As Filed with the Securities and Exchange Commission
on March 3, 1999
Registration Nos. 333 - 62893
811 - 08989
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
Pre Effective Amendment No. 2 |x|
Post Effective Amendment No. __ |_|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. 2 |x|
INDUSTRY LEADERS FUND
--------------------------------------------------
(Exact name of Registrant as specified in charter)
104 Summit Avenue, Box 80, Summit, New Jersey 07902-0080
--------------------------------------------
(Address of Principal Executive Offices)
(908) 273-5440
-------------------------------
(Registrant's telephone number)
Gerald P. Sullivan
Claremont Investment Partners, L.L.C.
104 Summit Avenue, Box 80, Summit, NJ 07902-0080
--------------------------------------------
(Name and address for agent for service)
Copies of all correspondence to:
Travis L. Gering, Esq.
Wuersch & Gering LLP
11 Hanover Square - 21st Floor
New York, NY 10005
Approximate Date of Proposed Public Offering: As soon as practicable after
this Registration Statement becomes effective.
Title of Securities Being Registered: Shares of Beneficial Interest of the
Industry Leaders Fund.
Registrant hereby declares its intention to register an indefinite number of
shares of beneficial interest pursuant to Rule 24f-2 under the Investment
Company Act of 1940, as amended.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO RULE 404(a)
UNDER THE SECURITIES ACT OF 1933
The enclosed prospectus and Statement of Additional Information ("SAI") for the
Industry Leaders Fund(R) relate to Class D and Class I Shares.
PART A
ITEM PROSPECTUS CROSS REFERENCE/CAPTION
1 (a) Front Cover Page
(b) Back Cover Page
2 (a) Overview of the Industry Leaders
Fund(R) - Risk/Return Summary - Investment Objective of
The Fund
(b) Overview of the Industry Leaders
Fund(R) - Risk/Return Summary - Principal Investment
Strategy of the Fund
(c) Overview of the Industry Leaders
Fund(R)- Risk/Return Summary - Principal Risks of
Investing in the Fund
3 Overview of the Industry Leaders
Fund(R) - Risk/Return Summary - Fees and Expenses of
the Fund
4 (a) Investments - Principal Investment Objectives
(b) Investment Strategy
(c) Important Risk Considerations
5 Not Applicable
6 (a) Management of the Fund
(b) Not Applicable
7 (a) Shareholder Information
(b) How You Can Invest With The Industry Leaders Fund(R)
(c) How You Can Invest With The Industry Leaders Fund(R)
(d) Dividends, Distributions
(e) Taxes
(f) Not Applicable
8 (a) Overview of the Industry Leaders Fund(R) -
Risk/Return Summary - Fees and Expenses of the Fund;
Distribution Arrangements; How You Can Invest
With The Industry Leaders Fund(R)
(b) Distribution Arrangements - Distribution Plan
(c) Not Applicable
9 Not Applicable
PART B
ITEM STATEMENT OF ADDITIONAL INFORMATION CROSS REFERENCE/CAPTION
10 (a) Front Cover Page
(b) Table of Contents
11 (a) Overview Of The Statement Of Additional Information;
Description Of Fund Shares
(b) Not Applicable
12 (a) Overview Of The Statement Of Additional Information
(b) Fundamental Investment Restrictions; Non-Fundamental
Investment Restrictions; Instruments in which the
Fund Can Invest
(c) Investment Objectives and Policies; Fundamental
Investment Restrictions; Non-Fundamental Investment
Restrictions; Instruments in which the Fund Can
Invest
(d) Not Applicable
(e) Not Applicable
13 Trustees and Officers of the Fund
14 (a) Control Persons and Principal Holders of Securities
(b) Control Persons and Principal Holders of Securities
(c) Trustees and Officers
15 (a) Investment Management and Other Services
(b) Distributor
(c) Investment Management and Other Services
(d) Distributor; Administrator; Transfer Agent and Fund
Accounting Services; Distribution Plan; Fund
Custodian
(e) Not Applicable
(f) Additional Purchase and Redemption Information
(g) Distribution Plan
(h) Distributor; Administrator; Transfer Agent and Fund
Accounting Services; Distribution Plan; Fund
Custodian
16 (a) Portfolio Transactions and Brokerage
(b) Not Applicable
(c) Portfolio Transactions and Brokerage
(d) Not Applicable
(e) Not Applicable
17 (a) Description of Fund Shares
(b) Not Applicable
18 (a) Net Asset Valuation; Additional Purchase and Redemption
Information
(b) Not Applicable
(c) Additional Purchase and Redemption Information
(d) Additional Purchase, Exchange, and Redemption
Information
19 Taxes
20 (a) Distributor
(b) Not Applicable
(c) Not Applicable
21 Not Applicable
22 (a) Financial Statements
(b) Not Applicable
<PAGE>
PART C
The information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C in the Registration Statement.
<PAGE>
THE INDUSTRY LEADERS FUND(R)
104 Summit Avenue - Box 80
Summit, New Jersey 07902-0080
Toll Free: (877) 280-1952
[Industry Leaders Fund(R) Logo Graphic]
PROSPECTUS ______ __, 1999
THE INDUSTRY LEADERS FUND(R) SERVES DIRECT, ADVISED,
AND INSTITUTIONAL INVESTORS
The Industry Leaders Fund(R) (the "Fund") is an open-end, diversified mutual
fund. The Fund seeks long-term capital appreciation through a proprietary method
of investing in the common stocks of companies having the highest common
stockholders' equity in their respective industries. The Fund is intended for
investors who seek investment through a diversified portfolio comprised of large
capitalization companies.
The Adviser to the Industry Leaders Fund(R) is Claremont Investment Partners(R)
L.L.C.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold, nor may
offers to buy be accepted, prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or solicitation
of any offer to buy, nor shall there be any sale of these securities in any
state in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such state.
This prospectus contains important information about investing in the Industry
Leaders Fund(R). Please carefully read the prospectus before you invest and keep
it for future reference. Your investment in the Industry Leaders Fund(R) is
affected by market fluctuations and there is no guarantee that the Fund will
achieve its objectives.
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.
<PAGE>
TABLE OF CONTENTS
FOR YOUR CONVENIENCE, A GLOSSARY OF TERMS
USED IN THIS PROSPECTUS MAY BE FOUND
ON THE INSIDE BACK COVER.
Overview of the Industry Leaders Fund(R) Risk/Return Summary:
Objective of the Fund
Principal Investment Strategy of the Fund
Principal Risks of Investing in the Fund
Who May Want to Invest in the Fund
Fees and Expenses
Principal Investment Objectives
Investment Strategy
Investment Policies
Important Risk Considerations
Hypothetical Performance of the Industry Leaders Strategy Model(TM)
Management of the Fund
Shareholder Information
Distribution Arrangements
How You Can Invest with the Industry Leaders Fund(R)
How to Redeem Your Shares
Special Services
Dividends and Distributions
Taxes
Glossary of Terms
Exhibit A - Industry Leaders Strategy Model(TM)
Additional Information
<PAGE>
OVERVIEW OF THE INDUSTRY LEADERS FUND(R)
RISK/RETURN SUMMARY
OBJECTIVE OF THE FUND
The objective of the Fund is to obtain long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGY OF THE FUND
The Fund's approach is to invest in companies with the highest common
stockholders' equity in their respective industries.
o Common stockholders' equity refers to a company's assets minus its
liabilities, preferred stock and minority interests.
o The Fund utilizes the Adviser's proprietary Industry Leaders
Strategy Model(TM) (referred to as the "Strategy Model") to pursue
the principal investment strategy.
o The companies selected by the Strategy Model for Fund investment
are predominantly leaders in their respective industries.
o The Fund anticipates that the investment portfolio will consist of
the common stock of approximately 100 primarily domestic large
capitalization companies from approximately 85 different
industries.
PRINCIPAL RISKS OF INVESTING IN THE FUND
The Fund is subject to the same risks common to all mutual funds that invest in
equity securities. You could lose money by investing in the Fund, if any of the
following occur:
o The stock market goes down (known as a "bear market").
o Fees and expenses are greater than investment returns.
The following risks of loss are particular to investing in the Fund:
o The Strategy Model may not perform as expected.
Large Capitalization stocks may fall out of favor with investors.
A detailed discussion of risks is set forth below under the heading, "Important
Risk Considerations."
<PAGE>
Before investing in the Fund, you should read this Prospectus in its entirety
and keep in mind all of the following:
o Mutual fund shares are subject to risks, including possible loss
of your principal investment.
o Mutual fund shares are not insured by the Federal Deposit
Insurance Corporation (FDIC) or any other government or private
agency.
o Mutual fund shares are not deposit obligations of any bank, nor
are they guaranteed, endorsed, or insured by any bank or other
institution.
WHO MAY WANT TO INVEST IN THE FUND
The Fund may be a suitable investment if you are:
o Seeking investment over the long term
o Seeking investment mainly in U.S. companies
o Seeking a systematic and disciplined large capitalization strategy.
However, the Fund is NOT appropriate if you are:
o Seeking short-term gains or current income
o Seeking absolute predictability and stability of investment principal
o Not willing to take any risk of losing money on an investment.
Two classes of Fund shares (the "Shares") are available for prospective
investors who wish to invest in the Fund:
o Class D Shares - For purchase by advised investors and
self-directed investors
o Class I Shares - For purchase by institutional investors.
<PAGE>
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
Shares of the Fund.
SHAREHOLDER FEES
(fees paid directly from your investment)
<TABLE>
<CAPTION>
Class D Class I
------------- -------------
<S> <C> <C>
Maximum Sales Charge (Load) on initial purchases (1) None None
Maximum Deferred Sales Charge (Load) None None
Maximum Sales Charge (Load) on Reinvested Dividends None None
Redemption Fees (as a percentage of amount redeemed)(2) 0.75% None
Maximum Annual Account Fees None None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
<TABLE>
<CAPTION>
Class D Class I
------------- -------------
<S> <C> <C>
Management Fees 0.70% 0.70%
Distribution Plan (12b-1) Fees (3) 0.25% None
Other Fund Expenses None None
------------- -------------
Total Annual Fund Operating Expenses 0.95% 0.70%
(1) "Load" is another name for a sales charge.
(2) Redemption fees are charged if you redeem Class D Shares held for less
than six months. Redemption fees are paid to the Advisor.
(3) Under the Fund's Rule 12b-1 Distribution Plan, the Fund may charge
Class D Shares up to 0.25% per year for Class D distribution expenses.
See "Distribution Arrangements" below.
</TABLE>
<PAGE>
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated below and then redeem all of your Shares at the end of those periods.
The example also assumes that your investment has a 5% return each year and that
the Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
Class D Class I
- ------------------------------------- -----------------------------------
1 year 3 years 1 year 3 years
$97.00 $303.00 $71.00 $224.00
You would pay the same expenses if you did not redeem your Shares (redemption
fees apply only to redemptions occurring within six months of purchase for Class
D Shares).
<PAGE>
PRINCIPAL INVESTMENT OBJECTIVES
The Industry Leaders Fund(R) objective is to obtain long-term capital
appreciation.
INVESTMENT STRATEGY
The Fund's principal investment strategy is to invest in a broad number of
industries and companies with the highest common stockholders' equity in their
respective industries. To implement this investment approach, the Fund utilizes
the Adviser's proprietary Strategy Model. The companies selected by the Strategy
Model for Fund investment are predominantly leaders in their respective
industry. The Fund anticipates that the investment portfolio during most periods
will include approximately 100 primarily domestic companies across approximately
85 different industries.
The Fund investment portfolio is constructed by the Strategy Model
according to the following steps:
The Strategy Model Universe.
1. Companies and industries that are listed in the Value Line Investment
Survey(R) ("Value Line") form the starting point for identifying the
companies included in the Strategy Model universe.
2. Value Line lists approximately 1,700 companies and classifies each
company into an industry category (each, an "Industry").
3. The Strategy Model universe is comprised of all Value Line listed
companies except for the following
exclusions:
(a) The Strategy Model excludes from its universe companies that
are in the following current Industries:
o Canadian Banks
o Canadian Energy
o Foreign Electronics/Entertainment
o Foreign Telecommunications
o Investment Companies (Closed-End Domestic)
o Investment Companies (Foreign Funds)
o Investment Companies (Income)
(b) The Strategy Model excludes from its universe companies
whose shares are not directly traded in the United States
(E.G., American Depository Receipts, commonly referred to as
"ADRs").
<PAGE>
(c) The Strategy Model also excludes from its universe companies
included in Value Line as "recent additions" but which have
not yet been assigned an Industry category.
4. In establishing its universe of stocks, the Strategy Model also
adjusts the Industry category of "Banks" to include "Banks Midwest" so
as to unify the banking Industry analysis.
5. Industries and companies are included in the Strategy Model universe
only for the periods during which they are listed in Value Line.
Portfolio Allocation.
6. The Strategy Model then identifies the common stockholders' equity of
each company included in the Strategy Model universe. Common
stockholders' equity refers to a company's assets minus its
liabilities, preferred stock and minority interests. All of the
foregoing information is obtained from publicly available financial
statements that each company in the Strategy Model universe is
required by law to file with the United States Securities and Exchange
Commission on a quarterly basis. Each financial statement identifies,
as separate line-items, the company's assets, liabilities, preferred
stock and minority interests.
7. The Strategy Model totals the common stockholders' equity of all
companies included in the Strategy Model
universe.
8. The Strategy Model then obtains the subtotal of common stockholders'
equity for each Industry by aggregating the common stockholders'
equity of all companies included within that Industry.
9. By dividing the subtotal of stockholders' equity within each Industry
by the grand total of stockholders' equity of all companies in the
Strategy Model universe, the Strategy Model determines the universe's
percentage of stockholders' equity within each Industry. For example,
if the total Strategy Model universe had $2.7 trillion worth of total
common stockholders' equity and the Industry category of Auto & Truck
companies had aggregate common stockholders' equity of $40.7 billion,
the Auto & Truck Industry would be deemed to contain 1.51% of the
Strategy Model universe.
10. The Strategy Model then allocates a percentage of the Fund's
investment portfolio to each Industry at the same percentage that each
Industry contains of the Strategy Model universe. Continuing the
example above, the Strategy Model would allocate 1.51% of the Fund's
portfolio for investment in the Auto & Truck Industry.
<PAGE>
Specific Portfolio Investments.
11. After the Industry allocation determination, the Strategy Model
determines specific company investments by selecting the leading
company within each Industry. A company is considered to be the
Industry leader if it has the highest common stockholders' equity in
that Industry and no other company in that same Industry has 98% or
more of that Industry leader's amount of common stockholders' equity.
Continuing the above example, if Ford had the highest common
stockholders' equity in the Auto & Truck Industry of $23.54 billion,
98% of that equity would be $23.07 billion. Assuming no other company
in the Auto & Truck Industry had $23.07 billion or more in common
stockholders' equity, the Fund would invest the entire 1.51% of the
portfolio Auto & Truck Industry allocation in Ford Motor Company
common stock.
12. In the event multiple companies are to be included in an Industry, the
portfolio allocation is divided equally between the companies
selected. For example, if the Strategy Model determined that 1.2% of
the portfolio should be allocated to the Railroad Industry and the
analysis showed that Union Pacific had the highest amount of
stockholders' equity in that Industry, but the amount of common
stockholders' equity of Burlington Northern/Santa Fe was within 98% of
the amount of common stockholders' equity of Union Pacific, the Fund
would invest 0.6% of its portfolio in each of the two companies, for a
total 1.2% portfolio investment in the Railroad Industry as per the
Strategy Model allocation.
13. The Strategy Model also has a monthly portfolio allocation limit of
2.25% for any one company. For an Industry with a portfolio allocation
greater than the individual limit of 2.25%, the company with the
next-highest stockholders' equity is added until the percentage
portfolio allocation is complete. The 2.25% individual company
investment rule is maintained with respect to portfolio investments
that are made in multiple companies which are within one Industry. For
example, if the Strategy Model allocates 9% of the portfolio to the
Bank Industry, the maximum that the Fund could invest in any one
banking company would be 2.25% of the Fund's portfolio value, after
which the next leading banking company with the highest stockholders'
equity would be selected for investment, up to 2.25% for each
subsequent company, until the Strategy Model Industry portfolio
allocation percentage of 9% is reached.
14. The 98% leader differentiation rule is also maintained with respect to
portfolio investments that are made in an Industry which has a
portfolio allocation greater than the 2.25%. For example, if the
Electric Utility East Industry portfolio allocation is 3.1% and
Southern Company is the Industry leader, with Duke Energy as the
second Industry leader but not having its common stockholders equity
equal an amount of 98% or more of the common stockholders equity of
Southern Company, the Fund would invest 2.25% in Southern Company and
the balance of the Industry portfolio allocation of 0.85% in Duke
Energy. In the event that Duke Energy had its common stockholders
equity equal 98% or more of the common stockholders equity of Southern
Company, the Fund would divide its 3.1% Electric Utility East Industry
portfolio allocation for equal investment in each of the two
companies.
15. The Strategy Model is re-calculated and re-balanced monthly. The Fund
portfolio is adjusted accordingly by buying and/or selling stocks
depending on changes in total Fund assets and/or changes in the
parameters of the Strategy Model universe as described above.
Portfolio Characteristics.
As a result of following the Strategy Model, the Fund portfolio is expected to
have the following general characteristics:
o Be comprised of approximately 100 Industry-leading companies which
represent investments in approximately 85 different Industries;
o Be primarily composed of U.S. common stocks;
o Not have more than 2.25% of Fund portfolio assets in any one company;
o Not have the top 10 holdings exceed 22.5% of the Fund portfolio.
The portfolio constructed by the Strategy Model is expected to be classified as
"Large Value" which generally refers to a portfolio of companies having a median
market capitalization similar to the Standard & Poor's 500 Index but with lower
price-earnings and price-book ratios. Notwithstanding that classification, the
Fund portfolio is also expected to contain a number of stocks that would
traditionally be classified as growth companies. Growth companies add to the
diversity of the Fund portfolio, but are not expected to have a material effect
on overall portfolio statistics. For example, in accordance with the Strategy
Model, the Fund's diversified portfolio will own a stock in the internet
Industry (currently America Online), but only .001% of the portfolio is
currently allocated by the Strategy Model for investment in that Industry. There
is very little common shareholders' equity in the internet Industry, so the Fund
portfolio allocation for investment in that Industry will be correspondingly
small. As with all Fund investments, growth industries and companies are
represented in the Fund portfolio only with reference to their common
shareholders' equity, not their market capitalization. As a result, the Fund
portfolio will hold smaller investments in growth companies than a growth or
blend index fund.
<PAGE>
The Strategy Model, in this way, creates, allocates and maintains a broadly
diversified portfolio of companies which have the highest common stockholders'
equity of their respective Industry.
The Fund, like the Strategy Model will be re-balanced monthly. The Adviser
expects to make Fund investments and redemptions between such re-balancing (due
to purchases and redemptions of Fund Shares) on a pro-rata basis so as to
maintain the Strategy Model with respect to the percentage of each stock held in
the portfolio. The Adviser expects the Fund portfolio to drift marginally from
the precise allocation of the Strategy Model between monthly re-balancing, but
will attempt to minimize any differences through pro-rata apportionment of
interim period purchases and sales.
A list of all Industries and companies in the Fund portfolio as of December 31,
1998 is included at the end of this Prospectus as part of Exhibit A, as well as
a list of all Industries analyzed by the Strategy Model from the past 10 years.
Exhibit A also sets forth a list of Industries previously included in the
Strategy Model, with the dates of inclusion, as well as a list of Industries
previously excluded from the Strategy Model which are no longer categorized as
separate Industries by Value Line.
The Strategy Model has been tested by comparing its results to publicly
available data from the past twelve years, however, there can be no assurance of
success with respect to any future performance of the Fund.
The Industry Leaders Fund(R), The Industry Leaders Strategy Model(TM) and
Claremont Investment Partners(R), L.L.C., have no affiliation with The Value
Line Investment Survey(R). The Value Line Investment Survey(R) is a registered
trademark of Value Line Publishing, Inc. The Value Line Investment Survey(R)
makes no representation regarding the advisability of investing in the Industry
Leaders Fund(R).
The Industry Leaders Fund(R) and The Industry Leaders Strategy Model(TM) are
trademarks of Claremont Investment Partners(R), L.L.C.
<PAGE>
INVESTMENT POLICIES
Under normal market conditions, at any given time, the Fund will not:
o Invest in debt securities or preferred stocks
o Hedge investments by engaging in speculative asset management, such as
short sales, puts, calls, warrants or stock option contracts
o Make Fund portfolio decisions based on short-term performance goals
o Invest "defensively" against particular market or economic conditions,
such as shift a substantial portion of Fund portfolio assets to cash
or cash equivalents
o Otherwise make investments that are inconsistent with the Fund's
principal long term strategy.
The Strategy Model is rebalanced monthly and the Advisor re-allocates the Fund
portfolio on the basis of any changes in the Strategy Model. Due to cash inflows
and outflows (primarily from purchases and redemptions of Fund Shares), the
Adviser expects the portfolio to drift marginally from the precise allocation of
the Strategy Model between monthly reallocations.
The Fund will attempt to remain fully invested, however, it may not always be
fully invested for several reasons, including, but not limited to, obtaining
economic efficiency with respect to brokerage costs. The Adviser may use short
term cash management instruments to temporarily hold uninvested Fund assets.
<PAGE>
IMPORTANT RISK CONSIDERATIONS
Investing in the Industry Leaders Fund(R) involves risks common to the risks of
investing in any equity mutual fund:
o The Fund invests in common stocks that may decrease in value.
Therefore, the value of your investment in the Fund may also decrease.
o Declines in the market as a whole (i.e., a "bear market"), may cause
you to lose some or all of your investment.
o The Fund could lose money if the stocks selected for the Fund's
portfolio are experiencing financial difficulty, or are out of favor
in the market because of weak performance, poor earnings forecasts,
negative publicity or industry-specific market cycles.
o It can take many months or possibly years to recover a loss.
Historically, some stock market declines have ended quickly while
others have continued for sustained periods of time, as indicated by
the following:
Commencement of Period To Recover Loss
Market Decline From Market High
--------------- ----------------------
July 1990 1 year
October 1987 18 months
1973 10 years
1929 24 years
o It is impossible to predict either the timing or severity of a
downward-trend market.
o Periods of unusually high returns have, historically, increased the
risk of stock investing for subsequent periods. The upward trend
market (i.e., a "bull market") during the past several years has been
an unusual growth period for most major stock market indexes,
producing substantial average annual returns. However, these returns
may not continue in the future as indicated by recent volatility in
most markets.
In addition to risks common to all equity mutual funds, the following risks are
particular to investing in the Fund:
o There can be no assurance that the Strategy Model will perform as
expected or that the Fund will be successful in replicating the
results indicated from comparing its results to publicly available
data from the past twelve years.
o The Fund has no operating history and therefore no actual past
performance record to guide prospective investors in their decision
whether or not to invest in Shares of the Fund.
o There is also a risk that the Fund, its service providers and/or
exchanges on which stocks of the Fund portfolio trade, could be
disrupted by computer systems that cannot accurately process
date-related information after December 31, 1999. This failure, often
referred to as the "Year 2000 Issue," might adversely affect
securities trades, pricing and account servicing for the Fund. The
Adviser has taken steps that it reasonably believes will address the
Year 2000 Issue. In addition, the Fund's major service providers have
informed the Adviser that they have taken similar steps. However,
neither the Adviser nor the Fund's service providers can assure that
these steps will be sufficient to avoid any adverse effects from the
Year 2000 Issue.
o While the Fund believes that most companies in its portfolio will be
Year 2000 compliant with respect to their material operations, if a
Fund portfolio company's modifications and replaced systems are not
made Year 2000 compliant in a timely manner, it could result in a
material adverse effect on such company. Additionally, a non-compliant
company's products and services as well as the tools it uses to
conduct its Year 2000 evaluation, may be dependent on technological
components, equipment and software that could have been developed by
third parties which may not be Year 2000 compliant. Failure of such
third party components, equipment or software to operate properly with
regard to the Year 2000 could interrupt ongoing operations or require
such company to incur unanticipated expenses to remedy any problems,
which could have a material adverse effect on such company's business
and operations. As a result, the Fund's portfolio could be adversely
affected, thereby reducing the value of an investment in the Fund.
Each prospective investor must assess all of the risks of investing in a
stock-based mutual fund in general, and the risks of investing in the Industry
Leaders Fund(R) in particular. It is important that you understand your
financial-risk tolerance. The impact of a downward-trend market also depends not
only upon the extent of a decline, but also upon your individual time horizon.
For example, a downward-trend market may be harder to tolerate if you are
retired or nearing retirement. Ask yourself these questions: What can you
tolerate to lose? If your investment incurs a loss, how long can you wait for a
market rebound? What are your other financial resources?
Investors should remember that an investment in the Fund is not a deposit
in a bank and is not insured or guaranteed by the Federal Deposit Insurance
Corporation (the FDIC) or any other private organization or government agency.
As a result, investment losses are not covered by any kind of insurance.
<PAGE>
HYPOTHETICAL PERFORMANCE OF
THE INDUSTRY LEADERS STRATEGY MODEL(TM)
The following graph and table compares the actual performance of the Standard
and Poor's Barra Value Index(R) ("S&P Barra Value"), with the hypothetical
results of the Strategy Model (minus fees and expenses related to operation of
the Fund) for various historical periods (as indicated in the graph and table
below). Total returns of the Strategy Model are returns on a hypothetical
portfolio composed of stocks selected by the Strategy Model and re-balanced
monthly. Although the Fund will attempt to remain fully invested, the Adviser
expects that up to 2% of Fund assets may at times be held in short term
instruments for cash management purposes. These cash management purposes
primarily address aggregating portfolio purchases to obtain efficiency in
brokerage costs and/or honoring redemption requests without liquidating stock
holdings. As all Fund expenses are paid by the Adviser and not out of Fund
assets (except for the Fund's Rule 12b-1 Distribution Plan and the Management
Fee), the Adviser believes that carrying a maximum of 2% of assets in cash at
any given time will be reasonably sufficient to satisfy the Fund's cash
management needs while maintaining the Fund portfolio's balance with the
Strategy Model. The effects on Strategy Model returns of such cash management
have been taken into account in calculating hypothetical performance of the
Strategy Model in the table below by reference to the federal funds rate for
each period shown, less a discount of 0.001% which is the approximate
commercially available rate of return which the Fund could have expected to
receive during the periods shown and which the Fund reasonably expects to
receive on cash assets in the foreseeable future, however, there can be no
assurance in this regard.
All returns of the Strategy Model contained in the chart below are net of all
deductions for Fund operating expenses (0.95% for Class D Shares and 0.70% for
Class I Shares) which would have been incurred by Shareholders during the
periods presented. The chart reflects continued investment, reinvestment of
dividends and other earnings, without redemptions.
The S&P Barra Value is an index that has no costs or expenses of operation,
however, its total return amounts reflect reinvestment of dividends for purposes
of general comparison to the Strategy Model. Of course, past hypothetical
results of the Strategy Model do not necessarily indicate future performance of
the Strategy Model or earnings of the Fund.
Prospective investors should note that during the periods shown below, large
capitalized stocks in general have experienced substantial price appreciation.
The performance results of the Strategy Model are hypothetical and should not be
considered predictive of the investment expertise of the Adviser. The Adviser
has not managed money according to the Strategy Model during the period shown
and no investments using clients assets were made in connection with the
retroactive application of the back-tested Strategy Model which was developed
with the benefit of retrospective trial and analysis. The performance
information was compiled after the end of the periods depicted and does not
represent actual investment decisions of the Adviser.
<PAGE>
COMPARATIVE HYPOTHETICAL TOTAL RETURN PERFORMANCE OF
THE INDUSTRY LEADERS STRATEGY MODEL(TM)
PLEASE NOTE THAT THE HYPOTHETICAL RETURNS BELOW ARE DERIVED ONLY FROM
TESTING THE STRATEGY MODEL AND DO NOT REPRESENT ACTUAL TRADING OR
ACTUAL RETURNS ON INVESTMENTS
Strategy Model
------------------------------- S&P Barra
Value
Period Class D Class I Index
- ----------------------- --------------- --------------- ----------------
1 Year
12/31/97-12/31/98 21.69% 22.01% 13.83%
3 Years
12/31/95-12/31/98 97.17% 98.64% 76.82%
5 Years
12/31/93-12/31/98 172.17% 175.53% 132.19%
10 Years
12/31/88-12/31/98 409.38% 421.96% 338.27%
12 Years
12/31/86-12/31/98 498.87% 516.66% 452.87%
Please note that past hypothetical results of the Strategy Model do
not necessarily indicate future performance or earnings of the Fund.
<PAGE>
MANAGEMENT OF THE FUND
INVESTMENT ADVISER
Claremont Investments Partners(R) L.L.C. is the Adviser to the Fund. The Adviser
manages the Fund's investments and business affairs subject to the supervision
of the Fund Board of Trustees. The Adviser is a registered investment adviser.
The Adviser offers investment advisory services to clients other than the Fund.
The Adviser began conducting business in 1996. Since then, its principal
business has been the development of the Strategy Model. The Adviser has not
previously advised or managed a mutual fund. The Adviser's principal address is
104 Summit Avenue, P.O. Box 80, Summit, New Jersey 07902-0080.
ADVISORY MANAGEMENT FEES
As an annual management fee, the Fund pays the Adviser 0.70% of the Fund
portfolio's average daily net asset value, computed daily and payable monthly.
Except for management fees and Class D distribution fees which are discussed
under "Distribution Arrangements" below, the Advisor pays for all of the costs
and expenses related to operation of the Fund.
CHIEF EXECUTIVE OFFICER
The CEO of the Adviser and of the Fund is Barry F. Sullivan. Mr. Sullivan
currently serves as Vice Chairman of Sithe Energies, Inc. and also serves on the
Boards of Directors of Merrill Lynch International Bank and The Guardian Life
Insurance Company of America. Mr. Sullivan has served as Chairman and CEO of
First Chicago Corporation, the parent company of First National Bank of Chicago.
Mr. Sullivan served in various executive capacities at Chase Manhattan Bank,
N.A., including Executive Vice President and Member of the Management Committee,
from June 1957 through 1980. Mr. Sullivan served as an active member of the
Board of Trustees of the University of Chicago from August 1980 to June 1995,
and was Chairman of the Board of Trustees from July 1987 to April 1991. Mr.
Sullivan also served as Chief Operating Officer of the New York City Board of
Education from October 1994 to October 1995, and as Deputy Mayor for The City of
New York from May 1992 through December 1993. From January through October 1994,
Mr. Sullivan served as President and Chief Executive Officer of the New York
City Partnership in conjunction with the Chamber of Commerce. Mr. Sullivan
graduated from Columbia University and obtained an M.B.A. from the University of
Chicago Graduate School of Business. Mr. Sullivan is presently a candidate for a
Ph.D. from Fordham University. Mr. Sullivan holds honorary doctoral degrees
awarded by De Paul University and the University of Chicago. Barry F. Sullivan
is the father of the Portfolio Manager, Gerald P. Sullivan.
<PAGE>
PORTFOLIO MANAGER
The Adviser's portfolio manager for the Fund is Gerald P. Sullivan. Mr.
Sullivan, President of the Adviser and the Fund, has been associated with the
Adviser since 1996. Previous to that he was a Vice President of First Fidelity
Bancorporation, a Managing Director of Hilliard Farber & Co., and a Management
Analyst for The Atlanta Committee for the Olympic Games. Mr. Sullivan obtained
his undergraduate degree from Columbia University and holds an M.B.A. from the
University of Chicago Graduate School of Business.
SHAREHOLDER INFORMATION
HOW THE FUND'S SHARES ARE PRICED
The net asset value ("NAV"), multiplied by the number of Fund Shares you own,
gives you the value of your investment.
The Fund calculates the NAV each business day, as of the close of the New York
Stock Exchange, which is normally 4:00 p.m. Eastern Time. Any Shares that you
purchase or redeem are valued at the next share price calculated after the Fund
receives your investment instructions. A business day is a day on which the NYSE
is open for trading.
The Fund calculates the NAV by adding up the total value of the Fund's
investments and other assets, subtracting Fund liabilities, and then dividing
that figure by the number of the Fund's outstanding Shares. The value of an
investment in a mutual fund is based upon the NAV determined by that mutual
fund. The following formula expresses the NAV on a per share basis:
Total Assets Less Liabilities
NAV = -------------------------------------
Number of Shares Outstanding
You can find the NAV of most mutual funds every day in THE WALL STREET JOURNAL
and other newspapers. However, newspapers do not normally publish information
about a particular mutual fund until it has a minimum number of shareholders or
minimum level of assets. In the event you redeem Shares, any applicable
redemption fees are subtracted from your account after calculation of the NAV.
The Fund's investments are valued based on market price. If market quotations
are not readily available, the Fund's investments will be valued based on fair
value as determined in good faith by the Fund's board.
<PAGE>
DISTRIBUTION ARRANGEMENTS
DISTRIBUTION PLAN
On behalf of the Class D Shares, the Fund has adopted a distribution plan (the
"Distribution Plan") under Rule 12b-1 of the Investment Company Act of 1940, as
amended. Under the Distribution Plan, the Fund is authorized to pay a fee in an
amount not to exceed on an annual basis 0.25% of the average daily net asset
value of the Class D Shares.
Payments made pursuant to the Distribution Plan will be made to securities
dealers, financial services organizations and/or other parties (each, a
"Distribution Organization") for the following purposes: (i) providing
distribution assistance relating to the sale of Class D Shares and (ii)
paying for promotional activities intended to result in the sale of Class D
Shares, such as the preparation, printing and distribution of prospectuses
to other than current Fund Shareholders. The fee paid to a Distribution
Organization may exceed the actual costs incurred by such organization in
connection with the provision of distribution services. From time to time, a
Distribution Organization may voluntarily reduce all or a portion of its fee
under the Distribution Plan to increase the net income of the Class D Shares
available for distribution as dividends. A Distribution Organization may not
seek reimbursement of such reduced fees after the end of the fiscal year in
which its fees were reduced.
The voluntary reduction of any Distribution Organization's fee will cause the
total return of the Class D Shares to be higher than it would otherwise be in
the absence of such a fee reduction. Because Distribution Plan fees are paid out
of the Fund's assets on an on-going basis, these fees will increase the cost of
Class D share investment and may cost you more than paying other types of sales
charges.
REDEMPTION FEES
The Fund incurs brokerage fees in connection with its portfolio transactions.
Short-term "market timers" who engage in frequent purchases and redemption of
Fund Shares can disrupt the Fund's investment program and create additional
transaction costs that all Shareholders must bear. If you sell your Class D
Shares within six months of purchase, you will pay a redemption fee to the Fund
to help offset such transaction costs. Redemption fees are charged at a
percentage of an amount equal to the lesser of the net asset value at the time
of purchase of the Shares being redeemed or the net asset value of such Shares
at the time of redemption. The redemption fee calculations are made in the
manner that results in the lowest possible charge being assessed. The Fund will
use the "first-in, first-out" method to determine the holding periods. The date
of the redemption will be compared with the earliest purchase date of Shares
held in the account. In this regard, it will be assumed that the redemption is
first of Shares held for more than six months or Shares acquired pursuant to
reinvestment of dividends or distributions. You will pay a redemption fee if
this holding period is less than six months for Class D Shares.
HOW YOU CAN INVEST WITH THE INDUSTRY LEADERS FUND(R)
This section tells you how to open an account and how to buy Shares after your
account is open. Below is a description of the minimum investment requirements
for the Fund, expenses and sales charges applied to each Class of Shares, and
the procedures to follow if you decide to buy Shares of the Fund. Please read
the entire Prospectus carefully before buying Shares of the Fund.
Investors choosing to purchase or redeem their Shares through a broker/dealer or
other institution may be charged a fee by that institution. Investors choosing
to purchase or redeem Shares directly from the Fund will not incur charges on
purchases or redemptions (except for Class D Share redemptions within six months
of the date of purchase).
HOW TO BUY SHARES
o ADVISED AND SELF-DIRECTED PURCHASES: You may invest in Class D
Shares by opening an account directly with the Fund. To do this,
simply complete and return an Industry Leaders Fund(R)
application with proper payment.
o INSTITUTIONAL PURCHASES: Institutions may invest directly in
Class I Shares. To do this, simply complete and return an
Industry Leaders Fund(R)account application. Wire instructions
will be provided to you upon establishment of the account.
o PURCHASES THROUGH MUTUAL FUND VENDORS: You may be able to invest
in the Fund through third-party mutual fund vendors, such as
mutual fund supermarkets or no-transaction fee programs that make
available Fund Shares. To the extent investments of individual
investors are aggregated into an omnibus account established by a
mutual fund vendor, the Fund account minimums apply to the
vendor's omnibus account, not to the account of the individual
investor. As a result, mutual fund vendors may be able to offer
prospective investors lower minimum investment access to the
Fund. Please contact your mutual fund vendor directly for
information on how to invest in the Fund through their services,
or for a referral to a mutual fund vendor, contact the Fund
toll-free at (877) 280-1952.
Minimum Investments
o DIRECT PURCHASE CLASS D SHARES: $10,000 minimum initial
investment ($5,000 for qualified retirement accounts, which are
described below) and minimum subsequent investments of $100.
O DIRECT PURCHASE CLASS I SHARES: $500,000 minimum initial
investment and minimum subsequent investments of $100.
O PURCHASES THROUGH MUTUAL FUND VENDORS: As discussed above, mutual
fund vendors may be able to offer lower minimum investment access
to prospective Fund investors. Please contact your mutual fund
vendor directly for information concerning their respective
minimum investment requirements.
PURCHASE CLASS D SHARES BY MAIL
You can purchase Class D and Class I Shares by mail. For an initial purchase,
please complete a Fund application. Please be sure to indicate the Share Class
into which you intend to invest. Enclose a check for at least the minimum
investment amount of the Class you wish to purchase (Class D: $10,000; Class I
$500,000) made out in the full name of the Fund and the Share Class in which you
are investing (for example, "The Industry Leaders Fund, Class D") and addressed
to the P.O. Box listed below. If you prefer overnight delivery, use the
overnight address listed below.
U.S. Mail: Overnight Delivery Services:
Industry Leaders Fund Industry Leaders Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, IN 46204-6110 Indianapolis, IN 46204
Your purchase of Shares of the Fund will be effected at the next Share price
calculated after receipt of your investment.
For additional share purchases by mail, please make a check payable to the full
name of the Fund and the Share Class in which you are investing. Additional
purchases must be for at least $100. Be sure to write your account number on the
check as well.
PURCHASE SHARES BY WIRE
To open a new account by wire, please call the Fund toll free at (877) 280-1952.
A representative will assist you to obtain an account application by fax (or
mail), which must be completed, signed and faxed (or mailed) to the Fund before
payment by wire may be made.
The order is considered received when the Fund's custodian bank (the
"Custodian") receives payment by wire. However, the signed and completed
original account application must be mailed to the Fund on the same day the wire
payment is made. See "Opening an Account -- By Mail" above. The Fund will not
permit redemptions until the Fund receives the application in proper form. Third
party financial institutions may charge a fee for wire transfers.
Wire orders will be accepted only on a day on which the Fund, Custodian and
Transfer Agent are open for business. A wire purchase will not be considered
made until the wired money is received and the purchase is accepted by the Fund.
Any delays which may occur in wiring money, including delays which may occur in
processing by the banks, are not the responsibility of the Fund or the Transfer
Agent. There is presently no fee for the receipt of wired funds, but the right
to charge Shareholders for this service is reserved by the Fund.
To purchase additional Class D or Class I Shares by wire transfer, you must have
an existing account which has been previously established. In order to ensure
that wire orders are invested promptly, investors must call the Fund at (877)
280-1952 to obtain instructions regarding the bank account number into which the
funds should be wired and other pertinent information. Be sure to have the
wiring bank include your current account number and the name in which your
account is registered.
INVESTMENT RESTRICTIONS
The Fund reserves the right to reject any order for the purchase of its Shares
in whole or in part, including (a) purchase orders made with foreign checks and
third party checks not originally made payable to the order of the investor and
(b) orders that are reasonably deemed to be disruptive to efficient portfolio
management, either because of the timing of the investment or previous excessive
trading by the investor. Additionally, the Fund reserves the right to suspend
the offering of its Shares. The Fund does not currently provide for exchange
privileges between different classes of the Fund.
<PAGE>
HOW TO REDEEM YOUR SHARES
This section explains how you can sell your Fund Shares.
REDEEM BY MAIL
Write a letter to the Fund, stating your account registration, your account
number, the Fund Class you wish to redeem, and the dollar amount ($100 or more)
of the redemption you wish to receive (or write "Full Redemption", if you wish
to sell all of your investment in the Fund). Make sure all the account owners
sign the request. You may request that redemption proceeds be sent to you by
check, by ACH transfer into a bank account, or by wire (a wire requires a $5,000
minimum).
For mailed redemption requests over $5,000 a signature guarantee is required.
You can obtain a signature guarantee from an eligible guarantor institution, as
detailed below under the caption, "Signature Guarantees."
REDEEM BY TELEPHONE
The Fund makes telephone privileges available to you automatically unless you
specifically decline them on your application or subsequently in writing.
Telephone redemptions must be for at least $100. Be prepared to provide your
account number, taxpayer identification number (social security number) and
other personal identification information. Unless you have instructed otherwise,
only one account owner needs to call in redemption requests. You may request
that redemption proceeds be sent electronically directly to a domestic
commercial bank account previously designated by you on the Account Registration
Form or mailed directly to your address of record. A wire transfer requires a
$5,000 minimum. All proceeds from telephone redemptions may be delivered only to
the address of record for such account. The Fund will not be liable for any
losses incurred if it follows telephone instructions which it reasonably
believes are genuine.
The Fund will employ procedures designed to provide reasonable assurance that
instructions by telephone are genuine; if these procedures are not followed, the
Fund or its service providers may be liable for any losses due to unauthorized
or fraudulent instructions. These procedures may include recording all phone
conversations, sending confirmations to Shareholders within 72 hours of the
telephone transaction, verification of account name and account number or tax
identification number, requesting additional personal identification
information, and sending redemption proceeds only to the address of record or to
a previously authorized bank account. If, due to temporary conditions, Fund
Shareholders are unable to effect telephone transactions, Fund Shareholders may
also fax and/or mail the redemption request to the Fund at the address shown on
the front page of this Prospectus.
<PAGE>
REDEMPTION PAYMENT POLICIES
Under most circumstances, redemption payments will be transmitted on the next
business day following receipt of a valid request for redemption. Although it is
not the Fund's policy to delay redemption payments, the Fund reserves the right
to delay payment of a redemption for up to five business days. The Fund may also
delay payment of redemptions under extraordinary circumstances or as the
Securities and Exchange Commission permits in order to protect remaining Fund
Shareholders.
Although no fees are currently in effect for wiring funds, the Fund reserves the
right to pass through to Fund Shareholders any third-party surcharges incurred
by the Fund.
The Fund does not provide for waiver of any fees in connection with
re-investments in the Fund after redeeming Shares.
CHANGES IN ACCOUNT ADDRESS OF RECORD
To change an account address of record, the account holder must make a written
request to the Fund. Such request must contain a signature guarantee, as
detailed below.
SIGNATURE GUARANTEES
For purposes of the Fund's policy on signature guarantees, the term "eligible
guarantor institution" shall include banks, brokers, dealers, credit unions,
securities exchanges and associations, clearing agencies and savings
associations as those terms are defined in the Securities Exchange Act of 1934.
The Fund reserves the right to reject any signature guarantee if (1) it has
reason to believe that the signature is not genuine, (2) it has reason to
believe that the transaction would otherwise be improper, or (3) the guarantor
institution is a broker or dealer that is neither a member of a clearing
corporation nor maintains net capital of at least $100,000. The Fund does not
accept notarized signatures.
REDEMPTION THROUGH MUTUAL FUND VENDORS
If you purchased your Fund Shares through a third-party mutual fund vendor,
please contact your vendor directly for information on how to redeem your Fund
Shares.
<PAGE>
SPECIAL SERVICES
The Fund has certain programs to help you to purchase or redeem Shares
conveniently each month.
SYSTEMATIC INVESTMENT PROGRAM: You may automatically buy additional Fund Shares
each month with a minimum purchase of at least $100. Money from your linked bank
account can, each month, be automatically transferred to purchase additional
Fund Shares. The Fund will transfer the amount on or about the day you specify,
or on or about the 20th of each month if you have not specified a day. If you
wish to change or add linked accounts, please call the Fund toll-free at (877)
280-1952.
SYSTEMATIC WITHDRAWAL PROGRAM: The Fund can automatically redeem enough Shares
to equal a specified dollar amount of at least $100, on or about the fifth
business day prior to the end of each month, and either send you the proceeds by
check or transfer them into your linked bank account. In order to set up a
Systematic Withdrawal Program, you must:
o Have a Fund account valued at $25,000 or more
o Have distributions reinvested
o Not simultaneously participate in the Fund Systematic Investment Program.
Once the Fund has received your instructions, it generally takes about ten
business days to set up either of the automatic plans. It generally takes the
Fund about five business days to change or cancel participation in either plan.
The Fund automatically cancels your program if the linked account you have
specified is closed.
RETIREMENT PLANS: Since the Fund is oriented to longer term investments, Shares
of the Fund may be an appropriate investment medium for tax sheltered retirement
plans, including: individual retirement plans (IRAs); simplified employee
pensions (SEPs); 401(k) plans; qualified corporate pension and profit sharing
plans (for employees); tax deferred investment plans (for employees of public
school systems and certain types of charitable organizations); and other
qualified retirement plans. Consultation with an attorney or tax professional
regarding these plans is advisable. Custodial fees for an IRA will be paid by
the Shareholder by redemption of sufficient Shares of the Fund from the IRA
unless the fees are paid directly to the IRA custodian. To obtain more
information regarding details about these plans, the IRA custodial fees and
the steps required to roll-over an existing IRA account or open a new retirement
plan account, please call the Fund toll free at (877) 280-1952.
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
DIVIDEND AND CAPITAL GAIN DISTRIBUTION OPTIONS
The Fund passes along to your account your share of investment earnings in the
form of dividends. Fund dividend distributions are the net dividends earned on
investments after Fund expenses. The Fund will at least annually declare and pay
dividends from its net investment income and distribute any net capital gains
obtained through Fund investment transactions.
You may select one of the following ways for the Fund to make your
distributions:
o AUTOMATIC REINVESTMENT OPTION: You may automatically buy new Shares of
your Fund class. The new Shares are purchased at NAV generally on the
day the income is paid. This option is implemented automatically for
your Fund account unless you instruct the Fund otherwise.
o DIRECT DEPOSIT OPTION: You may have your dividends and capital gains
deposited into any bank account you link to your Fund account if it is
part of the ACH system. If your specified bank account is closed, the
Fund will automatically reinvest your distributions.
o CHECK PAYMENT OPTION: You may receive checks for distributions mailed
to your address of record or to another name and address which you have
specified in written, signature-guaranteed instructions. If checks
remain uncashed for six months, or the Post Office cannot deliver them,
the Fund will automatically reinvest your distributions.
You may change your distribution option at any time by calling or writing to the
Fund. The Fund must receive any change five business days (ten business days for
electronic fund transfers) prior to a dividend or capital gain distribution
payment date, in order for the change to be effective for that payment.
<PAGE>
TAXES
The Fund intends to continue to qualify as a regulated investment company. This
status exempts the Fund from paying federal income tax on the earnings or
capital gains it distributes to its Shareholders.
In general, your investment in the Fund will be subject to the following tax
consequences:
o Ordinary dividends received by the Fund and passed through to
Shareholders are taxable as ordinary income (you are subject to
taxation on automatically reinvested dividends, as well as on dividends
which are distributed in cash).
o Dividends from the Fund's capital gains are taxable as capital gain
(which may be taxed at different rates depending on the length of time
the Fund holds its assets).
o Dividends may also be subject to state and local taxes.
o Certain dividends paid to you in January will be taxable as if
they had been paid the previous December.
o After the end of each calendar year, you will receive a statement (Form
1099) of the federal income tax status of all dividends and other
distributions paid (or deemed paid) during the year.
o When you sell (i.e., redeem) Shares of the Fund, you will be subject to
taxation for any gain or loss.
For the foregoing reasons, you should keep all of your Fund statements for
accurate tax-accounting purposes.
The tax information above is for your general information. A more detailed
discussion of federal income tax considerations may be found in the Fund's
Statement of Additional Information. The foregoing information is not intended
to provide complete tax planning advice. Please consult with your own tax
professional prior to investing in the Fund.
<PAGE>
GLOSSARY OF TERMS
Adviser Claremont Investment Partners, L.L.C.(R)
Bear Market Prolonged period of falling stock prices.
Bull Market Prolonged period of rising stock prices.
Capital Appreciation Growth of an investment.
Common stock Units of ownership of a public corporation,
also referred to as common equity.
Common stockholders' equity A company's total assets minus its total
liabilities (including preferred stock),
also commonly referred to as the "net worth"
of a company.
Defensive Investing Shift of portfolio assets during periods of
market and/or economic uncertainty.
Diversified The spread of risk by investing in more than
one industry category.
Equity securities Units of ownership of a public corporation.
Fund The Industry Leaders Fund(R).
Large Value A portfolio of companies having a
median market capitalization similar to the
Standard & Poor's 500 Index but with lower
price-earnings and price-book ratios.
Minority Interest On the consolidated balance sheets
of companies whose subsidiaries are not
wholly owned, the minority interest is shown
as a separate equity account or as a
liability of indefinite term. On the income
statement, the minority's share of income is
subtracted to arrive at consolidated net
income.
Market Timing Speculative investment strategy based
on prediction of future movement of the
stock market.
NAV Net asset value.
Offering price The price at which Fund Shares are sold.
Open End Mutual Fund A mutual fund which stands ready to redeem
(buy back) its shares from investors.
Portfolio Combined holding of more than one
investment.
SAI Statement of Additional Information.
Strategy Model The Industry Leaders Strategy
Model(TM), a proprietary portfolio
allocation and stock selection model
developed and owned by the Adviser.
Value Line Investment Survey(R) Independent investment advisory service that
analyzes approximately 1700 companies.
Year 2000 Issue Concern that computer systems cannot
accurately process date-related
information after December 31, 1999.
<PAGE>
Exhibit A
Industry Leaders Strategy Model(TM)
List of Companies Included in the Strategy Model as of December 31, 1998
<TABLE>
<CAPTION>
Portfolio
Industry Company Percentage
<S> <C> <C>
Advertising Interpublic Group Cos. Inc. 0.141%
Aerospace/Defense Boeing Co. 1.433%
Air Transport AMR Corp/Del 0.976%
Apparel V F Corp. 0.329%
Auto & Truck Ford Motor Company 1.503%
Auto Parts OEM Magna International Inc. 0.563%
Auto Parts Replacement Tenneco Inc. (New) 0.222%
Bank Bank One Corp. 2.250%
Bank BankAmerica Corp. 2.250%
Bank Chase Manhattan Corp. 2.250%
Bank Wells Fargo Company 2.250%
Bank First Union Corp. 0.387%
Beverage (Alcoholic) Seagram Co. Ltd. 0.624%
Beverage (Soft Drinks) Coca-Cola Co. 0.616%
Building Materials Masco Corp. 0.305%
Cable TV Tele-Communications-TCI Group 0.001%
Cement & Aggregates Lafarge Corp. 0.167%
Chemical - Basic Du Pont (E.I.) de Nemours 0.879%
Chemical Diversified Minnesota Mining & MFG Co. 0.868%
Chemical Specialty Praxair Inc. 0.804%
Coal/Alternative Energy AES Corp. 0.093%
Computer and Peripherals Internat'l Business Mach. Corp. 2.250%
Computer and Peripherals Hewlett-Packard CO. 0.933%
Computer Software & Services Microsoft Corp. 2.051%
Diversified Tyco International Ltd. 1.788%
Drug Merck & Co., Inc. 2.250%
Drug American Home Products Corp. 0.500%
Drugstore Rite Aid Corp. 0.169%
Drugstore Walgreen Co. 0.169%
Educational Services Sylvan Learning Systems Inc. 0.034%
Electric Utility Central Texas Utilities Co. 2.250%
Electric Utility Central Entergy Corp. 0.176%
Electric Utility East Southern Co. 2.250%
Electric Utility East Duke Energy Corp. 0.888%
Electric Utility West P G & E Corp. 1.205%
Electrical Equipment General Electric Company 2.170%
Electronics AMP Inc. 0.623%
Entertainment Disney (Walt) 2.191%
Environmental Waste Management Inc. 0.383%
Financial Services Citigroup Inc. 2.250%
Financial Services Loews Corp. 1.438%
Food Processing Unilever N.V. 1.687%
Food Wholesalers Sysco Corp. 0.183%
Furniture/Home Furnishings Leggett & Platt Inc. 0.170%
Gold/Silver Mining Barrick Gold Corp. 0.294%
Grocery Store Safeway Inc. 0.596%
Healthcare Information System HBO & Co. 0.106%
Home Appliance Whirlpool Corp. 0.133%
Homebuilding Centex Corp. 0.218%
Hotel/Gaming Hilton Hotels Corp. 0.469%
Household Products Procter & Gamble Co. 0.814%
Industrial Services Republic Industries Inc. 0.714%
Insurance-Life Equitable Companies Inc. 1.410%
Insurance-Property & Casualty Berkshire Hathaway Inc. 2.250%
Insurance-Property & Casualty Allstate Corp. 2.006%
Insurance Diversified American International Group 2.205%
Internet America Online Inc. 0.098%
Machinery Caterpillar Inc. 1.207%
Manufactured Housing / RV Clayton Homes Inc. 0.109%
Maritime Overseas Shipholding Group 0.065%
Medical Services Aetna Inc. 1.990%
Medical Supplies Johnson & Johnson 1.656%
Metal Fabricating Illinois Tool Works 0.284%
Metals & Mining Alcoa Inc. 0.839%
Natural Gas Distribution Keyspan Energy Corp. 0.464%
Natural Gas Diversified Enron Corp. 1.152%
Newspaper Gannett Co. Inc. 0.551%
Office Equipment & Supply Xerox Corp. 0.582%
Oilfield Services Schlumberger Ltd. 1.139%
Packaging & Container Crown Cork & Seal Co. Inc. 0.363%
Paper & Forest Products International Paper Co. 1.657%
Petroleum Integrated Exxon Corp. 2.250%
Petroleum Integrated Mobil Corp. 2.250%
Petroleum Integrated Royal Dutch Petroleum Company 2.250%
Petroleum Integrated Chevron 0.007%
Petroleum Producting Burlington Resources Inc. 0.347%
Precision Instrument Eastman Kodak Co. 0.391%
Publishing McGraw-Hill Companies Inc. 0.234%
Railroad Burlington Northern/Santa FE 0.614%
Railroad Union Pacific Corp. 0.614%
Recreation Carnival Corp. 0.558%
REIT Equity Residential Props TR 0.620%
Restaurant McDonald's Corp. 0.626%
Retail Building Supply Home Depot Inc. 0.481%
Retail Special Lines Toys R Us Inc. 1.035%
Retail Store Wal-Mart Stores, Inc. 2.250%
Retail Store Penney (J.C.) Co. 0.169%
Securities Brokerage Morgan Stanley Dean Witter & Co. 1.469%
Semiconductor Intel Corp. 2.021%
Semiconductor Capital Equip. Applied Materials Inc. 0.194%
Shoe Nike Inc. 0.201%
Steel (Integrated) USX-U.S. Steel Group Inc. 0.227%
Steel General Nucor Corp. 0.239%
Telecommunications Equipment Hughes Electronics 0.832%
Telecommunications Service AT&T Corp. 2.250%
Telecommunications Service MCI WORLDCOM Inc. 2.250%
Telecommunications Service Bellsouth Corporation 1.787%
Textile Springs Industries Inc. 0.115%
Thrift Fannie MAE 1.593%
Tire & Rubber Goodyear Tire & Rubber Co. 0.203%
Tobacco Philip Morris Companies Inc. 0.993%
Toiletries/Cosmetics Gillette Company 0.244%
Trucking & Transport Leasing Hertz Corp. 0.309%
Water Utility American Water Works Inc. 0.085%
</TABLE>
<PAGE>
Exhibit A
Industry Leaders Strategy Model(TM)
(continued)
2. List of Industries Previously Included in the Strategy Model with dates of
inclusion.
Broadcasting Cable TV (December 1986 to June 1996)
Metals & Mining (Industrial) (December 1986 to December 1993)
Real Estate (December 1986 to June 1993)
Toy & School Supplies (December 1986 to November 1993)
Machine Tool (December 1986 to April 1996)
Machinery (Construction & Mining) (December 1986 to January 1997)
Beverage (December 1986 to April 1991)
Specialty Steel (December 1986 to February 1994)
Bank Southwest (December 1986) (aggregated with Strategy Model analysis of
all Banks for December 1986)
Bank Texas (January 1987 to March 1988) (aggregated with Strategy Model
analysis of all Banks for January 1987 to March 1988)
<PAGE>
Exhibit A
Industry Leaders Strategy Model(TM)
(continued)
3. List of Industries excluded at all times from the Strategy Model which
no longer exist as separately categorized Industries.
Investment Company
European Diversified
Gold/Diamond (South Africa)
Japanese / Australian Diversified
Japanese Diversified
(Prospectus continues on the following page)
<PAGE>
File Nos. 333-62893
811-08989
[Prospectus back cover page]
ADDITIONAL INFORMATION
The Industry Leaders Fund(R) is an open-end, diversified mutual fund which
serves direct, advised, and institutional investors. The Industry Leaders
Fund(R) seeks long-term capital appreciation through a proprietary method of
investing in the common stocks of companies having the highest common
stockholders' equity in their respective industries.
To request additional information about the Fund, contact your financial adviser
or contact the Fund by mail, telephone or the internet:
The Industry Leaders Fund(R)
104 Summit Avenue - Box 80
Summit, New Jersey 07902-0080
Toll Free: (877) 280-1952
Device for the Hearing Impaired: (877) 280-1952
(http://www.industry-leaders.com)
The Statement of Additional Information (the "SAI") provides a more complete
discussion of certain matters contained in this Prospectus. The Securities and
Exchange Commission (the "SEC") allows the Fund to "incorporate by reference"
information the Fund files with the SEC, which means that the Fund can make
important disclosures by referring you to those documents. The information
incorporated by reference is an important part of this Prospectus, and
information that the Fund later files with the SEC will automatically update and
supersede this information. This Prospectus incorporates by reference the SAI.
Information on how to obtain a copy of the SAI is set forth below.
o You may obtain a free copy of the SAI and the current annual or semi-annual
reports, by contacting the Fund as set forth above.
o You may also obtain copies of the SAI or financial reports for free by
calling or writing your Authorized Securities Dealer.
o You may review the SAI and/or other reports at the Public Reference Room of
the Securities Exchange Commission, 450 Fifth Street, N.W., Washington,
D.C.
o Information on the operation of the Securities Exchange Commission's public
reference room may be obtained by calling the Commission at 1-800-SEC-0330.
o You may obtain copies of the Fund's prospectus, the SAI and the financial
reports for a fee by calling or writing the SEC's Public Reference Room at
the SEC's address or phone number listed above, or without a fee by
visiting the SEC's Worldwide Web site at http://www.sec.gov.
<PAGE>
INDUSTRY LEADERS FUND(R)
104 Summit Avenue - Box 80
Summit, New Jersey 07902-0080
Toll Free: (877) 280-1952
STATEMENT OF ADDITIONAL INFORMATION
___________ __, 1999
SUBJECT TO COMPLETION
THE INFORMATION IN THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT COMPLETE AND
MAY BE CHANGED. THE FUND MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
STATEMENT OF ADDITIONAL INFORMATION IS NOT AN OFFER TO SELL THESE SECURITIES AND
IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
This Statement of Additional Information, which should be kept for future
reference, is not a prospectus and should be read in conjunction with the
Industry Leaders Fund(R) Prospectus, dated ___________ __, 1999 (the
"Prospectus"). The Prospectus can be obtained without cost by contacting your
financial adviser or by calling the Fund toll-free at (877) 280-1952, or by
writing to the Fund at the address referenced above. This Statement of
Additional Information is incorporated by reference in its entirety into the
Prospectus. This Statement of Additional Information is intended to provide you
with further information about the Fund.
INVESTMENT ADVISER
Claremont Investment Partners, L.L.C.
DISTRIBUTOR
Unified Management Corporation
ADMINISTRATOR
AmeriPrime Financial Services, Inc.
TRANSFER AGENT and FUND ACCOUNTING
Unified Fund Services, Inc.
CUSTODIAN
UMB Bank, N.A.
INDEPENDENT ACCOUNTANTS
McCurdy & Associates CPA's, Inc.
COUNSEL
Wuersch & Gering, LLP
<PAGE>
TABLE OF CONTENTS
Overview of the Statement of Additional Information.............................
Investment Objectives and Policies..............................................
Fundamental Investment Restrictions.............................................
Non-Fundamental Investment Restrictions.........................................
Instruments in which the Fund Can Invest........................................
Domestic Common Stocks.................................................
Foreign Company Stocks.................................................
Net Asset Valuation.............................................................
Performance Information.........................................................
Average Annual Total Return............................................
Cumulative Total Return................................................
Comparative Performance Information....................................
Additional Purchase and Redemption Information..................................
Distributor Concessions and Dealer Reallowances........................
Additional Dividend And Distribution Information................................
Taxes...........................................................................
Subchapter M...........................................................
Diversification........................................................
Excise Tax.............................................................
Treatment of Capital Gains.............................................
Taxation of Fund Shareholders..........................................
Distribution of Capital Gains..........................................
Distribution of Foreign Source Income..................................
Distribution of Tax Exempt Interest Income.............................
Treatment of Distributions.............................................
Timing of Distributions................................................
Shareholder Purchases before a Distribution............................
Dividends Received Deduction...........................................
Alternative Minimum Tax Considerations.................................
Additional Withholding Requirements....................................
Sale or Redemption of Shares...........................................
Foreign Shareholders...................................................
Additional Tax Considerations..........................................
Trustees and Officers of The Fund...............................................
Control Persons and Principal Holders of Securities.............................
Investment Management and Other Services........................................
Portfolio Transactions and Brokerage............................................
Distributor.....................................................................
Administrator...................................................................
Transfer Agent and Fund Accounting Services.....................................
Distribution Plan...............................................................
Fund Custodian..................................................................
The Year 2000 Issue.............................................................
Independent Accountants.........................................................
Legal Counsel...................................................................
Fund Expenses...................................................................
Description of Fund Shares......................................................
Shareholder and Trustee Liability...............................................
Financial Statements............................................................
Registration Statement..........................................................
<PAGE>
OVERVIEW OF THE STATEMENT OF ADDITIONAL INFORMATION
The Industry Leaders Fund(R) (the "Trust") is a diversified, open-end management
investment company. The Trust is organized as a Delaware business trust which
was formed on December 13, 1995. The Trust consists of a diversified fund (the
"Fund") of units of beneficial interest ("Shares" and the holders thereof,
"Shareholders"). The Fund has two classes of Shares: Class D Shares and Class I
Shares. The outstanding Shares of all classes represent interests in the Fund
investment portfolio. This SAI relates to all Shares of the Fund. Some of the
information contained in this SAI explains in further detail subjects which are
discussed in the Prospectus. Capitalized terms not otherwise defined herein are
used as defined in the Prospectus. You should carefully read the Prospectus
before investing in the Fund.
If you have any questions or comments prior to investing in the Fund, please do
not hesitate to call the Fund toll-free at (877) 280-1952.
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objectives, policies and permitted investments are
described in the Prospectus under the headings "Overview of Industry Leaders
Fund(R)", "Principal Investment Objectives", "Investment Strategy", "Investment
Policies" and "Important Risk Considerations." Set forth below is additional
information with respect to the Fund's investment policies. The Fund's
investment objective is fundamental and may not be changed without a vote of the
holders of a majority of the Fund's outstanding voting securities, as described
below. There can be no assurance that the Fund will achieve its investment
objective. Except for the fundamental investment restrictions set forth below,
the policies of the Fund may be changed without Shareholder approval.
The phrases "Shareholder approval" and "vote of a majority of the outstanding
voting securities", as used in the Prospectus or in this Statement of Additional
Information means the affirmative vote of the lesser of (i) 67% or more of the
Fund's voting securities present at a meeting of Shareholders provided that the
holders of more than 50% of the Fund's outstanding voting securities are present
in person or by proxy, or (ii) more than 50% of the Fund's outstanding voting
securities. Shares of the Fund have voting power based on dollar value and are
thus allocated in proportion to the value of each Shareholder's investment on
the record date.
Unless otherwise noted, whenever an investment policy or limitation states a
maximum percentage of the Fund's assets that may be invested in any security or
other asset, or sets forth a policy regarding quality standards, such standard
or percentage limitation will be determined immediately after and as a result of
the Fund's acquisition of such security or other asset except in the case of
borrowing (or other activities that may be deemed to result in the issuance of a
"senior security" under the Investment Company Act of 1940, as amended (the
"1940 Act")). Accordingly, any subsequent change in values, net assets, or other
circumstances will not be considered when determining whether the investment
complies with the Fund's investment policies and limitations.
FUNDAMENTAL INVESTMENT RESTRICTIONS
The following policies and limitations supplement the Fund investment policies
set forth in the Prospectus. The first 8 investment restrictions set forth below
are fundamental policies of the Fund. These fundamental restrictions cannot be
changed without approval by a majority of the outstanding voting securities of
the Fund.
The Fund may not:
1. Purchase the securities of any one issuer, if, immediately
after such purchase, more than 2.25% of the value of the Fund's total assets
would be invested in such issuer;
2. Purchase any securities which would cause more than 15% of the
value of the Fund's total assets at the time of purchase to be invested in
securities of one or more issuers conducting their principal business activities
in the same industry;
3. Borrow money in excess of 2% of the Fund's total assets taken
at cost or at market value, whichever is lower, which may not be made in excess
of commercially reasonable rates, and with respect to any borrowings of 1% or
more, then only as a temporary measure for extraordinary or emergency purposes,
and if such borrowings exceed 1% of the Fund's total assets, the Fund will make
no further investments until such borrowing is repaid;
4. Issue senior securities;
5. Act as an underwriter, except that the Fund technically may be
deemed to be an underwriter in a registration under the Securities Act of 1933
to resell restricted securities;
6. Invest in real estate, provided that this limitation shall not
prohibit the purchase of securities issued by companies that invest in real
estate or interests therein, including real estate investment trusts;
7. Make loans from Fund assets; and
8. Purchase or sell physical commodities, commodity futures
contracts, commodities futures stock index contracts or options thereon.
<PAGE>
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
The following investment restrictions and policies are non-fundamental and can
be changed by the Board of Trustees without Shareholder approval.
Currently, the Fund may not:
9. Invest in companies whose stock is not domestically traded
in the United States;
10. Invest in open-end or closed-end mutual funds;
11. Invest in bonds or other debt securities, convertible
securities, warrants, options or repurchase agreements;
12. Maintain a short position or sell securities short;
13. Purchase securities which are not readily marketable, such as
securities subject to legal or contractual restrictions on resale or securities
which are otherwise illiquid;
14. Pledge its assets in an amount greater than 2% of the value
of its total assets, and then only to secure borrowings permitted by Restriction
3;
15. Purchase securities on margin; and
16. Participate in a joint or a joint and several basis in any
trading account in securities (the bunching of orders for the sale or purchase
of portfolio securities of two or more accounts managed by the Adviser or its
affiliates, shall not be considered participation in a joint securities trading
account).
INSTRUMENTS IN WHICH THE FUND CAN INVEST
DOMESTIC COMMON STOCKS. The Fund may invest in the common equity securities of
companies which are domestically traded in the United States. The risks of
investing in equity securities are discussed in detail in the Prospectus under
the caption, "Overview of Industry Leaders Fund(R), Risk Return Summary -
Principal Risks" and also under the caption, "Important Risk Considerations."
FOREIGN COMPANY STOCKS. Under the Fundamental Policy of the Fund, a stock must
be domestically traded in the United States to be eligible for inclusion in the
Fund portfolio. This requirement eliminates foreign companies whose equity is
only traded abroad or traded in the U.S. only as an American Depository Receipt
(commonly referred to as an "ADR"). Other foreign companies, typically through a
U.S. subsidiary, have registered their stock with the Securities and Exchange
Commission (the "Commission" and the "SEC") and listed such stock for trading on
U.S. exchanges. Therefore, some foreign companies may be included in the Fund
portfolio if they are selected by the Industry Leaders Strategy Model(TM) (the
"Strategy Model"). The Prospectus contains a complete discussion of the
operation of the Strategy Model under the captions, "Overview of Industry
Leaders Fund(R), Risk Return Summary" and " Investment Strategy."
Although the Adviser believes it unlikely that the Fund portfolio will at any
time be comprised of a statistically significant percentage of foreign stocks,
there are risks inherent in investments in foreign companies that are different
from, and additional to, those related to investments in obligations of U.S.
domestic issuers. For example, the value of dividends from such securities,
which may be denominated in or indexed to foreign currencies, can change
significantly when foreign currencies strengthen or weaken relative to the U.S.
dollar. Foreign companies with substantial operations abroad may also be
affected by actions of foreign governments adverse to the interests of U.S.
investors, including the possibility of expropriation or nationalization of
assets, confiscatory taxation, restrictions on U.S. investment or on the ability
to repatriate assets or convert currency into U.S. dollars, or other government
intervention. Investments in foreign countries also involve a risk of local
political, economic, or social instability, military action or unrest, or
adverse diplomatic developments. There is no assurance that the Adviser will be
able to anticipate these potential events or counter their effects. The
considerations noted above are generally intensified for investments in
developing countries.
NET ASSET VALUATION
The net asset value per share of each class of Shares of the Fund is determined
as of the close of regular trading on the NYSE, on each day that the NYSE is
open. The closed days are set forth below in this SAI under the caption,
"Additional Purchase and Redemption Information."
The Fund subtracts the non-class specific liabilities of the Fund from the
Fund's assets to determine its total net assets. The Fund then determines each
class's proportionate interest in the Fund's net assets. The liabilities
attributable to that class, including its Fund management and Distribution Plan
fees, are then deducted and the resulting amount is divided by the number of
Shares of that class outstanding to produce its net asset value per share.
Stocks are valued at the closing prices reported on recognized securities
exchanges or if no sale was reported, and for unlisted securities, at the mean
between the last-reported bid and asked prices. Although the Fund does not
anticipate holding securities for which market quotations are not readily
available, such securities will be valued at fair value as determined in good
faith by or under the direction of the Board of Trustees.
PERFORMANCE INFORMATION
The Fund will include performance data for Class D and Class I Shares of the
Fund in its advertisements, sales literature and other information distributed
to the public that includes performance data of the Fund. Such performance
information will be based on investment "average annual total return" or
"cumulative total return" the Fund. An explanation of how such returns are
calculated for each class is set forth below.
Total return information may be useful to investors in reviewing the Fund's
performance. The Fund's advertisement of its performance must, under applicable
SEC rules, include the average annual total returns for each class of Shares of
the Fund for the 1, 5, and 10-year period (or the life of the class, if less) as
of the most recently ended calendar quarter. This enables an investor to compare
the Fund's performance to the performance of other funds for the same periods.
Investors should also consider other relevant factors before using such
information as a basis for comparison with other investments, such as
comparative risks and investment time horizons.
AVERAGE ANNUAL TOTAL RETURN. Total return represents the average annual
compounded rate of return on an investment of $1,000 at the maximum public
offering price. All data are based on past investment results. Average annual
total return for a given period is computed by finding the average annual
compounded rate of return over the period that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
P(1 + T)[n-exponent] = ERV
Where:
P = a hypothetical initial investment in the Fund of $1,000
T = average annual total return
n = number of years in period
ERV = ending redeemable value, at the end of the period, of a
hypothetical $1,000 investment in the Fund made at the
beginning of the period.
The investment results of Shares of the Fund will tend to fluctuate over time,
so that historical yields, current distributions and total returns should not be
considered representations of what an investment may earn in any future period.
Investments in the Fund are not insured and its total return is not guaranteed.
Actual dividends will tend to reflect changes in the market as a whole, and will
also depend upon the level of a class's or the Fund's expenses, realized or
unrealized investment gains and losses, and the results of the Fund's investment
policies. When redeemed, an investor's Shares may be worth more or less than
their original cost. Total return for any given past period are not a prediction
or representation by the Fund of future rates of return on its Shares. Thus, at
any point in time, investment yields, current distributions or total returns may
be either higher or lower than past results.
<PAGE>
CUMULATIVE TOTAL RETURN. The cumulative total return calculation (or "total
return") measures the change in value of a hypothetical investment of $1,000
over an entire period of years. Its calculation uses some of the same factors as
average annual total return, but it does not average the rate of return on an
annual basis. Cumulative total return is determined as follows:
ERV - P
------- = Cumulative Total Return
P
Total returns for the Fund are calculated from the initial investment ("P") and
assume that (1) all Fund dividends and net capital gains distributions during
the period are reinvested to buy additional Shares at net asset value per share,
(2) applicable fees are deducted during the total return period and (3) the
investment is redeemed at the end of the period.
COMPARATIVE PERFORMANCE INFORMATION. The total return on an investment made in
the Fund may be compared with the performance for the same period of the
Standard & Poor's Barra Value(R) Index. Other indices may be used from time to
time. The Standard & Poor's Barra Value(R) Index is a capitalization-weighted
index of all the stocks in the Standard & Poor's 500 that have low price-to-book
ratios. The foregoing index is an unmanaged index of securities that does
not reflect reinvestment of capital gains or take investment costs into
consideration, as these items are not applicable to indices generally.
The Fund may also be quoted in and compared to other mutual funds with similar
investment objectives in advertisements, Shareholder reports or other
communications to Shareholders. The Fund may include in these communications
calculations that describe back-testing of the Industry Leaders Strategy
Model(TM) and hypothetical past investment results. These performance examples
are based on an express set of assumptions and are not indicative of future
performance of the Fund. These calculations may include discussions or
illustrations of the effects of compounding. "Compounding" means that, if
dividends or other distributions on the Fund's investment are reinvested by
being paid in additional Fund Shares, any future income or capital appreciation
of the Fund would increase the value, not only of the original Fund investment,
but also of the additional Fund Shares received through reinvestment. As a
result, the value of the Fund investment would increase more quickly than if
dividends or other distributions had been paid in cash. The Fund may also
include discussions or illustrations of the potential investment goals of a
hypothetical investor. These may include, but are not limited to, tax and/or
retirement planning, investment management techniques, policies or investment
suitability of the Fund. The Fund may discuss such factors as general economic
conditions, legislative developments (including pending legislation), the
effects of inflation and historical performance of various types of investments,
including, but not limited to, stocks, bonds and U.S. Government Treasury Bills.
Fund advertisements or other communications to Shareholders may also summarize
certain information contained in Shareholder reports (including portfolio
composition), as well as the Adviser's views as to current economic indicators,
such as overall market performance, economic, trade and interest rate trends,
legislative, regulatory and monetary developments, investment strategies and
related matters believed to be of relevance to Fund investors.
The Fund may also include in advertisements, charts, graphs or drawings which
illustrate the potential risks and rewards of investment in comparative
investment vehicles, including but not limited to stock, bonds, and Treasury
bills, against an investment in Shares of the Fund. The Fund may also include
charts or graphs that illustrate strategies such as dollar cost averaging.
Advertisements or Shareholder communications may also include discussions of
certain beneficial characteristics of an investment in the Fund. Advertisements
and other communications may contain symbols, headlines or other material which
highlight or summarize information which is included in such communication. The
Fund may reprint (in whole or in part) articles reporting on the Fund and, after
obtaining permission from the respective publisher, provide these articles to
current and/or prospective Shareholders. Performance information with respect to
the Fund is generally available by calling toll-free (877) 280-1952.
Advertisements and sales literature may include discussions of the Industry
Leaders Strategy Model(TM), including, but not limited to, descriptions of
security selection and analysis. Advertisements may also include descriptive
information about the Adviser, including, but not limited to, its status within
the industry, other services and products it makes available, total assets under
management, and its investment philosophy.
When comparing total return and investment risk of an investment in Shares of
the Fund with other investments, investors should keep in mind that certain
other investments have very different risk characteristics than an investment in
Shares of the Fund. For example, CDs may have fixed rates of return and may be
insured for both principal and interest by the FDIC, while the Fund's returns
will fluctuate and its share values and returns are not guaranteed. U.S.
Treasury securities are guaranteed as to principal and interest by the full
faith and credit of the U.S. Government.
The Fund also may include in its advertisements data from the American
Association of Retired Persons, American Banker, Barron's, Business Week,
Forbes, Fortune, Institutional Investor, Business Week, Lipper Analytical
Services, Inc., Money, Morningstar Mutual Funds, The New York Times, Smart
Money, USA Today, U.S. News & World Report, The Wall Street Journal, Worth and
other publications. In addition to performance information, general information
about the Fund that appears in a publication, such as those mentioned above, may
also be quoted or reproduced in advertisements or in reports to current or
prospective Shareholders.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The Fund does not issue share certificates. Instead, an account is established
for each investor and all Shares purchased or received, including those obtained
through reinvestment of distributions, are credited to such account on the books
of the Fund.
Reference is made to the materials in the Prospectus under the captions,
"Overview of Industry Leaders Fund(R) Risk Return Summary: Who May Want to
Invest in the Fund"; "How You Can Invest With The Industry Leaders Fund(R) "
and "How to Redeem Your Fund Shares", which describe the methods of purchase
and redemption of the Fund's Shares. If you invest through an investment firm,
financial adviser or agent, they may have their own service features,
transaction charges and fees. This SAI and the accompanying Prospectus
should be read in conjunction with such firms' material regarding their fees
and services. If you wish to obtain a referral to an investment professional,
please call the toll-free Fund at (877) 280-1952.
The NYSE is currently scheduled to be closed on New Year's Day, Dr. Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day, or, when one of these
holidays fall on a Saturday or Sunday, the preceding Friday or subsequent
Monday. The closing schedule is subject to change.
When the NYSE is closed, or when trading is restricted for any reason other than
its customary weekend or holiday closings, or under emergency circumstances as
determined by the SEC to warrant such action, the Fund will determine its net
asset value as of the daily NAV valuation time.
The Fund has elected to honor all redemption requests in cash.
DISTRIBUTOR CONCESSION AND DEALER REALLOWANCES. The Fund does not pay
distribution concessions or dealer reallowances in connection with the
distribution of the Class D or Class I Shares, except with respect to fees which
thereunder. See the Prospectus, under the captions "Fees and Expenses of the
Fund" and "Distribution Arrangements" for detailed information concerning the
Class D Shares Rule 12b-1 Distribution Plan.
ADDITIONAL DIVIDEND AND DISTRIBUTION INFORMATION
To the extent necessary for the Fund to obtain favorable federal tax treatment,
the Fund distributes net investment income and net capital gains, if any, to
Shareholders within each calendar year as well as on a fiscal year basis. The
Fund intends to distribute any net investment income and any net realized
capital gains at least annually.
The amount of the Fund's distributions may vary from time to time depending on
the composition of the Fund's portfolio, dispositions of portfolio assets and
expenses borne by the Fund.
The net income of the Fund, from the period of the immediately preceding
determination thereof, shall consist primarily of dividend income, if any, and
realized capital gains and losses on Fund's assets, less all expenses and
liabilities of the Fund chargeable against income. To a lesser extent, net
income will include any incidental interest income accrued on the portfolio
assets during periods in which the Adviser has held cash for purposes of, but
not limited to, anticipated redemptions and/or for reasons of minimizing
brokers' commissions by grouping portfolio purchase orders and sales.
Expenses, including the compensation payable to the Adviser, are accrued each
day. The expenses and liabilities of the Fund include those appropriately
allocable to the Fund, as well as general expenses and liabilities of the Trust.
TAXES
The following is only a summary of certain additional federal income tax
considerations generally affecting the Fund and its Shareholders which are not
described in the Prospectus. This summary does not attempt to provide a detailed
explanation of the tax treatment of the Fund or its Shareholders, and the
discussions here and in the Prospectus are not intended as substitutes for legal
and/or professional accounting advice with respect to tax planning. Prospective
Shareholders are urged to consult their own tax professional prior to investing
in the Fund.
SUBCHAPTER M. The Fund has elected to be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"
). As a regulated investment company, the Fund will not be subject to federal
income tax on the portion of its investment income (i.e., taxable interest,
dividends, and other taxable ordinary income) and capital gain income (i.e., the
excess of capital gains over capital losses) that it distributes to
Shareholders, provided that it distributes at least 90% of its investment
company taxable income (i.e., net investment income and the excess of net
short-term capital gain over net long-term capital loss) for the taxable year
plus 90% of its net income from tax-exempt obligations (the "Distribution
Requirement"), and satisfies certain other requirements of the Code that are
described below. Distributions by the Fund made with respect to the taxable year
will be considered distributions of income and gains of the taxable year and
will therefore count towards the satisfaction of the Distribution Requirement.
Since the Fund intends to distribute substantially all of its investment company
taxable income and its net capital gain income in compliance with the
Distribution Requirement, the Fund does not expect to be subject to income or
excise taxes otherwise applicable to undistributed income of a regulated
investment company. If the Fund were to fail to distribute all its income and
gains, it would be subject to corporate income tax and, in certain
circumstances, a nondeductible 4% excise tax, as discussed in further detail
below.
<PAGE>
DIVERSIFICATION. In addition to satisfying the requirements described above, the
Fund must satisfy an asset diversification test in order to qualify as a
regulated investment company. Under this test, at the close of each quarter of
the Fund's taxable year, at least 50% of the value of the Fund's assets must
consist of securities (as to which the Fund has not invested more than 5% of the
value of the Fund's total assets and does not represent more than 10% of the
outstanding voting securities of any issuer), cash and cash items, U.S.
Government securities, securities of other regulated investment companies. In
addition, no more than 25% of the value of its total assets may be invested in
the securities of any one issuer (other than U.S. Government securities and
securities of other regulated investment companies), or in two or more issuers
which the Fund controls (i.e., ownership of 20% or more of the total combined
voting power of all classes of voting stock in a corporation) and which are
engaged in the same or similar trades or businesses.
If for any taxable year the Fund does not qualify as a regulated investment
company, all of its taxable income (including its net capital gain) will be
subject to tax at regular corporate rates without any deduction for
distributions to Shareholders, and such distributions will be taxable to the
Shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate Shareholders.
EXCISE TAX. A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to (a)
98% of its ordinary income for such calendar year, (b) 98% of capital gain net
income for the one-year period ended on October 31 of such calendar year, and
(c) the prior year shortfall. (For purposes of the excise tax, the Fund would be
obligated to reduce its capital gain net income (but not below its net capital
gain) by the amount of any net ordinary loss for the calendar year.) The balance
of such income must be distributed during the next calendar year. A regulated
investment company is treated as having distributed any amount on which it is
subject to income tax for any taxable year ending in such calendar year. The
Fund intends to make sufficient distributions of its ordinary taxable income and
capital gain net income prior to the end of each calendar year to avoid
liability for the excise tax. However, investors should keep in mind that the
Fund may, in certain circumstances, be required to liquidate portfolio
investments to make sufficient distributions to avoid excise tax liability. A
regulated investment company, in determining its investment company taxable
income and net capital gain for any taxable year, may elect to carry over its
capital losses for a period of eight taxable years succeeding the loss year.
TREATMENT OF CAPITAL GAINS. The Fund is taxable by the amount of its net capital
gain over the amount of its deduction for dividends paid, determined with
reference to capital gains dividends only. The Fund must pay tax on its
undistributed net capital gain at the maximum corporate income tax rate,
currently 35%.
TAXATION OF FUND SHAREHOLDERS. Dividends from net investment income and
distributions from short-term capital gains are taxable to Shareholders as
ordinary income. The Fund anticipates distributing substantially all of its
investment company taxable income for each taxable year. Dividend distributions
represent dividends on stocks that the Fund receives. Such distributions are
treated as dividends for federal income tax purposes. Such dividends paid by the
Fund are expected to qualify for the 70% dividends-received deduction for
corporate Shareholders to the extent discussed below.
DISTRIBUTION OF CAPITAL GAINS. The Fund may either retain or distribute to
Shareholders its net long-term capital gain for each taxable year. The Fund
currently intends to distribute all such amounts. Net long-term capital gain
that is distributed and designated as a capital gain dividend will be taxable to
Shareholders as long-term capital gain, regardless of the length of time the
Shareholder has held his or her Fund Shares or whether such gain was recognized
by the Fund prior to the date on which the Shareholder acquired his or her
Shares.
DISTRIBUTION OF FOREIGN SOURCE INCOME. Investment income that may be received by
the Fund from sources within foreign countries may be subject to foreign taxes
that may be withheld at the source. The United States has entered into tax
treaties with many foreign countries which entitle the Fund to a reduced rate
of, or exemption from, taxes on such income. It is impossible to determine the
effective rate of foreign tax in advance since the amount of the Fund's assets
to be invested in various countries is not known.
Under certain circumstances, the Fund may elect to pass through to its
Shareholders the right to take a credit or a deduction for foreign taxes. But
because the Fund does not expect to have more than 50% of the value of its total
assets at the close of its taxable year in the stock or securities of foreign
corporations, the Fund anticipates that it will not elect to pass through to the
Fund's Shareholders the amount of foreign taxes paid by the Fund.
DISTRIBUTION OF TAX-EXEMPT INTEREST INCOME. If certain conditions are met, the
Fund is permitted to pass through to its Shareholders the tax-exempt character
of the Fund's net income from tax-exempt obligations through the payment of
tax-exempt interest dividends, however, the Fund does not anticipate that it
will derive any tax-exempt income during the foreseeable future.
TREATMENT OF DISTRIBUTIONS. The tax implications arising from distributions by
the Fund will be treated in the manner described above regardless of whether
such distributions are paid in cash or reinvested in additional Shares of the
Fund. Shareholders receiving a distribution in the form of additional Shares
will be treated as receiving a distribution in an amount equal to the fair
market value of the Shares received, determined as of the date the stock is
credited to the Shareholder's account.
TIMING OF DISTRIBUTIONS. Ordinarily, Shareholders are required to take
distributions by the Fund into account in the year in which the distributions
are made. However, dividends declared in October, November or December of any
year and payable to Shareholders of record on a specified date in such a month
will be deemed to have been received by the Shareholders (and made by the Fund)
on December 31 of such calendar year if such dividends are actually paid in
January of the following year. Shareholders will be advised annually as to the
U.S. federal income tax consequences of distributions made (or deemed made)
during the year.
SHAREHOLDER PURCHASES BEFORE A DISTRIBUTION. Investors who purchase Shares
shortly before the record date for a distribution will pay a share price that
includes the value of the anticipated distribution and will be taxed on the
distribution when it is received even though, with respect to themselves, the
distribution in effect represents a return of a return of capital to the
Shareholder.
DIVIDENDS RECEIVED DEDUCTION. Subject to holding period and other limitations,
With respect to each taxable year, ordinary income dividends paid by the Fund
are expected to qualify for the 70% dividends-received deduction generally
available to corporations (other than corporations such as S corporations) to
the extent of the amount of qualifying dividends received by the Fund from
domestic corporations for the taxable year. Since an insignificant portion, if
any, of the Fund's assets will be invested in stock of foreign corporations, the
ordinary dividends distributed by the Fund generally is expected to qualify for
the dividends-received deduction for corporate Shareholders.
ALTERNATIVE MINIMUM TAX CONSIDERATIONS. Alternative minimum tax ("AMT") is
imposed in addition to, but only to the extent it exceeds, the regular tax and
is computed at a maximum marginal rate of 28% for non-corporate taxpayers and
20% for corporate taxpayers on the excess of the taxpayer's alternative minimum
taxable income ("AMTI") over an exemption amount. For purposes of the corporate
AMT, the corporate dividends-received deduction is not itself an item of tax
preference that must be added back to taxable income or is otherwise disallowed
in determining a corporation's AMTI. However, a corporate Shareholder will
generally be required to take the full amount of any dividend received from the
Fund into account, without a dividends-received deduction, in determining its
adjusted current earnings. Adjusted current earnings is used in computing an
additional corporate preference item (i.e., 75% of the excess of a corporate
taxpayer's adjusted current earnings over its AMTI (determined without regard to
this item and the AMT net operating loss deduction)) includable in AMTI.
ADDITIONAL WITHHOLDING REQUIREMENTS. The Fund will be required in certain cases
to withhold and remit to the U.S. Treasury 31% of ordinary income dividends and
capital gain dividends, and the proceeds of redemption of Shares, paid to any
Shareholder who is subject to backup withholding.
SALE OR REDEMPTION OF SHARES. A Shareholder will recognize gain or loss on the
sale or redemption of Shares of the Fund in an amount equal to the difference
between the proceeds of the sale or redemption and the Shareholder's adjusted
tax basis in the Shares. In general, any gain or loss arising from (or treated
as arising from) the sale or redemption of Shares of the Fund will be considered
capital gain or loss and will be long-term capital gain or loss if the Shares
were held for longer than one year. All or a portion of any loss so recognized
may be disallowed if the Shareholder purchases other Shares of the Fund within
30 days before or after the sale or redemption.
FOREIGN SHAREHOLDERS. Taxation of a Shareholder who, with respect to the United
States government, is a nonresident alien individual, foreign trust or estate,
foreign corporation, or foreign partnership ("foreign shareholder"), depends on
whether the income from the Fund is "effectively connected" with a U.S. trade or
business carried on by such Shareholder.
If the income from the Fund is not effectively connected with a U.S. trade or
business carried on by a foreign shareholder, ordinary income dividends paid to
a foreign shareholder will be subject to U.S. withholding tax at the rate of 30%
(or lower applicable treaty rate) upon the gross amount of the dividend.
If the income from the Fund is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends, and any gains realized upon the sale of Shares of the
Fund will be subject to U.S. federal income tax at the rates applicable to U.S.
citizens or domestic corporations or as the case may be.
The tax consequences to a foreign shareholder entitled to claim the benefits of
an applicable tax treaty may be different from those described herein. Foreign
Shareholders are therefore urged to consult their own tax advisers with respect
to the particular tax consequences to them of an investment in the Fund,
including the applicability of foreign taxes.
ADDITIONAL TAX CONSIDERATIONS. In addition to the Federal income tax
consequences described above relating to an investment in the Fund, there may be
other Federal, state, local or foreign tax considerations that depend upon the
circumstances of each particular investor. The foregoing general discussion of
U.S. federal income tax consequences is based on the Code and the Treasury
Regulations issued thereunder as in effect on the date of this SAI. Future
legislative or administrative changes or court decisions may significantly alter
the information above, and any such changes or decisions may have a retroactive
effect. Shareholders should maintain contact with their own tax professional
concerning investment in the Fund.
<PAGE>
TRUSTEES AND OFFICERS OF THE FUND
Overall responsibility for management of the Trust rests with the Board of
Trustees, who are elected by the Shareholders of the Fund. The Fund is managed
by the Trustees in accordance with the laws of the State of Delaware. There are
currently 7 Trustees, 4 of whom are not "interested persons" of the Trust within
the meaning of that term under the 1940 Act. The Trustees, in turn, elect the
officers of the Trust to supervise actively its day-to-day operations. The
officers and Trustees of the Trust, addresses, and their business affiliations
for the past five years are as follows:
<TABLE>
<CAPTION>
Name, Age and Position(s) With Principal Occupation
Principal Business Address the Trust During Past 5 Years
- -------------------------- --------- -------------------
<S> <C> <C>
Barry F. Sullivan*(1) age 67 Chief Executive Officer Chief Executive
Claremont Investment Partners and Trustee Officer, Claremont
104 Summit Ave. - Box 80 Investment Partners
Summit, NJ 07902-0080 (9/98 - Present);
Vice Chairman, Sithe
Energies, Inc.
(independent power
producer; 11/95-
present); Chief
Operating Officer,
New York City Board
of Education (10/94-
10/95); President &
CEO, New York City
Partnership (Chamber
of Commerce
organization; 1/94-
10/94); Deputy Mayor
for Finance /
Economics, City of
New York (5/92-12/93)
Gerald P. Sullivan*(1) age 38 President and Trustee President, Claremont
Claremont Investment Partners Investment Partners
104 Summit Ave. (2/96 - present);
Summit, NJ 07902-0080 Vice President, First
Fidelity Bancorp.
(6/95-2/96) Managing
Director, Hilliard
Farber & Co. (7/93-
6/95) Senior
Management Analyst,
Atlanta Committee for
the Olympic Games
(6/92-7/93)
Mark S. Kaufmann* Chairman, Board 1996 - Present:
age 66 of Trustees Chairman, Kaufmann
Kaufmann and Partners, LLC and Partners LLC
712 Fifth Avenue, (Financial
22nd Floor Consulting);
New York, NY 10019 1973-1996: Senior
Vice President Chase
Manhattan Corporation
and Chase Manhattan
Bank, N.A. (Corporate
Development)
Seth H. Dubin Trustee Partner, Satterlee,
age 65 Stephens, Burke &
Satterlee, Stephens, Burke LLP
Burke & Burke LLP (Attorneys-at-Law)
230 Park Ave
New York, NY 10169
Robert Lichten Trustee Principal, Inter-
age 59 Atlantic Group
Inter-Atlantic Group (Financial Services)
712 Fifth Ave - 22nd Floor
New York, NY 10019
Fred B. Tarter Trustee Advertising Executive,
age 55 Stage Bill LLC
210 E. 39th St.
New York, NY 10016
Thomas Volpe Trustee Senior Vice President
age 63 The Interpublic Group
The Interpublic Group of Companies, Inc.
of Companies, Inc.
1271 Avenue of the Americas
New York, NY 10020
*Designates a Trustee who is an "interested person" of the Trust within the meaning of the 1940 Act.
(1) Mr. Barry F. Sullivan is the father of Gerald P. Sullivan.
</TABLE>
Trustees of the Fund who are officers of the Adviser are not separately
compensated for their services as Trustees of the Fund. The Trustees and
officers of the Fund are not affiliated with the distributor of the Fund's
Shares. The Fund currently pays each of its non-officer Trustees a fee of $5,000
per year for attendance at meetings (including phone meetings) and reimburses
Trustees for expenses incurred for attendance at meetings. As noted below,
all compensation paid to Trustees is paid by the Adviser and not from Trust
assets.
The Trust does not provide pension or retirement benefits to Trustees or Trust
officers.
The following table indicates the compensation each Trustee is expected to
receive from the Trust, in their capacity as a Trustee, for the 12 month period
ending December 31, 1999.
<TABLE>
<CAPTION>
Pension or Retirement Aggregate Total Compensation
Benefits Accrued as Compensation* Paid to Trustees*
Name, Position Portfolio Expenses
<S> <C> <C> <C>
Barry F. Sullivan $0 $0 $0
CEO and Trustee
Gerald P. Sullivan $0 $0 $0
President and Trustee
Mark S. Kaufmann $0 $5,000 $5,000
Chairman, Board of Trustees
Seth H. Dubin, Trustee $0 $5,000 $5,000
Robert Lichten, Trustee $0 $5,000 $5,000
Fred B. Tarter, Trustee $0 $5,000 $5,000
Thomas Volpe, Trustee $0 $5,000 $5,000
</TABLE>
*All compensation paid to Trustees is paid by the Adviser and not from Trust
assets. For further information concerning payments of Trust expenses, see the
Prospectus under the caption, "Management of the Fund", and this Statement of
Additional Information under the caption "Investment Management and Other
Services."
Trustees may be removed from office at any meeting of Shareholders by a vote of
two-thirds of the outstanding Shares of the Trust. Except as set forth above,
the Trustees shall continue to hold office and may appoint their successors.
In addition to the foregoing compensation provided to Fund Trustees, the Trust
provides elimination of Fund fees and minimum purchase thresholds for Trustees
as a form of additional benefit to the Trustees. In addition to the foregoing
waivers, third party dealers, brokers and/or financial advisors, may, at their
sole discretion, waive all or a portion of their fees derived from the Fund with
respect to purchases of Fund Shares by persons affiliated and/or unaffiliated
with the Fund.
<PAGE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Until its initial public offering, all Shares of the Fund will be held by the
Adviser, Claremont Investment Partners, L.L.C. a Delaware limited liability
company, which may be deemed to control the Fund. The Adviser is controlled by
RoadHouse Capital LLC ("RoadHouse Capital"), a Delaware limited liability
company, which is jointly controlled by Gerald P. Sullivan, President and
Trustee of the Fund, and Barry F. Sullivan, CEO and Trustee of the Fund, through
two special purpose family investment entities (as defined below, the "Family
Interests"). The "Family Interests" controlling RoadHouse Capital are RoadHouse
Group LLC, a Delaware limited liability company, and Sullvesco NJ 1998-II LLC, a
New Jersey limited liability company. Each of the Adviser, RoadHouse Capital and
the Family Interests are located at 104 Summit Avenue, Box 80, Summit, New
Jersey 07902-0080.
As of February 28, 1999 there were no holders of more than 5% ownership of Fund
Shares except for the Adviser who owned 100% of outstanding Fund Shares.
As of February 28, 1999, solely through the Family Interests referenced above,
the officers and Trustees of the Fund as a group beneficially owned 100% of
outstanding Fund Shares.
INVESTMENT MANAGEMENT AND OTHER SERVICES
The Fund and the Adviser have entered into an investment management agreement,
dated January 20, 1999, (the "Management Agreement" ) pursuant to which the
Adviser manages the portfolio of securities and investments of the Fund in
accordance with the Fund's investment objectives, strategies and policies, and
advises and assists the Fund with respect to the selection, acquisition, holding
or disposal of securities. In addition to managing the investments, the Adviser
also makes recommendations with respect to other aspects and affairs of the
Fund. The Adviser also furnishes the Fund with certain administrative services,
office space and equipment, and permits its officers and employees who may be
elected Trustees or officers of the Fund to serve in the capacities to which
they are elected without additional compensation from the Fund. All expenses
incurred in the operation of the Fund, except for the Management Fee and the
Rule 12b-1 Distribution Plan fees, are borne by the Adviser. For further
information concerning fees payable by the Fund, see the Prospectus under the
caption, "Fees and Expenses of the Fund."
Pursuant to the Management Agreement, the Fund pays the Adviser a fee at the
annual rate of 0.70% of the average daily net assets of the Fund calculated
daily and payable monthly.
The Management Agreement will continue in effect from year to year if
specifically approved annually by a majority of the Board of Trustees who are
not parties to such contract or "interested persons" of any such party. The
Management Agreement may be terminated without penalty by either party on 60
days' written notice and must terminate in the event of its assignment.
The Management Agreement provides that the Adviser is liable only for its acts
or omissions caused by its willful misfeasance, bad faith or gross negligence in
the performance of its duties or reckless disregard of its obligations under the
Management Agreement. The Management Agreement permits the Adviser to render
services to others and to engage in other activities.
The Adviser may draw upon the resources of the Fund distributor and its
qualified affiliates in rendering its services to the Fund. The distributor or
its affiliates may provide the Adviser (without charge to the Fund) with
investment information and recommendations that may serve as the principal basis
for investment decisions with respect to the Fund.
The Adviser has adopted a code of ethics (the "Ethics Code") that requires all
Advisor personnel to pre-clear any proposed non-exempt personal
securities transaction. Permission for any proposed transaction will be granted
provided it is determined that such transaction would not negatively impact
activity in client accounts. In the event that a client of Adviser's affiliates
also owns such security, or it is proposed that such client purchase such
security, available investments or opportunities for sales will be allocated in
a manner deemed to be equitable by the Adviser.
As set forth above under the caption, "Control Persons and Principal Holders of
Securities", the Adviser is controlled jointly through the Family Interests by
Barry F. Sullivan, who serves as CEO and Trustee of the Fund, and as an officer
and director of the Adviser, and Gerald P. Sullivan, who serves as President of
the Fund and as an officer and director of the Adviser. In addition, the
Prospectus, under the caption, "Management of the Fund", provides detailed
business information concerning the Adviser and Messrs. Sullivan and Sullivan.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Officers and Trustees of the Fund and officers of the Adviser are not officers
or directors of the Fund distributor or its affiliates, or any broker which
engages in the purchase and sale of portfolio securities on behalf of the Fund.
The Officers and Trustees of the Fund do not receive any direct or indirect
benefits from the Fund as a result of the usual and customary brokerage
commissions paid by the Adviser in connection with the purchase and sale of
portfolio securities on behalf of the Fund. The Management Agreement does not
provide for a reduction of the advisory fee by any portion of the fees generated
by portfolio transactions of the Fund which the Fund distributor or any broker
may receive. Pursuant to the Management Agreement, the Adviser pays for all
costs and expenses of the Fund related to portfolio transactions and brokerage
commissions.
Allocation of transactions, including their frequency, to various dealers is
determined by the Adviser 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. Subject
to this consideration, dealers who provide supplemental investment research,
statistical or other services to the Adviser may receive orders for transactions
by the Fund. Information so received will enable the Adviser to supplement its
own research and analysis with the views and information of other securities
firms. Such information may be useful and of value to the Adviser and its
affiliates in servicing other clients as well as the Fund; in addition,
information obtained by the Adviser and its affiliates in servicing other
clients may be useful and of value to the Adviser in servicing the Fund. No
principal transactions are effected with any companies affiliated with the
Adviser. Consideration may be given to research provided and payment may be made
of a fee higher than that charged by another broker-dealer which does not
furnish research services or which furnishes research services deemed to be of
lesser value, so long as the criteria of Section 28(e) of the Securities
Exchange Act of 1934, as amended (the "1934 Act") are met. Section 28(e) of the
1934 Act specifies that a person with investment discretion shall not be "deemed
to have acted unlawfully or to have breached a fiduciary duty" solely because
such person has caused the account to pay a higher commission than the lowest
available under certain circumstances. To obtain the benefit of Section 28(e),
the person so exercising investment discretion must make a good faith
determination that the commissions paid are reasonable in relation to the value
of the brokerage and research services provided viewed in terms of either that
particular transaction or his or her overall responsibilities with respect to
the accounts as to which he exercises investment discretion. Currently, it is
not possible to determine the extent to which commissions that reflect an
element of value for research services might exceed commissions that would be
payable for execution alone, nor generally can the value of research services be
measured.
There are no fixed limitations regarding the turnover rates of the Fund's
portfolio. The turnover rate is calculated by dividing (A) the lesser of
purchases or sales of securities in the Fund's long portfolio for the fiscal
year by (B) the monthly average of the value of portfolio securities owned by
the portfolio during the fiscal year. The Adviser expects that Fund portfolio
turnover rates will be relatively low.
DISTRIBUTOR
The Fund has entered into an agreement with Unified Management Corporation ("the
"Distributor"), dated as of January 20, 1999, which provides for the
distribution by the Distributor of the Fund's Shares. The Distribution Agreement
was approved by the vote of the Trustees on January 20, 1999. The adoption of
the Distribution Agreement included approval by more than a majority of the
Board who are neither "interested persons" of the Fund (as defined in the 1940
Act) nor have any direct or indirect financial interest in the operation of the
Distribution Agreement (the "Qualified Trustees"), by vote cast in person at a
meeting called for the purpose of considering the Distribution Agreement. The
Distribution Agreement is subject to annual approval by the Board of Trustees as
a whole and by a majority of the Qualified Trustees. Pursuant to the
Distribution Agreement, the Distributor shall act as agent for the distribution
of Fund Shares and make a continuous offering of the Fund's Shares during the
term of the Distribution Agreement. The Distributor is obligated to sell shares
of the Fund on a best efforts basis only against purchase orders for the Shares.
The Adviser may, at its own expense, finance additional
activities of the Distributor which are primarily intended to result in the sale
of the Fund Shares, including, but not limited to, advertising, compensation of
underwriters, dealers and sales personnel, printing and mailing of Fund
prospectuses to other than current Fund Shareholders, and printing and mailing
of sales literature. On behalf of the Fund, the Adviser has agreed to pay the
Distributor for its services rendered to the Fund, a minimum of $6,000 per year
against which the portion of sales charges, if any, and/or Rule 12b-1 fees
retained by the Distributor after payment of amounts reallowed to dealers shall
be applied against such minimum. In addition, the Adviser shall promptly
reimburse the Distributor for any distribution expenses not covered by Rule
12b-1 fees. The term of the Distribution Agreement is for a one year period
which may be renewed upon the annual review and approval by the Board of
Trustees and by a majority of Qualified Trustees by vote cast in person at a
meeting called for such purpose. The Distribution Agreement provides for
indemnification by the Fund of the Distributor against substantially all types
of claims and/or other liabilities incurred in the course of its duties.
ADMINISTRATOR
The Fund has entered into an agreement with AmeriPrime Financial Services Inc.
(the "Administrator"), dated January 20, 1999 (the "Administration Agreement").
Under the Administration Agreement, the Administrator will assist in the Fund's
administration and operation, including providing statistical and research data,
clerical services, internal compliance and various other administrative and
executive services, participating in the updating of the Prospectus,
coordinating the preparation, filing, printing and dissemination of reports to
Shareholders, coordinating the preparation of income tax returns, arranging for
the maintenance of books and records and providing the office facilities
necessary to carry out the duties thereunder. The Administrator assists in
carrying out all operations of the Fund and coordinating with the Fund's other
service providers, subject to the supervision of the Board (other than those
performed by the Adviser under the Investment Adviser Agreement). For services
rendered to the Fund, the Adviser, on behalf of the Fund, shall pay the
Administrator an asset-weighted fee of 0.07% for the first $150 million in total
Fund assets, 0.05% from $150 million to $250 million in total Fund assets, and
0.04% over $250 million in total Fund assets, provided, however, that the
foregoing shall be subject to a $20,000 annual minimum per Share Class plus
$7,500 per additional Share Class. The Adviser shall also promptly pay out-of-
pocket fees, as well as any additional fees and expenses for supplemental
transactions and expenses incurred in connection with the Administration
Agreement.
Unless sooner terminated, the Administration Agreement will continue in effect
for a period of one year and may be renewed for one year periods thereafter,
provided that such renewal is ratified by the Trustees or by vote of a majority
of the outstanding Shares of Fund, and in either case by a majority of Qualified
Trustees who are not parties to the Administration Agreement or interested
persons (as defined in the 1940 Act) of any party to the Administration
Agreement, by votes cast in person at a meeting called for such purpose.
TRANSFER AGENT AND FUND ACCOUNTING SERVICES
The Fund has entered into a Mutual Fund Services Agreement with Unified Fund
Services, Inc. ("UFS"), dated January 20, 1999, with respect to the provision to
the Fund of transfer agency services, accounting services and dividend
dispersing services (the "Fund Services Agreement"). UFS has agreed (1) to issue
and redeem Shares of the Fund; (2) to address and mail such communications as
instructed from time-to-time by the Trust to its Shareholders, including reports
to Shareholders, dividend and distribution notices, and proxy material for its
meetings of Shareholders; (3) to respond to correspondence or inquiries by
Shareholders and others relating to its duties; (4) to maintain Shareholder
accounts and certain sub-accounts; (5) to make periodic reports to the Trustees
concerning the Fund's operations (6) provide certain Fund accounting services
pursuant to which the Fund Accountant shall maintains all Fund books and
records, performs daily accounting services, and provide additional Fund
reporting and record keeping functions and (7) serve as the Fund's dividend
disbursing agent and prepare and mail checks, place wire transfers of credit
income and capital gain payments to Fund Shareholders. Under the Fund Services
Agreement, in connection with transfer agency services, the Adviser, on behalf
of the Fund, shall pay to UFS a base fee of $15.60 per Fund account with a
minimum fee of $8,333.33 per Share Class per year. In connection with accounting
services, the Adviser, on behalf of the Fund, shall pay to UFS an asset
weighted fee of 0.05% for the first $150 million in total Fund assets, 0.04%
from 150 million to $250 million in total Fund assets, and 0.03% over $250
million in total Fund assets, provided, however, that the
foregoing shall be subject to a $20,000 annual minimum per Share class plus
$7,500 per additional Share Class. The Adviser, on behalf of the Fund, shall
also promptly pay out-of-pocket fees, as well as any additional fees and
expenses for supplemental transactions and expenses incurred in connection with
the Fund Services Agreement.
DISTRIBUTION PLAN
The Fund has adopted a distribution plan with respect to Class D Shares in
accordance with Rule 12b-1 under the 1940 Act (the "Distribution Plan"). Rule
12b-1 mandates that a mutual fund may not engage directly or indirectly in
financing any activity that is primarily intended to result in the sale of
shares of such mutual fund except pursuant to a plan adopted by the mutual fund
under Rule 12b-1. The purpose of the Distribution Plan is to compensate certain
financial services organizations, broker-dealers and/or other parties (each, a
"Distribution Organization") for activities which are primarily intended to
result in the sale of the Fund's shares, including, but not limited to the
following: (i) providing distribution assistance relating to the sale of Class D
Shares and (ii) paying for promotional activities intended to result in the sale
of Class D Shares, such as the preparation, printing and distribution of
prospectuses to other than current Fund Shareholders. The Class D Shares pay
a distribution fee at a rate of up to 0.25% per annum of the average daily net
assets of such class. A report of the amounts expended under the Distribution
Plan must be made to, and reviewed by, the Board of Trustees at least quarterly.
The Distribution Plan is subject to annual approval by a majority of the Board
of Trustees, including a majority of the Qualified Trustees, by vote cast in
person at a meeting called for the purpose of voting on the Distribution Plan.
The Distribution Plan is severable with respect to the Class D Shares and any
other Class of Shares which may at any time be offered and included in the
Distribution Plan by the Fund. The Distribution Plan is terminable with respect
to any Fund Class at any time by vote of a majority of the Qualified Trustees or
by vote of a majority of the Shares of such terminating class. Pursuant to the
Distribution Plan, any new Trustees who are not "interested persons" must be
nominated by existing Trustees who are not "interested persons." In addition,
the Distribution Plan provides that it may not be amended to increase materially
any costs which a particular Class of the Fund may bear for distribution
pursuant to the Distribution Plan without Shareholder approval and that other
material amendments to the Distribution Plan must be approved by a majority of
the Board, including a majority of the Qualified Trustees, by vote cast in
person at a meeting called for the purpose of considering such amendments.
Some amounts paid pursuant to the Distribution Plan may from time-to-time be
paid to the Adviser and/or its affiliates for legitimate costs or expenses with
respect to Class D Shares distribution activities. The officers, directors and
employees of the Advisor may therefore be deemed to have a direct or indirect
financial interest in the operation of the Distribution Plan. The Trustees who
are not "interested persons" of the Fund do not have any direct or indirect
financial interest in the operation of the Distribution Plan. Any and all
Distribution Plan payments to the Advisor may be made only with the prior
approval of a majority of Qualified Trustees, who must be provided with
reasonable evidence that such payments were used by the Advisor for legitimate
costs and/or expenses authorized under the Distribution Plan.
Benefits from the Distribution Plan may accrue to the Fund and its Class D
Shareholders from the growth in assets due to sales of Shares to the public
pursuant to the Distribution Plan. Increases in the Fund's net assets from sales
pursuant to its Distribution Plan may benefit Shareholders by reducing per Share
expenses, permitting increased investment flexibility and diversification of the
Fund's assets, and facilitating economies of scale in the Fund's costs. Under
its terms, the Distribution Plan will continue from year to year, provided that
such continuance is approved annually by a vote of the Trustees in the manner
described above.
The adoption of the Distribution Plan was approved by the Board of Trustees,
including a majority of the Qualified Trustees, at a meeting called for such
purpose on January 20, 1999. Prior to approving the adoption of the Distribution
Plan, the Board requested and received from the Distributor all the information
which it deemed necessary to arrive at an informed determination as to such
continuance and adoption of the Distribution Plan. In making its determination
to adopt the Plan, the Board considered, among other factors: (1) comparable
plans in similarly situated mutual funds; (2) the benefits the Fund would be
likely to obtain under the Plan; including the fact that the Plan is necessary
to permit the Fund to operate at its contemplated low management overhead; (3)
the services to be provided under the Plan by the Distributor to the Fund and
its Shareholders; and (4) the reasonableness of the fees to be paid to the
Distributor for its services under the Plan. Based upon their review, the Board,
including each of the Qualified Trustees, determined that the adoption of the
Plan would be in the best interest of the Fund, and that there was a reasonable
likelihood that the Plan would benefit the Fund and its Shareholders. In the
Board's quarterly review of the Plan, the Trustees will consider its continued
appropriateness and the level of compensation provided therein.
The Board of Trustees has the right to terminate the Distribution Plan for the
Class D Shares, and in the event of such termination, no further payments would
be made thereunder. Termination of the Distribution Plan for the Class D Shares
or the Distribution Agreement does not affect the obligation of the Class D
Shareholders to pay other fees and charges. The Adviser may periodically
reimburse the Fund for all or a portion of Distribution Plan fees in order to
increase the net income of the Fund available for distribution to Class D
Shareholders.
The Board of Trustees has also adopted on January 20, 1999, a multi-class share
plan under Rule 18f-3 of the 1940 Act, permitting the issuance of Shares in
multiple classes.
FUND CUSTODIAN
The Fund has appointed UMB Bank, N.A. (the "Custodian"), located at 928 Grand
Blvd., 10th Floor, Kansas City, Missouri, to serve as the custodian for the
Fund, pursuant to an agreement dated February 1, 1999 (the "Custody Agreement").
Under the Custody Agreement, the Custodian (1) maintains a separate account or
accounts in the name of the Fund; (2) makes receipts and disbursements of money
on behalf of the Fund;(3) collects and receives all income and other payments
and distributions on account of portfolio securities; and (4) responds to
correspondence from security brokers and others relating to its duties. The
Custodian may, with the approval of the Fund and at the Custodian's own expense,
open and maintain a sub-custody account or accounts on behalf of the Fund,
provided that the Custodian shall remain liable for the performance of all of
its duties under the Custody Agreement. The initial Custody Agreement was
approved by a majority of the Qualified Trustees and by the Board of Trustees as
a whole, by vote cast in person at a meeting called for the purpose of
considering the Custody Agreement. The Custody Agreement is subject to annual
approval by the Board of Trustees as a whole and by a majority of the Qualified
Trustees.
For custody services rendered to the Fund, the Adviser shall pay the Custodian
an asset-weighted fee of 1.00 basis point on the first $100,000,000, plus 0.75
basis point on the next $100,000,000, plus 0.50 basis point in excess of
$200,000,000, provided, however, that such fees shall be subject to a $300 per
month minimum per Fund portfolio. The Adviser shall also promptly pay
out-of-pocket fees, as well as any additional fees and expenses for supplemental
transactions and expenses incurred in connection with the Custody Agreement.
THE YEAR 2000 ISSUE
The Fund and its service providers, including the Adviser with respect to its
operation of the Strategy Model, have a high degree of reliance on various
computer systems in carrying out their respective business activities. In this
regard, the Fund is aware of the "Year 2000 Issue" which refers to potential
problems which may confront users whose own or dependent computer systems cannot
correctly identify the year 2000. Computer systems that fail to properly
identify the year 2000 could fail or cause miscalculations which disrupt Fund
operations. In the case of the Fund and its service providers, such disruptions
could include pricing errors and account maintenance failures. The Fund is
working with its service providers to ensure reasonable steps are being taken to
address the Year 2000 Issue. The Fund has no reason to believe that these steps
will not be sufficient to avoid any material adverse impact on the Funds,
although there can be no assurance in this regard. The costs or consequences of
incomplete or untimely resolution of the Year 2000 Issue are unknown to the Fund
at this time but could have a material adverse impact on the operations of the
Funds and its service providers. See also the discussion of Year 2000 Issues in
the Prospectus under the caption, "Important Risk Considerations."
INDEPENDENT ACCOUNTANTS
The Fund has appointed McCurdy & Associates, 27955 Clemens Road, Westlake, Ohio
44145, as independent accountants for the Fund. In addition to reporting
annually on the Fund's financial statements, the Fund's accountants also review
certain filings of the Fund with the Securities and Exchange Commission.
LEGAL COUNSEL
Wuersch & Gering LLP, 11 Hanover Square, 21st Floor, New York, New York 10005,
is counsel to the Fund. The firm also acts as counsel to the Adviser.
FUND EXPENSES
Except for management fees and Distribution Plan fees, payable by Fund
Shareholders as set forth in the Prospectus under the caption, "Fees and
Expenses of the Fund", the Advisor has assumed responsibility for the following
expenses relating to the operation of the Fund: interest, taxes, fees and
commissions of every kind; expenses of issue, repurchase or redemption of
Shares; SEC fees, state notification and qualification fees, other costs of
registering or qualifying Shares for sale (including printing costs, legal fees
and other expenses relating to the preparation and filing of the Fund's
registration statement with the appropriate regulatory authorities and the
production and filing of the Fund's Prospectus); costs of insurance; association
membership dues; all charges of custodians, including fees as custodian, escrow
agent, and fees for keeping books and performing portfolio valuations; all
charges of transfer agents, registrars, pricing services, fees and expenses of
independent accountants and legal counsel; other advisory and administrative
fees, expenses of preparing, printing and distributing prospectuses and all
proxy materials, reports and notices to Shareholders; expenses of distribution
of Class D Shares over and above amounts which may be paid pursuant to the
Distribution Plan; out-of-pocket expenses of Trustees and fees, costs and
expenses related to meetings of the Trustees; fees of Trustees who are not
officers of the Fund; costs of Shareholders' reports and meetings, other costs
incident to the Fund's existence as a business trust and any extraordinary
expenses incurred in the Fund's operation.
<PAGE>
DESCRIPTION OF FUND SHARES
The Trust is a Delaware business trust that was formed on December 13, 1995. The
Trust Instrument authorizes the Board to issue an unlimited number of Shares,
which are units of beneficial interest, without par value. The Trust presently
has two classes of Shares which represent interests in the Fund.
The Trust Instrument authorizes the Board to divide or redivide any unissued
Shares of the Trust into one or more additional series by setting or changing in
any one or more aspects their respective preferences, conversion or other
rights, voting power, restrictions, limitations as to dividends, qualifications,
and terms and conditions of redemption. The Fund currently offers two share
classes:
(1) Class D, designed to be sold primarily to advised investors and
self-directed investors; and
(2) Class I, designed to be sold primarily to institutions investing at
least $500,000.
The Fund may, in its discretion, instruct the Distributor to
sell Class I Shares to non-institutional investors who invest at least $500,000,
provided, however, that the Fund's officers may waive the initial and subsequent
investment minimums for certain purchases when they deem it appropriate,
including, but not limited to, purchases by Trustees of the Fund and the
Advisor's officers, directors, employees and agents.
Shares have no subscription or preemptive rights and only such conversion or
exchange rights as the Board may grant in its discretion. When issued for
payment as described in the Prospectus and this SAI, the Trust's Shares will be
fully paid and non-assessable. In the event of a liquidation or dissolution of
the Trust, Shares of the Fund are entitled to receive the assets available for
distribution belonging to the Fund.
Shares of the Trust are entitled to one vote per share (with proportional voting
for fractional Shares) on such matters as Shareholders are entitled to vote.
Shareholders vote as a single class on all matters except (1) when required by
the 1940 Act, Shares shall be voted by individual class, and (2) when the
Trustees have determined that the matter affects only the interests of one or
more classes, then only Shareholders of such class shall be entitled to vote
thereon. There will normally be no meetings of Shareholders for the purpose of
electing Trustees unless and until such time as less than a majority of the
Trustees have been elected by the Shareholders, at which time the Trustees then
in office will call a Shareholders' meeting for the election of Trustees within
60 days. A meeting shall be held for such purpose upon the written request of
the holders of not less than 10% of the outstanding Shares. Upon written request
by ten or more Shareholders meeting the qualifications of Section 16(c) of the
1940 Act (i.e., persons who have been Shareholders for at least six months, and
who hold Shares having a net asset value of at least $25,000 or constituting 1%
of the outstanding Shares) stating that such Shareholders wish to communicate
with the other Shareholders for the purpose of obtaining the signatures
necessary to demand a meeting to consider removal of a Trustee, the Trust will
provide a list of Shareholders or disseminate appropriate materials (at the
expense of the requesting Shareholders). Except as set forth above, the Trustees
shall continue to hold office and may appoint their successors.
Rule 18f-2 under the 1940 Act provides that any matter required to be submitted
to the holders of the outstanding voting securities of an investment company
such as the Trust shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding Shares of each class
affected by the matter. For purposes of determining whether the approval of a
majority of the outstanding Shares of a class will be required in connection
with a matter, the class will be deemed to be affected by a matter unless it is
clear that the interests of each class in the matter are identical, or that the
matter does not affect any interest of the class. Under Rule 18f-2, the approval
of an investment advisory agreement or any change in investment policy would be
effectively acted upon with respect to a class only if approved by a majority of
the outstanding Shares of such class. Rule 18f-2 also provides that the
ratification of independent accountants, approval of principal underwriting
contracts, and election of Trustees may be effectively acted upon by
Shareholders of the Trust voting without regard to class.
SHAREHOLDER AND TRUSTEE LIABILITY
The Trust is organized as a Delaware business trust. The Delaware Business Trust
Act provides that a Shareholder of a Delaware business trust shall be entitled
to the same limitation of personal liability extended to Shareholders of
Delaware corporations, and the Trust Instrument provides that Shareholders of
the Trust shall not be liable for the obligations of the Trust. The Trust
Instrument also provides for indemnification out of Trust property of any
Shareholder held personally liable solely by reason of his or her being or
having been a Shareholder. The Trust Instrument also provides that the Trust
shall, upon request, assume the defense of any claim made against any
Shareholder for any act or obligation of the Trust, and shall satisfy any
judgment thereon. Therefore, it is unlikely that a Shareholder bears any
significant risk of financial loss with respect to Shareholder liability.
The Trust Instrument states further that no Trustee, officer, or agent of the
Trust shall be personally liable in connection with the administration or
preservation of the assets of the Fund or the conduct of the Trust's business;
nor shall any Trustee, officer, or agent be personally liable to any person for
any action or failure to act except for his or her own bad faith, willful
misfeasance, gross negligence, or reckless disregard of his or her duties. The
Trust Instrument also provides that all persons having any claim against the
Trustees or the Trust shall look solely to the assets of the Trust for payment.
<PAGE>
INDUSTRY LEADERS FUND
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 26, 1999
ASSETS:
Cash in Bank $100,000
Total Assets $100,000
LIABILITIES: $ 0
Total Liabilities $ 0
NET ASSETS $100,000
NET ASSETS CONSIST OF:
Capital Paid In $100,000
OUTSTANDING SHARES
Unlimited Number of Shares
Authorized Without Par Value-Class D 5,000
Authorized Without Par Value-Class I 5,000
NET ASSET VALUE PER SHARE-CLASS D $10
NET ASSET VALUE PER SHARE-CLASS I $10
OFFERING PRICE PER SHARE-CLASS D $10
OFFERING PRICE PER SHARE-CLASS I $10
MAXIMUM REDEMPTION PRICE PER SHARE-CLASS D $ 9.925
MAXIMUM REDEMPTION PRICE PER SHARE-CLASS I $10
See Accountants' Audit Report
INDUSTRY LEADERS FUND
NOTES TO FINANCIAL STATEMENTS
February 26, 1999
1. ORGANIZATION
Industry Leaders Fund (the "Trust") is an open-end management investment company
organized as a business trust under the laws of the State of Delaware by a
Declaration of Trust dated December 13, 1998. The Declaration of Trust provides
for an unlimited number of authorized shares of beneficial interest without par
value, which may, without shareholder approval, be divided into an unlimited
number of series of such shares, and which presently consist of two series of
shares for the Industry Leaders Fund (the "Fund").
The Fund uses an independent custodian and transfer agent. No transactions other
than those relating to organizational matters and the sale of 10,000 Shares of
the Industry Leaders Fund have taken place to date.
The investment objective of the Fund is long term capital appreciation.
2. RELATED PARTY TRANSACTIONS
As of February 26, 1999, all of the outstanding shares of the Fund were owned by
Claremont Investment Partners, L.L.C. A shareholder who beneficially owns,
directly or indirectly, more than 25% of the Fund's voting securities may be
deemed a "control person" (as defined in the 1940 Act) of the Fund.
Claremont Investment Partners, L.L.C., the Fund's investment adviser and
administrator, is registered as an investment adviser under the Investment
Advisers Act of 1940. Claremont Investment Partners, L.L.C. is controlled by
Gerald P. Sullivan and Barry F. Sullivan who are also officers and trustees of
the Fund.
As adviser, Claremont Investment Partners, L.L.C. receives from the Fund as
compensation for its services to the Fund an annual fee of 0.70% of the Fund's
net assets. The fee is paid monthly and calculated on the average daily closing
net asset value of the Fund.
All expenses incurred in the operation of the Fund, except for the management
fee and the Rule 12b-1 distribution plan fees are borne by the adviser.
3. DISTRIBUTION PLAN
The Fund has adopted a distribution plan with respect to Class D shares in
accordance with Rule 12b-1 under the 1940 Act. The Class D shares pay a
distribution fee at a rate of up to 0.25% per annum of the average daily net
assets of such class.
4. REDEMPTION FEES
The Class D shares carry a 0.75% redemption fee if sold within six months of
purchase. The redemption fee is charged at a percentage of an amount equal to
the lesser of the net asset value at the time of purchase of the shares being
redeemed or the net asset value of such shares at the time of redemption.
INDUSTRY LEADERS FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
February 26, 1999
5. CAPITAL STOCK AND DISTRIBUTION at February 26 1999, an unlimited number of
shares were authorized and paid in capital amounted to $100,000 for the Industry
Leaders Fund. Transactions in capital stock were as follows:
Shares Sold:
Industry Leaders Fund-Class D 5,000
Industry Leaders Fund-Class I 5,000
Shares Redeemed:
Industry Leaders Fund-Class D 0
Industry Leaders Fund-Class I 0
Net Increase:
Industry Leaders Fund-Class D 5,000
Industry Leaders Fund-Class I 5,000
Shares Outstanding:
Industry Leaders Fund-Class D 5,000
Industry Leaders Fund-Class I 5,000
To The Shareholders and Trustees
Industry Leaders Fund:
We have audited the accompanying statement of assets and liabilities of the
Industry Leaders Fund as of February 26, 1999. This financial statement is the
responsibility of the Company'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 management, as well as evaluating the overall
statement of assets and liabilities presentation. Our procedures included
confirmation of cash held by the custodian as of February 26, 1999, by
correspondence with the custodian. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the
Industry Leaders Fund as of February 26, 1999, in conformity with generally
accepted accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
February 26, 1999
<PAGE>
[BACK COVER OF SAI]
The Trust is registered with the Securities and Exchange Commission (the
"Commission") as an open-end management investment company. The Commission
does not supervise the management or policies of the Trust.
The Prospectus and this SAI do not include certain information contained in the
registration statement filed with the Commission. Copies of such information
may be obtained from the SEC upon payment of the prescribed fee.
THE PROSPECTUS AND THIS SAI DO NOT CONSTITUTE AN OFFERING OF THE SECURITIES
DESCRIBED IN THESE DOCUMENTS IN ANY STATE IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE. NO SALESPERSON, DEALER, OR ANY OTHER PERSON IS AUTHORIZED TO
GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN
THE PROSPECTUS AND THIS SAI.
REGISTRATION STATEMENT
This Statement of Additional Information and the Prospectus do not contain all
the information included in the Registration Statement filed with the Commission
under the 1933 Act with respect to the securities offered by the Prospectus. The
Registration Statement, including the exhibits filed therewith, may be examined
at the office of the Commission in Washington, D.C.
Statements contained in this Statement of Additional Information and the
Prospectus as to the contents of any contract or other document are not complete
and, in each instance, reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement of which this
Statement of Additional Information and the Prospectus form a part, each such
statement being qualified in all respects by such reference.
<PAGE>
PART C OTHER INFORMATION
ITEM 23. EXHIBITS
(a)(1) Certificate of Trust
(a)(2) Trust Instrument
(b) By-laws of the Trust
(c) Not applicable except to the extent set forth in each of the
Certificate of Trust, Trust Instrument and By-Laws of the Trust,
copies of which are filed herewith and incorporated by reference
thereto.
(d) Investment Adviser Agreement between Registrant and Claremont
Investment Partners, L.L.C.
(e) Distribution Agreement between Registrant and Unified
Management Corporation
(f) Not Applicable
(g) Custody Agreement between the Registrant and UMB Bank, N.A.
(h)(1) Mutual Fund Services Agreement between the Registrant and Unified Fund
Services, Inc.
(h)(2) Administration Agreement between the Registrant and AmeriPrime
Financial Services, Inc.
(i) Opinion and Consent of Counsel
(j) Consent of McCurdy and Associates, Independent Accountants for
Registrant
(k) Not Applicable
(l) Purchase Agreement for Shares of the Industry Leaders Fund(R)
(m) Distribution Plan
(n)(1) Financial Data Schedule
(n)(2) Financial Data Schedule
(o) Rule 18f-3 Plan
(p) Powers of Attorney for Officers, Directors and Trustees
<PAGE>
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE TRUST
The Trust does not control and is not under common control with any other
person.
ITEM 25. INDEMNIFICATION
All officers, Trustees, employees and agents of the Trust are to be indemnified
as set forth in Trust Instrument. To this end, the Trust intends to obtain an
Officers' and Trustees' Errors and Omissions Insurance Policy.
Insofar as indemnification for liability arising under the Securities Act of
1933, as amended (the "1933 Act") may be permitted for Trustees, officers and
controlling persons of the Trust pursuant to the foregoing provisions, or
otherwise, the Trust has been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Trust of
expenses incurred or paid by a Trustee, officer or controlling person of the
Trust 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 Trust 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 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The investment manager of the Fund is Claremont Investment Partners, LLC (the
"Adviser"), located at 104 Summit Avenue, Box 80, Summit, New Jersey 07902-0080,
engages in no business other than that of investment counseling for clients,
including the Fund.
During the past two years, Mr. Gerald P. Sullivan, President of the Fund and
Trustee, has worked only as the principal developer of the Industry Leaders
Strategy Model(TM) (the "Strategy Model") on behalf of the Adviser. Mr. Sullivan
also serves as an officer and director of the Adviser. A portion of his
development of the Strategy Model was sponsored by RoadHouse Capital LLC, 104
Summit Avenue, Box 80, Summit, New Jersey 07902-0080, the parent company of the
Adviser.
During the past two years, Mr. Barry F. Sullivan, an officer and director of the
Adviser, has served as Vice-Chairman of Sithe Energies, Inc., a private energy
resources firm located at 450 Lexington Avenue, New York, NY 10017.
Additional information concerning the respective business activities of Messrs.
Sullivan and Sullivan is set forth in the Prospectus under the caption,
"Management of the Fund - Portfolio Managers."
<PAGE>
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Unified Management Corporation, 431 Pennsylvania St., Indianapolis, Indiana
46204, is the Fund's principal underwriter. The Underwriter may from
time-to-time act as an underwriter, depositor or investment adviser for other
investment companies.
(b) There are no officers and directors of the Distributor who also serve on
behalf of the Trust.
(c) None.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books or other documents required to be maintained by Section
31(a) of the 1940 Act and the rules promulgated thereunder are maintained on
behalf of the Industry Leaders Fund(R) by the Fund Administrator, AmeriPrime
Financial Services, Inc., 1793 Kingswood Dr., Suite 200, Southlake, Texas 76092.
ITEM 29. MANAGEMENT SERVICES
The Trust has not entered into any management-related service contracts other
than as described in Part A and B of this Registration Statement.
ITEM 30. UNDERTAKINGS
The Registrant undertakes to call a meeting of Shareholders for the purpose of
voting upon the question of removal of a Trustee or Trustees if requested to do
so by the holders of at least 10% of Registrant's outstanding voting securities,
and to assist in communications with other Shareholders, as required by Section
16(c) of the 1940 Act.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant has duly caused this
Registration Statement on Form N-1A to be signed on its behalf by the
undersigned, thereunto duly authorized, in New York, New York, on the 3rd day
of March, 1999.
INDUSTRY LEADERS FUND(R)
By: /s/ Gerald P. Sullivan
----------------------
Gerald P. Sullivan,
President
Pursuant to the requirements of the Securities Act of 1933, as amended, this to
the Registration Statement of the Trust on Form N-1A has been signed below by
the following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- ----------------------------- -------------------------- --------------
<S> <C> <C>
Chief Executive Officer
/s/ Barry F. Sullivan* and Trustee March 3, 1999
- -----------------------------------
Barry F. Sullivan
/s/ Gerald P. Sullivan President and Trustee March 3, 1999
- -----------------------------------
Gerald P. Sullivan
Chairman of the Board
/s/ Mark S. Kaufmann* of Trustees March 3, 1999
- -----------------------------------
Mark S. Kaufmann
/s/ Seth H. Dubin* Trustee March 3, 1999
- -----------------------------------
Seth H. Dubin
/s/ Robert Lichten* Trustee March 3, 1999
- -----------------------------------
Robert Lichten
/s/ Fred B. Tartar* Trustee March 3, 1999
- -----------------------------------
Fred B. Tartar
/s/ Thomas Volpe* Trustee March 3, 1999
- -----------------------------------
Thomas Volpe
* By: /s/ Gerald P. Sullivan
Gerald P. Sullivan, attorney-in-fact
</TABLE>
<PAGE>
EXHIBIT INDEX TO
TO THE REGISTRATION STATEMENT
ON FORM N-1A
EX 99.B1.1 - (a)(1) Certificate of Trust
EX 99.B1.2 - (a)(2) Trust Instrument
EX 99.B2 - (a)(3)(b) By-laws of the Trust
- (c) Not Applicable except to the extent set forth in
each of the Certificate of Trust, Trust Instrument
and By-Laws of the Trust, copies of which are filed
herewith and incorporated by reference thereto.
EX 99.B5 - (d) Investment Adviser Agreement between Registrant and
Claremont Investment Partners, L.L.C.
EX 99.B6 - (e) Distribution Agreement between Registrant and
Unified
Management Corporation
EX 99.B8 - (g) Custody Agreement between the Registrant and UMB
Bank, N.A.
EX 99.B9.1 - (h)(1) Mutual Fund Services Agreement between the
Registrant and
Unified Fund Services, Inc.
EX 99.B9.2 - (h)(2) Administration Agreement between the Registrant and
AmeriPrime Financial Services, Inc.
EX 99.B10 - (i) Opinion and Consent of Counsel
EX 99.B11 - (j) Consent of McCurdy and Associates, Independent
Accountants for Registrant
EX 99.B13 - (l) Purchase Agreement for Shares of the Industry
Leaders Fund(R)
EX 99.B15 - (m) Distribution Plan
EX 27.1 - (n)(1) Financial Data Schedule
EX 27.2 - (n)(2) Financial Data Schedule
EX 99.B18 - (o) Rule 18f-3 Plan
EX 24 - (p) Powers of Attorney for Officers, Directors and
Trustees
CERTIFICATE OF TRUST
INDUSTRY LEADERS FUND
This Certificate of Trust is being duly executed and filed on behalf of the
business trust formed hereby by the undersigned, all of the trustees of the
Trust, to form a business trust pursuant to the Delaware Business Trust Act (12
Del. C. ss. 3801 et. seq.).
ARTICLE I
The name of the business trust formed hereby is "Industry Leaders Fund"
(the "Trust").
ARTICLE II
The Trust is, or will become prior to or within 180 days following the
first issuance of beneficial interests, a registered investment company under
the Investment Company Act of 1940, as amended (15 U.S.C. ss.ss. 80a-1 et.
seq.).
ARTICLE III
The address of the registered office of the Trust in the State of
Delaware is c/o The Corporation Trust Company, Corporation Trust Center, 1209
Orange Street, Wilmington, New Castle County, Delaware 19801.
ARTICLE IV
The address of the registered agent for service of process on the Trust
in the State of Delaware is The Corporation Trust Company, Corporation Trust
Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The
name of the registered agent at such address is The Corporation Trust Company.
ARTICLE V
The Trust Instrument relating to the Trust provides for the issuance of
one or more series of shares of beneficial interest in the Trust. Separate and
distinct records shall be maintained by the Trust for each series and the assets
associated solely with any such series shall be held and accounted for
separately from the assets of the Trust associated solely with any other series.
As provided in the Trust Instrument, the debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to a
particular series shall be enforceable against the assets of such series only,
and not against the assets of the Trust generally.
ARTICLE VI
This Certificate of Trust shall become effective upon filing in the
Office of the Secretary of State of Delaware.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Trust as of this 12th day of December, 1995.
Industry Leaders Fund
(the "Trust")
/s/ Gerald P. Sullivan
Gerald P. Sullivan, Trustee
/s/ Christopher D. Landsberg
Christopher D. Landsberg, Trustee
INDUSTRY LEADERS FUND(R)
TRUST INSTRUMENT
DATED AS OF JANUARY 20, 1999
<PAGE>
TRUST INSTRUMENT, made by the natural persons whose names and hands are set
forth below (the "Trustees") on January 20, 1999.
WHEREAS, the Industry Leaders Fund(R) (the "Trust") was established on December
13, 1995 pursuant to the filing of a Certificate of Trust with the Secretary of
State of the State of Delaware;
WHEREAS, the purpose of the Trust is to conduct, operate and carry on the
business of a management investment company registered under the 1940 Act
through one or more Series investing primarily in securities, and to carry on
such other business as the Trustees may from time to time determine in
accordance with their authority under the law of Delaware;
WHEREAS, the Trustees desire to further provide for the terms of governance of
the Trust and for the terms and conditions of the investment and reinvestment of
funds contributed thereto;
NOW THEREFORE, the Trustees declare that all money and property contributed to
the trust hereunder shall be held and managed in trust under this Trust
Instrument as herein set forth below.
ARTICLE I
NAME AND DEFINITIONS
SECTION 1.01 NAME. The name of the trust is the "INDUSTRY LEADERS FUND."
SECTION 1.02 DEFINITIONS. Wherever used herein, unless otherwise required by the
context or specifically provided:
(a) The "1940 Act" means the Investment Company Act of 1940, as amended from
time to time. Whenever reference is made hereunder to the 1940 Act, such
references shall be interpreted as including any applicable order or orders of
the Commission or any rules or regulations adopted by the Commission thereunder
or interpretive releases of the Commission staff;
(b) "Bylaws" means the Bylaws of the Trust as adopted by the Trustees, as
amended from time to time;
(c) "Class" means a class of Shares of a Series of the Trust established in
accordance with the provisions of Article II hereof;
(d) "Commission" has the meaning given it in the 1940 Act. In addition,
"Affiliated Person," "Assignment," "Interested Person" and "Principal
Underwriter" shall have the respective meanings given them in the 1940 Act.
"Majority Shareholder Vote" shall have the same meaning as the term "vote of a
majority of the outstanding voting securities" under the 1940 Act;
(e) "Delaware Act" refers to Chapter 38 of Title 12 of the Delaware Code
entitled "Treatment of Delaware Business Trusts," as amended from time to time;
(f) "Net Asset Value" means the net asset value of each Series of the Trust
determined in the manner provided in Article IX, Section 9.03 hereof;
(g) "Outstanding Shares" means those Shares shown from time to time in the books
of the Trust or its transfer agent as then issued and outstanding, but shall not
include Shares which have been redeemed or repurchased by the Trust and which
are at the time held in the treasury of the Trust;
(h) "Person" means and includes individuals, corporations, partnerships, trusts,
associations, joint ventures, estates and other entities, whether or not legal
entities, and governments and agencies and political subdivisions thereof,
whether domestic or foreign;
(i) "Series" means a series of Shares of the Trust established in accordance
with the provisions of Article II hereof;
(j) "Shareholder" means a record owner of Outstanding Shares of the Trust;
(k) "Shares" means the equal proportionate transferable units of beneficial
interest into which the beneficial interest of each Series of the Trust or class
thereof shall be divided and may include fractions of Shares as well as whole
Shares;
(l) The "Trust" means the Industry Leaders Fund, a Delaware business trust, and
reference to the Trust when applicable to one or more Series of the Trust, shall
refer to any such Series;
(m) The "Trustees" means the Person or Persons who has or have signed this Trust
Instrument so long as he or they shall continue in office in accordance with the
terms hereof and all other Persons who may from time to time be duly qualified
and serving as Trustees in accordance with the provisions of Article III hereof,
and reference herein to a Trustee or to the Trustees shall refer to the
individual Trustees in their respective capacity as Trustees hereunder;
(n) "Trust Property" means any and all property, real or Personal, tangible or
intangible, which is owned or held by or for the account of one or more of the
Trust or any Series, or the Trustees on behalf of the Trust or any Series.
ARTICLE II
BENEFICIAL INTEREST
SECTION 2.01. DIVISION OF BENEFICIAL INTEREST.
(a) The beneficial interest in the Trust may be divided into one or more Series.
Each Series may be divided into one or more Classes. Subject to the further
provisions of this Article II and any applicable requirements of the 1940 Act,
the Trustees shall have full power and authority, in their sole discretion, and
without obtaining any authorization or vote of the Shareholders of any Series or
Class thereof, (i) to divide the beneficial interest in the Trust or in each
Series or Class thereof into Shares, with or without par value as the Trustees
shall determine, (ii) to issue Shares without limitation as to number (including
fractional Shares), to such Persons and for such amount and type of
consideration, including cash or securities, at such time or times and on such
terms as the Trustees may deem appropriate, (iii) to establish and designate and
to change in any manner any Series or Class thereof and to fix such preferences,
voting powers, rights, duties and privileges and business purpose of each Series
or Class thereof as the Trustees may from time to time determine, which
preferences, voting powers, rights, duties and privileges may be senior or
subordinate to (or in the case of business purpose, different from) any existing
Series or Class thereof and may be limited to specified property or obligations
of the Trust or profits and losses associated with specified property or
obligations of the Trust, (iv) to divide or combine the Shares of any Series or
Class thereof into a greater or lesser number, or issue dividends in Shares with
respect to Shares of any Series or Class, without thereby materially changing
the proportionate beneficial interest of the Shares of such Series or Class in
the assets held with respect to that Series or Class thereof, (v) to classify or
reclassify any issued Shares of any Series or Class thereof into Shares of one
or more Series or Classes thereof and (vi) to take such other action with
respect to the Shares as the Trustees may deem desirable.
(b) Subject to the distinctions permitted among Classes or otherwise in Shares
of the same Series as established by the Trustees consistent with the
requirements of the 1940 Act, each Share of a Series of the Trust shall
represent an equal beneficial interest in the net assets of such Series, and
each holder of Shares of a Series shall be entitled to receive such holder's pro
rata share of distributions of income and capital gains, if any, made with
respect to such Series. Upon redemption of the Shares of any Series or Class
thereof, the applicable Shareholder shall be entitled to be paid solely out of,
the funds and property of such Series or Class thereof of the Trust.
(c) All references to Shares in this Declaration of Trust shall be deemed to be
Shares of any or all Series or Classes thereof, as the context may require. All
provisions herein relating to the Trust shall apply equally to each Series of
the Trust and each Class thereof, except as the context otherwise requires.
(d) All Shares issued hereunder, including, without limitation, Shares issued in
connection with a dividend in Shares or a split or reverse split of Shares,
shall be fully paid and non-assessable. Except as otherwise provided by the
Trustees, Shareholders shall have no appraisal, preemptive or other right to
subscribe to any additional Shares or other securities issued by the Trust.
(e) The Trust shall consist of the Series and Classes set forth on Schedule A
attached hereto, as amended from time to time. The preferences, voting powers,
rights and privileges of such Series and Classes thereof shall be as set forth
in the Trust's registration statement or statements as filed with the
Commission, as from time to time in effect.
SECTION 2.02. OWNERSHIP OF SHARES. The Ownership of Shares shall be recorded on
the books of the Trust or a transfer or similar agent for the Trust, which books
shall be maintained separately for the Shares of each Series (or Class). No
certificates certifying the ownership of Shares shall be issued except as the
Trustees may otherwise determine from time to time. The Trustees may make such
rules as they consider appropriate for the issuance of Share certificates, the
transfer of Shares of each Series (or Class) and similar matters. The record
books of the Trust as kept by the Trust or any transfer or similar agent, as the
case may be, shall be conclusive as to the identity of the Shareholders of each
Series (or Class) and as to the number of Shares of each Series (or Class) held
from time to time by each Shareholder.
SECTION 2.03. TRANSFER OF SHARES. Except as otherwise provided by the Trustees,
Shares shall be transferable on the books of the Trust only by the record holder
thereof or by his duly authorized agent upon delivery to the Trustees or the
Trust's transfer agent of a duly executed instrument of transfer, together with
a Share certificate if one is outstanding, and such evidence of the genuineness
of the execution and authorization thereof as may be required by the Trustees
and of such other matters as may be required by the Trustees. Upon such
delivery, and subject to any further requirements specified by the Trustees or
contained in the By-Laws, the transfer shall be recorded on the books of the
Trust. Until a transfer is so recorded, the Shareholder of record of Shares
shall be deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor the Trust, nor any transfer agent, Shareholder
servicing agent or similar agent, any officer, employee or agent of the Trust,
shall be affected by any notice of a proposed transfer.
SECTION 2.04. INVESTMENTS IN THE TRUST. Investments may be accepted by the Trust
from such Persons, at such times, on such terms, and for such consideration as
the Trustees from time to time may authorize.
SECTION 2.05. STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY. Shares
shall be deemed to be Personal property giving only the rights provided in this
instrument. Every Shareholder by virtue of having become a Shareholder shall be
held to have expressly assented and agreed to the terms hereof. The death,
incapacity, dissolution, termination or bankruptcy of a Shareholder during the
existence of the Trust shall not operate to terminate the Trust, nor entitle the
representative of any such Shareholder to an accounting or to take any action in
court or elsewhere against the Trust or the Trustees, but entitles such
representative only to the rights of such Shareholder under this Trust.
Ownership of Shares shall not entitle the Shareholder to any title in or to the
whole or any part of the Trust Property or right to call for a partition or
division of the same or for an accounting, nor shall the ownership of Shares
constitute the Shareholders as partners. Neither the Trust nor the Trustees, nor
any officer, employee or agent of the Trust shall have any power to bind
Personally any Shareholder, nor, except as specifically provided herein, to call
upon any Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time Personally agree
to pay. Except as specifically provided herein, no Shareholder shall be
Personally liable for the debts, liabilities, obligations or expenses incurred
by, contracted for, or otherwise existing with respect to, the Trust or by or on
behalf of any Series or Class. Every note, bond, contract or other understanding
issued by or on behalf of the Trust or Trustees relating to the Trust or to a
Series or Class may include a recitation limiting the obligation represented
thereby to the Trust or to one or more Series or Class and its respective assets
(but the omission of such a recitation shall not operate to bind any Shareholder
or Trustee of the Trust).
SECTION 2.06. ESTABLISHMENT AND DESIGNATION OF SERIES (OR CLASS).
Subject to the provisions of this Section 2.06, the Trust shall consist of the
Series indicated on Schedule A attached hereto, as such Schedule may be amended
from time to time. The preferences, voting powers, rights and privileges of the
Series and any classes thereof existing as of the date hereof shall be as set
forth in the Trust's registration statement or statements as filed with the
Commission, as from time to time in effect. Without obtaining any authorization
or vote of the Shareholders of any Series or Class thereof (except as otherwise
required by the 1940 Act), the establishment and designation of any Series (or
Class) of Shares shall be effective upon the adoption by a majority of the then
Trustees of a resolution that sets forth such establishment and designation and
the relative rights and preferences of such Series (or Class), whether directly
in such resolution or by reference to another document including, without
limitation, any registration statement of the Trust, or as otherwise provided in
such resolution. Upon the establishment of any such Series (or Class), Schedule
A shall be amended to reflect the addition of such Series (or Class) thereto;
provided that amendment of Schedule A shall not be a condition precedent to the
establishment of any Series (or Class) in accordance with this Trust Instrument.
Shares of each Series (or Class) established pursuant to this Article II, unless
otherwise provided in the resolution establishing such Series, shall have the
following relative rights and preferences:
(a) Assets Held with Respect to a Particular Series (or Class). All
consideration received by the Trust for the issue or sale of Shares of a
particular Series or Class thereof, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof from whatever source derived, including, without limitation,
any proceeds derived from the sale, exchange or liquidation of such assets, and
any funds or payments derived from any reinvestment of such proceeds in whatever
form the same may be, shall irrevocably be held with respect to that Series (or
Class) for all purposes, subject only to the rights of creditors of such Series
(or Class thereof to the extent provided below), and shall be so recorded upon
the books of account of the Trust. Such consideration, assets, income, earnings,
profits and proceeds thereof, from whatever source derived, including, without
limitation, any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, are herein referred to as "assets
held with respect to" that Series (or Class thereof). In the event that there
are any assets, income, earnings, profits and proceeds thereof, funds or
payments that are not readily identifiable as assets held with respect to any
particular Series (and the Classes thereof) (collectively "General Assets"), the
Trustees shall allocate such General Assets to, between or among any one or more
of the Series (and the Classes thereof) in such manner and on such basis as the
Trustees, in their sole discretion, deem fair and equitable, and any General
Assets so allocated to a particular Series (and the Classes thereof) shall be
assets held with respect to that Series and such Classes. Each such allocation
by the Trustees shall be conclusive and binding upon the Shareholders of all
Series and Classes for all purposes. Separate and distinct records shall be
maintained for each Series (and the Classes thereof) and the assets held with
respect to each Series (and the Classes thereof) shall be held and accounted for
separately from the assets held with respect to all other Series (and the
Classes thereof) and the General Assets of the Trust not allocated to such
Series or Classes.
(b) Liabilities Attributable to a Particular Series (or Class). Unless otherwise
agreed by the Trust pursuant to written agreement with an investment adviser,
the assets of the Trust held with respect to each particular Series (or Class
thereof) shall be charged exclusively with the liabilities of the Trust
attributable to that Series or Class and all expenses, costs, charges and
reserves attributable to that Series or Class, and any general liabilities of
the Trust that are not readily identifiable as being attributable to any
particular Series (and the Classes thereof) shall be allocated and charged by
the Trustees to and among any one or more of the Series (and the Classes
thereof) in such manner and on such basis as the Trustees in their sole
discretion deem fair and equitable. All liabilities, expenses, costs, charges,
and reserves so charged to a Series (and the Classes thereof) are herein
referred to as "liabilities attributable to" that Series (or Class thereof).
Each allocation of liabilities, expenses, costs, charges and reserves by the
Trustees shall be conclusive and binding upon the Shareholders of all Series and
Classes for all purposes. All liabilities attributable to a particular Series
shall be enforceable against the assets held with respect to such Series only
and not against the assets of the Trust generally or against the assets held
with respect to any other Series. Notice of this limitation on the liability of
each Series shall be set forth in the Certificate of Trust or in an amendment
thereto prior to the issuance of any Shares of a Series. To the extent that the
Trustees, pursuant to Section 2 of Article X hereof, include a Class limitation
on liability in any note, bond, contract, instrument, certificate or undertaking
made with respect to any Class, the parties to such note, bond, contract,
instrument, certificate or undertaking shall look only to the assets of such
Class in satisfaction of the liabilities arising thereunder and not to the
assets of any other Class of the applicable Series.
(c) Dividends, Distributions, Redemptions and Repurchases. Notwithstanding any
other provision of this Declaration of Trust, no dividend or distribution,
including, without limitation, any distribution paid upon termination of the
Trust or of any Series (or Class) thereof with respect to, nor any redemption or
repurchase of, the Shares of any Series (or Class thereof) shall be effected by
the Trust other than from the assets held with respect to such Series (or Class
thereof), nor shall any Shareholder of any particular Series (or Class thereof)
otherwise have any right or claim against the assets held with respect to any
other Series or Class except to the extent that such Shareholder has such a
right or claim hereunder as a Shareholder of such other Series or Class. The
Trustees shall have full discretion, to the extent not inconsistent with the
1940 Act, to determine which items shall be treated as income and which items as
capital; and each such determination and allocation shall be conclusive and
binding upon the Shareholders.
(d) Equality. All the Shares of each particular Series (or Class thereof) shall
represent an equal proportionate interest in the assets held with respect to
that Series (or Class thereof), and each Share of any particular Series shall be
equal to each other Share of that Series (subject to the liabilities
attributable to that Series and such rights and
<PAGE>
preferences as may have been established and designated with respect to Classes,
or otherwise, of Shares within such Series).
(e) Fractions. Any fractional Share of a Series (or Class thereof) shall carry
proportionately all the rights and obligations of a whole Share of that Series
or Class, including rights with respect to voting, receipt of dividends and
distributions, redemption of Shares and termination of the Trust.
(f) Combination of Series. The Trustees shall have the authority, without the
approval of the Shareholders of any Series (or Class thereof), unless otherwise
required by applicable law, to combine the assets and liabilities attributable
to any two or more Series (or Classes) into assets and liabilities attributable
to a single Series or Class.
(g) Elimination of Series. At any time that there are no Shares outstanding of
any particular Series (or Class) previously established and designated, the
Trustees may by resolution of a majority of the Trustees abolish that Series (or
Class) and rescind the establishment and designation thereof and may thereafter
establish a new Series (or Class) with such designation and otherwise as herein
provided, and, in connection with such abolishment, Schedule A shall be amended
to reflect the removal of such Series (or Class) therefrom; provided that
amendment of Schedule A shall not be a condition precedent to the abolishment of
any Series (or Class) in accordance with this Trust Instrument.
ARTICLE III THE TRUSTEES
SECTION 3.01 MANAGEMENT OF THE TRUST. The Trustees shall have exclusive and
absolute control over the Trust Property and over the business of the Trust to
the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Trust Instrument. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the State of Delaware, in any and
all states of the United States of America, in the District of Columbia, in any
and all commonwealths, territories, dependencies, colonies, or possessions of
the United States of America, and in any foreign jurisdiction and to do all such
other things and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust although such things
are not herein specifically mentioned. Any determination as to what is in the
interests of the Trust made by the Trustees in good faith shall be conclusive.
In construing the provisions of this Trust Instrument, the presumption shall be
in favor of a grant of power to the Trustees.
The enumeration of any specific power in this Trust Instrument shall not be
construed as limiting the aforesaid power. The powers of the Trustees may be
exercised without order of or resort to any court.
Except for the Trustees named herein or appointed to fill vacancies pursuant to
Section 3.04 of this Article III, the Trustees shall be elected by the
Shareholders owning of record a plurality of the Shares voting at a meeting of
Shareholders. Any Shareholder meeting held for such purpose shall be held on a
date fixed by the Trustees. In the event that less than a majority of the
Trustees holding office have been elected by Shareholders, the Trustees then in
office will call a Shareholders' meeting for the election of Trustees in
accordance with the provisions of the 1940 Act.
SECTION 3.02 INITIAL TRUSTEES. As of the date of issuance of beneficial
interests of the Trust, Claremont Investment Advisers, as initial shareholder of
the Trust, has duly elected the Trustees of the Trust; to the extent that other
Persons are from time-to-time elected as Trustees, or appointed as Trustees in
accordance with Section 3.04 herein, such other Persons shall replace, and
assume the duties of, Trustees of the Trust.
SECTION 3.03 TERM OF OFFICE. The Trustees shall hold office during the lifetime
of this Trust, and until its termination as herein provided; except (a) that any
Trustee may resign his trust by written instrument signed by him and delivered
to the other Trustees, which shall take effect upon such delivery or upon such
later date as is specified therein; (b) that any Trustee may be removed at any
time by written instrument, signed by at least two-thirds of the number of
Trustees prior to such removal specifying the date when such removal shall
become effective; (c) that any Trustee who requests in writing to be retired or
who has died, becomes physically or mentally incapacitated by reason of illness
or otherwise, or is otherwise unable to serve, may be retired by written
instrument signed by a majority of the other Trustees, specifying the date of
his retirement; and (d) that a Trustee may be removed at any meeting of the
Shareholders of the Trust by a vote of Shareholders owning at least two-thirds
of the Outstanding Shares of the Trust.
SECTION 3.04 VACANCIES AND APPOINTMENTS. In case of a Trustee's declination to
serve, death, resignation, retirement, removal, physical or mental incapacity by
reason of illness, disease or otherwise, or if a Trustee is otherwise unable to
serve, or if there is an increase in the number of Trustees, a vacancy shall
occur. Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled, the other Trustees shall have all the powers hereunder and
the certificate of the other Trustees of such vacancy shall be conclusive. In
the case of a vacancy, the remaining Trustees shall fill such vacancy by
appointing such other Person as they in their discretion see fit, to the extent
consistent with the limitations provided under the 1940 Act. Such appointment
shall be evidenced by a written instrument signed by a majority of the Trustees
in office or by resolution of the Trustees, duly adopted, which shall be
recorded in the minutes of a meeting of the Trustees, whereupon the appointment
shall take effect.
An appointment of a Trustee may be made by the Trustees then in office in
anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As soon as any Person
appointed as a Trustee pursuant to this Section 3.04 shall have accepted this
Trust, the trust estate shall vest in the new Trustee or Trustees, together with
the continuing Trustees, without any further act or conveyance, and such Person
shall be deemed a Trustee.
SECTION 3.05 TEMPORARY ABSENCE. Any Trustee may, by power of attorney, delegate
his power for a period not exceeding six months at any time to any other Trustee
or Trustees, provided that in no case shall fewer than two Trustees personally
exercise the other powers hereunder except as herein otherwise expressly
provided.
SECTION 3.06 NUMBER OF TRUSTEES. The number of Trustees shall be at least two
(2), and thereafter shall be such number as shall be fixed from time to time by
a majority of the Trustees, provided, however, that the number of Trustees shall
in no event be more than twelve (12).
SECTION 3.07 EFFECT OF ENDING OF A TRUSTEE'S SERVICE. The declination to serve,
death, resignation, retirement, removal, incapacity, or inability of the
Trustees, or any one of them, shall not operate to terminate the Trust or to
revoke any existing agency created pursuant to the terms of this Trust
Instrument.
SECTION 3.08 OWNERSHIP OF ASSETS OF THE TRUST. The assets of the Trust and of
each Series shall be held separate and apart from any assets now or hereafter
held in any capacity other than as Trustee hereunder by the Trustees or any
successor Trustees. Legal title in all of the assets of the Trust and the right
to conduct any business shall at all times be considered as vested in the
Trustees on behalf of the Trust, except that the Trustees may cause legal title
to any Trust Property to be held by, or in the name of, the Trust or in the name
of any Person as nominee. No Shareholder shall be deemed to have a severable
ownership in any individual asset of the Trust or of any Series or any right of
partition or possession thereof but each Shareholder shall have, except as
otherwise provided for herein, a proportionate undivided beneficial interest in
the Trust or Series based upon the number of Shares owned. The Shares shall be
Personal property giving only the rights specifically set forth in this Trust
Instrument.
ARTICLE IV
POWERS OF THE TRUSTEES
SECTION 4.01 POWERS. The Trustees in all instances shall act as principals, and
are and shall be free from the control of the Shareholders. The Trustees shall
have full power and authority to do any and all acts and to make and execute any
and all contracts and instruments that they may consider necessary or
appropriate in connection with the management of the Trust. The Trustees shall
not in any way be bound or limited by present or future laws or customs in
regard to trust investments, but shall have full authority and power to make any
and all investments which they, in their sole discretion, shall deem proper to
accomplish the purpose of this Trust without recourse to any court or other
authority. Subject to any applicable limitation in this Trust Instrument or the
Bylaws of the Trust, the Trustees shall have the power and authority:
(a) To invest and reinvest cash and other property (including investment,
notwithstanding any other provision hereof, of all of the assets of any Series
in a single open-end investment company, including investment by means of
transfer of such assets in exchange for an interest or interests in such
investment company), and to hold cash or other property of the Trust uninvested,
without in any event being bound or limited by any present or future law or
custom in regard to investments by trustees, and to sell, exchange, lend,
pledge, mortgage, hypothecate, write options on and lease any or all of the
assets of the Trust;
(b) To operate as and carry on the business of an investment company, and
exercise all the powers necessary and appropriate to the conduct of such
operations;
(c) To borrow money and in this connection issue notes or other evidence of
indebtedness; to secure borrowings by mortgaging, pledging or otherwise
subjecting as security the Trust Property; to endorse, guarantee, or undertake
the performance of an obligation or engagement of any other Person and to lend
Trust Property;
(d) To provide for the distribution of interests of the Trust either through a
principal underwriter in the manner hereinafter provided for or by the Trust
itself, or both, or otherwise pursuant to a plan of distribution of any kind;
(e) To adopt Bylaws not inconsistent with this Trust Instrument providing for
the conduct of the business of the Trust and to amend and repeal them to the
extent that they do not reserve that right to the Shareholders; such Bylaws
shall be deemed incorporated and included in this Trust Instrument;
(f) To elect and remove such officers and appoint and terminate such agents as
they consider appropriate;
(g) To employ one or more banks, trust companies or companies that are members
of a national securities exchange or such other entities as the Commission may
permit as custodians of any assets of the Trust subject to any conditions set
forth in this Trust Instrument or in the Bylaws;
(h) To retain one or more transfer agents and shareholder servicing agents, or
both;
(i) To set record dates in the manner provided herein or in the Bylaws;
(j) To delegate such authority as they consider desirable to any officers of the
Trust and to any investment adviser, manager, custodian, underwriter or other
agent or independent contractor;
(k) To sell or exchange any or all of the assets of the Trust, subject to the
provisions of Article XI, subsection 11.04(b) hereof;
(l) To vote or give assent, or exercise any rights of ownership, with respect to
stock or other securities or property, and to execute and deliver powers of
attorney to such Person or Persons as the Trustees shall deem proper, granting
to such Person or Persons such power and discretion with relation to securities
or property as the Trustees shall deem proper;
(m) To exercise powers and rights of subscription or otherwise which in any
manner arise out of ownership of securities;
(n) To hold any security or property in a form not indicating any trust, whether
in bearer, book entry, unregistered or other negotiable form; or either in the
name of the Trust or in the name of a custodian or a nominee or nominees,
subject in either case to proper safeguards according to the usual practice of
Delaware business trusts or investment companies;
(o) To establish separate and distinct Series with separately defined investment
objectives and policies and distinct investment purposes in accordance with the
provisions of Article II hereof and to establish classes of such Series having
relative rights, powers and duties as they may provide consistent with
applicable law;
(p) Subject to the provisions of Section 3804 of the Delaware Act, to allocate
assets, liabilities and expenses of the Trust to a particular Series or to
apportion the same between or among two or more Series, provided that any
liabilities or expenses incurred by a particular Series shall be payable solely
out of the assets belonging to that Series as provided for in Article II hereof,
except that the Trustees may determine that the Trust shall enter into written
agreement from time-to-time providing that certain liabilities or expenses
incurred by the Trust and/or a particular Series (or Class) shall be paid or
reimbursed by an investment adviser or other third party;
(q) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase, or
sale of property by such corporation or concern, and to pay calls or
subscriptions with respect to any security held in the Trust;
(r) To compromise, arbitrate, or otherwise adjust claims in favor of or against
the Trust or any matter in controversy including, but not limited to, claims for
taxes;
(s) To make distributions of income and of capital gains to Shareholders in the
manner provided herein;
(t) To establish, from time to time, a minimum investment for Shareholders in
the Trust or in one or more Series or class, and to require the redemption of
the Shares of any Shareholders whose investment is less than such minimum upon
giving notice to such Shareholder;
(u) To establish one or more committees, to delegate any of the powers of the
Trustees to said committees and to adopt a committee charter providing for such
responsibilities, membership (including Trustees, officers or other agents of
the Trust therein) and any other characteristics of said committees as the
Trustees may deem proper. Notwithstanding the provisions of this Article IV, and
in addition to such provisions or any other provision of this Trust Instrument
or of the Bylaws, the Trustees may by resolution appoint a committee consisting
of less than the whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office, with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
action, suit or proceeding which shall be pending or threatened to be brought
before any court, administrative agency or other adjudicatory body;
(v)To interpret the investment policies, practices or limitations of any Series;
(w) To establish a registered office and have a registered agent in the state of
Delaware;
(x) To invest part or all of the Trust Property (or part or all of the assets of
any Series), or to dispose of part or all of the Trust Property (or part or all
of the assets of any Series) and invest the proceeds of such disposition, in
securities issued by one or more other investment companies registered under the
1940 Act (including investment by means of transfer of part or all of the Trust
Property in exchange for an interest or interests in such one or more investment
companies) all without any requirement of approval by Shareholders unless
required by the 1940 Act. Any such other investment company may (but need not)
be a trust (formed under the laws of the State of Delaware or of any other
state) which is classified as a partnership for federal income tax purposes; and
(y) In general to carry on any other business in connection with or incidental
to any of the foregoing powers, to do everything necessary, suitable or proper
for the accomplishment of any purpose or the attainment of any object or the
furtherance of any power hereinbefore set forth, either alone or in association
with others, and to do every other act or thing incidental or appurtenant to or
growing out of or connected with the aforesaid business or purposes, objects or
powers.
The foregoing clauses shall be construed as objects and powers, and the
foregoing enumeration of specific powers shall not be held to limit or restrict
in any manner the general powers of the Trustees. Any action by one or more of
the Trustees in their capacity as such hereunder shall be deemed an action on
behalf of the Trust or the applicable Series, and not an action in an individual
capacity.
The Trustees shall not be limited to investing in obligations maturing before
the possible termination of the Trust.
No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see the application of
any payments made or property transferred to the Trustees or upon their order.
SECTION 4.02 ISSUANCE AND REPURCHASE OF SHARES. The Trustees shall have the
power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell,
reissue, dispose of and otherwise deal in Shares and, subject to the provisions
set forth in Article II and Article IX, to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of Shares any funds or
property of the Trust, or the particular Series of the Trust, with respect to
which such Shares are issued.
SECTION 4.03 TRUSTEES AND OFFICERS AS SHAREHOLDERS. Any Trustee, officer or
other agent of the Trust may acquire, own and dispose of Shares to the same
extent as if he were not a Trustee, officer or agent; and the Trustees may issue
and sell or cause to be issued and sold Shares to and buy such Shares from any
such Person or any firm or company in which he is interested, subject only to
the general limitations herein contained as to the sale and purchase of such
Shares; and all subject to any restrictions which may be contained in the
Bylaws.
SECTION 4.04 ACTION BY THE TRUSTEES. In any action taken by the Trustees
hereunder, unless otherwise specified, the Trustees shall act by majority vote
at a meeting duly called or by unanimous written consent without a meeting or by
telephone meeting provided a quorum of Trustees participate in any such
telephone meeting, unless the 1940 Act requires that a particular action be
taken only at a meeting at which the Trustees are present in person. At any
meeting of the Trustees, a majority of the Trustees shall constitute a quorum.
Meetings of the Trustees may be called as provided in the Bylaws. Notice of the
time, date and place of all meetings of the Trustees shall be given by the
Person calling the meeting to each Trustee by telephone, facsimile or other
electronic mechanism sent to his home or business address at least twenty-four
hours in advance of the meeting or by written notice mailed to his home or
business address at least seventy-two hours in advance of the meeting. Notice
need not be given to any Trustee who attends the meeting without objecting to
the lack of notice or who executes a written waiver of notice with respect to
the meeting. Any meeting conducted by telephone shall be deemed to take place at
the principal office of the Trust, as determined by the Bylaws or by the
Trustees. Subject to the requirements of the 1940 Act, the Trustees by majority
vote may delegate to any one or more of their number their authority to approve
particular matters or take particular actions on behalf of the Trust. Written
consents or waivers of the Trustees may be executed in one or more counterparts.
Execution of a written consent or waiver and delivery thereof to the Trust may
be accomplished by facsimile or other similar electronic mechanism.
SECTION 4.05 CHAIRMAN OF THE BOARD OF TRUSTEES. Trustees shall appoint one of
their number to be Chairman of the Board of Trustees. The Chairman shall preside
at all meetings of the Trustees, shall be responsible for the execution of
policies established by the Trustees and the administration of the Trust, and
may be (but is not required to be) an officer of the Trust.
SECTION 4.06 PRINCIPAL TRANSACTIONS. Except to the extent prohibited by
applicable law, the Trustees may, on behalf of the Trust, buy any securities
from or sell any securities to, or lend any assets of the Trust to, any Trustee
or officer of the Trust or any firm of which any such Trustee or officer is a
member acting as principal, or have any such dealings with any investment
adviser, administrator, distributor or transfer agent for the Trust or with any
interested Person of such Person; and the Trust may employ any such Person, or
firm or company in which such Person is an interested Person, as broker, legal
counsel, registrar, investment adviser, administrator, distributor, transfer
agent, dividend disbursing agent, custodian or in any other capacity upon
customary terms.
ARTICLE V
EXPENSES OF THE TRUST
SECTION 5.01 PAYMENTS AND REIMBURSEMENT. Unless otherwise agreed by the Trust
pursuant to written agreement with an investment adviser, subject to the
provisions of Article II hereof the Trustees shall be reimbursed from the Trust
estate or the assets belonging to the appropriate Series for their expenses and
disbursements, including, without limitation, interest charges, taxes, brokerage
fees and commissions; expenses of issue, repurchase and redemption of Shares;
certain insurance premiums; applicable fees, interest charges and expenses of
third parties, including the Trust's investment advisers, managers,
administrators, distributors, custodians, transfer agent and fund accountant;
fees of pricing, interest, dividend, credit and other reporting services; costs
of membership in trade associations; telecommunications expenses; funds
transmission expenses; auditing, legal and compliance expenses; costs of forming
the Trust and maintaining its existence; costs of preparing and printing the
Trust's prospectuses, statements of additional information and shareholder
reports and delivering them to existing Shareholders; expenses of meetings of
Shareholders and proxy solicitations therefor; costs of maintaining books and
accounts; costs of reproduction, stationery and supplies; fees and expenses of
the Trustees; compensation of the Trust's officers and employees and costs of
other Personnel performing services for the Trust; costs of Trustee meetings;
Commission registration fees and related expenses; state or foreign securities
laws registration fees and related expenses and for such non-recurring items as
may arise, including litigation to which the Trust (or a Trustee acting as such)
is a party, and for all losses and liabilities by them incurred in administering
the Trust, and for the payment of such expenses, disbursements, losses and
liabilities the Trustees shall have a lien on the assets belonging to the
appropriate Series, or in the case of an expense allocable to more than one
Series, on the assets of each such Series, prior to any rights or interests of
the Shareholders thereto. This section shall not preclude the Trust from
directly paying any of the aforementioned fees and expenses.
ARTICLE VI
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT
SECTION 6.01 INVESTMENT ADVISER.
(a) The Trustees may in their discretion, from time to time, enter into an
investment advisory contract or contracts with respect to the Trust or any
Series whereby the other party or parties to such contract or contracts shall
undertake to furnish the Trustees with such investment advisory, statistical and
research facilities and services and such other facilities and services, if any,
all upon such terms and conditions (including any Shareholder vote) that may be
required under the 1940 Act, as may be prescribed in the Bylaws, or as the
Trustees may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws).
Notwithstanding any other provision of this Trust Instrument, the Trustees may
authorize any investment adviser (subject to such general or specific
instructions as the Trustees may from time to time adopt) to effect purchases,
sales or exchanges of portfolio securities, other investment instruments of the
Trust, or other Trust Property on behalf of the Trustees, or may authorize any
officer, agent, or Trustee to effect such purchases, sales or exchanges pursuant
to recommendations of the investment adviser (and all without further action by
the Trustees). Any such purchases, sales and exchanges shall be deemed to have
been authorized by all of the Trustees.
(b) The Trustees may authorize the investment adviser to employ, from time to
time, one or more sub-advisers to perform such of the acts and services of the
investment adviser, and upon such terms and conditions, as may be agreed upon
between the investment adviser and subadviser (such terms and conditions not to
be inconsistent with the provisions of this Trust Instrument or of the Bylaws).
Any reference in this Trust Instrument to the investment adviser shall be deemed
to include such sub-advisers, unless the context otherwise requires; provided
that no Shareholder approval shall be required with respect to any sub-adviser
unless required under the 1940 Act or other law, contract or order applicable to
the Trust.
SECTION 6.02 PRINCIPAL UNDERWRITER. The Trustees may in their discretion from
time to time enter into an exclusive or non-exclusive underwriting contract or
contracts providing for the sale and/or distribution of Shares, whereby the
Trust may either agree to sell Shares to the other party to the contract or
appoint such other party its sales agent for such Shares. In either case, the
contract shall be on such terms and conditions as may be prescribed in the
Bylaws and as the Trustees may in their discretion determine (such terms and
conditions not to be inconsistent with the provisions of this Trust Instrument
or of the Bylaws); and such contract may also provide for the repurchase or sale
of Shares by such other party as principal or as agent of the Trust.
SECTION 6.03 ADMINISTRATION. The Trustees may in their discretion from time to
time enter into one or more management or administrative contracts whereby the
other party or parties shall undertake to furnish the Trustees with management
or administrative services. The contract or contracts shall be on such terms and
conditions as may be prescribed in the Bylaws and as the Trustees may in their
discretion determine (such terms and conditions not to be inconsistent with the
provisions of this Trust Instrument or of the Bylaws).
SECTION 6.04 TRANSFER AGENT. The Trustees may in their discretion from time to
time enter into one or more transfer agency and shareholder service contracts
whereby the other party or parties shall undertake to furnish the Trustees with
transfer agency and shareholder services. The contract or contracts shall be on
such terms and conditions as may be prescribed in the Bylaws and as the Trustees
may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws).
SECTION 6.05 PARTIES TO CONTRACT. Any contract of the character described in
Sections 6.01, 6.02, 6.03 and 6.04 of this Article VI or any contract of the
character described in Article VIII hereof may be entered into with any
corporation, firm, partnership, trust or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, or member of such other party to the contract, and no such contract
shall be invalidated or rendered void or voidable by reason of the existence of
any relationship, nor shall any Person holding such relationship be disqualified
from voting on or executing the same in his capacity as Shareholder and/or
Trustee, nor shall any Person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was not
inconsistent with the provisions of this Article VI or Article VIII hereof or of
the Bylaws. The same Person (including a corporation, firm, partnership, trust,
or association) may be the other party to contracts entered into pursuant to
Sections 6.01, 6.02, 6.03 and 6.04 of this Article VI or pursuant to Article
VIII hereof and any individual may be financially interested or otherwise
affiliated with Persons who are parties to any or all of the contracts mentioned
in this Section 6.05.
SECTION 6.06 PROVISIONS AND AMENDMENTS. Any contract entered into pursuant to
Section 6.01 or 6.02 of this Article VI shall be consistent with and subject to
the requirements of Section 15 of the 1940 Act, if applicable, or other
applicable Act of Congress hereafter enacted with respect to its continuance in
effect, its termination, and the method of authorization and approval of such
contract or renewal thereof, and no amendment to any contract entered into
pursuant to Section 6.01 or 6.02 of this Article VI shall be effective unless
assented to in a manner consistent with the requirements of said Section 15, as
modified by any applicable rule, regulation or order of the Commission.
ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
SECTION 7.01 VOTING POWERS.
(a) The Shareholders shall have power to vote only (i) for the election of
Trustees to the extent provided in Article III, Section 3.01 hereof, (ii) for
the removal of Trustees to the extent provided in Article III, Section 3.03(d)
hereof, (iii) with respect to any investment advisory contract to the extent
provided in Article VI, Section 6.01 hereof, (iv) with respect to an amendment
of this Trust Instrument, to the extent provided in Article XI, Section 11.08,
and (v) with respect to such additional matters relating to the Trust as may be
required by law, by this Trust Instrument, or any registration of the Trust with
the Commission or any State, or as the Trustees may consider desirable.
(b) Notwithstanding paragraph (a) of this Section 7.01 or any other provision of
this Trust Instrument (including the Bylaws) which would by its terms provide
for or require a vote of Shareholders, the Trustees may take action without a
Shareholder vote if (i) the Trustees shall have obtained an opinion of counsel
that a vote or approval of such action by Shareholders is not required under (A)
the 1940 Act or any other applicable laws, or (B) any registrations,
undertakings or agreements of the Trust known to such counsel, and if the
Trustees determine that the taking of such action without a Shareholder vote
would be consistent with the best interests of the Shareholders (considered as a
group).
(c) On any matter submitted to a vote of the Shareholders, all Shares shall be
voted separately by individual Series, and whenever the Trustees determine that
the matter affects only certain Series, may be submitted for a vote by only such
Series, except (i) when required by the 1940 Act, Shares shall be voted in the
aggregate and not by individual Series; and (ii) when the Trustees have
determined that the matter affects the interests of more than one Series and
that voting by shareholders of all Series would be consistent with the 1940 Act,
then the Shareholders of all such Series shall be entitled to vote thereon
(either by individual Series or by Shares voted in the aggregate, as the
Trustees in their discretion may determine). The Trustees may also determine
that a matter affects only the interests of one or more classes of a Series, in
which case (or if required under the 1940 Act) such matter shall be voted on by
such class or classes. As determined by the Trustees without the vote or consent
of Shareholders (except as required by the 1940 Act), on any matter submitted to
a vote of Shareholders, either (i) each whole Share shall be entitled to one
vote as to any matter on which it is entitled to vote and each fractional Share
shall be entitled to a proportionate fractional vote or (ii) each dollar of Net
Asset Value (number of Shares owned times Net Asset Value per share of such
Series or class thereof, as applicable) shall be entitled to one vote on any
matter on which such Shares are entitled to vote and each fractional dollar
amount shall be entitled to a proportionate fractional vote. Without limiting
the power of the Trustees in any way to designate otherwise in accordance with
the preceding sentence, the Trustees hereby establish that each whole Share
shall be entitled to one vote as to any matter on which it is entitled to vote
and each fractional Share shall be entitled to a proportionate fractional vote.
There shall be no cumulative voting in the election of Trustees. Shares may be
voted in person or by proxy or in any manner provided for in the Bylaws. A proxy
may be given in writing. The Bylaws may provide that proxies may also, or may
instead, be given by any electronic or telecommunications device or in any other
manner. Notwithstanding anything else herein or in the Bylaws, in the event a
proposal by anyone other than the officers or Trustees of the Trust is submitted
to a vote of the Shareholders, or in the event of any proxy contest or proxy
solicitation or proposal in opposition to any proposal by the officers or
Trustees of the Trust, Shares may be voted only in person or by written proxy.
Until Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required or permitted by law, this Trust Instrument or
any of the Bylaws of the Trust to be taken by Shareholders.
SECTION 7.02 MEETINGS. Meetings may be held within or without the State of
Delaware. Special meetings of the Shareholders of any Series may be called by
the Trustees and shall be called by the Trustees upon the written request of
Shareholders owning at least one tenth of the Outstanding Shares of the Trust
entitled to vote. Whenever ten or more Shareholders meeting the qualifications
set forth in Section 16(c) of the 1940 Act, as the same may be amended from time
to time, seek the opportunity of furnishing materials to the other Shareholders
with a view to obtaining signatures on such a request for a meeting, the
Trustees shall comply with the provisions of said Section 16(c) with respect to
providing such Shareholders access to the list of the Shareholders of record of
the Trust or the mailing of such materials to such Shareholders of record,
subject to any rights provided to the Trust or any Trustees provided by said
Section 16(c). Notice shall be sent, by First Class Mail or such other means
determined by the Trustees, at least 10 days prior to any such meeting.
Notwithstanding anything to the contrary in this Section 7.02, the Trustees
shall not be required to call a special meeting of the Shareholders of any
Series or to provide Shareholders seeking the opportunity of furnishing the
materials to other Shareholders with a view to obtaining signatures on a request
for a meeting except to the extent required under the 1940 Act.
SECTION 7.03 QUORUM AND REQUIRED VOTE. One-third of Shares outstanding and
entitled to vote in person or by proxy as of the record date for a Shareholders'
meeting shall be a quorum for the transaction of business at such Shareholders'
meeting, except that where any provision (i) of law, (ii) of this Trust
Instrument, or (iii) of the Trust's registration statement or statements as
filed with the Commission and as then in effect, permits or requires that
holders of any Series shall vote as a Series (or that holders of a class shall
vote as a class), then one-third of the aggregate number of Shares of that
Series (or that class) entitled to vote shall be necessary to constitute a
quorum for the transaction of business by that Series (or that class). Any
meeting of Shareholders may be adjourned from time to time by a majority of the
votes properly cast upon the question of adjourning a meeting to another date
and time, whether or not a quorum is present. Any adjourned session or sessions
may be held, within a reasonable time after the date set for the original
meeting, without the necessity of further notice. Except when a larger vote is
required (i) by law, (ii) by this Trust Instrument, (iii) by the Bylaws, or (iv)
by the Trust's registration statement or statements as filed with the Commission
and as then in effect (each of the foregoing, a "Superceding Authority"), a
majority of the Shares voted in person or by proxy shall decide any questions,
and a plurality shall elect a Trustee, and where any provision of Superceding
Authority permits or requires that holders of any Series shall vote as a Series
(or that holders of a class shall vote as a class), then such number of Shares
referenced thereto, present in person or by proxy of that Series (or Class),
voted on the matter in person or by proxy, shall decide that matter insofar as
that Series (or Class) is concerned. Shareholders may act by unanimous written
consent, to the extent not inconsistent with the 1940 Act, and any such actions
taken by a Series (or Class) may be consented to unanimously in writing by
Shareholders of that Series (or Class).
ARTICLE VIII
CUSTODIAN
SECTION 8.01 APPOINTMENT AND DUTIES. The Trustees shall employ a bank, a company
that is a member of a national securities exchange, or a trust company, that is
a member of the Depository Trust Company (or such other Person or entity as may
be permitted to act as custodian of the Trust's assets under the 1940 Act) as
custodian with authority as its agent, but subject to such restrictions,
limitations and other requirements, if any, as may be contained in the 1940 Act
and the Bylaws of the Trust: (a) to hold the securities owned by the Trust and
deliver the same upon written order or oral order confirmed in writing; (b) to
receive and receipt for any moneys due to the Trust and deposit the same in its
own banking department or elsewhere as the Trustees may direct; and (c) to
disburse such funds upon orders or vouchers.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian, and upon such terms and conditions, as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, provided that in
every case such sub-custodian shall be a bank, a company that is a member of a
national securities exchange, or a trust company organized under the laws of the
United States or one of the states thereof and that is a member of the
Depository Trust Company or such other Person or entity as may be permitted by
the Commission or is otherwise able to act as custodian of the Trust's assets in
accordance with the 1940 Act.
SECTION 8.02 CENTRAL CERTIFICATE SYSTEM. Subject to the 1940 Act and such other
rules, regulations and orders as the Commission may adopt, the Trustees may
direct the custodian to deposit all or any part of the securities owned by the
Trust in a system for the central handling of securities established by a
national securities exchange or a national securities association registered
with the Commission under the Securities Exchange Act of 1934, as amended, or
such other Person as may be permitted by the Commission, or otherwise in
accordance with the 1940 Act, pursuant to which system all securities of any
particular class or series of any issuer deposited within the system are treated
as fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of such securities, provided that all such deposits shall be
subject to withdrawal only upon the order of the Trust or its custodians,
sub-custodians or other agents.
<PAGE>
ARTICLE IX
DISTRIBUTIONS AND REDEMPTIONS
SECTION 9.01 DISTRIBUTIONS.
(a) The Trustees may from time to time declare and pay dividends or other
distributions with respect to any Series and/or class of a Series. The amount of
such dividends or distributions and the payment of them and whether they are in
cash or any other Trust Property shall be wholly in the discretion of the
Trustees.
(b) Dividends and other distributions may be paid or made to the Shareholders of
record at the time of declaring a dividend or other distribution or among the
Shareholders of record at such other date or time or dates or times as the
Trustees shall determine, which dividends or distributions, at the election of
the Trustees, may be paid pursuant to a standing resolution or resolutions
adopted only once or with such frequency as the Trustees may determine. The
Trustees may adopt and offer to Shareholders such dividend reinvestment plans,
cash dividend payout plans or related plans as the Trustees shall deem
appropriate.
(c) Anything in this Trust Instrument to the contrary notwithstanding, the
Trustees may at any time declare and distribute a stock dividend to the
Shareholders of a particular Series, or class thereof, as of the record date of
that Series fixed as provided in Subsection 9.01(b) hereof.
SECTION 9.02 REDEMPTIONS. In case any holder of record of Shares of a particular
Series desires to dispose of his Shares or any portion thereof he may deposit at
the office of the transfer agent or other authorized agent of that Series a
written request or such other form of request as the Trustees may from time to
time authorize, requesting that the Series purchase the Shares in accordance
with this Section 9.02; and, subject to Section 9.04 hereof, the Shareholder so
requesting shall be entitled to require the Series to purchase, and the Series
or the principal underwriter of the Series shall purchase his said Shares, but
only at the Net Asset Value thereof (as described in Section 9.03 of this
Article IX). The Series shall make payment for any such Shares to be redeemed,
as aforesaid, in cash or property from the assets of that Series and, subject to
Section 9.04 hereof, payment for such Shares shall be made by the Series or the
principal underwriter of the Series to the Shareholder of record within seven
(7) days after the date upon which the request is effective. Upon redemption,
shares shall become Treasury shares and may be re-issued from time to time.
SECTION 9.03 DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO ASSETS.
The term "Net Asset Value" of any Series shall mean that amount by which the
assets of that Series exceed its liabilities, all as determined by or under the
direction of the Trustees. The Trustees may delegate any of their powers and
duties under this Section 9.03 with respect to valuation of assets and
liabilities. Such value shall be determined separately for each Series and shall
be determined on such days and at such times as the Trustees may determine. Such
determination shall be made with respect to securities for which market
quotations are readily available, at the market value of such securities; and
with respect to other securities and assets, at the fair value as determined in
good faith by the Trustees; provided, however, that the Trustees, without
Shareholder approval, may alter the method of valuing portfolio securities
insofar as permitted under the 1940 Act. The resulting amount, which shall
represent the total Net Asset Value of the particular Series, shall be divided
by the total number of shares of that Series outstanding at the time and the
quotient so obtained shall be the Net Asset Value per Share of that Series. At
any time the Trustees may cause the Net Asset Value per Share last determined to
be determined again in similar manner and may fix the time when such
redetermined value shall become effective.
The Trustees shall not be required to adopt, but may at any time adopt,
discontinue or amend a practice of seeking to maintain the Net Asset Value per
Share of the Series at a constant amount. If, for any reason, the net income of
any Series, determined at any time, is a negative amount, the Trustees shall
have the power with respect to that Series (a) to offset each Shareholder's pro
rata share of such negative amount from the accrued dividend account of such
Shareholder, (b) to reduce the number of Outstanding Shares of such Series by
reducing the number of Shares in the account of each Shareholder by a pro rata
portion of that number of full and fractional Shares which represents the amount
of such excess negative net income, (c) to cause to be recorded on the books of
such Series an asset account in the amount of such negative net income (provided
that the same shall thereupon become the property of such Series with respect to
such Series and shall not be paid to any Shareholder), which account may be
reduced by the amount of dividends declared thereafter upon the Outstanding
Shares of such Series on the day such negative net income is experienced, until
such asset account is reduced to zero; (d) to combine the methods described in
clauses (a) and (b) and (c) of this sentence; or (e) to take any other action
they deem appropriate, in order to cause (or in order to assist in causing) the
Net Asset Value per Share of such Series to remain at a constant amount per
Outstanding Share immediately after each such determination and declaration. The
Trustees shall also have the power not to declare a dividend out of net income
for the purpose of causing the Net Asset Value per Share to be increased.
In the event that any Series is divided into classes, the provisions of this
Section 9.03, to the extent applicable as determined in the discretion of the
Trustees and consistent with the 1940 Act and other applicable law, may be
equally applied to each such class.
SECTION 9.04 SUSPENSION OF THE RIGHT REDEMPTION. The Trustees may declare a
suspension of the right of redemption or postpone the date of payment if
permitted under the 1940 Act. Such suspension shall take effect at such time as
the Trustees shall specify but not later than the close of business on the
business day next following the declaration of suspension, and thereafter there
shall be no right of redemption or payment until the Trustees shall declare the
suspension at an end. In the case of a suspension of the right of redemption, a
Shareholder may either withdraw his request for redemption or receive payment
based on the Net Asset Value per Share next determined after the termination of
the suspension.
SECTION 9.05 REQUIRED REDEMPTION OF SHARES. The Trustees may require
Shareholders to redeem Shares for any reason under terms set by the Trustees,
including, but not limited to, (i) the determination of the Trustees that direct
or indirect ownership of Shares of any Series has or may become concentrated in
such Shareholder to an extent that would disqualify any Series as a regulated
investment company under the Internal Revenue Code of 1986, as amended (or any
successor statue thereto), (ii) the failure of a Shareholder to supply a tax
identification number if required to do so, or to have the minimum investment
required (which may vary by Series), (iii) the failure of a Shareholder to pay
when due for the purchase of Shares issued to him or (iv) the Shares owned by
such Shareholder being below the minimum investment set by the Trustees, from
time to time, for investments in the Trust or in such Series or classes thereof,
as applicable.
The holders of Shares shall upon demand disclose to the Trustees in writing such
information with respect to direct and indirect ownership of Shares as the
Trustees deem necessary to comply with the requirements of any taxing authority
or for the Trustees to make any determination contemplated by this Section 9.05.
ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION
SECTION 10.01 LIMITATION OF LIABILITY.
(a) Neither a Trustee nor an officer of the Trust, when acting in such capacity,
shall be Personally liable to any Person other than the Trust or the
Shareholders for any act, omission or obligation of the Trust, any Trustee or
any officer of the Trust. Neither a Trustee nor an officer of the Trust shall be
liable for any act or omission or any conduct whatsoever in his capacity as
Trustee or as an officer of the Trust, provided that nothing contained herein or
in the Delaware Act shall protect any Trustee or any officer of the Trust
against any liability to the Trust or to Shareholders 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 the
office of Trustee or officer of the Trust hereunder.
(b) All Persons extending credit to, contracting with or having any claim
against the Trust or the Trustees shall look only to the assets of the
appropriate Series (or Class thereof if the Trustees have included a Class
limitation on liability in the agreement with such Person as provided below),
or, if the Trustees have yet to establish Series, of the Trust for payment under
such credit, contract or claim; and neither the Trustees nor the Shareholders,
nor any of the Trust's officers, employees or agents, whether past, present or
future, shall be Personally liable therefor.
(c) Every note, bond, contract, instrument, certificate or undertaking and every
other act or thing whatsoever executed or done by or on behalf of the Trust or
the Trustees by any of them in connection with the Trust shall conclusively be
deemed to have been executed or done only in or with respect to his or their
capacity as Trustee or Trustees, and such Trustee or Trustees shall not be
Personally liable thereon. At the Trustees' discretion, any note, bond,
contract, instrument, certificate or undertaking made or issued by the Trustees
or by any officer or officers may give notice that the Certificate of Trust is
on file in the Office of the Secretary of State of the State of Delaware and
that a statutory limitation on liability of Series exists and such note, bond,
contract, instrument, certificate or undertaking may, if the Trustees so
determine, recite that the same was executed or made on behalf of the Trust by a
Trustee or Trustees in such capacity and not individually or by an officer or
officers in such capacity and not individually and that the obligations of such
instrument are not binding upon any of them or the Shareholders individually but
are binding only on the assets and property of the Trust or a Series thereof,
and may contain such further recital as such Person or Persons may deem
appropriate including, without limitation, a requirement, in any note, bond,
contract, instrument, certificate or undertaking made with respect to one or
more Classes of any Series that the parties thereto look only to the assets of
such Class or Classes in satisfaction of the liabilities arising thereunder. The
omission of any such notice or recital shall in no way operate to bind any
Trustees, officers or Shareholders individually.
(d) The Trustees shall be entitled and empowered to the fullest extent permitted
by law to purchase with Trust assets insurance for liability and for all
expenses reasonably incurred or paid or expected to be paid by a Trustee,
officer, employee or agent of the Trust in connection with any claim, action,
suit or proceeding in which she or he becomes involved by virtue of her or his
capacity or former capacity with the Trust.
(e) The exercise by the Trustees of their powers and discretion hereunder shall
be binding upon everyone interested. A Trustee shall be liable to the Trust and
to any Shareholder solely for her or his own willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
the office of Trustee, and shall not be liable for errors of judgment or
mistakes of fact or law. The Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Declaration of Trust,
and shall be under no liability for any act or omission in accordance with such
advice nor for failing to follow such advice. The Trustees shall not be required
to give any bond as such, nor any surety if a bond is required.
SECTION 10.02 INDEMNIFICATION.
(a) Subject to the exceptions and limitations contained in Subsection 10.02(b):
(i) every Person who is, or has been, a Trustee or officer of the Trust
(hereinafter referred to as a "Covered Person") shall be indemnified by the
Trust to the fullest extent permitted by law against liability and against all
expenses reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or otherwise
by virtue of his being or having been a Trustee or officer and against amounts
paid or incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall apply
to all claims, actions, suits or proceedings (civil, criminal or other,
including appeals), actual or threatened while in office or thereafter, and the
words "liability" and "expenses" shall include, without limitation, attorneys'
fees, costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before which the
proceeding was brought (A) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office or (B) not to have acted in
good faith in the reasonable belief that his action was in the best interest of
the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office, (A) by the court or other body approving
the settlement; (B) by at least a majority of those Trustees who are neither
interested Persons of the Trust nor are parties to the matter based upon a
review of readily available facts (as opposed to a full trial-type inquiry); or
(C) by written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type inquiry).
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not be exclusive of
or affect any other rights to which any Covered Person may now or hereafter be
entitled, shall continue as to a Person who has ceased to be a Covered Person
and shall inure to the benefit of the heirs, executors and administrators of
such a Person. Nothing contained herein shall affect any rights to
indemnification to which Trust Personnel, other than Covered Persons, and other
Persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a defense to
any claim, action, suit or proceeding of the character described in Subsection
(a) of this Section 10.02 may be paid by the Trust or Series from time to time
prior to final disposition thereof upon receipt of an undertaking by or on
behalf of such Covered Person that such amount will be paid over by him to the
Trust or Series if it is ultimately determined that he is not entitled to
indemnification under this Section 10.02; provided, however, that either (i)
such Covered Person shall have provided appropriate security for such
undertaking, (ii) the Trust is insured against losses arising out of any such
advance payments or (iii) either a majority of the Trustees who are neither
interested Persons of the Trust nor parties to the matter, or independent legal
counsel in a written opinion, shall have determined, based upon a review of
readily available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such Covered Person will be
found entitled to indemnification under this Section 10.02.
SECTION 10.03 SHAREHOLDERS. In case any Shareholder of any Series shall be held
to be Personally liable solely by reason of his being or having been a
Shareholder of such Series and not because of his acts or omissions or for some
other reason, the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives, or, in the case of a corporation
or other entity, its corporate or other general successor) shall be entitled out
of the assets belonging to the applicable Series to be held harmless from and
indemnified against all loss and expense arising from such liability. The Trust,
on behalf of the affected Series, shall, upon request by the Shareholder, assume
the defense of any claim made against the Shareholder for any act or obligation
of the Series and satisfy any judgment thereon from the assets of the Series.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 TRUST NOT A PARTNERSHIP. It is hereby expressly declared that a
trust and not a partnership is created hereby. No Trustee hereunder shall have
any power to bind Personally either the Trust officers or any Shareholder. All
Persons extending credit to, contracting with or having any claim against the
Trust or the Trustees shall look only to the assets of the appropriate Series or
(if the Trustees shall have yet to have established Series) of the Trust for
payment under such credit, contract or claim; and neither the Shareholders nor
the Trustees, nor any of their agents, whether past, present or future, shall be
Personally liable therefor. Nothing in this Trust Instrument shall protect a
Trustee against any liability to which the Trustee would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of the office of Trustee hereunder.
SECTION 11.02 TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY. The
exercise by the Trustees or the officers of the Trust of their powers and
discretion hereunder in good faith and with reasonable care under the
circumstances then prevailing shall be binding upon everyone interested. Subject
to the provisions of Article X hereof and to Section 11.01 of this Article XI,
the Trustees and the officers of the Trust shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees and the officers of the Trust
may take advice of counsel or other experts with respect to the meaning and
operation of this Trust Instrument, and subject to the provisions of Article X
hereof and Section 11.01 of this Article XI, shall be under no liability for any
act or omission in accordance with such advice or for failing to follow such
advice. The Trustees and the officers of the Trust shall not be required to give
any bond as such, nor any surety if a bond is obtained.
SECTION 11.03 ESTABLISHMENT OF RECORD DATES. The Trustees may close the Share
transfer books of the Trust for a period not exceeding ninety (90) days
preceding the date of any meeting of Shareholders, or the date for the payment
of any dividends or other distributions, or the date for the allotment of
rights, or the date when any change or conversion or exchange of Shares shall go
into effect; or in lieu of closing the stock transfer books as aforesaid, the
Trustees may fix in advance a date, not exceeding ninety (90) days preceding the
date of any meeting of Shareholders, or the date for payment of any dividend or
other distribution, or the date for the allotment of rights, or the date when
any change or conversion or exchange of Shares shall go into effect, as a record
date for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting, or entitled to receive payment of any such dividend
or other distribution, or to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of Shares, and in
such case such Shareholders and only such Shareholders as shall be Shareholders
of record on the date so fixed shall be entitled to such notice of, and to vote
at, such meeting, or to receive payment of such dividend or other distribution,
or to receive such allotment or rights, or to exercise such rights, as the case
may be, notwithstanding any transfer of any Shares on the books of the Trust
after any such record date fixed as aforesaid.
<PAGE>
SECTION 11.04 DISSOLUTION AND TERMINATION OF TRUST.
(a) This Trust shall continue without limitation of time but subject to the
provisions of Subsection 11.04(b).
(b) The Trustees may, subject to any necessary Shareholder, Trustee, and
regulatory approvals:
(i) sell and convey all or substantially all of the assets of the Trust
or any affected Series to another trust, partnership, association or
corporation, or to a separate series of shares thereof, organized under the laws
of any state which trust, partnership, association or corporation is an open-end
management investment company as defined in the 1940 Act, or is a series
thereof, for adequate consideration which may include the assumption of all
outstanding obligations, taxes and other liabilities, accrued or contingent, of
the Trust or any affected Series, and which may include shares of beneficial
interest, stock or other ownership interests of such trust, partnership,
association or corporation or of a series thereof;
(ii) enter into a plan of liquidation in order to dissolve and
liquidate any Series (or Class) of the Trust, or the Trust; or
(iii) at any time sell and convert into money all of the assets of the
Trust or any affected Series.
Upon making reasonable provision, in the determination of the Trustees, for the
payment of all liabilities by assumption or otherwise, the Trustees shall
distribute the remaining proceeds or assets (as the case may be) of each Series
(or Class) ratably among the holders of Shares of the affected Series, based
upon the ratio that each Shareholder's Shares bears to the number of Shares of
such Series (or Class) then outstanding.
(c) Upon completion of the distribution of the remaining proceeds or the
remaining assets as provided in Subsection 11.04(b), the Trustees and the Trust
or any affected Series shall be discharged of any and all further liabilities
and duties hereunder and the right, title and interest of all parties with
respect to the Trust or Series shall be canceled and discharged and any such
Series shall terminate.
Following completion of winding up of its business, the Trustees shall cause a
certificate of cancellation of the Trust's certificate of trust to be filed in
accordance with the Delaware Act, which certificate of cancellation may be
signed by any one Trustee. Upon filing of the certificate of cancellation for
the Trust, the Trust shall terminate.
SECTION 11.05 REORGANIZATION AND MASTER/FEEDER.
(a) Notwithstanding anything else herein, the Trustees, in order to change the
form or jurisdiction of organization of the Trust, may (i) cause the Trust to
merge or consolidate with or into one or more trusts, partnerships (general or
limited), associations or corporations so long as the surviving or resulting
entity is an open-end management investment company under the 1940 Act, or is a
series thereof, that will succeed to or assume the Trust's registration under
that Act and which is formed, organized or existing under the laws of a state,
commonwealth, possession or colony of the United States or (ii) cause the Trust
to incorporate under the laws of Delaware.
(b) The Trustees may, subject to a vote of a majority of the Trustees and any
shareholder vote required under the 1940 Act, if any, cause the Trust to merge
or consolidate with or into one or more trusts, partnerships (general or
limited), associations, limited liability companies or corporations formed,
organized or existing under the laws of a state, commonwealth, possession or
colony of the United States.
(c) Any agreement of merger or consolidation or certificate of merger or
consolidation may be signed by a majority of Trustees and facsimile signatures
conveyed by electronic or telecommunication means shall be valid.
(d) Pursuant to and in accordance with the provisions of Section 3815(f) of the
Delaware Act, and notwithstanding anything to the contrary contained in this
Trust Instrument, an agreement of merger or consolidation approved by the
Trustees in accordance with paragraph (a) or (b) of this Section 11.05 may
effect any amendment to the Trust Instrument or effect the adoption of a new
trust instrument of the Trust if it is the surviving or resulting trust in the
merger or consolidation.
(e) Notwithstanding anything else herein, the Trustees may, without Shareholder
approval (unless required by the 1940 Act), invest all or a portion of the Trust
Property of any Series, or dispose of all or a portion of the Trust Property of
any Series, and invest the proceeds of such disposition in interests issued by
one or more other investment companies registered under the 1940 Act. Any such
other investment company may (but need not) be a trust (formed under the laws of
the State of Delaware or any other state or jurisdiction) (or series thereof)
which is classified as a partnership for federal income tax purposes.
Notwithstanding anything else herein, the Trustees may, without Shareholder
approval unless such approval is required by the 1940 Act, cause a Series that
is organized in the master/feeder fund structure to withdraw or redeem its Trust
Property from the master fund and cause such series to invest its Trust Property
directly in securities and other financial instruments or in another master
fund.
SECTION 11.06 FILING OF COPIES, REFERENCES, HEADINGS. The original or a copy of
this Trust Instrument and of each amendment hereof or Trust Instrument
supplemental hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. Anyone dealing with the Trust may rely on a
certificate by an officer or Trustee of the Trust as to whether or not any such
amendments or supplements have been made and as to any matters in connection
with the Trust hereunder, and with the same effect as if it were the original,
may rely on a copy certified by an officer or Trustee of the Trust to be a copy
of this Trust Instrument or of any such amendment or supplemental Trust
Instrument. In this Trust Instrument or in any such amendment or supplemental
Trust Instrument, references to this Trust Instrument, and all expressions such
as "herein," "hereof" and "hereunder," shall be deemed to refer to this Trust
Instrument as amended or affected by any such supplemental Trust Instrument. All
expressions like "his," "he" and "him," shall be deemed to include the feminine
and neuter, as well as masculine, genders. Headings are placed herein for
convenience of reference only and in case of any conflict, the text of this
Trust Instrument, rather than the headings, shall control. This Trust Instrument
may be executed in any number of counterparts each of which shall be deemed an
original.
SECTION 11.07 APPLICABLE LAW. The trust set forth in this instrument is made in
the State of Delaware, and the Trust and this Trust Instrument, and the rights
and obligations of the Trustees and Shareholders hereunder, are to be governed
by and construed and administered according to the Delaware Act and the laws of
said State; provided, however, that there shall not be applicable to the Trust,
the Trustees or this Trust Instrument (a) the provisions of Section 3540 of
Title 12 of the Delaware Code or (b) any provisions of the laws (statutory or
common) of the State of Delaware (other than the Delaware Act) pertaining to
trusts which relate to or regulate (i) the filing with any court or governmental
body or agency of trustee accounts or schedules of trustee fees and charges,
(ii) affirmative requirements to post bonds for trustees, officers, agents or
employees of a trust, (iii) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding or disposition of real
or Personal property, (iv) fees or other sums payable to trustees, officers,
agents or employees of a trust, (v) the allocation of receipts and expenditures
to income or principal, (vi) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding of trust assets, or (vii) the
establishment of fiduciary or other standards of responsibilities or limitations
on the acts or powers of trustees, which are inconsistent with the limitations
or liabilities or authorities and powers of the Trustees set forth or referenced
in this Trust Instrument. The Trust shall be of the type commonly called a
"business trust," and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust under
Delaware law. The Trust specifically reserves the right to exercise any of the
powers or privileges afforded to trusts or actions that may be engaged in by
trusts under the Delaware Act, and the absence of a specific reference herein to
any such power, privilege or action shall not imply that the Trust may not
exercise such power or privilege or take such actions.
SECTION 11.08 DERIVATIVE ACTIONS. In addition to the requirements set forth in
Section 3816 of the Delaware Act, a Shareholder may bring a derivative action on
behalf of the Trust only if the following conditions are met:
(a) The Shareholder or Shareholders must make a pre-suit demand upon the
Trustees to bring the subject action unless an effort to cause the Trustees to
bring such an action is not likely to succeed. For purposes of this Section
11.08(a), a demand on the Trustees shall only be deemed not likely to succeed
and therefore excused if a majority of the Board of Trustees, or a majority of
any committee established to consider the merits of such action, has a Personal
financial interest in the transaction at issue, and a Trustee shall not be
deemed interested in a transaction or otherwise disqualified from ruling on the
merits of a Shareholder demand by virtue of the fact that such Trustee receives
remuneration for his service on the Board of Trustees of the Trust or on the
boards of one or more investment companies that are under common management with
or otherwise affiliated with the Trust.
(b) Unless a demand is not required under paragraph (a) of this Section 11.08,
Shareholders eligible to bring such derivative action under the Delaware Act who
hold at least 10% of the Outstanding Shares of the Trust, or 10% of the
Outstanding Shares of the Series or Class to which such action relates, shall
join in the request for the Trustees to commence such action; and
(c) Unless a demand is not required under paragraph (a) of this Section 11.08,
the Trustees must be afforded a reasonable amount of time to consider such
Shareholder request and to investigate the basis of such claim. The Trustees
shall be entitled to retain counsel or other advisors in considering the merits
of the request and shall require an undertaking by the Shareholders making such
request to reimburse the Trust for the expense of any such advisors in the event
that the Trustees determine not to bring such action.
For purposes of this Section 11.08, the Board of Trustees may designate a
committee of one Trustee to consider a Shareholder demand if necessary to create
a committee with a majority of Trustees who do not have a Personal financial
interest in the transaction at issue.
SECTION 11.09 AMENDMENTS. Except as specifically provided herein, the Trustees
may, without shareholder vote, amend or otherwise supplement this Trust
Instrument by making an amendment, a Trust Instrument supplemental hereto or an
amended and restated trust instrument. Shareholders shall have the right to vote
(a) on any amendment as may be required by law or by the Trust's registration
statement filed with the Commission and (b) on any amendment submitted to them
by the Trustees. Any amendment required or permitted to be submitted to
Shareholders which, as the Trustees determine, shall affect the Shareholders of
one or more Series shall be authorized by vote of the Shareholders of each
Series affected and no vote of shareholders of a Series not affected shall be
required. Notwithstanding any other provision of this Trust Instrument, any
amendment to Article X hereof shall not limit the rights to indemnification or
insurance provided therein with respect to action or omission of Covered Persons
prior to such amendment.
SECTION 11.10 FISCAL YEAR. The fiscal year of the Trust shall end on a specified
date as set forth in the Bylaws, provided, however, that the Trustees may change
the fiscal year of the Trust.
SECTION 11.11 NAME RESERVATION. The Trustees, on behalf of the Trust,
acknowledge that any and all intellectual property rights associated with the
names "Industry Leaders Fund(R)" and the "Industry Leaders Strategy Model(TM)"
and any and all copyrights, trademarks, and trade names associated therewith
(collectively, the "Marks") belong exclusively to Claremont Investment Partners
LLC ("Claremont"), which, subject to the terms and conditions set forth in its
management agreement with the Trust, has granted a limited-use exclusive license
to the Trust with respect to the right of usage of the Marks for purposes of
activities related to operating and marketing an open-end mutual fund registered
with the Commission under the 1940 Act.
SECTION 11.12 PROVISIONS IN CONFLICT WITH LAW. The provisions of this Trust
Instrument are severable, and if the Trustees shall determine, with the advice
of counsel, that any of such provision is in conflict with the 1940 Act, the
regulated investment company provisions of the Internal Revenue Code or with
other applicable laws and regulations, the conflicting provision shall be deemed
never to have constituted a part of this Trust Instrument; provided, however,
that such determination shall not affect any of the remaining provisions of this
Trust Instrument or render invalid or improper any action taken or omitted prior
to such determination. If any provision of this Trust Instrument shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any matter affect such provision in any other jurisdiction or any
other provision of this Trust Instrument in any jurisdiction.
# # #
<PAGE>
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the Trust as
of the date first written above, have executed this instrument as of even date
therewith.
/s/ Barry F. Sullivan
Barry F. Sullivan, as Trustee and not individually
/s/ Gerald P. Sullivan
Gerald P. Sullivan, as Trustee and not individually
/s/ Mark S. Kaufmann
Mark S. Kaufmann, as Trustee and not individually
/s/ Seth H. Dubin
Seth H. Dubin, as Trustee and not individually
/s/ Robert Lichten
Robert Lichten, as Trustee and not individually
/s/ Fred B. Tartar
Fred B. Tarter, as Trustee and not individually
/s/ Thomas Volpe
Thomas Volpe, as Trustee and not individually
<PAGE>
Schedule A
Establishment of Series of the Trust and Classes thereof
Established as of January 20, 1999
1. Industry Leaders Fund Class D Shares; and
2. Industry Leaders Fund Class I Shares
INDUSTRY LEADERS FUND
BYLAWS
These Bylaws, dated as of January 20, 1999, of THE INDUSTRY LEADERS FUND (the
"Trust"), a Delaware business trust, are subject to the Trust Instrument of the
Trust, dated as of January 20, 1999 as from time to time amended, supplemented
or restated (the "Trust Instrument"). Capitalized terms used herein which are
defined in the Trust Instrument are used as therein defined.
ARTICLE I
PRINCIPAL OFFICE
The principal office of the Trust shall be located in Summit, New Jersey or such
other location as the Trustees may, from time to time, determine. The Trust may
establish and maintain such other offices and places of business as the Trustees
may, from time to time, determine.
ARTICLE II
OFFICERS AND THEIR ELECTION
SECTION 2.01 OFFICERS. The officers of the Trust shall be a Chief Executive
Officer, a President, a Treasurer, a Secretary, and such other officers as the
Trustees may from time to time elect. The Trustees may delegate to any officer
or committee the power to appoint any subordinate officers or agents. It shall
not be necessary for any Trustee or other officer to be a holder of Shares in
the Trust.
SECTION 2.02 ELECTION OF OFFICERS. The Treasurer and Secretary shall be chosen
by the Trustees. The Chief Executive Officer and the President shall be chosen
by and from the Trustees. Two or more offices may be held by a single person
except the offices of President and Secretary. Subject to the provisions of
Section 3.13 hereof, the Chief Executive Officer, the President, the Treasurer
and the Secretary shall each hold office until their successors are chosen and
qualified and all other officers shall hold office at the pleasure of the
Trustees.
SECTION 2.03 RESIGNATIONS. Any officer of the Trust may resign, notwithstanding
Section 2.02 hereof, by filing a written resignation with the Trustees or the
Secretary, which resignation shall take effect on being so filed or at such time
as may be therein specified.
ARTICLE III
POWERS AND DUTIES OF OFFICERS AND TRUSTEES
SECTION 3.01 MANAGEMENT OF THE TRUST. The business and affairs of the Trust
shall be managed by, or under the direction of the Trustees, and they shall have
all powers necessary and desirable to carry out their responsibilities, so far
as such powers are not inconsistent with the laws of the State of Delaware, the
Trust Instrument or with these Bylaws.
SECTION 3.02 EXECUTIVE AND OTHER COMMITTEES. The Trustees may elect from their
own number an executive committee, which shall have any or all of the powers of
the Board of Trustees while the Board of Trustees is not in session. The
Trustees may also elect from their own number other committees from time to
time. The number composing such committees and the powers conferred upon the
same are to be determined by vote of a majority of the Trustees. All members of
such committees shall hold such offices at the pleasure of the Trustees, and the
Trustees may abolish any of the committees at any time. Any committee to which
the Trustees delegate any of their powers or duties shall keep records of its
meetings and shall report its actions to the Trustees. The Trustees shall have
power to rescind any action of any committee, but no such rescission shall have
retroactive effect.
SECTION 3.03 COMPENSATION. Each Trustee and each committee member may receive
such compensation for his services and reimbursement for his expenses as may be
fixed from time to time by resolution of the Trustees.
SECTION 3.04 CHAIRMAN OF THE BOARD OF TRUSTEES. The Trustees may appoint from
among their number a Chairman who shall serve as such at the pleasure of the
Trustees. When present, he shall preside at all meetings of the Shareholders and
the Trustees, and he may, subject to the approval of the Trustees, appoint a
Trustee to preside at such meetings in his absence. He shall perform such other
duties as the Trustees may from time to time designate.
SECTION 3.05 CHIEF EXECUTIVE OFFICER AND PRESIDENT. The Chief Executive Officer
shall, subject to the direction of the Trustees, oversee implementation of the
policies of the Trust. The President, subject to the direction of the Trustees,
shall be responsible for general administration of the Trust. Except as the
Trustees may otherwise order, each of the Chief Executive Officer and the
President shall have the power to grant, issue, execute or sign such powers of
attorney, process, agreements or other documents as may be deemed advisable or
necessary in the furtherance of the interests of the Trust or any Series
thereof. Each such person shall also have the power to employ attorneys,
accountants and other advisors and agents and counsel for the Trust. The Chief
Executive Officer and the President shall each perform such duties additional to
all of the foregoing as the Trustees may from time to time designate.
SECTION 3.06 TREASURER. The Treasurer shall be the principal financial and
accounting officer of the Trust. He shall deliver all funds and securities of
the Trust which may come into his hands to such company as the Trustees shall
employ as Custodian in accordance with the Trust Instrument and applicable
provisions of law. He shall make annual reports regarding the business and
condition of the Trust, which reports shall be preserved in Trust records, and
he shall furnish such other reports regarding the business and condition of the
Trust as the Trustees may from time to time require. The Treasurer shall perform
such additional duties as the Trustees may from time to time designate.
SECTION 3.07 SECRETARY. The Secretary shall record in books kept for the purpose
all votes and proceedings of the Trustees and the Shareholders at their
respective meetings. He shall have the custody of the seal of the Trust. The
Secretary shall perform such additional duties as the Trustees may from time to
time designate.
SECTION 3.08 VICE PRESIDENT. Any Vice President of the Trust shall perform such
duties as the Trustees or the President may from time to time designate. At the
request or in the absence or disability of the President, the Vice President
(or, if there are two or more Vice Presidents, then the senior of the Vice
Presidents) present and able to act may perform all the duties of the President
and, when so acting, shall have all the powers of and be subject to all the
restrictions upon the President.
SECTION 3.09 ASSISTANT TREASURER. Any Assistant Treasurer of the Trust shall
perform such duties as the Trustees or the Treasurer may from time to time
designate, and, in the absence of the Treasurer, the senior Assistant Treasurer,
present and able to act, may perform all the duties of the Treasurer and, when
so acting, shall have all the powers of and be subject to all the restrictions
upon the Treasurer.
SECTION 3.10 ASSISTANT SECRETARY. Any Assistant Secretary of the Trust shall
perform such duties as the Trustees or the Secretary may from time to time
designate, and, in the absence of the Secretary, the senior Assistant Secretary,
present and able to act, may perform all the duties of the Secretary and, when
so acting, shall have all the powers of and be subject to all the restrictions
upon the Secretary.
SECTION 3.11 SUBORDINATE OFFICERS. The Trustees from time to time may appoint
such officers or agents as they may deem advisable, each of whom shall have such
title, hold office for such period, have such authority and perform such duties
as the Trustees may determine. The Trustees from time to time may delegate to
one or more officers or committees of Trustees the power to appoint any such
subordinate officers or agents and to prescribe their respective terms of
office, authorities and duties.
SECTION 3.12 SURETY BONDS. The Trustees may require any officer or agent of the
Trust to execute a bond (including without limitation, any bond required by the
Investment Company Act of 1940 (the "1940 Act") and the rules and regulations of
the Commission) to the Trust in such sum and with such surety or sureties as the
Trustees may determine, conditioned upon the faithful performance of his duties
to the Trust including responsibility for negligence and for the accounting of
any of the Trust's property, funds or securities that may come into his hands.
SECTION 3.13 REMOVAL. Any officer may be removed from office, with or without
cause, whenever in the judgment of the Trustees the best interest of the Trust
will be served thereby, by the vote of a majority of the Trustees given at any
regular meeting or any special meeting of the Trustees. In addition, any officer
or agent appointed in accordance with the provisions of Section 3.11 hereof may
be removed, either with or without cause, by any officer upon whom such power of
removal shall have been conferred by the Trustees.
SECTION 3.14 REMUNERATION. The salaries or other compensation, if any, of the
officers of the Trust shall be fixed from time to time by resolution of the
Trustees.
ARTICLE IV
SHAREHOLDERS' MEETINGS
SECTION 4.01 SPECIAL MEETINGS. A special meeting of the shareholders shall be
called by the Secretary as provided in the Trust Instrument. If the Secretary,
when so ordered or requested, refuses or neglects for more than 30 days to call
such special meeting, the Trustees or the Shareholders so requesting may, in the
name of the Secretary, call the meeting by giving notice thereof in the manner
required when notice is given by the Secretary. If the meeting is a meeting of
the Shareholders of one or more Series or classes of Shares, but not a meeting
of all Shareholders of the Trust, then only special meetings of the Shareholders
of such one or more Series or classes shall be called and only the shareholders
of such one or more Series or classes shall be entitled to notice of and to vote
at such meeting.
SECTION 4.02 NOTICES. Except as provided in Section 4.01, notices of any meeting
of the Shareholders shall be given by the Secretary by delivering or mailing,
postage prepaid, to each Shareholder entitled to vote at said meeting, written
or printed notification of such meeting at least ten (10) days before the
meeting, to such address as may be registered with the Trust by the Shareholder.
Notice of any Shareholder meeting need not be given to any Shareholder if a
written waiver of notice, executed before or after such meeting, is filed with
the records of such meeting, or to any Shareholder who shall attend such meeting
in person or by proxy. Notice of adjournment of a Shareholder's meeting to
another time or place need not be given, if such time and place are announced at
the meeting or reasonable notice is given to persons present at the meeting and
the adjourned meeting is held within a reasonable time after the date set for
the original meeting.
SECTION 4.03 VOTING-PROXIES. Subject to the provisions of the Trust Instrument,
shareholders entitled to vote may vote either in person or by proxy. A proxy
shall be deemed signed if the Shareholder's name is placed on the proxy (by
manual signature, typewriting, telegraphic transmission, facsimile, other
electronic or computerized means or otherwise) by the Shareholder or the
Shareholder's attorney-in-fact. Proxies may be given by any electronic or
computerized or telecommunication device except as otherwise provided in the
Trust Instrument or determined by the Trustees. The placing of a Shareholder's
name on a proxy instruction transmitted by telephone, computer, other electronic
means or otherwise pursuant to procedures reasonably designed, as determined by
the Trustees, to verify that such instructions have been authorized by the
Shareholder shall constitute execution of the proxy by or on behalf of the
Shareholder. Proxies shall be delivered to the Secretary of the Trust or other
person responsible for recording the proceedings before being voted. A proxy
with respect to shares held in the name of two or more persons shall be valid if
executed by one of them unless at or prior to exercise of such proxy the Trust
receives a specific written notice from any one of them. Unless otherwise
specifically limited by their terms, proxies shall entitle the holder thereof to
vote at any adjournment of a meeting. A proxy purporting to be exercised by or
on behalf of a Shareholder shall be deemed valid unless challenged at or prior
to its exercise and the burden or proving invalidity shall rest on the
challenger. At all meetings of the Shareholders, unless the voting is conducted
by inspectors, all questions relating to the qualifications of voters, the
validity of proxies, and the acceptance or rejection of votes shall be decided
by the Chairman of the meeting. Except as otherwise provided herein or in the
Trust Instrument, as these Bylaws or such Trust Instrument may be amended or
supplemented from time to time, all matters relating to the giving, voting or
validity of proxies shall be governed by the General Corporation Law of the
State of Delaware relating to proxies, and judicial interpretations thereunder,
as if the Trust were a Delaware corporation and the Shareholders were
shareholders of a Delaware corporation.
SECTION 4.04 PLACE OF MEETING. All special meetings of the Shareholders shall be
held at the principal place of business of the Trust or at such other place in
the United States as the Trustees may designate.
SECTION 4.05 ACTION WITHOUT A MEETING. Any action to be taken by Shareholders
may be taken without a meeting if all Shareholders entitled to vote on the
matter consent to the action in writing and the written consents are filed with
the records of meetings of Shareholders of the Trust. Such consent shall be
treated for all purposes as a vote at a meeting of the Shareholders held at the
principal place of business of the Trust.
SECTION 4.06 ABSTENTIONS AND BROKER NON-VOTES. Shares that (a) abstain or do not
vote with respect to one or more of any proposals presented for Shareholder
approval and (b) are held in "street name" as to which the broker or nominee
with respect thereto indicates on the proxy that it does not have discretionary
authority to vote with respect to a particular proposal will be counted as
outstanding and entitled to vote for purposes of determining whether a quorum is
present at a meeting, but will not be counted as Shares voted with respect to
such proposal or proposals.
ARTICLE V
TRUSTEES' MEETINGS
SECTION 5.01 SPECIAL MEETINGS. Special meetings of the Trustees may be called
orally or in writing by individual notice from the Chairman of the Board of
Trustees, the Chief Executive Officer, the President, or joint notice from any
two other Trustees.
SECTION 5.02 REGULAR MEETINGS. Regular meetings of the Trustees may be held at
such places and at such times as the Trustees may from time to time determine;
each Trustee present at such determination shall be deemed a party calling the
meeting and no call or notice will be required to such Trustee provided that any
Trustee who is absent when such determination is made shall be given notice of
the determination by the Chairman or any two other Trustees, as provided for in
Section 4.04 of the Trust Instrument.
SECTION 5.03 QUORUM. A majority of the Trustees shall constitute a quorum for
the transaction of business at any meeting and an action of a majority of the
Trustees in attendance constituting a quorum shall constitute action of the
Trustees.
SECTION 5.04 NOTICE. Except as otherwise provided, notice of any special meeting
of the Trustees shall be given by the party calling the meeting to each of the
Trustees, as provided for in Section 4.04 of the Trust Instrument. A written
notice may be delivered, postage prepaid, addressed to him at his address as
registered on the books of the Trust or, if not so registered, at his last known
address.
SECTION 5.05 PLACE OF MEETING. All special meetings of the Trustees shall be
held at the principal place of business of the Trust or such other place as the
Trustees may designate. Any meeting may adjourn to any place.
SECTION 5.06 SPECIAL ACTION. When all the Trustees shall be present at any
meeting however called or wherever held, or shall assent to the holding of the
meeting without notice, or shall sign a written assent thereto filed with the
records of such meeting, the acts of such meeting shall be valid as if such
meeting had been regularly held.
SECTION 5.07 ACTION BY CONSENT. Any action by the Trustees may be taken without
a meeting if a written consent thereto is signed by all the Trustees and filed
with the records of the Trustees' meeting. Such consent shall be treated, for
all purposes, as a vote at a meeting of the Trustees held at the principal place
of business of the Trustees.
SECTION 5.08 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Except when
presence in person is required at a meeting under the 1940 Act or other
applicable laws, Trustees may participate in a meeting of Trustees by conference
telephone or similar communications equipment by means of which all persons
participating in the meeting are able to communicate with each other, and such
participation shall constitute presence in person at such meeting. Any meeting
conducted by telephone shall be deemed to take place at and from the principal
office of the Trust.
ARTICLE VI
FISCAL YEAR; REGISTERED OFFICE AND REGISTERED AGENT
SECTION 6.01 FISCAL YEAR. The fiscal year of the Trust and of each Series of the
Trust shall end on June 30th of each year; provided that the last fiscal year of
the Trust and each Series shall end on the date on which the Trust or each such
Series is terminated, as applicable; and further provided that the Trustees by
resolution and without a Shareholder vote may at any time change the fiscal year
of the Trust and of any or all Series (and the Trust and each Series may have
different fiscal years as determined by the Trustees).
SECTION 6.02 REGISTERED OFFICE AND REGISTERED AGENT. The initial registered
office of the Trust in the State of Delaware shall be located at c/o The
Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801. The registered agent of the Trust
at such location shall be The Corporation Trust Company; provided that the
Trustees by resolution and without a Shareholder vote may at any time change the
Trust's registered office or its registered agent, or both.
ARTICLE VII
INSPECTION OF BOOKS
The Trustees shall from time to time determine whether and to what extent, and
at what times and places, and under what conditions and regulations the accounts
and books of the Trust or any of them shall be open to the inspection of the
Shareholders; and no Shareholder shall have any right to inspect any account or
book or document of the Trust except as conferred by law or otherwise by the
Trustees or by resolution of the Shareholders.
ARTICLE VIII
INSURANCE OF OFFICERS, TRUSTEES, AND EMPLOYEES
The Trust may purchase and maintain insurance on behalf of any Covered Person
(as defined in Section 10.02 of the Trust Instrument) or employee of the Trust,
including any Covered Person or employee of the Trust who is or was serving at
the request of the Trust as a Trustee, officer or employee of a corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and claimed by him in any such capacity or arising out of
his status as such, whether or not the Trustees would have the power to
indemnify him against such liability.
The Trust may not acquire or obtain a contract for insurance that protects or
purports to protect any Trustee or officer of the Trust against any liability to
the Trust or its Shareholders 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.
ARTICLE IX
SEAL
The seal of the Trust shall be circular in form and bear the following
inscription:
INDUSTRY LEADERS FUND
DECEMBER 13, 1995
THE STATE OF DELAWARE
* * *
INDUSTRY LEADERS FUND(R)
MANAGEMENT AGREEMENT
January 20, 1999
Claremont Investment Partners LLC
175 Oak Ridge Avenue
Summit, NJ 07901
Ladies and Gentlemen:
Industry Leaders Fund, a Delaware business trust (the "Trust"), is an investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Trust currently offers shares of one series with two classes of
shares, designated as Class D and Class I shares. In the future the Trust may
issue other series and other classes of shares.
Each series of the Trust invests and reinvests its assets in a portfolio of
securities and investments. The Trust hereby engages you to act as its
investment manager for each series of the Trust authorized now or in the future
subject to the terms and conditions of this Management Agreement (this
"Agreement").
SECTION 1. Investment Management Services.
You shall use your staff and other facilities to conduct and maintain a
continuous review of each series' portfolio of securities and investments, and
shall advise and assist each series of the Trust with respect to the selection,
acquisition, holding and disposal of securities and investments. In so doing,
you shall be guided by the investment objectives and policies of each series
delineated and limited in documents filed with the U.S. Securities and Exchange
Commission (the "Commission"), by policies adopted by the Board of Trustees of
the Trust (the "Board") and by the provisions of the 1940 Act and the rules
thereunder, so that at all times the Trust shall be in compliance with its
policies and the provisions of the 1940 Act. The Trust agrees to supply you with
copies of all such documents and to notify you of any changes in its investment
objectives, policies and restrictions.
In rendering services to the Trust pursuant to this Agreement, you may employ,
retain or otherwise avail yourself of the services or facilities of other
persons or organizations for the purpose of providing you and/or the Trust with
such statistical and other factual information, such advice regarding economic
factors and trends, such advice as to occasional transactions in specific
securities, or such other information, advice or assistance as you may deem
necessary, appropriate or convenient for the discharge of your obligations under
this Agreement or otherwise helpful to the Trust or in the discharge of your
overall responsibilities with respect to the other accounts for which you or
your affiliates serve as investment manager.
You and any person performing executive, administrative or trading functions for
the Trust, whose services were made available to the Trust by you, are
specifically authorized to allocate brokerage and principal business to firms
that provide such services or facilities or to cause the Trust to pay a member
of a securities exchange or any other securities broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange or broker or dealer would have charged
for effecting that transaction if you or such person determine in good faith
that such amount of commission is reasonable in relation to the value of the
brokerage and research services (as such services are defined in Section 28(e)
of the Securities Exchange Act of 1934, as amended (the "1934 Act")) provided by
such member, broker or dealer, viewed in terms of either that particular
transaction or your or such person's over-all responsibilities with respect to
the accounts as to which you or such person exercise investment discretion.
You shall maintain a record of all the investments and securities which comprise
the portfolios of each series of the Trust and shall furnish to the Board, at
its regularly scheduled meetings and at such other times as the Board may
reasonably request, a resume of the portfolios and report on all matters
pertaining to your services as investment manager. In addition, you shall
furnish the Trust with such statistical information reasonably available to you
as the Board shall reasonably request.
SECTION 2. Intellectual Property Rights
The Trust acknowledges that any and all intellectual property rights associated
with the names "Industry Leaders Fund(R)" and the "Industry Leaders Strategy
Model(TM)" and any and all copyrights, trademarks, and trade names associated
therewith (collectively, the "Marks") belong exclusively to you. You hereby
grant to the Trust a limited-use exclusive license with respect to the right of
usage of the Marks for purposes of activities related to operating and marketing
an open-end mutual fund registered with the Commission under the 1940 Act. Such
right is irrevocable during the term of this Agreement, but exclusive to the
Trust only to the extent of the foregoing grant. The Trust agrees to comply with
limitations on the use of the Marks in accordance with the 1940 Act and/or the
regulations of the National Association of Securities Dealers, and the Trust
shall further undertake to use reasonable efforts to ensure that Trust
personnel, its distributors, service providers and its other representatives do
the same. The Trust shall have the right to reproduce the Marks on documents
filed with the Commission and any other Trust communications, including, but not
limited to, prospectuses, business cards, letterhead stationery, and Trust
marketing materials. The Trust shall not use the Marks in a disparaging manner.
The Trust shall not take any action which is inconsistent with your ownership of
the Marks. The Trust agrees to include correct trademark, trade name, copyright,
trade secret and patent notices for the Marks on all materials and equipment
where appropriate. The Trust shall not remove, alter, cover, obfuscate or
otherwise deface any Mark on any promotional or advertising material used in
conjunction with operation of the Trust. In addition, The Trust acknowledges and
agrees that you have reserved the right to use the Marks in your own business
activities and/or grant the use of the Marks to, and to withdraw such right
from, any other business or other enterprise, except within the scope of the
limited-use exclusive right set forth above, and that you further reserve the
right to withdraw from the Trust the right to use said Marks and will withdraw
such right if the Trust ceases to employ, for any reason, you, an affiliate or
any successor as adviser of the Trust. In the event this Agreement is terminated
(a) by you or (b) by the Trust for Cause (as defined below), then the Trust
shall continue to have the right to use the Marks for a period of six (6) months
from the effective date of such termination. In the event this Agreement is
terminated by the Trust without Cause, then the Trust's right to use the Marks
shall cease sixty (60) days from the effective date of such termination. For
purposes of the foregoing, "Cause" shall mean a finding by the Board, based upon
reasonable evidence, that you have: (i) intentionally or repeatedly failed to
perform the duties set forth in this Agreement, (ii) engaged in dishonest or
willful misconduct in the performance of such duties or (iii) willfully violated
any law, rule or regulation promulgated by a government entity or agency which
either singly or in the aggregate would have a materially adverse effect on the
Trust.
SECTION 3. Additional Services to be Furnished.
You shall coordinate with the Trust's other service providers to assure the
maintenance of the books and financial records of the Trust and shall perform
such other services as are reasonably incidental to the foregoing duties,
including reviewing the Trust Custodian's record keeping. You shall coordinate
with the Trust's other service providers to assure the computation of the net
asset value of the shares of each class of each series of the Trust (in
accordance with the Trust's Prospectus and the instructions of the Board) and
shall coordinate with the Trust distributor to assure the provision of any
statements with respect to the net assets of each series of the Trust and the
net asset value per share of each class of each series of the Trust at such
times, and in such forms, as the Trust may prescribe. You shall coordinate with
other service providers to the Trust to assure the maintenance of office space
reasonably suited to the Trust's ministerial operations and with its
bookkeeping, internal accounting and administrative requirements, and shall
permit such of your directors, officers and employees as may be elected as
Trustees or officers of the Trust to serve in the capacities to which they are
elected without additional compensation from the Trust. You shall also make
recommendations with respect to other aspects and affairs of the Trust as from
time-to-time requested by the Board. All services to be furnished by you under
this Agreement may be furnished through directors, officers or employees of you
or your affiliates.
In acting under this Agreement, you shall be an independent contractor and shall
not be an agent of the Trust except as explicitly mandated herein. The
investment policies, the administration of its business and affairs and all
other acts of the Trust are and shall at all times be subject to the approval
and direction of the Board.
SECTION 4. Multiple Capacities.
Nothing in this Agreement shall be deemed to prohibit you or your affiliates
from acting, and being separately compensated for acting, in one or more
capacities on behalf of the Trust. The Trust understands that you and your
affiliates may, in the future, act as investment manager or in other capacities
on behalf of other investment companies and customers. While information and
recommendations you supply to the Trust shall in your judgment be appropriate
under the circumstances and in light of the investment objectives and policies
of the Trust, they may be different from the information and recommendations you
supply to other investment companies and customers. You shall give the Trust
equitable treatment under the circumstances in supplying information,
recommendations and any other services requested of you, but you shall not be
required to give preferential treatment to the Trust as compared with the
treatment given to any other investment company or customer. Whenever you shall
act in multiple capacities on behalf of the Trust, you shall maintain the
appropriate separate accounts and records for each such capacity.
SECTION 5. Payment of Expenses.
You shall assume and pay all of your own costs and expenses under this
Agreement. In addition, You assume and shall pay, or reimburse the Trust for,
all expenses incurred in the operation of the Trust, except for obligations of
the Trust under a plan adopted pursuant to Rule 12b-1 under the 1940 Act (the
"12b-1 Plan") and the Management Fee, each as set forth in the Trust's
Registration Statement, as amended from time-to-time and as filed and in effect
with the Securities and Exchange Commission. In particular, but without
limitation, you hereby assume and agree to bear the cost of and pay any and all
costs and expenses of agreements entered into by the Trust:
(a) the Distribution Agreement with Unified Management Corporation except
for amounts payable under the 12b-1 Plan;
(b) services of McCurdy & Associates as independent public auditors;
(c) the Mutual Fund Services Agreement with Unified Fund Services,
pertaining to Fund Accounting and Transfer Agency Services;
(d) the Administrative Services Agreement with AmeriPrime Financial
Services Corporation;
(e) the Fidelity Bond, directors and officers insurance, and any and all
other insurance policies;
(f) the Custody Agreement with UMB Bank, n.a. and all charges of
custodians (including fees as custodian, escrow agent, for keeping
books and performing portfolio valuations);
(g) services of Wuersch & Gering LLP as Fund legal counsel;
(h) any and all other agreements entered into by the Trust, to the
extent permitted by the 1940 Act, related to expenses of issue,
repurchase or redemption of shares, expenses of registering or
qualifying shares for sale, association membership dues, dividend
disbursing agents, and, to the extent not paid by third parties
under one or more of the foregoing agreements,
(i) interest expenses incident to the Trust's existence; and
(j) expenses of preparing, printing and distributing prospectuses and
all proxy materials, reports and notices to shareholders,
out-of-pocket expenses of trustees and fees of all trustees,
including those who are not "interested persons", and all costs
related to the foregoing, including.
SECTION 6. Compensation for Services.
Each series of the Trust will pay to you monthly, a management fee determined
daily at the rate as follows, times the Trust's net assets: 1/365 (1/366 for
Leap Years) of 0.70%.
SECTION 7. Liability of the Investment Manager, etc.
You shall be liable for your own acts and omissions caused by your willful
misfeasance, bad faith or gross negligence in the performance of your duties or
by your reckless disregard of your obligations under this Agreement, and nothing
in this Agreement shall protect you against any such liability to the Trust or
its security holders. You shall not be liable for the acts and omissions of any
agent employed by you, nor for those of any bank, trust company, broker or other
person with whom, or into whose hands, any monies, shares of the Trust or
securities and investments may be deposited or come, pursuant to the provisions
of this Agreement. You shall not be liable for any defect in title of any
property acquired, nor for any loss unless it shall occur through your own
willful default. Subject to the first sentence of this section, you shall not be
liable for any action taken or omitted on advice, obtained in good faith, of
counsel, provided such counsel is satisfactory to the Trust.
SECTION 8. Termination of Agreement.
This Agreement may be terminated at any time, without the payment of any
penalty, upon 60 days' written notice by the terminating party to the other
party, by you or by the Trust, acting pursuant to a resolution adopted by its
Board or by a vote of shareholders in accordance with the requirements of the
1940 Act. This Agreement shall automatically terminate in the event of its
assignment. Termination shall not affect rights of the parties which have
accrued prior thereto.
SECTION 9. Duration of Agreement.
Unless sooner terminated, this Agreement shall continue in effect for one year,
and thereafter automatically for successive one year terms unless terminated as
described above, provided that the continuation of this Agreement and the terms
thereof are specifically approved annually in accordance with the requirements
of the 1940 Act by a majority of the Trustees, including a majority of the
Trustees who are not "interested persons" of you or of the Trust, cast in person
at a meeting specifically called for the purpose of voting on such approval.
<PAGE>
SECTION 10. Definitions.
The terms "assignment" and "interested person" when used in this Agreement shall
have the meanings given such terms in the 1940 Act and the rules and regulations
thereunder.
SECTION 11. Obligation of the Trust.
The Trust's Declaration of Trust is on file with the Secretary of the State of
Delaware and notice is hereby given that this Agreement is made and executed on
behalf of the Trust, and not by the Trustees or officers of the Trust
individually, and the obligations of or arising out of this Agreement are not
binding upon the Trustees, officers or shareholders of the Trust individually
but are binding only upon the assets and property of one or more classes or
series of the Trust.
SECTION 12. Concerning Applicable Provisions of Law, etc.
This Agreement shall be subject to all applicable provisions of law, including,
without limitation, the applicable provisions of the 1940 Act, and to the extent
that any provisions in this Agreement conflict with any such applicable
provisions of law, the latter shall control.
SECTION 13. Counterparts.
This Agreement may be executed by any one or more of the parties in any number
of counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
SECTION 14. Effective Date.
This Agreement is effective upon such date on or after its initial approval in
accordance with the 1940 Act as may be agreed upon by the parties.
[Signature Page Follows]
<PAGE>
If the foregoing correctly sets forth your understanding of our agreement,
please sign where indicated below and return an executed copy of this Agreement
to the Trust.
Very truly yours,
INDUSTRY LEADERS FUND
By: /s/ Mark S. Kaufmann
Name: Mark S. Kaufmann
Title: Chairman of the Board of Trustees
Attest: /s/ Travis L. Gering
Name: Travis L. Gering
Accepted and agreed to as of the date first set forth above
CLAREMONT INVESTMENT PARTNERS LLC
By: /s/ Gerald P. Sullivan
Name: Gerald P. Sullivan
Title: President
Attest: /s/ Travis L. Gering
Name: Travis L. Gering
DISTRIBUTION AGREEMENT
This Agreement made as of January 20, 1999 by and between
Industry Leaders Fund (the "Trust"), an Delaware business trust and an open-end
registered investment company, and Unified Management Corporation, a Delaware
corporation ("Distributor").
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, Distributor is a broker-dealer registered with the Securities
and Exchange Commission and a member of the National Association of
Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust and Distributor are desirous of entering into an
agreement providing for the distribution by Distributor of shares of beneficial
interest (the "Shares") of each series of shares of the Trust (the "Series");
NOW, THEREFORE, in consideration of the promises and agreements of the
parties contained herein, the parties agree as follows:
1. Appointment.
The Trust hereby appoints Distributor as its exclusive agent for the
distribution of the Shares, and Distributor hereby accepts such appointment
under the terms of this Agreement. While this Agreement is in force, the
Trust shall not sell any Shares except on the terms set forth in this
Agreement. Notwithstanding any other provision hereof, the Trust may
terminate, suspend or withdraw the offering of Shares whenever, in its sole
discretion, it deems such action to be desirable.
2. Sale and Repurchase of Shares.
(a) Distributor will have the right, as agent for the Trust, to enter into
dealer agreements with responsible investment dealers, and to sell Shares
to such investment dealers against orders therefor at the public offering
price (as defined in subparagraph 2(d) hereof) stated in the Trust's
effective Registration Statement on Form N-1A under the Act and the
Securities Act of 1933, as amended, including the then current prospectus
and statement of additional information (the "Registration Statement").
Upon receipt of an order to purchase Shares from a dealer with whom
Distributor has a dealer agreement, Distributor will promptly cause such
order to be filled by the Trust.
(b) Distributor will also have the right, as agent for the Trust, to sell such
Shares to the public against orders therefor at the public offering price.
(c) Distributor will also have the right to take, as agent for the Trust, all
actions which, in Distributor's reasonable judgment, are necessary to carry
into effect the distribution of the Shares.
(d) The public offering price for the Shares of each Series shall be the
respective net asset value of the Shares of that Series then in effect,
plus any applicable sales charge determined in the manner set forth in the
Registration Statement or as permitted by the Act and the rules and
regulations of the Securities and Exchange Commission promulgated
thereunder. In no event shall any applicable sales charge exceed the
maximum sales charge permitted by the Rules of the NASD.
(e) The net asset value of the Shares of each Series shall be determined in the
manner provided in the Registration Statement, and when determined shall be
applicable to transactions as provided for in the Registration Statement.
The net asset value of the Shares of each Series shall be calculated by the
Trust or by another entity on behalf of the Trust. Distributor shall have
no duty to inquire into or liability for the accuracy of the net asset
value per Share as calculated.
(f) On every sale, the Trust shall receive the applicable net asset value of
the Shares promptly, but in no event later than the third business day
following the date on which Distributor shall have received an order for
the purchase of the Shares.
(g) Upon receipt of purchase instructions, Distributor will transmit such
instructions to the Trust or its transfer agent for registration of the
Shares purchased.
(h) Nothing in this Agreement shall prevent Distributor or any affiliated
person (as defined in the Act) of Distributor from acting as Distributor or
distributor for any other person, firm or corporation (including other
investment companies) or in any way limit or restrict Distributor or any
such affiliated person from buying, selling or trading any securities for
its or their own account or for the accounts of others from whom it or they
may be acting; provided, however, that Distributor expressly represents
that it will undertake no activities which, in its reasonable judgment,
will adversely affect the performance of its obligations to the Trust under
this Agreement.
(i) Distributor, as agent of and for the account of the Trust, may repurchase
the Shares at such prices and upon such terms and conditions as shall be
specified in the Registration Statement.
3. Sale of Shares by the Trust.
The Trust reserves the right to issue any Shares at any time directly to
the holders of Shares ("Shareholders"), to sell Shares to its Shareholders
or to other persons at not less than net asset value and to issue Shares in
exchange for substantially all the assets of any corporation or trust or
for the shares of any corporation or trust.
4. Basis of Sale of Shares.
Distributor does not agree to sell any specific number of Shares.
Distributor, as agent for the Trust, undertakes to sell Shares on a best
efforts basis only against orders therefor.
5. Rules of NASD, etc.
(a) Distributor will conform to the Rules of the NASD and the securities laws
of any jurisdiction in which it sells, directly or indirectly, any Shares.
(b) Distributor will require each dealer with whom Distributor has a dealer
agreement to conform to the applicable provisions hereof and the
Registration Statement with respect to the public offering price of the
Shares, and neither Distributor nor any such dealers shall withhold the
placing of purchase orders so as to make a profit thereby.
(c) Distributor agrees to furnish to the Trust sufficient copies of any
agreements, plans or other materials it intends to use in connection with
any sales of Shares in reasonably adequate time for the Trust to file and
clear them with the proper authorities before they are put in use, and not
to use them until so filed and cleared.
(d) Distributor, at its own expense, will qualify as dealer or broker, or
otherwise, under all applicable state or federal laws required in order
that Shares may be sold in such States as may be mutually agreed upon by
the parties.
(e) Distributor shall not make, or permit any representative, broker or dealer
to make, in connection with any sale or solicitation of a sale of the
Shares, any representations concerning the Shares except those contained in
the then current prospectus and statement of additional information
covering the Shares and in printed information approved by the Trust as
information supplemental to such prospectus and statement of additional
information. Copies of the then effective prospectus and statement of
additional information and any such printed supplemental information will
be supplied by the Trust to Distributor in reasonable quantities upon
request.
<PAGE>
6. Records to be Supplied by Trust.
The Trust shall furnish to Distributor copies of all information, financial
statements and other papers which Distributor may reasonably request for
use in connection with the distribution of the Shares, and this shall
include, but shall not be limited to, one certified copy, upon request by
Distributor, of all financial statements prepared for the Trust by
independent public accountants.
7. Fees and Expenses.
For performing its services under this Agreement, Distributor will receive
from the Trust a minimum fee of $6,000 per year. The portion of sales
charges and/or 12(b)-1 fees retained by Distributor after payment of
amounts reallowed to dealers shall be applied against the minimum. The
balance of the minimum fee, if any, shall be paid on a monthly basis. The
Trust shall promptly reimburse Distributor for any expenses which are to be
paid by the Trust in accordance with the following paragraph.
In the performance of its obligations under this Agreement, Distributor
will pay only the costs incurred in qualifying as a broker or dealer under
state and federal laws and in establishing and maintaining its
relationships with the dealers selling the Shares. All other costs in
connection with the offering of the Shares will be paid by the Trust in
accordance with agreements between them as permitted by applicable laws,
including the Act and rules and regulations promulgated thereunder. These
costs include, but are not limited to, licensing fees, filing fees, sales
literature review fees, travel and such other expenses as may be incurred
by Distributor on behalf of the Trust.
8. Indemnification of Trust.
Distributor agrees to indemnify and hold harmless the Trust and each person
who has been, is, or may hereafter be a trustee, director, officer,
employee, shareholder or control person of the Trust against any loss,
damage or expense (including the reasonable costs of investigation) and
reasonable attorney's fees reasonably incurred by any of them in connection
with any claim or in connection with any action, suit or proceeding to
which any of them may be a party, which arises out of or is alleged to
arise out of or is based upon any untrue statement or alleged untrue
statement of a material fact, or the omission or alleged omission to state
a material fact necessary to make the statements not misleading, on the
part of Distributor or any agent or employee of Distributor or any other
person for whose acts Distributor is responsible, unless such statement or
omission was made in reliance upon written information furnished by the
Trust. Distributor likewise agrees to indemnify and hold harmless the Trust
and each such person in connection with any claim or in connection with any
action, suit or proceeding which arises out of or is alleged to arise out
of Distributor's failure to exercise reasonable care and diligence with
respect to its services, if any, rendered in connection with investment,
reinvestment, automatic withdrawal and other plans for Shares. The
Distributor will advance attorneys' fees or other expenses incurred by any
such person in defending a proceeding, upon the undertaking by or on behalf
of such person to repay the advance if it is ultimately determined that
such person is not entitled to indemnification. The term "expenses" for
purposes of this and the next paragraph includes amounts paid in
satisfaction of judgments or in settlements which are made with
Distributor's consent. The foregoing rights of indemnification shall be in
addition to any other rights to which the Trust or each such person may be
entitled as a matter of law.
9. Indemnification of Distributor.
The Trust agrees to indemnify and hold harmless Distributor and each person
who has been, is, or may hereafter be a director, officer, employee,
shareholder or control person of Distributor against any loss, damage or
expense (including the reasonable costs of investigation) reasonably
incurred by any of them in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance, bad
faith or negligence, including clerical errors and mechanical failures, on
the part of any of such persons in the performance of Distributor's duties
or from the reckless disregard by any of such persons of Distributor's
obligations and duties under this Agreement, for all of which exceptions
Distributor shall be liable to the Trust. The Trust will advance attorneys'
fees or other expenses incurred by any such person in defending a
proceeding, upon the undertaking by or on behalf of such person to repay
the advance if it is ultimately determined that such person is not entitled
to indemnification.
In order that the indemnification provisions contained in this Paragraph 9
shall apply, it is understood that if in any case the Trust may be asked to
indemnify Distributor or any other person or hold Distributor or any other
person harmless, the Trust shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that Distributor will use all reasonable care to identify and
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 Distributor and any such person against any claim which may be the
subject of this indemnification, and in the event that the Trust so elects
it will so notify Distributor, and thereupon the Trust shall take over
complete defense of the claim, and neither Distributor nor any such person
shall in such situation initiate further legal or other expenses for which
it shall seek indemnification under this Paragraph 9. Distributor shall in
no case confess any claim or make any compromise in any case in which the
Trust will be asked to indemnify Distributor or any such person except with
the Trust's written consent.
Notwithstanding any other provision of this Agreement, Distributor shall be
entitled to receive and act upon advice of counsel (who may be counsel for
the Trust or its own counsel) and shall be without liability for any action
reasonably taken or thing reasonably done pursuant to such advice, provided
that such action is not in violation of applicable federal or state laws or
regulations.
10. Year 2000.
Unified covenants and agrees that it will use reasonable commercial efforts
to not allow a Year 2000 problem in its computer systems, software or
equipment owned, leased or licensed by it or its affiliates to interfere
with its performance under this Agreement. Each of Unified and the Fund
will use reasonable commercial efforts to cooperate and share information
to further comply with this Section 10, and to minimize the impact of any
Year 2000 problem of such party on the performance of this Agreement. Each
of Unified and the Fund will inform the other party of any circumstance
indicating a possible obstacle to such compliance, and the steps being
taken to avoid or overcome the obstacle. A "Year 2000 problem" means a
date-handling problem relating to the Year 2000 date change that would
cause a computer system, software or equipment to fail to correctly
perform, process or handle date-related data for the dates within and
between the 20th and 21st centuries and all other centuries. Any
modification of a defect to Unified's computer systems, software or
equipment necessary to solve a Year 2000 problem shall be at no additional
charge to the Fund.
11. Termination and Amendment of this Agreement.
This Agreement shall automatically terminate, without the payment of any
penalty, in the event of its assignment. This Agreement may be amended only
if such amendment is approved (i) by Distributor, (ii) either by action of
the Board of Trustees of the Trust or at a meeting of the Shareholders of
the Trust by the affirmative vote of a majority of the outstanding Shares,
and (iii) by a majority of the Trustees of the Trust who are not interested
persons of the Trust or of Distributor by vote cast in person at a meeting
called for the purpose of voting on such approval.
Either the Trust or Distributor may at any time terminate this Agreement on
sixty (60) days' written notice delivered or mailed by registered mail,
postage prepaid, to the other party.
12. Effective Period of this Agreement.
This Agreement shall take effect upon its execution and shall remain in
full force and effect for a period of one (1) year from the date of its
execution (unless terminated automatically as set forth in Section 10), and
from year to year thereafter, subject to annual approval (i) by
Distributor, (ii) by the Board of Trustees of the Trust or a vote of a
majority of the outstanding Shares, and (iii) by a majority of the Trustees
of the Trust who are not interested persons of the Trust or of Distributor
by vote cast in person at a meeting called for the purpose of voting on
such approval.
13. New Series.
The terms and provisions of this Agreement shall become automatically
applicable to any additional series of the Trust established during the
initial or renewal term of this Agreement.
14. Successor Investment Trust.
Unless this Agreement has been terminated in accordance with Paragraph 10,
the terms and provisions of this Agreement shall become automatically
applicable to any investment company which is a successor to the Trust as a
result of reorganization, recapitalization or change of domicile.
15. Limitation of Liability.
It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust
property of the Trust. The execution and delivery of this Agreement have
been authorized by the Trustees of the Trust and signed by an officer of
the Trust, acting as such, and neither such authorization by such Trustees
nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of
them personally, but shall bind only the trust property of the Trust.
16. Severability.
In the event any provision of this Agreement is determined to be void or
unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
17. Questions of Interpretation.
(a) This Agreement shall be governed by the laws of the State of Indiana.
(b) 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 Act shall be resolved by reference to such term or provision of the Act
and to interpretation thereof, if any, by the United States courts or in
the absence of any controlling decision of any such court, by rules,
regulations or orders of the Securities and Exchange Commission issued
pursuant to said Act. In addition, where the effect of a requirement of the
Act, reflected in any provision of this Agreement is revised by rule,
regulation or order of the Securities and Exchange Commission, such
provision shall be deemed to incorporate the effect of such rule,
regulation or order.
18. Notices.
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party, with a copy to the
Fund's counsel, at such address as such other party may designate for the
receipt of such notice. Such notice will be effective upon receipt. Until
further notice to the other party, it is agreed that the address of the
Trust for this purpose shall be 104 Summit Avenue Box 80, Summit, New
Jersey 07902, and that the address of Distributor for this purpose shall be
431 N. Pennsylvania St., Indianapolis, Indiana 46204.
19. Execution
This Agreement may be executed by one or more counterparts, each of which
shall be deemed an original, but all of which together will constitute one
in the same instrument.
<PAGE>
IN WITNESS WHEREOF, the Trust and Distributor have each caused this
Agreement to be signed in duplicate on their behalf, all as of the day and
year first above written.
ATTEST: INDUSTRY LEADERS FUND
/s/ Travis L. Gering By: /s/ Gerald P. Sullivan
Name: Travis L. Gering Name: Gerald P. Sullivan
Its: President
ATTEST: UNIFIED MANAGEMENT CORPORATION
________________________________ By: /s/ Lynn E. Wood
Name: Lynn E. Wood
Its: President
By: /s/ Stephen D. Highsmith, Jr.
Name: Stephen D. Highsmith, Jr.
Its: Senior Vice President, Chief Operating Officer
CUSTODY AGREEMENT
Dated February 1, 1999
Between
UMB BANK, N.A.
and
THE INDUSTRY LEADERS FUND
<PAGE>
Table of Contents
SECTION PAGE
1. Appointment of Custodian 1
2. Definitions 1
(a) Securities 1
(b) Assets 1
(c) Instructions and Special Instructions 1
3. Delivery of Corporate Documents 2
4. Powers and Duties of Custodian and Domestic Subcustodian 2
(a) Safekeeping 3
(b) Manner of Holding Securities 3
(c) Free Delivery of Assets 4
(d) Exchange of Securities 4
(e) Purchases of Assets 4
(f) Sales of Assets 5
(g) Options 5
(h) Futures Contracts 6
(i) Segregated Accounts 6
(j) Depositary Receipts 6
(k) Corporate Actions, Put Bonds, Called Bonds, Etc. 6
(l) Interest Bearing Deposits 7
(m) Foreign Exchange Transactions 7
(n) Pledges or Loans of Securities 8
(o) Stock Dividends, Rights, Etc. 8
(p) Routine Dealings 8
(q) Collections 8
(r) Bank Accounts 9
(s) Dividends, Distributions and Redemptions 9
(t) Proceeds from Shares Sold 9
(u) Proxies and Notices; Compliance with the Shareholders
Communication Act of 1985 9
(v) Books and Records 9
(w) Opinion of Fund's Independent Certified Public Accountants 10
(x) Reports by Independent Certified Public Accountants 10
(y) Bills and Others Disbursements 10
(z) Qualification
5. Subcustodians 10
(a) Domestic Subcustodians 10
(b) Foreign Subcustodians 10
(c) Interim Subcustodians 11
(d) Special Subcustodians 11
(e) Termination of a Subcustodian 11
(f) Certification Regarding Foreign Subcustodians 11
6. Standard of Care 12
(a) General Standard of Care 12
(b) Actions Prohibited by Applicable Law, Events Beyond Custodian's Control,
Armed 12 Conflict, Sovereign Risk, etc.
(c) Liability for Past Records 12
(d) Advice of Counsel 12
(e) Advice of the Fund and Others 12
(f) Instructions Appearing to be Genuine 13
(g) Exceptions from Liability 13
7. Liability of the Custodian for Actions of Others 13
(a) Domestic Subcustodians 13
(b) Liability for Acts and Omissions of Foreign Subcustodians 13
(c) Securities Systems, Interim Subcustodians, Special Subcustodians,
Securities 13 Depositories and Clearing Agencies
(d) Defaults or Insolvency's of Brokers, Banks, Etc. 14
(e) Reimbursement of Expenses 14
8. Indemnification 14
(a) Indemnification by Fund 14
(b) Indemnification by Custodian 14
9. Advances 14
10. Liens 15
11. Compensation 15
12. Powers of Attorney 15
13. Termination and Assignment 15
14. Additional Funds 15
15. Notices 16
16. Miscellaneous 16
<PAGE>
CUSTODY AGREEMENT
This agreement made as of this 1st day of February, 1999, between UMB
Bank, n.a., a national banking association with its principal place of business
located in Kansas City, Missouri (hereinafter "Custodian"), and each of the
Funds listed on Appendix B hereof, together with such additional Funds which
shall be made parties to this Agreement by the execution of Appendix B hereto
(individually, a "Fund" and collectively, the "Funds").
WITNESSETH:
WHEREAS, each Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended; and
WHEREAS, each Fund desires to appoint Custodian as its custodian for
the custody of Assets (as hereinafter defined) owned by such Fund which Assets
are to be held in such accounts as such Fund may establish from time to time;
and
WHEREAS, Custodian is willing to accept such appointment on the terms
and conditions hereof.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutually covenant and
agree as follows:
1. APPOINTMENT OF CUSTODIAN.
Each Fund hereby constitutes and appoints the Custodian as custodian of
Assets belonging to each such Fund which have been or may be from time to time
deposited with the Custodian. Custodian accepts such appointment as a custodian
and agrees to perform the duties and responsibilities of Custodian as set forth
herein on the conditions set forth herein.
2. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings so indicated:
(a) "Security" or "Securities" shall mean stocks, bonds, bills, rights,
script, warrants, interim certificates and all negotiable or nonnegotiable paper
commonly known as Securities and other instruments or obligations.
(b) "Assets" shall mean Securities, monies and other property held by
the Custodian for the benefit of a Fund.
(c)(1) "Instructions", as used herein, shall mean: (i) a tested telex,
a written (including, without limitation, facsimile transmission) request,
direction, instruction or certification signed or initialed by or on behalf of a
Fund by an Authorized Person (as defined below in Section 3); (ii) a telephonic
or other oral communication from a person the Custodian reasonably believes to
be an Authorized Person; or (iii) a communication effected directly between an
electro-mechanical or electronic device or system (including, without
limitation, computers) on behalf of a Fund. Instructions in the form of oral
communications shall be confirmed by the appropriate Fund by tested telex or in
writing in the manner set forth in clause (i) above, but the lack of such
confirmation shall in no way affect any action taken by the Custodian in
reliance upon such oral Instructions prior to the Custodian's receipt of such
confirmation. Each Fund authorizes the Custodian to record any and all
telephonic or other oral Instructions communicated to the Custodian.
(c)(2) "Special Instructions", as used herein, shall mean Instructions
countersigned or confirmed in writing by the Treasurer or any Assistant
Treasurer of a Fund or any other person designated by the Treasurer of such Fund
in writing, which countersignature or confirmation shall be included on the same
instrument containing the Instructions or on a separate instrument relating
thereto.
(c)(3) Instructions and Special Instructions shall be delivered to the
Custodian at the address and/or telephone, facsimile transmission or telex
number agreed upon from time to time by the Custodian and each Fund.
(c)(4) Where appropriate, Instructions and Special Instructions
shall be continuing instructions.
3. DELIVERY OF CORPORATE DOCUMENTS.
Each of the parties to this Agreement represents that its execution
does not violate any of the provisions of its respective charter, articles of
incorporation, articles of association or bylaws and all required corporate
action to authorize the execution and delivery of this Agreement has been taken.
Each Fund has furnished the Custodian with copies, properly certified
or authenticated, with all amendments or supplements thereto, of the following
documents:
(a) Certificate of Incorporation (or equivalent document) of the Fund
as in effect on the date hereof;
(b) By-Laws of the Fund as in effect on the date hereof;
(c) Resolutions of the Board of Directors of the Fund appointing the
Custodian and approving the form of this Agreement; and
(d) The Fund's current prospectus and statements of additional
information.
Each Fund shall promptly furnish the Custodian with copies of any
updates, amendments or supplements to the foregoing documents.
In addition, each Fund has delivered or will promptly deliver to the
Custodian, copies of the Resolution(s) of its Board of Directors or Trustees and
all amendments or supplements thereto, properly certified or authenticated,
designating certain officers or employees of each such Fund who will have
continuing authority to certify to the Custodian: (a) the names, titles,
signatures and scope of authority of all persons authorized to give Instructions
or any other notice, request, direction, instruction, certificate or instrument
on behalf of each Fund, and (b) the names, titles and signatures of those
persons authorized to countersign or confirm Special Instructions on behalf of
each Fund (in both cases collectively, the "Authorized Persons" and
individually, an "Authorized Person"). Such Resolutions and certificates may be
accepted and relied upon by the Custodian as conclusive evidence of the facts
set forth therein and shall be considered to be in full force and effect until
delivery to the Custodian of a similar Resolution or certificate to the
contrary. Upon delivery of a certificate which deletes or does not include the
name(s) of a person previously authorized to give Instructions or to countersign
or confirm Special Instructions, such persons shall no longer be considered an
Authorized Person authorized to give Instructions or to countersign or confirm
Special Instructions. Unless the certificate specifically requires that the
approval of anyone else will first have been obtained, the Custodian will be
under no obligation to inquire into the right of the person giving such
Instructions or Special Instructions to do so. Notwithstanding any of the
foregoing, no Instructions or Special Instructions received by the Custodian
from a Fund will be deemed to authorize or permit any director, trustee,
officer, employee, or agent of such Fund to withdraw any of the Assets of such
Fund upon the mere receipt of such authorization, Special Instructions or
Instructions from such director, trustee, officer, employee or agent.
4. POWERS AND DUTIES OF CUSTODIAN AND DOMESTIC SUBCUSTODIAN.
Except for Assets held by any Subcustodian appointed pursuant to
Sections 5(b), (c), or (d) of this Agreement, the Custodian shall have and
perform the powers and duties hereinafter set forth in this Section 4. For
purposes of this Section 4 all references to powers and duties of the
"Custodian" shall also refer to any Domestic Subcustodian appointed pursuant to
Section 5(a).
(a) Safekeeping.
The Custodian will keep safely the Assets of each Fund which are
delivered to it from time to time. The Custodian shall not be responsible for
any property of a Fund held or received by such Fund and not delivered to the
Custodian.
(b) Manner of Holding Securities.
(1) The Custodian shall at all times hold Securities of each Fund
either: (i) by physical possession of the share certificates or other
instruments representing such Securities in registered or bearer form; or (ii)
in book-entry form by a Securities System (as hereinafter defined) in accordance
with the provisions of sub-paragraph (3) below.
(2) The Custodian may hold registrable portfolio Securities which
have been delivered to it in physical form, by registering the same in the name
of the appropriate Fund or its nominee, or in the name of the Custodian or its
nominee, for whose actions such Fund and Custodian, respectively, shall be fully
responsible. Upon the receipt of Instructions, the Custodian shall hold such
Securities in street certificate form, so called, with or without any indication
of fiduciary capacity. However, unless it receives Instructions to the contrary,
the Custodian will register all such portfolio Securities in the name of the
Custodian's authorized nominee. All such Securities shall be held in an account
of the Custodian containing only assets of the appropriate Fund or only assets
held by the Custodian as a fiduciary, provided that the records of the Custodian
shall indicate at all times the Fund or other customer for which such Securities
are held in such accounts and the respective interests therein.
(3) The Custodian may deposit and/or maintain domestic Securities
owned by a Fund in, and each Fund hereby approves use of: (a) The Depository
Trust Company; (b) The Participants Trust Company; and (c) any book-entry system
as provided in (i) Subpart O of Treasury Circular No. 300, 31 CFR 306.115, (ii)
Subpart B of Treasury Circular Public Debt Series No. 27-76, 31 CFR 350.2, or
(iii) the book-entry regulations of federal agencies substantially in the form
of 31 CFR 306.115. Upon the receipt of Special Instructions, the Custodian may
deposit and/or maintain domestic Securities owned by a Fund in any other
domestic clearing agency registered with the Securities and Exchange Commission
("SEC") under Section 17A of the Securities Exchange Act of 1934 (or as may
otherwise be authorized by the SEC to serve in the capacity of depository or
clearing agent for the Securities or other assets of investment companies) which
acts as a Securities depository. Each of the foregoing shall be referred to in
this Agreement as a "Securities System", and all such Securities Systems shall
be listed on the attached Appendix A. Use of a Securities System shall be in
accordance with applicable Federal Reserve Board and SEC rules and regulations,
if any, and subject to the following provisions:
(i) The Custodian may deposit the Securities directly or
through one or more agents or Subcustodians which are also qualified to act as
custodians for investment companies.
(ii) The Custodian shall deposit and/or maintain the
Securities in a Securities System, provided that such Securities are represented
in an account ("Account") of the Custodian in the Securities System that
includes only assets held by the Custodian as a fiduciary, custodian or
otherwise for customers.
(iii) The books and records of the Custodian shall at all
times identify those Securities belonging to any one or more Funds which are
maintained in a Securities System.
(iv) The Custodian shall pay for Securities purchased for the
account of a Fund only upon (a) receipt of advice from the Securities System
that such Securities have been transferred to the Account of the Custodian in
accordance with the rules of the Securities System, and (b) the making of an
entry on the records of the Custodian to reflect such payment and transfer for
the account of such Fund. The Custodian shall transfer Securities sold for the
account of a Fund only upon (a) receipt of advice from the Securities System
that payment for such Securities has been transferred to the Account of the
Custodian in accordance with the rules of the Securities System, and (b) the
making of an entry on the records of the Custodian to reflect such transfer and
payment for the account of such Fund. Copies of all advices from the Securities
System relating to transfers of Securities for the account of a Fund shall be
maintained for such Fund by the Custodian. The Custodian shall deliver to a
Fund, on the next succeeding business day, daily transaction reports that shall
include each day's transactions in the Securities System for the account of such
Fund. Such transaction reports shall be delivered to such Fund or any agent
designated by such Fund pursuant to Instructions, by computer or in such other
manner as such Fund and Custodian may agree.
(v) The Custodian shall, if requested by a Fund pursuant to
Instructions, provide such Fund with reports obtained by the Custodian or any
Subcustodian with respect to a Securities System's accounting system, internal
accounting control and procedures for safeguarding Securities deposited in the
Securities System.
(vi) Upon receipt of Special Instructions, the Custodian shall
terminate the use of any Securities System on behalf of a Fund as promptly as
practicable and shall take all actions reasonably practicable to safeguard the
Securities of such Fund maintained with such Securities System.
(c) Free Delivery of Assets.
Notwithstanding any other provision of this Agreement and except as
provided in Section 3 hereof, the Custodian, upon receipt of Special
Instructions, will undertake to make free delivery of Assets, provided such
Assets are on hand and available, in connection with a Fund's transactions and
to transfer such Assets to such broker, dealer, Subcustodian, bank, agent,
Securities System or otherwise as specified in such Special Instructions.
(d) Exchange of Securities.
Upon receipt of Instructions, the Custodian will exchange portfolio
Securities held by it for a Fund for other Securities or cash paid in connection
with any reorganization, recapitalization, merger, consolidation, or conversion
of convertible Securities, and will deposit any such Securities in accordance
with the terms of any reorganization or protective plan.
Without Instructions, the Custodian is authorized to exchange Securities
held by it in temporary form for Securities in definitive form, to surrender
Securities for transfer into a name or nominee name as permitted in Section
4(b)(2), to effect an exchange of shares in a stock split or when the par value
of the stock is changed, to sell any fractional shares, and, upon receiving
payment therefor, to surrender bonds or other Securities held by it at maturity
or call.
(e) Purchases of Assets.
(1) Securities Purchases. In accordance with Instructions, the
Custodian shall, with respect to a purchase of Securities, pay for such
Securities out of monies held for a Fund's account for which the purchase was
made, but only insofar as monies are available therein for such purpose, and
receive the portfolio Securities so purchased. Unless the Custodian has received
Special Instructions to the contrary, such payment will be made only upon
receipt of Securities by the Custodian, a clearing corporation of a national
Securities exchange of which the Custodian is a member, or a Securities System
in accordance with the provisions of Section 4(b)(3) hereof. Notwithstanding the
foregoing, upon receipt of Instructions: (i) in connection with a repurchase
agreement, the Custodian may release funds to a Securities System prior to the
receipt of advice from the Securities System that the Securities underlying such
repurchase agreement have been transferred by book-entry into the Account
maintained with such Securities System by the Custodian, provided that the
Custodian's instructions to the Securities System require that the Securities
System may make payment of such funds to the other party to the repurchase
agreement only upon transfer by book-entry of the Securities underlying the
repurchase agreement into such Account; (ii) in the case of Interest Bearing
Deposits, currency deposits, and other deposits, foreign exchange transactions,
futures contracts or options, pursuant to Sections 4(g), 4(h), 4(l), and 4(m)
hereof, the Custodian may make payment therefor before receipt of an advice of
transaction; and (iii) in the case of Securities as to which payment for the
Security and receipt of the instrument evidencing the Security are under
generally accepted trade practice or the terms of the instrument representing
the Security expected to take place in different locations or through separate
parties, such as commercial paper which is indexed to foreign currency exchange
rates, derivatives and similar Securities, the Custodian may make payment for
such Securities prior to delivery thereof in accordance with such generally
accepted trade practice or the terms of the instrument representing such
Security.
(2) Other Assets Purchased. Upon receipt of Instructions and except as
otherwise provided herein, the Custodian shall pay for and receive other Assets
for the account of a Fund as provided in Instructions.
(f) Sales of Assets.
(1) Securities Sold. In accordance with Instructions, the Custodian
will, with respect to a sale, deliver or cause to be delivered the Securities
thus designated as sold to the broker or other person specified in the
Instructions relating to such sale. Unless the Custodian has received Special
Instructions to the contrary, such delivery shall be made only upon receipt of
payment therefor in the form of: (a) cash, certified check, bank cashier's
check, bank credit, or bank wire transfer; (b) credit to the account of the
Custodian with a clearing corporation of a national Securities exchange of which
the Custodian is a member; or (c) credit to the Account of the Custodian with a
Securities System, in accordance with the provisions of Section 4(b)(3) hereof.
Notwithstanding the foregoing, Securities held in physical form may be delivered
and paid for in accordance with "street delivery custom" to a broker or its
clearing agent, against delivery to the Custodian of a receipt for such
Securities, provided that the Custodian shall have taken reasonable steps to
ensure prompt collection of the payment for, or return of, such Securities by
the broker or its clearing agent, and provided further that the Custodian shall
not be responsible for the selection of or the failure or inability to perform
of such broker or its clearing agent or for any related loss arising from
delivery or custody of such Securities prior to receiving payment therefor.
(2) Other Assets Sold. Upon receipt of Instructions and except as
otherwise provided herein, the Custodian shall receive payment for and deliver
other Assets for the account of a Fund as provided in Instructions.
(g) Options.
(1) Upon receipt of Instructions relating to the purchase of an option
or sale of a covered call option, the Custodian shall: (a) receive and retain
confirmations or other documents, if any, evidencing the purchase or writing of
the option by a Fund; (b) if the transaction involves the sale of a covered call
option, deposit and maintain in a segregated account the Securities (either
physically or by book-entry in a Securities System) subject to the covered call
option written on behalf of such Fund; and (c) pay, release and/or transfer such
Securities, cash or other Assets in accordance with any notices or other
communications evidencing the expiration, termination or exercise of such
options which are furnished to the Custodian by the Options Clearing Corporation
(the "OCC"), the securities or options exchanges on which such options were
traded, or such other organization as may be responsible for handling such
option transactions.
(2) Upon receipt of Instructions relating to the sale of a naked option
(including stock index and commodity options), the Custodian, the appropriate
Fund and the broker-dealer shall enter into an agreement to comply with the
rules of the OCC or of any registered national securities exchange or similar
organizations(s). Pursuant to that agreement and such Fund's Instructions, the
Custodian shall: (a) receive and retain confirmations or other documents, if
any, evidencing the writing of the option; (b) deposit and maintain in a
segregated account, Securities (either physically or by book-entry in a
Securities System), cash and/or other Assets; and (c) pay, release and/or
transfer such Securities, cash or other Assets in accordance with any such
agreement and with any notices or other communications evidencing the
expiration, termination or exercise of such option which are furnished to the
Custodian by the OCC, the securities or options exchanges on which such options
were traded, or such other organization as may be responsible for handling such
option transactions. The appropriate Fund and the broker-dealer shall be
responsible for determining the quality and quantity of assets held in any
segregated account established in compliance with applicable margin maintenance
requirements and the performance of other terms of any option contract.
<PAGE>
(h) Futures Contracts.
Upon receipt of Instructions, the Custodian shall enter into a futures
margin procedural agreement among the appropriate Fund, the Custodian and the
designated futures commission merchant (a "Procedural Agreement"). Under the
Procedural Agreement the Custodian shall: (a) receive and retain confirmations,
if any, evidencing the purchase or sale of a futures contract or an option on a
futures contract by such Fund; (b) deposit and maintain in a segregated account
cash, Securities and/or other Assets designated as initial, maintenance or
variation "margin" deposits intended to secure such Fund's performance of its
obligations under any futures contracts purchased or sold, or any options on
futures contracts written by such Fund, in accordance with the provisions of any
Procedural Agreement designed to comply with the provisions of the Commodity
Futures Trading Commission and/or any commodity exchange or contract market
(such as the Chicago Board of Trade), or any similar organization(s), regarding
such margin deposits; and (c) release Assets from and/or transfer Assets into
such margin accounts only in accordance with any such Procedural Agreements. The
appropriate Fund and such futures commission merchant shall be responsible for
determining the type and amount of Assets held in the segregated account or paid
to the broker-dealer in compliance with applicable margin maintenance
requirements and the performance of any futures contract or option on a futures
contract in accordance with its terms.
(i) Segregated Accounts.
Upon receipt of Instructions, the Custodian shall establish and maintain
on its books a segregated account or accounts for and on behalf of a Fund, into
which account or accounts may be transferred Assets of such Fund, including
Securities maintained by the Custodian in a Securities System pursuant to
Paragraph (b)(3) of this Section 4, said account or accounts to be maintained
(i) for the purposes set forth in Sections 4(g), 4(h) and 4(n) and (ii) for the
purpose of compliance by such Fund with the procedures required by the SEC
Investment Company Act Release Number 10666 or any subsequent release or
releases relating to the maintenance of segregated accounts by registered
investment companies, or (iii) for such other purposes as may be set forth, from
time to time, in Special Instructions. The Custodian shall not be responsible
for the determination of the type or amount of Assets to be held in any
segregated account referred to in this paragraph, or for compliance by the Fund
with required procedures noted in (ii) above.
(j) Depositary Receipts.
Upon receipt of Instructions, the Custodian shall surrender or cause to be
surrendered Securities to the depositary used for such Securities by an issuer
of American Depositary Receipts or International Depositary Receipts
(hereinafter referred to, collectively, as "ADRs"), against a written receipt
therefor adequately describing such Securities and written evidence satisfactory
to the organization surrendering the same that the depositary has acknowledged
receipt of instructions to issue ADRs with respect to such Securities in the
name of the Custodian or a nominee of the Custodian, for delivery in accordance
with such instructions.
Upon receipt of Instructions, the Custodian shall surrender or cause to be
surrendered ADRs to the issuer thereof, against a written receipt therefor
adequately describing the ADRs surrendered and written evidence satisfactory to
the organization surrendering the same that the issuer of the ADRs has
acknowledged receipt of instructions to cause its depository to deliver the
Securities underlying such ADRs in accordance with such instructions.
(k) Corporate Actions, Put Bonds, Called Bonds, Etc.
Upon receipt of Instructions, the Custodian shall: (a) deliver warrants,
puts, calls, rights or similar Securities to the issuer or trustee thereof (or
to the agent of such issuer or trustee) for the purpose of exercise or sale,
provided that the new Securities, cash or other Assets, if any, acquired as a
result of such actions are to be delivered to the Custodian; and (b) deposit
Securities upon invitations for tenders thereof, provided that the consideration
for such Securities is to be paid or delivered to the Custodian, or the tendered
Securities are to be returned to the Custodian.
Notwithstanding any provision of this Agreement to the contrary, the
Custodian shall take all necessary action, unless otherwise directed to the
contrary in Instructions, to comply with the terms of all mandatory or
compulsory exchanges, calls, tenders, redemptions, or similar rights of security
ownership, and shall notify the appropriate Fund of such action in writing by
facsimile transmission or in such other manner as such Fund and Custodian may
agree in writing.
The Fund agrees that if it gives an Instruction for the performance of an
act on the last permissible date of a period established by any optional offer
or on the last permissible date for the performance of such act, the Fund shall
hold the Bank harmless from any adverse consequences in connection with acting
upon or failing to act upon such Instructions.
(l) Interest Bearing Deposits.
Upon receipt of Instructions directing the Custodian to purchase interest
bearing fixed term and call deposits (hereinafter referred to, collectively, as
"Interest Bearing Deposits") for the account of a Fund, the Custodian shall
purchase such Interest Bearing Deposits in the name of such Fund with such banks
or trust companies, including the Custodian, any Subcustodian or any subsidiary
or affiliate of the Custodian (hereinafter referred to as "Banking
Institutions"), and in such amounts as such Fund may direct pursuant to
Instructions. Such Interest Bearing Deposits may be denominated in U.S. dollars
or other currencies, as such Fund may determine and direct pursuant to
Instructions. The responsibilities of the Custodian to a Fund for Interest
Bearing Deposits issued by the Custodian shall be that of a U.S. bank for a
similar deposit. With respect to Interest Bearing Deposits other than those
issued by the Custodian, (a) the Custodian shall be responsible for the
collection of income and the transmission of cash to and from such accounts; and
(b) the Custodian shall have no duty with respect to the selection of the
Banking Institution or for the failure of such Banking Institution to pay upon
demand.
(m) Foreign Exchange Transactions.
(l) Each Fund hereby appoints the Custodian as its agent in the
execution of all currency exchange transactions. The Custodian agrees to provide
exchange rate and U.S. Dollar information, in writing, to the Funds. Such
information shall be supplied by the Custodian at least by the business day
prior to the value date of the foreign exchange transaction, provided that the
Custodian receives the request for such information at least two business days
prior to the value date of the transaction.
(2) Upon receipt of Instructions, the Custodian shall settle foreign
exchange contracts or options to purchase and sell foreign currencies for spot
and future delivery on behalf of and for the account of a Fund with such
currency brokers or Banking Institutions as such Fund may determine and direct
pursuant to Instructions. If, in its Instructions, a Fund does not direct the
Custodian to utilize a particular currency broker or Banking Institution, the
Custodian is authorized to select such currency broker or Banking Institution as
it deems appropriate to execute the Fund's foreign currency transaction.
(3) Each Fund accepts full responsibility for its use of third party
foreign exchange brokers and for execution of said foreign exchange contracts
and understands that the Fund shall be responsible for any and all costs and
interest charges which may be incurred as a result of the failure or delay of
its third party broker to deliver foreign exchange. The Custodian shall have no
responsibility or liability with respect to the selection of the currency
brokers or Banking Institutions with which a Fund deals or the performance of
such brokers or Banking Institutions.
(4) Notwithstanding anything to the contrary contained herein, upon
receipt of Instructions the Custodian may, in connection with a foreign exchange
contract, make free outgoing payments of cash in the form of U.S. Dollars or
foreign currency prior to receipt of confirmation of such foreign exchange
contract or confirmation that the countervalue currency completing such contract
has been delivered or received.
(5) The Custodian shall not be obligated to enter into foreign exchange
transactions as principal. However, if the Custodian has made available to a
Fund its services as a principal in foreign exchange transactions and subject to
any separate agreement between the parties relating to such transactions, the
Custodian shall enter into foreign exchange contracts or options to purchase and
sell foreign currencies for spot and future delivery on behalf of and for the
account of the Fund, with the Custodian as principal.
(n) Pledges or Loans of Securities.
(1) Upon receipt of Instructions from a Fund, the Custodian will
release or cause to be released Securities held in custody to the pledgees
designated in such Instructions by way of pledge or hypothecation to secure
loans incurred by such Fund with various lenders including but not limited to
UMB Bank, n.a.; provided, however, that the Securities shall be released only
upon payment to the Custodian of the monies borrowed, except that in cases where
additional collateral is required to secure existing borrowings, further
Securities may be released or delivered, or caused to be released or delivered
for that purpose upon receipt of Instructions. Upon receipt of Instructions, the
Custodian will pay, but only from funds available for such purpose, any such
loan upon re-delivery to it of the Securities pledged or hypothecated therefor
and upon surrender of the note or notes evidencing such loan. In lieu of
delivering collateral to a pledgee, the Custodian, on the receipt of
Instructions, shall transfer the pledged Securities to a segregated account for
the benefit of the pledgee.
(2) Upon receipt of Special Instructions, and execution of a separate
Securities Lending Agreement, the Custodian will release Securities held in
custody to the borrower designated in such Instructions and may, except as
otherwise provided below, deliver such Securities prior to the receipt of
collateral, if any, for such borrowing, provided that, in case of loans of
Securities held by a Securities System that are secured by cash collateral, the
Custodian's instructions to the Securities System shall require that the
Securities System deliver the Securities of the appropriate Fund to the borrower
thereof only upon receipt of the collateral for such borrowing. The Custodian
shall have no responsibility or liability for any loss arising from the delivery
of Securities prior to the receipt of collateral. Upon receipt of Instructions
and the loaned Securities, the Custodian will release the collateral to the
borrower.
(o) Stock Dividends, Rights, Etc.
The Custodian shall receive and collect all stock dividends, rights, and
other items of like nature and, upon receipt of Instructions, take action with
respect to the same as directed in such Instructions.
(p) Routine Dealings.
The Custodian will, in general, attend to all routine and mechanical
matters in accordance with industry standards in connection with the sale,
exchange, substitution, purchase, transfer, or other dealings with Securities or
other property of each Fund except as may be otherwise provided in this
Agreement or directed from time to time by Instructions from any particular
Fund. The Custodian may also make payments to itself or others from the Assets
for disbursements and out-of-pocket expenses incidental to handling Securities
or other similar items relating to its duties under this Agreement, provided
that all such payments shall be accounted for to the appropriate Fund.
(q) Collections.
The Custodian shall (a) collect amounts due and payable to each Fund with
respect to portfolio Securities and other Assets; (b) promptly credit to the
account of each Fund all income and other payments relating to portfolio
Securities and other Assets held by the Custodian hereunder upon Custodian's
receipt of such income or payments or as otherwise agreed in writing by the
Custodian and any particular Fund; (c) promptly endorse and deliver any
instruments required to effect such collection; and (d) promptly execute
ownership and other certificates and affidavits for all federal, state, local
and foreign tax purposes in connection with receipt of income or other payments
with respect to portfolio Securities and other Assets, or in connection with the
transfer of such Securities or other Assets; provided, however, that with
respect to portfolio Securities registered in so-called street name, or physical
Securities with variable interest rates, the Custodian shall use its best
efforts to collect amounts due and payable to any such Fund. The Custodian shall
notify a Fund in writing by facsimile transmission or in such other manner as
such Fund and Custodian may agree in writing if any amount payable with respect
to portfolio Securities or other Assets is not received by the Custodian when
due. The Custodian shall not be responsible for the collection of amounts due
and payable with respect to portfolio Securities or other Assets that are in
default.
(r) Bank Accounts.
Upon Instructions, the Custodian shall open and operate a bank account or
accounts on the books of the Custodian; provided that such bank account(s) shall
be in the name of the Custodian or a nominee thereof, for the account of one or
more Funds, and shall be subject only to draft or order of the Custodian. The
responsibilities of the Custodian to any one or more such Funds for deposits
accepted on the Custodian's books shall be that of a U.S. bank for a similar
deposit.
(s) Dividends, Distributions and Redemptions.
To enable each Fund to pay dividends or other distributions to
shareholders of each such Fund and to make payment to shareholders who have
requested repurchase or redemption of their shares of each such Fund
(collectively, the "Shares"), the Custodian shall release cash or Securities
insofar as available. In the case of cash, the Custodian shall, upon the receipt
of Instructions, transfer such funds by check or wire transfer to any account at
any bank or trust company designated by each such Fund in such Instructions. In
the case of Securities, the Custodian shall, upon the receipt of Special
Instructions, make such transfer to any entity or account designated by each
such Fund in such Special Instructions.
(t) Proceeds from Shares Sold.
The Custodian shall receive funds representing cash payments received for
shares issued or sold from time to time by each Fund, and shall credit such
funds to the account of the appropriate Fund. The Custodian shall notify the
appropriate Fund of Custodian's receipt of cash in payment for shares issued by
such Fund by facsimile transmission or in such other manner as such Fund and the
Custodian shall agree. Upon receipt of Instructions, the Custodian shall: (a)
deliver all federal funds received by the Custodian in payment for shares as may
be set forth in such Instructions and at a time agreed upon between the
Custodian and such Fund; and (b) make federal funds available to a Fund as of
specified times agreed upon from time to time by such Fund and the Custodian, in
the amount of checks received in payment for shares which are deposited to the
accounts of such Fund.
(u) Proxies and Notices; Compliance with the Shareholders Communication
Act of 1985.
The Custodian shall deliver or cause to be delivered to the appropriate
Fund all forms of proxies, all notices of meetings, and any other notices or
announcements affecting or relating to Securities owned by such Fund that are
received by the Custodian, any Subcustodian, or any nominee of either of them,
and, upon receipt of Instructions, the Custodian shall execute and deliver, or
cause such Subcustodian or nominee to execute and deliver, such proxies or other
authorizations as may be required. Except as directed pursuant to Instructions,
neither the Custodian nor any Subcustodian or nominee shall vote upon any such
Securities, or execute any proxy to vote thereon, or give any consent or take
any other action with respect thereto.
The Custodian will not release the identity of any Fund to an issuer which
requests such information pursuant to the Shareholder Communications Act of 1985
for the specific purpose of direct communications between such issuer and any
such Fund unless a particular Fund directs the Custodian otherwise in writing.
(v) Books and Records.
The Custodian shall maintain such records relating to its activities under
this Agreement as are required to be maintained by Rule 31a-1 under the
Investment Company Act of 1940 ("the 1940 Act") and to preserve them for the
periods prescribed in Rule 31a-2 under the 1940 Act. These records shall be open
for inspection by duly authorized officers, employees or agents (including
independent public accountants) of the appropriate Fund during normal business
hours of the Custodian.
The Custodian shall provide accountings relating to its activities under
this Agreement as shall be agreed upon by each Fund and the Custodian.
(w) Opinion of Fund's Independent Certified Public Accountants.
The Custodian shall take all reasonable action as each Fund may request to
obtain from year to year favorable opinions from each such Fund's independent
certified public accountants with respect to the Custodian's activities
hereunder and in connection with the preparation of each such Fund's periodic
reports to the SEC and with respect to any other requirements of the SEC.
(x) Reports by Independent Certified Public Accountants.
At the request of a Fund, the Custodian shall deliver to such Fund a
written report prepared by the Custodian's independent certified public
accountants with respect to the services provided by the Custodian under this
Agreement, including, without limitation, the Custodian's accounting system,
internal accounting control and procedures for safeguarding cash, Securities and
other Assets, including cash, Securities and other Assets deposited and/or
maintained in a Securities System or with a Subcustodian. Such report shall be
of sufficient scope and in sufficient detail as may reasonably be required by
such Fund and as may reasonably be obtained by the Custodian.
(y) Bills and Other Disbursements.
Upon receipt of Instructions, the Custodian shall pay, or cause to be
paid, all bills, statements, or other obligations of a Fund.
(z) Qualification. The Custodian hereby represents and warrants that it is
qualified to act as a custodian in accordance with the mandates set forth in
Sections 17(f)(1) and 26(a) of the 1940 Act and the rules and regulations
thereunder, and hereby covenants to maintain such qualification during the term
of this Agreement, and further covenants to ascertain and monitor continued
qualification under the foregoing sections of the 1940 Act and the rules and
regulations thereunder of any Subscustodian providing services hereunder, and
the Custodian further covenants that it shall promptly inform the Trust of the
existence of any material event which could threaten the ability of the
Custodian or any Subcustodian then providing services to the Trust, to comply
with the foregoing qualification, and in any and each such event the Custodian
shall promptly provide the Trust with reasonable information so that it may
independently monitor such event.
5. SUBCUSTODIANS.
From time to time, in accordance with the relevant provisions of this
Agreement, the Custodian may appoint one or more Domestic Subcustodians, Foreign
Subcustodians, Special Subcustodians, or Interim Subcustodians (as each are
hereinafter defined) to act on behalf of any one or more Funds. A Domestic
Subcustodian, in accordance with the provisions of this Agreement, may also
appoint a Foreign Subcustodian, Special Subcustodian, or Interim Subcustodian to
act on behalf of any one or more Funds. For purposes of this Agreement, all
Domestic Subcustodians, Foreign Subcustodians, Special Subcustodians and Interim
Subcustodians shall be referred to collectively as "Subcustodians".
(a) Domestic Subcustodians.
The Custodian may, at any time and from time to time, appoint any bank as
defined in Section 2(a)(5) of the 1940 Act or any trust company or other entity,
any of which meet the requirements of a custodian under Section 17(f) of the
1940 Act and the rules and regulations thereunder, to act for the Custodian on
behalf of any one or more Funds as a subcustodian for purposes of holding Assets
of such Fund(s) and performing other functions of the Custodian within the
United States (a "Domestic Subcustodian"). Each Fund shall approve in writing
the appointment of the proposed Domestic Subcustodian; and the Custodian's
appointment of any such Domestic Subcustodian shall not be effective without
such prior written approval of the Fund(s). Each such duly approved Domestic
Subcustodian shall be listed on Appendix A attached hereto, as it may be
amended, from time to time.
(b) Foreign Subcustodians.
The Custodian may at any time appoint, or cause a Domestic Subcustodian to
appoint, any bank, trust company or other entity meeting the requirements of an
"eligible foreign custodian" under Section 17(f) of the 1940 Act and the rules
and regulations thereunder to act for the Custodian on behalf of any one or more
Funds as a subcustodian or sub-subcustodian (if appointed by a Domestic
Subcustodian) for purposes of holding Assets of the Fund(s) and performing other
functions of the Custodian in countries other than the United States of America
(hereinafter referred to as a "Foreign Subcustodian" in the context of either a
subcustodian or a sub-subcustodian); provided that the Custodian shall have
obtained written confirmation from each Fund of the approval of the Board of
Directors or other governing body of each such Fund (which approval may be
withheld in the sole discretion of such Board of Directors or other governing
body or entity) with respect to (i) the identity of any proposed Foreign
Subcustodian (including branch designation), (ii) the country or countries in
which, and the securities depositories or clearing agencies (hereinafter
"Securities Depositories and Clearing Agencies"), if any, through which, the
Custodian or any proposed Foreign Subcustodian is authorized to hold Securities
and other Assets of each such Fund, and (iii) the form and terms of the
subcustodian agreement to be entered into with such proposed Foreign
Subcustodian. Each such duly approved Foreign Subcustodian and the countries
where and the Securities Depositories and Clearing Agencies through which they
may hold Securities and other Assets of the Fund(s) shall be listed on Appendix
A attached hereto, as it may be amended, from time to time. Each Fund shall be
responsible for informing the Custodian sufficiently in advance of a proposed
investment which is to be held in a country in which no Foreign Subcustodian is
authorized to act, in order that there shall be sufficient time for the
Custodian, or any Domestic Subcustodian, to effect the appropriate arrangements
with a proposed Foreign Subcustodian, including obtaining approval as provided
in this Section 5(b). In connection with the appointment of any Foreign
Subcustodian, the Custodian shall, or shall cause the Domestic Subcustodian to,
enter into a subcustodian agreement with the Foreign Subcustodian in form and
substance approved by each such Fund. The Custodian shall not consent to the
amendment of, and shall cause any Domestic Subcustodian not to consent to the
amendment of, any agreement entered into with a Foreign Subcustodian, which
materially affects any Fund's rights under such agreement, except upon prior
written approval of such Fund pursuant to Special Instructions.
(c) Interim Subcustodians.
Notwithstanding the foregoing, in the event that a Fund shall invest in an
Asset to be held in a country in which no Foreign Subcustodian is authorized to
act, the Custodian shall notify such Fund in writing by facsimile transmission
or in such other manner as such Fund and the Custodian shall agree in writing of
the unavailability of an approved Foreign Subcustodian in such country; and upon
the receipt of Special Instructions from such Fund, the Custodian shall, or
shall cause its Domestic Subcustodian to, appoint or approve an entity (referred
to herein as an "Interim Subcustodian") designated in such Special Instructions
to hold such Security or other Asset.
(d) Special Subcustodians.
Upon receipt of Special Instructions, the Custodian shall, on behalf of a
Fund, appoint one or more banks, trust companies or other entities designated in
such Special Instructions to act for the Custodian on behalf of such Fund as a
subcustodian for purposes of: (i) effecting third-party repurchase transactions
with banks, brokers, dealers or other entities through the use of a common
custodian or subcustodian; (ii) providing depository and clearing agency
services with respect to certain variable rate demand note Securities, (iii)
providing depository and clearing agency services with respect to dollar
denominated Securities, and (iv) effecting any other transactions designated by
such Fund in such Special Instructions. Each such designated subcustodian
(hereinafter referred to as a "Special Subcustodian") shall be listed on
Appendix A attached hereto, as it may be amended from time to time. In
connection with the appointment of any Special Subcustodian, the Custodian shall
enter into a subcustodian agreement with the Special Subcustodian in form and
substance approved by the appropriate Fund in Special Instructions. The
Custodian shall not amend any subcustodian agreement entered into with a Special
Subcustodian, or waive any rights under such agreement, except upon prior
approval pursuant to Special Instructions.
(e) Termination of a Subcustodian.
The Custodian may, at any time in its discretion upon notification to the
appropriate Fund(s), terminate any Subcustodian of such Fund(s) in accordance
with the termination provisions under the applicable subcustodian agreement, and
upon the receipt of Special Instructions, the Custodian will terminate any
Subcustodian in accordance with the termination provisions under the applicable
subcustodian agreement.
(f) Certification Regarding Foreign Subcustodians.
Upon request of a Fund, the Custodian shall deliver to such Fund a
certificate stating: (i) the identity of each Foreign Subcustodian then acting
on behalf of the Custodian; (ii) the countries in which and the Securities
Depositories and Clearing Agencies through which each such Foreign Subcustodian
is then holding cash, Securities and other Assets of such Fund; and (iii) such
other information as may be requested by such Fund, and as the Custodian shall
be reasonably able to obtain, to evidence compliance with rules and regulations
under the 1940 Act.
6. STANDARD OF CARE.
(a) General Standard of Care.
The Custodian shall be liable to a Fund for all losses, damages and
reasonable costs and expenses suffered or incurred by such Fund resulting from
the negligence or willful misfeasance of the Custodian; provided, however, in no
event shall the Custodian be liable for special, indirect or consequential
damages arising under or in connection with this Agreement.
(b) Actions Prohibited by Applicable Law, Events Beyond Custodian's
Control, Sovereign Risk, Etc.
In no event shall the Custodian or any Domestic Subcustodian incur
liability hereunder (i) if the Custodian or any Subcustodian or Securities
System, or any subcustodian, Securities System, Securities Depository or
Clearing Agency utilized by the Custodian or any such Subcustodian, or any
nominee of the Custodian or any Subcustodian (individually, a "Person") is
prevented, forbidden or delayed from performing, or omits to perform, any act or
thing which this Agreement provides shall be performed or omitted to be
performed, by reason of: (a) any provision of any present or future law or
regulation or order of the United States of America, or any state thereof, or of
any foreign country, or political subdivision thereof or of any court of
competent jurisdiction (and neither the Custodian nor any other Person shall be
obligated to take any action contrary thereto); or (b) any event beyond the
control of the Custodian or other Person such as armed conflict, riots, strikes,
lockouts, labor disputes, equipment or transmission failures, natural disasters,
or failure of the mails, transportation, communications or power supply; or (ii)
for any loss, damage, cost or expense resulting from "Sovereign Risk." A
"Sovereign Risk" shall mean nationalization, expropriation, currency
devaluation, revaluation or fluctuation, confiscation, seizure, cancellation,
destruction or similar action by any governmental authority, de facto or de
jure; or enactment, promulgation, imposition or enforcement by any such
governmental authority of currency restrictions, exchange controls, taxes,
levies or other charges affecting a Fund's Assets; or acts of armed conflict,
terrorism, insurrection or revolution; or any other act or event beyond the
Custodian's or such other Person's control.
(c) Liability for Past Records.
Neither the Custodian nor any Domestic Subcustodian shall have any
liability in respect of any loss, damage or expense suffered by a Fund, insofar
as such loss, damage or expense arises from the performance of the Custodian or
any Domestic Subcustodian in reliance upon records that were maintained for such
Fund by entities other than the Custodian or any Domestic Subcustodian prior to
the Custodian's employment hereunder.
(d) Advice of Counsel.
The Custodian and all Domestic Subcustodians shall, at their own
respective sole cost and expense, be entitled to receive and act upon advice of
counsel of its own choosing on all matters. The Custodian and all Domestic
Subcustodians shall be without liability for any actions taken or omitted in
good faith pursuant to the advice of counsel.
(e) Advice of the Fund and Others.
The Custodian and any Domestic Subcustodian may rely upon the advice of
any Fund and upon statements of such Fund's accountants and other persons
believed by it in good faith to be expert in matters upon which they are
consulted, and neither the Custodian nor any Domestic Subcustodian shall be
liable for any actions taken or omitted, in good faith, pursuant to such advice
or statements.
(f) Instructions Appearing to be Genuine.
The Custodian and all Domestic Subcustodians shall be fully protected and
indemnified in acting as a custodian hereunder upon any Resolutions of the Board
of Directors or Trustees, Instructions, Special Instructions, advice, notice,
request, consent, certificate, instrument or paper appearing to it to be genuine
and to have been properly executed and shall, unless otherwise specifically
provided herein, be entitled to receive as conclusive proof of any fact or
matter required to be ascertained from any Fund hereunder a certificate signed
by any officer of such Fund authorized to countersign or confirm Special
Instructions.
(g) Exceptions from Liability.
Without limiting the generality of any other provisions hereof, neither
the Custodian nor any Domestic Subcustodian shall be under any duty or
obligation to inquire into, nor be liable for:
(i) the validity of the issue of any Securities purchased by or for
any Fund, the legality of the purchase thereof or evidence of ownership required
to be received by any such Fund, or the propriety of the decision to purchase or
amount paid therefor;
(ii) the legality of the sale of any Securities by or for any Fund,
or the propriety of the amount for which the same were sold; or
(iii) any other expenditures, encumbrances of Securities, borrowings
or similar actions with respect to any Fund's Assets;
and may, until notified to the contrary, presume that all Instructions or
Special Instructions received by it are not in conflict with or in any way
contrary to any provisions of any such Fund's Declaration of Trust, Partnership
Agreement, Articles of Incorporation or By-Laws or votes or proceedings of the
shareholders, trustees, partners or directors of any such Fund, or any such
Fund's currently effective Registration Statement on file with the SEC.
7. LIABILITY OF THE CUSTODIAN FOR ACTIONS OF OTHERS.
(a) Domestic Subcustodians
The Custodian shall be liable for the acts or omissions of any Domestic
Subcustodian to the same extent as if such actions or omissions were performed
by the Custodian itself.
(b) Liability for Acts and Omissions of Foreign Subcustodians.
The Custodian shall be liable to a Fund for any loss or damage to such
Fund caused by or resulting from the acts or omissions of any Foreign
Subcustodian to the extent that, under the terms set forth in the subcustodian
agreement between the Custodian or a Domestic Subcustodian and such Foreign
Subcustodian, the Foreign Subcustodian has failed to perform in accordance with
the standard of conduct imposed under such subcustodian agreement and the
Custodian or Domestic Subcustodian recovers from the Foreign Subcustodian under
the applicable subcustodian agreement.
(c) Securities Systems, Interim Subcustodians, Special Subcustodians,
Securities Depositories and Clearing Agencies.
The Custodian shall not be liable to any Fund for any loss, damage or
expense suffered or incurred by such Fund resulting from or occasioned by the
actions or omissions of a Securities System, Interim Subcustodian, Special
Subcustodian, or Securities Depository and Clearing Agency unless such loss,
damage or expense is caused by, or results from, the negligence or willful
misfeasance of the Custodian.
<PAGE>
(d) Defaults or Insolvency's of Brokers, Banks, Etc.
The Custodian shall not be liable for any loss, damage or expense suffered
or incurred by any Fund resulting from or occasioned by the actions, omissions,
neglects, defaults or insolvency of any broker, bank, trust company or any other
person with whom the Custodian may deal (other than any of such entities acting
as a Subcustodian, Securities System or Securities Depository and Clearing
Agency, for whose actions the liability of the Custodian is set out elsewhere in
this Agreement) unless such loss, damage or expense is caused by, or results
from, the negligence or willful misfeasance of the Custodian.
(e) Reimbursement of Expenses.
Each Fund agrees to reimburse the Custodian for all out-of-pocket expenses
incurred by the Custodian in connection with this Agreement, but excluding
salaries and usual overhead expenses.
8. INDEMNIFICATION.
(a) Indemnification by Fund.
Subject to the limitations set forth in this Agreement, each Fund agrees
to indemnify and hold harmless the Custodian and its nominees from all losses,
damages and expenses (including reasonable attorneys' fees) suffered or incurred
by the Custodian or its nominee caused by or arising from actions taken by the
Custodian, its employees or agents in the performance of its duties and
obligations under this Agreement, including, but not limited to, any
indemnification obligations undertaken by the Custodian under any relevant
subcustodian agreement; provided, however, that such indemnity shall not apply
to the extent the Custodian is liable under Sections 6 or 7 hereof.
If any Fund requires the Custodian to take any action with respect to
Securities, which action involves the payment of money or which may, in the
opinion of the Custodian, result in the Custodian or its nominee assigned to
such Fund being liable for the payment of money or incurring liability of some
other form, such Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
(b) Indemnification by Custodian.
Subject to the limitations set forth in this Agreement and in addition to
the obligations provided in Sections 6 and 7, the Custodian agrees to indemnify
and hold harmless each Fund from all losses, damages and expenses (including
reasonable attorneys' fees) suffered or incurred by each such Fund caused by the
negligence or willful misfeasance of the Custodian.
9. ADVANCES.
In the event that, pursuant to Instructions, the Custodian or any
Subcustodian, Securities System, or Securities Depository or Clearing Agency
acting either directly or indirectly under agreement with the Custodian (each of
which for purposes of this Section 9 shall be referred to as "Custodian"), makes
any payment or transfer of funds on behalf of any Fund as to which there would
be, at the close of business on the date of such payment or transfer,
insufficient funds held by the Custodian on behalf of any such Fund, the
Custodian may, in its discretion without further Instructions, provide an
advance ("Advance") to any such Fund in an amount sufficient to allow the
completion of the transaction by reason of which such payment or transfer of
funds is to be made. In addition, in the event the Custodian is directed by
Instructions to make any payment or transfer of funds on behalf of any Fund as
to which it is subsequently determined that such Fund has overdrawn its cash
account with the Custodian as of the close of business on the date of such
payment or transfer, said overdraft shall constitute an Advance. Any Advance
shall be payable by the Fund on behalf of which the Advance was made on demand
by Custodian, unless otherwise agreed by such Fund and the Custodian, and shall
accrue interest from the date of the Advance to the date of payment by such Fund
to the Custodian at a rate agreed upon in writing from time to time by the
Custodian and such Fund. It is understood that any transaction in respect of
which the Custodian shall have made an Advance, including but not limited to a
foreign exchange contract or transaction in respect of which the Custodian is
not acting as a principal, is for the account of and at the risk of the Fund on
behalf of which the Advance was made, and not, by reason of such Advance, deemed
to be a transaction undertaken by the Custodian for its own account and risk.
The Custodian and each of the Funds which are parties to this Agreement
acknowledge that the purpose of Advances is to finance temporarily the purchase
or sale of Securities for prompt delivery in accordance with the settlement
terms of such transactions or to meet emergency expenses not reasonably
foreseeable by a Fund. The Custodian shall promptly notify the appropriate Fund
of any Advance. Such notification shall be sent by facsimile transmission or in
such other manner as such Fund and the Custodian may agree.
10. LIENS.
The Bank shall have a lien on the Property in the Custody Account to
secure payment of fees and expenses for the services rendered under this
Agreement. If the Bank advances cash or securities to the Fund for any purpose
or in the event that the Bank or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of its duties hereunder, except such as may arise from its or
its nominee's negligent action, negligent failure to act or willful misconduct,
any Property at any time held for the Custody Account shall be security therefor
and the Fund hereby grants a security interest therein to the Bank. The Fund
shall promptly reimburse the Bank for any such advance of cash or securities or
any such taxes, charges, expenses, assessments, claims or liabilities upon
request for payment, but should the Fund fail to so reimburse the Bank, the Bank
shall be entitled to dispose of such Property to the extent necessary to obtain
reimbursement. The Bank shall be entitled to debit any account of the Fund with
the Bank including, without limitation, the Custody Account, in connection with
any such advance and any interest on such advance as the Bank deems reasonable.
11. COMPENSATION.
Each Fund will pay to the Custodian such compensation as is agreed to in
writing by the Custodian and each such Fund from time to time, which shall
initially be as set forth on Appendix C attached hereto. Such compensation,
together with all amounts for which the Custodian is to be reimbursed in
accordance with Section 7(e), shall be billed to each such Fund and paid in cash
to the Custodian.
12. POWERS OF ATTORNEY.
Upon request, each Fund shall deliver to the Custodian such proxies,
powers of attorney or other instruments as may be reasonable and necessary or
desirable in connection with the performance by the Custodian or any
Subcustodian of their respective obligations under this Agreement or any
applicable subcustodian agreement.
13. TERMINATION AND ASSIGNMENT.
Any Fund or the Custodian may terminate this Agreement by notice in
writing, delivered or mailed, postage prepaid (certified mail, return receipt
requested) to the other not less than 90 days prior to the date upon which such
termination shall take effect. Upon termination of this Agreement, the
appropriate Fund shall pay to the Custodian such fees as may be due the
Custodian hereunder as well as its reimbursable disbursements, costs and
expenses paid or incurred. Upon termination of this Agreement, the Custodian
shall deliver, at the terminating party's expense, all Assets held by it
hereunder to the appropriate Fund or as otherwise designated by such Fund by
Special Instructions. Upon such delivery, the Custodian shall have no further
obligations or liabilities under this Agreement except as to the final
resolution of matters relating to activity occurring prior to the effective date
of termination. Notwithstanding the foregoing, in the event the Custodian for
any reason is no longer qualified to act as a custodian under Sections 17(f)(1)
and 26(a) of the 1940 Act and the rules and regulations thereunder, then the
Trust may terminate this Agreement effective immediately without any further
obligations or liabilities under this Agreement except as to the final
resolution of matters relating to activity occurring prior to the effective date
of termination.
This Agreement may not be assigned by the Custodian or any Fund without
the respective consent of the other, duly authorized by a resolution by its
Board of Directors or Trustees.
14. ADDITIONAL FUNDS.
An additional Fund or Funds may become a party to this Agreement after the
date hereof by an instrument in writing to such effect signed by such Fund or
Funds and the Custodian. If this Agreement is terminated as to one or more of
the Funds (but less than all of the Funds) or if an additional Fund or Funds
shall become a party to this Agreement, there shall be delivered to each party
an Appendix B or an amended Appendix B, signed by each of the additional Funds
(if any) and each of the remaining Funds as well as the Custodian, deleting or
adding such Fund or Funds, as the case may be. The termination of this Agreement
as to less than all of the Funds shall not affect the obligations of the
Custodian and the remaining Funds hereunder as set forth on the signature page
hereto and in Appendix B as revised from time to time.
15. NOTICES.
As to each Fund, notices, requests, instructions and other writings
delivered to The Industry Leaders Fund, 104 Summit Avenue, Box 80, Attn: Gerry
Sullivan, Summit, New Jersey 07901, postage prepaid, or to such other address as
any particular Fund may have designated to the Custodian in writing, shall be
deemed to have been properly delivered or given to a Fund.
Notices, requests, instructions and other writings delivered to the
Securities Administration department of the Custodian at its office at 928 Grand
Blvd., 10th Floor, Attn: Ralph Santoro, Kansas City, Missouri 64106, or mailed
postage prepaid, to the Custodian's Securities Administration department, Post
Office Box 226, Attn: Ralph Santoro, Kansas City, Missouri 64141, or to such
other addresses as the Custodian may have designated to each Fund in writing,
shall be deemed to have been properly delivered or given to the Custodian
hereunder; provided, however, that procedures for the delivery of Instructions
and Special Instructions shall be governed by Section 2(c) hereof.
16. MISCELLANEOUS.
(a) This Agreement is executed and delivered in the State of Missouri and
shall be governed by the laws of such state.
(b) All of the terms and provisions of this Agreement shall be binding
upon, and inure to the benefit of, and be enforceable by the respective
successors and assigns of the parties hereto.
(c) No provisions of this Agreement may be amended, modified or waived, in
any manner except in writing, properly executed by both parties hereto;
provided, however, Appendix A may be amended from time to time as Domestic
Subcustodians, Foreign Subcustodians, Special Subcustodians, and Securities
Depositories and Clearing Agencies are approved or terminated according to the
terms of this Agreement.
(d) The captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
(e) This Agreement shall be effective as of the date of execution hereof.
(f) This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(g) The following terms are defined terms within the meaning of this
Agreement, and the definitions thereof are found in the following sections of
the Agreement:
Term Section
- ---- -------
Account 4(b)(3)(ii)
ADR'S 4(j)
Advance 9
Assets 2(b)
Authorized Person 3
Banking Institution 4(1)
Domestic Subcustodian 5(a)
Foreign Subcustodian 5(b)
Instruction 2(c)(1)
Interim Subcustodian 5(c)
Interest Bearing Deposit 4(1)
Liens 10
OCC 4(g)(1)
Person 6(b)
Procedural Agreement 4(h)
SEC 4(b)(3)
Securities 2(a)
Securities Depositories and Clearing Agencies 5(b)
Securities System 4(b)(3)
Shares 4(s)
Sovereign Risk 6(b)
Special Instruction 2(c)(2)
Special Subcustodian 5(d)
Subcustodian 5
1940 Act 4(v)
(h) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid by any court of competent
jurisdiction, the remaining portion or portions shall be considered severable
and shall not be affected, and the rights and obligations of the parties shall
be construed and enforced as if this Agreement did not contain the particular
part, term or provision held to be illegal or invalid.
(i) This Agreement constitutes the entire understanding and agreement
of the parties hereto with respect to the subject matter hereof, and accordingly
supersedes, as of the effective date of this Agreement, any custodian agreement
heretofore in effect between the Fund and the Custodian.
IN WITNESS WHEREOF, the parties hereto have caused this Custody
Agreement to be executed by their respective duly authorized officers.
THE INDUSTRY LEADERS FUND
Attest: /s/ Travis L. Gering By: /s/ Gerald P. Sullivan
------------------------------------------
Name: Travis L. Gering
Name: Gerry P. Sullivan
-------------------------------------------
Title: President
------------------------------------------
Date: February 1, 1999
------------------------------------------
UMB BANK, N.A.
Attest: By: /s/ Ralph R. Santoro
------------------------------------------
Name: Ralph R. Santoro
------------------------------------------
Title: Senior Vice President
------------------------------------------
Date: February 1, 1999
------------------------------------------
<PAGE>
APPENDIX A
CUSTODY AGREEMENT
DOMESTIC SUBCUSTODIANS:
United Missouri Trust Company of New York
Morgan Stanley Trust Company (Foreign Securities Only)
SECURITIES SYSTEMS:
Federal Book Entry
Depository Trust Company
Participant Trust Company
SPECIAL SUBCUSTODIANS:
SECURITIES DEPOSITORIES
COUNTRIES FOREIGN SUBCUSTODIANS CLEARING AGENCIES
Euroclear
THE INDUSTRY LEADERS FUND UMB BANK, N.A.
By: /s/ Gerald P. Sullivan By: /s/ Ralph R. Santoro
- ---------------------------------------- ----------------------------
Name: Gerry P. Sullivan Name: Ralph R. Santoro
- ----------------------------------------- ------------------------------
Title: President Title: Senior Vice President
- ---------------------------------------- -------------------------------
Date: February 1, 1999 Date: February 1, 1999
- ------------------------------------------ -------------------------------
<PAGE>
APPENDIX B
CUSTODY AGREEMENT
The following open-end management investment companies ("Funds") are
hereby made parties to the Custody Agreement dated February 1, 1999, with UMB
Bank, n.a. ("Custodian") and The Industry Leaders Fund, and agree to be bound by
all the terms and conditions contained in said Agreement:
THE INDUSTRY LEADERS FUND
THE INDUSTRY LEADERS FUND
Attest: /s/ Travis L. Gering By: /s/ Gerald P. Sullivan
- --------------------------------
---------------------------------
Name: Travis L. Gering
Name: Gerry P. Sullivan
---------------------------------
Title: President
---------------------------------
Date: February 1, 1999
---------------------------------
UMB BANK, N.A.
Attest: By: /s/ Ralph R. Santoro
---------------------------------
Name: Ralph R. Santoro
---------------------------------
Title: Senior Vice President
---------------------------------
Date: February 1, 1999
---------------------------------
<PAGE>
Exhibit C
Custodian Compensation
UMB Bank, n.a.
Mutual Fund
Domestic Custody Fee Schedule
<TABLE>
Net Asset Value Fees
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
To be computed as of month-end on the average net asset value of each portfolio at the annual rate of:
1.00 basis point on the first $100,000,000; plus
.75 basis point on the next $100,000,000; plus
.50 basis point in excess of $200,000,000;
*Subject to a $300 per month minimum per portfolio
Portfolio Transaction Fees
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
*DTC - Equities $4.00
*DTC - Fixed Income 7.00
*PTC 12.00
*Fed Book Entry 8.00
*Physical 20.00
Principal Paydown 5.00
Option (Initial Only)/Future 25.00
Corporate Action/Call/Reorg 25.00
*Third-Party VRDN (Bank Book Entry) 15.00
*UMB Repurchase Agreement 5.00
*Tri-Party Repurchase Agreement 15.00
Wires In/Out & Checks Issued (Non-Settlement Related) 8.00
*Fund of Fund Security Transaction
~ In-house Sweep (Scout &/or MMF) no charge
~ Preferred List** 10.00
~ All other 25.00
Fund of Fund Dividend Transaction
~ Sweep Income no charge
~ Preferred List** 5.00
~ All other 10.00
*A transaction includes buys, sells, maturities, or free security movements.
</TABLE>
Out-of-Pocket Expenses
--------------------------------------------------------------------------
Includes, but is not limited to, security transfer fees, certificate fees,
shipping/courier fees or charges, FDIC insurance premiums, specialized
programming charges, and system access/connect charges.
This fee schedule pertains to custody of U.S. Domestic assets only. UMB
Bank will provide its fee schedule for Euroclear and international custody
upon request. Fees for services not contemplated by this schedule will be
negotiated on a case-by-case basis.
MUTUAL FUND SERVICES AGREEMENT
Fund Accounting Services
and
Transfer Agency Services
between
Industry Leaders Fund
and
Unified Fund Services, Inc.
January 20, 1999
Exhibit A - Portfolio Listing
Exhibit B - Fund Accounting Services Description
Exhibit C - Transfer Agency Services Description
Exhibit D - Fees and Expenses
<PAGE>
Unified Fund Services, Inc. Industry Leaders Fund - 3
MUTUAL FUND SERVICES AGREEMENT
AGREEMENT (this "Agreement"), dated as of January 20, 1999, between the
Industry Leaders Fund, a Delaware business trust (the "Fund"), and Unified Fund
Services, Inc., an Indiana corporation ("Unified").
WITNESSTH:
WHEREAS, the Fund is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to retain Unified to provide certain transfer
agent and fund accounting services with respect to the Fund, and Unified is
willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:
Section 1. Appointment. The Fund hereby appoints Unified to provide
transfer agent and fund accounting services for the Fund, subject to the
supervision of the Board of Trustees of the Fund (the "Board"), for the period
and on the terms set forth in this Agreement. Unified accepts such appointment
and agrees to furnish the services herein set forth in return for the
compensation as provided in Section 6 and Exhibit D to this Agreement. The Fund
will initially consist of the portfolios, funds and/or classes of shares (each a
"Portfolio"; collectively the "Portfolios") listed on Exhibit A. The Fund shall
notify Unified in writing of each additional Portfolio established by the Fund.
Each new Portfolio shall be subject to the provisions of this Agreement, except
to the extent that the provisions (including those relating to the compensation
and expenses payable by the Fund and its Portfolios) may be modified with
respect to each new Portfolio in writing by the Fund and Unified at the time of
the addition of the new Portfolio.
Section 2. Representations and Warranties of Unified. Unified represents and
warrants to the Fund that:
(a) Unified is a corporation duly organized and existing under the laws of
the State of Indiana;
(b) Unified is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement, and all
requisite corporate proceedings have been taken by Unified to authorize Unified
to enter into and perform this Agreement;
(c) Unified has, and will continue to have, access to the facilities,
personnel and equipment required to fully perform its duties and obligations
hereunder;
(d) no legal or administrative proceedings have been instituted or
threatened against Unified that would impair its ability to perform its duties
and obligations under this Agreement; and
(e) Unified's entrance into this Agreement will not cause a material
breach or be in material conflict with any other agreement or obligation of
Unified or any law or regulation applicable to Unified.
Section 3. Representations and Warranties of the Fund. The Fund represents and
warrants to Unified that:
(a) the Fund is a business trust duly organized and existing under the
laws of the State of Delaware;
(b) the Fund is empowered under applicable laws and by its Declaration
of Trust and By-Laws to enter into and perform this Agreement, and the Fund has
taken all requisite proceedings to authorize the Fund to enter into and perform
this Agreement;
(c) the Fund is an investment company properly registered under the
1940 Act; a registration statement under the Securities Act of 1933, as amended
("1933 Act") and the 1940 Act on Form N-lA has been filed and will be effective
and will remain effective during the term of this Agreement, and all necessary
filings under the laws of the states will have been made and will be current
during the term of this Agreement;
(d) no legal or administrative proceedings have been instituted or
threatened against the Fund that would impair its ability to perform its duties
and obligations under this Agreement; and
(e) the Fund's entrance into this Agreement will not cause a material
breach or be in material conflict with any other agreement or obligation of the
Fund or any law or regulation applicable to it.
Section 4. Delivery of Documents. The Fund will promptly furnish to
Unified such copies, properly certified or authenticated, of contracts,
documents and other related information that Unified may reasonably request or
reasonably requires to properly discharge its duties. Such documents may include
but are not limited to the following:
(a) Resolutions of the Board authorizing the appointment of Unified to
provide certain transfer agency, fund accounting and administration services to
the Fund and approving this Agreement;
(b) The Fund's Declaration of Trust;
(c) The Fund's By-Laws;
(d) The Fund's Notification of Registration on Form N-8A under the 1940
Act as filed with the Securities and Exchange Commission ("SEC");
(e) The Fund's registration statement including exhibits, as amended,
on Form N-1A (the "Registration Statement") under the 1933 Act and the 1940 Act,
as filed with the SEC;
(f) Copies of the Management Agreement between the Fund and its
investment adviser (the "Advisory Agreement");
(g) Opinions of counsel and auditors reports;
(h) The Fund's Prospectus and Statement of Additional Information
relating to all Portfolios and all amendments and supplements thereto (such
Prospectus and Statement of Additional Information and supplements thereto, as
presently in effect and as from time to time hereafter amended and supplemented,
herein called the "Prospectuses"); and
(i) Such other agreements as the Fund may enter into from time to time
including securities lending agreements, futures and commodities account
agreements, brokerage agreements, and options agreements.
Section 5. Services Provided by Unified.
(a) Unified will provide the following services subject to the control,
direction and supervision of the Board and in compliance with the objectives,
policies and limitations set forth in the Fund's Registration Statement,
Declaration of Trust and By-Laws; applicable laws and regulations; and all
resolutions and policies implemented by the Board:
(i) Fund Accounting, as described on Exhibit B to this Agreement.
(ii) Transfer Agency, as described on Exhibit C to this Agreement.
(iii) Dividend Disbursing. Unified will serve as the Fund's dividend
disbursing agent. Unified will prepare and mail checks, place wire transfers of
credit income and capital gain payments to shareholders. The Fund will advise
Unified in advance of the declaration of any dividend or distribution and the
record and payable date thereof. Unified will, on or before the payment date of
any such dividend or distribution, notify the Fund's Custodian of the estimated
amount required to pay any portion of such dividend or distribution payable in
cash, and on or before the payment date of such distribution, the Fund will
instruct its Custodian to make available to Unified sufficient funds for the
cash amount to be paid out. If a shareholder is entitled to receive additional
shares by virtue of any such distribution or dividend, appropriate credits will
be made to each shareholder's account and/or certificates delivered where
requested. A shareholder not receiving certificates will receive a confirmation
from Unified indicating the number of shares credited to his/her account.
(b) Unified will also:
(i) provide office facilities with respect to the provision of the
services contemplated herein (which may be in the offices of Unified or a
corporate affiliate of Unified);
(ii) provide or otherwise obtain personnel sufficient, in Unified's
sole discretion, for provision of the services contemplated herein;
(iii) furnish equipment and other materials, which Unified, in its sole
discretion, believes are necessary or desirable for provision of the services
contemplated herein; and
(iv) keep records relating to the services provided hereunder in such
form and manner as set forth on Exhibits B and C and as Unified may otherwise
deem appropriate or advisable, all in accordance with the 1940 Act. To the
extent required by Section 31 of the 1940 Act and the rules thereunder, Unified
agrees that all such records prepared or maintained by Unified relating to the
services provided hereunder are the property of the Fund and will be preserved
for the periods prescribed under Rule 31a-2 under the 1940 Act, maintained at
the Fund's expense, and made available in accordance with such Section and
rules. Unified further agrees to surrender promptly to the Fund upon its request
and cease to retain in its records and files those records and documents created
and maintained by Unified pursuant to this Agreement.
Section 6. Fees: Expenses: Expense Reimbursement.
(a) As compensation for the services rendered to the Fund pursuant to
this Agreement the Fund shall pay Unified monthly fees determined as set forth
on Exhibit D to this Agreement. Such fees are to be billed monthly and shall be
due and payable upon receipt of the invoice. Upon any termination of this
Agreement and before the end of any month, the fee for the part of the month
before such termination shall be equal to the fee normally due for the full
monthly period and shall be payable upon the date of termination of this
Agreement.
(b) For the purpose of determining fees calculated as a function of a
Portfolio's net assets, the value of the Portfolio's net assets shall be
computed as required by the Prospectus, generally accepted accounting
principles, and resolutions of the Board.
(c) Unified will from time to time employ or associate with such person
or persons as may be appropriate to assist Unified in the performance of this
Agreement. Such person or persons may be officers and employees who are employed
or designated as officers by both Unified and the Fund. The compensation of such
person or persons for such employment shall be paid by Unified and no obligation
will be incurred by or on behalf of the Fund in such respect.
(d) Unified will bear all of its own expenses in connection with the
performance of the services under this Agreement except as otherwise expressly
provided herein. The Fund agrees to promptly reimburse Unified for any equipment
and supplies specially ordered, with the prior written consent of the Fund, by
or for the Fund through Unified and for any other expenses not contemplated by
this Agreement that Unified may incur on the Fund's behalf at the Fund's request
or as previously consented to by the Fund. Such other expenses to be incurred in
the operation of the Fund and to be borne by the Fund, include, but are not
limited to: taxes; interest; brokerage fees and commissions; salaries and fees
of officers and directors who are not officers, directors, shareholders or
employees of Unified, or the Fund's investment adviser or distributor; SEC and
state Blue Sky registration and qualification fees, levies, fines and other
charges; advisory fees; charges and expenses of custodians; insurance premiums
including fidelity bond premiums; auditing and legal expenses; costs of
maintenance of corporate existence; expenses of typesetting and printing of
prospectuses and for distribution to current shareholders of the Fund; expenses
of printing and production cost of shareholders' reports and proxy statements
and materials; costs and expense of Fund stationery and forms; costs and
expenses of special telephone and data lines and devices; costs associated with
corporate, shareholder, and Board meetings; and any extraordinary expenses and
other customary Fund expenses. In addition, Unified may utilize one or more
independent pricing services, approved from time to time by the Board, to obtain
securities prices and to act as backup to the primary pricing services, in
connection with determining the net asset values of the Fund, and the Fund will
reimburse Unified for the Fund's share of the cost of such services based upon
the actual usage, or a pro-rata estimate of the use, of the services for the
benefit of the Fund.
(e) The Fund may request additional services, additional processing, or
special reports. Such requests may be provided by Unified at additional charges.
In this event, the Fund shall submit such requests in writing together with such
specifications as may be reasonably required by Unified, and Unified shall
respond to such requests in the form of a price quotation. The Fund's written
acceptance of the quotation must be received prior to implementation of such
request. Additional services will be charged at Unified's standard rates.
(f) All fees, out-of-pocket expenses, or additional charges of Unified
shall be billed on a monthly basis and shall be due and payable upon receipt of
the invoice.
Unified will render, after the close of each month in which services
have been furnished, a statement reflecting all of the charges for such month.
Charges remaining unpaid after thirty (30) days shall bear interest in finance
charges equivalent to, in the aggregate, the Prime Rate (as publicly announced
by Star Bank, N.A., from time to time) plus 2.00% per year and all costs and
expenses of effecting collection of any such sums, including reasonable
attorney's fees, shall be paid by the Fund to Unified.
In the event that the Fund is more than sixty (60) days delinquent in
its payments of monthly billings in connection with this Agreement (with the
exception of specific amounts which may be contested in good faith by the Fund),
this Agreement may be terminated upon thirty (30) days' written notice to the
Fund by Unified. The Fund must notify Unified in writing of any contested
amounts within thirty (30) days of receipt of a billing for such amounts.
Disputed amounts are not due and payable while they are being investigated.
Section 7. Proprietary and Confidential Information. Unified agrees on
behalf of itself and its employees to treat confidentially and as proprietary
information of the Fund, all records and other information relative to the
Fund's prior, present or potential shareholders, and to not use such records and
information for any purpose other than performance of Unified's responsibilities
and duties hereunder. Unified may seek a waiver of such confidentiality
provisions by furnishing reasonable prior notice to the Fund and obtaining
approval in writing from the Fund, which approval shall not be unreasonably
withheld and may not be withheld where the service agent may be exposed to civil
or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities. Waivers of
confidentiality are automatically effective without further action by Unified
with respect to Internal Revenue Service levies, subpoenas and similar actions,
or with respect to any request by the Fund.
Section 8. Duties, Responsibilities and Limitations of Liability.
(a) In the event performance of its duties hereunder, Unified shall be
obligated to exercise due care and diligence, and to act in good faith in
performing the services provided for under this Agreement. In performing its
services hereunder, Unified shall be entitled to rely on any oral or written
instructions, notices or other communications from the Fund and its Custodian,
officers and Trustees, investors, agents and other service providers which
Unified reasonably believes to be genuine, valid and authorized. Unified shall
also be entitled to consult with and rely on the advice and opinions of outside
legal counsel retained by the Fund, as necessary or appropriate.
(b) Unified shall not be liable for any error of judgment or mistake of
law or for any loss or expense suffered by the Fund, in connection with the
matters to which this Agreement relates, except for a loss or expense solely
caused by or resulting from willful misfeasance, bad faith or negligence on
Unified's part in the performance of its duties or from reckless disregard by
Unified of its obligations and duties under this Agreement. Any person, even
though also an officer, director, partner, employee or agent of Unified, who may
be or become an officer, director, partner, employee or agent of the Fund, shall
be deemed when rendering services to the Fund or acting on any business of the
Fund (other than services or business in connection with Unified's duties
hereunder) to be rendering such services to or acting solely for the Fund and
not as an officer, director, partner, employee or agent or person under the
control or direction of Unified even though paid by Unified.
(c) Except for a loss or expense solely caused by or resulting from
willful misfeasance, bad faith or negligence on Unified's part in the
performance of its duties or from reckless disregard by Unified of its
obligations and duties under this Agreement, Unified shall not be responsible
for, and the Fund shall indemnify and hold Unified harmless from and against,
any and all losses, damages, costs, reasonable attorneys' fees and expenses,
payments, expenses and liabilities arising out of or attributable to:
(i) all actions of Unified or its officers or agents required to be
taken pursuant to this Agreement;
(ii) the reliance on or use by Unified or its officers or agents of
information, records, or documents which are received by Unified or its officers
or agents and furnished to it or them by or on behalf of the Fund, and which
have been prepared or maintained by the Fund or any third party on behalf of the
Fund;
(iii) the Fund's refusal or failure to comply with the terms of this
Agreement or the Fund's lack of good faith, or its actions, or lack thereof
involving negligence or willful misfeasance;
(iv) the breach of any representation or warranty of the Fund
hereunder;
(v) the taping or other form of recording of telephone conversations or
other forms of electronic communications with investors and shareholders, or
reliance by Unified on telephone or other electronic instructions of any person
acting on behalf of a shareholder or shareholder account for which telephone or
other electronic services have been authorized;
(vi) the reliance on or the carrying out by Unified or its officers or
agents of any proper instructions reasonably believed to be duly authorized, or
requests of the Fund or recognition by Unified of any share certificates which
are reasonably believed to bear the proper signatures of the officers of the
Fund and the proper countersignature of any transfer agent or registrar of the
Fund;
(vii) any delays, inaccuracies, errors in or omissions from data
provided to Unified by data and pricing services;
(viii) the offer or sale of shares by the Fund in violation of any
requirement under the federal securities laws or regulations or the securities
laws or regulations of any state, or in violation of any stop order or other
determination or ruling by any federal agency or any state agency with respect
to the offer or sale of such shares in such state (1) resulting from activities,
actions, or omissions by the Fund or its other service providers and agents, or
(2) existing or arising out of activities, actions or omissions by or on behalf
of the Fund prior to the effective date of this Agreement; and
(ix) the compliance by the Fund, its investment adviser, and its
distributor with applicable securities, tax, commodities and other laws, rules
and regulations.
Section 9. Terms. This Agreement shall become effective on the date
first herein above written. This Agreement may be modified or amended from time
to time by mutual agreement between the parties hereto. This Agreement shall
continue in effect unless terminated by either party on at least ninety (90)
days' prior written notice. Upon termination of this Agreement, the Fund shall
pay to Unified such compensation and any reimbursable expenses as may be due
under the terms hereof as of the date of termination or the date that the
provision of services ceases, whichever is sooner.
Should the Fund exercise its right to terminate this Agreement, the
Fund agrees to pay a termination/conversion fee, simultaneous with the transfer
of all Fund records to the successor mutual fund service provider(s), in an
amount equal to the total compensation under this agreement for the 90 day
period immediately preceding the termination notice date. In addition, the Fund
agrees to pay for all conversion tape set-up fees, test conversion preparation
and processing fees and final conversion fees.
Such compensation to Unified shall be for the expenses incurred in
connection with the retrieval, compilation and movement of books, records and
materials relative to the deconversion or conversion of Fund records to the
successor mutual fund service provider as directed by the Fund. Notwithstanding
the foregoing, any amount owed by the Fund to Unified prior to the
termination/conversion shall still be due and payable under the terms of this
Agreement. No such compensation shall be due to Unified if Unified terminates
this Agreement for reasons other than a default by the Fund.
Upon the termination of the Agreement for any reason, Unified agrees to
provide the Fund with complete and accurate tranfer agency, fund accounting and
administration records and to assist the Fund in the orderly transfer of
accounts and records. Without limiting the generality of the foregoing, Unified
agrees upon termination of this Agreement:
(a) to promptly deliver to the successor mutual fund service
provider(s), computer tapes containing the Fund's accounts and records together
with such record layouts and additional information as may be necessary to
enable the successor mutual fund service provider(s) to utilize the information
therein;
(b) to promptly cooperate with the successor mutual fund service
provider(s) in the interpretation of the Fund's account and records;
(c) to promptly forward all shareholder calls, mail and correspondence
to the new mutual fund service provider(s) upon de-conversion; and
(d) to act in good faith, to make the conversion as smooth as possible
for the successor mutual fund service provider(s) and the Fund.
Section 10. Notices. Any notice required or permitted hereunder shall
be in writing and shall be deemed to have been given when delivered in person or
by certified mail, return receipt requested, to the parties at the following
address (or such other address as a party may specify by notice to the other):
(a) If to the Fund, to:
Industry Leaders Fund
104 Summit Avenue, Box 80
Summit, New Jersey 07902-0080
Attention: President
Copies of notice to the Fund are to be forwarded to the Fund's counsel of
record.
(b) If to Unified, to:
Unified Fund Services, Inc.
431 North Pennsylvania Street
Indianapolis, Indiana 46204
Attention: President
Notice shall be effective upon receipt if by mail, on the date of
personal delivery (by private messenger, courier service or otherwise) or upon
confirmed receipt of telex or facsimile, whichever occurs first.
Section 11. Assignability. This Agreement shall not be assigned by either
party hereto without the prior written consent of the other party.
Section 12. Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver nor shall it deprive such party of the right thereafter to insist upon
strict adherence to that term or any term of this Agreement. Any waiver must be
in writing signed by the waiving party.
Section 13. Force Majeure. Unified shall not be responsible or liable
for any failure or delay in performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
control, including without limitations, acts of God, earthquake, fires, floods,
wars, acts of civil or military authorities, or governmental actions, nor shall
any such failure or delay give the Fund the right to terminate this Agreement.
Section 14. Year 2000. Unified covenants and agrees that it will use
reasonable commercial efforts to not allow a Year 2000 problem in its computer
systems, software or equipment owned, leased or licensed by it or its affiliates
to interfere with its performance under this Agreement. Each of Unified and the
Fund will use reasonable commercial efforts to cooperate and share information
to further comply with this Section 14, and to minimize the impact of any Year
2000 problem of such party on the performance of this Agreement. Each of Unified
and the Fund will inform the other party of any circumstance indicating a
possible obstacle to such compliance, and the steps being taken to avoid or
overcome the obstacle. A "Year 2000 problem" means a date-handling problem
relating to the Year 2000 date change that would cause a computer system,
software or equipment to fail to correctly perform, process or handle
date-related data for the dates within and between the 20th and 21st centuries
and all other centuries. Any modification of a defect to Unified's computer
systems, software or equipment necessary to solve a Year 2000 problem shall be
at no additional charge to the Fund.
Section 15. Use or Name. The Fund and Unified agree not to use the
other's name nor the names of such other's affiliates, designees, or assignees
in any prospectus, sales literature, or other printed material written in a
manner not previously, expressly approved in writing by the other or such
other's affiliates, designees, or assignees except where required by the SEC or
any state agency responsible for securities regulation.
Section 16. Amendments. This Agreement may be modified or amended from
time to time by mutual written agreement between the parties. No provision of
this Agreement may be changed, discharged, or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, discharge or termination is sought.
Section 17. Severability. If any provision of this Agreement is invalid
or unenforceable, the balance of the Agreement shall remain in effect, and if
any provision is inapplicable to any person or circumstance it shall
nevertheless remain applicable to all other persons and circumstances.
Section 18. Governing Law. This Agreement shall be governed by the
laws of the State of Indiana.
Section 19. Execution. This Agreement may be executed by one or
more counterparts, each of which shall be deemed an original, but all of
which together will constitute one in the same instrument.
[signature page to follow]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Mutual Fund
Services Agreement to be signed by their respective duly authorized officers as
of the day and year first above written.
INDUSTRY LEADERS FUND
By /s/ Gerald P. Sullivan Date: January 20, 1999
- --------------------------------------- --------------------
Print Name: Gerald P. Sullivan
Title: President
Attest: /s/ Travis L. Gering
Name: Travis L. Gering
UNIFIED FUND SERVICES, INC.
By: /s/ David A. Bogaert Date: January 20, 1999
- ---------------------------------------- --------------------
Print Name: David A. Bogaert
Title: President
By: /s/ Linda A. Lawson Date: January 25, 1999
- --------------------------------------- --------------------
Print Name: Linda A. Lawson
Title: Senior Vice President, Chief Operating Officer
Attest: /s/ Carol J. Highsmith
Name: Carol J. Highsmith
<PAGE>
EXHIBIT A
to
Mutual Fund Services Agreement
List of Portfolios
Industry Leaders Fund, D Shares
Industry Leaders Fund, I Shares
<PAGE>
EXHIBIT B
to
Mutual Fund Services Agreement
Description of Fund Accounting Services
I. General Description
Unified shall provide the following accounting services to the Fund:
A. Calculate dividend and capital gain distributions in accordance with
distribution policies detailed in the Fund's Prospectus. Assist Fund
management in making final determinations of distribution amounts.
B. Estimate and recommend year-end dividend and capital gain distributions
necessary to establish Fund's status as a regulated investment company
("RIC") under Section 4982 of the Internal revenue Code of 1986, as
amended (the "Code") regarding minimum distribution requirements.
C. Working with the Fund's public accountants or other professionals,
prepare and file Fund's Federal tax return on Form 1120-RIC along with
all state and local tax returns where applicable. Prepare and file
Federal Excise Tax Return (Form 8613).
D. Maintain the books and records and accounting controls for the Fund's
assets, including records of all securities transactions.
E. Calculate each Portfolio's net asset value in accordance with the
Prospectus and (once the Portfolio meets eligibility requirements)
transmit to NASDAQ and to such other entities as directed by the Fund.
F. Account for dividends and interest received and distributions made
by the Fund.
G. Prepare Fund or Portfolio expense projections, establish accruals and
review on a periodic basis, including expenses based on a percentage of
Fund's average daily net assets (advisory and administrative fees) and
expenses based on actual charges annualized and accrued daily (audit
fees, registration fees, directors' fees, etc.).
H. Produce transaction data, financial reports and such other periodic and
special reports as the Board may reasonably request.
I. Liaison with the Fund's independent auditors.
J. Monitor and administer arrangements with the Fund's Custodian and
depository banks.
K. A listing of reports that will be available to the Fund is included
below.
II. Daily Reports
A. General Ledger Reports
1. Trial Balance Report
2. General Ledger Activity Report
B. Portfolio Reports
1. Portfolio Report
2. Cost Lot Report
3. Purchase Journal
4. Sell/Maturity Journal
5. Amortization/Accretion Report
6. Maturity Projection Report
C. Pricing Reports
1. Pricing Report
2. Pricing Report by Market Value
3. Pricing Variance by % Change
4. NAV Report
5. NAV Proof Report
6. Money Market Pricing Report
D. Accounts Receivable/Payable Reports
1. Accounts Receivable for Investments Report
2. Accounts Payable for Investments Report
3. Interest Accrual Report
4. Dividend Accrual Report
E. Other Reports
1. Dividend Computation Report
2. Cash Availability Report
3. Settlement Journal
IV. Monthly Reports
Standard Reports
1. Cost Proof Report
2. Transaction History Report
3. Realized Gain/Loss Report
4. Interest Record Report
5. Dividend Record Report
6. Broker Commission Totals
7. Broker Principal Trades
8. Shareholder Activity Report
9. Fund Performance Report
10.SEC Yield Calculation Work Sheet (fixed-income funds only)
<PAGE>
EXHIBIT C
to
Mutual Fund Services Agreement
Description of Transfer Agency Services
The following is a general description of the transfer agency services
Unified shall provide to the Fund.
A. Shareholder Recordkeeping. Maintain records showing for each Fund
shareholder the following: (i) name, address and tax identifying number;
(ii) number of shares of each Portfolio; (iii) historical information
including, but not limited to, dividends paid and date and price of all
transactions including individual purchases and redemptions; and (iv) any
dividend reinvestment order, application, dividend address and
correspondence relating to the current maintenance of the account.
B. Shareholder Issuance. Record the issuance of shares of each Portfolio.
Except as specifically agreed in writing between Unified and the Fund,
Unified shall have no obligation when countersigning and issuing and/or
crediting shares to take cognizance of any other laws relating to the issue
and sale of such shares except insofar as policies and procedures of the
Stock Transfer Association recognize such laws.
C. Purchase Orders. Process all orders for the purchase of shares of the Fund
in accordance with the Fund's current registration statement. Upon receipt
of any check or other payment for purchase of shares of the Fund from an
investor, Unified will (i) stamp the envelope with the date of receipt,
(ii) forthwith process the same for collection, (iii) determine the amounts
thereof due the Fund, and notify the Fund of such determination and
deposit, such notification to be given on a daily basis of the total
amounts determined and deposited to the Fund's custodian bank account
during such day. Unified shall then credit the share account of the
investor with the number of Portfolio shares to be purchased made on the
date such payment is received by Unified, as set forth in the Fund's
current prospectus and shall promptly mail a confirmation of said purchase
to the investor, all subject to any instructions which the Fund may give to
Unified with respect to the timing or manner of acceptance of orders for
shares relating to payments so received by it.
D. Redemption Orders. Receive and stamp with the date of receipt all requests
for redemptions or repurchase of shares held in certificate or
non-certificate form, and process redemptions and repurchase requests as
follows: (i) if such certificate or redemption request complies with the
applicable standards approved by the Fund, Unified shall on each business
day notify the Fund of the total number of shares presented and covered by
such requests received by Unified on such day; (ii) on or prior to the
seventh calendar day succeeding any such requests received by Unified,
Unified shall notify the Custodian, subject to instructions from the Fund,
to transfer monies to such account as designated by Unified for such
payment to the redeeming shareholder of the applicable redemption or
repurchase price; (iii) if any such certificate or request for redemption
or repurchase does not comply with applicable standards, Unified shall
promptly notify the investor of such fact, together with the reason
therefor, and shall effect such redemption at the Fund's price next
determined after receipt of documents complying with said standards, or, at
such other time as the Fund shall so direct.
E. Telephone Orders. Process redemptions, exchanges and transfers of Fund
shares upon telephone instructions from qualified shareholders in
accordance with the procedures set forth in the Fund's current Prospectus.
Unified shall be permitted to redeem, exchange and/or transfer Fund shares
from any account for which such services have been authorized.
F. Transfer of Shares. Upon receipt by Unified of documentation in proper form
to effect a transfer of shares, including in the case of shares for which
certificates have been issued the share certificates in proper form for
transfer, Unified will register such transfer on the Fund's shareholder
records maintained by Unified pursuant to instructions received from the
transferor, cancel the certificates representing such shares, if any, and
if so requested, countersign, register, issue and mail by first class mail
new certificates for the same or a smaller whole number of shares.
G. Shareholder Communications and Meetings. Address and mail all
communications by the Fund to its shareholders promptly following the
delivery by the Fund of the material to be mailed. Prepare shareholder
lists, mail and certify as to the mailing of proxy materials, receive the
tabulated proxy cards, render periodic reports to the Fund on the progress
of such tabulation, and provide the Fund with inspectors of election at any
meeting of shareholders.
H. Share Certificates. If the Fund issues certificates, and if a shareholder
of the Fund requests a certificate representing his shares, Unified as
Transfer Agent, will countersign and mail by first class mail with receipt
confirmed, a share certificate to the investor at his/her address as it
appears on the Fund's transfer hooks. Unified shall supply, at the expense
of the Fund, a supply of blank share certificates. The certificates shall
be properly signed, manually or by facsimile, as authorized by the Fund,
and shall bear the Fund's seal or facsimile; and notwithstanding the death,
resignation or removal of any officers of the Fund authorized to sign
certificates, Unified may, until otherwise directed by the Fund, continue
to countersign certificates which bear the manual or facsimile signature of
such officer.
I. Returned checks. In the event that any check or other order for the payment
of money is returned unpaid for any reason, Unified will take such steps,
including redepositing the check for collection or returning the check to
the investor, as Unified may, at its discretion, deem appropriate and
notify the Fund of such action, or as the Fund may instruct.
J. Shareholder Correspondence. Acknowledge all correspondence from
shareholders relating to their share accounts and undertake such other
shareholder correspondence as may from time to time be mutually agreed
upon.
<PAGE>
EXHIBIT D
to
MUTUAL FUND SERVICES AGREEMENT
TRANSFER AGENT SERVICES FEE SCHEDULE
The prices contained herein are effective for twelve months from the
execution date of this contract.
I Conversion Fee: Manual conversion/new fund establishment - fee not to
exceed $1,500 per portfolio. Electronic conversions - $2.00 per shareholder
account with a $5,000 minimum fee.
II Standard Base Fee for Standard Base Services
The Base Fee* is $18.00 for money market funds and $15.60 for equity/bond
funds per active Shareholder Account per year with a minimum fee of
$8,333.33 per portfolio/and or share class per year. An Active Shareholder
Account is any Shareholder Account existing on Transfer Agent's
computerized files with a non-zero Share balance. There is a $.40 per
account charge for any account with a zero share balance for the current
calendar year, as determined on the last day of each month.
*The Base Fee does not include: forms design and printing, statement
production, envelope design and printing, postage and handling, shipping,
statement microfiche copies and 800 number access to Unified's shareholder
services group.
Unified supports for an additional annual fee of $0.60 per shareholder
account per service: receivables accounting, 12b-1 fund reporting,
front-end sales load accounting, back-end sales load accounting, including
detailed dealer and representative load commission accounting and
reporting. Funds paying dividends more frequently than once per quarter
(generally, money market funds) are charged an additional $3.60 per month
per account.
Unified will provide lost account search services in connection of SEC
Rules 17Ad-17 and 17a-24 at a cost of $2.50 per account per account
searched. These "Electronic Data Search Services" will be performed on a
semi-annual basis. This service will apply to only Active Shareholder
Accounts maintained on the transfer agency system coded as RPO accounts.
In addition to the above fees, there will be a $500.00 minimum fee/rerun
charge when the nightly processing has be repeated due to incorrect NAV or
dividend information received from the Fund Accountant/Portfolio Pricing
Agent.
III Standard Base Transaction Fees
Fund/Serv processing charges are $0.25 per transaction in addition to
direct Fund/Serv charges that are passed through (See Section VI herein).
Minimum charge: $250.00 per month >
Networking processing charges are $0.24 per account for Matrix levels 1, 2
& 4 and $0.06 for Matrix level 3 in addition to direct Networking charges
that are passed through (See Section VI herein). Minimum charge:
$250.00 per month.
IV Standard Services Provided
-Opening new accounts
-Maintaining Shareholder accounts
Includes:
-Maintaining certificate records
-Changing addresses
-Daily reports on number of Shares, accounts
-Preparation of Shareholder federal tax information
-Withhold taxes on U.S. resident and non-resident alien accounts
-Reply to Shareholder calls and correspondence other than that for Fund
information and related inquiries
-Processing purchase of Shares
-Issuing/Canceling of certificates (Excessive use may be subject to
additional charges)
-Processing partial and complete redemptions
-Regular and legal transfer of accounts
-Mail processing of semi-annual and annual reports
-Processing dividends and distributions
-Prepare Shareholder meeting lists
-One proxy processing per year per fund. Tabulation is limited to three.
-Receiving and tabulating of proxies -Confirmation of all transactions as
provided by the terms of each Shareholder's account -Provide a system which
will enable Fund to monitor the total number of Shares sold in each
state. System has capability to halt sales and warn of potential oversell.
(Blue Sky Reports)
-Determination/Identification of lost Shareholder accounts
-1099 reporting
V Standard Reports Available
<PAGE>
-12b-1 Disbursement Report
-12b-1 Disbursement Summary
-Dealer Commission Report
-Dealer Commission Summary Report
-Exchange Activity Report
-Fees Paid Summary Report
-Fund Accrual Details
-Holdings by Account Type
-Posting Details
-Posting Summary
-Settlement Summary
-Tax Register
-Transactions Journal
<PAGE>
Unified Fund Services, Inc. 2/25/99 Industry Leaders Fund - 18
VI Additional Fees for Services Outside the Standard Base
<TABLE>
<S> <C>
- Interactive Voice Response System set-up pass through
-Archiving of old records/storage of aged records negotiable
-Off-line Shareholder research $25/hour (Billed to customer account)
-Check copies $3/each (Billed to customer account)
-Statement copies $5/each (Billed to customer account)
-Mutual Fund fulfillment/prospect file maintenance $1.00/item
-Shareholder communications charges (Faxes) pass through
-Leased line/equipment on TA's computer system pass through
-Dial-up access to TA's computer system pass through
-Labels .05 ea/$100 minimum
-Electronic filings of approved forms $75/transmission
-Monthly Director's Reports $25/mo/portfolio
-Direct Fund/Serv expenses Pass through
-Direct Networking expenses Pass through
-AD-HOC REPORTWRITER Report Generation $50.00 per report
-Bank Reconciliation Service $50.00 monthly maintenance fee per bank
account $1.50 per bank item
-Systems Programming Labor Charges:
System Support Representatives $100.00/hour
Programmers, Consultants or
Department Heads $125.00/hour
Officers $150.00/hour
-Additional Proxy Processing:
Each processing $225.00 fixed charge per processing
Preparation and Tabulation $0.145/proxy issued
(includes 3 tabulations, sixteen propositions)
Each Extra Tabulation $23.00 fixed charge per processing
$0.02 per proxy tabulated
</TABLE>
<PAGE>
FUND ACCOUNTING FEE SCHEDULE
The prices contained herein are effective for twelve months from the
execution date of the Fund Accounting contract.
Standard Fee
0.05% for the first $150 million in total fund assets;
0.04% from $150 million to $250 million in total fund assets;
0.03% over $250 million in total fund assets.
Out of Pocket Fees: Fees charged for outside pricing services and all
accompanying administrative expenditures.
Subject to a $20,000 annual minimum per portfolio (one share class)
plus $7,500 per additional share class.
Standard Services Provided
-Daily processing of Fund transactions
-Ability to specify and execute partial sales on FIFO, LIFO, high cost,
low cost and specifically identified lots
-"As-of" reporting, as far back as transactions are maintained
-Monitoring and communication to management and adviser(s) on cash
activity -General ledger processing -Calculations of Net Asset Value
-Calculations of Money Market Daily Dividend Factor
-Reporting of NAV to NASDAQ and Fund management
-Reporting of NAV to principal reporting services (Lipper, etc.)
-Daily portfolio valuation
-Estimation of semi-annual income and capital gain distributions
-Provide information to complete semi-annual and annual financial
statements and Director's reports
-Coordination with auditors
-Coordination and communication with investment advisers
-Payables processing
-Full bond accrual, accretion, amortization, including
variable rates
-Daily accrual and amortization of income and expense
-Full accounting for all securities transactions
-Complete audit trail
-Automated securities and income records
-Fiscal year-end processing
-Load funds processing
Standard Reports Provided
-Daily cash reports
-Daily portfolio valuations
-Daily Pricing Sheets
-Weekly accruals transactions listing
-Standard monthly Closing Packages
-Monthly general ledger activity report as requested
- Reports to assist in the preparation of semi-annual and annual
financial statements
-Dividend estimations worksheet
-Pre-approved audit schedules
-Broker commissions report for N-SAR filings
-Financial schedules for proxy statements and prospectuses
*Requests for Unified to provide standard reports with increased
frequency may be subject to additional service fees.
Optional Services Available - Initial (for desired services)
-Additional portfolio sub-adviser fee $10,000/portfolio
-Multiple custodian fee $5,000/fund group
-GNMA securities fee $2,500/portfolio
-Monthly dividend estimation fee $2,500/portfolio
-Quarterly financial statement preparation fee $5,000/portfolio
-Creation of semi-annual and annual reports $3,000/fund group
-Statistical reporting fee (ICI, Lipper, Donoghue, etc.) $100/report
-Quarterly tax and compliance checklist $4,000/portfolio
-Accrual calculations $2,500/fund group
-S.E.C. yield calculations $1,000/portfolio
-S.E.C. audit requirements pass through
-Processing of backup withholding $1,500/portfolio
Special Report Generation Fees
AD-HOC Report Generation $75.00 per report
Reruns $75.00 per run
Extract Tapes $110.00 plus
Systems Programming Labor Charges
System Support Representatives $100.00/hour
Programmers, Consultants or
Department Heads $125.00/hour
Officers $150.00/hour
De-Conversion Fees
De-Conversion fees will be subject to additional charges commensurate
with particular circumstances and dependent upon scope of problems.
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT dated as of January 20, 1999, between Industry Leaders Fund,
Inc. (the "Trust"), a Delaware business trust, and AmeriPrime Financial
Services, Inc. (the "Administrator"), a Texas corporation.
WHEREAS, the Trust has been organized to operate as an open-end
management investment company registered under the Investment Company Act of
1940 (the "Act"); and
WHEREAS, the Trust wishes to avail itself of the information, advice,
assistance and facilities of the Administrator to perform on behalf of the Trust
the services as hereinafter described; and
WHEREAS, the Administrator wishes to provide such services to the
Trust under the conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and the Administrator agree as follows:
1. Employment. The Trust, being duly authorized, hereby employs the
Administrator to perform those services described in this Agreement. The
Administrator shall perform the obligations thereof upon the terms and
conditions hereinafter set forth. Any administrative services undertaken by the
Administrator pursuant to this Agreement, as well as any other activities
undertaken by the Administrator on behalf of the Trust pursuant hereto, shall at
all times be subject to any directives of the Board of Trustees of the Trust.
2. Trust Administration. The Administrator shall give the Trust the
benefit of its best judgment, efforts and facilities in rendering its services
as administrator. The Administrator shall at all times conform to: (i) all
applicable provisions of the Act and any rules and regulations adopted
thereunder, (ii) the provisions of the Registration Statement of the Trust under
the Securities Act of 1933 and the Act as amended from time to time, (iii) the
provisions of the Agreement and Declaration of Trust and the By-Laws of the
Trust, and (iv) any other applicable provisions of state and federal law.
Subject to the direction and control of the Trust, the Administrator
shall supervise the Trust's business affairs not otherwise supervised by other
agents of the Trust. To the extent not otherwise the primary responsibility of,
or provided by, other parties under agreement with the Trust, the Administrator
shall supply (i) non-investment related statistical and research data, (ii)
internal regulatory compliance services, and (iii) executive and administrative
services. The Administrator shall supervise the preparation of (i) tax returns,
(ii) reports to shareholders of the Trust, (iii) reports to and filings with the
Securities and Exchange Commission, state securities commissions and Blue Sky
authorities including preliminary and definitive proxy materials and
post-effective amendments to the Trust's registration statement, and (iv)
necessary materials for meetings of the Trust's Board of Trustees. The
Administrator shall provide personnel to serve as officers of the Trust if so
elected by the Board of Trustees; provided, however, that the Trust shall
reimburse the Administrator for the expenses incurred by such personnel in
attending Board of Trustees' meetings and shareholders' meetings of the Trust.
Executive and administrative services include, but are not limited to, the
coordination of all third parties furnishing services to the Trust, review of
the books and records of the Trust maintained by such third parties, and the
review and submission to the officers of the Trust for their approval, of
invoices or other requests for payment of Trust expenses; and such other action
with respect to the Trust as may be necessary in the opinion of the
Administrator to perform its duties hereunder.
3. Record Keeping and Other Information. The Administrator shall
create and maintain all necessary records in accordance with all applicable
laws, rules and regulations, including but not limited to records required by
Section 31(a) of the Investment Company Act of 1940 and the rules thereunder, as
the same may be amended from time to time, pertaining to the various functions
performed by it and not otherwise created and maintained by another party
pursuant to contract with the Trust. Where applicable, such records shall be
maintained by the Administrator for the periods and in the places required by
Rule 31a-2 under the Investment Company Act of 1940.
4. Audit, Inspection and Visitation. The Administrator shall make
available to the Trust during regular business hours all records and other data
created and maintained pursuant to the foregoing provisions of this Agreement
for reasonable audit and inspection by the Trust or any regulatory agency having
authority over the Trust.
5. Compensation. For the performance of the Administrator's
obligations under this Agreement, each series of the Trust shall pay the
Administrator, on the first business day following the end of each month, a fee
as set out in the fee schedule attached hereto as Exhibit A. In addition, the
Trust shall reimburse the Administrator for out of pocket expenses incurred on
behalf of the Trust and for expenses related to Administrator personnel
attending Trust meetings. The Administrator shall not be required to reimburse
the Trust or the Trust's investment adviser for (or have deducted from its fees)
any expenses in excess of expense limitations imposed by certain state
securities commissions having jurisdiction over the Trust.
6. Limitation of Liability. Administrator may rely on information
reasonably believed by it to be accurate and reliable. Except as may otherwise
be required by the Act or the rules thereunder, neither Administrator nor its
shareholders, officers, directors, employees, agents, control persons or
affiliates of any thereof (collectively, the "Administrator's Employees") shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act or
omission in connection with or arising out of any services rendered under or
payments made pursuant to this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of the duties of
Administrator under this Agreement or by reason of reckless disregard by any of
such persons of the obligations and duties of Administrator under this
Agreement. Any person, even though also a director, officer, employee,
shareholder or agent of the Administrator, who may be or become an officer,
trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust (other than
services or business in connection with the Administrator's duties hereunder),
to be rendering such services to or acting solely for the Trust and not as a
director, officer, employee, shareholder or agent, or one under the control or
direction of the Administrator, even though paid by it.
7. Indemnification of Administrator. Subject to and except as
otherwise provided in the Securities Act of 1933, as amended, and the Act, the
Trust shall indemnify Administrator and each of Administrator's Employees
(hereinafter collectively referred to as a "Covered Person") against all
liabilities, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while serving as the administrator for the Trust or as one of
Administrator's Employees, or, thereafter, by reason of being or having been the
administrator for the Trust or one of Administrator's Employees, including but
not limited to liabilities arising due to any misrepresentation or misstatement
in the Trust's prospectus, other regulatory filings, and amendments thereto, or
in other documents originating from the Trust. In no case shall a Covered Person
be indemnified against any liability to which such Covered Person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties of such Covered Person.
8. Services for Others. Nothing in this Agreement shall prevent the
Administrator or any affiliated person of the Administrator from providing
services for any other person, firm or corporation, including other investment
companies; provided, however, that the Administrator expressly represents that
it will undertake no activities which, in its judgment, will adversely affect
the performance of its obligations to the Trust under this Agreement.
9. Compliance with the Act. The parties hereto acknowledge and agree
that nothing contained herein shall be construed to require the Administrator to
perform any services for any series of the Trust which services could cause the
Administrator to be deemed an "investment adviser" of the Series within the
meaning of Section 2(a)(20) of the Act or to supersede or contravene the
Prospectus or Statement of Additional Information of any series of the Trust or
any provisions of the Act and the rules thereunder.
10. Renewal and Termination. This Agreement shall become effective on
the date first above written and shall remain in force for a period of one (1)
year from such date, and thereafter shall be renewed automatically for
successive three year terms, unless written notice not to renew is given by the
non-renewing party to the other party at least sixty days prior to the
expiration of the current term. In the event of a material breach of this
Agreement by either party, the non-breaching party shall notify the breaching
party in writing of such breach and upon receipt of such notice , the breaching
party shall have 45 days to remedy the breach or the nonbreaching party may
immediately terminate this Agreement. This agreement shall be approved at least
annually by the vote of a majority of the Trustees who are not interested
persons of the Trust or the Administrator, cast in person at a meeting called
for the purpose of voting on such approval and by a vote of the Board of
Trustees or of a majority of the Trust's outstanding voting securities. Upon the
termination of this Agreement, the Trust shall pay the Administrator such
compensation as may be payable for the period prior to the effective date of
such termination.
11. The Trust. The term " Funds" means and refers to the Trustees from
time to time serving under the Trust's Agreement and Declaration of Trust as the
same may subsequently thereto have been, or subsequently hereto may be, amended.
It is expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agent or
employees of the Trust, personally, but bind only the trust property of the
Trust. The execution and delivery of this Agreement have been authorized by the
Trustees of the Trust and signed by an officer of the Trust, acting as such, and
neither such authorization by such Trustees nor such execution and delivery by
such officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the trust
property of the Trust.
12. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Such
notice shall be effective upon confirmed receipt by the other party. Until
further notice to the other party, it is agreed that the address of the Trust
for this purpose shall be 104 Summit Avenue, Box 80, Summit, New Jersey
07902-0080, and that the address of the Administrator for this purpose shall be
1793 Kingswood Dr. 3200, Southlake, TX 76092.
13. Year 2000. The Administrator covenants and agrees that it will use
commercially reasonable efforts to avoid a Year 2000 problem in its computer
systems, software or equipment owned, leased or licensed by it or its affiliates
which may interfere with the performance of this Agreement. Each of the Trust
and the Administrator agree to use reasonable commercial efforts to cooperate
and share information to further comply with this Section 13, and to minimize
the impact of any Year 2000 problem of either such party with respect to the
performance of this Agreement. Each of the Trust and the Administrator will
promptly inform the other party of any circumstance to which they have knowledge
indicating a possible obstacle to such compliance, and the steps being taken to
avoid or overcome such obstacle. For purposes of this paragraph, "Year 2000"
problem shall mean any problem relating to the Year 2000 date change that would
cause a computer system, software or equipment to fail to correctly perform,
process or accommodate data in a date range within the 20th and/or 21st
centuries. Any modifications which are necessary to remedy Year 2000 problem
defects in the Administrator's computer systems, software or equipment shall be
undertaken at its sole expense and shall not result in any additional charges to
the Trust.
14. Miscellaneous. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement constitutes the entire understanding between the parties
hereto relating to the subject matter hereof, superseding all negotiations,
prior discussions, preliminary agreements and agreements relating to the subject
matter hereof made prior to the date hereof. This Agreement shall be construed
and enforced in accordance with and governed by the laws of the State of
Delaware. The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. Except as otherwise specified
herein, the invalidity or unenforceability of any term or terms of this
Agreement shall not invalidate, make unenforceable or otherwise affect any other
term of this Agreement which shall remain in full force and effect. Every
contract, instrument, certificate or undertaking made or issued by the Trustees
or by any officers or officer shall give notice (a) that this document was
executed or made on behalf of the Trust or by them as Trustees or as officers
and not by them individually, and (b) that the obligations of such instrument
are not binding upon any of them or the Shareholders individually, but are
binding only upon the assets and property of the Trust. Omission of such notice
shall not operate to bind any Trustee, officer or Shareholder individually.
15. Execution and Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
Industry Leaders Fund, Inc.
By: /s/ Gerald P. Sullivan
Name: Gerald P. Sullivan
Title: President
AmeriPrime Financial Services, Inc.
By: /s/ Ken Trumpfheller
Name: Ken Trumpfheller
Title: President
<PAGE>
EXHIBIT A
ADMINISTRATIVE SERVICES AGREEMENT
Annual Fee Schedule*
Average Value of Daily Net Assets Annual Rate
Under $150 million 0.07%
From $150 million to $250 million 0.05%
Over $250 million 0.04%
* Subject to a minimum fee of $20,000 per portfolio (one share class)
plus $7,500 per additional share class. Fees will be billed on a
monthly basis.
WUERSCH & GERING LLP
11 Hanover Square, 21st Floor
New York, NY 10005
Tel: (212) 509-5050
Fax: (212) 509-9559
March 3, 1999
Industry Leaders Fund
104 Summit Ave
Summit, NJ 07901
Ladies and Gentlemen:
We have acted as counsel to the Industry Leaders Fund, a Delaware business trust
(the "Trust"), in connection with certain matters relating to the creation of
the Trust and the issuance of shares of beneficial interest in the Trust (the
"Shares"). Capitalized terms used herein and not herein defined are used as
defined in the Trust Instrument of the Trust dated January 20,1999 (the
"Governing Instrument").
In rendering this opinion, we have examined copies of the following documents,
each in the form provided to us: the Certificate of Trust of the Trust as filed
in the Office of the Secretary of State of the State of Delaware (the "State
Office") on December 13, 1995, (the "Certificate"); the Governing Instrument;
the By-laws of the Trust; the resolutions of the Trustees of the Trust prepared
for adoption at the Trustees' January 20, 1999 special meeting; the Trust's
Registration Statement under the Securities Act of 1933 on Form N-1A as filed
with the Securities and Exchange Commission (the "Commission") on September 4,
1998 (the "Registration Statement"); the Pre-Effective Amendment No. 1 to the
Registration Statement as filed with the Commission on December 4, 1998; the
Pre-Effective Amendment No. 2 to the Registration Statement contemplated to be
filed with the Commission on or about the date hereof; and a certification of
good standing of the Trust obtained as of a recent date from the State Office.
In such examinations, we have assumed the genuineness of all signatures, the
conformity to original documents of documents submitted to us as copies or
drafts of documents to be executed, and the legal capacity of natural persons to
complete the execution of documents. We have further assumed for purposes of
this opinion: (i) the due adoption, authorization, execution and delivery by, or
on behalf of, each of the parties thereto of the above-referenced resolutions,
instruments, certificates and other documents, and of all documents contemplated
by the Governing Instrument and applicable resolutions of the Trustees to be
executed by investors desiring to become Shareholders; (ii) the payment of
consideration for Trust Shares, and the application of such consideration, as
provided in the Governing Instrument, and compliance with the other terms,
conditions and restrictions set forth in the Governing Instrument and all
applicable resolutions of the Trustees in connection with the issuance of Trust
Shares (including, without limitation, the taking of all appropriate action by
the Trustees to designate Series and Classes of Trust Shares and the rights and
preferences attributable thereto as contemplated by the Governing Instrument);
(iii) that appropriate notation of the names and addresses of, the number of
Trust Shares held by, and the consideration paid by, Shareholders will be
maintained in the appropriate registers and other books and records of the Trust
in connection with the issuance or transfer of Trust Shares; (iv) that no event
has occurred subsequent to the filing of the Certificate that would cause a
termination or reorganization of the Trust under the Governing Instrument; (v)
that the Trust had or will become a registered investment company under the 1940
Act within 180 days following the first issuance of beneficial interests by the
Trust; (vi) that the activities of the Trust have been and will be conducted in
accordance with the terms of the Governing Instrument and the Delaware Business
Trust Act, 12 Del. C. ss.ss. 3801 et. seq.; and (vii) that each of the documents
examined by us is in full force and effect and has not been amended,
supplemented or otherwise modified except as herein referenced.
No opinion is expressed herein with respect to the requirements of, or
compliance with, federal or state securities laws including, without limitation,
the 1940 Act. Further, we express no opinion on the sufficiency or accuracy of
any registration or offering material relating to the Trust or the Trust Shares.
As to any fact material to our opinion, other than those assumed, we have relied
without independent investigation on the above referenced documents and on the
accuracy, as of the date hereof, of the matters therein contained.
Based on and subject to the foregoing, and limited in all respects to matters of
the Delaware Business Trusts Act, Title 12, ss. ss. 3801-3822 (the "Delaware
Business Trust Act"), and Delaware General Corporation Law (the "Delaware
General Corporation law" and collectively with the Delaware Business Trust Act,
the "laws of the State of Delaware"), it is our opinion that:
1. The Trust is a duly created and validly existing business trust in good
standing under the laws of the State of Delaware.
2. The Shares, as and when issued to Shareholders, in accordance with the terms,
conditions, requirements and procedures set forth in the Governing Instrument,
will constitute legally issued, fully paid and non-assessable shares of a
beneficial interest in the Trust.
3. Under the laws of the State of Delaware and the terms of the Governing
Instrument, subject to the limitation in the following paragraph, each
Shareholder of the Trust, in such capacity, will be entitled to the same
limitation of personal liability as that extended to stockholders of private
corporations for profit organized under the Delaware General Corporation Law;
provided, however, that we express no opinion with respect to the liability of
any Shareholder who is, was or may become a named Trustee of the Trust.
We note that, pursuant to the Management Agreement, dated January 20, 1999,
between the Trust and Claremont Investment Partners, L.L.C. ( the "Adviser") and
in further accordance with Section 2.06(b) of the Governing Instrument, the
Adviser has agreed to assume and pay for all expenses incurred in the operation
of the Trust except for obligations of the Trust under a plan adopted pursuant
to Rule 12b-1 under the 1940 Act (the "12b-1 Fee") and the management fee (the
"Management Fee"), each as set forth in the Trust's registration statement, as
amended from time-to-time and as filed and in effect with the Securities and
Exchange Commission. Notwithstanding the foregoing or the opinion expressed in
paragraph 2 above, while fees and charges other than the 12b-1 Fee and the
Management Fee are not currently contemplated to be assessed upon Shareholders,
the Trustees have reserved the power under Section 2.06(b) to cause
Shareholders, or Shareholders of a particular Series or Class, to pay the
liabilities of the Trust attributable to that Series or Class, and all expenses,
costs, charges, related obligations, setoffs and reserves attributable to that
Series or Class.
We hereby consent to the filing of a copy of this opinion with the Commission
together with a pre-effective amendment to the Registration Statement to be
filed on or about the date hereof. In addition, we hereby consent to the
reference of our firm as Counsel in such pre-effective amendment to the
Registration Statement on Form N-1A. In giving this consent, we do not thereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder. The opinion
set forth above is expressed solely for your benefit in connection with the
transactions contemplated hereby and may not be relied upon for any other
purpose or by any other person or entity without our prior written consent.
Very truly yours,
/s/ WUERSCH & GERING LLP
WUERSCH & GERING LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
Pre-effective Amendment No. 2 to the Registration Statement for the Industry
Leaders Fund of all references to our firm included in or made a part of this
Amendment.
McCurdy & Associates CPA's, Inc.
February 26, 1999
PURCHASE AGREEMENT
The Industry Leaders Fund, a Delaware business trust (the "Trust"), and
Claremont Investment Partners LLC ("Claremont") hereby agree as follows:
1. The Trust hereby offers and Claremont hereby purchases shares (the
"Original Shares") of each Class of the Trust as indicated on Exhibit A,
attached hereto. Claremont hereby acknowledges receipt of a purchase
confirmation reflecting the purchase of the Shares, and the Trust hereby
acknowledges receipt from Claremont in the amount of $100,000 in full payment
for the Original Shares.
2. Claremont represents and warrants to the Trust that the Original
Shares are being acquired for investment purposes and not with a view to the
distribution thereof.
IN WITNESS WHEREOF, the parties hereto have executed this agreement
this 24th day of November, 1998.
THE INDUSTRY LEADERS FUND
By:/s/ Gerald P. Sullivan
Name: Gerald P. Sullivan
Title: President
CLAREMONT INVESTMENT PARTNERS LLC
By:/s/ Gerald P. Sullivan
Name: Gerald P. Sullivan
Title: President
Attest:
/s/ Travis L. Gering
Name: Travis L. Gering, Esq.
Title: Fund Counsel
<PAGE>
Exhibit A
INDUSTRY LEADERS FUND
Claremont Investment Partners LLC Original Share Purchase
- ----------------------- ---------------------------------- ---------------------
Name of Class Number of Shares Price Per Share
- ----------------------- ---------------------------------- ---------------------
- ----------------------- ---------------------------------- ---------------------
Class D 5,000 $10.00
- ----------------------- ---------------------------------- ---------------------
- ----------------------- ---------------------------------- ---------------------
Class I 5,000 $10.00
- ----------------------- ---------------------------------- ---------------------
INDUSTRY LEADERS FUND(R)
RULE 12b-1
DISTRIBUTION PLAN
This distribution plan (the "Rule 12b-1 Distribution Plan" or the "Plan") has
been adopted by the sole shareholder of the Class D Shares of Industry Leaders
Fund(R) (referred to herein as the "Trust" and the "Fund"), a Delaware business
trust, on January 20, 1999, pursuant to Rule 12b-1 under the Investment Company
Act of 1940, as amended (the "1940 Act").
W H E R E A S:
The Trust is an open-end management investment company and is registered as such
under the 1940 Act. The Trust has a multi-class distribution system that allows
investors the option of purchasing (i) shares which have a Rule 12b-1
distribution fee (the "Class D Shares") and (ii) shares which do not have a Rule
12b-1 distribution fee (the "Class I Shares"). This Plan, however, governs only
the Class D Shares of the Trust. The Trust may, from time to time, distribute
shares of any class through a contractual arrangement (the "Distribution
Agreement") with one or more service providers or distributors (each, a "Plan
Distributor"). The Trust may change any Plan Distributor for any class of shares
from time to time. The Board of Trustees, including a majority of the Qualified
Trustees (as defined in paragraph 5 herein), has determined to adopt this Plan.
In voting to approve this Plan, the Trustees have concluded, in the exercise of
their reasonable business judgment and in light of their fiduciary duty, that
there is a reasonable likelihood that this Plan will benefit the Class D Shares
of the Fund.
NOW, THEREFORE, in consideration of the foregoing, the Trust hereby adopts this
Plan in accordance with Rule 12b-1 under the 1940 Act on the following terms and
conditions:
1. Distribution Fees
In connection with the distribution of Class D Shares, the Trust shall pay from
Class D Shares a distribution fee at the rate of one quarter of one percent
(0.25%) per annum of the average daily net assets of each such class of Shares
(collectively, the "Distribution Fee"). The Distribution Fee may be paid in
specified portions (each, an "Apportioned Allocation" as defined below) to such
Plan Distributors as the Trust by action of the Board of Trustees may from
time-to-time enter into agreement in the manner set forth herein. In the event
there is at any time more than one Plan Distributor, references herein to "Plan
Distributor" shall mean all such Plan Distributors to the extent of their
respective Apportioned Allocation. Payments under this Plan may be made only for
the Fund distribution purposes specified under Section 2 herein and no payments
may be made under this Plan, either directly or indirectly, to pay for, or to
reimburse, any costs or expenses of the Fund unrelated to Class D Shares
distribution. The Fund Adviser may act in the capacity of a Plan Distributor
provided that approval is obtained in the manner set forth in Section 5 below
and any and all Distribution Fees and/or Apportioned Allocation amounts paid
thereof to the Advisor are segregated, accounted for and expended only as
permitted herein.
2. Plan Expenditures
The amounts set forth in paragraph 1 of this Plan shall be paid for the Plan
Distributor's services and expenses in connection with the distribution of the
Class D Shares of the Trust, and may be spent by the Plan Distributor, in its
sole discretion, or as may be specified from time-to-time by the Trust pursuant
to special instructions included in a Distribution Agreement, on the following:
(a) Compensation to, and expenses (including overhead) of, a Plan
Distributor who engages in and/or supports distribution of Class D Shares;
(b) Printing of prospectuses and reports for other than existing
shareholders; advertising; preparation, printing and distribution of Class D
Shares sales literature;
(c) Payment of allowances to other broker-dealers, maintenance fees or
other payments to the Plan Distributor and to securities dealers and others who
are engaged in the sale of Class D Shares and who may be advising prospective
shareholders of the Trust regarding the purchase, sale or retention of Class D
Shares;
(d) Formulating and implementing of marketing and promotional
activities with respect to Class D Shares, including, but not limited to, direct
mail promotions and television, radio, newspaper, magazine and other mass media
advertising;
(e) Preparing, printing and distributing prospectuses and statements of
additional information and reports of the Trust with respect to Class D Shares
for recipients other than existing shareholders of the Trust; and
(f) Obtaining such information, analyses and reports with respect to
marketing and promotional activities of Class D Shares as the Trust may, from
time to time, deem advisable.
Notwithstanding the foregoing, the Trust shall only make payments out of Class D
Share net assets to the extent the nature of such incurred costs or expenses are
relevant to the distribution of Class D Shares and not with respect to the
distribution, sales or promotional activities of any other Class of the Trust,
such determination to be made on a quarterly basis by the Trust's Board of
Trustees.
The Trust is authorized to engage in the activities listed above, and in any
other activities related to the distribution of Class D Shares, either directly
or through other persons with which the Trust has entered into agreements
related to this Plan.
<PAGE>
3. Distribution Agreements
The Trust shall be subject to the following terms and conditions in respect of
each Distribution Agreement:
(I) The Plan Distributor in respect of such Distribution Agreement will
be deemed to have fully earned its Apportioned Allocation of the Distribution
Fee payable in respect of Class D Shares upon the sale and settlement of each
"Initial Issue Share" (as hereinafter defined) taken into account in determining
such Plan Distributor's Apportioned Allocation;
(II) Except as provided in (III) below, the Trust's obligation to pay
such Plan Distributor its Apportioned Allocation of the Distribution Fee payable
in respect of the Class D Shares shall be absolute and unconditional and shall
not be subject to dispute, offset, counterclaim or any defense whatsoever (it
being understood that such provision is not a waiver of the Trust's right to
pursue such Plan Distributor and enforce such claims against the assets of such
Plan Distributor other than its right to the specified Apportioned Allocation of
Distribution Fees in respect of the Class D Shares);
(III) The Trust's obligation to pay such Plan Distributor its
Apportioned Allocation of the Distribution Fee payable in respect of the Class D
Shares shall not be terminated or modified except to the extent required by a
change in the 1940 Act or the Rules of Conduct enacted or promulgated after the
date of adoption of this Plan (a "Change-in-Applicable-Law"), or in connection
with a "Complete Termination" (as hereinafter defined) of this Plan in respect
of the Class D Shares;
(IV) Except as provided in the Trust's Prospectus and statement of
additional information, until such Plan Distributor has been paid its
Apportioned Allocation of the Distribution Fees in respect of the Class D
Shares, the Trust will not adopt a plan of liquidation without the consent of
such Plan Distributor (or its assigns), which consent will not unreasonably
withheld; and
(V) Such Plan Distributor may sell and assign its rights to its
Apportioned Allocation of each of the Distribution Fees (but not such Plan
Distributor's obligations to the Trust under the Distribution Agreement) to
raise funds to make the expenditures related to the distribution of Class D
Shares and in connection therewith, upon receipt of notice of such sale and
assignment, the Trust shall pay to the purchaser or assignee such portion of the
Plan Distributor's Apportioned Allocation of the Distribution Fees in respect of
the Class D Shares so sold or assigned.
For purposes of this Plan, the term "Apportioned Allocation" means, in respect
of Distribution Fees payable in respect of the Class D Shares as applied to any
Plan Distributor, the portion of such Distribution Fees allocated to such Plan
Distributor, that shall be approved in the same manner as this Plan as
contemplated by Section 5 hereof and which shall be set forth in any
Distribution Agreement in respect of Class D Shares.
For purposes of this Plan, the term "Complete Termination" of this Plan means a
termination of this Plan involving the cessation of payments of Distribution
Fees hereunder in respect of Class D Shares and the cessation of payments of
distribution fees pursuant to every other rule 12b-1 plan of the Trust in
respect of such series for every future class of shares which, in the good faith
determination of the Board of Trustees of the Trust, has substantially similar
economic characteristics to the Class D Shares taking into account the total
sales charge, contingent deferred sales charge and other similar charges.
For purposes of this Plan, the term "Initial Issue Share" shall mean a Class D
share which is issued in connection with an ordinary sale of such Shares as
described in the Prospectus, and any such Class D Shares shall not cease to be
an Initial Issue Share prior to redemption.
4. Plan Approval
This Plan shall not take effect until it has been approved by a vote of at least
a majority (as defined in the 1940 Act) of the outstanding voting securities of
Class D Shares as of the date presented for vote to such class. With respect to
the submission of this Plan for such a vote, it shall have been effectively
approved with respect to Class D Shares if a majority of the then-outstanding
voting securities of Class D Shares votes for the approval of this Plan,
notwithstanding that: (a) this Plan has not been approved by shareholders
then-constituting a majority of the outstanding voting securities of Class D
Shares on any date after adoption of this Plan, or (b) the matter has not been
approved by a majority of then-holders of the outstanding voting securities of
Class D Shares of the Trust on any date after adoption of this Plan.
5. Plan Effectiveness
This Plan shall become effective with respect to the Class D Shares upon
approval, together with any other agreements referenced herein, by a majority
vote of both (i) the Board of Trustees and (ii) those Trustees who are not
"interested persons" of the Trust (as defined in the 1940 Act) and have no
direct or indirect financial interest in the operation of this Plan or any
agreements related to it (the "Qualified Trustees"), cast in person at a special
meeting specifically called for the purpose of voting on this Plan and such
related agreements.
6. Term of Plan
This Plan shall continue in effect for so long as such continuance is
specifically approved at least annually in the manner provided for approval of
this Plan in paragraph 5 herein.
<PAGE>
7. Plan Reports
In each year that this Plan remains in effect, any person authorized to direct
the disposition of monies paid or payable by the Trust pursuant to this Plan or
any related agreement shall prepare and furnish to the Board and the Board shall
review, at least quarterly, written reports, complying with the requirements of
Rule 12b-1 under the 1940 Act, of the amounts expended under this Plan and
purposes for which such expenditures were made.
8. Plan Termination
This Plan is severable from any other distribution plan of the Trust and may be
terminated at any time with respect to the Class D Shares, by (i) majority vote
of the Qualified Trustees or (ii) vote of a majority of the outstanding Class D
Shares. Unless terminated in the foregoing manner, this Plan shall remain in
effect even if a distribution plan of any other class or series of the Trust has
been terminated.
9. Plan Amendments
This Plan may not be amended in order to increase materially the amount of
distribution expenses provided for in paragraph 1 herein unless such amendment
is approved by a majority (as defined in the 1940 Act) of the outstanding voting
securities of Class D Shares and no material amendment to this Plan shall be
made unless approved in the manner provided in paragraph 5 herein.
10. Selection and Nomination of Independent Trustees
While this Plan shall be in effect, the selection and nomination of Trustees who
are not interested persons of the Trust (as defined in the 1940 Act) shall be
committed to the discretion of the Trustees then in office who are not
interested persons of the Trust.
11. Trust Record Retention Obligations
The Trust shall preserve copies of this Plan and any related agreements and all
reports made pursuant to paragraph 7 herein, for a period of not less than six
years from the date of this Plan, or the agreements or such report, as the case
may be, the first two years in an easily accessible place.
The Declaration of Trust of the Trust is on file with the Secretary of the State
of Delaware and notice is hereby given that this Plan is adopted on behalf of
the Trust, and not by the Trustees or officers of the Trust individually, and
the obligations of or arising out of this Plan are not binding upon the
Trustees, officers or shareholders of the Trust individually but are binding
only upon the assets and property of the Trust.
# # #
<PAGE>
IN WITNESS WHEREOF, the Trust has adopted this Plan, in accordance with the
terms and conditions of the 1940 Act and the Rules promulgated thereunder, of as
of the date set forth below.
Date: January 20, 1999
/s/ Gerald P. Sullivan
- -----------------------------
Name: Gerald P. Sullivan
Title: President
Attest: /s/ Travis L. Gering
Name: Travis L. Gering
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001010481
<NAME> INDUSTRY LEADERS FUND
<SERIES>
<NUMBER> 11
<NAME> INDUSTRY LEADERS FUND CLASS D
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> FEB-26-1999
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 100000
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 100000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 100000
<SHARES-COMMON-STOCK> 5000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 100000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
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<NET-CHANGE-FROM-OPS> 0
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<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5000
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<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 100000
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.00
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001010481
<NAME> INDUSTRY LEADERS FUND
<SERIES>
<NUMBER> 12
<NAME> INDUSTRY LEADERS FUND CLASS I
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> FEB-26-1999
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 100000
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 100000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 100000
<SHARES-COMMON-STOCK> 5000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 100000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 100000
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.93
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
INDUSTRY LEADERS FUND
RULE 18f-3 MULTI-CLASS PLAN
I. Introduction.
In accordance with Rule 18f-3 under the Investment Company Act of 1940 (the
"1940 Act"), the following Multiple Class Plan (the "Plan") specifies the
differences among each individual class of shares of the series of investment
funds of the Industry Leaders Fund (the "Trust") and sets forth the separate
arrangements for allocating expenses among each class of shares that may be
issued under the Trust's multiple class distribution system.
The Trust is an open-end series investment company registered under the 1940 Act
and its shares are registered under the Securities Act of 1933. The Trust
currently offers one series and has provided for offering additional series in
the future (each, a "Series").
As of the date hereof, the Trust hereby elects to offer multiple classes of
shares in each of its Series pursuant to the provisions of Rule 18f-3 and this
Plan. Each share in a Series will represent an equal pro rata interest in the
underlying assets of the respective Series.
II. General.
The Trust reserves the right to increase, decrease or waive the front-end sales
charge (the "Load") and any contingent redemption charge ("CRC") imposed on any
existing or future classes of shares within the ranges permissible under
applicable rules and regulations of the Securities and Exchange Commission (the
"SEC"), and the rules of the National Association of Securities Dealers, Inc.
(the "NASD"), as such rules and regulations may be amended, modified or adopted
from time to time. As described more fully herein, the Trust currently intends
to issue Class D Shares and Class I Shares of each of its Series. The Trust may
in the future alter the terms of existing classes or create new classes, and may
increase or waive shareholder account fees with respect to any and all
individual accounts in each of its Series, in each case in compliance with
applicable rules and regulations of the SEC and the NASD.
III. Allocation of Expenses.
Pursuant to Rule 18f-3 under the 1940 Act, the Trust shall allocate to each
class of shares in a Series (i) any fees and expenses incurred by the Trust in
connection with the distribution of such class of shares under a distribution
plan adopted for such class of shares pursuant to Rule 12b-1 under the 1940 Act,
and (ii) any fees and expenses incurred by the Trust under a shareholder
servicing plan in connection with the provision of shareholder services to the
holders of such class of shares. In addition, pursuant to Rule 18f-3, the Trust
may allocate the following fees and expenses to a particular class of shares (to
the extent such expenses actually vary among each class of shares or vary by
types of services provided to each class of shares) in any Series:
(i) transfer agent fees identified by the transfer agent as being
attributable to such class of shares;
(ii) printing and postage expenses related to preparing and
distributing materials such as shareholder reports, prospectuses, reports, and
proxies to current shareholders of such class of shares or to regulatory
agencies with respect to such class of shares;
(iii) blue sky and SEC registration or qualification fees incurred by
such class of shares;
(iv) the expenses of administrative personnel and services as required
to support the shareholders of such class of shares;
(v) litigation or other legal expenses relating solely to such class of
shares;
(vi) Trustees' fees incurred as a result of issues relating to such
class of shares; and
(vii) other expenses that are subsequently identified and determined to
be properly allocated to such class of shares.
IV. Class Arrangements.
The following summarizes features of each class of shares for each Series.
Additional details regarding such fees and services are set forth in the Trust's
current Prospectus.
1. Class D Shares
For each Series:
a. Maximum Sales Charge: None.
b. Contingent Redemption Charges: 0.75% if redeemed prior to six months
after the date of purchase.
c. Rule 12b-1 Fees: 0.25%.
d. Shareholder Services Fee: None.
e. Exchange Privileges: None.
f. Maximum Annual Shareholder Account Fee: None.
<PAGE>
2. Class I Shares
For each Series:
a. Maximum Sales Charge: None
b. Contingent Early Redemption Charges: None.
c. Rule 12b-1 Fees: None.
d. Shareholder Services Fee: None.
e. Exchange Privileges: None.
f. Maximum Annual Shareholder Account Fee: None.
V. Net Asset Value.
Under the Plan, all expenses incurred by the Trust will continue to be allocated
among the various classes of shares based upon the net assets of the Trust
attributable to each class, except that shares of a particular class will
continue to bear the class expenses incurred by such class. Consequently, the
net income of, and the dividends payable with respect to, each particular class
would generally differ from the net income of, and the dividends payable with
respect to, the other classes of shares of a particular Series. Therefore, the
net asset value per share of the classes will differ at times. Expenses of a
Series allocated to a class of shares will continue to be borne on a pro rata
basis by each outstanding share of that class.
VIII. Compensation for Distributors.
As described more fully in the Trust's Prospectus, various persons who assist
and/or arrange for the sale of shares of any Series through differing
distribution channels may be compensated differently depending on the class of
shares an investor chooses.
IX. Conflicts of Interest.
The Trust does not believe that the implementation of the Plan will give rise to
any conflicts of interest. The Board of Trustees will continue to monitor, on an
ongoing basis, the Trust for the existence of any material conflicts among the
interests of the holders of the various classes of shares and will take any
action reasonably necessary to eliminate any such conflicts that may develop.
The Trust also believes that the interests of the various classes of shares as
to the investment advisory fees of the Trust are the same and not in conflict.
These fees are used to compensate the Trust's investment adviser for providing
investment advisory services that are common to all investors, regardless of the
class of shares.
<PAGE>
X. Board Review.
The Board of Trustees of the Trust shall review this Plan as frequently as it
deems necessary. Prior to any material amendment(s) to this Plan, the Trust's
Board of Trustees, including a majority of the Trustees that are not "interested
persons" of the Trust, as defined in the Act, shall find that the Plan, as
proposed to be amended (including any proposed amendments to the method of
allocating class and/or Trust expenses), is in the best interest of each class
of shares of any Series individually and the Trust as a whole. In considering
whether to approve any proposed amendment(s) to the Plan, the Trustees shall
request and evaluate such information as they consider reasonably necessary to
evaluate the proposed amendment(s) to the Plan. Such information shall address,
among other issues, the issue of whether any waivers or reimbursements of
advisory or administrative fees could be considered a cross-subsidization of one
class by another.
In making its initial determination to approve this Plan, the Board has focused
on, among other things, the relationship between or among the classes and has
examined potential conflicts of interest among classes (including those
potentially involving a cross-subsidization between classes) regarding the
allocation of fees, services, waivers and reimbursements of expenses, and voting
rights. The Board has evaluated the level of services provided to each class and
the cost of those services to ensure that the services are appropriate and the
allocation of expenses is reasonable. In approving any subsequent amendments to
this Plan, the Board shall focus on and evaluate such factors as well as any
others deemed necessary by the Board.
# # #
<PAGE>
This Plan is hereby approved by a majority of the Trustees of the Trust,
including a majority of the Trustees who are not "interested persons" (as
defined in the Act) of the Trust (all Trustees collectively, the "Trustees").
The Trustees have concluded that this Plan, including the expense allocation, is
in the best interests of each class individually and the Trust as a whole. The
Trustees have made this determination after requesting and evaluating such
information as reasonably necessary to evaluate this Plan.
This Plan is intended to conform to Rule 18f-3 and Rule 6c-10 under the 1940 Act
and any inconsistencies shall be read to conform with such Rules.
IN WITNESS WHEREOF, the Trust has adopted this Plan as of the date set forth
below.
Date: January 20, 1999
Attest:____________
Name:
/s/ Gerald P. Sullivan
Name: Gerald P. Sullivan
Title: President
/s/ Travis L. Gering
Name: Travis L. Gering
Title: Secretary
POWER OF ATTORNEY
The undersigned trustee of the Industry Leaders Fund, a Delaware trust (the
"Trust"), does hereby constitute and appoint Mark S. Kaufmann, Barry F.
Sullivan, Gerald P. Sullivan and Travis L. Gering, each of them acting singly,
with full powers of substitution and resubstitution, for him in his name, place
and stead, in any and all capacities, to be my true, sufficient and lawful
attorneys-in-fact, with full power to each of them, to sign for me, in my name
and in my capacity as Trustee of the Trust, the Registration Statements on Form
N-1A (the "Registration Statement") filed by the Trust under the Investment
Company Act of 1940, as amended (the "1940 Act"), the Securities Act of 1933, as
amended (the "1933 Act"), and any and all pre-effective and post-effective
amendments to the Registration Statement and any and all other documents,
exhibits and papers relating thereto, including such additional or supplemental
filings required pursuant thereto or required in connection therewith, and
generally to do all such things in my name and on my behalf in the capacities
indicated below to enable the Trust to comply with the 1940 Act and the 1933 Act
(where applicable) and all requirements of the Securities and Exchange
Commission thereunder, hereby ratifying, confirming and approving my signature
as it may be signed by said attorneys-in-fact or his substitute or substitutes.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument on this 20th
day of January, 1999.
/s/ Mark S. Kaufmann
- --------------------------------------------------------------------
Mark S. Kaufmann
Trustee
<PAGE>
POWER OF ATTORNEY
The undersigned trustee of the Industry Leaders Fund, a Delaware trust (the
"Trust"), does hereby constitute and appoint Mark S. Kaufmann, Barry F.
Sullivan, Gerald P. Sullivan and Travis L. Gering, each of them acting singly,
with full powers of substitution and resubstitution, for him in his name, place
and stead, in any and all capacities, to be my true, sufficient and lawful
attorneys-in-fact, with full power to each of them, to sign for me, in my name
and in my capacity as Trustee of the Trust, the Registration Statements on Form
N-1A (the "Registration Statement") filed by the Trust under the Investment
Company Act of 1940, as amended (the "1940 Act"), the Securities Act of 1933, as
amended (the "1933 Act"), and any and all pre-effective and post-effective
amendments to the Registration Statement and any and all other documents,
exhibits and papers relating thereto, including such additional or supplemental
filings required pursuant thereto or required in connection therewith, and
generally to do all such things in my name and on my behalf in the capacities
indicated below to enable the Trust to comply with the 1940 Act and the 1933 Act
(where applicable) and all requirements of the Securities and Exchange
Commission thereunder, hereby ratifying, confirming and approving my signature
as it may be signed by said attorneys-in-fact or his substitute or substitutes.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument on this 20th
day of January, 1999.
/s/ Barry F. Sullivan
- --------------------------------------------------------------------
Barry F. Sullivan
Trustee
<PAGE>
POWER OF ATTORNEY
The undersigned trustee of the Industry Leaders Fund, a Delaware trust (the
"Trust"), does hereby constitute and appoint Mark S. Kaufmann, Barry F.
Sullivan, Gerald P. Sullivan and Travis L. Gering, each of them acting singly,
with full powers of substitution and resubstitution, for him in his name, place
and stead, in any and all capacities, to be my true, sufficient and lawful
attorneys-in-fact, with full power to each of them, to sign for me, in my name
and in my capacity as Trustee of the Trust, the Registration Statements on Form
N-1A (the "Registration Statement") filed by the Trust under the Investment
Company Act of 1940, as amended (the "1940 Act"), the Securities Act of 1933, as
amended (the "1933 Act"), and any and all pre-effective and post-effective
amendments to the Registration Statement and any and all other documents,
exhibits and papers relating thereto, including such additional or supplemental
filings required pursuant thereto or required in connection therewith, and
generally to do all such things in my name and on my behalf in the capacities
indicated below to enable the Trust to comply with the 1940 Act and the 1933 Act
(where applicable) and all requirements of the Securities and Exchange
Commission thereunder, hereby ratifying, confirming and approving my signature
as it may be signed by said attorneys-in-fact or his substitute or substitutes.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument on this 20th
day of January, 1999.
/s/ Seth H. Dubin
- --------------------------------------------------------------------
Seth H. Dubin
Trustee
<PAGE>
POWER OF ATTORNEY
The undersigned trustee of the Industry Leaders Fund, a Delaware trust (the
"Trust"), does hereby constitute and appoint Mark S. Kaufmann, Barry F.
Sullivan, Gerald P. Sullivan and Travis L. Gering, each of them acting singly,
with full powers of substitution and resubstitution, for him in his name, place
and stead, in any and all capacities, to be my true, sufficient and lawful
attorneys-in-fact, with full power to each of them, to sign for me, in my name
and in my capacity as Trustee of the Trust, the Registration Statements on Form
N-1A (the "Registration Statement") filed by the Trust under the Investment
Company Act of 1940, as amended (the "1940 Act"), the Securities Act of 1933, as
amended (the "1933 Act"), and any and all pre-effective and post-effective
amendments to the Registration Statement and any and all other documents,
exhibits and papers relating thereto, including such additional or supplemental
filings required pursuant thereto or required in connection therewith, and
generally to do all such things in my name and on my behalf in the capacities
indicated below to enable the Trust to comply with the 1940 Act and the 1933 Act
(where applicable) and all requirements of the Securities and Exchange
Commission thereunder, hereby ratifying, confirming and approving my signature
as it may be signed by said attorneys-in-fact or his substitute or substitutes.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument on this 20th
day of January, 1999.
/s/ Gerald P. Sullivan
- --------------------------------------------------------------------
Gerald P. Sullivan
Trustee
<PAGE>
POWER OF ATTORNEY
The undersigned trustee of the Industry Leaders Fund, a Delaware trust (the
"Trust"), does hereby constitute and appoint Mark S. Kaufmann, Barry F.
Sullivan, Gerald P. Sullivan and Travis L. Gering, each of them acting singly,
with full powers of substitution and resubstitution, for him in his name, place
and stead, in any and all capacities, to be my true, sufficient and lawful
attorneys-in-fact, with full power to each of them, to sign for me, in my name
and in my capacity as Trustee of the Trust, the Registration Statements on Form
N-1A (the "Registration Statement") filed by the Trust under the Investment
Company Act of 1940, as amended (the "1940 Act"), the Securities Act of 1933, as
amended (the "1933 Act"), and any and all pre-effective and post-effective
amendments to the Registration Statement and any and all other documents,
exhibits and papers relating thereto, including such additional or supplemental
filings required pursuant thereto or required in connection therewith, and
generally to do all such things in my name and on my behalf in the capacities
indicated below to enable the Trust to comply with the 1940 Act and the 1933 Act
(where applicable) and all requirements of the Securities and Exchange
Commission thereunder, hereby ratifying, confirming and approving my signature
as it may be signed by said attorneys-in-fact or his substitute or substitutes.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument on this 20th
day of January, 1999.
/s/ Robert M. Lichten
- --------------------------------------------------------------------
Robert M. Lichten
Trustee
<PAGE>
POWER OF ATTORNEY
The undersigned trustee of the Industry Leaders Fund, a Delaware trust (the
"Trust"), does hereby constitute and appoint Mark S. Kaufmann, Barry F.
Sullivan, Gerald P. Sullivan and Travis L. Gering, each of them acting singly,
with full powers of substitution and resubstitution, for him in his name, place
and stead, in any and all capacities, to be my true, sufficient and lawful
attorneys-in-fact, with full power to each of them, to sign for me, in my name
and in my capacity as Trustee of the Trust, the Registration Statements on Form
N-1A (the "Registration Statement") filed by the Trust under the Investment
Company Act of 1940, as amended (the "1940 Act"), the Securities Act of 1933, as
amended (the "1933 Act"), and any and all pre-effective and post-effective
amendments to the Registration Statement and any and all other documents,
exhibits and papers relating thereto, including such additional or supplemental
filings required pursuant thereto or required in connection therewith, and
generally to do all such things in my name and on my behalf in the capacities
indicated below to enable the Trust to comply with the 1940 Act and the 1933 Act
(where applicable) and all requirements of the Securities and Exchange
Commission thereunder, hereby ratifying, confirming and approving my signature
as it may be signed by said attorneys-in-fact or his substitute or substitutes.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument on this 20th
day of January, 1999.
/s/ Fred B. Tartar
- --------------------------------------------------------------------
Fred B. Tartar
Trustee
<PAGE>
POWER OF ATTORNEY
The undersigned trustee of the Industry Leaders Fund, a Delaware trust (the
"Trust"), does hereby constitute and appoint Mark S. Kaufmann, Barry F.
Sullivan, Gerald P. Sullivan and Travis L. Gering, each of them acting singly,
with full powers of substitution and resubstitution, for him in his name, place
and stead, in any and all capacities, to be my true, sufficient and lawful
attorneys-in-fact, with full power to each of them, to sign for me, in my name
and in my capacity as Trustee of the Trust, the Registration Statements on Form
N-1A (the "Registration Statement") filed by the Trust under the Investment
Company Act of 1940, as amended (the "1940 Act"), the Securities Act of 1933, as
amended (the "1933 Act"), and any and all pre-effective and post-effective
amendments to the Registration Statement and any and all other documents,
exhibits and papers relating thereto, including such additional or supplemental
filings required pursuant thereto or required in connection therewith, and
generally to do all such things in my name and on my behalf in the capacities
indicated below to enable the Trust to comply with the 1940 Act and the 1933 Act
(where applicable) and all requirements of the Securities and Exchange
Commission thereunder, hereby ratifying, confirming and approving my signature
as it may be signed by said attorneys-in-fact or his substitute or substitutes.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument on this 20th
day of January, 1999.
/s/ Thomas J. Volpe
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Thomas J. Volpe
Trustee
