100/year
Audit Committee
- --------------------------------------------------------------------------------------------------------------------------------
<FN>
(*)Estimated future payments
</FN>
</TABLE>
Trustees who are interested persons of the Trust, as that term is defined by
the 1940 Act, do not receive compensation from the Trust.
COMMITTEES OF THE BOARD OF TRUSTEES
The Board 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
B-10
<PAGE>
matters as the Audit Committee members may deem appropriate or desirable.
Lester H. McKeever, Jr., Kenneth R. Meyer and John D. Mabie 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 this 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
this 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 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
B-11
<PAGE>
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.
In addition to the administrative services provided by the Investment Manager,
Firstar Trust Company, pursuant to agreements between it and the Trust,
performs certain accounting, administrative, recordkeeping, tax related and
other reporting services for the Trust.
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 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. Firstar Trust Company serves as custodian of the assets of the
Trust. Pursuant to separate agreements with the Trust, Firstar also provides
certain administrative, accounting and transfer agent services.
B-12
<PAGE>
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.
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
B-13
<PAGE>
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 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.
B-14
<PAGE>
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 Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.
The assets of the Growth Fund are valued as follows:
B-15
<PAGE>
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 satisfy 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.
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
B-16
<PAGE>
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 amounts would
be subject to the 90% and calendar year distribution requirements described
above.
B-17
<PAGE>
ORGANIZATION OF THE 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 applicable period; where P equals
a hypothetical initial payment of $1,000; and where n equals the number of
years.
B-18
<PAGE>
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 Gross Domestic Product, 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
B-19
<PAGE>
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 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 auditors are Deloitte & Touche LLP, 2 Prudential
Plaza, Chicago, Illinois 60601.
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.
B-20
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholder of The Lou Holland Trust:
We have audited the accompanying statement of assets and liabilities of
The Lou Holland Trust (the "Trust") as of March 19, 1996. This financial
statement is the responsibility of the Trust's management. Our responsibility
is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of assets and
liabilities is free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the statement
of assets and liabilities. An audit also includes assessing the accounting
principles used and significant estimates made by the Trust's management, as
well as evaluating the overall statement of assets and liabilities
presentation. We believe that our audit of the statement of assets and
liabilities provides a reasonable basis for our opinion.
In our opinion, such statement of assets and liabilities presents fairly,
in all material respects, the financial position of the Trust as of March 19,
1996 in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Chicago, Illinois
March 20, 1996
B-21
<PAGE>
<TABLE>
THE LOU HOLLAND TRUST
STATEMENT OF ASSETS AND LIABILITIES
MARCH 19, 1996
<CAPTION>
<S> <C>
ASSETS
Cash $100,000
Deferred organizational expenses (Note 1) 50,000
--------
Total assets $150,000
--------
LIABILITIES
Organizational expenses payable (Note 1) $50,000
SHAREHOLDER'S EQUITY
10,000 shares issued and outstanding, no par value 100,000
Total liabilities and shareholder's equity $150,000
========
NET ASSETS $100,000
========
NET ASSET VALUE PER SHARE $10.00
======
</TABLE>
NOTE 1 - ORGANIZATION
The Lou Holland Trust (the "Trust"), established on December 20, 1995, is a
Delaware business trust registered with the Securities and Exchange Commission
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. Costs incurred by the Trust
in connection with its organization are deferred and amortized on a
straight-line basis over five years beginning at the commencement of
operations of the Trust. As of March 19, 1996, organization costs incurred
were estimated at $50,000. In the event that the current shareholder (or any
subsequent holder) redeems any of its original shares prior to the end of the
five-year period, the proceeds of the redemption payable in respect of such
shares shall be reduced by the pro rata share (based on the proportionate
share of the original shares redeemed to the total number of original shares
outstanding at the time of redemption) of the unamortized deferred
organization expenses as of the date of such redemption. In the event that the
Trust is liquidated prior to the end of the five-year period, the current
shareholder (or any subsequent holder) shall bear the unamortized deferred
organization expenses.
The Trust proposes to sell shares to the public pursuant to a Registration
Statement on Form N-1A, under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, as filed on February 13, 1996. The
Trust intends to use the proceeds to operate and carry on the business of a
management investment company 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.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The preparation of the financial statement in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liablities at the
date of the financial statement. Actual results could differ from those
estimates.
B-22
<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.
B-23
<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-24
<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-25
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements
1. Filed as part of the Supplement to the Prospectus:
Financial Highlights Table
2. Filed as part of the Supplement to the Statement of
Additional Information:
Unaudited:
Portfolio of Investments as of September 30, 1996
Statement of Assets and Liabilities as of
September 30, 1996
Statement of Operations for the Period Ended
September 30, 1996
Statement of Changes in Net Assets for the Period
Ended September 30, 1996
Notes to Financial Statements
3. Filed as part of the Statement of Additional
Information:
Audited Financial Statements as of March 19, 1996,
including Independent Auditor's Report and
Statement of Assets and Liabilities as of March 19,
1996.
(b) Exhibits:
1(a). Certificate of Trust and Agreement and
Declaration of Trust of The Holland Trust.1
1(b). Certificate of Amendment of the Certificate of
Trust and Revised Agreement and Declaration of
Trust of The Lou Holland Trust.2
2(a). By-Laws of The Holland Trust.1
2(b). Revised By-Laws of The Lou Holland Trust.2
3. Not applicable.
4. Specimen Certificate of Share of the Growth
Fund.2
5. Investment Management and Administration
Agreement by and between The Holland Trust and
Holland Capital Management.
<PAGE>
6. Distribution Agreement between the Holland
Trust and HCM Investments, Inc.
7. Not applicable.
8. Custodian Agreement between The Lou Holland
Trust and Firstar Trust Company.
9(a). Transfer Agent Agreement by and between The
Lou Holland Trust and Firstar Trust Company.
9(b). Fund Administration Servicing Agreement by and
between The Lou Holland Trust and Firstar
Trust Company.
9(c). Fund Accounting Servicing Agreement between
The Lou Holland Trust and Firstar Trust
Company.
9(d). Expense Limitation Agreement by and between
The Lou Holland Trust and Holland Capital
Management.
10. Opinion and Consent of Katten Muchin & Zavis
regarding the legality of the securities being
registered.2
11. Not applicable.
12. Not applicable.
13. Share Subscription Agreement by and between
Holland Capital Management and The Holland
Trust.
14. Not applicable.
15. Not applicable.
16. Not applicable.
17. Financial Data Schedule.
18. Not applicable.
1 Incorporated herein by reference to Registrant's Registration Statement on
Form N-1A (File No. 333-935).
2 Incorporated herein by reference to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A (File No. 333-935).
C-2
<PAGE>
Item 25. Persons Controlled by or under Common Control with the
Trust.
None.
Item 26. Number of Holders of Securities, as of the effective date
of this Registration Statement.
Title of Class Number of Record Holders as of
September 30, 1996
Growth Fund 46
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 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 1940 Act) 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
C-3
<PAGE>
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 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.
C-4
<PAGE>
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.
(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
C-5
<PAGE>
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.
Firstar will serve as the Trust's custodian, transfer agent,
dividend paying agent, and provides certain administrative
services pursuant to written agreements between Firstar and
the Trust. In these capacities, Firstar 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. The Investment
Manager, pursuant to its Investment Management and
Administration Agreement with respect to the Fund, maintains
all records required pursuant to such agreement, and
Firstar, pursuant to it Fund Administration Servicing
Agreement with the Trust provides certain other
recordkeeping services. Further, the 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, and
Firstar, pursuant to its Fund Administration Servicing
Agreement, each will perform certain administrative services
for the Trust, as described more fully in the Prospectus and
Statement of Additional Information.
C-6
<PAGE>
Item 32. Undertakings.
Registrant undertakes to call a meeting of shareholders for
the purpose of voting upon the question of removal of a
Trustee(s) when requested in writing to do so by the holders
of at least 10% of Registrant's outstanding shares and in
connection with such meetings, to comply with the provisions
of Section 16(c) of the Investment Company Act of 1940
relating to shareholder Communications.
Registrant hereby undertakes that whenever shareholders
meeting the requirements of Section 16(c) of the Investment
Company Act of 1940 inform the Board of Trustees of their
desire to communicate with shareholders of the Fund, the
Trustees will inform such shareholders as to the approximate
number of shareholders of record and the approximate costs
of mailing or afford said shareholders access to a list of
shareholders.
Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's
latest annual report to shareholders, upon request and
without charge.
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant certifies that this filing
meets all of the requirements for effectiveness pursuant to Rule 485(b) under
the Securities Act of 1933 and the Registrant has duly caused this Post
Effective Amendment No. 1 to the Trust's Registration Statement No. 333-935 to
be signed on its behalf by the undersigned, thereto duly authorized in
Chicago, Illinois on the 22nd day of October, 1996.
THE LOU 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 & Chairman of October 22, 1996
the Board of Trustees
s/ Monica L. Walker Secretary & Trustee October 22, 1996
s/ Laura J. Janus Treasurer October 22, 1996
s/ Lester H. McKeever, Jr. Trustee October 22, 1996
s/ Elzie L. Higginbottom Trustee October 22, 1996
s/ Kenneth R. Meyer Trustee October 22, 1996
EXHIBIT INDEX
C-8
<PAGE>
Exhibit Sequentially
Number Description Numbered Page
5. Investment Management and
Administrative Agreement by and
between The Holland Trust and
Holland Capital Management
6. Distribution Agreement between the
Holland Trust and HCM Investments,
Inc.
8. Custodian Agreement between The Lou
Holland Trust and Firstar Trust
Company.
9(a). Transfer Agent Agreement by and
between The Lou Holland Trust and
Firstar Trust Company.
9(b). Fund Administration Servicing
Agreement by and between The Lou
Holland Trust and Firstar Trust
Company.
9(c). Fund Accounting Servicing Agreement
between The Lou Holland Trust and
Firstar Trust Company.
9(d). Expense Limitation Agreement by and
between The Lou Holland Trust and
Holland Capital Management.
13. Share Subscription Agreement by and
between Holland Capital Management
and The Holland Trust
17. Financial Data Schedule
97339.2
C-9
<PAGE>
INVESTMENT MANAGEMENT AND ADMINISTRATION AGREEMENT
INVESTMENT MANAGEMENT AND ADMINISTRATION AGREEMENT ("Agreement") made
as of the 27 day of March, 1996, by and between THE LOU HOLLAND TRUST, a
Delaware business trust (the "Trust"), on behalf of its series, the Growth
Fund (the "Fund"), 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 the
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 the Fund and, as such, shall:
1.1.1. INVESTMENT OF ASSETS. Supervise and direct the
investment of the Fund's assets in accordance with applicable law, and
the investment objectives, 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 the 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 the 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 the Fund.
1.2. ADMINISTRATIVE SERVICES. The Investment Manager shall
oversee the administration of the Trust's and the Fund's business and
affairs as set forth herein and shall provide or arrange for the provision of
certain services required for effective administration of the Trust and the
Fund. 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 administrative or accounting
service providers, 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.
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.
<PAGE>
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 Subparagraph 1.2.3. above,
the Investment Manager shall coordinate, as needed, the provision of their
response.
<PAGE>
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 the 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 the 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 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.
<PAGE>
3.4. LIMITATION OF FEE. In the event the expenses of the
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.
4.1. USE OF BROKERAGE COMMISSIONS. 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 the 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 shares as a factor in the selection of
brokers to execute brokerage and principal transactions, subject to the
requirements of "best execution."
4.2. USE OF AFFILIATED PERSONS AS BROKER. 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 select, and place orders for the
purchase and sale of portfolio securities with, brokers who are affiliated
persons of the Investment Manager or the Trust.
<PAGE>
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.
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.
<PAGE>
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 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.
<PAGE>
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.
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 Fund 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 the 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.
<PAGE>
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 Fund, or, in the case of
an amendment to this Agreement with respect to the 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 the Fund, as required by applicable law.
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 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 Lou Holland Trust, Suite 3260, 35 West Wacker
Drive, Chicago, Illinois 60601, Attention: Mr. Louis A. Holland.
<PAGE>
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.
<PAGE>
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.
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 LOU HOLLAND TRUST
/S/ MONICA L.WALKER By: /S/ LOUIS A. HOLLAND
Name: Louis A. Holland
Title: President and Chairman of the Board of
Trustees
ATTEST: HOLLAND CAPITAL MANAGEMENT, L.P.
/S/ MONICA L.WALKER By: /S/ LOUIS A. HOLLAND
Name: Louis A. Holland
Title: Managing Partner and Chief Investment
Officer
<PAGE>
SCHEDULE A
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
<PAGE>
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT ("Agreement") made this 27 day of
March, 1996, by and between THE LOU 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 each with its own
investment objective, investment program, policies, and restrictions, and
currently offers shares in one series, the Growth Fund (the "Fund"); and
WHEREAS, the Trust has registered the Shares of the Fund 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 Fund 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 Fund 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 Fund; provided, however, that the Trust in its
absolute discretion may issue Shares of the Fund 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 the Fund with
any other investment company or trust or any personal holding company, or the
acquisition of the assets of any such entity or another series
<PAGE>
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 the 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 Fund and to solicit orders for the purchase of Shares.
The Distributor shall service Shares of the Fund 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 Fund 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 Fund 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 the 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.
- 2 -
<PAGE>
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 Fund; (ii) compensation and expenses of employees of the
Distributor who engage in or support the servicing of Shares of the Fund 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
Fund; (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 Fund under the federal
securities laws; (iv) qualification of the Shares of the Fund 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 Fund 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 Fund
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 Fund 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 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:
- 3 -
<PAGE>
(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:
(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
- 4 -
<PAGE>
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 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
- 5 -
<PAGE>
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 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 Lou Holland Trust, Suite 3260, 35 West Wacker
Drive, Chicago, Illinois 60601.
- 6 -
<PAGE>
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 LOU HOLLAND TRUST
/S/ MONICA L. WALKER /S/ LOUIS A. HOLLAND
_________________________ By:____________________________________
Title: President, Trustee and Chairman of
the Board of Trustees
ATTEST: HCM INVESTMENTS, INC.
/S/ MONICA L. WALKER /S/ LOUIS A. HOLLAND
_________________________ By:____________________________________
Title: President, Treasurer and Director
- 7 -
<PAGE>
CUSTODIAN AGREEMENT
THIS AGREEMENT made on APRIL 1 , 1996, between The Lou
Holland Trust, a Delaware business trust organized as a series company
currently consisting of one series, the Growth Fund (hereinafter called the
("Trust"), and FIRSTAR TRUST COMPANY, a corporation organized under the laws
of the State of Wisconsin (hereinafter called "Custodian"),
WHEREAS, the Trust desires that its securities and cash
shall be hereafter held and administered by Custodian pursuant to the terms of
this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements
herein made, the Trust and Custodian agree as follows:
1. DEFINITIONS
The word "securities" as used herein includes stocks,
shares, bonds, debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing rights to
receive, purchase or subscribe for the same, or evidencing or representing any
other rights or interests therein, or in any property or assets.
The words "officers' certificate" shall mean a request or
direction or certification in writing signed in the name of the Trust by any
two of the President, a Vice President, the Secretary and the Treasurer of the
Trust, or any other persons duly authorized to sign by the Board of Trustees.
The words "proper instructions" shall mean those
instructions for which an officers' certificate is required but which includes
oral and facsimile instructions communicated to custodian for certain types of
transactions set forth in Sections 3A and 5 where an officers' certificate is
received within two business days of the transaction.
The word "Board" shall mean Board of Trustees of The Lou
Holland Trust.
2. NAMES, TITLES, AND SIGNATURES OF THE TRUST'S OFFICERS
An officer of the Trust will certify to Custodian the names
and signatures of those persons authorized to sign the officers' certificates
described in Section 1 hereof, and the names of the members of the Board of
Trustees, together with any changes which may occur from time to time.
ADDITIONAL SERIES. The Holland Investment Trust is
authorized to issue separate classes of shares of beneficial interest
representing interests in separate investment portfolios or separate classes of
shares of the same series. The parties intend that each portfolio
establishedby the Trust, now or in the future, be covered by the terms and
conditions of this agreement.
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3. RECEIPT AND DISBURSEMENT OF MONEY
A. Custodian shall open and maintain a separate account or
accounts in the name of the Trust, subject only to draft or order by Custodian
acting pursuant to the terms of this Agreement. Custodian shall hold in such
account or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Trust. Custodian shall make payments of cash
to, or for the account of, the Trust from such cash only:
(a) for the purchase of securities for the portfolio of
the Trust upon the delivery of such securities to
Custodian, registered in the name of the Trust or
of the nominee of Custodian referred to in Section
7 or in proper form for transfer;
(b) for the purchase or redemption of shares of the
common stock of the Trust upon delivery thereof to
Custodian, or upon proper instructions from the
Holland Trust;
(c) for the payment of interest, dividends, taxes,
investment adviser's fees or operating expenses
(including, without limitation thereto, fees for
legal, accounting, auditing and custodian services
and expenses for printing and postage);
(d) for payments in connection with the conversion,
exchange or surrender of securities owned or
subscribed to by the Trust held by or to be
delivered to Custodian: or
(e) for other proper corporate purposes certified by
resolution of the Board of Directors of the Trust.
Before making any such payment, Custodian shall receive (and
may rely upon) an officers' certificate requesting such payment and stating
that it is for a purpose permitted under the terms of items (a), (b), (c), or
(d) of this Subsection A, and also, in respect of item (e), upon receipt of an
officers' certificate specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to whom such
payment is to be made, provided, however, that an officers' certificate need
not precede the disbursement of cash for the purpose of purchasing a money
market instrument, or any other security with same or next-day settlement, if
the President, a Vice President, the Secretary or the Treasurer of the Trust
issues appropriate oral or facsimile instructions to Custodian and an
appropriate officers' certificate is received by Custodian within two business
days thereafter.
B. Custodian is hereby authorized to endorse and
collect all checks, drafts or other orders for the payment of money received
by Custodian for the account of the Trust.
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C. Custodian shall, upon receipt of proper instructions,
make federal funds available to the Trust as of specified times agreed upon
from time to time by the Trust and the custodian in the amount of checks
received in payment for shares of the Trust which are deposited into the
Trust's account.
4. SEGREGATED ACCOUNTS
Upon receipt of proper instructions, the Custodian shall
establish and maintain a segregated account(s) for and on behalf of the
portfolio, into which account(s) may be transferred cash and/or securities.
5. TRANSFER, EXCHANGE, REDELIVERY, ETC. OF SECURITIES
Custodian shall have sole power to release or deliver any
securities of the Trust held by it pursuant to this Agreement. Custodian
agrees to transfer, exchange or deliver securities held by it hereunder only:
(a) for sales of such securities for the account of the
Trust upon receipt by Custodian of payment
therefore;
(b) when such securities are called, redeemed or retired
or otherwise become payable; provided that
consideration therefore is delivered to Custodian;
(c) for examination by any broker selling any such
securities in accordance with "street delivery"
custom;
(d) in exchange for, or upon conversion into, other
securities alone or other securities and cash
whether pursuant to any plan of merger,
consolidation, reorganization, recapitalization or
readjustment, or otherwise;
(e) upon conversion of such securities pursuant to their
terms into other securities;
(f) upon exercise of subscription, purchase or other
similar rights represented by such securities;
(g) for the purpose of exchanging interim receipts or
temporary securities for definitive securities;
(h) for the purpose of redeeming in kind shares of
common stock of the Trust upon delivery thereof to
Custodian; or
(i) for other proper corporate purposes.
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<PAGE>
As to any deliveries made by Custodian pursuant to items
(a), (b), (d), (e), (f), and (g), securities or cash receivable in exchange
therefore shall be deliverable to Custodian.
Before making any such transfer, exchange or delivery,
Custodian shall receive (and may rely upon) an officers' certificate
requesting such transfer, exchange or delivery, and stating that it is for a
purpose permitted under the terms of items (a), (b), (c), (d), (e), (f), (g),
or (h) of this Section 5 and also, in respect of item (i), upon receipt of an
officers' certificate specifying the securities to be delivered, setting forth
the purpose for which such delivery is to be made, declaring such purpose to
be a proper corporate purpose, and naming the person or persons to whom
delivery of such securities shall be made, provided, however, that an
officers' certificate need not precede any such transfer, exchange or delivery
of a money market instrument, or any other security with same or next-day
settlement, if the President, a Vice President, the Secretary or the Treasurer
of the Trust issues appropriate oral or facsimile instructions to Custodian
and an appropriate officers' certificate is received by Custodian within two
business days thereafter.
6. CUSTODIAN'S ACTS WITHOUT INSTRUCTIONS
Unless and until Custodian receives an officers' certificate
to the contrary, Custodian shall: (a) present for payment all coupons and
other income items held by it for the account of the Trust, which call for
payment upon presentation and hold the cash received by it upon such payment
for the account of the Trust; (b) collect interest and cash dividends
received, with notice to the Trust, for the account of the Trust; (c) hold for
the account of the Trust hereunder all stock dividends, rights and similar
securities issued with respect to any securities held by it hereunder; and (d)
execute, as agent on behalf of the Trust, all necessary ownership certificates
required by the Internal Revenue Code or the Income Tax Regulations of the
United States Treasury Department or under the laws of any state now or
hereafter in effect, inserting the Trust's name on such certificates as the
owner of the securities covered thereby, to the extent it may lawfully do so.
7. REGISTRATION OF SECURITIES
Except as otherwise directed by an officers' certificate,
Custodian shall register all securities, except such as are in bearer form, in
the name of a registered nominee of Custodian as defined in the Internal
Revenue Code and any Regulations of the Treasury Department issued hereunder
or in any provision of any subsequent federal tax law exempting such
transaction from liability for stock transfer taxes, and shall execute and
deliver all such certificates in connection therewith as may be required by
such laws or regulations or under the laws of any state. Custodian shall use
its best efforts to the end that the specific securities held by it hereunder
shall be at all times identifiable in its records.
The Trust shall from time to time furnish to Custodian
appropriate instruments to enable Custodian to hold or deliver in proper form
for transfer, or to register in the name of its registered nominee, any
securities which it may hold for the account of the Trust and which may from
time to time be registered in the name of the Trust.
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<PAGE>
8. VOTING AND OTHER ACTION
Neither Custodian nor any nominee of Custodian shall vote
any of the securities held hereunder by or for the account of the Trust,
except in accordance with the instructions contained in an officers'
certificate. Custodian shall deliver, or cause to be executed and delivered,
to the Corporation all notices, tender offers, proxies and proxy soliciting
materials with relation to such securities, such proxies to be executed by the
registered holder of such securities (if registered otherwise than in the name
of the Trust), but without indicating the manner in which such proxies are to
be voted.
9. TRANSFER TAX AND OTHER DISBURSEMENTS
The Trust shall pay or reimburse Custodian from time to time
for any transfer taxes payable upon transfers of securities made hereunder,
and for all other necessary and proper disbursements and expenses made or
incurred by Custodian in the performance of this Agreement.
Custodian shall execute and deliver such certificates in
connection with securities delivered to it or by it under this Agreement as
may be required under the provisions of the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, or under the laws of
any state, to exempt from taxation any exemptible transfers and/or deliveries
of any such securities.
10. CONCERNING CUSTODIAN
Custodian shall be paid as compensation for its services
pursuant to this Agreement such compensation as may from time to time be
agreed upon in writing between the two parties. Until modified in writing,
such compensation shall be as set forth in Exhibit A attached hereto. If the
Trust terminates this Agreement prior to the second anniversary of this
Agreement, the Trust agrees to reimburse Custodian for the difference between
the standard fee schedule and the discounted fee schedule agreed to between
the parties.
Custodian shall not be liable for any action taken in good
faith upon any certificate herein described or certified copy of any
resolution of the Board, and may rely on the genuineness of any such document
which it may in good faith believe to have been validly executed.
Custodian represents that it maintains fidelity bond
coverage with limits of $40 million.
The Trust agrees to indemnify and hold harmless Custodian
and its nominee from all taxes, charges, expenses, assessments, claims and
liabilities (including counsel fees) incurred or assessed against it or by its
nominee in connection with the performance of this Agreement, except such as
may arise from its or its nominee's own negligent action, negligent failure to
act
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<PAGE>
or willful misconduct. Custodian is authorized to charge any account of the
Trust for such items not excepted.
In the event of any advance of cash for any purpose made by
Custodian resulting from orders or instructions of the Trust, or in the event
that Custodian or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the
performance of this Agreement, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Trust shall
be security therefore.
Custodian shall exercise reasonable care in carrying out the
provisions of this agreement.
Custodian agrees to indemnify and hold harmless Trust from
all charges, expenses, assessments, and claims/liabilities (including counsel
fees) incurred or assessed against the Trust in connection with the
performance of this agreement, except such as may arise from the Trust's own
negligent action, negligent failure to act, or willful misconduct.
The indemnification provisions referred to above shall
survive the termination of this agreement.
11. SUBCUSTODIANS
Custodian is hereby authorized to engage another bank or
trust company as a Subcustodian for all or any part of the Trust's assets, so
long as any such bank or trust company is a bank or trust company organized
under the laws of any state of the United States, having an aggregate capital,
surplus and undivided profit, as shown by its last published report, of not
less than Two Million Dollars ($5,000,000) and provided further that, if the
Custodian utilizes the services of a Subcustodian, the Custodian shall remain
fully liable and responsible for any losses caused to the Trust by the
Subcustodian as fully as if the Custodian was directly responsible for any
such losses under the terms of the Custodian Agreement.
Notwithstanding anything contained herein, if the Trust
requires the Custodian to engage specific Subcustodians for the safekeeping
and/or clearing of assets, the Trust agrees to indemnify and hold harmless
Custodian from all claims, expenses and liabilities incurred or assessed
against it in connection with the use of such Subcustodian in regard to the
Trust's assets, except as may arise from its own negligent action, negligent
failure to act or willful misconduct
12. REPORTS BY CUSTODIAN
Custodian shall furnish the Trust periodically monthly with
a statement summarizing all transactions and entries for the account of Trust.
Custodian shall furnish to the Trust, at the end of every month, a list of the
portfolio securities showing the aggregate cost of each issue and location.
The books and records of Custodian pertaining to its actions under this
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<PAGE>
Agreement shall be open to inspection and audit at reasonable times by
officers of, and of auditors employed by, the Trust.
13. TERMINATION, ASSIGNMENT AND SEVERABILITY
This Agreement may be terminated by the Trust, or by
Custodian, on ninety (90) days notice, given in writing and sent by registered
mail to Custodian at P.O. Box 2054, Milwaukee, Wisconsin 53201, or to the
Trust at Suite 3260, 35 West Wacker Drive, Chicago, Illinois 60601, as the
case may be. Upon any termination of this Agreement, pending appointment of a
successor to Custodian or a vote of the shareholders of the Trust to dissolve
or to function without a custodian of its cash, securities and other property,
Custodian shall not deliver cash, securities or other property of the Trust to
the Trust, but may deliver them to a bank or trust company of its own
selection, having an aggregate capital, surplus and undivided profits, as
shown by its last published report of not less than Two Million Dollars
($2,000,000) as a Custodian for the Trust to be held under terms similar to
those of this Agreement, provided, however, that Custodian shall not be
required to make any such delivery or payment until full payment shall have
been made by the Trust of all liabilities constituting a charge on or against
the properties then held by Custodian or on or against Custodian, and until
full payment shall have been made to Custodian of all its fees, compensation,
costs and expenses, subject to the provisions of Section 10 of this Agreement.
This Agreement may not be assigned by Custodian without the
consent of the Trust, authorized or approved by a resolution of its Board of
Trustees.
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. DEPOSITS OF SECURITIES IN SECURITIES DEPOSITORIES
Pursuant to Rule 17f-4 promulgated under the Investment
Company Act of 1940, the Federal Reserve Treasury Book Entry System is hereby
designated as a permitted depository for United States Government securities
owned by the Trust and that the Custodian for the Trust is hereby authorized
to establish safekeeping accounts under the Book Entry System at Custodian and
at such other institutions properly qualified to hold securities under the
Book Entry System as they may, from time to time, deem appropriate;
Further, pursuant to Rule 17f-4 promulgated under the
Investment Company Act of 1940, the Depository Trust Company is hereby
designated as a permitted depository for securities owned by the Trust and
that the Custodian for the Trust is hereby authorized to establish safekeeping
accounts with Depository Trust Company at the Custodian and at such other
institutions properly qualified to participate in the Depository Trust Company
system as the may, from time to time, deem appropriate;
No provision of this Agreement shall be deemed to prevent
the use by Custodian of a central securities clearing agency or securities
depository, provided, however, that
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<PAGE>
Custodian and the central securities clearing agency or securities depository
meet all applicable federal and state laws and regulations, and the Board of
Trustees of the Trust approves by resolution the use of such central
securities clearing agency or securities depository.
15. RECORDS
To the extent that Custodian in any capacity prepares or
maintains any records required to be maintained and preserved by the Trust
pursuant to the provisions of the Investment Company Act of 1940, as amended,
or the rules and regulations promulgated thereunder, Custodian agrees to make
any such records available to the Trust upon request and to preserve such
records for the periods prescribed in Rule 31a-2 under the Investment Company
Act of 1940, as amended. Further, Custodian acknowledges that these records
are the property of the Trust and will be suspended to the Trust per request.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and their respective corporate seals to be affixed
hereto as of the date first above-written by their respective officers
thereunto duly authorized.
Executed in several counterparts, each of which is an
original.
ATTEST: FIRSTAR TRUST COMPANY
/S/ ANDREA MCVOY By /S/ ROBERT J. KERN
Assistant Secretary Vice President
ATTEST: The Lou Holland Trust
/S/ MONICA L. WALKER By /S/ LOUIS A. HOLLAND
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<PAGE>
TRANSFER AGENT AGREEMENT
THIS AGREEMENT is made and entered into on this 1ST day of APRIL ,
1996, by and between The Lou Holland Trust (hereinafter referred to as the
"Trust") and Firstar Trust Company, a corporation organized under the laws of
the State of Wisconsin (hereinafter referred to as the "Agent").
WHEREAS, the Trust is a Delaware business trust organized as a series
company currently consisting of one series, the Growth Fund.
WHEREAS, the Agent is a trust company and, among other things, is in
the business of administering transfer and dividend disbursing agent functions
for the benefit of its customers;
NOW, THEREFORE, the Trust and the Agent do mutually promise and agree
as follows:
1. TERMS OF APPOINTMENT; DUTIES OF THE AGENT
Subject to the terms and conditions set forth in this Agreement, the
Trust hereby employs and appoints the Agent to act as transfer agent and
dividend disbursing agent.
The Agent shall perform all of the customary services of a transfer
agent and dividend disbursing agent, and as relevant, agent in connection with
accumulation, open account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), in accordance with
the current prospectus and statement of additional information of Trust, and
in accordance with the requirements of the Investment Company Act of 1940, as
amended, and the rules thereunder, including but not limited to:
A. Receive orders for the purchase of shares;
B. Process purchase orders and issue the appropriate number of
certificated or uncertificated shares with such
uncertificated shares being held in the appropriate
shareholder account;
C. Process redemption requests received in good order;
D. Pay monies in accordance with the instructions of redeeming
shareholders;
E. Process transfers of shares in accordance with the
shareowner's instructions;
F. Process exchanges between funds within the same family of
funds;
G. Issue and/or cancel certificates as instructed; replace lost,
stolen or destroyed certificates upon receipt of satisfactory
indemnification or surety bond;
H. Prepare and transmit payments for dividends and distributions
declared by the Trust;
<PAGE>
I. Make changes to shareholder records, including, but not
limited to, address changes in plans (i.e., systematic
withdrawal, automatic investment, dividend reinvestment,
etc.);
J. Record the issuance of shares of the Trust and maintain,
pursuant to Section 7ad-10(e), a record of the total number
of shares of the Trust which are authorized, issued and
outstanding;
K. Prepare shareholder meeting lists and, if applicable, mail,
receive and tabulate proxies;
L. Mail shareholder reports and prospectuses to current
shareholders;
M. Prepare and file U.S. Treasury Department forms 1099 and
other appropriate information returns required with respect
to dividends and distributions for all shareholders:
N. Provide shareholder account information upon request and
prepare and mail confirmations and statements of account to
shareholders for all purchases, redemptions and other
confirmable transactions as agreed upon with the Trust;
and
O. Provide a Blue Sky System which will enable the Trust to
monitor the total number of shares sold in each state. In
addition, the Trust shall identify to the Agent in writing
those transactions and assets to be treated as exempt from
the Blue Sky reporting to the Trust for each state. The
responsibility of the Agent for the Trust's Blue Sky state
registration status is solely limited to the initial
compliance by the Trust and the reporting of such
transactions to the Trust.
2. COMPENSATION
The Trust agrees to pay the Agent for performance of the duties
listed in this Agreement; the fees and out-of-pocket expenses include, but are
not limited to the following: printing, postage, forms, stationery, record
retention, mailing, insertion, programming, labels, shareholder lists and
proxy expenses.
These fees and reimbursable expenses may be changed from time to time
subject to mutual written agreement between the Trust and the Agent.
Notwithstanding the foregoing, if the Trust terminates this Agreement prior to
the second anniversary of this Agreement, the Trust agrees to reimburse
Firstar Trust Company for the difference between the standard fee schedule and
the discounted fee schedule agreed to between the parties.
The Trust agrees to pay all fees and reimbursable expenses within ten
(10) business days following the mailing of the billing notice.
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3. REPRESENTATIONS OF AGENT
The Agent represents and warrants to the Trust that:
A. It is a trust company duly organized, existing and in good
standing under the laws of Wisconsin;
B. It is a registered transfer agent under the Securities
Exchange Act of 1934 as amended;
C. It is duly qualified to carry on its business in the state of
Wisconsin;
D. It is empowered under applicable laws and by its charter and
bylaws to enter into and perform this Agreement;
E. All requisite corporate proceedings have been taken to
authorize it to enter and perform this Agreement; and
F. It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
G. It will comply with all applicable requirements of the
Securities and Exchange Acts of 1933 and 1934, as amended,
the Investment Company Act of 1940, as amended, and any
laws, rules, and regulations of governmental authorities
having jurisdiction.
4. REPRESENTATIONS OF THE TRUST
The Trust represents and warrants to the Agent that:
A. The Trust is an open-ended diversified investment company
under the Investment Company Act of 1940;
B. The Trust is a corporation or business trust organized,
existing, and in good standing under the laws of Delaware:
C. The Trust is empowered under applicable laws and by its
Declaration of Trust and bylaws to enter into and perform
this Agreement;
D. All necessary proceedings required by the Declaration of
Trust have been taken to authorize them to enter into and
perform this Agreement;
E. The Trust will comply with all applicable requirements of
the Securities Act of 1933 and the Securities and Exchange
Act of 1934, each as amended, the Investment Company Act of
1940, as amended, and any laws, rules and regulations of
governmental authorities having jurisdiction; and
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<PAGE>
F. A registration statement under the Securities Act of 1933 is
currently effective, or will be prior to the sale of any
shares to the public, and will remain effective, and
appropriate state securities law filings have been made and
will continue to be made, with respect to all shares of the
Trust being offered for sale.
5. COVENANTS OF TRUST AND AGENT
The Trust shall furnish the Agent a certified copy of the resolution
of the Board of Trustees of the Trust authorizing the appointment of the Agent
and the execution of this Agreement. The Trust shall provide to the Agent a
copy of the Declaration of Trust, bylaws of the Trust, and all amendments.
The Agent shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the rules thereunder, the Agent agrees that all such records prepared or
maintained by the Agent relating to the services to be performed by the Agent
hereunder are the property of the Trust and will be preserved, maintained and
made available in accordance with such section and rules and will be
surrendered to the Trust on and in accordance with its request.
6. INDEMNIFICATION; REMEDIES UPON BREACH
The Agent shall exercise its best efforts in the performance of its
duties under this Agreement. The Agent shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust in connection
with matters to which this Agreement relates, including losses resulting from
mechanical breakdowns or the failure of communication or power supplies beyond
the Agent's control, except a loss resulting from the Agent's refusal or
failure to comply with the terms of this Agreement or from bad faith,
negligence, or willful misconduct on its part in the performance of its duties
under this Agreement. Notwithstanding any other provision of this Agreement,
the Trust shall indemnify and hold harmless the Agent from and against any and
all claims, demands, losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which the Agent may sustain or incur or which may be asserted
against the Agent by any person arising out of any action taken or omitted to
be taken by it in performing the services hereunder (i) in accordance with the
foregoing standards, or (ii) in reliance upon any written or oral instruction
provided to the Agent by any duly authorized officer of the Trust, such duly
authorized officer to be included in a list of authorized officers furnished
to the Agent and as amended from time to time in writing by resolution of the
Board of Trustees of the Trust.
Further, the Trust will indemnify and hold the Agent harmless against
any and all losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) resulting from any claim, demand,
action, or suit as a result of the negligence of the Trust or the principal
underwriter (unless contributed to by the Agent's breach of this Agreement or
other Agreements between the Trust and the Agent, or the Agent's own
negligence or bad faith); or as a result of the Agent acting upon telephone
instructions relating to the exchange or redemption
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<PAGE>
of shares received by the Agent and reasonably believed by the Agent under a
standard of care customarily used in the industry to have originated from the
record owner of the subject shares; or as a result of acting in reliance upon
any genuine instrument or stock certificate signed, countersigned, or executed
by any person or persons authorized to sign, countersign, or execute the same.
In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, the Agent shall take all reasonable steps
to minimize service interruptions for any period that such interruption
continues beyond the Agent's control. The Agent will make every reasonable
effort to restore any lost or damaged data and correct any errors resulting
from such a breakdown at the expense of the Agent. The Agent agrees that it
shall, at all times, have reasonable contingency plans with appropriate
parties, making reasonable provision for emergency use of electrical data
processing equipment to the extent appropriate equipment is available.
Representatives of the Trust shall be entitled to inspect the Agent's premises
and operating capabilities at any time during regular business hours of the
Agent, upon reasonable notice to the Agent.
Regardless of the above, the Agent reserves the right to reprocess
and correct administrative errors at its own expense.
In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the Trust may be
asked to indemnify or hold the Agent harmless, the Trust shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the Agent will use all reasonable care to
notify the Trust promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Trust. The Trust shall have the option to defend the Agent against any
claim which may be the subject of this indemnification. In the event that the
Trust so elects, it will so notify the Agent and thereupon the Trust shall
take over complete defense of the claim, and the Agent shall in such situation
initiate no further legal or other expenses for which it shall seek
indemnification under this section. The Agent shall in no case confess any
claim or make any compromise in any case in which the Trust will be asked to
indemnify the Agent except with the Trust's prior written consent.
The Agent shall indemnify and hold the Trust harmless from and
against any and all claims, demands, losses, expenses, and liabilities
(whether with or without basis in fact or law) of any and every nature
(including reasonable attorneys' fees) which may be asserted against the Trust
by any person arising out of any action taken or omitted to be taken by the
Agent as a result of the Agent's refusal or failure to comply with the terms
of this Agreement, its bad faith, negligence, or willful misconduct.
These indemnification provisions shall survive the termination of this
agreement.
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7. CONFIDENTIALITY
The Agent agrees on behalf of itself and its employees to treat
confidentially all records and other information relative to the Trust and its
shareholders and shall not be disclosed to any other party, except after prior
notification to and approval in writing by the Trust, which approval shall not
be unreasonably withheld and may not be withheld where the Agent may be
exposed to civil or criminal contempt proceedings for failure to comply after
being requested to divulge such information by duly constituted authorities
ADDITIONAL SERIES. The Lou Holland Trust is authorized to
issue separate classes of shares of beneficial interest representing interests
in separate investment portfolios or separate classes of shares of any series.
The parties intend that each portfolio established by the Trust, now or in the
future, be covered by the terms and conditions of this agreement.
8. RECORDS
The Agent shall keep records relating to the services to be performed
hereunder, in the form and manner, and for such period as it may deem
advisable and is agreeable to the Trust but not inconsistent with the rules
and regulations of appropriate government authorities, in particular, Section
31 of The Investment Company Act of 1940 as amended (the "Investment Company
Act"), and the rules thereunder. The Agent agrees that all such records
prepared or maintained by The Agent relating to the services to be performed
by The Agent hereunder are the property of the Trust and will be preserved,
maintained, and made available with such section and rules of the Investment
Company Act and will be promptly surrendered to the Trust on and in accordance
with its request.
9. WISCONSIN LAW TO APPLY
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the state of Wisconsin.
10. AMENDMENT, ASSIGNMENT, TERMINATION, NOTICE AND SEVERABILITY
A. This Agreement may be amended by the mutual written consent
of the parties.
B. This Agreement may be terminated upon ninety (90) day's
written notice given by one party to the other subject to
completion by Transfer Agent of any orders, etc. in process.
C. This Agreement and any right or obligation hereunder may not
be assigned by either party without the signed, written
consent of the other party.
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<PAGE>
D. Any notice required to be given by the parties to each other
under the terms of this Agreement shall be in writing,
addressed and delivered, or mailed to the principal place of
business of the other party. If to the agent, such notice
should to be sent to Firstar Trust Company, Mutual Fund
Services, P.O. Box 701, Milwaukee, Wisconsin 53202. If to
the Trust, such notice should be sent to LOUIS HOLLAND .
E. 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.
F. In the event that the Trust gives to the Agent its written
intention to terminate and appoint a successor transfer
agent, the Agent agrees to cooperate in the transfer of its
duties and responsibilities to the successor, including any
and all relevant books, records and other data established
or maintained by the Agent under this Agreement.
G. Should the Trust exercise its right to terminate, all
out-of-pocket expenses associated with the movement of
records and material will be paid by the Trust.
THE LOU HOLLAND TRUST FIRSTAR TRUST COMPANY
By: /S/ LOUIS A. HOLLAND By: /S/ ROBERT J. KERN
Attest: /S/ MONICA L. WALKER Attest: /S/ ANDREA MCVOY
Assistant Secretary
-7-
<PAGE>
FUND ADMINISTRATION SERVICING AGREEMENT
This Agreement is made and entered into on this 1ST day of APRIL , 1996, by
and between The Lou Holland Trust, a Delaware Business Trust organized as a
series company currently consisting of one series, the Growth Fund
(hereinafter referred to as the "Trust") and Firstar Trust Company, a
corporation organized under the laws of the State of Wisconsin (hereinafter
referred to as "FTC").
WHEREAS, The Trust is an open-ended management investment company which is
registered under the Investment Company Act of 1940;
WHEREAS, FTC is a trust company and, among other things, is in the business of
providing fund administration services for the benefit of its customers;
NOW, THEREFORE, the Trust and FTC do mutually promise and agree as follows:
I. Appointment of Administrator
The Trust hereby appoints FTC as Administrator of the Trust on the
terms and conditions set forth in this Agreement, and FTC hereby
accepts such appointment and agrees to perform the services and
duties set forth in this Agreement in consideration of the
compensation provided for herein.
II. Duties and Responsibilities of FTC
A. General Trust Management
1. Act as liaison among all fund service
providers, subject to the general
supervision of Holland Capital Management
(the "Investment Manager").
2. Coordinate board communication by:
a. Assisting fund counsel in establishing
meeting agendas
b. Preparing board reports based on financial
and administrative data
c. Evaluating independent auditor
d. Securing and monitoring fidelity bond and
director and officers liability coverage,
and making the necessary SEC filings
relating thereto
<PAGE>
3. Audits
a. Prepare appropriate schedules and assist
independent auditors
b. Provide information to SEC and facilitate
audit process
c. Provide office facilities
4. Assist in overall operations of the Trust
B. Compliance
1. Regulatory Compliance
a. Periodically monitor compliance with
Investment Company Act of 1940 requirements
1) Asset diversification tests
2) Total return and SEC yield
calculations
3) Maintenance of books and records
under Rule 31a-3
4) Code of ethics
b. Periodically monitor Trust's
compliance with the policies and
investment limitations of the Trust
as set forth in its prospectus and
statement of additional information
2. Blue Sky Compliance
a. Prepare and file with the appropriate state
securities authorities any and all required
compliance filings relating to the
registration of the securities of the Trust
so as to enable the Trust to make a
continuous offering of its shares
b. Monitor status and maintain registrations
in each state
3. SEC Registration and Reporting
a. Assisting Trust's counsel in updating
prospectus and statement of additional
information; and in preparing proxy
statements, and Rule 24f-2 notice,
b. Annual and semiannual reports
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<PAGE>
4. IRS Compliance
a. Periodically monitor Trust's status as a
regulated investment company under
Subchapter M through review of the
following:
1) Asset diversification requirements
2) Qualifying income requirements
3) Distribution requirements
b. Monitor short testing
c. Calculate required distributions (including
excise tax distributions)
5. Financial Reporting
6. Provide financial data required by fund prospectus
and statement of additional information
7. Prepare financial reports for shareholders, the
board, the SEC, and independent auditors
8. Supervise the Trust's Custodian and Fund
Accountants in the maintenance of the Trust's
general ledger and in the preparation of the
Trust's financial statements including oversight of
expense accruals and payments, of the determination
of net asset value of the Trust's net assets and of
the Trust's shares, and of the declaration and
payment of dividends and other distributions to
shareholders
C. Tax Reporting
1. Prepare and file on a timely basis appropriate
federal and state tax returns including forms
1120/8610 with any necessary schedules
2. Prepare state income breakdowns where relevant
3. File 1099 Miscellaneous for payments to directors
and other service providers
4. Monitor wash losses
5. Calculate eligible dividend income for corporate
shareholders
D. Coordinate with the Investment Manager with regard to all
services provided hereunder.
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<PAGE>
III. Compensation
The Trust agrees to pay FTC for performance of the duties listed in
this Agreement and the fees and out-of-pocket expenses as set forth
in the attached Schedule A. If the Trust terminates this Agreement
prior to the second anniversary of this Agreement, the Trust agrees
to reimburse FTC for the difference between the standard fee schedule
and the discounted fee schedule agreed to between the parties.
These fees may be changed from time to time, subject to mutual
written Agreement between the Trust and FTC
The Trust agrees to pay all fees and reimbursable expenses within ten
(10) business days following the mailing of the billing notice.
IV. Additional Series
In the event that The Lou Holland Trust, a Delaware Business Trust
organized as a series company currently consisting of one series, the
Growth Fund establishes one or more series of shares with respect to
which it desires to have FTC render fund administration services,
under the terms hereof, it shall so notify FTC in writing, and if FTC
agrees in writing to provide such services, such series will be
subject to the terms and conditions of this Agreement, and shall be
maintained and accounted for by FTC on a discrete basis. The funds
currently covered by this Agreement are: The Growth Fund
V. Performance of Service; Limitation of Liability
A. FTC shall exercise its best efforts in the performance of
its duties under this Agreement. FTC shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the
Trust in connection with matters to which this Agreement relates,
including losses resulting from mechanical breakdowns or the failure
of communication or power supplies beyond FTC's control, except a
loss resulting from FTC's refusal or failure to comply with the terms
of this Agreement or from bad faith, negligence, or willful
misconduct on its part in the performance of its duties under this
Agreement. Notwithstanding any other provision of this Agreement, the
Trust shall indemnify and hold harmless FTC from and against any and
all claims, demands, losses, expenses, and liabilities (whether with
or without basis in fact or law) of any and every nature (including
reasonable attorneys' fees) which FTC may sustain or incur or which
may be asserted against FTC by any person arising out of any action
taken or omitted to be taken by it in performing the services
hereunder (i) in accordance with the foregoing standards, or (ii) in
reliance upon any written or oral instruction provided to FTC by any
duly authorized officer of the Trust, such duly authorized officer to
be included in a list of authorized officers furnished to FTC and as
amended from time to time in writing by resolution of the Board of
Trustees of the Trust.
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<PAGE>
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its control, FTC shall take
all reasonable steps to minimize service interruptions for any period
that such interruption continues beyond FTC's control. FTC will make
every reasonable effort to restore any lost or damaged data and
correct any errors resulting from such a breakdown at the expense of
FTC. FTC agrees that it shall, at all times, have reasonable
contingency plans with appropriate parties, making reasonable
provision for emergency use of electrical data processing equipment
to the extent appropriate equipment is available. Representatives of
the Trust shall be entitled to inspect FTC's premises and operating
capabilities at any time during regular business hours of FTC, upon
reasonable notice to FTC.
Regardless of the above, FTC reserves the right to reprocess
and correct administrative errors at its own expense.
B. In order that the indemnification provisions contained in
this section shall apply, it is understood that if in any case the
Trust may be asked to indemnify or hold FTC harmless, the Trust shall
be fully and promptly advised of all pertinent facts concerning the
situation in question, and it is further understood that FTC will use
all reasonable care to notify the Trust promptly concerning any
situation which presents or appears likely to present the probability
of such a claim for indemnification against the Trust. The Trust
shall have the option to defend FTC against any claim which may be
the subject of this indemnification. In the event that the Trust so
elects, it will so notify FTC and thereupon the Trust shall take over
complete defense of the claim, and FTC shall in such situation
initiate no further legal or other expenses for which it shall seek
indemnification under this section. FTC shall in no case confess any
claim or make any compromise in any case in which the Trust will be
asked to indemnify FTC except with the Trust's prior written consent.
C. FTC shall indemnify and hold the Trust harmless from and
against any and all claims, demands, losses, expenses, and
liabilities (whether with or without basis in fact or law) of any and
every nature (including reasonable attorneys' fees) which may be
asserted against the Trust by any person arising out of any action
taken or omitted to be taken by FTC as a result of FTC's refusal or
failure to comply with the terms of this Agreement, its bad faith,
negligence, or willful misconduct.
D. These indemnification provisions shall survive the
termination of this Agreement.
VI. Confidentiality
FTC shall handle, in confidence, all information relating to the
Trust's business which is received by FTC during the course of
rendering any service hereunder.
-5-
<PAGE>
VII. Data Necessary to Perform Service
The Trust or its agent, which may be FTC, shall furnish to FTC the
data necessary to perform the services described herein at times and
in such form as mutually agreed upon.
VIII. Terms of Agreement
This Agreement shall become effective as of the date hereof and,
unless sooner terminated as provided herein, shall continue
automatically in effect for successive annual periods. The Agreement
may be terminated by either party upon giving ninety (90) days prior
written notice to the other party or such shorter period as is
mutually agreed upon by the parties.
IX. Duties in the Event of Termination
In the event that, in connection with termination, a successor to any
of FTC's duties or responsibilities hereunder is designated by the
Trust by written notice to FTC, FTC will promptly, upon such
termination and at the expense of the Trust, transfer to such
successor all relevant books, records, correspondence, and other data
established or maintained by FTC under this Agreement in a form
reasonably acceptable to the Trust (if such form differs from the
form in which FTC has maintained, the Trust shall pay any expenses
associated with transferring the data to such form), and will
cooperate in the transfer of such duties and responsibilities,
including provision for assistance from FTC's personnel in the
establishment of books, records, and other data by such successor.
X. Choice of Law
This Agreement shall be construed in accordance with the laws of the
State of Wisconsin.
XI. 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.
XII. Notices
Notices of any kind to be given by either party to the other party
shall be in writing and shall be duly given if mailed or delivered as
follows: Notice to FTC shall be sent to Joe Nueberger, 615 East
Michigan Street, Milwaukee, Wisconsin 53202, and notice to Trust
shall be sent to The Lou Holland Trust, Suite 3260, 35 West Wacker
Drive, Chicago, Illinois 60801.
-6-
<PAGE>
XIII. Records
FTC shall keep records relating to the services to be performed
hereunder, in the form and manner, and for such period as it may deem
advisable and is agreeable to the Trust but not inconsistent with the
rules and regulations of appropriate government authorities, in
particular, Section 31 of the Investment Company Act of 1940 as
amended (the "Investment Company Act"), and the rules thereunder. FTC
agrees that all such records prepared or maintained by FTC relating
to the services to be performed by FTC hereunder are the property of
the Trust and will be preserved, maintained, and made available with
such section and rules of the Investment Company Act and will be
promptly surrendered to the Trust on and in accordance with its
request.
The Lou Holland Trust FIRSTAR TRUST COMPANY
By: /S/ LOUIS A. HOLLAND By: /S/ ROBERT J. KERN
Attest: /S/ MONICA L. WALKER Attest: /S/ ANDREA MCVOY
-7-
<PAGE>
FUND ACCOUNTING SERVICING AGREEMENT
This contract between The Lou Holland Trust, a Delaware business trust
organized as a series company currently consisting of one series, the Growth
Fund, hereinafter called the "Trust," and Firstar Trust Company, a Wisconsin
corporation, hereinafter called "FTC," is entered into on this
1ST day of APRIL , 1996.
WHEREAS, The Lou Holland Trust, is an open-ended management investment
company registered under the Investment Company Act of 1940; and
WHEREAS, Firstar Trust Company ("FTC") is in the business of providing,
among other things, mutual fund accounting services to investment companies;
NOW, THEREFORE, the parties do mutually promise and agree as follows:
1. SERVICES. FTC agrees to provide the following mutual fund accounting
services to the Trust all in compliance with the requirements of the
Investment Company Act of 1940 (the "1940 Act") and rules thereunder:
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date + basis
using security trade information communicated from the investment
manager on a timely basis.
(2) For each valuation date, obtain prices from pricing
sources approved by the Board of Trustees and apply those prices
to the portfolio positions. For those securities where market
quotations are not readily available, the Board of Trustees shall
approve, in good faith, the method for determining the fair value
for such securities.
(3) Identify interest and dividend accrual balance as of
each valuation date and calculate gross earnings on investments
for the accounting period.
(4) Determine gain/loss on security sales and identif
them as to short-short, short- or long-term status; account for
periodic distributions of gains or losses to shareholders and
maintain undistributed gain or loss balances as of each valuation
date.
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense accrual
amounts as directed by the Trust as to methodology, rate or dollar
amount. (See Exhibit A)
<PAGE>
(2) Record payments for Trust expenses upon receipt of
written authorization from the Trust.
(3) Account for trust expenditures and maintain expense
accrual balances at the level of accounting detail, as agreed upon
by FTC and the Trust.(See Exhibit A)
(4) Provide expense accrual and payment reporting.
C. Trust Valuation and Financial Reporting Services:
(1) Account for trust share purchases, sales, exchanges,
transfers, dividend reinvestments, and other trust share activity
as reported by the transfer agent on a timely basis.
(2) Apply equalization accounting as directed by the
Trust.(See Exhibit A)
(3) Determine net investment income (earnings) for the
Trust as of each valuation date. Account for periodic
distributions of earnings to shareholders and maintain
undistributed net investment income balances as of each valuation
date.
(4) Maintain a general ledger for the Trust.
(5) For each day the Trust is open as defined in the
prospectus, determine the net asset value of the according to the
accounting policies and procedures set forth in the prospectus.
(6) Calculate per share net asset value, per share net
earnings, and other per share amounts reflective of trust operation
at such time as required by the nature and characteristics of t
Trust.
(7) Communicate, by 5:00 p.m. CST, the net asset value
for each valuation date to parties as agreed upon from time
to time.
(8) Prepare monthly reports which document the adequacy of
accounting detail to support month-end ledger balances.
D. Tax Accounting Services:
(1) Maintain accounting records for the investment
portfolio of the Trust to support the tax reporting required for
IRS-defined regulated investment companies.
(2) Maintain tax lot detail for the investment portfolio.
-2-
<PAGE>
(3) Calculate taxable gain/loss on security sales using
the tax lot relief method designated by the Trust.
(4) Provide the necessary financial information to support
the taxable components of income and capital gain distributions to
the transfer agent to support tax reporting to the shareholders.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies and support
financial statement preparation by making the trust accounting
records available to The Lou Holland Trust, the Securities and
Exchange Commission, and the outside auditors.
(2) Maintain accounting records according to the
Investment Company Act of 1940 and regulations provided thereunder.
2. PRICING OF SECURITIES. For each valuation date, obtain prices from
pricing sources selected by FTC but approved by the Trust's Board and apply
those prices to the portfolio positions. For those securities where market
quotations are not readily available, the Trust's Board shall approve, in good
faith, the method for determining the fair value for such securities.
If the Trust desires to provide a price which varies from the
pricing source, the Trust shall promptly notify and supply FTC with the
valuation of any such security on each valuation date. All pricing changes
made by the Trust will be in writing and must specifically identify the
securities to be changed by CUSIP, name of security, new price or rate to be
applied, and, if applicable, the time period for which the new prices is
effective.
3. CHANGES IN ACCOUNTING PROCEDURES. Any resolution passed by the
Board of Trustees that affects accounting practices and procedures under this
agreement shall be effective upon written receipt and acceptance by the FTC.
4. CHANGES IN EQUIPMENT, SYSTEMS, SERVICE, ETC. FTC reserves the
right to make changes from time to time, as it deems advisable, relating to
its services, systems, programs, rules, operating schedules and equipment, so
long as such changes do not adversely affect the service provided to the Trust
under this Agreement.
5. COMPENSATION. FTC shall be compensated for providing the services
set forth in this Agreement in accordance with the Fee Schedule attached
hereto as Exhibit A and as mutually agreed upon and amended from time to time.
Notwithstanding the foregoing, if the Trust terminates this Agreement prior to
the second anniversary of this Agreement, the Trust agrees to reimburse FTC
for the difference between the standard fee schedule and the discounted fee
schedule agreed to between the parties.
-3-
<PAGE>
6. PERFORMANCE OF SERVICE: INDEMNIFICATION.
A. FTC shall exercise reasonable care in the performance of
its duties under this Agreement. FTC shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the
Trust in connection with matters to which this Agreement relates,
including losses resulting from mechanical breakdowns or the failure
of communication or power supplies beyond FTC's control, except a
loss resulting from FTC's refusal or failure to comply with the terms
of this Agreement or from bad faith, negligence, or willful
misconduct on its part in the performance of its duties under this
Agreement. Notwithstanding any other provision of this Agreement, the
Trust shall indemnify and hold harmless FTC from and against any and
all claims, demands, losses, expenses, and liabilities (whether with
or without basis in fact or law) of any and every nature (including
reasonable attorneys' fees) which FTC may sustain or incur or which
may be asserted against FTC by any person arising out of any action
taken or omitted to be taken by it in performing the services
hereunder (i) in accordance with the foregoing standards, or (ii) in
reliance upon any written or oral instruction provided to FTC by any
duly authorized officer of the Trust, such duly authorized officer to
be included in a list of authorized officers furnished to FTC and as
amended from time to time in writing by resolution of the Board of
Directors of the Trust.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its control, FTC shall take
all reasonable steps to minimize service interruptions for any period
that such interruption continues beyond FTC's control. FTC will make
every reasonable effort to restore any lost or damaged data and
correct any errors resulting from such a breakdown at the expense of
FTC. FTC agrees that it shall, at all times, have reasonable
contingency plans with appropriate parties, making reasonable
provision for emergency use of electrical data processing equipment
to the extent appropriate equipment is available. Representatives of
the Trust shall be entitled to inspect FTC's premises and operating
capabilities at any time during regular business hours of FTC, upon
reasonable notice to FTC.
Regardless of the above, FTC reserves the right to reprocess
and correct administrative errors at its own expense.
B. In order that the indemnification provisions contained in
this section shall apply, it is understood that if in any case the
Trust may be asked to indemnify or hold FTC harmless, the Trust shall
be fully and promptly advised of all pertinent facts concerning the
situation in question, and it is further understood that FTC will use
all reasonable care to notify the Trust promptly concerning any
situation which presents or appears likely to present the probability
of such a claim for indemnification against the Trust. The Trust
shall have the option to defend FTC against any claim which may be
the subject of this indemnification. In the event that the Trust so
elects, it will so notify FTC and thereupon the Trust shall take over
complete defense of the claim, and FTC
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<PAGE>
shall in such situation initiate no further legal or other expenses
for which it shall seek indemnification under this section. FTC shall
in no case confess any claim or make any compromise in any case in
which the Trust will be asked to indemnify FTC except with the
Trust's prior written consent.
C. FTC shall indemnify and hold the Trust harmless from and
against any and all claims, demands, losses, expenses, and
liabilities (whether with or without basis in fact or law) of any and
every nature (including reasonable attorneys' fees) which may be
asserted against the Trust by any person arising out of any action
taken or omitted to be taken by FTC as a result of FTC's refusal or
failure to comply with the terms of this Agreement, its bad faith,
negligence, or willful misconduct
D. These indemnification provisions shall survive the
termination of this Agreement.
7. RECORDS. FTC shall keep records relating to the services to be
performed hereunder, in the form and manner, and for such period as it may
deem advisable and is agreeable to the Trust but not inconsistent with the
rules and regulations of appropriate government authorities, in particular,
Section 31 of The Investment Company Act of 1940 as amended (the "Investment
Company Act"), and the rules thereunder. FTC agrees that all such records
prepared or maintained by FTC relating to the services to be performed by FTC
hereunder are the property of the Trust and will be preserved, maintained, and
made available with such section and rules of the Investment Company Act and
will be promptly surrendered to the Trust on and in accordance with its
request.
8. CONFIDENTIALITY. FTC shall handle in confidence all information
relating to the Trust's business, which is received by FTC during the course
of rendering any service hereunder.
9. DATA NECESSARY TO PERFORM SERVICES. The Trust or its agent, which
may be FTC, shall furnish to FTC the data necessary to perform the services
described herein at times and in such form as mutually agreed upon.
10. NOTIFICATION OF ERROR. The Trust will notify FTC of any balancing
or control error caused by FTC within three (3) business days after receipt of
daily share balance and transaction journals rendered by FTC to the Trust, or
within three (3) business days after discovery of any error or omission not
covered in the balancing of daily cash and shares or control procedure, or
within three (3) business days of receiving notice from any shareholder
11. ADDITIONAL SERIES. In the event that The Lou Holland Trust
establishes one or more series of shares with respect to which it desires to
have FTC render accounting services, under the terms hereof, it shall so notify
FTC in writing, and if FTC agrees in writing to
-5-
<PAGE>
provide such services, such series will be subject to the terms and conditions
of this Agreement, and shall be maintained and accounted for by FTC on a
discrete basis. The portfolios currently covered by this Agreement are: the
Growth Fund
12. TERM OF AGREEMENT. This Agreement may be terminated by either
party upon giving ninety (90) days prior written notice to the other party or
such shorter period as is mutually agreed upon by the parties. However, this
Agreement may be replaced or modified by a subsequent agreement between the
parties.
13. DUTIES IN THE EVENT OF TERMINATION. In the event that in
connection with termination a Successor to any of FTC's duties or
responsibilities hereunder is designated by The Lou Holland Trust by written
notice to FTC, FTC will promptly, upon such termination and at the expense of
The Lou Holland Trust, transfer to such Successor all relevant books, records,
correspondence and other data established or maintained by FTC under this
Agreement in a form reasonably acceptable to The Lou Holland Trust (if such
form differs from the form in which FTC has maintained the same, The Lou
Holland Trust shall pay any expenses associated with transferring the same to
such form), and will cooperate in the transfer of such duties and
responsibilities, including provision for assistance from FTC's personnel in
the establishment of books, records and other data by such successor.
14. NOTICES. Notices of any kind to be given by either party to the
other party shall be in writing and shall be duly given if mailed or delivered
as follows: Notice to FTC shall be sent to ________________, and notice to
Trust shall be sent to ___________________________.
15. 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.
16. CHOICE OF LAW. This Agreement shall be construed in accordance
with the laws of the State of Wisconsin.
IN WITNESS WHEREOF, the due execution hereof on the date first above
written.
ATTEST: Firstar Trust Company
/S/ ANDREA MCVOY By: /S/ ROBERT J. KERN
ATTEST: The Lou Holland Trust
/S/ MONICA L. WALKER By: /S/ LOUIS A. HOLLAND
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<PAGE>
FIRSTAR TRUST COMPANY
MUTUAL FUND ACCOUNTING
NEW FUND QUESTIONNAIRE
Fund Name: THE LOU HOLLAND GROWTH FUND
Ticker Symbol: N/A
Contact Person: MONICA WALKER AT HOLLAND / MARY VANDERLOOP AT FIRSTAR TRUST CO.
Telephone Number: (312) 553-1028 / (414) 287-3867
Address:35 W. WACKER DRIVE STE 3260, CHICAGO, IL 60601/FUND ADMINISTRATION LC-2
Fiscal Year-End: 12/31
Tax Method: Tax Lot Relief
If no specific
identification,
default to:
Fifo Low Cost
High Cost X Minimum Gain
Maximum Gain Last In, First Out
Income Dividend Distribution Frequency: ANNUALLY
Equalization Account: Yes No X
Pricing:
Stocks (Close not available): Bid X Mean
---------
Bonds: Bid X Mean
---------
60-Day Rule: LT ST X
--------- -----
Amortization/Accretion
Book Same as Tax: Yes X No
---------
Amortize Morgage-Backed: Yes X No
---------
Begin on: Trade Plus One X Settle
---------
Long Term
Premium (Check one): Straight Line to Call
Straight Line to Maturity
Yield to Call X
Yield to Maturity
O.I.D. Discount (Check one): Straight Line to Maturity
Yield to Maturity X
Short Term
Premium (Check one): Straight Line to Call
Straight Line to Maturity
Yield to Call X
Yield to Maturity
Discount (Check one): Straight Line to Maturity X Accretion
of market
discount @
disposition
Weekend Accrual Performed On:
Monday
Friday X
Interest Income Accrual:
30/360 Spread Yes No X
97502
<PAGE>
EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT made as of the 1ST day of APRIL , 1996,
by and between The Lou Holland Trust, a Delaware business trust (the "Trust"),
on behalf of its sole series, the Growth Fund (the "Fund"), 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, on behalf of the Fund, and the Investment Manager
have entered into an Investment Management and Administration Agreement, dated
March 27, 1996, (the "Management Agreement") pursuant to which the Investment
Manager will render investment management and administration services to the
Fund for compensation based on the value of the average daily net assets of
the Fund; and
WHEREAS, the Trust and the Investment Manager have determined that it
is appropriate and in the best interests of the Fund and its shareholders to
maintain Fund expenses at a level below that to which the Fund would normally
be subject during the first year of its operation.
NOW THEREFORE, the parties hereto agree as follows:
1. EXPENSE LIMIT.
1.1. LIMITATION. To the extent that the aggregate expense of
every character incurred by the Fund during the first year of its operation,
including but not limited to investment management and administration fees of
the Investment Manager (but excluding interest, taxes, brokerage commissions,
and other expenditures which are capitalized in accordance with generally
accepted accounting principles, and other extraordinary expenses not incurred
in the ordinary course of the Fund's business) ("Fund Operating Expenses"),
exceeds the "Expense Limit," which is the lower of (i) the lowest applicable
limit actually enforced by any state in which the Fund's shares are qualified
for sale or (ii) 1.35% of the average daily net assets of the Fund, such
excess amount ("Excess Amount") shall be the liability of the Investment
Manager.
1.2. METHOD OF COMPUTATION. To determine the Investment
Manager's liability for the Excess Amount, the Fund Operating Expenses shall
be annualized monthly as of the last day of the month. If the annualized Fund
Operating Expenses for any month exceed 1/12th of the Expense Limit, the
Investment Manager shall first waive or reduce its investment management and
administration fee for such month, as appropriate, to the extent necessary to
pay such Excess Amount. In the event the Excess Amount exceeds the amount of
the investment management and administration fee for such month, the
Investment Manager, in addition to waiving its entire investment management
and administration fee for such month, shall also remit
<PAGE>
to the Fund the difference between the Excess Amount and the amount due as the
investment management and administration fee.
2. TERMINATION OF AGREEMENT. This Agreement shall continue in effect
for a period of one year from the date of execution and may be terminated
thereafter by either party hereto, without payment of any penalty, upon 90
days' prior notice in writing to the other party at its principal place of
business; provided that, in the case of termination by the Trust, such action
shall be authorized by resolution of the Board of Trustees of the Trust.
3. MISCELLANEOUS.
3.1. NOTICES. Any notice under this Agreement shall be given
in writing, addressed and delivered, or mailed postpaid, (a) if to the
Investment Manager, to Holland Capital Management, L.P., Suite 3260, 35 West
Wacker Drive, Chicago, Illinois 60601, and (b) if to the Trust, at the
foregoing office of the Investment Manager.
3.2. 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.
3.3. 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 its responsibility for and control of the conduct of the
affairs of the Trust.
3.4. DEFINITIONS. Any question of interpretation of any term
or provision of this Agreement, including but not limited to the investment
management and administration fee, the computations of net asset values, and
the allocation of expenses, having a counterpart in or otherwise derived from
the terms and provisions of the Management Agreement, shall have the same
meaning as and be resolved by reference to such Agreement.
<PAGE>
3.5. 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, as of the day
and year first above written.
ATTEST: THE LOU HOLLAND TRUST
ON BEHALF OF THE GROWTH FUND
/S/ MONICA L. WALKER By: /S/ LOUIS A. HOLLAND
ATTEST: HOLLAND CAPITAL MANAGEMENT, L.P.
/S/ MONICA L. WALKER By: /S/ LOUIS A. HOLLAND
90854
<PAGE>
SHARE SUBSCRIPTION AGREEMENT
THIS AGREEMENT is by and between Holland Capital Management, L.P.
("Investment Manager") and The Lou 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 1st day of April , 1996.
HCM INVESTMENTS, INC.
By: /s/ Louis A. Holland
Louis A. Holland
President, Treasurer & Director
THE LOU HOLLAND TRUST
By: /s/ Louis A. Holland
Louis A. Holland
President & Chairman of the Board
<PAGE>
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<NAME> Lou Holland Trust
<CAPTION>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-29-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 2555162
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<ACCUMULATED-NII-PRIOR> 0
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