As filed with the Securities and Exchange Commission on January 30, 1997
Securities Act Registration No. 333 - 02111
Investment Company Registration No. 811 - 7581
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ___ |_|
Post-Effective Amendment No. 2 |X|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 4 |X|
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MEYERS INVESTMENT TRUST
(formerly Meyers Sheppard Investment Trust)
(a Delaware Business Trust)
(Exact Name of Registrant as Specified in Charter)
8901 Wilshire Boulevard
Beverly Hills, California 90211
(Address of Principal Executive Offices)
(310) 657-9393
(Registrant's Telephone Number, including Area Code)
Shelly J. Meyers
8901 Wilshire Boulevard
Beverly Hills, California 90211
(Name and Address of Agent for Service)
With Copies to:
John M. Woodbury, Jr., Esq. Beth R. Kramer, Esq.
Pollet & Woodbury Mayer Brown & Platt
10900 Wilshire Boulevard, Suite 500 1675 Broadway, Suite 1900
Los Angeles, California 90024 New York, New York 10019
Approximate date of proposed public offering:
It is proposed that this filing will become effective (check appropriate box)
|X| immediately upon filing pursuant to paragraph (b)
|_| on ________________________ (date) pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)(1)
|_| on _______________________ (date) pursuant to paragraph (a)(1)
|_| 75 days after filing pursuant to paragraph (a)(2)
|_| on _______________________ (date) pursuant to paragraph (a)(2) of Rule 485
<PAGE>
The Registrant has previously registered an indefinite number of its Shares of
Beneficial Interest (par value $0.00001 per share) under the Securities Act of
1933, as amended, pursuant to Rule 24f-2(a)(1) under the Investment Company Act
of 1940, as amended. The Registrant expects to file a Rule 24f-2 notice with
respect to the Meyers Pride Value Fund for its fiscal year ended May 31, 1997 on
or before July 31, 1997.
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MEYERS PRIDE VALUE FUND
(formerly the Meyers Sheppard Pride Fund)
Cross Reference Sheet
Pursuant to Rule 495
PART A DESCRIPTION OF ITEM LOCATION IN PROSPECTUS
- ------ ------------------- ----------------------
Item 1 Cover Page...................... Front Cover Page
Item 2. Synopsis........................ Prospectus Summary; Expense Summary
Item 3. Condensed Financial Information. Financial Highlights
Item 4. General Description of Front Cover Page; Prospectus
Registrant...................... Summary; Investment And Social
................................ Objectives and Policies
Item 5. Management of the Fund.......... Prospectus Summary; Management And
................................ Service Providers; Inside Back Cover
Page; Other Information Concerning
Shares of the Fund
Item 5A. Management's Discussion of Fund
Performance..................... Not Applicable
Item 6. Capital Stock and Other Other Information Concerning Shares
Securities...................... of the Fund; Tax Matters
Item 7. Purchase of Securities Being Purchases and Redemptions of Shares;
Offered......................... Other Information Concerning Shares
of the Fund
Item 8. Redemption or Repurchase........ Purchases and Redemptions of Shares
Item 9. Pending Legal Proceedings....... Not Applicable
LOCATION IN STATEMENT OF
PART B DESCRIPTION OF ITEM ADDITIONAL INFORMATION
-------------------------------- ------------------------
Item 10. Cover Page...................... Front Cover Page
Item 11. Table of Contents............... Front Cover Page
Item 12. General Information and History. The Fund
Item 13. Investment Objectives and Investment And Social Objectives,
Policies........................ Policies And Restrictions
Item 14. Management of the Fund.......... Management Of And Service Providers
For The Trust And The Fund
Item 15. Control Persons and Principal Management Of And Service Providers
Holders of Securities........... For The Trust And The Fund
Item 16. Investment Advisory and Other Management Of And Service Providers
Services........................ For The Trust And The Fund;
Independent Auditors
Item 17. Brokerage Allocation and Other
Practices....................... Fund Transactions and Brokerage
................................ Commissions
Item 18. Capital Stock and Other Description of Shares, Voting Rights
Securities...................... and Liabilities
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Item 19. Purchase, Redemption and Pricing Determination of Net Asset Value;
of Securities Being Offered..... Valuation of Fund Securities
Item 20. Tax Status...................... Taxation
Item 21. Underwriter..................... Management Of And Service Providers
................................ For The Trust And The Fund
Item 22. Calculation of Performance Data. Performance Information
Item 23. Financial Statements............ Financial Statements
PART C
Information required to be included in Part C is set forth under the
appropriately numbered item in Part C of this Registration Statement.
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<PAGE>
PROSPECTUS DATED JANUARY 30, 1997
MEYERS PRIDE VALUE FUND
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The Meyers Pride Value Fund (the "Fund") is organized as a separate series of
the Meyers Investment Trust (the "Trust"), a business trust organized under the
laws of the State of Delaware. The Fund was formerly known as the Meyers
Sheppard Pride Fund, and the Trust was formerly known as the Meyers Sheppard
Investment Trust.
The Fund is an open-ended no-load diversified mutual fund whose overall
investment objective is to attain long-term capital appreciation through
investing in a diversified portfolio of equity securities of under-valued but
nevertheless fundamentally sound companies identified as generally having
progressive policies towards gays and lesbians. See "Investment And Social
Objectives And Policies" herein. There can be no assurance that the Fund will
achieve its investment objective.
The Investment Manager for the Fund is Meyers Capital Management, LLC, a
California limited liability company. The Distributor and Administrator for the
Fund is BISYS Fund Services Limited Partnership, an Ohio limited partnership.
BISYS Fund Services, Inc., a Delaware corporation, is the Accounting Agent and
Transfer Agent of the Fund. The Custodian of the Fund is Wells Fargo Bank, N.A.
------------------
This Prospectus sets forth concisely the information concerning the Fund that a
prospective investor should know before investing. Investors should read this
Prospectus and retain it for future reference.
The Fund has filed with the Securities and Exchange Commission a Statement of
Additional Information, dated January 30, 1997, which contains more detailed
information about the Fund and the Trust and is incorporated into this
Prospectus by reference. An investor may obtain a copy of the Statement of
Additional Information without charge by contacting the Distributor of the Fund
(see the section of this Prospectus captioned "Purchases and Redemptions of
Shares" for address).
------------------
Shares of the Fund are not deposits or obligations of, or guaranteed by, any
bank or other depository institution, and the shares are not insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
federal, state or other governmental agency.
------------------
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
Page
Prospectus Summary......................................................... 4
Expense Summary............................................................ 7
Financial Highlights....................................................... 9
Investment And Social Objectives And Policies.............................. 10
Risk Factors............................................................... 14
Management And Service Providers........................................... 16
Purchases And Redemptions Of Shares........................................ 20
Tax Matters................................................................ 25
Other Information Concerning Shares Of The Fund............................ 26
Performance Information.................................................... 28
3
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PROSPECTUS SUMMARY
What is the Fund?
The Meyers Pride Value Fund (the "Fund") is organized as a separate series of
the Meyers Investment Trust (the "Trust"), a business trust organized under the
laws of the State of Delaware on March 25, 1996. The Fund is an open-ended
no-load diversified management investment company whose overall investment
objective is to attain long-term capital appreciation through investing in a
diversified portfolio of equity securities of under-valued but nevertheless
fundamentally sound companies identified by the Investment Manager as generally
having progressive policies towards gays and lesbians, but at a minimum having
in place specifically stated policies against discrimination in hiring and
promotion based upon sexual orientation. See "Investment And Social Objectives
And Policies" herein.
The Fund is the first series to be established under the Trust. As a diversified
fund, the Fund is required, by the Investment Company Act of 1940, as amended
(the "Investment Company Act"), with respect to 75% of its assets, to invest no
more than 5% of its assets in the securities of any one issuer, and not more
than 10% of the outstanding voting securities of an issuer may be owned.
The Fund was formerly known as the Meyers Sheppard Pride Fund, and the Trust was
formerly known as the Meyers Sheppard Investment Trust.
The Fund's investment and social objectives and policies, including the
identification of companies which have progressive policies towards gays and
lesbians, are determined by the Investment Manager of the Fund, subject to the
Board of Trustees providing broad supervision over the affairs of both the Fund
and the Trust. The determination of which companies have progressive policies
toward gays and lesbians is generally based upon criteria determined from
time-to-time by the Investment Manager and approved by the Board of Trustees.
The Investment Manager has, to date, identified over 325 publicly-traded
companies meeting this criteria, most of which are listed on the Standard &
Poor's 500 Composite Stock Price Index (the "S&P 500"). For further information
about the Board of Trustees, see "Management And Service Providers" herein. A
majority of the Board of Trustees are not affiliated with the Investment
Manager.
Who is the Fund's Investment Manager?
The Investment Manager of the Fund, Meyers Capital Management, LLC, a California
limited liability company ("Meyers Capital Management"), serves as the Fund's
manager and investment adviser pursuant to an Investment Management Agreement.
The Investment Manager generally supervises (subject to the overall authority of
the Board of Trustees and officers of the Trust) the overall administration of
the Fund, including its various agents and service providers, including those
providing distribution, fund accounting, dividend disbursement, transfer agent
and custodian services. The Investment Manager also manages the investments of
the Fund on a day to day basis in accordance with the Fund's investment and
social objectives and policies, and determines the composition of the securities
in which the Fund may invest (i.e., those companies identified as having
anti-discrimination policies in place and demonstrating other progressive
policies towards gays and lesbians). For its management and investment advisory
services, the Investment Manager receives from the Fund a monthly fee equal, on
an annual basis, to 1% of the Fund's average daily net assets. See "Management
And Service Providers" herein.
How do you Purchase and Redeem Shares of the Fund?
Shares of the Fund are sold continuously by the Distributor of the Fund, BISYS
Fund Services Limited Partnership ("BISYS LP"), at the next determined net asset
value per share. The minimum initial investment in the Fund is $1,000, and
subsequent investments are $100. A lower initial investment of $250 is permitted
for Automatic Investment Plans, with subsequent investments allowed at a minimum
of $50.
4
<PAGE>
The Trust, on behalf of the Fund, has adopted a Distribution Plan which permits
reimbursement of certain expenses incurred by the Distributor in connection with
the distribution of shares of the Fund, up to a maximum of 0.25% of net asset
value annually. See "Management And Service Providers" and "Plan Of
Distribution," herein.
The Fund offers to redeem shares of the Fund from its shareholders at any time
at next determined net asset value per share. The redemption price may be more
or less than the purchase price.
No sales load is charged with respect to either the purchase or redemption of
Fund shares. An investor should contact the Distributor regarding any further
information describing the procedures under which Fund shares may be purchased
and redeemed. See "Purchases And Redemptions" herein.
When does the Fund Pay Dividends and Make Distributions?
The Fund will distribute substantially all of its net investment income and
capital gains annually, generally in December. Dividends or distributions
declared in December but actually paid the following January will be includable
in an investor's income as of the record date (usually in December) of such
dividends or distributions.
See "Taxation" herein.
Administrative Services
BISYS LP is also the Administrator of the Fund. In its capacity as the Fund's
Administrator, BISYS LP provides certain administrative and managerial support
services to the Fund, in consideration of which BISYS LP is paid an
administration fee per year equal to 0.15% of the first $100 million in
aggregate Fund assets, 0.10% for the next $400 million, 0.07% for the next $500
million, and 0.06% for aggregate Fund assets in excess of $1 billion.
BISYS Fund Services, Inc., a Delaware corporation ("BYSIS Inc."), is the Fund
Accounting Agent and Transfer Agent of the Fund. As Fund Accounting Agent, BISYS
Inc. calculates the Fund's net asset value on a daily basis, in consideration of
which it is paid a fund accounting fee of $35,000 per year plus reimbursement of
out-of-pocket expenses. In its capacity as Transfer Agent for the Fund, BISYS
Inc. provides dividend disbursing, registrar and transfer agency services to the
Fund and its shareholders, in consideration of which it is paid a transfer
agency fee equal to $15 per year per each shareholder of the Fund, subject to a
$12,000 per year minimum. See "Management And Service Providers" herein.
Risk Factors
There can be no assurance that the Fund will be able to achieve its investment
objective. Since the Fund will limit its investments to equity securities of
companies which have anti-discrimination policies in place and demonstrate other
progressive policies towards gays and lesbians, such social policy will tend to
limit the availability of investment opportunities to the Fund compared to that
for other investment companies that have a comparable investment objective to
that of the Fund. See "Investment And Social Objectives And Policies" herein.
Common stocks, the most familiar type of equity securities, represent an equity
(ownership) interest in a corporation. Although equity securities have a history
of long-term growth in value, their prices fluctuate based on changes in a
company's financial condition and on overall market, economic and political
conditions. Smaller companies are especially sensitive to these factors.
Investments of the Fund's assets in "illiquid securities," i.e., securities that
are restricted in their transfer or for which market quotations are otherwise
not readily available or repurchase agreements over seven days, may restrict the
ability of the Fund to dispose of its investments in a timely fashion and for a
favorable price. The risks associated with illiquidity are particularly acute in
situations in which the Fund's operations require cash, such as
5
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when the Fund redeems for shares of beneficial interests or pays distributions,
and may result in the Fund borrowing to meet short-term cash requirements or
incurring capital losses on the sale of such investments.
As a recently created entity, the Trust will be subject to all the risks
incident to the creation of a new business, including the absence of a history
of operation, and there can be no guarantee that the investment objective of the
Fund will be attained. The Investment Manager is a newly created entity and, as
such, prior to the commencement of operations of the Fund, had no previous
experience in providing investment management services to an investment company;
however, the Investment Manager's designated Portfolio Manager for the Fund has
provided analytical and portfolio management services to investment companies
and institutional asset management clients, and the Vice President of Operations
of the Investment Manager and the Fund's Administrator, BISYS LP, have provided
operations, compliance and administrative services for investment companies. See
"Management And Service Providers" in general, and "Management and Service
Providers - Investment Manager" and "Management And Service Providers -
Portfolio Manager" in particular, below.
There are market risks inherent in any investment, and there is no assurance
that the primary investment objective of the Fund will be achieved or that any
income will be earned. Moreover, the application of the investment policies is
dependent upon the judgment of the Investment Manager. A prospective purchaser
of shares of the Fund should realize there are risks in any policy dependent
upon such judgment and that no representation is made that the investment
objective of the Fund will be accomplished or that there may not be substantial
loses in any particular investment. At any time, the value of the Fund's shares
may be more or less than the cost of such shares to the investor. See
"Investment And Social Objectives And Policies" herein.
Some of the securities included in the Fund may be those of foreign issuers
(provided that the securities are publicly-traded in the United States in the
form of American Depositary Receipts or similar instruments the market for which
is denominated in United States dollars). Securities of foreign issuers may
represent a greater degree of risk (e.g., as a result of exchange rate
fluctuation, tax provisions, war or expropriation) than do securities of
domestic issuers. See "Risk Factors" herein.
6
<PAGE>
EXPENSE SUMMARY
The following table provides a summary of: (i) Shareholder Transaction Expenses
relating to purchases and sales of shares of the Fund, and (ii) estimated Annual
Operating Expenses of the Fund for its first fiscal year of investment
operations (commencing June 10, 1996 and ending May 31, 1997), expressed as a
percentage of average daily net assets. All of the Fund's Annual Operating
Expenses will be paid out of the Fund's assets, and will therefore be indirectly
borne by the shareholders of the Fund.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases........................ None
Sales Load Imposed on Reinvested Dividends..................... None
Deferred Sales Load Imposed on Redemptions..................... None
Exchange Fees.................................................. None
----
Total Shareholder Transaction Expenses................... None
====
Annual Operating Expenses (As a Percentage of Average Daily Net Assets)(1)
Investment Management Fee (after waiver)(2)........................ 0.00%
Distribution 12b-1 Fee(3).......................................... 0.25%
Other Expenses (estimated, after assumption by Investment Manager.. 1.70%
-----
Total Annual Operating Expenses (estimated, after waiver and
assumption(5)................................................. 1.95%
=====
---------------------------
(1) The Fund commenced investment operations on June 10, 1996. For the sole
purpose of preparing the foregoing table, the Fund: (i) assumed it will
have $2.2 million in average daily net assets for the period beginning June
10, 1996 and ended May 31, 1997 (based upon an assumption of $6.5 million
in net assets as of May 31, 1997); and (ii) made certain estimates relating
to the Annual Operating Expenses for the Fund for such period. The actual
average daily net assets of the Fund for the period beginning June 10, 1996
and ended May 31, 1997, and the actual net assets of the Fund as of May 31,
1997 and the actual Annual Operating Expenses for such period, could vary
significantly from the amounts assumed or estimated above.
(2) Under the Investment Agreement, the Fund will pay the Investment Manager a
monthly investment management fee equal, on an annual basis, to 1.0% of
the Fund's average daily net assets. The Investment Manager had undertaken
to waive such portion of its investment management fee and assume such
portion of the Fund's expenses necessary to maintain Total Annual
Operating Expenses at no more than 1.95% per year of average daily net
assets. Based upon the foregoing, the Fund estimates that the Investment
Manager will waive its entire fee and assume a portion of the Fund's
expenses in order to maintain Total Annual Operating Expenses at the 1.95%
per year level.
(3) Pursuant to the terms of the Distribution Plan, the Fund will pay its
Distributor, per year, up to 0.25% of the Fund's average daily net assets
in reimbursement of, or in anticipation of, expenses incurred by the
Distributor in connection with the sale of shares of the Fund. A long-term
shareholder in the Fund may, as a result of the Distribution Plan, pay
more than the economic equivalent of the maximum distribution charges
permitted by the rules of the National Association of Securities Dealers,
Inc. See "Management And Service Providers" herein.
(4) "Other Expenses" include fees to be paid to the Administrator, Fund
Accounting Agent, Transfer Agent and Custodian for the Fund. See
"Management And Service Providers" herein.
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(5) Without the waiver of its fee and assumption of expenses by the Investment
Manager as described above, estimated Total Annual Operating Expenses for
the Fund for its first year of operations would be 11.4% of average daily
net assets. The Fund estimates that the Fund would require average daily
net assets of approximately $40 million for Total Annual Operating
Expenses to decline below the level of 1.95% of average daily net assets
per year.
Example
A shareholder of the Fund would indirectly pay the following estimated
expenses(1) on a $1,000 investment in the Fund, assuming: (i) a 5% annual return
on such investment; and (ii) the redemption of the investment at the end of each
of the following time periods:
1 year.............................. $20.00
3 years............................. $61.00
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(1) Based upon the same assumptions, and subject to the same
qualifications, as set forth above in the table captioned "Annual
Operating Expenses."
The Example set forth above is hypothetical and should not be considered a
representation of future expenses of the Fund. Moreover, the Fund's actual
performance will vary and may result in actual returns that are greater or less
than 5%.
The foregoing tables and example have not been audited by the Fund's independent
accountants. For more information with respect to certain estimated expenses of
the Fund, see "Management And Service Providers" herein.
8
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FINANCIAL HIGHLIGHTS
The following selected data for a share in the Fund outstanding for the
indicated period has not been audited by KPMG Peat Marwick LLP, the Fund's
independent auditors, and should be read in conjunction with the unaudited
financial statements and related notes appearing in the Statement of Additional
Information dated January 30, 1997. The Fund's Annual Report will include a
discussion of the factors, strategies and techniques that materially affect its
performance during the period of the report, as well as certain other related
information. A copy of the Fund's Annual Report will be made available without
charge upon request and when available.
For the period
June 10, 1996
(commencement
of operations) to
December 31, 1996
(Unaudited)
For a share of beneficial interest outstanding throughout
the period:
Net Asset Value, beginning of period...................... $10.00
Income from investment operations:
Net investment income............................... (0.02)
Net realized and unrealized gain on investments..... 0.83
-----------
Total income from investment operations................... 0.81
Less distributions from:
Net investment income............................... 0
Net realized gains.................................. 0
-----------
Total distributions....................................... 0
Net Asset Value, end of period............................ $10.81
Total return.............................................. 8.10%(3)
Ratios/supplemental data:
Net assets, end of period .......................... $895,219
Ratio of expenses to average net assets (1)......... 2.25%(2)
Ratio of net investment income to average net
assets(1).......................................... (0.73%)(2)
Portfolio turnover rate................................... 6%
Average commissions per share............................. $0.080842
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(1) Reflects the Investment Manager's waiver of its entire investment
management fee and its assumption of liabilities of the Fund. Without such
waiver and assumption by the Investment Manager, the ratio of expenses and
net investment income to average net assets would have been as follows:
Ratio of expenses to average net assets........................59.68%(2)
Ratio of net investment income to average net assets..........(58.16%)(2)
(2) Annualized
(3) Not annualized
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INVESTMENT AND SOCIAL OBJECTIVES AND POLICIES
Investment Objective and Social Objective
The overall investment objective of the Fund (the "Investment Objective") is to
attain long-term capital appreciation by investing in a diversified portfolio of
equity securities of undervalued but nevertheless fundamentally sound companies
which have been identified as having met the Social Objective. Companies which
meet the "Social Objective" are defined as companies which, in general, have
been identified as having progressive policies towards gays and lesbians, but at
a minimum have in place specifically stated policies against discrimination in
hiring and promotion based upon sexual orientation (the "Fundamental Social
Criteria").
The Fund believes that enterprises which are responsive toward addressing the
concerns of the gay and lesbian community and other progressive
socially-sensitive constituencies will benefit financially from the consumer
loyalty generated by such social awareness and will therefore be more likely to
prosper in the long-term. The Fund also believes such enterprises will be less
likely to incur certain legal liabilities that may arise when an enterprise is
found to discriminate against minorities, such as members of the gay and lesbian
community. The Fund believes such enterprises should also, over the longer term,
be able to generate additional stockholder market-value as an indirect result of
the greater investment in such enterprises, through the Fund, by the gay and
lesbian community (which, per capita, is one of the wealthiest demographic
groups in the United States), as well as supporters of the gay and lesbian
community.
Investment Strategy
In order to achieve the Investment Objective, the Fund will use a value-based
investment approach focusing on a longer-term market cycle (at least three to
five years), consistent with moderate levels of risk, wherein the Investment
Manager will identify companies exhibiting the following investment
characteristics: (1) low or inexpensive current value relative to earnings
estimates, cash flow, book value and/or break-up value; (2) good management; (3)
strong business fundamentals, and (4) positive earnings momentum.
The equity securities the Fund may invest in include common stocks, preferred
stocks and warrants, and certain debt instruments convertible into stock,
primarily in publicly-traded companies. Publicly-traded companies refers to
companies whose equity securities are traded over a national stock exchange or
over-the-counter through the National Association of Securities Dealers
Automatic Quotation ("NASDAQ") system or the National Association of Securities
Dealers, Inc. ("NASD") Electronic Bulletin Board. The Fund may invest in
companies in all ranges of capitalization. The Investment Manager expects that
no less than 60% of the Fund's net assets will be invested in equity securities
of "large capitalization" companies, which the Investment Manager defines as
companies with total capitalization of at least $2 billion.
Since it is anticipated that most equity securities will be held for the
longer-term using this strategy, the Investment Manager anticipates there will
likely be a low rate of portfolio turnover, and estimates portfolio turn-over in
the first year of the Fund will be approximately 30% to 60%.
The Investment Manager expects that under normal market conditions the Fund will
typically invest up to 95% of its assets (and sometimes virtually all of its
assets) in the types of equity securities described above and, subject to
certain limitations, certain options in these securities for hedging purposes.
Under distressed market conditions, the Fund may maintain its assets in cash or
cash-equivalents, or invest in money-market instruments or obligations of the
United States government or government-sponsored enterprises and other types of
government-backed securities. Such investments would be temporary defensive in
nature and would not be expected to exceed 50% of the Fund's net assets.
Although returns on these assets are historically less than investment in equity
and other non-governmental types of securities, the risk of loss in investing in
such instruments is lower as well.
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Identification of Companies Which Satisfy Social Objective
The determination of which companies have satisfied the Social Objective, and
may therefore be considered as appropriate investment vehicles for the Fund, is
based upon recommendations of the Investment Manager and the approval by the
Board of Trustees. As of the date of this Prospectus, over 325 publicly-traded
companies, most of which are listed on the S&P 500, have been identified as
having satisfied the Social Objective.
In making its recommendations, the Investment Manager evaluates companies based
upon (1) the Fundamental Social Criteria and (2) such additional criteria and
considerations consistent with the Social Objective as are determined reasonable
by the Investment Manager from time-to-time in its sole discretion, and approved
in general by the Board of Trustees (the "Non-Fundamental Social Criteria").
Such methodology is, by its nature, subjective.
As of the date of this Prospectus, the Non-Fundamental Social Criteria consists
of two separate areas of general focus, employee relations and corporate
citizenship.
In evaluating a company's gay and lesbian employee relations, the Investment
Manager evaluates the company's record and policies with respect to labor
matters affecting gay and lesbian employees, such as: (1) the company's
commitment to equal employment opportunity for gays and lesbians, both overall
and in executive positions, and the scope of the company's policies against
discrimination based upon sexual orientation; (2) the breadth, quality and
innovation of the company's employee benefit programs and their positive effect
on gay and lesbian employees (including inclusion of gay and lesbian partners
and families in employee benefit programs); and (3) the company's relationships
with gay and lesbian suppliers, vendors, and customers.
In evaluating a company's corporate citizenship, the Investment Manager reviews
the company's record on gay and lesbian related charitable giving and other
philanthropic activities and its interaction with the gay and lesbian community,
such as advertising in gay and lesbian directed publications or other media.
It is not necessary that a company satisfy all of the factors and considerations
described above as part of the Non- Fundamental Social Criteria in order to be
identified as having satisfied the Social Objective. However, every company must
satisfy the Fundamental Social Criteria in order to be included on the list of
approved companies.
The Investment Manager uses publicly available information in evaluating
companies, including information disseminated by the Human Rights Campaign, the
largest national gay and lesbian organization. The Investment Manager also
directly reviews company policies and, in certain cases, discusses those
policies with the company's management.
The Investment Manager intends to vote proxies of companies included in the
Fund's portfolio consistent with the Social Objective. The inclusion of a
company on the Fund's list of approved companies with progressive policies
towards gays and lesbians does not imply that the company has requested it be
included on the list or approved such inclusion, has sought the approval of the
Fund with respect to the development and implementation of the company's
employment or corporate citizenship policies, or is affiliated with the Fund in
any manner.
Investment Policies
The Fund will diversify its holdings to reduce the risks of investing. As a
diversified Fund, the Fund is required, by the Investment Company Act with
respect to 75% of its assets, to invest no more than 5% of its assets into the
securities of any one issuer, and not more than 10% of the outstanding voting
securities of an issuer may be owned. In addition, the Fund may not invest more
than 25% of its total assets in any one industry.
The Fund may invest up to 10% of its total assets in convertible securities,
including bonds, debentures, notes, preferred stocks, warrants or other
securities that may be converted into or exchanged for a prescribed amount of
11
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common stock of the same or a different issuer within a particular period of
time at a specified price or formula. Certain convertible securities may in
addition be callable, in whole or in part, at the option of the issuer. A
convertible security entitles the holder to receive interest paid or accrued on
debt or the dividend paid on preferred stock until the convertible security
matures or is redeemed, converted or exchanged. Before conversion, convertible
securities have characteristics similar to nonconvertible debt securities in
that they ordinarily provide a stable stream of income with generally higher
yields than those of common stocks of the same or similar issuers. Convertible
securities rank senior to common stock in a corporation's capital structure but
are usually subordinated to comparable nonconvertible securities. The Investment
Manager will limit investments in convertible securities to those generally
considered to be "investment grade" debt securities, which the Investment
Manager defines as being rated BBB or higher by Standard & Poor or Baa or higher
by Moody. The highest rated debt securities (securities rated AAA by Standard &
Poor or Aaa by Moody) carry, in the opinion of such investments ratings
agencies, the smallest degree of investment risk and the capacity to pay
interest and repay principal is very strong.
The Fund may not invest more than 15% of its net assets in securities that are
illiquid by virtue of the absence of a readily available market or legal or
contractual restrictions on resale (including repurchase agreements which have a
maturity of longer than seven days). Securities that have legal or contractual
restrictions on resale but have a readily available market are not considered
illiquid for purposes of this limitation.
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
securities which are otherwise not readily marketable, and repurchase agreements
having a maturity of longer than seven days. Securities which have not been
registered under the Securities Act are referred to as privately placed or
restricted securities and are purchased directly from the issuer or in the
secondary market. Mutual funds do not typically hold a significant amount of
these restricted or other illiquid securities because of the potential for
delays on resale and uncertainty in valuation. Limitations on resale may have an
adverse effect on the marketability of portfolio securities and a mutual fund
might be unable to dispose of restricted or other illiquid securities promptly
or at reasonable prices and might thereby experience difficulty satisfying
redemptions within seven days. A mutual fund might also have to register such
restricted securities in order to dispose of them resulting in additional
expense and delay. Adverse market conditions could impede such a public offering
of securities.
Restricted securities include those that are subject to restrictions contained
in the securities laws of other countries. However, securities that are freely
marketable in the country in which they are principally traded would not be
considered illiquid. The Fund will treat any securities that are held in
countries with restrictions on repatriation of more than seven days, as illiquid
securities for purposes of the 15% limitation.
In recent years, a large institutional market has developed for certain
securities that are not registered under the Securities Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or
to certain institutions may not be indicative of the liquidity of such
investments.
Rule 144A under the Securities Act establishes a "safe harbor" from the
registration requirements of the Securities Act for resales to qualified
institutional buyers of certain securities otherwise subject to restriction on
resale to the general public. The Investment Manager anticipates that the market
for certain restricted securities will expand further under Rule 144A as a
result of the development of automated systems for the trading, clearance and
settlement of unregistered securities of domestic and foreign issuers, such as
the PORTAL System sponsored by the NASD.
The Investment Manager will monitor the liquidity of restricted securities in
the Fund under the supervision of the Board of Trustees. In reaching liquidity
decisions, the Investment Manager may consider, inter alia, the following
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factors: (1) the unregistered nature of the security; (2) the frequency of
trades and quotes for the security; (3) the number of dealers wishing to
purchase or sell the security and the number of other potential purchasers; (4)
dealer undertakings to make a market in the security; and (5) the nature of the
security and the nature of the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers and the mechanics of
the transfer).
The Fund may invest cash reserves in (1) direct obligations and/or short-term
debt securities (i.e., securities having a remaining maturity of one year or
less) issued by agencies or instrumentalities of the United States Government
and/or (2) bankers' acceptances, commercial paper or certificates of deposit,
provided that the issuer satisfies the Social Objective of the Fund. Although
the U.S. government provides financial support to U.S. government sponsored
agencies or instrumentalities, no assurance can be given that it will always do
so. The U.S. government and its agencies and instrumentalities do not guarantee
the market value of their securities; consequently, the value of such securities
will fluctuate. The Fund's policy is to hold its assets in such securities
pending readjustment of its portfolio holdings of stocks in order to meet
anticipated redemption requests.
In accordance with the Investment Company Act, the Fund may invest a maximum of
up to 10% of the value of its total assets in securities of other investment
companies, and the Fund may own up to 3% of the total outstanding voting stock
of any one investment company. In addition, up to 5% of the value of the Fund's
total assets may be invested in the securities of any one investment company. As
an investor in an investment company, the Fund would bear its ratable share of
that investment company's expenses, including its administrative and advisory
fees. At the same time, the Fund would continue to pay its own investment
management fees and other expenses, however, the Investment Manager has agreed
to waive its fees to the extent necessary to comply with state securities laws.
The Fund will readjust its securities holdings periodically to the extent the
Investment Manager deems it prudent to do so, and subject to the overall
supervision and approval of the Board of Trustees. The timing and extent of
adjustments in the holdings of the Fund will reflect the Investment Manager's
judgment as to: (1) the appropriate portfolio mix to achieve the investment
performance objective of the Fund; (2) the appropriate balance between the goal
of correlating the holdings of the Fund with its Social Objective; (3) the goals
of minimizing transaction costs and keeping sufficient reserves available for
anticipated redemptions of shares; and (4) compliance with certain restrictions
of the Fund imposed by the Fund's investment policies, including those mandated
by the Investment Company Act. See "Fundamental Investment Policies And
Restrictions" herein. There can be no assurance that any portfolio enhancement
strategies will be successful, and the performance of the Fund may as a result
be worse than if such strategies were not undertaken. The Board of Trustees of
the Fund will receive and review, at least quarterly, a report prepared by the
Investment Manager evaluating the performance of the Fund, and will consider
what action, if any, should be taken in the event of a significant change in the
performance of the Fund.
The Fund's primary consideration in placing securities transactions with
broker-dealers for execution is to obtain, and maintain the availability of,
execution at the most favorable prices and in the most effective manner
possible. For further discussion regarding securities trading by the Fund, see
the Statement of Additional Information.
The Fund may make short sales of securities or maintain a short position in
securities provided such investment is otherwise consistent with the Fund's
Investment Objective and Social Objective. Pursuant to the Investment Company
Act, the Fund will maintain government securities and certain other assets in
amounts sufficient to cover the fair market value of such sales and positions
plus margin posted with brokers for such sales and positions. No more than 25%
of the Fund's net assets will be used as collateral for such short positions at
any one time.
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Fundamental Investment Policies and Restrictions
Certain of the Fund's investment policies and restrictions are "fundamental"
and, as such, are subject to change only with shareholder approval. All policies
stated throughout this Prospectus, other than those identified in this section
as fundamental, may be changed without shareholder approval. The Fund's
fundamental policies include its Investment Objective, certain restrictions on
its investments under applicable securities laws, and its Fundamental Social
Criteria. Although adherence to the Fundamental Social Criteria is a fundamental
policy, the other factors and considerations used by the Investment Manager in
making its recommendations consistent with the overall Social Objective and the
Board in approving such recommendations are discretionary and non-fundamental.
The fundamental policies and restrictions may not be changed without the
approval of the holders of a majority of the Fund's shares (which, as used in
this Prospectus, means the lesser of (1) more than 50% of the outstanding shares
of the Fund, or (2) 67% or more of the outstanding shares of the Fund present at
a meeting at which holders of more than 50% of the Fund's outstanding shares are
represented in person or by proxy). If there were a change in the Fund's
fundamental policies and restrictions, shareholders should consider whether the
Fund remains an appropriate investment in light of their then-current financial
positions and needs. The Statement of Additional Information includes a complete
discussion of the foregoing matters as well as other investment policies and a
listing of specific investment restrictions which govern the Fund's investment
policies. In order to permit the sale of the Shares in certain states, the Fund
reserves the right to make commitments more restrictive than the investment
policies and restrictions set forth above. If the Fund determines that any such
commitment is not in its best interests, it may choose not to sell the Shares in
these states or seek a waiver in certain states.
RISK FACTORS
Investment Objective
There can be no assurance that the Fund will be able to achieve its Investment
Objective. It should be noted that the limitation of the Fund's investments to
equity securities of companies identified as meeting the Social Objective will
tend to limit the availability of investment opportunities to the Fund compared
to that for other investment companies that have a comparable investment
objective to that of the Fund.
Common Stocks
Common stocks, the most familiar type of equity securities, represent an equity
(ownership) interest in a corporation. Although equity securities have a history
of long-term growth in value, their prices fluctuate based on changes in a
company's financial condition and on overall market, economic and political
conditions. Smaller companies are especially sensitive to these factors.
Convertible Securities
Investments in convertible securities of a corporation generally entail less
risk than the corporation's common stock, although the extent to which such risk
is reduced depends in large measure upon the degree to which the convertible
security sells above its value as a fixed income security. Convertible
securities have unique investment characteristics in that they generally: (1)
have higher yields than common stocks, but lower yields than comparable
non-convertible securities;, (2) are less subject to fluctuation in value than
the underlying stock since they have fixed income characteristics; and (3)
provide the potential for capital appreciation if the market price of the
underlying common stock increases. The investment value of a convertible
security is influenced by changes in interest rates, with investment value
declining as interest rates increase and increasing as interest rates decline.
The credit standing of the issuer and other factors also may have an effect on
the convertible security's investment value. The conversion value of a
convertible security is determined by the market price of the underlying common
stock. If
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the conversion value is low relative to the investment value, the price of the
convertible security is governed principally by its investment value. Generally,
the conversion value decreases as the convertible security approaches maturity.
To the extent the market price of the underlying common stock approaches or
exceeds the conversion price, the price of the convertible security will be
increasingly influenced by its conversion value. A convertible security
generally will sell at a premium over its conversion value by the extent to
which investors place value on the right to acquire the underlying common stock
while holding a fixed income security. The Fund only intends to invest in
convertible securities where the value of the option is minimal and the
convertible security trades on the basis of its coupon.
Illiquid and Restricted Securities
Investments of the Fund's assets in illiquid securities, (i.e., securities that
are restricted in their transfer or for which market quotations are otherwise
not readily available or repurchase agreements over seven days), may restrict
the ability of the Fund to dispose of its investments in a timely fashion and
for a favorable price. The risks associated with illiquidity are particularly
acute in situations in which the Fund's operations require cash, such as when
the Fund redeems for shares of beneficial interests or pays distributions, and
may result in the Fund borrowing to meet short-term cash requirements or
incurring capital losses on the sale of such investments.
Securities of Foreign Issuers
Some of the securities included in the Fund may be those of foreign issuers
(provided that the securities are publicly-traded in the United States in the
form of American Depositary Receipts or similar instruments the market for which
is denominated in United States dollars). Securities of foreign issuers may
represent a greater degree of risk (e.g., as a result of exchange rate
fluctuation, tax provisions, war or expropriation) than do securities of
domestic issuers.
Loans of Securities
The Fund has the authority to lend its securities to brokers, dealers and
financial institutions provided, among other things, that the loan is secured
continuously by collateral consisting of U.S. Government securities or cash or
letters of credit, which is marked to the market daily to ensure that each loan
is fully collateralized at all times. Loans of securities involve a risk that
the borrower may fail to return the securities or may fail to provide additional
collateral.
Options
The Fund may enter into certain transactions involving stock options for the
purpose of hedging against possible increases in the value of securities which
are expected to be purchased by the Fund or possible declines in the value of
securities which are held by the Fund. Were the Fund to establish an option
position for the purpose of hedging against investment risks, and would do so
only if there appears to be a liquid secondary market therefor, there can be no
assurance that such a market will exist for any particular option contract at
any specific time. In that event, it may not be possible to close out a position
held by the Fund, and the Fund could be required to purchase or sell the
instrument or instruments underlying an option, make or receive a cash
settlement or meet ongoing variation margin requirements. The inability to close
out option positions also could have an adverse impact on the Fund's ability
effectively to hedge its portfolio.
The Fund will enter only into exchange-traded options. At all times when an
option position is outstanding, the Fund will maintain a segregated deposit with
the Fund's custodian of cash, money market instruments or high-quality
securities sufficient in order to cover the exposure of that position.
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Short Positions
Short selling or short positions by the Fund involves the Fund selling a
security that it does not own or it borrows from a broker. When the fund
purchases the security to replace the borrowed security, if the value of the
security declines as anticipated, the Fund will profit to the extent of the
difference between the purchase price and the sales price. If the price of the
security increases, the Fund will suffer a loss. Short selling or short
positions by the Fund involve a risk that the price of the security will not
decrease, as anticipated, and the Fund will suffer a loss.
History of Operations; Experience of Investment Manager
As a recently created entity, the Trust will be subject to all the risks
incident to the creation of a new business, including the absence of a history
of operation, and there can be no guarantee that the Investment Objective of the
Fund will be attained. The Investment Manager is a newly created entity and, as
such, prior to the commencement of operations of the Fund, had no previous
experience in providing investment management services to an investment company;
however, the Investment Manager's designated Portfolio Manager for the Fund has
provided analytical and portfolio management duties to investment companies and
institutional asset management clients, and the Vice President of Operations of
the Investment Manager and the Fund's Administrator, BISYS LP, have provided
operations, compliance and administrative services to investment companies. See
"Management And Service Providers" in general, and "Management and Service
Providers - Investment Manager" and "Management And Service Providers -
Portfolio Manager" in particular, below.
Investment Risks
There are market risks inherent in any investment, and there is no assurance
that the Fund will attain its Investment Objective or that any income will be
earned. Moreover, the application of the investment policies is dependent upon
the judgment of the Investment Manager. A prospective investor in the Fund
should realize there are risks in any policy dependent upon such judgment and
that no representation is made that the Investment Objective of the Fund will be
attained or that there may not be substantial loses in any particular
investment. At any time, the value of the Fund's shares may be more or less than
the cost of such shares to the investor.
MANAGEMENT AND SERVICE PROVIDERS
The Board of Trustees of the Fund provide broad supervision over the affairs of
the Fund. The Fund has engaged Meyers Capital Management to provide management
and investment advisory services to the Fund, BISYS LP to provide administration
and distribution services to the Fund, BISYS Inc. to provide fund accounting and
transfer agent services to the Fund, and Wells Fargo to provide custodial
services to the Fund.
Board of Trustees and Officers
The Board of Trustees is responsible for the overall management and supervision
of the Fund's business. The Board of Trustees consists of Ms. Shelly J. Meyers,
Mr. Leslie C. Sheppard, Ms. Gwendolyn H. Baba, Mr. Jay W. Gendron, Mr. Robert E.
Gipson, Professor Leonard Greenhalgh and Dr. Duane E. McWaine. None of the
Trustees, with the exception of Ms. Meyers, Mr. Sheppard and Ms. Baba by virtue
of their ownership interests in Meyers Capital Management, are considered
"interested persons" of the Fund as defined by the Investment Company Act.
The Board of Trustees is responsible for deciding matters of general policy and
reviewing actions of the Fund's contractors and agents, including the actions of
the Investment Manager, the Administrator, the Fund Accounting Agent, the
Transfer Agent, the Distributor, and the Custodian. The officers of the Trust
conduct and supervise the Fund's daily business operations. The Board of
Trustees also has broad supervisory authority over the Investment
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Manager's determination of which companies satisfy the Social Objective, and are
therefore eligible to be considered for an investment by the Fund.
Ms. Shelly J. Meyers, the Chairman of the Board of Trustees, is also the
Manager, Chief Executive Officer, Chief Financial Officer and the principal
owner of the Investment Manager, Meyers Capital Management. Ms. Meyers has a
background as a research analyst and assistant portfolio manager for The Boston
Company Asset Management, Inc., an investment management company, and has also
been a lead analyst for the Chevron Corporation and a certified public
accountant engaged in private practice. See "Management and Service Providers -
Investment Manager" below. Ms. Meyers received her Bachelors of Arts degree from
the University of Michigan and her Masters of Business Administration degree
from the Amos Tuck School of Business Administration at Dartmouth College. Ms.
Meyers is a member of the Executive Board of Directors of the Gay and Lesbian
Community Services Center located in Los Angeles, California, and is also a
member of the Human Rights Campaign, the largest national gay and lesbian
organization.
Mr. Leslie C. Sheppard, who is also an owner of the Investment Manager, has a
background in real estate marketing and management. From 1993 until he became a
principal in March 1996 with Meyers Capital Management, Mr. Sheppard was Sales
Representative for Fannie Mae, where he managed all aspects of a 300 property
real estate inventory worth over $40 million. Prior to his employment with
Fannie Mae, Mr. Sheppard was a principal of and the real estate asset manager
for Takenaka & Co. where he was responsible for real estate acquisitions,
management, marketing and government compliance. Mr. Sheppard received his
Bachelors of Science degree in Business Administration and his Master of
Business Administration degree in Finance from the University of Southern
California.
Ms. Gwendolyn H. Baba, who is also the President and an owner of the Investment
Manager, is general partner of several real estate management and development
partnerships, and is also a former investment banker. Ms. Baba holds a M.A.
degree in Management from the University of Redlands and a Bachelors of Arts
degree in Philosophy from Lewis & Clark College. Ms. Baba is a member and past
co-chair of the Board of Directors of the Gay and Lesbian Community Services
Center, and is also on the Board of Directors of ANGLE (Access Now For Gay And
Lesbian Equality), a political fund raising organization, both located in Los
Angeles, California. Ms. Baba also holds appointments to the California
Democratic State Central and Los Angeles County Committees, and is a member of
the Board of Directors of the Human Rights Campaign.
Mr. Jay W. Gendron, an entertainment attorney, is Vice President, Legal Affairs,
of Warner Bros. Television Productions (formerly Lorimar Productions). Mr.
Gendron received his Juris Doctor degree from Duke University School of Law and
his Bachelors of Arts degree in Government & International Studies from the
University of Notre Dame. Mr. Gendron in on the Board of Directors of the Camp
Laurel Foundation (which provides camping opportunities for children with HIV
and AIDS) and the Angels On My Shoulder Foundation (which provides support for
care-providers for cancer patients).
Mr. Robert E. Gipson, a business and corporate attorney, is a shareholder of and
an attorney with Gipson Hoffman & Pancione, a Los Angeles law firm. Mr. Gipson
received his Juris Doctor degree from Yale Law School and his Bachelors of Arts
degree in Government from Harvard College. Mr. Gipson is the founder and initial
president of the Los Angeles Venture Association (also known as LAVA), and is on
the Board of Directors of the City Scholars Foundation (which promotes
excellence in inner-city education), the James Redford Institution (active in
organ transplant issues), the Sundance Film Institute (which promotes
independent film development) and the Westwood United Methodist Church.
Professor Leonard Greenhalgh is Professor of Management at the Amos Tuck School
of Business Administration at Dartmouth College, and has also taught at Stanford
University and Cornell University. In addition to teaching, Professor Greenhalgh
also provides executive education, research and consulting services to large
corporations and organizations. Professor Greenhalgh received a Ph.D. degree
from Cornell University, and a Masters in Business
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Administration degree and a Bachelors of Science degree in Biology and Chemistry
from the University of Rhode Island.
Dr. Duane E. McWaine is a psychiatrist who has been in solo private practice
since 1988. Dr. McWaine was recently appointed as Medical Director of the Didi
Hirsch Medical Health Center. Dr. McWaine is on the Executive Board of Directors
of the Los Angeles Gay and Lesbian Community Services Center, and is a member of
Southern California Physicians for Human Rights. He has also been involved in a
variety of AIDS/HIV related health care programs in the Los Angeles area. Dr.
McWaine graduated from Princeton University in 1980, and received his Medical
degree from the University of Southern California School of Medicine in 1984.
For further information about the Board of Trustees and the officers of the
Fund, including their general business experience, see "Management Of And
Service Providers For The Trust And Fund" in the Statement of Additional
Information.
Investment Manager
The Fund has engaged the Investment Manager, Meyers Capital Management, to serve
as both the manager and the investment adviser for the Fund pursuant to an
Investment Management Agreement approved by the Board of Trustees. The
Investment Manager is a California limited liability company organized on
January 23, 1996, which has been registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, since March 7, 1996. The Manager
and principal owner of the Investment Manager is Ms. Shelly J. Meyers. The
officers of the Investment Manager are Ms. Meyers, Chief Executive Officer and
Chief Financial Officer; Ms Gwendolyn H. Baba, President; and Mr. Philip
McKinley, Vice President of Operations and Secretary. Ms. Baba , Mr. Sheppard
and Mr. McKinley are also owners of the Investment Manager.
As a newly created entity, the Investment Manager did not, prior to the
commencement of operations of the Fund, have previous experience in providing
investment management services to an investment company. However, Ms. Shelly J.
Meyers, the Investment Manager's designated Portfolio Manager for the Fund, has
provided analytical and portfolio management services to investment companies
and institutional asset management clients. Additionally, Mr. Philip McKinley,
the Vice President of Operations of the Investment Manager, and the Fund's
Administrator, BISYS LP have provided compliance and administrative services to
investment companies. See "Risk Factors History Of Operations; Experience Of
Investment Manager" above, "Management And Service Providers - Portfolio
Manager" below, and "Management Of And Service Providers For The Trust And The
Fund" in the Statement of Additional Information.
As part of its management function, the Investment Manager oversees (subject to
the overall authority of the Board of Trustees) the overall operations and
administration of the Fund, including the supervision of professional services
rendered by others, including the Distributor, Administrator, Transfer Agent,
and Custodian, as well as accounting, auditing, legal and other services.
As part of its investment advisory function, the Investment Manager implements
the investment strategy of the Fund and manages the Fund's investments subject
to the Fund's Investment Objective and Fundamental Social Criteria and the
overall supervision by the Board of Trustees. Specifically, the Investment
Manager determines, from amongst the companies who have been identified as
satisfying the Social Objective, which companies the Fund should invest in, what
the appropriate mix of investments amongst such companies should be, and the
timing and extent of adjustments in the holdings of the Fund to satisfy the
requirements of diversification and the need to maintain sufficient reserves for
anticipated redemptions of shares. The Investment Manager also has sole
discretion to select brokers for purchases and sales. Although the Investment
Manager's activities are subject to general oversight by the Trustees and
officers of the Fund, neither the Trustees nor officers of the Fund evaluate the
merits of the Investment Manager's selection of individual securities from
amongst approved companies.
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The Investment Management Agreement provides that the Investment Manager shall
not be liable and shall be indemnified, for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the matters to which
the Investment Management Agreement relates, except liability resulting from
willful misfeasance, bad faith or gross negligence in the performance of duties
specified in the Investment Management Agreement or from reckless disregard of
the Investment Manager's obligations thereunder.
Pursuant to the terms of the Investment Management Agreement, the Fund pays the
Investment Manager for its management and investment advisory services, a
monthly fee equal, on an annual basis, to 1% of the Fund's average daily net
assets. The Investment Manager has undertaken to waive such portion of its
investment management fee and to assume and pay such portion of the Fund's
expenses necessary to maintain Total Annual Operating Expenses of no more than
1.95% per year of average daily net assets.
Portfolio Manager
Ms. Shelly J. Meyers, the Manager of the Investment Manager and its Chief
Executive Officer and Chief Financial Officer, has been designated by the
Investment Manager as its "portfolio manager" for the Fund, in which capacity
she is responsible for providing all investment advisory services to the Fund on
behalf of the Investment Manager. Ms. Meyers received her Bachelors of Arts
degree from the University of Michigan and her Masters of Business
Administration from the Amos Tuck School of Business Administration at Dartmouth
College. From July, 1994 through February, 1995, Ms. Meyers was Assistant Vice
President, Institutional Asset Management for The Boston Company Asset
Management, Inc., in which capacity she acted as an equity research analyst and
assistant portfolio manager for the institutional investment group and was the
lead equity analyst for the entertainment, communications, apparel, specialty
retail, and energy industries. In that capacity Ms. Meyers was responsible for
analyzing portfolios containing investments valued at up to $1.2 billion. From
June, 1993 through September, 1993, Ms. Meyers was an Analyst with The Boston
Company Asset Management, Inc. From June, 1989 through September, 1992, Ms.
Meyers was Lead Analyst, International Audit, with the Chevron Corporation, in
which capacity, she led the analysis and review of various projects and
operations throughout the world and reported her findings to executive
management. Ms. Meyers is a certified public accountant in the State of
California.
Administration, Fund Accounting and Transfer Agents
The Fund has entered into an agreement with BISYS LP to provide the Fund with
administrative services pursuant to an Administration Agreement. Pursuant to the
Administration Agreement, BISYS LP generally performs or supervises the
performance by others of certain administrative services including, without
limitation, calculating Fund expenses and controlling disbursements; assisting
Fund counsel with preparing prospectuses, statements of additional information,
registration statements and proxy materials; preparing reports, applications and
documents required for compliance by the Fund with applicable federal and state
laws and regulations; developing and preparing communications to shareholders,
including the Fund's annual report and proxy materials; administering contracts
between the Fund and other service providers; coordinating and supervising the
filing of the Fund's tax returns; and monitoring and advising the Fund on its
registered investment company status under the Internal Revenue Code. BISYS LP
also provides persons satisfactory to the Board of Trustees of the Fund to serve
as officers of the Fund. Such officers, as well as certain other employees and
Trustees of the Fund, may be directors, officers or employees of BISYS LP or its
affiliates. As compensation for these services, the Fund pays BISYS LP, per
year, an amount equal to 0.15% of the first $100 million in aggregate Fund
assets, 0.10% for the next $400 million, 0.07% for the next $500 million, and
0.06% for aggregate Fund assets in excess of $1 billion.
The Fund has entered into an agreement with BISYS Inc. to provide the Fund with
fund accounting, services, pursuant to a Fund Accounting Agreement. Pursuant to
the Fund Accounting Agreement, BISYS Inc. maintains
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the Fund's books and records and calculates the Fund's net value on a daily
basis, in consideration of which the Fund pays BISYS Inc. the sum of $35,000 per
year, plus reimbursement of out-of-pocket expenses.
The Fund has entered into an agreement with BISYS Inc. to provide the Fund with
dividend disbursing and transfer agency services, pursuant to a Transfer Agency
Agreement. Pursuant to the Transfer Agency Agreement, BISYS Inc. provides
dividend disbursement, registrar and transfer agency services to the Fund, in
consideration of which the Fund pays BISYS Inc. the sum of $15 per year per each
shareholder, subject to a $12,000 per year minimum.
Plan of Distribution
The Trustees of the Trust have adopted a Plan of Distribution (the "Distribution
Plan") with respect to the Fund in accordance with Rule 12b-1 under the
Investment Company Act after having concluded that there is a reasonable
likelihood that the Distribution Plan will benefit the Fund and its
shareholders. As contemplated by the Distribution Plan, BISYS LP acts as agent
of the Fund in connection with the offering of shares of the Fund pursuant to
the Distribution Agreement. Pursuant to the Distribution Agreement, BISYS LP
also acts as the Fund's Distributor, and is responsible for facilitating the
continuous sale or redemption of Fund shares. Solely for the purpose of
reimbursing BISYS LP for activities primarily intended to result in the sale of
Fund shares, the Trust has, on behalf of the Fund, adopted the Distribution Plan
wherein, pursuant to Rule 12b-1 of the Investment Company Act, the Fund is
authorized to spend up to 0.25% of net asset value annually for BISYS LP's
services in connection with the distribution of shares of the Fund. The
Distribution Plan was approved by the independent trustees of the Trust as well
as the Fund's initial shareholders.
BISYS LP acts as the principal underwriter of shares of the Fund and bears the
compensation of personnel necessary to provide such services and all costs of
travel, office expense (including rent and overhead) and equipment. Under the
Distribution Plan, BISYS LP may receive a fee from the Fund at an annual rate up
to but not to exceed 0.25% of the Fund's average daily net assets in
anticipation of, or as reimbursement for, costs and expenses incurred in
connection with the sale of shares of the Fund, such as payments to
broker-dealers who advise shareholders regarding the purchase, sale or retention
of shares of the Fund, payments to employees of BISYS LP, advertising expenses
and the expenses of printing and distributing prospectuses and reports used for
sales purposes, expenses of preparing and printing sales literature and other
distribution-related expenses. BISYS LP will provide to the Board of Trustees a
quarterly written report of amounts expended by it under the Distribution Plan
and the purposes for which such expenditures were made.
Custodian
The Fund has engaged Wells Fargo to act as custodian of the assets of the Fund,
pursuant to a Custodian Agreement. The Custodian's responsibilities include
safeguarding and controlling the Fund's cash and securities, handling the
receipt and delivery of securities, collecting interest on the Fund's
investments, and maintaining books of original entry for fund accounting
purposes. As compensation for its services, the Fund pays Wells Fargo, per year,
an amount equal to 0.10% of the first $20 million in aggregate Fund assets, and
0.04% for aggregate Fund assets in excess of $20 million, subject to a $15,000
per year minimum.
PURCHASES AND REDEMPTIONS OF SHARES
Purchases
Shares of the Fund may be purchased without a sales load at the net asset value
next determined after an order for shares is received and accepted by the Fund.
The minimum initial investment in the Fund is $1,000 (except that the minimum
initial investment when selecting the Automatic Investment Plan is $250). The
minimum subsequent investment is $100 ($50 for the Automatic Investment Plan).
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<PAGE>
Initial Investments by Mail
Subject to acceptance by the Fund, investors desiring to purchase shares of the
Fund by mail should complete an Account Application and mail the Application to
the Fund at the address noted below, together with a check in U.S.
dollars ($1,000 minimum), payable to "Meyers Pride Value Fund":
Meyers Pride Value Fund
P.O. Box 182496
Columbus, Ohio 43218-2496
Subject to acceptance by the Fund, payment for the purchase of shares received
by mail will be credited to a shareholder's account at the net asset value per
share of the Fund next determined after receipt. Such payment need not be
converted into federal funds (monies credited to the bank of the Fund's
Custodian by a Federal Reserve Bank) before acceptance by the Fund.
Initial Investments by Wire
Subject to acceptance by the Fund, shares of the Fund may be purchased by wiring
federal funds ($1,000 minimum generally, $250 minimum for the Automatic
Investment Plan) to the Trust. Notification of an investor's intent to make a
wire transfer must be given to the Fund at 1-800-410-3337 prior to 4:00 p.m.,
New York time, on the business date prior to the date the purchase monies will
be wired. (Prior notification should also be received from investors with
existing accounts). Complete wire instructions will be given to Investors upon
making their notification of intent to wire transfer funds. [Investors Fiduciary
Trust Company ??] A completed Account Application must be forwarded by overnight
mail to the Fund at the address noted below:
Meyers Pride Value Fund
c/o BISYS Fund Services
3425 Stelzer Road
Columbus, Ohio 43219-8021
Funds must be paid in U.S. dollars. Federal funds purchases will be accepted
only on days in which the Fund, the Distributor and the Custodian are open for
business. Currently, days in which the Fund, the Distributor and the Custodian
are not open are those days on which the New York Stock Exchange is closed.
Additional Investments
Additional investments may be made at any time (minimum investment of $100 {$50
for the Automatic Investment Plan}) by purchasing shares of the Fund at net
asset value by mailing a check to the Fund at the address noted above under
"Initial Investments by Mail" (payable to the "Meyers Pride Value Fund" or by
wiring monies as outlined above under "Initial Investments by Wire"). For a wire
purchase, notification must be given to the Fund at 1-800-410-3337 prior to 4:00
p.m., New York time, on the business day prior to the day the purchase monies
will be wired.
Investments Through Shareholder Organizations
Shares may also be purchased through a broker, a bank, or other institutions or
investment professionals ("Shareholder Organizations"). Shareholder
Organizations may impose minimum customer account and other requirements in
addition to those of the Fund. Investors purchasing or redeeming shares may be
charged a transaction-based fee and other charges for the services of the
Shareholder Organization. Each Shareholder Organization is responsible for
transmitting to its customers a schedule of its fees and information regarding
any additional or different conditions regarding purchases or redemptions.
Customers of Shareholder Organizations
21
<PAGE>
should read this Prospectus in light of the terms governing accounts with their
organization. If an investor purchases shares through a Shareholder
Organization, the Shareholder Organization must promptly transmit such order to
the Fund so that the order receives the net asset value next determined
following receipt of the order. The Fund does not pay to or receive compensation
from Shareholder Organizations for the sale of Fund shares.
Investments Through IRAs and Other Qualified Retirement Plans
The Fund has available special forms which enable an investor to purchase Fund
shares through his or her Individual Retirement Account ("IRA"). The Fund may be
used as a qualifying medium for IRAs and other qualified retirement plans
("Plans"). The minimum initial investment for an IRA or a Plan is $250.
Completion of a special application is required in order to create such a
account. A $5.00 establishment fee and an annual $12.00 maintenance and custody
fee is payable with respect to each IRA; in addition there will be charged a
$10.00 termination fee when the account is closed. Fund shares may also be
purchased for IRAs and Plans established with other authorized custodians.
Contributions to IRAs are subject to prevailing amount limits set by the
Internal Revenue Service. For more information about IRAs and other Plan
accounts, contact the Fund.
Investors may also, in certain circumstances, be able to invest in the Fund
through other types of retirement plans, such as through simplified employee
pension plans ("SEPs"), qualified pension plans, and tax deferred annuity plans
sponsored by their employers. Investors considering investments through an IRA
or other types of retirement plans should write or telephone the Fund for
further information and the appropriate form of application.
Investments Through Automatic Investment Plan
The Fund also has available special forms enabling an investor to regularly
invest, through his or her bank, specified dollar amounts in periodic intervals
into the Fund (the "Automatic Investment Plan"). The minimum initial investment
under the Automatic Investment Plan is $250, and minimum subsequent investments
are $50. Payments under the Automatic Investment Plan are automatic and will
continue until such time as the Fund and the investor's bank are notified to
discontinue further investments. Due to the varying procedures to prepare,
process and to forward the bank withdrawal information to the Fund, there may be
a delay between the time of the bank withdrawal and the time the money reaches
the Fund. The investment in the Fund will be made at the next-determined net
asset value per share after receipt of the funds and bank withdrawal data are
received in the form required by the Fund. Investors regarding investments
through the Automatic Investment Plan should write or telephone the Fund for
further information and the appropriate form of application.
Other Purchase Information
The Fund reserves the right, in its sole discretion, to cease offering its
shares for sale at any time or to reject any order for the purchase of its
shares when, in the judgment of the Board of Trustees or officers of the Fund,
such suspension or rejection is in the best interests of the Fund. The Fund and
the Distributor also reserve the right to modify the minimum investment
requirement, the subsequent investment requirement, or the manner in which
shares are offered.
For each shareholder of record, the Fund establishes an open account to which
all shares purchased are credited together with any dividends and capital gain
distributions which are paid in additional shares. See "Other Information
Concerning Shares Of The Fund - Dividends And Capital Gain Distributions"
herein. Purchases of Fund shares will be made in full and fractional shares of
the Fund calculated to three decimal places. In the interest of economy and
convenience, certificates for shares will not be issued.
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<PAGE>
Redemptions
Shares of the Fund may be redeemed by mail, or, if authorized, by telephone,
subject to certain procedures. The value of the shares redeemed may be more or
less than the shareholder's purchase price, depending on the Fund's performance
during the period the shareholder owned its shares. A shareholder owning $12,000
or more of shares of the Fund may elect to have periodic redemptions of not less
than $100 made from his or her account to be paid on a monthly, quarterly,
semiannual or annual basis. The maximum payment per year is 12% of the account
value at the time of the election. A sufficient number of shares to make the
scheduled redemption will normally be redeemed on the date selected by the
shareholder. Depending on the size of the payment requested and fluctuation in
the net asset value, if any, of the shares redeemed, redemptions for the purpose
of making such payments may reduce or even exhaust the account. A shareholder
may request that these payments be sent to a predesignated bank or other
designated party. Capital gains and dividend distributions paid to the account
will automatically be reinvested at net asset value on the distribution payment
date. Redemptions of shares are taxable events on which the shareholder may
recognize a gain or a loss.
By Mail
The Fund will redeem the shares at the net asset value per share next determined
after a redemption request is received in "good order." The net asset value per
share of the Fund is determined as of 4:00 p.m., New York time, on each day that
the Fund, the Transfer Agent and the New York Stock Exchange are open for
business. Requests should be addressed to:
Meyers Pride Value Fund
P.O. Box 182496
Columbus, Ohio 43218-2496
Requests in "good order" must include the following documentation:
(1) a letter of instruction, if required, or a stock assignment specifying
the number of shares or dollar amount to be redeemed, signed by all
registered owners of the shares in the exact names in which they are
registered (if the shares are in street name, the investor may be
required to sell the shares through his or her investment
professional);
(2) any required signature guarantees (see "Signature Guarantees" below);
and
(3) other supporting legal documents, if required, in the case of estates,
trusts, guardianships, custodianships, corporations, pension and
profit sharing plans and other organizations.
Signature Guarantees
To protect shareholder accounts, the Fund and the Transfer Agent from fraud,
signature guarantees are required to enable the Transfer Agent to verify the
identity of the person who has authorized a redemption from an account. The
signature must be guaranteed by a member firm of the New York, American, Boston,
Midwest, Philadelphia or Pacific Stock Exchange or by a commercial bank (not a
savings bank) which is a member of the Federal Deposit Insurance Corporation.
Notarization by a notary public is not acceptable. Signature guarantees are
required for (1) redemptions where proceeds are to be sent to someone other than
the registered shareholder(s) and the registered address, and (2) share transfer
requests. Signature guarantees may also be provided through participation in the
Securities Transfer Association Medallion Program ("STAMP"), the Stock Exchange
Medallion Program ("SEMP"), or the New York Stock Exchange Medallion Signature
Program ("MSP"). Shareholders may contact the Transfer Agent at 1-800-410-3337
for further details.
23
<PAGE>
By Telephone
Provided the Telephone Redemption Option has been authorized by initialing the
appropriate box in the Account Application, a redemption of shares may be
requested by calling the Transfer Agent at 1-800-410-3337 and requesting that
the redemption proceeds be mailed to the primary registration address or wired
per the authorized instructions. If the Telephone Redemption Option is
authorized, the Fund and the Transfer Agent may act on telephone instructions
from the person representing himself or herself to be a shareholder and believed
by the Fund or the Transfer Agent to be genuine. The Transfer Agent's records of
such instructions are binding and the shareholders, not the Fund or the Transfer
Agent, bear the risk of any loss, liability, cost or expense for acting upon
telephone instructions believed to be genuine. The Fund will employ reasonable
procedures to confirm that instructions communicated are genuine and, if it does
not, it may be liable for any losses due to unauthorized or fraudulent
instructions. The procedures employed by the Fund in connection with
transactions initiated by telephone include tape recording of telephone
instructions and requiring some form of personal identification prior to acting
upon instructions received by telephone. The following information must be
supplied by the shareholder or broker at the time a request for a telephone
redemption is made: (1) the shareholder's account number; (2) the shareholder's
social security number; and (3) the name and account number of the shareholder's
designated securities dealer or bank. Telephone redemptions will be suspended
for a period of ten days following a telephonic address change.
Payment
Redemption proceeds for shares of the Fund recently purchased by check may not
be distributed until payment for the purchase has been collected, which may take
up to 15 business days from the purchase date.
Other than described above, payment of the redemption proceeds will be made by
check mailed within seven days after receipt of an order for a redemption.
Investors may request that payment be made by wire transfer to the investor's
designated account at a commercial bank.
A shareholder owning $12,000 or more of shares of the Fund may elect to have
periodic redemptions of at least $100 be made from his or her account to be paid
on a monthly, quarterly, semiannual or annual basis. The maximum payment per
year is 12% of the account value at the time of the election. A sufficient
number of shares to make the scheduled redemption will normally be redeemed on
the date selected by the shareholder. Depending on the size of the payment
requested and fluctuation in the net asset value, if any, of the shares
redeemed, redemptions for the purpose of making such payments may reduce or even
exhaust the account. A shareholder may request that these payments be sent to a
predesignated bank or other designated party. Capital gains and dividend
distributions paid to the account will automatically be reinvested at net asset
value on the distribution payment date.
The right of any shareholder to receive payment with respect to any redemption
may be suspended or the payment of the redemption proceeds postponed during any
period in which the New York Stock Exchange or the Fund or the Transfer Agent
are closed (in addition to weekends or holidays) or trading on such Exchange is
restricted, or under any emergency circumstances as determined by the Securities
and Exchange Commission.
If the Board of Trustees determines that it would be detrimental to the best
interests of the remaining shareholders of the Fund to make payment wholly in
cash, the Fund may pay the redemption proceeds in whole or in part by a
distribution in-kind of readily marketable securities held by the Fund in lieu
of cash in conformity with applicable rules of the Securities and Exchange
Commission. Investors generally will incur brokerage charges on the sale of Fund
securities so received in payment of redemptions.
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<PAGE>
Other Redemption Information
The Fund and the Transfer Agent reserve the right, in their sole discretion, to
suspend the right of telephone redemptions in general or to reject a telephone
redemption with respect to any individual shareholder in particular, either
before, during or after the call, when, in the judgment of the Board of Trustees
or officers of the Fund, such suspension or rejection is in the best interests
of the Fund. The Fund and the Distributor also reserve the right to modify the
redemption procedures from time-to-time including, without limitation, requiring
signature guarantees for all redemption requests.
The Fund reserves the right to redeem involuntary on at least 30 days' notice
the balance in a shareholder's account having a current value of not less than
$250, but not if an account falls below $250 due to a change in the market value
of the Fund's shares.
TAX MATTERS
The Fund intends to qualify and elect to be treated as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). To qualify as such, the Fund must satisfy certain requirements
relating to its sources of income, diversification of its assets, and
distribution of its income. As a regulated investment company, the Fund will not
be required to pay any federal income or excise taxes on any net investment
income and net realized capital gains that are distributed to its shareholders
in accordance with certain timing requirements imposed by the Code.
Shareholders of the Fund normally will have to pay federal income taxes, and any
state or local taxes, on the dividends and any realized net capital gain
distributions they receive from the Fund. At the end of each calendar year, each
shareholder receives information for tax purposes on the dividends and any
realized net capital gain distributions received during that calendar year
including the portion taxable as ordinary income, the portion taxable as capital
gains, the portion, if any, representing a return of capital (which generally is
free of current taxes but results in a basis reduction) and the amount of
dividends eligible for the dividends-received deduction for corporations.
Distributions of net long-term capital gains (i.e., the excess of net long-term
capital gains over net short-term capital losses) will cause any short-term
capital loss realized on the disposition by a shareholder of Fund shares held
for six or fewer months to be recharacterized, to the extent of those
distributions, as long-term capital loss. Under the back-up withholding rules of
the Code, certain shareholders may be subject to 31% withholding of federal
income tax on distributions and payments made by the Fund. Generally,
shareholders are subject to back-up withholding if they have not provided the
Fund with a correct taxpayer identification number and certain other
certifications. Individuals, corporations and other shareholders who are not
U.S. persons under the Code are generally subject to withholding at the rate of
30% (or lower rate provided by an applicable tax treaty) on dividends from the
Fund.
In addition to federal taxes, a shareholder may be subject to state, local or
foreign taxes on payments received from the Fund.
Under current law, the Fund is not liable for any income or franchise tax in the
State of Delaware as long as the Fund qualifies as a regulated investment
company under the Code. The Fund's fiscal year-end is May 31.
The foregoing discussion is intended for general information only. A prospective
shareholder should consult with its own tax adviser as to the tax consequences
of an investment in the Fund including the status of distributions from the Fund
under applicable state or local law. See "Taxation" in the Statement of
Additional Information for a more detailed discussion of the federal, state and
local income tax consequences of investing in the Fund shares.
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<PAGE>
OTHER INFORMATION CONCERNING SHARES OF THE FUND
Determination of Net Asset Value of Shares
The Fund determines the net asset value of the shares of the Fund on each Fund
business day. This determination is made once during each such day as of 4:00
P.M. on regular trading days of the New York Stock Exchange by deducting the
amount of the Fund's liabilities from the value of its assets and dividing the
difference by the number of shares of the Fund outstanding. A share's net asset
value is effective for orders received by the Fund prior to the close of the
business day on which such net asset value is determined.
Equity securities held by the Fund are valued at the last sale price on the
exchange on which they are primarily traded or on the NASDAQ system for unlisted
national market issues, or at the last quoted bid price for securities in which
there were no sales during the day or for unlisted securities not reported on
the NASDAQ system. Short- term obligations with remaining maturities of less
than sixty days are valued at amortized cost, which are valued at fair value as
determined by the Board of Trustees of the Fund. Fund securities (other than
short-term obligations with remaining maturities of less than sixty days) for
which there are no such quotation or valuations are valued at fair value as
determined in good faith by or at the direction of the Fund's Board of Trustees.
Dividends and Capital Gain Distributions
Substantially all of the Fund's net income from dividends and interest is paid
to the Fund's shareholders annually as a dividend, usually in December. For this
purpose, the Fund's net income from dividends and interest consists of all
income from dividends and interest accrued on the assets of the Fund, less all
actual and accrued expenses of the Fund determined in accordance with generally
accepted accounting principles.
The Fund also declares a long-term capital gain distribution to its shareholders
on an annual basis, usually in December, if the Fund's profits during the year
from the sale of securities held for longer than the applicable long-term
capital gains holding period exceeds the Fund's losses during such year from the
sale of securities together with the Fund's net capital losses carried forward
from prior years (to the extent not used to offset short-term capital gains).
The Fund's net short-term capital gains realized during each fiscal year will
also be distributed at that time.
The Fund will also make additional distributions to its shareholders to the
extent necessary to avoid application of the 4% non-deductible excise tax
created by the Tax Reform Act of 1986 on certain undistributed income and net
capital gains of mutual funds.
A shareholder of the Fund may receive dividends and capital gain distributions
either in cash or in additional shares of the Fund.
Dividend and capital gain distributions in the form of cash or checks which are
either (1) returned and marked as "undeliverable" or (2) uncashed for six
months, will be changed automatically and future dividend and capital gain
distributions will be reinvested in the Fund at the net asset value per share
determined as of the date of payment of the distribution. Additionally, any
undeliverable checks or checks that remain uncashed for six months will be
canceled and will be reinvested in the Fund at the net asset value per share
determined as of the date of cancellation.
Expenses
All expenses incurred in the operation of the Fund will be borne by the Fund.
These expenses include: organizational costs; taxes; the execution, recording
and settlement of security transactions including brokerage fees and
commissions; fees of members of the Board of Trustees who are not officers,
managers, employees or holders of 5% or more of the beneficial interests of the
Fund or its affiliates; expenses relating to the issuance, registration and
qualification of shares of the Fund including Securities and Exchange Commission
fees and state Blue Sky
26
<PAGE>
qualification fees and the preparation, printing and mailing of prospectuses for
such purposes; fees to the Investment Manager for its services as investment
adviser and manager; fees to BISYS LP for its administration services, fees to
BISYS Inc. for its fund accounting, dividend disbursement, registration and
transfer agent services; fees to Well Fargo for its custodial agent services;
reimbursements to BISYS LP for its distribution expenses pursuant to the
Distribution Agreement (subject to the cap set forth in the Distribution Plan);
certain insurance premiums; industry association fees; outside auditing and
legal expenses; costs of maintaining the Fund's existence; costs of independent
pricing services; costs attributable to investor services (other than those
arranged by BISYS LP pursuant to Distribution Agreement); costs of shareholders
reports and meetings; costs of preparing, printing and mailing certain
prospectuses, reports, notices, proxy statements and statements of additional
information to shareholders; and any extraordinary expenses.
Description of Shares, Voting Rights and Liabilities
The Trust Instrument permits the Trustees to issue an unlimited number of full
and fractional shares of beneficial interest (par value $0.00001 per share) and
to divide or combine the shares into a greater or lesser number of shares
without thereby changing the proportionate beneficial interests in the Fund. To
date the Fund is the only series of shares issued under the Trust. However, the
Trust reserves the right to create and issue additional series of shares, in
which case the shares of each series would participate equally in the dividends
and assets of the particular series. The Trust may establish additional classes
of any series of shares. For example, the Trust may offer another class of
shares that has lower annual distribution fees or shareholder servicing fees.
Prior to offering another series of shares, the Trust would either issue a new
Prospectus and Statement of Additional information or amend this Prospectus and
the Statement of Additional Information to reflect such issuances.
Each share of the Fund represents an equal proportionate interest in the Fund
with each other share. Shares have no preference, preemptive, conversion or
similar rights. Shares when issued are fully paid and nonassessable, except as
set forth below. Shareholders are entitled to one vote for each share held on
matters on which they are entitled to vote. There is no requirement for the
Trust, and the Board of Trustees has no current intention, of holding annual
meetings of shareholders of the Fund, although the special meetings of Fund
shareholders may be held when, in the judgment of the Board of Trustees, it is
necessary or desirable to submit matters for a shareholder vote. Shares of each
series will vote separately to approve matters specifically concerning such
series such as amendments to any plan of distribution under Section 12b-1 of the
Investment Company Act, any changes in fundamental investment policies or
restrictions of such series, and the approval of any investment management or
advisory contract pertaining to such series (unless any of such matters also
affect other series, in which case all of such affected series shall vote
together). In any event, shares of all series will vote together in the
following matters: (1) the removal of Trustees; (2) the termination of the
Trust; (3) certain amendments of the Trust Instrument; and (4) on such
additional matters relating to the Trust as may be required or authorized by
law, the Trust Instrument or the By-laws. If holders of 10% or more of the
Fund's outstanding shares so request, a meeting of the Fund shareholders will be
called. The Trust will assist in shareholder communications as required by
Section 16(c) of the Investment Company Act.
The Trust is an entity of the type commonly known as a "Delaware Business
Trust." Under Delaware law, shareholders of such a business trust are entitled
to the same limitation of personal liability extended to stockholders of a
corporation. Under the Trust Instrument, no shareholder shall be personally
liable for the debts, liabilities, obligations and expenses incurred by,
contracted for, or otherwise existing with respect to the Trust or any series.
The Trust Instrument contains an express disclaimer of shareholder liability for
acts or obligations of the Trust and provides for indemnification and
reimbursement of expenses out of Fund property for any shareholder held
personally liable for the obligations of a Fund or the Trust solely by reason of
his or her being or having been a shareholder. The Trust Instrument also
provides for the maintenance, by or on behalf of the Trust and the Fund, of
appropriate insurance (for example, fidelity bond and errors and omissions
insurance) for the protection of the Trust and the Fund, their shareholders,
trustees, officers, employees and agents, covering possible tort and other
liabilities. Thus, the risk of a shareholder incurring financial loss on account
of shareholder liability is limited to
27
<PAGE>
circumstances in which Delaware law did not apply, inadequate insurance existed,
and the Fund itself was unable to meet its obligations.
The Fund's Statement of Additional Information contains more detailed
information about the Fund, including information related to: (1) investment
policies and restrictions of the Fund; (2) the Trustees, officers, Investment
Manager, Administrator, Fund Accounting Agent, Transfer Agent and Custodian of
the Fund; (3) portfolio transactions; (4) the Fund's shares, including rights
and liabilities of shareholders; (5) additional performance information,
including the method used to calculate yield and total rate of return quotations
of the Fund; (6) determination of the net asset value of shares of the Fund; and
(7) the audited Statement of Assets and Liabilities of the Fund at June 7, 1996,
and (8) unaudited interim financial statements of the Fund as of and at December
31, 1996.
PERFORMANCE INFORMATION
Performance information concerning the Fund may from time-to-time be used in
advertisements, shareholder reports or other communications to shareholders. The
Fund may provide period and average annualized "total rates of return" with
respect to the Fund. The "total rate of return" of the Fund refers to the change
in the value of an investment in a Fund over a stated period based on any change
in net asset value per share and includes the value of any shares purchasable
with any dividends or capital gain distributions declared during such period.
Period total rates of return may be annualized. An annualized total rate of
return is a compounded total rate of return which assumes that the period total
rate of return is generated over a 52-week period, and that all dividends and
capital gain distributions are reinvested. An annualized total rate of return
will be slightly higher than a period total rate of return if the period is
shorter than one year, because of the effect of compounding.
Historical total return information for any period or portion thereof prior to
the establishment of the Fund will be that of the Fund, adjusted to assume that
all charges, expenses and fees of the Fund which are presently in effect were
deducted during such periods.
The Fund may provide "yield" quotations with respect to the Fund. The "yield" of
the Fund refers to the income generated by an investment in the Fund over a
30-day or one-month period (which period shall be stated in any advertisement or
communications with a shareholder). This income is then "annualized," that is,
the amount of income generated by the investment over the period is assumed to
be generated over a 52-week period and is shown as a percentage of Investment. A
"yield" quotation, unlike a total rate of return quotation, does not reflect
changes in net asset value.
From time-to-time the Fund may also quote fund rankings from various sources,
such as Lipper Analytical Services, Inc., and may compare its performance to
that of unmanaged securities indices, such as the S&P 500 (Standard & Poor's 500
Composite Stock Price Index) and the Dow Jones Industrial Average. "Standard &
Poor," "S&P" and "Standard & Poor's 500" are trademarks of Standard & Poor
Corporation. See the Statement of Addition Information for further information
concerning the calculation of yield and any total rate of return quotations.
Since the Fund's yield and total rate of return quotations are based on
historical earnings and since such yield and rates of return fluctuate over
time, such quotations should not be considered as an indication or
representation of the future performance of the Fund.
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<PAGE>
MEYERS INVESTMENT TRUST
MEYERS PRIDE VALUE FUND
--------------------
Trustees and Officers
Shelly J. Meyers
Trustee (Chairman of the Board)
and President
Leslie C. Sheppard
Trustee and Executive Vice President
Gwendolyn H. Baba
Trustee
Jay W. Gendron, Esq.
Trustee
Robert E. Gipson, Esq.
Trustee
Leonard Greenhalgh, M.B.A., Ph.D.
Trustee
Duane E. McWaine, M.D.
Trustee
Mark Sichley
Vice President
Tejal Albanese
Treasurer
Theresa Donovan
Secretary
Philip McKinley
Assistant Secretary
Alaina Metz
Assistant Secretary
Bruce Treff
Assistant Secretary
Investment Manager
Meyers Capital Management, LLC
8901 Wilshire Boulevard
Beverly Hills, California 90211
Distributor and Administrator
BISYS Fund Services Limited Partnership
3435 Stelzer Road
Columbus, Ohio 43219
Fund Accounting Agent
and Transfer Agent
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
Custodian
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163
Legal Counsel
Pollet & Woodbury, a Law Corporation
10900 Wilshire Boulevard
Suite 500
Los Angeles, California 90024
Legal Counsel for the
Independent Trustees
Mayer, Brown & Platt
1675 Broadway, Suite 1900
New York, New York 10019
Independent Auditors
KPMG Peat Marwick LLP
345 Park Avenue
New York, New York 10154
29
<PAGE>
PART B
<PAGE>
MEYERS PRIDE VALUE FUND
(formerly known as the Meyers Sheppard Pride Fund)
A separate portfolio of the Meyers Investment Trust
(formerly the Meyers Sheppard Investment Trust)
--------------
8901 Wilshire Boulevard
Beverly Hills, California 90211
Telephone Number: (310) 657-9393
Facsimile Number: (310) 657-9380
STATEMENT OF ADDITIONAL INFORMATION
January 30, 1997
The Meyers Pride Value Fund (the "Fund") is organized as a separate series of
the Meyers Investment Trust (the "Trust"), a business trust organized under the
laws of the State of Delaware. The Fund was formerly known as the Meyers
Sheppard Pride Fund, and the Trust was formerly known as the Meyers Sheppard
Investment Trust.
The Fund is an open-ended no-load diversified mutual fund whose overall
investment objective is to attain long-term capital appreciation through
investing in a diversified portfolio of equity securities of under-valued but
nevertheless fundamentally sound companies which have been identified as
generally having progressive policies towards gays and lesbians, and at a
minimum having in place specifically stated policies against discrimination in
hiring and promotion based upon sexual orientation. See "Investment And Social
Objectives, Policies And Restrictions" herein.
This Statement of Additional Information sets forth information which may be of
interest to investors but which is not necessarily included in the Prospectus
for the Fund dated January 30, 1997, as amended or supplemented from time to
time. This Statement of Additional Information should be read in conjunction
with the Prospectus dated January 30, 1997, a copy of which may be obtained by
an investor without charge by contacting BISYS Fund Services Limited
Partnership, the Fund's Distributor, at 3435 Stelzer Road, Columbus, Ohio 43219,
or at (800) 410- 3337. This Statement of Additional Information has been
incorporated into the Prospectus.
This Statement of Additional Information is NOT a prospectus and is authorized
for distribution to prospective investors only if preceded or accompanied by an
effective prospectus and should be read only in conjunction with such
prospectus.
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TABLE OF CONTENTS
Page
The Fund...................................................................B-3
Investment And Social Objectives, Policies And Restrictions................B-4
Tax-sheltered Retirement Plans............................................B-13
Investment Programs.......................................................B-16
Performance Information...................................................B-16
Determination Of Net Asset Value; Valuation Of Fund Securities............B-17
Management Of And Service Providers For The Trust And The Fund............B-18
Independent Auditors......................................................B-25
Code Of Ethics............................................................B-26
Taxation..................................................................B-26
Fund Transactions And Brokerage Commissions...............................B-27
Description Of Shares, Voting Rights And Liabilities......................B-29
Financial Statements......................................................B-30
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THE FUND
The Meyers Pride Value Fund (the "Fund") is organized as a separate series of
the Meyers Investment Trust (the "Trust"), a business trust organized under the
laws of the State of Delaware on March 25, 1996. The Fund is an open-ended
no-load diversified management investment company whose overall investment
objective is to attain long-term capital appreciation through investing in a
diversified portfolio of equity securities of under-valued but nevertheless
fundamentally sound companies. The Fund will invest in securities of selected
companies which have been identified by Meyers Capital Management, LLC ("Meyers
Capital Management"), the Investment Manager of the Fund, as generally having
progressive policies towards gays and lesbians, but at a minimum having in place
specifically stated policies against discrimination in hiring and promotion
based upon sexual orientation. See "Investment And Social Objectives, Policies
And Restrictions" herein.
The Fund is the first series to be established under the Trust. As a diversified
fund, the Fund is required, by the Investment Company Act of 1940, as amended
(the "Investment Company Act"), with respect to 75% of its assets, to invest no
more than 5% of its assets in the securities of any one issuer and not more than
10% of the outstanding voting securities of an issuer may be owned.
The Fund was formerly known as the Meyers Sheppard Pride Fund, until the
Trustees approved a change in the Fund's name to the Meyers Pride Value Fund on
January 3, 1997; and the Trust was formerly known as the Meyers Sheppard
Investment Trust, until the Trust's name was changed to the Meyers Investment
Trust pursuant to an amendment to the Trust's Certificate of Trust filed with
the Delaware Secretary of State on January 29, 1997.
The Fund's investment and social objectives and policies, including the
identification of companies which have progressive policies towards gays and
lesbians, are, with the exception of certain fundamental policies, determined by
the Investment Manager, subject to the Board of Trustees providing broad
supervision over the affairs of both the Fund and the Trust. The Fund has, to
date, identified over 325 publicly-traded companies meeting this criteria, most
of which are listed on the Standard & Poor's 500 Composite Stock Price Index
(the "S&P 500"). A majority of the Board of Trustees are not affiliated with the
Investment Manager.
The Investment Manager serves as the Fund's manager and investment adviser
pursuant to an Investment Management Agreement. As part of its management
function, the Investment Manager generally supervises (subject to the overall
authority of the Board of Trustees and officers of the Trust) the overall
administration of the Fund, including its various agents and service providers,
including those providing distribution, fund accounting, dividend disbursement,
transfer agent and custodian services. As part of its investment advisory
function, the Investment Manager manages the investments of the Fund day-to-day
in accordance with the Fund's investment and social objectives and policies, and
determines the composition of the securities which the Fund may invest (i.e.,
which companies designated by the Investment Manager as having
anti-discrimination policies in place and otherwise demonstrating progressive
policies towards gays and lesbians). For its management and investment advisory
services, the Investment Manager receives from the Fund a monthly fee equal, on
an annual basis, to 1% of the Fund's average daily net assets. See "Management
Of And Service Providers For The Trust And Fund" herein.
Shares of the Fund are sold continuously by the Distributor of the Fund, BISYS
Fund Services Limited Partnership, an Ohio limited partnership ("BISYS LP"), at
the next determined net asset value per share. The minimum initial investment in
the Fund is generally $1,000, and subsequent investments are generally $100. A
lower initial investment of $250 is permitted for Automatic Investment Plans
with subsequent investments allowed at a minimum of $50. The Trust, on behalf of
the Fund, has adopted a Distribution Plan which permits reimbursement of certain
expenses incurred by the Distributor in connection with the distribution of
shares of the Fund, up to a maximum of 0.25% of net asset value annually.
The Fund offers to redeem shares of the Fund from its shareholders at any time
at next determined net asset value per share. The redemption price may be more
or less than the purchase price.
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No sales load is charged with respect to either the purchase or redemption of
Fund shares. An investor should contact the Distributor regarding any further
information describing the procedures under which Fund shares may be purchased
and redeemed. See "Purchases And Redemptions" in the Prospectus.
INVESTMENT AND SOCIAL OBJECTIVES, POLICIES AND RESTRICTIONS
Investment Objective and Social Objective
The overall investment objective of the Fund (the "Investment Objective") is to
attain long-term capital appreciation by investing in a diversified portfolio of
equity securities of undervalued but nevertheless fundamentally sound companies
which have been identified as having met the Social Objective. Companies which
meet the "Social Objective" are defined as companies which, in general, have
been identified as having progressive policies towards gays and lesbians, but at
a minimum have in place specifically stated policies against discrimination in
hiring and promotion based upon sexual orientation (the "Fundamental Social
Criteria").
The Fund believes that enterprises which are responsive toward addressing the
concerns of the gay and lesbian community and other progressive
socially-sensitive constituencies will benefit financially from the consumer
loyalty generated by such social awareness and will therefore be more likely to
prosper in the long-term. The Fund also believes such enterprises will be less
likely to incur certain legal liabilities that may arise when an enterprise is
found to discriminate against minorities, such as members of the gay and lesbian
community. The Fund believes such enterprises should also, over the longer term,
be able to generate additional stockholder market-value as an indirect result of
the greater investment in such enterprises, through the Fund, by the gay and
lesbian community (which, per capita, is one of the wealthiest demographic
groups in the United States), as well as supporters of the gay and lesbian
community.
Investment Strategy
In order to achieve the Investment Objective, the Fund will use a value-based
investment approach focusing on a longer-term market cycle (at least three to
five years), consistent with moderate levels of risk, wherein the Investment
Manager will identify companies exhibiting the following investment
characteristics: (1) low or inexpensive current value relative to earnings
estimates, cash flow, book value and/or break-up value; (2) good management; (3)
strong business fundamentals; and (4) positive earnings momentum.
The equity securities the Fund may invest in include common stocks, preferred
stocks and warrants, and certain debt instruments convertible into stock,
primarily in publicly-traded companies. Publicly-traded companies refers to
companies whose equity securities are traded over a national stock exchange or
over-the-counter through the National Association of Securities Dealers
Automatic Quotation ("NASDAQ") system or the National Association of Securities
Dealers, Inc.("NASD") Electronic Bulletin Board. The Fund may invest in
companies in all ranges of capitalization. The Investment Manager expects that
no less than 60% of the Fund's net assets will be invested in equity securities
of "large capitalization" companies, which the Investment Manager defines as
companies with total capitalization of at least $2 billion.
Since it is anticipated that most equity securities will be held for the
longer-term using this strategy, the Investment Manager anticipates there will
likely be a low rate of portfolio turnover, and estimates portfolio turn-over in
the first year of the Fund will be approximately 30% to 60%.
The Investment Manager expects that under normal market conditions the Fund will
typically invest up to 95% of its assets (and sometimes virtually all of its
assets) in the equity securities described above and, subject to certain
limitations, certain options in these securities for hedging purposes. Under
distressed market conditions the Fund may maintain its assets in cash or
cash-equivalents, or invest in money-market instruments or obligations of the
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United States government or government-sponsored enterprises and other types of
government-backed securities. Such investments would be temporary defensive in
nature and would not be expected to exceed 50% of the Fund's net assets.
Although returns on these assets are historically less than investment in equity
and other non-governmental types of securities, the risk of loss in investing in
such instruments is lower as well.
Identification of Companies Which Satisfy Social Objective
The determination of which companies have satisfied the Social Objective, and
may therefore be considered as appropriate investment vehicles for the Fund, is
based upon recommendations of the Investment Manager and the approval by the
Board of Trustees. As of the date of this Prospectus, over 325 publicly-traded
companies, most of which are listed on the S&P 500, have been identified as
having satisfied the Social Objective.
In making its recommendations, the Investment Manager evaluates companies based
upon (1) the Fundamental Social Criteria and (2) such additional criteria and
considerations consistent with the Social Objective as are determined reasonable
by the Investment Manager from time-to-time in its sole discretion, and approved
in general by the Board of Trustees (the "Non-Fundamental Social Criteria").
Such methodology is, by its nature, subjective.
As of the date of this Prospectus, the Non-Fundamental Social Criteria consists
of two separate areas of general focus, employee relations and corporate
citizenship.
In evaluating a company's gay and lesbian employee relations, the Investment
Manager evaluates the company's record and policies with respect to labor
matters affecting gay and lesbian employees, such as: (1) the company's
commitment to equal employment opportunity for gays and lesbians, both overall
and in executive positions, and the scope of the company's policies against
discrimination based upon sexual orientation; (2) the breadth, quality and
innovation of the company's employee benefit programs and their positive effect
on gay and lesbian employees (including inclusion of gay and lesbian partners
and families in employee benefit programs); and (3) the company's relationships
with gay and lesbian suppliers, vendors, and customers.
In evaluating a company's corporate citizenship, the Investment Manager reviews
the company's record on gay and lesbian related charitable giving and other
philanthropic activities and its interaction with the gay and lesbian community,
such as advertising in gay and lesbian directed publications or other media.
It is not necessary that a company satisfy all of the factors and considerations
described above in the Non- Fundamental Social Criteria in order to be
identified as having satisfied the Social Objective. However, every company must
satisfy the Fundamental Social Criteria in order to be included on the list of
approved companies.
The Investment Manager uses publicly available information in evaluating
companies, including information disseminated by the Human Rights Campaign, the
largest national gay and lesbian organization. The Investment Manager also
directly reviews company policies and, in certain cases, discusses those
policies with the company's management.
The Investment Manager intends to vote proxies of companies included in the Fund
consistent with the Social Objective. The inclusion of a company on the Fund's
list of approved companies with progressive policies towards gays and lesbians
does not imply that the company has requested it be included on the list or
approved such inclusion, has sought the approval of the Fund with respect to the
development and implementation of the company's employment or corporate
citizenship policies, or is affiliated with the Fund in any manner.
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<PAGE>
Investment Policies
The Fund will diversify its holdings to reduce the risks of investing. See
"Fundamental Investment Restrictions" and "Non-Fundamental State And Federal
Restrictions" below relative to the Fund's threshold diversification
requirements. If the Fund were to concentrate its investments in a single
industry, the Fund would be more susceptible to any single economic, political
or regulatory occurrence than would be another investment company which was not
so concentrated. See "Risk Factors" below.
The Fund may invest up to 10% of its total assets in convertible securities,
including bonds, debentures, notes, preferred stocks, warrants or other
securities that may be converted into or exchanged for a prescribed amount of
common stock of the same or a different issuer within a particular period of
time at a specified price or formula. Certain convertible securities may in
addition be callable, in whole or in part, at the option of the issuer. A
convertible security entitles the holder to receive interest paid or accrued on
debt or the dividend paid on preferred stock until the convertible security
matures or is redeemed, converted or exchanged. Before conversion, convertible
securities have characteristics similar to nonconvertible debt securities in
that they ordinarily provide a stable stream of income with generally higher
yields than those of common stocks of the same or similar issuers. Convertible
securities rank senior to common stock in a corporation's capital structure but
are usually subordinated to comparable nonconvertible securities. The Investment
Manager will limit investments in convertible securities to those generally
considered to be "investment grade" debt securities, which the Investment
Manager defines as being rated BBB or higher by Standard & Poor or Baa or higher
by Moody. The highest rated debt securities (securities rated AAA by Standard &
Poor or Aaa by Moody) carry, in the opinion of such investment ratings agencies,
the smallest degree of investment risk and the capacity to pay interest and
repay principal is very strong. See "Fundamental Investment Restrictions" and
"Non-Fundamental State And Federal Restrictions" below relative to the maximum
percentage of Fund assets which can be invested in convertible securities. Also
see "Risk Factors" below.
The Fund may purchase a publicly-traded company's "restricted securities." These
securities are not registered for sale to the general public or are offered in
an exempt non-public offering under the Securities Act of 1933, as amended (the
"Securities Act"), including securities offered and sold to "qualified
institutional buyers" under Rule 144A under the Securities Act. See "Fundamental
Investment Restrictions" and "Non-Fundamental State And Federal Restrictions"
below relative to the maximum percentage of Fund assets which can be invested in
restricted securities. Also see "Risk Factors" below.
The Fund may invest cash reserves in (1) direct obligations and/or short-term
debt securities (i.e., securities having a remaining maturity of one year or
less) issued or guaranteed by agencies or instrumentalities of the United States
Government and/or (2) bankers' acceptances, commercial paper or certificates of
deposit, provided that the issuer satisfies the Social Criteria of the Fund. The
Fund's policy is to hold its assets in such securities pending readjustment of
its portfolio holdings of stocks in order to meet anticipated redemption
requests. Although the U.S. government provides financial support to U.S.
government sponsored agencies or instrumentalities, no assurance can be given
that it will always do so. The U.S. government and its agencies and
instrumentalities do not guarantee the market value of their securities;
consequently, the value of such securities will fluctuate.
The Fund may lend its securities to brokers, dealers and financial institutions,
provided that (1) the loan is secured continuously by collateral consisting of
U.S. Government securities or cash or letters of credit, which is marked to the
market daily to ensure that each loan is fully collateralized at all times; (2)
the Fund may at any time call the loan and obtain the return of the securities
loaned within five business days; (3) the Fund will receive any interest or
dividends paid on the securities loaned; and (4) the aggregate market value of
securities loaned will not at any time exceed 30% of the total assets of the
Fund. The Fund will earn income for lending its securities because cash
collateral pursuant to these loans will be invested in short-term money market
instruments. In connection with lending securities, the Fund may pay reasonable
finders, administrative and custodial fees. No such fees will be
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<PAGE>
paid to any person if it or any of its affiliates is affiliated with the Fund or
the Investment Manager. See "Risk Factors" below.
The Fund may enter into certain transactions in stock options for the purpose of
hedging against possible increases in the value of securities which are expected
to be purchased by the Fund or possible declines in the value of securities
which are held by the Fund. Generally, the Fund would only enter into such
transactions on a short-term basis pending readjustment of its holdings of
underlying stocks. The purchase of an option on an equity security provides the
holder with the right, but not the obligation, to purchase the underlying
security, in the case of a call option, or to sell the underlying security, in
the case of a put option, for a fixed price at any time up to a stated
expiration date. The holder is required to pay a non-refundable premium, which
represents the purchase price of the option. The holder of an option can lose
the entire amount of the premium, plus related transaction costs, but not more.
Upon exercise of the option, the holder is required to pay the purchase price of
the underlying security in the case of a call option, or deliver the security in
return for the purchase price in the case of a put option. Prior to exercise or
expiration, an option position may be terminated only by entering into a closing
purchase or sale transaction. This requires a secondary market on the exchange
on which the position was originally established. Each exchange on which option
contracts are traded has established a number of limitations governing the
maximum number of positions which may be held by a trader, whether acting alone
or in concert with others. The Investment Manager does not believe that these
trading and position limits would have an adverse impact on the possible use of
hedging strategies by the Fund. See "Risk Factors" below.
To the extent practicable, the Fund will attempt to be fully invested. The
ability of the Fund to meet its performance goals will depend to some extent on
the size and timing of cash flows into and out of the Fund as well as the Fund's
expenses. Adjustments in the securities holdings of the Fund to accommodate cash
flows will result in brokerage expenses. There can, of course, be no assurance
that the Fund will attain the Investment Objective. The investment strategies
used by the Fund to attain the Investment Objective may be changed without
approval by the shareholders of the Fund.
In accordance with the Investment Company Act, the Fund may invest a maximum of
up to 10% of the value of its total assets in securities of other investment
companies, and the Fund may own up to 3% of the total outstanding voting stock
of any one investment company. In addition, up to 5% of the value of the Fund's
total assets may be invested in the securities of any one investment company. As
an investor in an investment company, the Fund would bear its ratable share of
that investment company's expenses, including its administrative and advisory
fees. At the same time, the Fund would continue to pay its own investment
management fees and other expenses, however, the Investment Manager has agreed
to waive its fees to the extent necessary to comply with state securities laws.
The Fund will readjust its securities holdings periodically to the extent the
Investment Manager deems it prudent to do so. The timing and extent of
adjustments in the holdings of the Fund will reflect the Investment Manager's
judgment as to: (1) the appropriate portfolio mix to achieve the Investment
Objective of the Fund; (2) the appropriate balance between the goal of
correlating the holdings of the Fund with the Social Criteria of the Fund; (3)
the goals of minimizing transaction costs and keeping sufficient reserves
available for anticipated redemptions of shares; and (4) compliance with certain
restrictions of the Fund imposed by the Fund's investment policies, including
those mandated by the Investment Company Act. See "Fundamental Investment
Restrictions" below. There can be no assurance that any portfolio enhancement
strategies will be successful, and the performance of the Fund may as a result
be worse than if such strategies were not undertaken. The Board of Trustees of
the Fund will receive and review, at least quarterly, a report prepared by the
Investment Manager's evaluating the performance of the Fund, and will consider
what action, if any, should be taken in the event of a significant change in the
performance of the Fund.
The Fund may make short sales of securities or maintain short positions in
securities provided an investment in the subject securities is otherwise
consistent with the Fund's Investment Objective and Social Objective. Pursuant
to
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the Investment Company Act, the Fund will maintain government securities and
certain other assets in amounts sufficient to cover the fair market value of
such sales and positions and margin posted with brokers for such sales and
positions. No more than 25% of the Fund's net assets will be used as collateral
for such short positions at any one time.
Fundamental Investment Restrictions
The Fund has adopted the following fundamental investment policies which may not
be changed without approval by holders of a majority of the outstanding shares
of the Fund, which as used in this Statement of Additional Information means the
vote of the lesser of: (1) 67% or more of the outstanding "voting securities" of
the Fund (as such term is defined in the Investment Company Act), present at a
meeting, if the holders of more than 50% of the outstanding "voting securities"
of the Fund are present or represented by proxy, or (2) more than 50% of the
outstanding "voting securities" of the Fund. The Fund will not as a matter of
operating policy:
1. Borrow money, except from banks, and except that as a temporary measure for
extraordinary or emergency purposes the Fund may borrow an amount not to
exceed one-third of the current value of the net assets of the Fund
including the amount borrowed, moreover, the Fund may not purchase any
securities at any time at which borrowings exceed 5% of the total assets of
the Fund, taken in each case at market value (it is intended that the Fund
would borrow money only from banks and only to accommodate requests for the
withdrawal of all or a portion of a beneficial interest in the Fund while
effecting an orderly liquidation of securities) (for additional related
restrictions, see paragraph 1 under the caption "Non-Fundamental State and
Federal Restrictions" below). In the event that the asset coverage for the
Fund's borrowings falls below 300%, the Fund will reduce within three days
the amount of its borrowings in order to provide for 300% asset coverage.
2. Purchase any security or evidence of interest therein on margin, except
that the Fund may obtain such short-term credit as may be necessary for the
clearance of purchases and sales of securities and except that the Fund may
make deposits of initial deposit and variation margin in connection with
the purchase, ownership, holding or sale of options;
3. Write any put or call option or any combination thereof, provided that this
shall not prevent: (i) the purchase, ownership, holding or sale of warrants
where the grantor of the warrants is the issuer of the underlying
securities; or (ii) the purchase, ownership, holding or sale of options on
securities.
4. Underwrite securities issued by other persons, except insofar as the Fund
may technically be deemed an underwriter in selling a security.
5. Make loans to other persons except: (i) through the lending of securities
held by the Fund and provided that any such loans not exceed 30% of its
total assets (taken in each case at market value); or (ii) through the use
of repurchase agreements or the purchase of short-term obligations and
provided that not more than 10% of the Fund's net assets will be invested
in repurchase agreements maturing in more than seven days (for additional
related restrictions, see paragraph 6 immediately following).
6. Invest in securities which are subject to legal or contractual restrictions
on resale (other than repurchase agreements maturing in not more than seven
days and other than securities which may be resold pursuant to Rule 144
and/or Rule 144A under the Securities Act of 1933 if the Investment
Manager, determines that a liquid market exists for such securities) if, as
a result thereof, more than 15% of its net assets (taken at market value)
would be so invested (including repurchase agreements maturing in more than
seven days).
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7. Purchase or sell real estate (including limited partnership interests but
excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity contracts
in the ordinary course of business (the Fund reserves the freedom of action
to hold and to sell real estate acquired as a result of the ownership of
securities by the Fund).
8. Make short sales of securities or maintain a short position unless: (i) at
all times when a short position is open the Fund owns an equal amount to
such securities or securities convertible into or exchangeable, without
payment of any further consideration, for securities of the same issue as,
and equal in amount to, the securities sold short; and (ii) the Fund
complies with the collateral requirements of the Investment Company Act and
not more than 25% of the Fund's net assets (taken in each case at market
value) is held as collateral for such sales at any one time.
9. Issue any senior security (as that term is defined in Section 18(f) of the
Investment Company Act) if such issuance is specifically prohibited by the
Investment Company Act or the rules and regulations promulgated thereunder,
except as appropriate to evidence a debt incurred without violating
paragraph 1 above.
10. As to 75% of the Fund's assets, purchase securities of any issuer if such
purchase at the time thereof would cause more than 5% of the Fund's assets
(taken at market value) to be invested in the securities of such issuer
(other than securities or obligations issued or guaranteed by the United
States or any agency or instrumentality of the United States), except that
for purposes of this restriction the issuer of an option shall not be
deemed to be the issuer of the security or securities underlying such
contract.
11. Invest more than 25% of the Fund's assets in any one industry.
The Fund's fundamental policies also include its Investment Objective and
adherence to the Fundamental Social Criteria. Although adherence to the
Fundamental Social Criteria is a fundamental policy, the other factors and
considerations used by the Investment Manager in making its recommendations
consistent with the overall Social Objective and the Board in approving such
recommendations are discretionary and non-fundamental.
Whenever the Fund is requested to vote on a change in the investment
restrictions of the Fund, or the Investment Objective, the Fund will hold a
meeting of the shareholders of the Fund and will cast its vote as instructed by
the Fund's shareholders.
Non-Fundamental State and Federal Restrictions
In order to comply with certain state and federal statutes and regulatory
policies, the Fund will not as a matter of operating policy:
1. Borrow money for any purpose in excess of 10% of the total assets of the
Fund (taken in each case at cost) (moreover, the Fund will not purchase
any securities at any time at which borrowings exceed 5% of its total
assets {taken at market value}).
2. Pledge, mortgage or hypothecate for any purpose in excess of 10% of the
net assets of the Fund (taken in each case at market value), provided that
collateral arrangements with respect to options, including deposits of
initial deposit and variation margin, are not considered a pledge of
assets for purposes of this restriction.
3. Sell any security which the Fund does not own unless by virtue of its
ownership of other securities it has at the time of sale a right to obtain
securities, without payment of further consideration, equivalent in kind
and amount to the securities sold, and provided that if such right is
conditional the sale is made upon the same conditions.
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4. Invest for the purpose of exercising control or management.
5. Purchase securities issued by any registered investment company, except by
purchase in the open market where no commission or profit to a sponsor or
dealer results from such purchase other than the customary broker's
commission, or except when such purchase, though not made in the open
market, is part of a plan of merger or consolidation; provided, however,
the Fund will not purchase the securities of any registered investment
company if such purchase at the time thereof would cause more than 10% of
the total assets of the Fund (taken at the greater of cost or market value)
to be invested in the securities of such issuers or would cause more than
3% of the outstanding voting securities of any such issuer to be held by
the Fund; and provided, further, that the Fund may also purchase securities
issued by any open-end investment company provided, however, that the Fund
will not purchase the securities of any registered investment company if
such purchase at the time thereof would cause more than 10% of the total
assets of the Fund (taken at the greater of cost or market value) to be
invested in the securities of such issuers or would cause more than 3% of
the outstanding voting securities of any such issuer to be held by the
Fund; and provided, further, that the Fund shall not purchase securities
issued by any open-end investment company.
6. Invest more than 15% of the net assets of the Fund (taken at the greater of
cost or market value) in securities that are illiquid or not readily
marketable (defined as a security that cannot be sold in the ordinary
course of business within seven days at approximately the value at which
the Fund has valued the security).
7. Invest more than 10% of the net assets of the Fund (taken at the greater of
cost or market value) in securities that are restricted as to resale by the
Securities Act of 1933, as amended (including Rule 144 and Rule 144A
securities).
8. Invest more than 10% of the net assets of the Fund (taken at the greater of
cost or market value) in securities that are issued by issuers which
(including the period of operation of any predecessor company or
unconditional guarantor of such issuer) have been in operation less than
three years (including predecessors).
9. Purchase securities of any issuer if such purchase at the time thereof
would cause it to hold more than 10% of any class of securities of such
issuer, for which purposes all indebtedness of an issuer shall be deemed a
single class and all preferred stock of an issuer shall be deemed a single
class, except that option contracts shall not be subject to this
restriction.
10. Purchase or retain any securities issued by an issuer any of whose
officers, directors, trustees or security holders is an officer or Trustee
of the Fund, or is an officer or director of the Investment Manager (the
investment adviser and manager of the Fund), if after the purchase of the
securities of such issuer by the Fund one or more of such persons owns
beneficially more than 1/2 of 1% of the shares or securities, or both, all
taken at market value, of such issuer, and such persons owning more than
1/2 of 1% of such shares or securities together own beneficially more than
5% of such shares or securities, or both, all taken at market value.
11. Invest more than 5% of the Fund's net assets in warrants (valued at the
lower of cost or market), but not more than 2% of the Fund's net assets may
be invested in warrants not listed on the New York Stock Exchange or the
American Stock Exchange (notwithstanding the foregoing, warrants attached
to other securities are not subject to this limitation.
12. Make short sales of securities or maintain a short position, unless: (i) at
all times when a short position is open, the Fund owns an equal amount of
such securities or securities convertible into or exchangeable, without
payment of any further consideration, for securities of the same issue and
equal in amount to the
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securities sold short; and (ii) not more than 25% of the Fund's net assets
(taken at market value) is represented by such securities, or securities
convertible into or exchangeable for such securities, at any one time.
13. Enter into options transactions unless: (i) each such option is traded on
an exchange; (ii) the aggregate premiums paid on all such options which are
held at any time by the Fund do not exceed 20% of the Fund's total net
assets; and (iii) the aggregate margin deposits required on all such
futures or options held at any time do not exceed 5% of the Fund's total
assets.
14. Purchase securities of "unseasoned issuers" if such investments will exceed
5% of the Fund's total assets (an unseasoned issuer is an issuer {including
its predecessors} that has been in operation for less than three years).
Restrictions 1 through 14 are not fundamental and may be changed with respect to
the Fund by the Board of Trustees without approval by the Fund's shareholders or
its other investors. The Fund will comply with the state securities laws and
regulations of all states in which it is registered.
In order to permit the sale of the Shares in certain states, the Fund reserves
the right to may make commitments more restrictive than the investment policies
and restrictions set forth above. If the Fund determines that any such
commitment is not in its best interests, it may choose not to sell the Shares in
these states or seek a waiver in certain states.
Percentage Restrictions
If a percentage restriction on investment or utilization of assets set forth
above or referred to in the Prospectus is adhered to at the time an investment
is made or assets are so utilized, a later change in percentage resulting from
changes in the value of the securities held by the Fund will not be considered a
violation of policy; provided that if at any time the ratio of borrowings of the
Fund to the net asset value of the Fund exceeds the ratio permitted by Section
18(f) of the Investment Company Act, the Fund will take the corrective action
required by Section 18(f).
Risk Factors
Investment Objective
There can be no assurance that the Fund will be able to attain its Investment
Objective. It should be noted that the limitation of the Fund's investments to
equity securities of companies with progressive policies towards gays and
lesbians will tend to limit the availability of investment opportunities to the
Fund compared to that for other investment companies that have a comparable
investment objective to that of the Fund.
Common Stocks
Common stocks, the most familiar type of equity securities, represent an equity
(ownership) interest in a corporation. Although equity securities have a history
of long-term growth in value, their prices fluctuate based on changes in a
company's financial condition and on overall market, economic and political
conditions. Smaller companies are especially sensitive to these factors.
Convertible Securities
While no securities investment is completely without risk, investments in
convertible securities of a corporation generally entail less risk than the
corporation's common stock, although the extent to which such risk is reduced
depends in large measure upon the degree to which the convertible security sells
above its value as a fixed income
B-11
<PAGE>
security. Convertible securities have unique investment characteristics in that
they generally: (1) have higher yields than common stocks, but lower yields than
comparable non-convertible securities; (2) are less subject to fluctuation in
value than the underlying stock since they have fixed income characteristics;
and (3) provide the potential for capital appreciation if the market price of
the underlying common stock increases. The investment value of a convertible
security is influenced by changes in interest rates, with investment value
declining as interest rates increase and increasing as interest rates decline.
The credit standing of the issuer and other factors also may have an effect on
the convertible security's investment value. The conversion value of a
convertible security is determined by the market price of the underlying common
stock. If the conversion value is low relative to the investment value, the
price of the convertible security is governed principally by its investment
value. Generally, the conversion value decreases as the convertible security
approaches maturity. To the extent the market price of the underlying common
stock approaches or exceeds the conversion price, the price of the convertible
security will be increasingly influenced by its conversion value. A convertible
security generally will sell at a premium over its conversion value by the
extent to which investors place value on the right to acquire the underlying
common stock while holding a fixed income security. The Fund only intends to
invest in convertible securities where the value of the option is minimal and
the convertible security trades on the basis of its coupon.
Illiquid and Restricted Securities
The Fund may purchase a publicly-traded company's "restricted securities."
Restricted securities may not be traded on the public market except in
accordance with Rule 144 under the Securities Act, which mandates certain
holding periods, information dissemination requirements, and certain other
conditions, or Rule 144A to qualified institutional investors. Investing in
restricted securities will impair the liquidity of the Fund's portfolio to the
extent they cannot be publicly traded under Rule 144 or, if applicable,
qualified institutional investors become, for a time, uninterested in purchasing
these securities.
Securities of Foreign Issuers
Some of the securities included in the Fund may be those of foreign issuers
(provided that the securities are publicly-traded in the United States in the
form of American Depositary Receipts or similar instruments the market for which
is denominated in United States dollars). Securities of foreign issuers may
present a greater degree of risk (e.g., as a result of exchange rate
fluctuation, tax provisions, war or expropriation) than do securities of
domestic issuers.
Loans of Securities
The Fund may lend its securities to brokers, dealers and financial institutions
provided, among other things, that the loan is secured continuously by
collateral consisting of U.S. Government securities or cash or letters of
credit, which is marked to the market daily to ensure that each loan is fully
collateralized at all times. Loans of securities involve a risk that the
borrower may fail to return the securities or may fail to provide additional
collateral.
Options
The Fund may enter into certain transactions involving stock options for the
purpose of hedging against possible increases in the value of securities which
are expected to be purchased by the Fund or possible declines in the value of
securities which are held by the Fund. Were the Fund to establish an option
position for the purpose of hedging against investment risks, it would do so
only if there appears to be a liquid secondary market therefor, there can be no
assurance that such a market will exist for any particular option contract at
any specific time. In that event, it may not be possible to close out a position
held by the Fund, and the Fund could be required to purchase or sell the
instrument or instruments underlying an option, make or receive a cash
settlement or meet ongoing variation margin requirements. The inability to close
out option positions also could have an adverse impact on the Fund's ability to
effectively hedge its portfolio.
B-12
<PAGE>
The Fund will enter only into exchange-traded options. At all times when an
option position is outstanding, the Fund will maintain a segregated deposit with
the Fund's custodian of cash, money market instruments or high-quality
securities sufficient in order to cover the exposure of that position.
Short Positions
Short selling or short positions by the Fund involves the Fund selling a
security that it does not own or it borrows from a broker. When the fund
purchases the security to replace the borrowed security, if the value of the
security declines as anticipated, the Fund will profit to the extent of the
difference between the purchase price and the sales price. If the price of the
security increases, the Fund will suffer a loss. Short selling or short
positions by the Fund involve a risk that the price of the security will not
decrease, as anticipated, and the Fund will suffer a loss.
History of Operations; Experience of Investment Manager
As a recently created entity, the Trust will be subject to all the risks
incident to the creation of a new business, including the absence of a history
of operation, and there can be no guarantee that the Investment Objective of the
Fund will be attained. The Investment Manager is a newly created entity and, as
such, prior to the commencement of operations of the Fund, had no previous
experience in providing investment management services to an investment company;
however, the Investment Manager's designated Portfolio Manager for the Fund has
provided analytical and portfolio management services to investment companies
and institutional asset management clients, and the Vice President of Operations
of the Investment Manager and the Fund's Administrator, BISYS LP, have provided
operations, compliance and administrative services to investment companies. See
"Management Of And Service Providers For The Trust And The Fund" below.
Investment Risks
There are market risks inherent in any investment, and there is no assurance
that the Fund will attain its Investment Objective or that any income will be
earned. Moreover, the application of the investment policies is basically
dependent upon the judgment of the Investment Manager. A prospective purchaser
of shares of the Fund should realize there are risks in any policy dependent
upon such judgment and that no representation is made that the Investment
Objective of the Fund will be attained or that there may not be substantial
loses in any particular investment. At any time, the value of the Fund's shares
may be more or less than the cost of such shares to the investor.
TAX-SHELTERED RETIREMENT PLANS
The Trust does not offer a prototype tax-sheltered retirement plan. However,
banks, broker-dealers and other financial intermediaries may offer such plans
through which shares of the Fund may be purchased. These plans are more fully
described below. Persons who wish to establish a tax-sheltered retirement plan
should consult their financial institutions as to availability of such plans and
their own tax advisers or attorneys regarding their eligibility to do so and the
laws applicable thereto, such as the fiduciary responsibility provisions and
diversification requirements and the reporting and disclosure obligations under
the Employee Retirement Income Security Act of 1974. The Trust is not
responsible for compliance with such laws. Further information regarding the
retirement plans, including applications and fee schedules, may be obtained upon
request to the Fund.
Individual Retirement Account and Spousal Individual Retirement Account
The IRA is available to all individuals, including self-employed individuals,
who receive compensation for services rendered and wish to purchase shares of
the Fund. An IRA may also be established pursuant to a simplified employee
pension plan ("SEP"). Spousal Individual Retirement Accounts ("SPIRA") are
available to individuals
B-13
<PAGE>
who are otherwise eligible to establish an IRA for themselves and whose spouses
are treated as having no compensation of their own.
In general, the maximum deductible contribution to an IRA which may be made for
any one year is $2,000 or 100% of annual compensation includable in gross
income, whichever is less. If an individual establishes a SPIRA, the maximum
deductible amount that the individual may contribute annually is the lesser of
$2,250 or 100% of such individuals compensation includable in his or her gross
income for such year; provided, however, that no more than $2,000 per year for
either individual may be contributed to either the IRA or SPIRA. Contributions
to a SEP (discussed below) are excluded from an employee's gross income and are
subject to different limitations.
All taxpayers, including those who are active participants in employer-sponsored
retirement plans, will be able to make fully deductible IRA contributions at the
same levels discussed above, if their adjusted gross income is less than the
following levels: $25,000 for single taxpayers and $40,000 for married taxpayers
who file joint returns.
Married taxpayers who file joint tax returns will generally be deemed to be
active participants if either spouse is an active participant under an
employer-sponsored retirement plan. In the case of taxpayers who are active
participants in employer-sponsored retirement plans and who have adjusted gross
income which exceeds the specified levels, deductible IRA contributions will be
phased out on the basis of adjusted gross income between $25,000 and $35,000 for
single taxpayers adjusted gross income of $10,000 and under for married
taxpayers who file separate returns, and combined adjusted gross income between
$40,000 and $50,000 for married taxpayers who file joint returns. The $2,000 IRA
deduction is reduced by $200 for each $1,000 of adjusted gross income in excess
of the following levels: $25,000 for single taxpayers, $40,000 for married
taxpayers who file joint returns, and $0 for married taxpayers who file separate
returns. In the case of a taxpayer who contributes to an IRA and a SPIRA, the
$2,250 IRA deduction is reduced by $225 for each $1,000 of adjusted gross income
in excess of $40,000.
Individuals who are ineligible to make fully deductible contributions may make
nondeductible contributions up to an aggregate of $2,000 in the case of
contributions (deductible and nondeductible) to an IRA and up to an aggregate of
$2,250 in the case of contributions (deductible and nondeductible) to an IRA and
SPIRA and the income upon all such contributions will accumulate tax free until
distribution.
In addition, a separate IRA may be established by a "rollover" contribution,
which may permit the tax-free transfer of assets from qualified retirement plans
under specified circumstances. A "rollover contribution" includes a lump sum
distribution received by an individual, because of severance of employment, from
a qualified plan and paid into an individual retirement account within 60 days
after receipt.
Dividends and capital gains earned on amounts invested in either an IRA or SPIRA
are automatically reinvested by the Trustee in shares of the Fund and accumulate
tax-free until distribution. Distributions from either an IRA or SPIRA prior to
age 59 1/2, unless made as a result of disability or death, may result in
adverse tax consequences and penalties. In addition, there is a penalty on
contributions in excess of the contribution limits and other penalties are
imposed on insufficient payouts after age 70 1/2.
Simplified Employee Pension Plan
A SEP may be utilized by employers to provide retirement income to employees by
making contributions to employees SEP IRAs. Owners and partners may qualify as
employees. The employee is always 100% vested in contributions made under a SEP.
The maximum contribution to a SEP-IRA (an IRA established to receive SEP
contributions) is the lesser of $30,000 or 150% of compensation, excluding
contributions made pursuant to a salary reduction arrangement. Subject to
certain limitations, an employer may also make contributions to a SEP-IRA under
a salary reduction arrangement by which the employee elects contributions to a
SEP-IRA in lieu of immediate cash compensation. The maximum amount which may be
contributed to a SEP-IRA (for 1995) under a salary reduction
B-14
<PAGE>
agreement is the lesser of $30,000 (as adjusted for cost of living increases) or
15% of compensation up to a current annual compensation limit of $150,000.
Contributions by employers under a SEP arrangement up to the maximum permissible
amounts are deductible for federal income tax purposes. Contributions up to the
maximum permissible amounts are not includable in the gross income of the
employee. Dividends and capital gains on amounts invested in SEP-IRAs are
automatically reinvested in shares of the Fund and accumulate tax-free until
distribution. Contributions in excess of the maximum permissible amounts may be
withdrawn by the employee from the SEP-IRA no later than April 15 of the
calendar year following the year in which the contribution is made without tax
penalties. Such amounts will, however, be included in the employee's gross
income. Withdrawals of such amounts after April 15 of the year next following
the year in which the excess contributions is made and withdrawals of any other
amounts prior to age 59 1/2, unless made as a result of disability or death, may
result in adverse tax consequences.
Qualified Pension Plans
The Qualified Pension Plan can be utilized by self-employed individuals,
partnerships and corporations and their employees who wish to purchase shares of
a Fund under a retirement program.
The maximum contribution which may be made to a Qualified Pension Plan in any
one year on behalf of a participant is, depending on the benefit formula
selected by the Employer, up to the lesser of $30,000 or 25% of compensation
(net earned income in the case of a self-employed individual). Contributions by
Employers to Qualified Pension Plans up to the maximum permissible amounts are
deductible for Federal income tax purposes. Contributions in excess of
permissible amounts will result in adverse tax consequences and penalties to the
Employer. Dividends and capital gains earned on amounts invested in Qualified
Pension-Plans are automatically reinvested in shares of the Fund and accumulate
tax-free until distribution. Withdrawals of contributions prior to age 59 1/2,
unless made as a result of disability, death or early retirement, may result in
adverse tax consequences and penalties.
403(b)(7) Program
The Tax-Deferred Annuity Program and Custodial Account offered by the Fund (the
"403(b)(7) Program") allows employees of certain tax exempt organizations and
schools to have a portion of their compensation set aside for their retirement
years in shares held in an investment company custodial account.
In general, the maximum limit on annual contributions for each employee is the
lesser of $30,000 per year (as adjusted by the IRS for cost-of-living
increases), 25% of the employee's compensation or the employee's exclusion
allowance specified in Section 403(b) of the Code. However, an employee's salary
reduction contributions to a 403(b)(7) Program may not exceed $9,500 a year
(1995) (as adjusted for cost of living expenses and may be further adjusted if
the employee participates in another plan). Contributions in excess of
permissible amounts may result in adverse tax consequences and penalties.
Dividends and capital gains on amounts invested in the 403(b)(7) Program are
automatically reinvested in shares of the Fund. It is intended that dividends
and capital gains on amounts invested in the 403(b)(7) Program will accumulate
tax-free until distribution.
Employees will receive distributions from their accounts under the 403(b)(7)
Program following termination of employment by retirement or at such other time
as the employer shall designate, but in no case later than an employee's
reaching age 65. Withdrawals of contributions prior to age 59 1/2, unless made
as a result of disability, death or early retirement, may result in adverse tax
consequences and penalties. Employees will also receive distributions from their
accounts under the 403(b)(7) Program in the event they become disabled.
B-15
<PAGE>
INVESTMENT PROGRAMS
Automatic Investment Plan
Investors may periodically invest, through banks, broker-dealers and other
financial intermediaries offering automatic payment services, a specified dollar
amounts in periodic intervals into the Fund (the "Automatic Investment Plan").
The minimum initial investment under the Automatic Investment Plan is $250, with
subsequent minimum investments of $50. Payments under the Automatic Investment
Plan are automatic and will continue until such time as the Fund and the
investor's financial institution are notified to discontinue further
investments. See "Purchases And Redemptions Of Shares" in the Prospectus.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction with the
section in the Fund's Prospectus entitled "Performance Information."
Total Return
For purposes of quoting and comparing the performance of the Fund to that of
other mutual funds and to stock or other relevant indices in advertisements or
in reports to shareholders, performance may be stated in terms of total return.
Under the rules of the Securities and Exchange Commission, a fund's advertising
performance must include total return quotes calculated according to the
following formula:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (1, 5 or 10)
ERV = ending redeemable value at the end of the 1, 5
or 10 year periods (or fractional portion thereof)
of a hypothetical $1,000 payment made at the
beginning of the 1, 5 or 10 year periods.
Under the foregoing formula, the time periods used in advertising will be based
on rolling calendar quarters, updated to the last day of the most recent quarter
prior to submission of the advertisement for publication, and will cover one,
five and ten year periods or a shorter period dating from the effectiveness of
the Fund's registration statement. Total return, or "T" in the formula above, is
computed by finding the average annual compounded rates of return over the 1, 5
and 10 year periods (or fractional portion thereof) that would equate the
initial amount invested to the ending redeemable value. The Fund may also from
time to time include in such advertising an aggregate total return figure or a
total return figure that is not calculated according to the formula set forth
above in order to compare more accurately the Fund's performance with other
measures of investment return. For example, in comparing the Fund's total return
with data published by Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc. or Weisenberger Investment Company Service, or with the
performance of the Standard & Poor's 500 Stock Index or the Dow Jones Industrial
Average, as appropriate, the Fund may calculate its aggregate and/or average
annual total return for the specified periods of time by assuming the investment
of $1,000 in Fund shares and assuming the reinvestment of each dividend or other
distribution at net asset value on the reinvestment date. Such alternative total
return information will be given no greater prominence in such advertising than
the information prescribed under the rules of the Securities and Exchange
Commission, and all
B-16
<PAGE>
advertisements containing performance data will include a legend disclosing that
such performance data represent past performance and that the investment return
and principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
The Fund may also advertise its yield. Under the rules of the Securities and
Exchange Commission, the Fund's advertised yield must be calculated using the
following formula:
YIELD = [(a-b +1)6 - 1]
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursement).
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends.
d = the maximum offering price per share on the last day
of the period.
Under the foregoing formula, yield is computed by compounding semi-annually, the
net investment income per share earned during a 30 day period divided by the
maximum offering price per share on the last day of the period. For the purpose
of determining the interest earned (variable "a" in the formula) on debt
obligations that were purchased by the Fund, the formula generally calls for
amortization of the discount or premium; the amortization schedule will be
adjusted monthly to reflect changes in the market values of the debt
obligations.
Yield may fluctuate daily and does not provide a basis for determining future
yields. Because the yields will fluctuate, they cannot be compared with yields
on savings account or other investment alternatives that provide an agreed to or
guaranteed fixed yield for a stated period of time. However, yield information
may be useful to an investor considering temporary investments in money market
instruments. In comparing the yield of one money market fund to another,
consideration should be given to each fund's investment policies, including the
types of investments made, lengths of maturities of the Fund securities (the
method used by the Fund to compute the yield methods may differ) and whether
there are any special account charges which may reduce the effective yield.
The yields on certain obligations are dependent on a variety of factors,
including general money market conditions, conditions in the particular market
for the obligation, the financial condition of the issuer, the size of the
offering, the maturity of the obligation and the ratings of the issue. The
ratings of Moody and Standard & Poor represent their respective opinions as to
the quality of the absolute standards of quality. Consequently, obligations with
the same rating, maturity and interest rate may have different market prices. In
addition, subsequent to its purchase by the Fund, an issue may cease to be rated
or may have its rating reduced below the minimum required for purchase. In such
an event, the Investment Manager will consider whether the Fund should continue
to hold the obligation.
DETERMINATION OF NET ASSET VALUE;
VALUATION OF FUND SECURITIES
The net asset value of each share of the Fund is determined each day on which
the New York Stock Exchange is open for trading (a "Fund Business Day"). (As of
the date of this Statement of Additional Information, the New York Stock
Exchange is open for trading every weekday except for the following holidays:
New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas
B-17
<PAGE>
Day). This determination of net asset value of shares of the Fund is made once
during each such day at 4:00 p.m. New York time by dividing the value of the
Fund's net assets (i.e., the value of its investment in the Fund and any other
assets less its liabilities, including expenses payable or accrued) by the
number of shares outstanding at the time the determination is made. Purchases
and redemptions will be effected at the time of determination of net asset value
next following the receipt of any purchase or redemption order deemed to be in
good order. See "Purchases And Redemptions Of Shares" in the Prospectus.
Equity securities held by the Fund are valued at the last sale price on the
exchange on which they are primarily traded or on the NASDAQ system for unlisted
national market issues, or at the last quoted bid price for securities in which
there were no sales during the day or for unlisted securities not reported on
the NASDAQ system. If the Fund purchases option contracts, such option contracts
which are traded on commodities or securities exchanges are normally valued at
the settlement price on the exchange on which they are traded. Short-term
obligations with remaining maturities of less than sixty days are valued at
amortized cost, which constitutes fair value as determined by the Board of
Trustees of the Fund. Fund securities (other than short-term obligations with
remaining maturities of less than sixty days) for which there are no such
quotations or valuations are valued at fair value as determined in good faith by
or at the direction of the Fund's Board of Trustees.
A determination of value used in calculating net asset value must be a fair
value determination made in good faith utilizing procedures approved by the
Fund's Board of Trustees. While no single standard for determining fair value
exists, as a general rule, the current fair value of a security would appear to
be the amount which the Fund could expect to receive upon its current sale.
Some, but not necessarily all, of the general factors which may be considered in
determining fair value include: (1) the fundamental analytical data relating to
the investment; (2) the nature and duration of restrictions on disposition of
the securities; and (3) an evaluation of the forces which influence the market
in which these securities are purchased and sold. Without limiting or including
all of the specific factors which may be considered in determining fair value,
some of the specific factors include: type of security, financial statements of
the issuer, cost at date of purchase, size of holding, discount from market
value, value of unrestricted securities of the same class at the time of
purchase, special reports prepared by analysts, information as to any
transactions or offers with respect to the security, existence of merger
proposals or tender offers affecting the security, price and extent of public
trading in similar securities of the issuer or comparable companies, and other
relevant matters.
Interest income on short-term obligations held by the Fund is determined on the
basis of interest accrued less amortization of premium.
MANAGEMENT OF AND SERVICE PROVIDERS FOR THE TRUST AND THE FUND
Trustees and Officers of the Fund
The Trustees and officers of the Fund and their ages and principal occupations
during the past five years are set forth below. Asterisks indicate that those
Trustees and officers are "interested persons" (as defined by the Investment
Company Act) of the Fund. Unless otherwise indicated below, the address of each
Trustee and officer is 8901 Wilshire Boulevard, Beverly Hills, California 90211.
B-18
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name and Address Age Positions(s) Held
with Registrant Occupation(s) During Past 5 Years
Shelly J. Meyers 36 Trustee Chief Executive Officer and Chief Officer
(Chairman of the of the Board) and President of Meyers
Board) and Capital Management, LLC (formerly known
President as Meyers Sheppard & Co., LLC) since
February 1996; President of Meyers Capital
Management, LLC, from February 1996 through
September 1996; Assistant Vice President,
Institutional Asset Management for The Boston
Company Asset Management, Inc., from July 1994
through February 1995; Associate, The Boston
Company Asset Management, Inc., June 1993
to September 1993; Lead Analyst, International
Audit, Chevron Corporation, from June, 1989
through September, 1992.
Leslie C. Sheppard 42 Trustee and Manager and Senior Vice President of Meyers
Executive Vice Capital Management, LLC (formerly known as Meyers
President Sheppard & Co., LLC) from February 1996 through
December 1996; Sales Representative, Fannie Mae,
from 1993 through February 1996; Investment
Banking Principal and Asset Manager - Real
Estate, Takenaka & Co., from 1989 through 1992.
Gwendolyn H. Baba* 39 Trustee President of Meyers Capital Management, LLC
4470 Sunset Blvd., #187 (formerly known as Meyers Sheppard & Co., LLC),
Los Angeles, CA 90027 since September 1996; General Partner of
Baba-Malouf Properties, Community Storage Company
and Droubie Properties, since 1981.
Jay W. Gendron, Esq. 39 Trustee Vice President, Legal Affairs, and attorney,
Warner Bros. Television Warner Bros. Television Production (formerly
300 Television Plaza Lorimar Television), since 1987.
Burbank, CA 91505
Robert E. Gipson, Esq. 49 Trustee Attorney, Gipson, Hoffman & Pancione, a
Gipson Hoffman & Pacione Professional Corporation, since 1982.
1900 Avenue of the Stars
Suite 1100
Los Angeles, CA 90067
B-19
<PAGE>
Leonard Greenhalgh, Ph.D. 51 Trustee Professor of Management, Amos Tuck
Amos Tuck School of School of Business Administration,
Business Administration at Dartmouth College, since 1978.
Hanover, NH 03755
Duane E. McWaine, M.D. 37 Trustee Psychiatrist in solo private practice
1314 Westwood Boulevard since 1988.
Suite 101-D
Los Angeles, CA 90024
Mark Sichley 38 Vice President Associate Manager, BISYS Fund Services,
BISYS Fund Services Inc. since 1987.
1230 Columbia Street
Suite 500
San Diego, CA 92101
Tejal Albanese 30 Treasurer Manager - Fund Accounting of BISYS Fund
BISYS Fund Services Services, Inc. since January 1997; Associate
125 West 55th Street Director, Fund Services, of Furman Selz from
New York, NY 10019 March 1992 through December 1996; Section Head,
Fund Accounting, at Dean Witter from July 1989 to
March 1992.
Theresa Donovan 46 Secretary Manager - Legal Services of BISYS Fund
BISYS Fund Services Services, Inc. since January 1997; Director,
125 West 55th Street Corporate Secretary Services, of Furman Selz from
New York, NY 10019 January 1995 through December 1996; Assistant Director,
Corporate Secretary Services, of Furman Selz
from May 1990 through December 1995.
Philip McKinley 37 Assistant Vice President of Operations of Meyers Capital
Secretary Management, LLC (formerly known as Meyers Sheppard
Co., LLC), since April, 1996; Vice President, Compliance,
of Griffen Financial Services and The Griffen Funds
from September 1994 to March 1996; Vice President, Investments,
of Mercantile National Bank, March 1991 to September 1994.
Alaina Metz 29 Assistant Chief Administrative Officer of BISYS Fund
BISYS Fund Services Secretary Services, Inc. since June 1995; Supervisor,
3435 Stelzer Road Blue Sky Department, of Alliance Capital
Columbus, OH 43219 Management from May 1989 through June 1995.
B-20
<PAGE>
Bruce Treff 30 Assistant Counsel, BISYS Fund Services, Inc. since
BISYS Fund Services Secretary September, 1995; Manager, Alliance Capital
3435 Stelzer Fund Management Inc. from 1989 to August
Columbus, OH 43219 1995.
</TABLE>
For further information about the Board of Trustees, see "Management And Service
Providers - Board Of Trustees And Officers" in the Prospectus.
Compensation Table
The following table shows the compensation expected to be paid by the Trust to
the Trustees for the Fund's first full fiscal year of operations:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Pension or Retirement Total Compensation
Aggregate Benefits Accrued Estimated Annual from Trust and Fund
Compensation as Part of Benefits Complex Paid
Name of Trustee from the Fund Fund Expenses Upon Retirement to Trustees
Shelly J. Meyers None None None None
Leslie C. Sheppard None None None None
Gwendolyn H. Baba None None None None
Jay W. Gendron $3,000 None None $3,000
Robert E. Gipson $3,000 None None $3,000
Leonard Greenhalgh $3,000 None None $3,000
Duane E. McWaine $3,000 None None $3,000
Loretta Sanchez(1) $1,000 None None $1,000
(1) Resigned January 2, 1997 due to election to United States Congress
</TABLE>
The Trust will pay $2,000 in fees per annum to each Trustee who is not a
manager, officer, employee or holder of 5% or more of the Investment Manager,
its affiliates, or any Fund service provider, plus $250 per meeting attended by
such Trustee, together with such Trustees' out-of-pocket expenses related to
attendance at meetings of the Board of Trustees. Executive officers of the Trust
will receive no compensation from the Trust for their services as such. The
Trust does not have a pension or retirement plan applicable to Trustees or
officers of the Trust.
Investment Manager
The Fund has engaged the Investment Manager, Meyers Capital Management, to serve
as both the manager and the investment adviser for the Fund pursuant to an
Investment Management Agreement approved by the Board of Trustees. The
Investment Manager is a California limited liability company organized on
January 23, 1996. The manager and principal owner of the Investment Manager is
Ms. Shelly J. Meyers. The officers of the Investment Manager are Ms. Meyers,
Chief Executive Officer and Chief Financial Officer; Ms Gwendolyn H. Baba,
President; and Mr. Philip McKinley, Vice President of Operations and Secretary.
Ms. Baba, Mr. Sheppard and Mr. McKinley are also owners of the Investment
Manager.
As a newly created entity, the Investment Manager did not, prior to the
commencement of the operations of the Fund, have previous experience in
providing investment management services to an investment company. However,
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Ms. Shelly J. Meyers, the Investment Manager's designated Portfolio Manager for
the Fund, has provided analytical and portfolio management services to
investment companies and institutional asset management clients. Additionally,
Mr. Philip McKinley, the Vice President of Operations of the Investment Manager,
as well as the Fund's Administrator, BISYS LP, have provided operations,
compliance and administrative services to investment companies. See "Investment
And Social Objectives, Policies Restrictions - Risk Factors - History Of
Operations; Experience Of Investment Manager" in the Prospectus.
The Investment Manager provides its services as the Fund's manager and
investment adviser pursuant to an Investment Management Agreement approved by
the Board of Trustees.
As the Fund's manager, the Investment Manager oversees (subject to the overall
authority of the Board of Trustees) the overall operations and administration of
the Fund, including the supervision of professional services rendered by others,
including the Distributor, Administrator, Transfer Agent, and Custodian, as well
as accounting, auditing and other services.
As the Fund's investment adviser, the Investment Manager implements the
Investment Strategy of the Fund and manages the Fund's investments subject to
the Fund's Investment Objective and Fundamental Social Criteria and the overall
supervision and approval by the Board of Trustees. Specifically, the Investment
Manager determines, from amongst the universe of companies identified as
satisfying the Social Objective, which companies the Fund should invest in, what
the appropriate mix of investments amongst such companies should be, and the
timing and extent of adjustments in the holdings of the Fund to satisfy the
requirements of diversification and the need to maintain sufficient reserves for
anticipated redemptions of shares. The Investment Manager also has sole
discretion to select brokers for purchases and sales. Although the Investment
Manager's investment advisory activities are subject to general oversight by the
Trustees and officers of the Fund, neither the Trustees nor officers of the Fund
evaluate the merits of the Investment Manager's selection of individual
securities from amongst designated companies with progressive policies towards
gays and lesbians.
The Investment Manager furnishes at its own expense all facilities and personnel
necessary in connection with providing these services.
The Investment Management Agreement will continue in effect if such continuance
is specifically approved at least annually by the Fund's Board of Trustees or by
a majority vote of the shareholders of the Fund at a meeting called for the
purpose of voting on the Investment Management Agreement (with the vote of each
being in proportion to the amount of their investment), and, in either case, by
a majority of the Fund's Trustees who are not parties to the Investment
Management Agreement or interested persons of any such party at a meeting called
for the purpose of voting on the Investment Management Agreement.
The Investment Management Agreement provides that the Investment Manager may
render both management and investment advisory services to others. The
Investment Management Agreement is terminable without penalty on not more than
60 days written notice by the Fund when authorized either by majority vote of
the shareholders in the Fund (with the vote of each being in proportion to the
amount of their investment) or by a vote of a majority of its Board of Trustees,
or by the Investment Manager, and will automatically terminate in the event of
its assignment. The Investment Management Agreement provides that neither the
Investment Manager nor its personnel shall be liable for any error of judgment
or mistake of law or for any loss arising out of any investment or for any act
or omission in its services to the Fund, except for willful misfeasance, bad
faith or gross negligence or reckless disregard of its or their obligations and
duties under the Investment Management Agreement.
Pursuant to the terms of the Investment Management Agreement, the Fund pays the
Investment Manager for its management and investment advisory services, a
monthly fee equal, on an annual basis, to 1% of the Fund's average daily net
assets. The Investment Advisor reserves the right of any time to reduce and/or
waive all or part of its fees. . The Investment Manager had undertaken in its
initial Registration Statement to waive the portion of
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<PAGE>
its investment management fee necessary to maintain Total Annual Operating
Expenses at no more than 2.25% per year of average daily net assets, and
subsequently agreed, effective January 31, 1997, to voluntarily waive an
additional portion of its investment management fee and to assume and pay such
portion of the Fund's expenses necessary to maintain Total Annual Operating
Expenses at no more than 1.95% per year of average daily net assets, such
additional waiver to be computed retroactive to the commencement of operations.
The Investment Manager has also undertaken to reimburse the Fund or make other
arrangements to limit Fund expenses to the extent required by expense
limitations imposed by certain states. The most restrictive expense limitation
imposed by states provide that annual expenses (as defined) may not exceed 2
1/2% of the first $30 million dollars of the average value of the Fund's net
assets, plus 2% of the next $70 million, plus 1 1/2% of such assets in excess of
$100 million. Whether expense limitations apply to the Fund and in what amounts
depends upon the particular regulations of such states.
Administrator
The Fund has entered into an agreement with BISYS LP to provide the Fund with
administrative services effective January 1, 1997 pursuant to an Administration
Agreement. Pursuant to the Administration Agreement, BISYS LP generally performs
or supervises the performance by others of certain administrative services
including, without limitation, calculating Fund expenses and controlling
disbursements; assisting Fund counsel with preparing prospectuses, statements of
additional information, registration statements and proxy materials; preparing
reports, applications and documents required for compliance by the Fund with
applicable federal and state laws and regulations; developing and preparing
communications to shareholders, including the Fund's annual report and proxy
materials; administering contracts between the Fund and other service providers;
coordinating and supervising the filing of the Fund's tax returns; and
monitoring and advising the Fund on its registered investment company status
under the Internal Revenue Code. BISYS LP also provides persons satisfactory to
the Board of Trustees of the Fund to serve as officers of the Fund. Such
officers, as well as certain other employees and Trustees of the Fund, may be
directors, officers or employees of BISYS LP or its affiliates.
As compensation for these services, the Fund pays BISYS LP, per year, an amount
equal to 0.15% of the first $100 million in aggregate Fund assets, 0.10% for the
next $400 million, 0.07% for the next $500 million, and 0.06% for aggregate Fund
assets in excess of $1 billion.
BISYS LP will not be liable for any error of judgment or mistake of law or for
any loss suffered by the Fund in connection with the matters relating to the
Administration Agreement, except a loss from willful misfeasance, bad faith, or
negligence on its part in the performance of its duties or from reckless
disregard by BISYS LP of its obligations and duties. Son long as BISYS LP acts
in good faith and with due diligence and without negligence, the Fund assumes
full responsibility to indemnify BISYS LP and hold it harmless from and against
any and all actions, suits and claims.
The Administration Agreement renews on an annual basis unless either party
provides 90 days' prior notice of its intent not to renew. In the event either
party wrongfully terminates the Administration Agreement in its first year, the
non-terminating party shall be entitled to liquidated damages from the
terminating party in the amount BISYS LP would have received in compensation for
its services for the balance of such first year.
The Fund's Administration Agreement with Furman Selz LLC was terminated
effective January 1, 1997, and replaced with BISYS LP, as the result of the
acquisition of Furman Selz LLC's mutual fund business by BISYS Fund Services.
Fund Accounting Agent
The Fund has entered into a Fund Accounting Agreement with BISYS Inc. to provide
the Fund with fund accounting, services effective January 1, 1997. Under the
Fund Accounting Agreement, BISYS Inc. maintains books and records required under
Rule 31a-1 under the Investment Company Act, including journals containing an
B-23
<PAGE>
itemized daily record of purchases and sales of securities and receipts and
disbursements of cash; ledgers reflecting all assets, liability and reserve
accounts; and a monthly trial balance of all ledger accounts. BISYS Inc. also
calculates the Fund's net asset value on a daily basis; obtains security prices
from independent pricing services; verifies and reconciles daily trade
activities; posts Fund transactions; provides accounting and periodic reports;
and provides information for the Fund's federal and state income tax returns,
audit and securities filings.
In consideration of its services under the Fund Accounting Agreement, the Fund
will pay BISYS Inc. the sum of $35,000 per year, plus reimbursement of its
out-of-pocket expenses.
BISYS Inc. will not be liable for any action taken or omitted in the absence of
bad faith, willful misfeasance, negligence or reckless disregard. The Fund shall
indemnify and hold BISYS Inc. harmless from and against any and all claims,
demands, suits, judgments and liabilities other than actions or omissions of
BISYS Inc. in cases of its own bad faith, willful misfeasance, negligence or
reckless disregard.
The Fund Accounting Agreement renews on an annual basis unless either party
provides 60 days' prior notice of its intent not to renew. In the event either
party wrongfully terminates the Fund Accounting Agreement in its first year, the
non-terminating party shall be entitled to liquidated damages from the
terminating party in the amount BISYS Inc. would have received in compensation
for its services for the balance of such first year.
The Fund's Fund Accounting Agreement with Furman Selz LLC was terminated
effective January 1, 1997, and replaced with BISYS Inc., as the result of the
acquisition of Furman Selz LLC's mutual fund business by BISYS Fund Services.
Transfer Agent
The Fund has entered into a Transfer Agency Agreement with BISYS Inc. to provide
the Fund with dividend disbursing and transfer agency services, pursuant to a
Transfer Agency Agreement effective October 14, 1996. Pursuant to the Transfer
Agency Agreement, BISYS Inc. provides dividend disbursement, registrar and
transfer agency services to the Fund, in consideration of which the Fund pays
BISYS Inc. the sum of $15 per year per each shareholder, subject to a $12,000
per year minimum. BISYS shall also be reimbursed by the Fund for all costs
incurred by it.
BISYS Inc. will not be liable for any action taken or omitted in the absence of
bad faith, willful misfeasance, negligence or reckless disregard. The Fund shall
indemnify and hold BISYS Inc. harmless from and against any and all claims,
demands, suits, judgments and liabilities other than actions or omissions of
BISYS Inc. in cases of its own bad faith, willful misfeasance, negligence or
reckless disregard.
The Transfer Agency Agreement renews on an annual basis unless either party
provides 60 days' prior notice of its intent not to renew. In the event either
party wrongfully terminates the Transfer Agency Agreement in its first year, the
non-terminating party shall be entitled to liquidated damages from the
terminating party in the amount BISYS Inc. would have received in compensation
for its services for the balance of such first year.
The Fund's Transfer Agency Agreement with Furman Selz LLC was terminated
effective October 14, 1996, and replaced with BISYS Inc., as the result of the
acquisition of Furman Selz LLC's mutual fund business by BISYS Fund Services.
Distributor
The Fund has entered into a Distribution Agreement with BISYS LP as the Fund's
Distributor effective January 1, 1997. Under the Distribution Agreement, BISYS
is responsible for facilitating the continuous sale or redemption of Fund
shares.
B-24
<PAGE>
Solely for the purpose of reimbursing BISYS LP for activities primarily intended
to result in the sale of Fund shares, the Trust has, on behalf of the Fund and
with the approval of the Board of Trustees, adopted a Plan of Distribution (the
"Distribution Plan") pursuant to Rule 12b-1 of Investment Company Act. Under the
Distribution Plan, the Fund is authorized to spend up to 0.25% of net asset
value annually for BISYS LP's services in anticipation of, or as reimbursement
for, expenses incurred in connection with the sale of shares of the Fund, such
as payments to broker-dealers who advise shareholders regarding the purchase,
sale or retention of shares of the Fund, payments to employees of the
Distributor, advertising expenses and the expenses of printing and distributing
prospectuses and reports used for sales purposes, expenses of preparing and
printing sales literature and other distribution-related expenses. If the fee
received by the Distributor exceeds its expenses, it may realize a profit from
these arrangements.
The Distribution Plan will continue in effect indefinitely if such continuance
is specifically approved at least annually by a vote of both a majority of the
Fund's Trustees and a majority of the Fund's Trustees who are not "interested
persons of the Fund" and who have no direct or indirect financial interest in
the operation of the Distribution Plan or in any agreement related to such Plan
(the "Qualified Trustees"). The Distributor will provide to the Trustees of the
Fund a quarterly written report of amounts expended by it under the Distribution
Plan and the purposes for which such expenditures were made. The Distribution
Plan further provides that the selection and nomination of the Fund's Qualified
Trustees shall be committed to the discretion of the disinterested Trustees of
the Fund. The Distribution Plan may be terminated upon sixty days written notice
by a vote of a majority of the Fund's Qualified Trustees or by a vote of the
shareholders of the Fund on the one hand, or by sixty days written notice by
BISYS LP on the other hand. The Distribution Plan may not be amended to increase
materially the amount of permitted expenses thereunder without the approval of
shareholders and may not be materially amended in any case without a vote of the
majority of both the Fund's Trustees and the Fund's independent Trustees. The
Distributor will preserve copies of any plan, agreement or report made pursuant
to the Distribution Plan for a period of not less than six years from the date
of the Distribution Plan, and for the first two years the Distributor will
preserve such copies in an easily accessible place.
The Fund's Distribution Agreement with Furman Selz LLC was terminated effective
January 1, 1997, and replaced with BISYS LP, as the result of the acquisition of
Furman Selz LLC's mutual fund business by BISYS Fund Services.
Custodian
The Fund has entered into a Custodian Agreement with Wells Fargo Bank, N.A.
("Wells Fargo") pursuant to which Wells Fargo acts as custodian for the Fund.
The Custodian's responsibilities include safeguarding and controlling the Fund's
cash and securities, handling the receipt and delivery of securities, collecting
interest on the Fund's investments, and maintaining books of original entry for
fund accounting purposes. As compensation for its services, the Fund pays Wells
Fargo, per year, an amount equal to 0.10% of the first $20 million in aggregate
Fund assets, and 0.04% for aggregate Fund assets in excess of $20 million,
subject to a minimum of $15,000 per year.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, 345 Park Avenue, New York, New York 10154 are the
independent auditors for the Fund, providing audit services, tax return
preparation, and assistance and consultation with respect to the preparation of
filings with the Securities and Exchange Commission.
B-25
<PAGE>
CODE OF ETHICS
The Trust, on behalf of the Fund, adopted a Code of Ethics (the "Code of
Ethics"), which establishes standards by which certain access persons of the
Trust must abide relating to personal securities trading conduct. The Code of
Ethics provides that access persons shall place the interests of the
shareholders of the Fund first, shall avoid potential or actual conflicts of
interest with the Fund, and shall not take unfair advantage of their
relationship with the Fund. Access persons will be required by the Code of
Ethics to file quarterly reports of personal securities investment transactions.
The Code of Ethics provides that certain designated supervisory person(s) will
be appointed by the Trust, and shall supervise implementation and enforcement of
the Code of Ethics and shall, at their sole discretion, grant or deny approval
of transactions required by the Code of Ethics.
TAXATION
Each year the Fund intends to qualify and elect to be treated as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), by meeting all applicable requirements of Subchapter M, as
to the nature of the Fund's gross income, the amount of Fund distributions and
the composition and holding period of the Fund's assets. Because the Fund
intends to distribute all of its net investment income and net realized capital
gains to shareholders in accordance with the timing requirements imposed by the
Code, it is not expected that the Fund will be required to pay any federal
income or excise taxes. If the Fund should fail to qualify as a "regulated
investment company" in any year, the Fund would incur a regular corporate
federal income tax upon its taxable income (without deduction for dividends paid
to its shareholders) and Fund distributions would generally be taxable as
ordinary dividend income to the shareholders.
Shareholders of the Fund will have to pay federal income taxes and any state or
local income taxes on the dividends and capital gain distributions they receive
from the Fund. Dividends from ordinary income and any distributions from net
short-term capital gains are taxable to shareholders as ordinary income for
federal income tax purposes, whether the distributions are made in cash or in
additional shares. A portion of the Fund's ordinary income dividends is normally
eligible for the dividends received deduction for corporations if the recipient
otherwise qualifies for that deduction with respect to its holding of Fund
shares. Availability of the deduction for a particular shareholder is subject to
certain limitations, and deducted amounts may be subject to the alternative
minimum tax and result in certain basis adjustments. Distributions of net
capital gains (i.e., the excess of net long-term capital gains over net short
term capital losses), whether made in cash or in additional shares, are taxable
to shareholders as long-term capital gains without regard to the length of time
the shareholders have held their Fund shares.
Amounts not distributed on a timely basis in accordance with the calendar year
distribution requirement are subject to a nondeductible 4% excise tax. To
prevent imposition of the excise tax, the Fund must, and intends to, distribute
during each calendar year substantially all of its ordinary income for that year
and substantially all of its capital gain in excess of its capital losses for
that year, plus any undistributed ordinary income and capital gains from
previous years. Any Fund dividend that is declared in October, November or
December of any calendar year, that is payable to shareholders of record in such
a month, and that is paid the following January will be treated as if received
by the shareholders on December 31 of the year in which the dividend is
declared. The Fund will notify shareholders regarding the federal tax status of
its distributions after the end of each calendar year.
Any Fund distribution will have the effect of reducing the per share net asset
value of shares in the Fund by the amount of the distribution. Shareholders
purchasing shares shortly before the record date of any distribution may thus
pay the full price for the shares and then effectively receive a portion of the
purchase price back as a taxable distribution.
In general, any gain or loss realized upon a taxable disposition of shares of
the Fund by a shareholder that holds- such shares as a capital asset will be
treated as long-term capital gain or loss if the shares have been held for more
B-26
<PAGE>
than twelve months and otherwise as a short-term capital gain or loss. However,
any loss realized upon a disposition of shares in the Fund held for six months
or less will be treated as a long-term capital loss to the extent of any
distributions of net capital gain made with respect to those shares. Any loss
realized upon a disposition of shares may also be disallowed under rules
relating to wash sales.
The Fund is organized as a Delaware business trust and, under current law, is
not liable for any income or franchise tax in the State of Delaware as long as
the Fund qualifies as a regulated investment company under the Code. The Fund's
fiscal year-end is May 31.
Fund shareholders may be subject to state and local taxes on Fund distributions
to them. Shareholders are advised to consult with their tax advisers with
respect to the particular tax consequences to them of an investment in the Fund.
FUND TRANSACTIONS AND BROKERAGE COMMISSIONS
Specific decisions to purchase or sell securities for the Fund are made by a
portfolio manager who is an employee of the Investment Manager and who is
appointed and supervised by its senior officers. Changes in the Fund's
investments are reviewed by its Board of Trustees. The portfolio manager serving
the Fund on behalf of the Investment Manager, may serve other clients of the
Investment Manager in a similar capacity.
The Fund's primary consideration in placing securities transactions with the
broker-dealer for execution is to obtain and maintain the availability of
execution at the most favorable prices and in the most effective manner
possible. The Investment Manager attempts to achieve this result by selecting a
broker-dealer to execute transactions on behalf of the Fund and other clients of
the Investment Manager based upon various relevant factors, including but not
limited to, the size and type of transaction, execution efficiency, the basis of
their professional capability, the value and quality of their brokerage
services, and the reasonableness of their brokerage commissions. In the case of
securities traded in the over-the-counter market (where no stated commissions
are paid but the prices include a dealer's markup or markdown), the Investment
Manager normally seeks to deal directly with the primary market makers, unless
in its opinion, best execution is available elsewhere. In the case of securities
purchased from underwriters, the cost of such securities generally includes a
fixed underwriting commission or concession. From time-to-time, soliciting
dealer fees are available to the Investment Manager on the tender of the Fund's
securities in so-called tender or exchange offers. Such soliciting dealer fees
are in effect recaptured for the Fund by the Investment Manager. At present no
other recapture arrangements are in effect. Consistent with the foregoing
primary consideration, the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and such other policies as the Trustees of the Fund may
determine, the Investment Manager may consider sales of shares of the Fund and
of securities of other investors as a factor in the selection of broker-dealers
to execute the Fund's securities transactions.
Under the Investment Management Agreement with the Investment Manager, and as
permitted by Section 28(e) of the Securities Exchange Act of 1934, as amended,
Meyers Capital Management may cause the Fund to pay a broker-dealer acting on an
agency basis which provides brokerage and research services to the Investment
Manager an amount of commission for effecting a securities transaction for the
Fund in excess of the amount other broker-dealers would have charged for the
transaction if the Investment Manager determines in good faith that the greater
commission is reasonable in relation to the value of the brokerage and research
services provided by the executing broker-dealer viewed in terms of either a
particular transaction or the Investment Manager's overall responsibilities to
the Fund or to its other clients. Not all of such services are useful or of
value in advising the Fund.
The term "brokerage and research services" includes advice as to the value of
securities, the advisability of investing in, purchasing, or selling securities,
and the availability of securities or of purchasers or sellers of securities;
furnishing analyses and reports concerning issues, industries, securities,
economic factors and trends, portfolio
B-27
<PAGE>
strategy and the performance of accounts; and effecting securities transactions
and performing functions incidental thereto such as clearance and settlement.
Although commissions paid on every transaction will, in the judgment of the
Investment Manager, be reasonable in relation to the value of the brokerage
services provided, commissions exceeding those which another broker might charge
may be paid to broker-dealers who were selected to execute transactions on
behalf of the Fund and the Investment Manager's other clients, in part for
providing advice as to the availability of securities or of purchasers or
sellers of securities and services in effecting securities transactions and
performing functions incidental thereto such as clearance and settlement.
Certain broker-dealers may be willing to furnish statistical, research and other
factual information or services to the Investment Manager for no consideration
other than brokerage or underwriting commissions.
The Investment Manager attempts to evaluate the quality of research provided by
brokers. The Investment Manager sometimes uses evaluations resulting from this
effort as a consideration in the selection of brokers to execute portfolio
transactions. However, the Investment Manager is able to quantify the amount of
commissions which are paid as a result of such research because a substantial
number of transactions are effected through brokers which provide research but
which are selected principally because of their execution capabilities.
The fees that the Fund pays to the Investment Manager will not be reduced as a
consequence of the Fund's receipt of brokerage and research services. To the
extent the Fund's securities transactions are used to obtain brokerage and
research services, the brokerage commissions paid by the Fund will exceed those
that might otherwise be paid for such portfolio transactions and research, by an
amount which cannot be presently determined. Such services may be useful and of
value to the Investment Manager in serving both the Fund and other clients and,
conversely, such services obtained by the placement of brokerage business of
other clients may be useful to the Investment Manager in carrying out its
obligations to the Fund. While such services are not expected to reduce the
expenses of the Investment Manager, the Investment Manager would, through use of
the services, avoid the additional expenses which would be incurred if it should
attempt to develop comparable information through its own staff.
The Fund will not engage in brokerage transactions with the Investment Manager
(Meyers Capital Management) or the Administrator (BISYS LP) or any of their
respective affiliates or any affiliate of the Fund except to the extent, within
the meaning of Rule 17e-1 of the Investment Company Act, any commissions, fees
or other remunerations payable in connection with such transactions do not
exceed the usual and customary commission or fee of such broker and are
reasonable and fair compared to those which could be obtained by other brokers
in comparable transactions.
In certain instances there may be securities which are suitable for the Fund as
well as for one or more of the Investment Manager's other clients. Investment
decisions for the Fund and for the Investment Manager's other clients are made
with a view to achieving their respective investment objectives. It may develop
that a particular security is bought or sold for only one client even though it
might be held by, or bought or sold for, other clients. Likewise, a particular
security may be bought for one or more clients when one or more clients are
selling that same security. Some simultaneous transactions are inevitable when
several clients receive investment advice from the same investment adviser,
particularly when the same security is suitable for the investment objectives of
more than one client. When two or more clients are simultaneously engaged in the
purchase or sale of the same security, the securities are allocated among
clients in a manner believed to be equitable to each. It is recognized that in
some cases this system could have a detrimental effect on the price or volume of
the security as far as the Fund is concerned. However, it is believed that the
ability of the Fund to participate in volume transactions will produce better
executions for the Fund.
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<PAGE>
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Fund is a Delaware Business Trust established under a Certificate of Trust
dated March 20, 1996 and filed with the Delaware Secretary of State on March 25,
1996, and governed by a Trust Instrument dated March 26, 1996. Its authorized
capital consists of an unlimited number of shares of beneficial interest of
$0.00001 par value, issued in separate series. Each share of each series
represents an equal proportionate interest in that series with each other share
of that series.
The assets of the Fund received for the issue or sale of the shares of each fund
and all income, earnings, profits and proceeds thereof, subject only to the
rights of creditors, are specifically allocated to such series and constitute
the underlying assets of such series. The underlying assets of each series are
segregated on the books of account, and are to be charged with the liabilities
in respect to such series and with such a share of the general liabilities of
the Fund. If a series was unable to meet its obligations, the assets of only
that series, and no other series, will be available to creditors for that
purpose. General liabilities, expenses, costs, charges or reserves which are not
readily identifiable as belonging to any particular series shall be allocated
and charged by the Trustees between or among any one or more of the series in
such manner as the Trustees deem fair and equitable. In the event of the
dissolution or liquidation of the Fund or any series, the holders of the shares
of any series are entitled to ratably receive, as a class, the value of the
underlying assets of such shares available for distribution to shareholders.
However, the payment to the holders may be reduced by any fees, expenses or
charges allocated to that series.
Shares of the Fund entitle their holder to one vote per share; however, separate
votes are taken by each series on matters affecting an individual series. For
example, a change in investment policy for a series would be voted upon only by
shareholders of the series involved.
The Trustees of the Fund have the authority to designate additional series and
to designate the relative rights and preferences as between the different
series. There is presently one series so designated. All shares issued and
outstanding will be fully paid and nonassessable by the Fund, and redeemable as
described in this Statement of Additional Information and in the Prospectus.
The Trust Instrument provides that obligations of the Fund are not binding upon
the Trustees individually but only upon the property of the Fund, that the
Trustees and officers will not be liable for errors of judgment or mistakes of
fact or law, and that the Fund will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with litigation in which they
may be involved because of their offices with the Fund unless, as to liability
to Fund or Fund shareholders, it is finally adjudicated that they engaged in
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in their offices, or unless with respect to any other matter it
is finally adjudicated that they did not act in good faith in the reasonable
belief that their actions were in the best interests of the Fund. In the case of
settlement, such indemnification will be provided unless it has been determined
by a court or other body approving the settlement or other disposition, or by a
reasonable determination, based upon a review of readily available facts, by
vote of a majority of disinterested Trustees or in a written opinion of
independent counsel, that such officers or Trustees have engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of their duties.
The Trust Instrument contains an express disclaimer of shareholder liability for
acts or obligations of the Trust and provides for indemnification and
reimbursement of expenses out of Fund property for any shareholder held
personally liable for the obligations of a Fund solely by reason of his or her
being or having been a shareholder. The Trust Instrument also provides for the
maintenance, by or on behalf of the Trust and the Fund, of appropriate insurance
(for example, fidelity bond and errors and omissions insurance) for the
protection of the Trust and the Fund, their shareholders, trustees, officers,
employees and agents, covering possible tort and other liabilities. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which Delaware law did not apply,
inadequate insurance existed and the Fund itself was unable to meet its
obligations.
B-29
<PAGE>
FINANCIAL STATEMENTS
The Statement of Assets and Liabilities of the Fund dated as of June 7, 1996
incorporated by reference have been so included in reliance upon the report of
KPMG Peat Marwick LLP, independent auditors, as experts in accounting and
auditing.
The Financial Statements of the Fund for the interim period ended as of and at
December 31, 1996 included herein have not been audited. In the opinion of
management, the interim Financial Statements of the Fund have been prepared on
the same basis as audited financial statements would have been prepared, and
include all adjustments, consisting only of normally recurring adjustments,
necessary for a fair presentation of the results of operations for the Fund for
such interim period.
B-30
<PAGE>
PART C
OTHER INFORMATION
MEYERS PRIDE VALUE FUND
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Statement of Assets and Liabilities at June 7, 1996(1)
Report of Independent Auditors(1)
Statement of Assets and Liabilities (Unaudited) at December 31,
1996(2)
Statement of Operations for the Interim Period Ended December 31,
1996(2)
Statement of Change in Net Assets for the Interim Period Ended
December 31, 1996(2)
Financial Highlights for the Interim Period Ended December 31, 1996(2)
Notes to Financial Statements for the Interim Period Ended December
31, 1996(2)
(1) Previously filed in Part B of Post-Effective Amendment No. 1 to
Form N-1A filed by the Registrant on June 13, 1996.
(2) Filed in Part B of this Post-Effective Amendment No. 2.
(b) Exhibits:
Exhibit
Number Description of Exhibit
1(a) Certificate of Trust dated March 20, 1996, and filed by the
Delaware Secretary of State on March 25, 1996(1)
1(b) Certificate of Amendment to Certificate of Trust dated
January 15, 1997, and filed by the Delaware Secretary of
State on January 29, 1997(4)
2 By-Laws adopted on March 26, 1996(1)
3 None
4 Trust Instrument dated March 26, 1996(1)
5 Investment Management Agreement dated May 9, 1996 Between
the Registrant and Meyers, Sheppard & Co., LLC(1)
6(a) Distribution Agreement dated May 9, 1996 between the
Registrant and Furman Selz LLC(1)
C-1
<PAGE>
6(b) Distribution Agreement dated November 14, 1996 between the
Registrant and BISYS Fund Services Limited Partnership(4)
7 None
8 Custodian Agreement dated May 9, 1996 between the Registrant
and Wells Fargo Bank, N.A.(1)
9(a)(1) Administration Agreement dated May 9, 1996 between the
Registrant and Furman Selz LLC(1)
9(a)(2) Administration Agreement dated November 14, 1996 between
the Registrant and BISYS Fund Services Limited
Partnership(4)
9(b)(1) Fund Accounting Agreement dated May 9, 1996 between the
Registrant and Furman Selz LLC(1)
9(b)(2) Fund Accounting Agreement dated November 14, 1996 between
the Registrant and BISYS Fund Services, Inc.(4)
9(c)(1) Transfer Agency Agreement dated May 9, 1996 between the
and Furman Registrant Selz LLC(1)
9(c)(2) Transfer Agency Agreement dated November 14, 1996 between
the Registrant and BISYS Fund Services, Inc.(4)
10 Opinion and Consent of Pollet & Woodbury, a Law
Corporation(1)
11 Consent of independent auditors(4)
12 None
13(a) Form of Subscription Letter for $100,000 Seed Capital(1)
13(b) Form of Subscription Response Letter(2)
14 None
15 Form of Plan of Distribution adopted by the Registrant on
May 9, 1996(1)
16 None
17 None
18 None
19 None
(1) Previously provided as exhibit to Pre-Effective Amendment
No. 1 to Pre-Effective Amendment No. 1 to Form N-1A filed
by the Registrant on May 3, 1996.
C-2
<PAGE>
(2) Previously provided as exhibit to Pre-Effective Amendment
No. 2 to Form N-1A filed by the Registrant on June 5, 1996.
(3) Previously provided as exhibit to Post-Effective Amendment
No. 1 to Form N-1A filed by the Registrant on June 13,
1996.
(4) Filed herewith.
Item 25. Persons Controlled by or Under Common Control with Registrant.
None
Item 26. Number of Holders of Securities.
Title Of Class: Number of Record Holders
Shares of Beneficial Interest at
(par value $0.00001) December 31, 1996
----------------------------- ------------------------
Series 1:
Meyers Pride Value Fund
(formerly Meyers Sheppard Pride Fund) 188
Item 27. Indemnification.
Reference is made to Article IX of Registrant's Trust Instrument.
Registrant, its Trustees and officers are insured against certain expenses in
connection with the defense of claims, demands, actions, suits, or proceedings,
and certain liabilities that might be imposed as a result of such actions, suits
or proceedings.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended (the "Securities Act"), may be permitted to directors,
trustees, officers and controlling persons of the Registrant and the principal
underwriter pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, trustee, officer, or controlling person of the
Registrant and the principal underwriter in connection with the successful
defense of any action, suite or proceeding) is asserted against the Registrant
by such director, trustee, officer or controlling person or principal
underwriter in connection with the shares being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
C-3
<PAGE>
Item 28. Business and Other Connections of Investment Adviser.
The list required by this Item 28 of the managers and officers of Meyers Capital
Management, LLC (formerly Meyers, Sheppard & Co., LLC), together with
information as to any other business, profession, vocation or employment of a
substantial nature engaged in by such managers and officers during the past two
years, is incorporated by reference to Schedules A and D of Form ADV filed by
Meyers Sheppard & Co., LLC, pursuant to the Advisers Act (SEC File No.
801-51437).
Item 29. Principal Underwriters.
(a) BISYS Fund Services Limited Partnership, an Ohio limited
partnership, is the distributor (the "Distributor") for the shares of the
Registrant. The Distributor also serves as the principal underwriter or
placement agent for the Minerva Funds, Inc., a registered open-ended investment
company.
(b) The information required by this Item 29 with respect to the
Distributor is incorporated by reference to Schedule A of Form BD filed by BISYS
Fund Services Limited Partnership pursuant to the Securities Exchange Act of
1934 (SEC File No. 8-32480).
(c) Not applicable.
Item 30. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940, as amended (the "Investment Company
Act"), and the Rules thereunder will be maintained at the offices of:
(1) Records relating to management and investment advisement
functions:
Meyers Pride Value Fund
c/o Meyers Investment Trust
8901 Wilshire Boulevard
Beverly Hills, California 90211
(2) Records relating to administration and distribution functions:
BISYS Fund Services Limited Partnership
3435 Stelzer Road
Columbus, Ohio 43219
(3) Records relating to fund accounting and registrar/transfer agency
functions:
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
C-4
<PAGE>
(4) Records relating to custodial functions:
Wells Fargo Bank, N.A.
P.O. Box 6308
San Francisco, California 94163
Item 31. Management Services.
The Registrant is not a party to any management related service contract not
discussed in Part A or Part B of this Registration Statement.
Item 32. Undertakings.
(a) The Registrant undertakes to comply with Section 16(c) of the
Investment Company Act as though such provisions of the Investment Company Act
were applicable to the Registrant, except that the request referred to in the
third full paragraph thereof may only be made by shareholders who hold in the
aggregate at least 10% of the outstanding shares of the Registrant, regardless
of the net asset value of shares held by such requesting shareholders.
(b) If the information called for by Item 5A is contained in the latest
annual report to shareholders, an undertaking to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual report to
shareholders upon request and without change.
C-5
<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 certifies that it
meets all the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933, as amended, and has
duly caused this Post-Effective Amendment No. 2 to Registration Statement on
Form N-1A to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Beverly Hills, State of California, on January 30,
1997.
MEYERS INVESTMENT TRUST
(formerly Meyers Sheppard Investment Trust)
(Registrant)
By: /s/Shelly J. Meyers
----------------------------------
Name: Shelly J. Meyers
Title: Chairman, Trustee and President
C-6
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Post-Effective Amendment No. 2 to Registration Statement on Form N-1A has been
signed below by the following persons in the capacities indicated on January 30,
1997.
Signatures Title
By: /s/ Shelly J. Meyers Chairman, Trustee and President
--------------------------
Shelly J. Meyers
By: /s/ Leslie C. Sheppard Trustee and Executive Vice President
-------------------------
Leslie C. Sheppard
By: /s/ Gwendolyn H. Baba Trustee
-------------------------
Gwendolyn H. Baba
By: /s/ Jay W. Gendron Trustee
-------------------------
Jay W. Gendron
By: /s/ Robert E. Gipson Trustee
-------------------------
Robert E. Gipson
By: /s/ Leonard Greenhalgh Trustee
-------------------------
Leonard Greenhalgh
By: /s/ Duane E. McWaine Trustee
-------------------------
Duane E. McWaine
By: /s/ Tejal Albanese Treasurer
-------------------------
Tejal Albanese
C-7
<PAGE>
MEYERS PRIDE VALUE FUND
(formerly Meyers Sheppard Pride Fund)
a separate portfolio of the Meyers Investment Trust
(formerly the Meyers Sheppard Investment Trust)
8901 Wilshire Boulevard
Beverly Hills, California 90211
Telephone Number: (310) 657-9393
Facsimile Number: (310) 657-9380
EXHIBITS FILED ELECTRONICALLY VIA EDGAR ON JANUARY 30, 1997 UNDER:
- Post-Effective Amendment No. 2 to Registration Statement under the
Securities Act of 1933 (Securities Act Registration No. 333 - 02111);
and
- Amendment No. 4 To Registration Statement under the Investment Company
Act of 1940 (Investment Company Registration No. 811 - 7581)
C-8
<PAGE>
FILED EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ---------- ---------------------------------------------------------------
1(b) Certificate of Amendment to Certificate of Trust dated January
15, 1997, and filed by the Delaware Secretary of State on
January 29, 1997(4)
6(b) Distribution Agreement dated November 14, 1996 between the
Registrant and BISYS Fund Services Limited Partnership
9(a)(2) Administration Agreement dated November 14, 1996 between the
Registrant and BISYS Fund Services Limited Partnership
9(b)(2) Fund Accounting Agreement dated November 14, 1996 between the
Registrant and BISYS Fund Services, Inc.
9(c)(2) Transfer Agency Agreement dated November 14, 1996 between the
Registrant and BISYS Fund Services, Inc.
11 Consent of Independent Auditors
<PAGE>
Exhibit 1(b)
Certificate of Amendment to Certificate of Trust
dated January 15, 1997,
and filed by the Delaware Secretary of State on January 29, 1997
CERTIFICATE OF AMENDMENT
To
CERTIFICATE OF TRUST
Of
MEYERS SHEPPARD INVESTMENT TRUST
This Certificate of Amendment to Certificate of Trust (the "Certificate")
is filed in accordance with the provisions of the Delaware Business Trust Act
(12 Del. Code Ann. Tit. 12 Section 3810 et. seq.) and sets forth the following:
1. The name of the trust is hereby changed to: Meyers Investment Trust
(the "Trust").
2. This Certificate is effective upon filing.
IN WITNESS WHEREOF, the undersigned, being the Trustees of the Trust, have
executed this Certificate as of the 15th day of January, 1997.
Shelly J. Meyers, as
Trustee and not
individually
_________________________________
Leslie C. Sheppard, as
Trustee and not
individually
_________________________________
<PAGE>
Gwendolyn H. Baba, as Trustee and
not individually
_________________________________
Jay W. Gendron, as Trustee and not
individually
_________________________________
Robert E. Gipson, as Trustee and
not individually
_________________________________
Leonard Greenhalgh, as Trustee and
not individually
_________________________________
Duane E. McWaine, as Trustee and
not individually
_________________________________
<PAGE>
Exhibit 6(b)
Distribution Agreement dated November 14, 1996
between
the Registrant and BISYS Fund Services Limited Partnership
DISTRIBUTION AGREEMENT
AGREEMENT made this 14th day of November, 1996, between MEYERS SHEPPARD
INVESTMENT TRUST (the "Trust"), a Delaware business trust, and BISYS FUND
SERVICES LIMITED PARTNERSHIP d/b/a BISYS FUND SERVICES ("Distributor"), an Ohio
limited partnership.
WHEREAS, the Trust is an open-end management investment company, organized
as a Delaware business trust and registered with the Securities and Exchange
Commission (the "Commission") under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, it is intended that Distributor act as the distributor of the
units of beneficial interest ("Shares") of each of the investment portfolios of
the Trust (such portfolios being referred to individually as a "Fund" and
collectively as the "Funds").
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as Distributor; Conversion to the Services.
1.1 Distributor (i) will act as agent for the distribution of the
Shares covered by the registration statement and prospectus of the Trust then in
effect under the Securities Act of 1933, as amended (the "Securities Act") and
(ii) will perform such additional services as are provided in this Section 1
(collectively, the "Services"). In connection therewith, the Trust agrees to
convert to the Distributor's data processing systems and software (the "BISYS
System"). The Trust shall cooperate with the Distributor to provide the
Distributor with all necessary information and assistance required to
successfully convert to the BISYS System. The Distributor shall provide the
Trust with a schedule relating to such conversion and the parties agree that the
conversion may progress in stages. The date upon which all Services shall have
been converted to the BISYS System shall be referred to herein as the
"Conversion Date." The Distributor hereby accepts such engagement and agrees to
perform the Services commencing, with respect to each individual Service, on the
date that the conversion of such Service to the BISYS System has been completed.
The Distributor shall determine in accordance with its normal acceptance
procedures when the applicable Service has been successfully converted. As used
in this Agreement, the term "registration statement" shall mean Parts A (the
prospectus), B (the Statement of Additional Information) and C of each
registration statement that is filed on Form N-1A, or any successor thereto,
with the Commission, together with any amendments thereto. The term "prospectus"
shall mean each form of prospectus and Statement of Additional Information used
by the Funds for delivery to shareholders and prospective shareholders after the
effective dates of the above-referenced registration statements, together with
any amendments and supplements thereto.
1.2 Distributor agrees to use its best efforts to appropriately
promote each Fund and to solicit orders for the purchase of the Shares and will
undertake such advertising and
1
<PAGE>
promotion as is customary and reasonable in connection with such solicitation in
the jurisdiction or jurisdictions within which the offer and sale of the Shares
is duly registered. The Trust understands that Distributor is now and may in the
future be the distributor of the shares of several investment companies or
series (together, "Investment Companies") including Investment Companies having
investment objectives similar to those of the Trust. The Trust further
understands that investors and potential investors in the Trust may invest in
shares of such other Investment Companies. The Trust agrees that Distributor's
duties to such Investment Companies shall not be deemed in conflict with its
duties to the Trust under this paragraph 1.2.
Distributor shall, at its own expense, finance appropriate activities which
it deems reasonable, which are primarily intended to result in the sale of the
Shares, including, but not limited to, advertising, compensation of
underwriters, dealers and sales personnel, the printing and mailing of
prospectuses to other than current Shareholders, and the printing and mailing of
sales literature.
1.3 Distributor is a broker-dealer in good standing registered with
the Commission under Section 15 of the Securities Exchange Act of 1934 and with
all appropriate state securities commissioners. In its capacity as distributor
of the Shares, all activities of Distributor and its partners, agents, and
employees shall comply with all applicable laws, rules and regulations,
including, without limitation, the 1940 Act, all rules and regulations
promulgated by the Commission thereunder and all rules and regulations adopted
by any securities association registered under the Securities Exchange Act of
1934.
1.4 Distributor will provide one or more persons, during normal
business hours, to respond to telephone questions with respect to the Trust.
1.5 Distributor will transmit any orders received by it for purchase
or redemption of the Shares to the transfer agent and custodian for the Funds.
1.6 Whenever in their judgment such action is warranted by unusual
market, economic or political conditions, or by abnormal circumstances of any
kind, the Trust's officers may decline to accept any orders for, or make any
sales of, the Shares until such time as those officers deem it advisable to
accept such orders and to make such sales.
1.7 Distributor will act only on its own behalf as principal if it
chooses to enter into selling agreements with selected dealers or others.
1.8 The Trust agrees at its own expense to execute any and all
documents and to furnish any and all information and otherwise to take all
actions that may be reasonably necessary in connection with the qualification of
the Shares for sale in such states as Distributor and the Trust's Investment
Manager shall agree upon.
2
<PAGE>
1.9 The Trust shall furnish from time to time, for use in connection
with the sale of the Shares, such information with respect to the Funds and the
Shares as Distributor may reasonably request; and the Trust warrants that the
statements contained in any such information shall fairly show or represent what
they purport to show or represent. The Trust shall also furnish Distributor upon
request with: (a) unaudited semi-annual statements of the Funds' books and
accounts prepared by the Trust, (b) a monthly itemized list of the securities in
the Funds, (c) monthly balance sheets as soon as practicable after the end of
each month, and (d) from time to time such additional information regarding the
financial condition of the Funds as Distributor may reasonably request.
1.10 The Trust represents to Distributor that, with respect to the
Shares, all registration statements and prospectuses filed by the Trust with the
Commission under the Securities Act have been carefully prepared in conformity
with requirements of said Act and rules and regulations of the Commission
thereunder. The registration statement and prospectus contain all statements
required to be stated therein in conformity with said Act and the rules and
regulations of said Commission and all statements of fact contained in any such
registration statement and prospectus are true and correct. Furthermore, neither
any registration statement nor any prospectus includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser of the
Shares. The Trust may, but shall not be obligated to, propose from time to time
such amendment or amendments to any registration statement and such supplement
or supplements to any prospectus as, in the light of future developments, may,
in the opinion of the Trust's counsel, be necessary or advisable. If the Trust
shall not propose such amendment or amendments and/or supplement or supplements
within fifteen days after receipt by the Trust of a written request from
Distributor to do so, Distributor may, at its option, terminate this Agreement.
The Trust shall not file any amendment to any registration statement or
supplement to any prospectus without giving Distributor reasonable notice
thereof in advance; provided, however, that nothing contained in this Agreement
shall in any way limit the Trust's right to file at any time such amendments to
any registration statement and/or supplements to any prospectus, of whatever
character, as the Trust may deem advisable, such right being in all respects
absolute and unconditional.
1.11 The Trust authorizes Distributor and dealers to use any
prospectus in the form furnished from time to time in connection with the sale
of the Shares. Distributor shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any act or omission in carrying
out its duties hereunder, except a loss resulting from willful misfeasance, bad
faith or negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable law which cannot be waived or modified
hereby. The Trust agrees to indemnify, defend and hold Distributor, its several
partners and employees, and any person who controls Distributor within the
meaning of Section 15 of the Securities Act free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which Distributor, its partners and
employees, or any such controlling person, may incur under the Securities Act or
under common law
3
<PAGE>
or otherwise, arising out of or based upon any untrue statement, or alleged
untrue statement, of a material fact contained in any registration statement or
any prospectus or arising out of or based upon any omission, or alleged
omission, to state a material fact required to be stated in either any
registration statement or any prospectus or necessary to make the statements in
either thereof not misleading; provided, however, that the Trust's agreement to
indemnify Distributor, its partners or employees, and any such controlling
person shall not be deemed to cover any claims, demands, liabilities or expenses
arising out of any statements or representations as are contained in any
prospectus and in such financial and other statements as are furnished in
writing to the Trust by Distributor and used in the answers to the registration
statement or in the corresponding statements made in the prospectus, or arising
out of or based upon any omission or alleged omission to state a material fact
in connection with the giving of such information required to be stated in such
answers or necessary to make the answers not misleading; and further provided
that the Trust's agreement to indemnify Distributor and the Trust's
representations and warranties hereinbefore set forth in paragraph 1.10 shall
not be deemed to cover any liability to the Trust or its Shareholders to which
Distributor would otherwise be subject by reason of willful misfeasance, bad
faith or negligence in the performance of its duties, or by reason of
Distributor's reckless disregard of its obligations and duties under this
Agreement. The Trust's agreement to indemnify Distributor, its partners and
employees and any such controlling person, as aforesaid, is expressly
conditioned upon the Trust being notified of any action brought against
Distributor, its partners or employees, or any such controlling person, such
notification to be given by letter or by telegram addressed to the Trust at its
principal office specified in the first paragraph of this Agreement and sent to
the Trust by the person against whom such action is brought, within 10 days
after the summons or other first legal process shall have been served. The
failure to so notify the Trust of any such action shall not relieve the Trust
from any liability which the Trust may have to the person against whom such
action is brought by reason of any such untrue, or allegedly untrue, statement
or omission, or alleged omission, otherwise than on account of the Trust's
indemnity agreement contained in this paragraph 1.11. The Trust will be entitled
to assume the defense of any suit brought to enforce any such claim, demand or
liability, but, in such case, such defense shall be conducted by counsel of good
standing chosen by the Trust and approved by Distributor, which approval shall
not be unreasonably withheld. In the event the Trust elects to assume the
defense of any such suit and retain counsel of good standing approved by
Distributor, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case the
Trust does not elect to assume the defense of any such suit, or in case
Distributor reasonably does not approve of counsel chosen by the Trust, the
Trust will reimburse Distributor, its partners and employees, or the controlling
person or persons named as defendant or defendants in such suit, for the fees
and expenses of any counsel retained by Distributor or them. The Trust's
indemnification agreement contained in this paragraph 1.11 and the Trust's
representations and warranties in this Agreement shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
Distributor, its partners and employees, or any controlling person, and shall
survive the delivery of any Shares.
This Agreement of indemnity will inure exclusively to Distributor's
benefit, to the benefit of its several partners and employees, and their
respective estates, and to the benefit
4
<PAGE>
of the controlling persons and their successors. The Trust agrees promptly to
notify Distributor of the commencement of any litigation or proceedings against
the Trust or any of its officers or Trustees in connection with the issue and
sale of any Shares.
1.12 Distributor agrees to indemnify, defend and hold the Trust, its
several officers and Trustees and any person who controls the Trust within the
meaning of Section 15 of the Securities Act free and harmless from and against
any and all claims, demands, liabilities and expenses (including the costs of
investigating or defending such claims, demands, or liabilities and any counsel
fees incurred in connection therewith) which the Trust, its officers or Trustees
or any such controlling person, may incur under the Securities Act or under
common law or otherwise, but only to the extent that such liability or expense
incurred by the Trust, its officers or Trustees or such controlling person
resulting from such claims or demands, shall arise out of or be based upon any
untrue, or alleged untrue, statement of a material fact contained in information
furnished in writing by Distributor to the Trust and used in the answers to any
of the items of the registration statement or in the corresponding statements
made in the prospectus, or shall arise out of or be based upon any omission, or
alleged omission, to state a material fact in connection with such information
furnished in writing by Distributor to the Trust required to be stated in such
answers or necessary to make such information not misleading. Distributor's
agreement to indemnify the Trust, its officers and Trustees, and any such
controlling person, as aforesaid, is expressly conditioned upon Distributor
being notified of any action brought against the Trust, its officers or
Trustees, or any such controlling person, such notification to be given by
letter or telegram addressed to Distributor at its principal office in Columbus,
Ohio, and sent to Distributor by the person against whom such action is brought,
within 10 days after the summons or other first legal process shall have been
served. Distributor shall have the right of first control of the defense of such
action, with counsel of its own choosing, satisfactory to the Trust, if such
action is based solely upon such alleged misstatement or omission on
Distributor's part, and in any other event the Trust, its officers or Trustees
or such controlling person shall each have the right to participate in the
defense or preparation of the defense of any such action. The failure to so
notify Distributor of any such action shall not relieve Distributor from any
liability which Distributor may have to the Trust, its officers or Trustees, or
to such controlling person by reason of any such untrue or alleged untrue
statement, or omission or alleged omission, otherwise than on account of
Distributor's indemnity agreement contained in this paragraph 1.12.
1.13 No Shares shall be offered by either Distributor or the Trust
under any of the provisions of this Agreement and no orders for the purchase or
sale of Shares hereunder shall be accepted by the Trust if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
Securities Act or if and so long as a current prospectus as required by Section
10(b)(2) of said Act is not on file with the Commission; provided, however, that
nothing contained in this paragraph 1.13 shall in any way restrict or have an
application to or bearing upon the Trust's obligation to repurchase Shares from
any Shareholder in accordance with the provisions of the Trust's prospectus,
Agreement and Declaration of Trust, or Bylaws.
5
<PAGE>
1.14 The Trust agrees to advise Distributor as soon as reasonably
practical by a notice in writing delivered to Distributor or its counsel:
(a) of any request by the Commission for amendments to the
registration statement or prospectus then in effect or for
additional information;
(b) in the event of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or
prospectus then in effect or the initiation by service of process
on the Trust of any proceeding for that purpose;
(c) of the happening of any event that makes untrue any statement of
a material fact made in the registration statement or prospectus
then in effect or which requires the making of a change in such
registration statement or prospectus in order to make the
statements therein not misleading; and
(d) of all action of the Commission with respect to any amendment to
any registration statement or prospectus which may from time to
time be filed with the Commission.
For purposes of this section, informal requests by or acts of the Staff of
the Commission shall not be deemed actions of or requests by the Commission.
1.15 Distributor agrees on behalf of itself and its partners and
employees to treat confidentially and as proprietary information of the Trust
all records and other information relative to the Trust and its prior, present
or potential Shareholders, and not to use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except, after prior notification to and approval in writing by the Trust, which
approval shall not be unreasonably withheld and may not be withheld where
Distributor may be exposed to civil or criminal contempt proceedings for failure
to comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust.
1.16 This Agreement shall be governed by the laws of the State of
California.
1.17 Distributor is an independent contractor of the Trust and neither
Distributor nor any of its managers, officers or employees is or shall be
employees of the Trust in the performance of Distributor's duties hereunder.
Distributor shall be responsible for its own conduct and the employment, control
and conduct of its employees, and for injury to such employees and agents or to
others through employees and agents. Distributor assumes full responsibility for
its employees and agents under applicable statutes and agrees to pay all
employment taxes thereunder.
6
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2. Fee.
Distributor shall receive from the Funds identified in the Plan of
Distribution (the "Plan") pursuant to Rule 12b-1 under the 1940 Act attached as
Schedule A hereto (the "Distribution Plan Funds") a distribution fee at the rate
and upon the terms and conditions set forth in such Plan. The distribution fee
shall be accrued daily and shall be paid on the first business day of each
month, or at such time(s) as the Distributor shall reasonably request.
3. Sale and Payment.
Shares of a Fund may be subject to a sales load and may be subject to the
imposition of a distribution fee pursuant to the Distribution and Shareholder
Service Plan referred to above. To the extent that Shares of a Fund are sold at
an offering price which includes a sales load or at net asset value subject to a
contingent deferred sales load with respect to certain redemptions (either
within a single class of Shares or pursuant to two or more classes of Shares),
such Shares shall hereinafter be referred to collectively as "Load Shares" (in
the case of Shares that are sold with a front-end sales load or Shares that are
sold subject to a contingent deferred sales load), "Front-End Load Shares" or
"CDSL Shares" and individually as a "Load Share," a "Front-End Load Share" or a
"CDSL Share." A Fund that contains Front-End Load Shares shall hereinafter be
referred to collectively as "Load Funds" or "Front-End Load Funds" and
individually as a "Load Fund" or a "Front-end Load Fund." A Fund that contains
CDSL Shares shall hereinafter be referred to collectively as "Load Funds" or
"CDSL Funds" and individually as a "Load Fund" or a "CDSL Fund." Under this
Agreement, the following provisions shall apply with respect to the sale of, and
payment for, Load Shares.
3.1 Distributor shall have the right to purchase Load Shares at their
net asset value and to sell such Load Shares to the public against orders
therefor at the applicable public offering price, as defined in Section 4
hereof. Distributor shall also have the right to sell Load Shares to dealers
against orders therefor at the public offering price less a concession
determined by Distributor, which concession shall not exceed the amount of the
sales charge or underwriting discount, if any, referred to in Section 4 below.
3.2 Prior to the time of delivery of any Load Shares by a Load Fund
to, or on the order of, Distributor, Distributor shall pay or cause to be paid
to the Load Fund or to its order an amount in Boston or New York clearing house
funds equal to the applicable net asset value of such Shares. Distributor may
retain so much of any sales charge or underwriting discount as is not allowed by
Distributor as a concession to dealers.
4. Public Offering Price.
The public offering price of a Load Share shall be the net asset value of
such Load Share, plus any applicable sales charge, all as set forth in the
current prospectus of the Load Fund. The net asset value of Shares shall be
determined in accordance with the provisions of the
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Agreement and Declaration of Trust and Bylaws of the Trust and the then-current
prospectus of the Load Fund.
5. Issuance of Shares.
The Trust reserves the right to issue, transfer or sell Load Shares at net
asset value (a) in connection with the merger or consolidation of the Trust or
the Load Fund(s) with any other investment company or the acquisition by the
Trust or the Load Fund(s) of all or substantially all of the assets or of the
outstanding Shares of any other investment company; (b) in connection with a pro
rata distribution directly to the holders of Shares in the nature of a stock
dividend or split; (c) upon the exercise of subscription rights granted to the
holders of Shares on a pro rata basis; (d) in connection with the issuance of
Load Shares pursuant to any exchange and reinvestment privileges described in
any then-current prospectus of the Load Fund; and (e) otherwise in accordance
with any then-current prospectus of the Load Fund.
6. Reimbursement of Distribution Expenditures.
6.1 Reimbursement. As promptly as possible after the first business
day of each month this Agreement is in effect, the Trust shall, for each day
during the effective term of this Agreement, reimburse Distributor for its
Distribution Expenditures (as such term is hereinbelow defined in subparagraph
6.2 of this Section) incurred during the previous month (but not for any periods
prior to the first day of sale of the Shares to the public) (the "12b-1 Fees");
provided that payment of the 12b-1 Fees shall be made with respect to any month
only to the extent that such payment, together with any other payments made by
the Trust pursuant to the Plan, shall not exceed an amount (the "12b-1 Fee Cap")
equal to the aggregate of the average daily net assets of each Fund calculated
for each day of such month, multiplied by a fraction, the numerator of which is
zero point one five percent (0.15%), and the denominator of which is 365 (366 in
leap years). If the day for which calculation is required is a weekend or
holiday or other day for which the average daily net assets is not computed, the
average daily net assets for the last day prior thereto shall be used for the
calculation. Any 12b-1 Fees which cannot be paid due to the 12b-1 Cap shall be
borne by Distributor and accrued as Distribution Expenditures until such time as
12b-1 Fees are available to pay such unpaid Distribution Expenditures. The
reimbursement by the Trust of Distribution Expenditures incurred by Distributor
shall be authorized pursuant to the Plan adopted by the Trust under Rule 12b-1
under the 1940 Act.
6.2 Definition of Distribution Expenditures. For purposes of this
Agreement, "Distribution Expenditures" of Distributor shall mean all reasonable
and actual out-of-pocket expenditures borne by Distributor or by any other
person with which Distributor has an agreement approved by the Trust, which
expenditures represent payment for activities primarily intended to result in
the sale of the Shares to the public including, but not limited to, the
following: (i) payments to securities dealers and others engaged in the sale of
the Shares; (ii) expenditures for support services such as telephone facilities
and expenses and shareholder services for each Fund as the Trust may reasonably
request; (iii) formulation and implementation of marketing and promotional
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activities for each Fund including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising;
(iv) preparation, printing and distribution of sales literature; (v)
preparation, printing and distribution of prospectuses of each Fund and reports
for recipients other than existing shareholders of each Fund; and (vi) provision
to the Trust of such information, analyses and opinion, with respect to
marketing and promotional activities for each Fund as the Trust may, from time
to time, reasonably request; except that Distribution Expenditures shall not
include any expenditures in connection with services which Distributor, any of
its affiliates, or any other person have agreed to bear without reimbursement.
6.3 Documentation. Each written request for reimbursement of
Distribution Expenses under this paragraph shall be directed to the President of
the Trust and shall show in reasonable detail the expenditures incurred by
Distributor and the purposes therefor, together with any documentation required
by the Trust to verify such payment.
6.4 Reports. Distributor shall prepare and deliver reports to the
President of the Trust on a regular, but at least monthly, basis, showing the
Distribution Expenditures incurred pursuant to this Agreement and the Plan and
the purposes therefor, as well as any supplemental reports as the Board of
Trustees of the Trust, from time to time, may reasonably request.
6.5 Waiver of Fees. Distributor reserves the right from time to time
in its sole discretion, and without any obligation to do so, to reduce and/or
waive all or a portion of the 12b-1 Fees otherwise payable hereunder. Any such
fee reduction or waiver may be discontinued or modified by Distributor at any
time.
7. Term, Duration and Termination.
The initial term of this Agreement (the "Initial Term") shall be for a
period commencing on the date this Agreement is executed by both parties and
ending on the date that is one year after the Conversion Date. Thereafter, if
not terminated, this Agreement shall continue with respect to a particular Fund
automatically for successive one-year terms, provided that such continuance is
specifically approved at least annually by (a) by the vote of a majority of
those members of the Trust's Board of Trustees who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
for the purpose of voting on such approval and (b) by the vote of the Trust's
Board of Trustees or the vote of a majority of the outstanding voting securities
of such Fund. This Agreement is terminable without penalty, on not less than
sixty days' prior written notice, by the Trust's Board of Trustees, by vote of a
majority of the outstanding voting securities of the Trust or by the
Distributor. This Agreement will also terminate automatically in the event of
its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment" shall have
the same meanings as ascribed to such terms in the 1940 Act.)
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8. Rule 12b-1 Savings Clause.
It is the parties' intent that this Agreement and each and every provision
thereof comply with the terms of the Plan and Rule 12b-1 under the 1940 Act and
regulatory interpretations thereof, and that this Agreement and each and every
provision thereof be construed to conform to that intent. To the extent that any
such provision cannot be so construed, such offending provision shall be severed
from this Agreement. The parties agree that they shall, without the payment of
any additional consideration, modify or amend this Agreement, as required, to:
(i) comport with changes in securities or other laws or rules, regulations or
regulatory interpretations thereof applicable to this Agreement or to comply
with stock exchange rules or requirements and/or (ii) ensure that this Agreement
is and remains in compliance with Rule 12b-1 under the 1940 Act.
9. Limitation of Liability of Trust.
Distributor agrees that no shareholder, Trustee, officer, employee or agent
of the Trust shall be subject to claims against or obligations of the Trust to
any extent whatsoever, but that the Trust estate alone shall be liable (with the
exception of any Fund for whom Distributor has not provided services under this
Agreement and for which the claims or obligations therefore do not relate).
10. Entire Agreement.
Each party expressly acknowledges and agrees that this Agreement: (1) is
the final, complete and exclusive statement of the agreement of the parties with
respect to the subject matter hereof; (2) supersedes any prior or
contemporaneous agreements or understandings of any kind, oral or written
(collectively and severally, the "prior agreements"), and that any such prior
agreements are of no force or effect except as expressly set forth herein; and
(3) may not be varied, supplemented or contradicted by evidence of prior
agreements, or by evidence of subsequent oral agreements.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first written
above.
MEYERS SHEPPARD INVESTMENT BISYS FUND SERVICES LIMITED
TRUST PARTNERSHIP
By: BISYS Fund Services, General Partner
By: By:
Title: Title:
Date: Date:
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<PAGE>
Dated: November 14, 1996
SCHEDULE A
TO THE DISTRIBUTION AGREEMENT
BETWEEN
MEYERS SHEPPARD INVESTMENT TRUST
AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
PLAN OF DISTRIBUTION
A-1
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Exhibit 9(a)(2)
Administration Agreement dated November 14, 1996
between
the Registrant and BISYS Fund Services Limited Partnership
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 14th day of November, 1996, by and
between MEYERS SHEPPARD INVESTMENT TRUST, a Delaware business trust (the
"Trust"), and BISYS FUND SERVICES LIMITED PARTNERSHIP, d/b/a BISYS FUND SERVICES
(the "Administrator"), an Ohio limited partnership.
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"),
consisting of several series of shares of beneficial interest ("Shares"); and
WHEREAS, the Trust desires the Administrator to provide, and the
Administrator is willing to provide, management and administrative services to
such series of the Trust as the Trust and the Administrator may agree on
("Portfolios") and as listed on Schedule A attached hereto and made a part of
this Agreement, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Administrator hereby agree as follows:
ARTICLE 1. Retention of the Administrator; Conversion to the Services. The
Trust hereby engages the Administrator to act as the administrator of the
Portfolios and to furnish the Portfolios with the management and administrative
services as set forth in Article 2 below (collectively, the "Services"), and, in
connection therewith, the Trust agrees to convert to the Administrator's data
processing systems and software (the "BISYS System") as necessary in order to
receive the Services. The Trust shall cooperate with the Administrator to
provide the Administrator with all necessary information and assistance required
to successfully convert to the BISYS System. The Administrator shall provide the
Trust with a schedule relating to such conversion and the parties agree that the
conversion may progress in stages. The date upon which all Services shall have
been converted to the BISYS System shall be referred to herein as the
"Conversion Date." The Administrator hereby accepts such engagement and agrees
to perform the Services commencing, with respect to each individual Service, on
the date that the conversion of such Service to the BISYS System has been
completed. The Administrator shall determine in accordance with its normal
acceptance procedures when the applicable Service has been successfully
converted.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trust in any way and shall
not be deemed an agent of the Trust.
ARTICLE 2. Administrative Services. The Administrator shall perform or
supervise the performance by others of administrative services in connection
with the operations of the Portfolios, and, on behalf of the Trust, will
investigate, assist in the selection of and conduct relations with
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custodians, depositories, accountants, legal counsel, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Portfolios' operations. The
Administrator shall provide the Trustees of the Trust with such reports
regarding investment performance as they may reasonably request but shall have
no responsibility for supervising the performance by any investment adviser or
sub-adviser of its responsibilities.
The Administrator shall provide the Trust with regulatory reporting, all
necessary office space, equipment, personnel, compensation and facilities
(including facilities for meetings of shareholders ("Shareholders") and Trustees
of the Trust) for handling the affairs of the Portfolios and such other services
as the Administrator shall, from time to time, determine to be necessary to
perform its obligations under this Agreement. In addition, at the request of the
Board of Trustees, the Administrator shall make reports to the Trust's Trustees
concerning the performance of its obligations hereunder.
Without limiting the generality of the foregoing, the Administrator shall:
(a) calculate contractual Trust expenses and control all disbursements for
the Trust, and as appropriate compute the Trust's yields, total
return, expense ratios, portfolio turnover rate and, if required,
portfolio average dollar-weighted maturity;
(b) assist Trust counsel with the preparation of prospectuses, statements
of additional information, registration statements and proxy
materials;
(c) prepare such reports, applications and documents (including reports
regarding the sale and redemption of Shares as may be required in
order to comply with Federal and state securities law) as may be
necessary or desirable to register the Trust's Shares with state
securities authorities, monitor the sale of Trust Shares for
compliance with state securities laws, and file with the appropriate
state securities authorities the registration statements and reports
for the Trust and the Trust's Shares and all amendments thereto, as
may be necessary or convenient to register and keep effective the
Trust and the Trust's Shares with state securities authorities to
enable the Trust to make a continuous offering of its Shares;
(d) develop and prepare, with the assistance of the Trust's investment
adviser, communications to Shareholders, including the annual report
to Shareholders, coordinate the mailing of prospectuses, notices,
proxy statements, proxies and other reports to Trust Shareholders, and
supervise and facilitate the proxy solicitation process for all
shareholder meetings, including the tabulation of shareholder votes;
(e) administer contracts on behalf of the Trust with, among others, the
Trust's investment adviser, distributor, custodian, transfer agent and
fund accountant;
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(f) supervise the Trust's transfer agent with respect to the payment of
dividends and other distributions to Shareholders;
(g) calculate performance data of the Trust and its Portfolios for
dissemination to information services covering the investment company
industry;
(h) coordinate and supervise the preparation and filing of the Trust's tax
returns;
(i) examine and review the operations and performance of the various
organizations providing services to the Trust or any Portfolio of the
Trust, including, without limitation, the Trust's investment adviser,
distributor, custodian, fund accountant, transfer agent, outside legal
counsel and independent public accountants, and at the request of the
Board of Trustees, report to the Board on the performance of
organizations;
(j) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and printing of the
Trust's semi-annual and annual reports to Shareholders;
(k) assist with the design, development, and operation of the Trust
Portfolios, including new classes, investment objectives, policies and
structure;
(l) provide individuals reasonably acceptable to the Trust's Board of
Trustees to serve as officers of the Trust, who will be responsible
for the management of certain of the Trust's affairs as determined by
the Trust's Board of Trustees;
(m) advise the Trust and its Board of Trustees on matters concerning the
Trust and its affairs;
(n) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Trust in
accordance with the requirements of Rules 17g-1 and 17d-1(7) under the
1940 Act as such bonds and policies are approved by the Trust's Board
of Trustees;
(o) monitor and advise the Trust and its Portfolios on their registered
investment company status under the Internal Revenue Code of 1986, as
amended;
(p) perform all administrative services and functions of the Trust and
each Portfolio to the extent administrative services and functions are
not provided to the Trust or such Portfolio pursuant to the Trust's or
such Portfolio's investment advisory agreement, distribution
agreement, custodian agreement, transfer agent agreement and fund
accounting agreement;
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(q) furnish advice and recommendations with respect to other aspects of
the business and affairs of the Portfolios as the Trust and the
Administrator shall determine desirable; and
(r) prepare and file with the SEC the semi-annual report for the Trust on
Form N-SAR and all required notices pursuant to Rule 24f-2.
The Administrator shall perform such other services for the Trust that are
mutually agreed upon by the parties from time to time. Such services may include
performing internal audit examinations; mailing the annual reports of the
Portfolios; preparing an annual list of Shareholders; and mailing notices of
Shareholders' meetings, proxies and proxy statements, for all of which the Trust
will pay the Administrator's out-of-pocket expenses.
In performing its administrative duties under this Agreement, the
Administrator will (i) exercise reasonable care and diligence, (ii) act in good
faith in accordance with the Trust Instrument, Certificate of Trust, By-Laws,
Prospectus and with the instructions and directions of the Board of Trustees of
the Trust and the President of the Trust, (iii) conform to and comply with the
requirements of the 1940 Act and all other applicable federal or state laws and
regulations, and (vi) consult with legal counsel to the Trust, as necessary and
appropriate.
The appointment by the Trust of the officers provided by the Administrator
pursuant to paragraph (1) of this Article 2 (the "Designated Officers") shall be
governed by the following:
(i) The appointment of any Designated Officer by the Trust shall not be
exclusive or full-time; provided, however, the Designated Officer
shall devote so much business time, effort, energy, abilities and
attention to the performance of his or her duties hereunder as are
reasonable and necessary to perform such duties in an exemplary
manner.
(ii) The Designated Officers shall perform their services at the offices
provided by the Administrator, whom shall provide the Designated
Officers with such support staff, facilities, equipment and supplies
as are reasonably necessary or suitable for the adequate performance
of the Designated Officers' duties and obligations under this
Agreement, including technical and secretarial help.
(iii) In performing their duties as officers of the Trust, the Designated
Officers shall report to the President of the Trust and, upon its
request, to the Board of Trustees of the Trust, and shall act in
accordance with and subject to the instructions and directions of
the President of the Trust and the Board of Trustees, and shall
perform such other appropriate duties that are consistent with the
terms of this Agreement which may from to time be reasonably
prescribed by the President of the Trust and/or the Board of
Trustees.
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(iv) In performing their duties as officers of the Trust: (i) the
Designated Officers shall at all times loyally, conscientiously,
diligently and, to the best of their ability, perform all of their
duties, and otherwise promote the interests and welfare of the Trust
and each Portfolio; (ii) strictly comply with and adhere to all
applicable laws, and the Trust's Certificate of Trust, Trust
Instrument and Bylaws, and Registration Statement (including the
prospectus and statement of additional information contained therein);
(iii) obey all reasonable rules and regulations now in effect or as
subsequently modified governing the conduct of mutual fund officers;
and (iv) not commit any acts of gross negligence, willful misconduct,
dishonesty, fraud or misrepresentation, racism, sexism or other
discrimination as would tend to bring the Trust or any Fund into
public scandal, ridicule, or would otherwise result in material harm
to the Trust's or any Fund's business or reputation.
(v) Either the President of the Trust or the Board of Trustees may, at any
time, with or without cause, and with or without prior notice,
terminate the services of the Designated Officers, without any
liability whatsoever, it being understood that the Designated Officers
have been appointed pursuant to the terms of this Agreement to
facilitate the performance of the Administrator's administrative
functions hereunder. There is no express or implied promise of
continued service as Designated Officers and such service will, in any
event, terminate upon termination of this Agreement. The Designated
Officers shall be entitled to no compensation from the Trust for their
services, it being agreed that all compensation (including, without
limitation, benefits, vacation pay, disability pay and employment
taxes) for the provision of such services shall be paid by the
Administrator without charge against the Trust.
(vi) The Trust acknowledges that the Designated Officers are primarily
employed by the Administrator, and may also serve as officers for
other mutual funds pursuant to agreements of similar nature to this
Agreement, and hereby waives any conflict of interest claims
resulting from such arrangements, and further agrees that none of
the aforesaid provisions in this paragraph shall have any affect or
application whatsoever to any Designated Officer's role as officer
of another mutual fund.
ARTICLE 3. Allocation of Charges and Expenses.
(A) The Administrator. The Administrator shall furnish at its own expense
the executive, supervisory and clerical personnel necessary to perform its
obligations under this Agreement. The Administrator shall also provide the items
which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Trust as well as all Trustees of the
Trust who are affiliated persons of the Administrator or any affiliated
corporation of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Trust retained by the Trustees of the Trust
to perform services on behalf of the Trust.
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(B) The Trust. The Trust assumes and shall pay or cause to be paid all
other expenses of the Trust not otherwise allocated herein, including, without
limitation, organization costs, taxes, expenses for legal and auditing services,
the expenses of preparing (including typesetting), printing and mailing reports,
prospectuses, statements of additional information, proxy solicitation material
and notices to existing Shareholders, all expenses incurred in connection with
issuing and redeeming Shares, the costs of custodial services, the cost of
initial and ongoing registration of the Shares under Federal and state
securities laws, fees and out-of-pocket expenses of Directors who are not
affiliated persons of the Administrator or the Investment Adviser to the Trust
or any affiliated corporation of the Administrator or the Investment Adviser,
insurance, interest, brokerage costs, litigation and other extraordinary or
nonrecurring expenses, and all fees and charges of investment advisers to the
Trust.
ARTICLE 4. Compensation of the Administrator.
(A) Administration Fee. For the services to be rendered, the facilities
furnished and the expenses assumed by the Administrator pursuant to this
Agreement, the Trust shall pay to the Administrator compensation at an annual
rate specified in Schedule A attached hereto. Such compensation shall be
calculated and accrued daily, and paid to the Administrator monthly. The Trust
shall also reimburse the Administrator for its reasonable out-of-pocket
expenses, including the travel and lodging expenses incurred by officers and
employees of the Administrator in connection with attendance at Board meetings.
If the Conversion Date occurs subsequent to the first day of a month or
termination of this Agreement occurs before the last day of a month, the
Administrator's compensation for that part of the month in which this Agreement
is in effect shall be prorated in a manner consistent with the calculation of
the fees as set forth above. Payment of the Administrator's compensation for the
preceding month shall be made promptly.
(B) Survival of Compensation Rights. All rights of compensation under this
Agreement for services performed as of the termination date shall survive the
termination of this Agreement.
ARTICLE 5. Limitation of Liability of the Administrator. The duties of the
Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any act or omission in carrying
out its duties hereunder, except a loss resulting from willful misfeasance, bad
faith or negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable law which cannot be waived or modified
hereby. (As used in this Article 5, the term "Administrator" shall include
Trustees, officers, employees and other agents of the Administrator as well as
the Administrator itself.)
So long as the Administrator acts in good faith and with due diligence and
without negligence, the Trust assumes full responsibility and shall indemnify
the Administrator and hold it harmless from and against any and all actions,
suits and claims, whether groundless or otherwise,
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and from and against any and all losses, damages, costs, charges, reasonable
counsel fees and disbursements, payments, expenses and liabilities (including
reasonable investigation expenses) arising directly or indirectly out of said
administration, transfer agency, and dividend disbursing relationships to the
Trust or any other service rendered to the Trust hereunder. The indemnity and
defense provisions set forth herein shall indefinitely survive the termination
of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Trust may be asked to indemnify or hold the
Administrator harmless, the Trust shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Administrator 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, but failure to do so in good faith shall not affect the rights
hereunder.
The Trust shall be entitled to participate at its own expense or, if it so
elects, to assume the defense of any suit brought to enforce any claims subject
to this indemnity provision. If the Trust elects to assume the defense of any
such claim, the defense shall be conducted by counsel chosen by the Trust and
satisfactory to the Administrator, whose approval shall not be unreasonably
withheld. In the event that the Trust elects to assume the defense of any suit
and retain counsel, the Administrator shall bear the fees and expenses of any
additional counsel retained by it. If the Trust does not elect to assume the
defense of a suit, it will reimburse the Administrator for the reasonable fees
and expenses of any counsel retained by the Administrator.
The Administrator may apply to the Trust at any time for instructions and
may consult counsel for the Trust or its own counsel and with accountants and
other experts with respect to any matter arising in connection with the
Administrator's duties, and the Administrator shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. The Administrator will not be held to have
notice of any change of authority of any officers, employees or agents of the
Trust until receipt of written notice thereof from the Trust.
ARTICLE 6. Activities of the Administrator. The services of the
Administrator rendered to the Trust are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that trustees, officers, employees
and Shareholders of the Trust are or may be or become interested in the
Administrator, as directors, officers, employees and shareholders or otherwise
and that partners, officers and employees of the Administrator and its counsel
are or may be or become similarly interested in the
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Trust, and that the Administrator may be or become interested in the Trust as a
Shareholder or otherwise.
ARTICLE 7. Duration of this Agreement. The Term of this Agreement shall be
as specified in Schedule A hereto.
ARTICLE 8. Assignment. This Agreement shall not be assignable by either
party without the written consent of the other party; provided, however, that
the Administrator may, at its expense, subcontract with any entity or person
concerning the provision of the services contemplated hereunder. The
Administrator shall not, however, be relieved of any of its obligations under
this Agreement by the appointment of such subcontractor and provided further,
that the Administrator shall be responsible, to the extent provided in Article 5
hereof, for all acts of such subcontractor as if such acts were its own. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns.
ARTICLE 9. Amendments. This Agreement may be amended by the parties hereto
only if such amendment is specifically approved (i) by the vote of a majority of
the Trustees of the Trust, and (ii) by the vote of a majority of the Trustees of
the Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a Board of Trustees meeting called for the purpose
of voting on such approval.
For special cases, the parties hereto may amend such procedures set forth
herein as may be appropriate or practical under the circumstances, and the
Administrator may conclusively assume that any special procedure which has been
approved by the Trust does not conflict with or violate any requirements of its
Declaration of Trust or then current prospectuses, or any rule, regulation or
requirement of any regulatory body.
ARTICLE 10. Certain Records. The Administrator shall maintain customary
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Trust shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Trust and will be made available
to or surrendered promptly to the Trust on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Trust and follow the Trust's
instructions as to permitting or refusing such inspection; provided that the
Administrator may exhibit such records to any person in any case where it is
advised by its counsel that it may be held liable for failure to do so, unless
(in cases involving potential exposure only to civil liability) the Trust has
agreed to indemnify the Administrator against such liability.
ARTICLE 11. Definitions of Certain Terms. The terms "interested person" and
"affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act
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and the rules and regulations thereunder, subject to such exemptions as may be
granted by the Securities and Exchange Commission.
ARTICLE 12. Notice. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other party
at the following address: if to the Administrator, to it at 3435 Stelzer Road,
Columbus, Ohio 43219; if to the Trust, to it at 9107 Wilshire Blvd., Suite 700,
Beverly Hills, California 90210, or at such other address as such party may from
time to time specify in writing to the other party pursuant to this Section.
ARTICLE 13. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of California and the applicable provisions of the
1940 Act. To the extent that the applicable laws of the State of California, or
any of the provisions herein, conflict with the applicable provisions of the
1940 Act, the latter shall control.
ARTICLE 14. Multiple Originals. This Agreement may be executed in two or
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
ARTICLE 15. Limitation of Liability of Trust. The Administrator agrees
that no shareholder, Trustee, officer, employee or agent of the Trust shall be
subject to claims against or obligations of the Trust to any extent whatsoever,
but that the Trust estate alone shall be liable (with the exception of any
Portfolio for whom the Administrator has not provided services under this
Agreement and for which the claims or obligations therefore do not relate).
ARTICLE 16. Disaster Recovery. The Administrator shall maintain a
commercially reasonable plan to provide for the recovery of data in the event of
an emergency due to equipment failures or the like. In the event of equipment
failures, the Administrator shall, at no additional expense to the Trust, take
reasonable steps to minimize service interruptions but shall not have liability
with respect to losses that result despite the taking of such steps.
ARTICLE 17. Independent Contractor. The Administrator is an independent
contractor of the Trust and neither the Administrator nor any of its managers,
officers or employees is or shall be employees of the Trust or any Portfolio in
the performance of the Administrator's duties hereunder. The Administrator shall
be responsible for its own conduct and the employment, control and conduct of
its employees, and for injury to such employees and agents or to others through
employees and agents (except those specifically appointed as officers of the
Trust pursuant to Article 2, paragraph (1) of this Agreement). The Administrator
assumes full responsibility for its employees and agents under applicable
statutes and agrees to pay all employment taxes thereunder (including those
specifically appointed as officers of the Trust pursuant to Article 2, paragraph
(1) of this Agreement).
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ARTICLE 18. Entire Agreement. Each party expressly acknowledges and agrees
that this Agreement: (1) is the final, complete and exclusive statement of the
agreement of the parties with respect to the subject matter hereof; (2)
supersedes any prior or contemporaneous agreements or understandings of any
kind, oral or written (collectively and severally, the "prior agreements"), and
that any such prior agreements are of no force or effect except as expressly set
forth herein; and (3) may not be varied, supplemented or contradicted by
evidence of prior agreements, or by evidence of subsequent oral agreements.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
MEYERS SHEPPARD INVESTMENT
TRUST
By:
Title:
BISYS FUND SERVICES LIMITED
PARTNERSHIP
By: BISYS Fund Services,
General Partner
By:
Title:
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SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
DATED AS OF NOVEMBER 14, 1996
BETWEEN MEYERS SHEPPARD INVESTMENT TRUST
AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
Portfolio: This Agreement shall apply to all Portfolios of Meyers Sheppard
Investment Trust, either now or hereafter created (collectively,
the "Portfolios"). The current Portfolio of the Trust is set
forth below:
The Meyers Sheppard Pride Fund.
Fees: Pursuant to Article 4, in consideration of services rendered and
expenses assumed pursuant to this Agreement, the Trust will pay
the Administrator on the first business day of each month, or at
such time(s) as the Administrator shall request and the parties
hereto shall agree, a fee computed daily at the annual rate of:
Fifteen one-hundredths of one percent (.15%) of the Company's
average daily net assets up to $100 million.
Ten one-hundredths of one percent (.10%) of the Company's average
daily net assets in excess of $100 million up to $500 million.
Seven one-hundredths of one percent (.07%) of the Company's
average daily net assets in excess of $500 million up to $1
billion.
Six one-hundredths of one percent (.06%) of the Company's average
daily net assets in excess of $1 billion.
The fee for the period from the day of the month upon which the
Conversion Date occurs this until the end of that month shall be
prorated according to the proportion which such period bears to
the full monthly period. Upon any termination of this Agreement
before the end of any month, the fee for such part of a month
shall be prorated according to the proportion which such period
bears to the full monthly period and shall be payable upon the
date of termination of this Agreement.
For purposes of determining the fees payable to the
Administrator, the value of the net assets of a particular
Portfolio shall be computed in the manner described in the
Trust's Declaration of Trust or in the Prospectus or Statement of
Additional Information respecting that Portfolio as from time to
time is in effect for the
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computation of the value of such net assets in connection with the
determination of the liquidating value of the shares of such
Portfolio.
The parties hereby confirm that the fees payable hereunder shall be
applied to each Portfolio as a whole, and not to separate classes of
shares within the Portfolios.
Term: The initial term of this Agreement (the "Initial Term") shall be for a
period commencing on the date this Agreement is executed by both
parties and ending on the date that is one year after the Conversion
Date. This Agreement shall be renewed automatically for successive
periods of one year after the Initial Term, unless written notice of
nonrenewal is provided by either party not less than 90 days prior to
the end of the then-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.
In the event the breach is not remedied within such time period, the
nonbreaching party may immediately terminate this Agreement.
Notwithstanding the foregoing, after such termination for so long as
the Administrator, with the written consent of the Trust, in fact
continues to perform any one or more of the services contemplated by
this Agreement or any schedule or exhibit hereto, the provisions of
this Agreement, including without limitation the provisions dealing
with indemnification, shall continue in full force and effect.
Compensation due the Administrator and unpaid by the Trust upon such
termination shall be immediately due and payable upon and
notwithstanding such termination.
If, during the Initial Term, for any reason other than nonrenewal or a
material breach of this Agreement, this Agreement is terminated by the
Trust, then the Trust shall make a one-time cash payment, as
liquidated damages, to the Administrator in lieu of all other damages
the Administrator may claim against the Trust for termination
including, without limitation, for lost profits, equal to the balance
due the Administrator for the remainder of the Initial Term, assuming
for purposes of calculation of the payment that the asset level of the
Trust on the date the Administrator is replaced, or a third party is
added, will remain constant for the balance of such Initial Term.
In the event the Administrator terminates this Agreement during the
Initial Term for any reason other than nonrenewal or a material
breach, the Administrator shall make payment to the Trust, as
liquidated damages in lieu of all other damages the Trust may claim
against the Administrator for termination hereof, including, without
limitation, for lost profits, the same amount which the Trust would
have paid to the Administrator as hereinabove specified.
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<PAGE>
Liquidated damage payments pursuant to this Section shall be made in
equal installments over the balance of the Initial Term of the
Agreement, with the number of installments to be equal to the number
of whole months remaining in such Initial Term as of the effective
date of termination, and with the installments to be paid commencing
as of the effective date of termination and on the same date of each
month thereafter.
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<PAGE>
Exhibit 9(b)(2)
Fund Accounting Agreement dated November 14, 1996
between
the Registrant and BISYS Fund Services, Inc.
FUND ACCOUNTING AGREEMENT
AGREEMENT made this 14th day of November, 1996, between MEYERS SHEPPARD
INVESTMENT TRUST (the "Trust"), a Delaware business trust, and BISYS FUND
SERVICES, INC. ("Fund Accountant"), a corporation organized under the laws of
the State of Delaware.
WHEREAS, the Trust desires that Fund Accountant perform certain fund
accounting services for each investment portfolio of the Trust, all as now or
hereafter may be established from time to time (individually referred to herein
as the "Fund" and collectively as the "Funds"); and
WHEREAS, Fund Accountant is willing to perform such services on the terms
and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as Fund Accountant; Conversion to Services.
The Trust hereby engages Fund Accountant to perform fund accounting
services as set forth in this Section 1 (collectively, the "Services"), and, in
connection therewith, the Trust agrees to convert to Fund Accountant's data
processing systems and software (the "BISYS System") as necessary in order to
receive the Services. The Trust shall cooperate with Fund Accountant to provide
Fund Accountant with all necessary information and assistance required to
successfully convert to the BISYS System. Fund Accountant shall provide the
Trust with a schedule relating to such conversion and the parties agree that the
conversion may progress in stages. The date upon which all Services shall have
been converted to the BISYS System shall be referred to herein as the
"Conversion Date." Fund Accountant hereby accepts such engagement and agrees to
perform the Services commencing, with respect to each individual Service, on the
date that the conversion of such Service to the BISYS System has been completed.
Fund Accountant shall determine in accordance with its normal acceptance
procedures when the applicable Service has been successfully converted.
(a) Maintenance of Books and Records. Fund Accountant will keep and
maintain the following books and records of each Fund pursuant to Rule
31a-1 under the Investment Company Act of 1940 (the "Rule"):
(i) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements
of cash and all other debits and credits, as required by
subsection (b)(1) of the Rule;
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(ii) General and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, including interest
accrued and interest received, as required by subsection
(b)(2)(I) of the Rule;
(iii)Separate ledger accounts required by subsection (b)(2)(ii) and
(iii) of the Rule; and
(iv) A monthly trial balance of all ledger accounts (except
shareholder accounts) as required by subsection (b)(8) of the
Rule.
(b) Performance of Daily Accounting Services. In addition to the
maintenance of the books and records specified above, Fund Accountant
shall perform the following accounting services daily for each Fund:
(i) Calculate the net asset value per share utilizing prices obtained
from the sources described in subsection 1(b)(ii) below;
(ii) Obtain security prices from independent pricing services, or if
such quotes are unavailable, then obtain such prices from each
Fund's investment adviser or its designee, as approved by the
Trust's Board of Trustees;
(iii)Verify and reconcile with the Fund's custodian all daily trade
activity;
(iv) Compute, as appropriate, each Fund's net income and capital
gains, dividend payables, dividend factors, 7-day yields, 7-day
effective yields, 30-day yields, and weighted average portfolio
maturity;
(v) Review daily the net asset value calculation and dividend factor
(if any) for each Fund prior to release to shareholders, check
and confirm the net asset values and dividend factors for
reasonableness and deviations, and distribute net asset values
and yields to NASDAQ;
(vi) Report to the Trust the daily market pricing of securities in any
money market Funds, with the comparison to the amortized cost
basis;
(vii)Determine unrealized appreciation and depreciation on securities
held in variable net asset value Funds;
(viii)Amortize premiums and accrete discounts on securities purchased
at a price other than face value, if requested by the Trust;
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<PAGE>
(ix) Update fund accounting system to reflect rate changes, as
received from a Fund's investment adviser, on variable interest
rate instruments;
(x) Post Fund transactions to appropriate categories;
(xi) Accrue expenses of each Fund according to instructions received
from the Trust's Administrator;
(xii)Determine the outstanding receivables and payables for all (1)
security trades, (2) Fund share transactions and (3) income and
expense accounts;
(xiii)Provide accounting reports in connection with the Trust's
regular annual audit and other audits and examinations by
regulatory agencies; and
(xiv)Provide such periodic reports as the parties shall agree upon,
as set forth in a separate schedule.
(c) Special Reports and Services.
(i) Fund Accountant may provide additional special reports upon the
request of the Trust or a Fund's investment adviser, which may
result in an additional charge, the amount of which shall be
agreed upon between the parties.
(ii) Fund Accountant may provide such other similar services with
respect to a Fund as may be reasonably requested by the Trust,
which may result in an additional charge, the amount of which
shall be agreed upon between the parties.
(d) Additional Accounting Services. Fund Accountant shall also perform the
following additional accounting services for each Fund:
(i) Provide monthly a download (and hard copy thereof) of the
financial statements described below, upon request of the Trust.
The download will include the following items:
Statement of Assets and Liabilities,
Statement of Operations,
Statement of Changes in Net Assets, and
Condensed Financial Information;
3
<PAGE>
(ii) Provide accounting information for the following:
(A) federal and state income tax returns and federal excise tax
returns;
(B) the Trust's semi-annual reports with the Securities and
Exchange Commission ("SEC") on Form N-SAR;
(C) the Trust's annual, semi-annual and quarterly (if any)
shareholder reports;
(D) registration statements on Form N-1A and other filings
relating to the registration of Shares;
(E) the Administrator's monitoring of the Trust's status as a
regulated investment company under Subchapter M of the
Internal Revenue Code, as amended;
(F) annual audit by the Trust's auditors; and
(G) examinations performed by the SEC.
2. Subcontracting.
Fund Accountant may, at its expense, subcontract with any entity or person
concerning the provision of the services contemplated hereunder; provided,
however, that Fund Accountant shall not be relieved of any of its obligations
under this Agreement by the appointment of such subcontractor and provided
further, that Fund Accountant shall be responsible, to the extent provided in
Section 6 hereof, for all acts of such subcontractor as if such acts were its
own.
3. Compensation.
The Trust shall pay Fund Accountant for the services to be provided by Fund
Accountant under this Agreement in accordance with, and in the manner set forth
in, Schedule A hereto, as such Schedule may be amended from time to time.
4. Reimbursement of Expenses.
In addition to paying Fund Accountant the fees described in Section 3
hereof, the Trust agrees to reimburse Fund Accountant for its out-of-pocket
expenses in providing services hereunder, including without limitation the
following:
4
<PAGE>
(a) All freight and other delivery and bonding charges incurred by Fund
Accountant in delivering materials to and from the Trust;
(b) All direct telephone, telephone transmission and telecopy or other
electronic transmission expenses incurred by Fund Accountant in
communication with the Trust, the Trust's investment advisor or
custodian, dealers or others as required for Fund Accountant to
perform the services to be provided hereunder;
(c) The cost of obtaining security market quotes pursuant to Section
l(b)(ii) above;
(d) The cost of microfilm or microfiche of records or other materials;
(e) Any expenses Fund Accountant shall incur at the written direction of
an officer of the Trust thereunto duly authorized; and
(f) Any additional expenses reasonably incurred by Fund Accountant in the
performance of its duties and obligations under this Agreement.
5. Effective Date.
This Agreement shall become effective with respect to a Fund as of the date
first written above.
6. Term.
The initial term of this Agreement (the "Initial Term") shall be for a
period commencing on the date this Agreement is executed by both parties and
ending on the date that is one year after the Conversion Date. This Agreement
shall be renewed automatically for successive one-year terms unless written
notice not to renew is given by the non-renewing party to the other party at
least 60 days prior to the expiration of the then-current term; provided,
however, that after such termination for so long as Fund Accountant, with the
written consent of the Trust, in fact continues to perform any one or more of
the services contemplated by this Agreement or any schedule or exhibit hereto,
the provisions of this Agreement, including without limitation the provisions
dealing with indemnification, shall continue in full force and effect.
Compensation due Fund Accountant and unpaid by the Trust upon such termination
shall be immediately due and payable upon and notwithstanding such termination.
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. In the event the breach is not remedied within such time
period, the nonbreaching party may immediately terminate this Agreement.
5
<PAGE>
If, during the Initial Term, for any reason other than nonrenewal or a
material breach of this Agreement, this Agreement is terminated by the Trust,
then the Trust shall make a one-time cash payment, as liquidated damages, to
Fund Accountant in lieu of all other damages Fund Accountant may claim against
the Trust for termination including, without limitation, for lost profits, equal
to the balance due Fund Accountant for the remainder of the Initial Term,
assuming for purposes of calculation of the payment that the asset level of the
Trust on the date Fund Accountant is replaced, or a third party is added, will
remain constant for the balance of such Initial Term.
In the event Fund Accountant terminates this Agreement during the Initial
Term for any reason other than nonrenewal or a material breach, Fund Accountant
shall make payment to the Trust, as liquidated damages in lieu of all other
damages the Trust may claim against Fund Accountant for termination hereof,
including, without limitation, for lost profits, the same amount which the Trust
would have paid to Fund Accountant as hereinabove specified.
Liquidated damage payments pursuant to this Section 6 shall be made in
equal installments over the balance of the Initial Term of the Agreement, with
the number of installments to be equal to the number of whole months remaining
in such Initial Term as of the effective date of termination, and with the
installments to be paid commencing as of the effective date of termination and
on the same date of each month thereafter.
7. Standard of Care; Reliance on Records and Instructions; Indemnification.
Fund Accountant shall use its best efforts to insure the accuracy of all
services performed under this Agreement, but shall not be liable to the Trust
for any action taken or omitted by Fund Accountant in the absence of bad faith,
willful misfeasance, negligence or from reckless disregard by it of its
obligations and duties. A Fund agrees to indemnify and hold harmless Fund
Accountant, its employees, agents, directors, officers and nominees from and
against any and all claims, demands, actions and suits, whether groundless or
otherwise, and from and against any and all judgments, liabilities, losses,
damages, costs, charges, counsel fees and other expenses of every nature and
character arising out of or in any way relating to Fund Accountant's actions
taken or nonactions with respect to the performance of services under this
Agreement with respect to such Fund or based, if applicable, upon reasonable
reliance on information, records, instructions or requests with respect to such
Fund given or made to Fund Accountant by a duly authorized representative of the
Trust; provided that this indemnification shall not apply to actions or
omissions of Fund Accountant in cases of its own bad faith, willful misfeasance,
negligence or from reckless disregard by it of its obligations and duties, and
further provided that prior to confessing any claim against it which may be the
subject of this indemnification, Fund Accountant shall give the Trust written
notice of and reasonable opportunity to defend against said claim in its own
name or in the name of Fund Accountant.
6
<PAGE>
8. Record Retention and Confidentiality.
Fund Accountant shall keep and maintain on behalf of the Trust all books
and records which the Trust and Fund Accountant is, or may be, required to keep
and maintain pursuant to any applicable statutes, rules and regulations,
including without limitation Rules 31a-1 and 31a-2 under the Investment Company
Act of 1940, as amended (the "1940 Act"), relating to the maintenance of books
and records in connection with the services to be provided hereunder. Fund
Accountant agrees that all records and data that it maintains for the Trust,
other than the computer programs and procedures described in Section 11 herein,
shall be the exclusive property of the Trust. Fund Accountant further agrees to
provide reasonable access to such records and data during business hours to the
Trust (including properly designated officers and agents of the Trust) and to
the Securities and Exchange Commission and to surrender promptly to the Trust
any and all such records upon request at Fund Accountant's expense; provided,
however, that Fund Accountant shall be entitled to retain copies of any such
records that Fund Accountant deems reasonable and necessary. In addition, Fund
Accountant shall keep confidential all books and records and other information
relative to the Trust and its shareholders except when requested to divulge such
information by duly-constituted authorities or court process.
9. Uncontrollable Events.
Fund Accountant assumes no responsibility hereunder, and shall not be
liable, for any damage, loss of data, delay or any other loss whatsoever caused
by events beyond its reasonable control.
10. Reports.
Fund Accountant will furnish to the Trust and to its properly authorized
auditors, investment advisers, examiners, distributors, dealers, underwriters,
salesmen, insurance companies and others designated by the Trust in writing,
such reports and at such times as are prescribed pursuant to the terms and the
conditions of this Agreement to be provided or completed by Fund Accountant, or
as subsequently agreed upon by the parties pursuant to an amendment hereto. The
Trust agrees to examine each such report or copy promptly and will report or
cause to be reported any errors or discrepancies therein.
11. Computer Programs and Procedures.
All computer programs and procedures developed to perform services required
to be provided by Fund Accountant under this Agreement shall be the property of
Fund Accountant.
12. Return of Records.
Fund Accountant may at its option at any time, and shall promptly upon the
Trust's demand, turn over to the Trust and cease to retain Fund Accountant's
files, records and documents
7
<PAGE>
created and maintained by Fund Accountant pursuant to this Agreement which are
no longer needed by Fund Accountant in the performance of its services or for
its legal protection. If not so turned over to the Trust, such documents and
records will be retained by Fund Accountant for six years from the year of
creation. At the end of such six-year period, such records and documents will be
turned over to the Trust unless the Trust authorizes in writing the destruction
of such records and documents.
13. Representations of the Trust.
The Trust certifies to Fund Accountant that: (1) as of the close of
business on each Conversion Date, each Fund that is in existence as of the
Conversion Date has authorized unlimited shares, and (2) this Agreement has been
duly authorized by the Trust and, when executed and delivered by the Trust, will
constitute a legal, valid and binding obligation of the Trust, enforceable
against the Trust in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
14. Representations of Fund Accountant.
Fund Accountant represents and warrants that Fund Accountant shall maintain
a commercially reasonable plan to provide for the recovery of data in the event
of an emergency due to equipment failures or the like. In the event of equipment
failures, Fund Accountant shall, at no additional expenses to the Trust, take
reasonable steps to minimize service interruptions but shall not have liability
with respect to losses that result despite the taking of such steps. Fund
Accountant further represents and warrants that this Agreement has been duly
authorized by Fund Accountant and, when executed and delivered by Fund
Accountant, will constitute a legal, valid and binding obligation of Fund
Accountant, enforceable against Fund Accountant in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting the rights and remedies of creditors and secured
parties.
15. Insurance.
Fund Accountant shall notify the Trust should any of its insurance coverage
be canceled or reduced. Such notification shall include the date of change and
the reasons therefor. Fund Accountant shall notify the Trust of any material
claims against it with respect to services performed under this Agreement,
whether or not they may be covered by insurance, and shall notify the Trust from
time to time as may be appropriate of the total outstanding claims made by Fund
Accountant under its insurance coverage.
16. Information to be Furnished by the Trust and Funds.
The Trust has furnished to Fund Accountant the following:
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<PAGE>
(a) Copies of the Declaration of Trust of the Trust and of any
amendments thereto, certified by the proper official of the state
in which such document has been filed.
(b) Copies of the following documents:
(i) The Trust's Bylaws and any amendments thereto; and
(ii) Certified copies of resolutions of the Board of Trustees
covering the approval of this Agreement, authorization of a
specified officer of the Trust to execute and deliver this
Agreement and authorization for specified officers of the
Trust to instruct Fund Accountant thereunder.
(c) A list of all the officers of the Trust, together with specimen
signatures of those officers who are authorized to instruct Fund
Accountant in all matters.
(d) Two copies of the Prospectuses and Statements of Additional
Information for each Fund.
17. Information Furnished by Fund Accountant.
(a) Fund Accountant has furnished to the Trust the following:
(i) Fund Accountant's Articles of Incorporation; and
(ii) Fund Accountant's Bylaws and any amendments thereto.
(b) Fund Accountant shall, upon request, furnish certified copies of
corporate actions covering the following matters:
(i) Approval of this Agreement, and authorization of a specified
officer of Fund Accountant to execute and deliver this
Agreement; and
(ii) Authorization of Fund Accountant to act as fund accountant
for the Trust and to provide accounting services for the
Trust.
18. Amendments to Documents.
The Trust shall furnish Fund Accountant written copies of any amendments
to, or changes in, any of the items referred to in Section 16 hereof forthwith
upon such amendments or changes becoming effective. In addition, the Trust
agrees that no amendments will be made to the Prospectuses or Statements of
Additional Information of the Trust which might have the effect of changing the
procedures employed by Fund Accountant in providing the services agreed to
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<PAGE>
hereunder or which amendment might affect the duties of Fund Accountant
hereunder unless the Trust first obtains Fund Accountant's approval of such
amendments or changes.
19. Compliance with Law.
Except for the obligations of Fund Accountant set forth in Section 8
hereof, the Trust assumes full responsibility for the preparation, contents and
distribution of each prospectus of the Trust as to compliance with all
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the 1940 Act and any other laws, rules and regulations of
governmental authorities having jurisdiction. The Trust represents and warrants
that no Shares of the Trust will be offered to the public until the Trust's
registration statement under the Securities Act and the 1940 Act has been
declared or becomes effective.
20. Notices.
Any notice required or permitted to be given by either party to the other
shall be deemed sufficient if sent by registered or certified mail, postage
prepaid, addressed by the party giving notice to the other party at the
following address: if to the Fund Accountant, to it at 3435 Stelzer Road,
Columbus, Ohio 43219; if to the Trust, to it at 9107 Wilshire Blvd., Suite 700,
Beverly Hills, California 90210, or at such other address as such party may from
time to time specify in writing to the other party pursuant to this Section.
21. Headings.
Paragraph headings in this Agreement are included for convenience only and
are not to be used to construe or interpret this Agreement.
22. Assignment.
This Agreement and the rights and duties hereunder shall not be assignable
with respect to a Fund by either of the parties hereto except by the specific
written consent of the other party. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns.
23. Governing Law.
This Agreement shall be governed by and provisions shall be construed in
accordance with the laws of the State of Ohio.
24. Limitation of Liability of the Trust.
Fund Accountant agrees that no shareholder, Trustee, officer, employee or
agent of the Trust shall be subject to claims against or obligations of the
Trust to any extent whatsoever, but
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that the Trust estate alone shall be liable (with the exception of any Fund for
whom Fund Accountant has not provided services under this Agreement and for
which the claims or obligations therefore do not relate).
25. Independent Contractor.
Fund Accountant is an independent contractor of the Trust and neither Fund
Accountant nor any of its managers, officers or employees is or shall be
employees of the Trust or any Fund in the performance of Fund Accountant's
duties hereunder. Fund Accountant shall be responsible for its own conduct and
the employment, control and conduct of its employees, and for injury to such
employees and agents or to others through employees and agents. Fund Accountant
assumes full responsibility for its employees and agents under applicable
statutes and agrees to pay all employment taxes thereunder.
26. Entire Agreement.
Each party expressly acknowledges and agrees that this Agreement: (1) is
the final, complete and exclusive statement of the agreement of the parties with
respect to the subject matter hereof; (2) supersedes any prior or
contemporaneous agreements or understandings of any kind, oral or written
(collectively and severally, the "prior agreements"), and that any such prior
agreements are of no force or effect except as expressly set forth herein; and
(3) may not be varied, supplemented or contradicted by evidence of prior
agreements, or by evidence of subsequent oral agreements.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
MEYERS SHEPPARD INVESTMENT
TRUST
By:
Title:
BISYS FUND SERVICES, INC.
By:
Title:
11
<PAGE>
Dated: November 14, 1996
SCHEDULE A
TO THE FUND ACCOUNTING AGREEMENT
BETWEEN
MEYERS SHEPPARD INVESTMENT TRUST
AND
BISYS FUND SERVICES, INC..
FEES
Effective as of the Conversion Date, Fund Accountant shall be entitled to
receive a fee from each Fund in accordance with the following schedule:
$35,000 annually plus out-of-pocket expenses, as described in Section 4.
The annual fee amount set forth above shall be prorated for periods of less
than one year.
MEYERS SHEPPARD INVESTMENT BISYS FUND SERVICES, INC.
TRUST
By: By:
A-1
<PAGE>
Exhibit 9(c)(2)
Transfer Agency Agreement dated November 14, 1996
between
the Registrant and BISYS Fund Services, Inc.
TRANSFER AGENCY AGREEMENT
AGREEMENT made this 14th day of November, 1996, between MEYERS SHEPPARD
INVESTMENT TRUST (the "Trust"), a Delaware business trust, and BISYS FUND
SERVICES, INC. ("BISYS"), a Delaware corporation.
WHEREAS, the Trust desires that BISYS perform certain services for each
series of the Trust (individually referred to herein as a "Fund" and
collectively as the "Funds"); and
WHEREAS, BISYS is willing to perform such services on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Retention of BISYS; Conversion to the Services.
The Trust hereby engages BISYS to act as the transfer agent for the Funds
to perform (i) the transfer agent services set forth in Schedule A hereto (the
"Initial Services"), (ii) such special services (the "Special Services")
incidental to the performance of such services as may be agreed to by the
parties from time to time (for such fees as the parties may agree as aforesaid)
and (iii) such additional services (collectively with the Initial Services and
the Special Services, the "Services"), as may be agreed to by the parties from
time to time and set forth in an amendment to said Schedule A (for such fees as
the parties may agree as aforesaid), and, in connection therewith, the Trust
agrees to convert to BISYS' data processing systems and software (the "BISYS
System") as necessary in order to receive the Services. The Trust shall
cooperate with BISYS to provide BISYS with all necessary information and
assistance required to successfully convert to the BISYS System. BISYS shall
provide the Trust with a schedule relating to such conversion and the parties
agree that the conversion may progress in stages. The date upon which all
Initial Services shall have been converted to the BISYS System shall be referred
to herein as the "Conversion Date." BISYS hereby accepts such engagement and
agrees to perform the Services commencing, with respect to each individual
Service, on the date that the conversion of such Service to the BISYS System has
been completed. BISYS shall determine in accordance with its normal acceptance
procedures when the applicable Service has been successfully converted.
BISYS may, in its discretion, appoint in writing other parties qualified to
perform transfer agency services reasonably acceptable to the Trust
(individually, a "Sub-transfer Agent") to carry out some or all of its
responsibilities under this Agreement with respect to a Fund; provided, however,
that the Sub-transfer Agent shall be the agent of BISYS and not the agent of the
Trust or such Fund, and that BISYS shall be fully responsible for the acts of
such Sub-transfer Agent and shall not be relieved of any of its responsibilities
hereunder by the appointment of such Sub-transfer Agent.
1
<PAGE>
2. Fees.
The Trust shall pay BISYS for the services to be provided by BISYS under
this Agreement in accordance with, and in the manner set forth in, Schedule B
hereto. Fees for any additional services to be provided by BISYS pursuant to an
amendment to Schedule A hereto shall be subject to mutual agreement at the time
such amendment to Schedule A is proposed.
3. Reimbursement of Expenses.
In addition to paying BISYS the fees described in Section 2 hereof, the
Trust agrees to reimburse BISYS for BISYS' out-of-pocket expenses in providing
services hereunder, including without limitation, the following:
(a) All freight and other delivery and bonding charges incurred by
BISYS in delivering materials to and from the Trust and in
delivering all materials to shareholders;
(b) All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred by BISYS in
communication with the Trust, the Trust's investment adviser or
custodian, dealers, shareholders or others as required for BISYS
to perform the services to be provided hereunder;
(c) Costs of postage, couriers, stock computer paper, statements,
labels, envelopes, checks, reports, letters, tax forms, proxies,
notices or other form of printed material which shall be required
by BISYS for the performance of the services to be provided
hereunder;
(d) The cost of microfilm or microfiche of records or other
materials; and
(e) Any expenses BISYS shall incur at the written direction of an
officer of the Trust thereunto duly authorized.
The parties agree that the Trust shall not be required to reimburse BISYS
for any expenses that BISYS Fund Services Limited Partnership has agreed to bear
pursuant to the Distribution Agreement between BISYS Fund Services Limited
Partnership and the Trust.
4. Effective Date.
This Agreement shall become effective as of the date first written above
(the "Effective Date").
2
<PAGE>
5. Term.
The initial term of this Agreement (the "Initial Term") shall be for a
period commencing on the date this Agreement is executed by both parties and
ending on the date that is one year after the Conversion Date. Thereafter, it
shall be renewed automatically for successive one-year terms unless written
notice not to renew is given by the non-renewing party to the other party at
least 60 days prior to the expiration of the then-current term; provided,
however, that after such termination, for so long as BISYS, with the written
consent of the Trust, in fact continues to perform any one or more of the
services contemplated by this Agreement or any Schedule or exhibit hereto, the
provisions of this Agreement, including without limitation the provisions
dealing with indemnification, shall continue in full force and effect. Fees and
out-of-pocket expenses incurred by BISYS but unpaid by the Trust upon such
termination shall be immediately due and payable upon and notwithstanding such
termination.
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. In the event the breach is not remedied within such time
period, the nonbreaching party may immediately terminate this Agreement.
If, during the Initial Term, for any reason other than nonrenewal or a
material breach of this Agreement, this Agreement is terminated by the Trust,
then the Trust shall make a one-time cash payment, as liquidated damages, to
BISYS in lieu of all other damages BISYS may claim against the Trust for
termination including, without limitation, for lost profits, equal to the
balance due BISYS for the remainder of the Initial Term, assuming for purposes
of calculation of the payment that the asset level of the Trust on the date
BISYS is replaced, or a third party is added, will remain constant for the
balance of such Initial Term.
In the event BISYS terminates this Agreement during the Initial Term for
any reason other than nonrenewal or a material breach, BISYS shall make payment
to the Trust, as liquidated damages in lieu of all other damages the Trust may
claim against BISYS for termination hereof, including, without limitation, for
lost profits, the same amount which the Trust would have paid to BISYS as
hereinabove specified.
Liquidated damage payments pursuant to this Section 5 shall be made in
equal installments over the balance of the Initial Term of the Agreement, with
the number of installments to be equal to the number of whole months remaining
in such Initial Term as of the effective date of termination, and with the
installments to be paid commencing as of the effective date of termination and
on the same date of each month thereafter.
6. Uncontrollable Events.
BISYS assumes no responsibility hereunder, and shall not be liable for any
damage, loss of data, delay or any other loss whatsoever caused by events beyond
its reasonable control.
3
<PAGE>
7. Legal Advice.
BISYS shall notify the Trust at any time BISYS believes that it is in need
of the advice of counsel (other than counsel in the regular employ of BISYS or
any affiliated companies) with regard to BISYS' responsibilities and duties
pursuant to this Agreement; and after so notifying the Trust, BISYS, at its
discretion, shall be entitled to seek, receive and act upon advice of legal
counsel of its choosing, such advice to be at BISYS' own expense and BISYS shall
in no event be liable to the Trust or any Fund or any shareholder or beneficial
owner of the Trust for any action reasonably taken pursuant to such advice.
8. Instructions.
Unless otherwise provided in this Agreement, BISYS shall act only upon Oral
and Written Instructions (as such terms are hereinbelow defined). BISYS shall be
entitled to rely upon any Oral and Written Instructions it receives from an
Authorized Person (as such term is hereinbelow defined) or from a person
reasonably believed by BISYS to be an Authorized Person, pursuant to this
Agreement. BISYS may assume that any Oral or Written Instruction received
hereunder is not in any way inconsistent with the provisions of the Trust's
organizational documents or this Agreement or of any vote, resolution or
proceeding of the Board of Trustees of the Trust or of the shareholders of any
Fund.
The Trust agrees to forward to BISYS Written Instructions confirming Oral
Instructions so that BISYS receives the Written Instructions by the close of
business on the same day that such Oral Instructions are received. The fact that
such confirming Written Instructions are not received by BISYS shall in no way
invalidate the transactions or enforceability of the transactions authorized by
the Oral Instructions. The Trust further agrees that BISYS shall incur no
liability to the Trust in acting upon Oral or Written Instructions provided such
instructions reasonably appear to have been received from an Authorized Person.
If BISYS is in doubt as to any action it should or should not take, it may
request directions or advice, including Oral or Written Instructions, from the
Trust. If BISYS shall be in doubt as to any questions of law pertaining to any
action it should or should not take, BISYS may request advice at its own cost
from such counsel of its own choosing (who may be counsel for the Trust). In the
event of a conflict between directions, advice or Oral or Written Instructions
BISYS receives from the Trust, and the advice it receives from counsel, BISYS
shall be entitled to rely upon and follow the advice of counsel.
Nothing in this Section shall be construed to impose an obligation upon
BISYS (i) to seek such directions, advice or Oral or Written Instructions, or
(ii) to act in accordance with such directions, advice or Oral or Written
Instructions unless, under the other provisions of this Agreement, the same is a
condition for properly taking or not taking such action.
4
<PAGE>
The term "Written Instructions" is defined as a writing signed or initialed
by one or more person or persons as the Board of Trustees shall have from time
to time authorized ("Authorized Persons"). Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. The term "Oral
Instructions" is defined as instructions given orally that will be considered
proper instructions if BISYS reasonably believes them to have been given by an
Authorized Person. The Trust shall cause all Oral Instructions to be confirmed
in writing pursuant to the terms of this Section. Upon receipt of a certificate
of the Secretary or an Assistant Secretary as to the authorization by the Board
of Trustees of the Trust, Oral Instructions may include communications effected
directly between electro mechanical or electronic devices provided that the
Board of Trustees and BISYS are satisfied that such procedures afford adequate
safeguards for the Trust's assets.
As to the services to be provided hereunder, BISYS may rely conclusively
upon the terms of the Prospectuses and Statement of Additional Information of
the Trust relating to the Funds to the extent that such services are described
therein unless BISYS receives Written Instructions to the contrary in a timely
manner from the Trust.
9. Standard of Care; Reliance on Records and Instructions; Indemnification.
BISYS shall use its best efforts to ensure the accuracy of all services
performed under this Agreement, but shall not be liable to the Trust for any
action taken or omitted by BISYS in the absence of bad faith, willful
misfeasance, negligence or from reckless disregard by it of its obligations and
duties. The Trust agrees to indemnify and hold harmless BISYS, its employees,
agents, directors, officers and nominees from and against any and all claims,
demands, actions and suits, whether groundless or otherwise, and from and
against any and all judgments, liabilities, losses, damages, costs, charges,
counsel fees and other expenses of every nature and character arising out of or
in any way relating to BISYS' actions taken or nonactions with respect to the
performance of services under this Agreement or based, if applicable, upon
reasonable reliance on information, records, instructions or requests given or
made to BISYS by the Trust, the investment adviser and on any records provided
by any fund accountant or custodian thereof; provided that this indemnification
shall not apply to actions or omissions of BISYS in cases of its own bad faith,
willful misfeasance, negligence or from reckless disregard by it of its
obligations and duties; and further provided that prior to confessing any claim
against it which may be the subject of this indemnification, BISYS shall give
the Trust written notice of and reasonable opportunity to defend against said
claim in its own name or in the name of BISYS.
10. Record Retention and Confidentiality.
BISYS shall keep and maintain on behalf of the Trust all books and records
which the Trust or BISYS is, or may be, required to keep and maintain pursuant
to any applicable statutes, rules and regulations, including without limitation
Rules 31a-1 and 31a-2 under the Investment Company Act of 1940, as amended (the
"1940 Act"), relating to the maintenance of books and
5
<PAGE>
records in connection with the services to be provided hereunder. BISYS agrees
that all records and data that it maintains for the Trust, other than the
computer programs and procedures described in Section 12 herein, shall be the
exclusive property of the Trust. BISYS further agrees to provide reasonable
access to such records and data during business hours to the Trust (including
properly designated officers and agents of the Trust) and to the Securities and
Exchange Commission (the "Commission") and to surrender promptly to the Trust
any and all such records upon request at BISYS' expense; provided, however, that
BISYS shall be entitled to retain copies of any such records that BISYS deems
reasonable and necessary. In addition, BISYS shall keep confidential all books
and records and other information relative to the Trust and its shareholders,
except when requested to divulge such information by duly-constituted
authorities or court process, or requested by a shareholder or shareholder's
agent with respect to information concerning an account as to which such
shareholder has either a legal or beneficial interest or when requested by the
Trust, the shareholder, or shareholder's agent, or the dealer of record as to
such account.
11. Reports.
BISYS will furnish to the Trust and to its properly-authorized auditors,
investment advisers, examiners, distributors, dealers, underwriters, salesmen,
insurance companies and others designated by the Trust in writing, such reports
at such times as are prescribed in Schedule C attached hereto, or as
subsequently agreed upon by the parties pursuant to an amendment to Schedule C.
The Trust agrees to examine each such report or copy promptly and will report or
cause to be reported any errors or discrepancies therein.
12. Computer Programs and Procedures.
All computer programs and procedures developed to perform services required
to be provided by BISYS under this Agreement shall be the property of BISYS.
13. Return of Records.
BISYS may at its option at any time, and shall promptly upon the Trust's
demand, turn over to the Trust and cease to retain BISYS' files, records and
documents created and maintained by BISYS pursuant to this Agreement which are
no longer needed by BISYS in the performance of its services or for its legal
protection. If not so turned over to the Trust, such documents and records will
be retained by BISYS for six years from the year of creation. At the end of such
six-year period, such records and documents will be turned over to the Trust
unless the Trust authorizes in writing the destruction of such records and
documents.
14. Bank Accounts.
The Trust and the Funds shall establish and maintain such bank accounts
with such bank or banks as are selected by the Trust, as are necessary in order
that BISYS may perform the services required to be performed hereunder. To the
extent that the performance of such services
6
<PAGE>
shall require BISYS directly to disburse amounts for payment of dividends,
redemption proceeds or other purposes, the Trust and Funds shall provide such
bank or banks with all instructions and authorizations necessary for BISYS to
effect such disbursements.
15. Representations of the Trust.
The Trust certifies to BISYS that: (a) as of the close of business on the
Effective Date, each Fund which is in existence as of the Effective Date has
authorized unlimited shares, and (b) by virtue of its Declaration of Trust,
shares of each Fund which are redeemed by the Trust may be sold by the Trust
from its treasury, and (c) this Agreement has been duly authorized by the Trust
and, when executed and delivered by the Trust, will constitute a legal, valid
and binding obligation of the Trust, enforceable against the Trust in accordance
with its terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting the rights and remedies of
creditors and secured parties.
16. Representations of BISYS.
BISYS represents and warrants that BISYS has been in, and shall continue to
be in, substantial compliance with all provisions of law, including Section
17A(c) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
required in connection with the performance of its duties under this Agreement.
BISYS further represents and warrants that this Agreement has been duly
authorized by BISYS and, when executed and delivered by BISYS, will constitute a
legal, valid and binding obligation of BISYS, enforceable against BISYS in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the rights and
remedies of creditors and secured parties. In addition, BISYS shall maintain a
commercially reasonable plan to provide for the recovery of data in the event of
an emergency due to equipment failures or the like. In the event of equipment
failures, BISYS shall, at no additional expense to the Trust, take reasonable
steps to minimize service interruptions but shall not have liability with
respect to losses that result despite the taking of such steps.
17. Insurance.
BISYS shall notify the Trust should its insurance coverage with respect to
professional liability or errors and omissions coverage be canceled or reduced.
Such notification shall include the date of change and the reasons therefor.
BISYS shall notify the Trust of any material claims against it with respect to
services performed under this Agreement, whether or not they may be covered by
insurance, and shall notify the Trust from time to time as may be appropriate of
the total outstanding claims made by BISYS under its insurance coverage.
18. Information to be Furnished by the Trust and Funds.
The Trust has furnished to BISYS the following:
7
<PAGE>
(a) Copies of the Declaration of Trust of the Trust and of any
amendments thereto, certified by the proper official of the state
in which such Declaration has been filed.
(b) Copies of the following documents:
1. The Trust's By-Laws and any amendments thereto.
2. Certified copies of resolutions of the Board of Trustees
covering the following matters:
A. Approval of this Agreement and authorization of a
specified officer of the Trust to execute and deliver
this Agreement and authorization for specified officers
of the Trust to instruct BISYS hereunder; and
B. Authorization of BISYS to act as Transfer Agent for the
Trust on behalf of the Funds.
(c) A list of all officers of the Trust, together with specimen
signatures of those officers, who are authorized to instruct
BISYS in all matters.
(d) Two copies of the following (if such documents are employed by
the Trust):
1. Prospectuses and Statement of Additional Information;
2. Distribution Agreement; and
3. All other forms commonly used by the Trust or its
Distributor with regard to their relationships and
transactions with shareholders of the Funds.
(e) A certificate as to shares of beneficial interest of the Trust
authorized, issued, and outstanding as of the Effective Date of
BISYS' appointment as Transfer Agent (or as of the date on which
BISYS' services are commenced, whichever is the later date) and
as to receipt of full consideration by the Trust for all shares
outstanding, such statement to be certified by the Treasurer of
the Trust.
19. Information Furnished by BISYS.
BISYS has furnished to the Trust the following:
(a) BISYS' Articles of Incorporation.
(b) BISYS' By-Laws and any amendments thereto.
8
<PAGE>
(c) Certified copies of actions of BISYS covering the following
matters:
1. Approval of this Agreement, and authorization of a specified
officer of BISYS to execute and deliver this Agreement;
2. Authorization of BISYS to act as Transfer Agent for the
Trust.
(d) A copy of the most recent independent accountants' report
relating to internal accounting control systems as filed with the
Commission pursuant to Rule 17Ad-13 under the Exchange Act.
20. Amendments to Documents.
The Trust shall furnish BISYS written copies of any amendments to, or
changes in, any of the items referred to in Section 18 hereof forthwith upon
such amendments or changes becoming effective. In addition, the Trust agrees
that no amendments will be made to the Prospectuses or Statement of Additional
Information of the Trust which might have the effect of changing the procedures
employed by BISYS in providing the services agreed to hereunder or which
amendment might affect the duties of BISYS hereunder unless the Trust first
obtains BISYS' approval of such amendments or changes.
21. Reliance on Amendments.
BISYS may rely on any amendments to or changes in any of the documents and
other items to be provided by the Trust pursuant to Sections 18 and 20 of this
Agreement and the Trust hereby indemnifies and holds harmless BISYS from and
against any and all claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, counsel fees and other expenses of every nature
and character which may result from actions or omissions on the part of BISYS in
reasonable reliance upon such amendments and/or changes. Although BISYS is
authorized to rely on the above-mentioned amendments to and changes in the
documents and other items to be provided pursuant to Sections 18 and 20 hereof,
BISYS shall be under no duty to comply with or take any action as a result of
any of such amendments or changes unless the Trust first obtains BISYS' written
consent to and approval of such amendments or changes.
22. Compliance with Law.
Except for the obligations of BISYS set forth in Section 10 hereof, the
Trust assumes full responsibility for the preparation, contents, and
distribution of each prospectus of the Trust as to compliance with all
applicable requirements of the Securities Act of 1933, as amended (the "1933
Act"), the 1940 Act, and any other laws, rules and regulations of governmental
authorities having jurisdiction. The Trust represents and warrants that no
shares of the Trust will be offered to the public until the Trust's registration
statement under the 1933 Act and the 1940 Act has been declared or becomes
effective.
9
<PAGE>
23. Notices.
Any notice provided hereunder shall be sufficiently given when sent by
registered or certified mail to the party required to be served with such notice
at the following address: if to the Trust, to it at 9107 Wilshire Blvd., Suite
700, Beverly Hills, California 90210; if to BISYS, to it at 3435 Stelzer Road,
Columbus, Ohio 43219, or at such other address as such party may from time to
time specify in writing to the other party pursuant to this Section.
24. Headings.
Paragraph headings in this Agreement are included for convenience only and
are not to be used to construe or interpret this Agreement.
25. Assignment.
This Agreement and the rights and duties hereunder shall not be assignable
by either of the parties hereto except by the specific written consent of the
other party. This Section 25 shall not limit or in any way affect BISYS' right
to appoint a Sub-transfer Agent pursuant to Section 1 hereof. This Agreement
shall be binding upon, and shall inure to the benefit of, the parties hereto and
their respective successors and permitted assigns.
26. Governing Law and Matters Relating to the Trust
This Agreement shall be governed by and provisions shall be construed in
accordance with the laws of the State of California. BISYS agrees that no
shareholder, Trustee, officer, employee or agent of the Trust shall be subject
to claims against or obligations of the Trust to any extent whatsoever, but that
the Trust estate alone shall be liable (with the exception of any Fund for whom
BISYS has not provided services under this Agreement and for which the claims or
obligations therefore do not relate)
27. Independent Contractor.
The parties hereto agree that BISYS is an independent contractor of the
Trust and neither BISYS nor any of its managers, officers or employees is or
shall be employees of the Trust in the performance of BISYS' duties hereunder.
BISYS shall be responsible for its own conduct and the employment, control and
conduct of its employees, and for injury to such employees and agents or to
others through employees and agents. BISYS assumes full responsibility for its
employees and agents under applicable statutes and agrees to pay all employment
taxes thereunder.
28. Entire Agreement.
Each party expressly acknowledges and agrees that this Agreement: (1) is
the final, complete and exclusive statement of the agreement of the parties with
respect to the subject matter
10
<PAGE>
hereof; (2) supersedes any prior or contemporaneous agreements or understandings
of any kind, oral or written (collectively and severally, the "prior
agreements"), and that any such prior agreements are of no force or effect
except as expressly set forth herein; and (3) may not be varied, supplemented or
contradicted by evidence of prior agreements, or by evidence of subsequent oral
agreements.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
MEYERS SHEPPARD INVESTMENT
TRUST
By:_________________________________
Title:______________________________
BISYS FUND SERVICES, INC.
By:________________________________
Title:______________________________
11
<PAGE>
Dated: November 14, 1996
SCHEDULE A
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
MEYERS SHEPPARD INVESTMENT TRUST
AND
BISYS FUND SERVICES, INC.
TRANSFER AGENCY SERVICES
1. Shareholder Transactions
a. Process shareholder purchase and redemption orders.
b. Set up account information, including address, dividend option,
taxpayer identification numbers and wire instructions.
c. Issue confirmations in compliance with Rule 10 under the
Securities Exchange Act of 1934, as amended.
d. Issue periodic statements for shareholders.
e. Process transfers and exchanges.
f. Process dividend payments, including the purchase of new shares,
through dividend reimbursement.
2. Shareholder Information Services
a. Make information available to shareholder servicing unit and
other remote access units regarding trade date, share price,
current holdings, yields, and dividend information.
b. Produce detailed history of transactions through duplicate or
special order statements upon request.
c. Provide mailing labels for distribution of financial reports,
prospectuses, proxy statements or marketing material to current
shareholders.
A-1
<PAGE>
3. Compliance Reporting
a. Provide reports to the Securities and Exchange Commission, the
National Association of Securities Dealers and the States in
which the Fund is registered.
b. Prepare and distribute appropriate Internal Revenue Service forms
for corresponding Fund and shareholder income and capital gains.
c. Issue tax withholding reports to the Internal Revenue Service.
4. Dealer/Load Processing (if applicable)
a. Provide reports for tracking rights of accumulation and purchases
made under a Letter of Intent.
b. Account for separation of shareholder investments from
transaction sale charges for purchase of Fund shares.
c. Calculate fees due under 12b-1 plans for distribution and
marketing expenses.
d. Track sales and commission statistics by dealer and provide for
payment of commissions on direct shareholder purchases in a load
Fund.
5. Shareholder Account Maintenance
a. Maintain all shareholder records for each account in the Trust.
b. Issue customer statements on scheduled cycle, providing duplicate
second and third party copies if required.
c. Record shareholder account information changes.
d. Maintain account documentation files for each shareholder.
A-2
<PAGE>
SCHEDULE B
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
MEYERS SHEPPARD INVESTMENT TRUST
AND
BISYS FUND SERVICES, INC.
TRANSFER AGENT FEES
Effective as of the Conversion Date, BISYS shall receive an account
maintenance fee of $15.00 per year for each account which is in existence at any
time during the month for which payment is made, such fee to be paid in equal
monthly installments, plus out-of-pocket expenses, provided that the minimum
annual fee to be paid by each Fund is $12,000.00. Such minimum annual fee shall
be prorated for periods of less than one year. BISYS shall be entitled to this
account maintenance fee on all accounts maintained in its records during the
year, including those accounts which have a zero balance during any portion of
the year.
Additional Services:
Additional services such as IRA processing, development of interface
capabilities, servicing of 403(b) and 408(c) accounts, management of cash sweeps
between DDAs and mutual fund accounts and coordination of the printing and
distribution of prospectuses, annual reports and semi-annual reports are subject
to additional fees which will be quoted upon request. Programming costs or
database management fees for special reports or specialized processing will be
quoted upon request.
Out-of-pocket Expenses:
BISYS shall be entitled to be reimbursed for all reasonable out-of-pocket
expenses including, but not limited to, the expenses set forth in Section 3 of
the Transfer Agency Agreement to which this Schedule B is attached; provided,
however, that the Trust shall not be required to reimburse BISYS for any
expenses that BISYS Fund Services Limited Partnership has agreed to bear
pursuant to the Distribution Agreement between BISYS Fund Services Limited
Partnership and the Trust.
B-1
<PAGE>
SCHEDULE C
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
MEYERS SHEPPARD INVESTMENT TRUST
AND
BISYS FUND SERVICES, INC.
REPORTS
1. Daily Shareholder Activity Journal
2. Daily Fund Activity Summary Report
a. Beginning Balance
b. Dealer Transactions
c. Shareholder Transactions
d. Reinvested Dividends
e. Exchanges
f. Adjustments
g. Ending Balance
3. Daily Wire and Check Registers
4. Monthly Dealer Processing Reports
5. Monthly Dividend Reports
6. Sales Data Reports for Blue Sky Registration
7. Annual report by independent public accountants concerning BISYS'
shareholder system and internal accounting control systems to be filed
with the Securities and Exchange Commission pursuant to Rule 17Ad-13 of
the Securities Exchange Act of 1934, as amended.
C-1
<PAGE>
Exhibit 11
Consent of Independent Auditors
Independent Auditors' Consent
The Shareholders and Board of Trustees of
Meyers Investment Trust:
We consent to the use of our report dated June 7, 1996 with respect to the
Meyers Sheppard Pride Fund of the Meyers Sheppard Investment Trust incorporated
herein by reference in this Registration Statement on Form N-1A and to the
references to our firm under the headings "Financial Highlights" in the
Prospectus and "Independent Auditors" and "Financial Statements" in the
Statement of Additional Information.
/s/ KPMG PEAT MARWICK LLP
New York, New York
January 29, 1997
<PAGE>
===============================================================================
MEYERS SHEPPARD PRIDE FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
(Unaudited)
--------------------------------------------------------------------
ASSETS:
Investments, at value (Cost $876,700)
(Note 1a).................................... $ 946,625
Receivables from Investment Advisor.......... 149,241
Dividend/Interest receivable................. 1,041
Deferred organizational expense and
other assets................................. 102,818
---------
Total Assets............................. $ 1,199,725
-------------
LIABILITIES:
Organizational expenses payable.............. 102,818
Payable for securities purchased............. 45,058
Payable for capital shares redeemed.......... 2,695
Other Accrued expenses....................... 153,935
---------
Total Liabilities........................ 304,506
-------------
Net Assets, applicable to 82,822 shares
of beneficial interest outstanding........... 895,219
-------------
NET ASSETS:
Capital...................................... 825,544
Accumulated undistributed net investment
income....................................... (1,901)
Accumulated undistributed net realized
gains on investment transactions............. 1,651
Net unrealized appreciation on investments... 69,925
------------
Net Assets............................... $ 895,219
=============
Net Asset Value Per Share............ 10.81
The accompanying notes are an integral part of the financial statements.
<PAGE>
===============================================================================
MEYERS SHEPPARD PRIDE FUND
STATEMENT OF OPERATIONS (unaudited)
===============================================================================
For the period from
June 10, 1996*
through December 31, 1996
Investment Income
Interest income.............................. $ 794
3,164
Dividend income........................ ------------
$ 3,958
Expenses
Advisory (Note 2).............................. 1,681
Administrative Services (Note 2)............... 82,500
Fund accounting fees and expenses (Note 2) 842
Audit.......................................... 10,000
Legal.......................................... 12,500
Registration................................... 8,686
Custodian...................................... 7,500
Amortization of organization expense........... 10,567
Printing....................................... 4,000
Trustees' fees................................. 3,750
Transfer agent and shareholder servicing (Note 2) 1,205
12b-1 fees (Note 2)............................ 548
Insurance...................................... 5,500
5,821
Miscellaneous.................................. ----------
Total expenses before waiver/
reimbursements............................ 155,100
Less expenses waived/reimbursed
(Note 2).................................. (149,241)
-------------
Net expenses................................ 5,859
-------------
Net Investment Loss............................ (1,901)
-------------
Realized And Unrealized Gain/(Loss) on
Investments
Net realized gain on investments............... 1,651
Net unrealized appreciation on investments..... 69,925
----------
Net realized and unrealized gain on
investments............................... 71,576
-------------
Net increase in net assets resulting
from operations................................ $ 69,675
=============
* Commencement of operations.
The accompanying notes are an integral part of the financial statements.
<PAGE>
=============================================================================
MEYERS SHEPPARD PRIDE FUND
STATEMENT OF CHANGES IN NET ASSETS (unaudited)
-----------------------------------------------------------------------------
For the period from
June 10, 1996*
through December 31, 1996
Increase in Net Assets from:
Operations
Net investment income.......................... $ (1,901)
Net realized gain on investments............... 1,651
Net change in unrealized appreciation on
investments.................................... 69,925
------------
Net increase in net assets resulting
from operations................................ 69,675
------------
Capital Share Transactions (Note 4)
Proceeds from sale of shares................... 727,684
Net asset value of shares redeemed............. (2,168)
------------
Net increase in net assets from capital
share transactions............................. 725,516
------------
Total increase in net assets................... 795,191
------------
Net Assets
Beginning of period............................ 100,028
-----------
End of period.................................. $ 895,219
===========
* Commencement of operations.
The accompanying notes are an integral part of the financial statements.
<PAGE>
MEYERS SHEPPARD PRIDE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 1996
(Unaudited)
------------------------------------------------------------------------
Market
Shares Value
----------- --------
Common Stocks (95.6%)
Banking (7.5%)
500 H.F. Ahmanson & Co. $16,250
1,200 Glendale Federal Bank* 27,900
300 Lincoln National Corp 15,750
400 Riggs National Corp. 6,900
---------
66,800
Beverages (1.3%)
300 Seagram Co. LTD. 11,625
---------
Broadcasting (1.9%)
500 Viacom Inc.* 17,438
---------
Computer Equipment (10.5%)
500 Digital Equipment Corp. 18,188
100 International Business Machines Corp. 15,100
7,000 Midisoft Corp.* 17,391
1,000 Silicon Graphics, Inc.* 25,500
2,000 Unisys Corp.* 17,550
---------
93,729
---------
Computer Software (3.7%)
1,300 Sun Microsystems, Inc.* 33,394
---------
Electrical & Electronics (8.4%)
500 Arrow Electronics, Inc.* 26,750
1,200 Cypress Semiconductor Corp.* 16,950
600 LAM Research Corp.* 16,875
550 LSI Logic Corp.* 14,713
---------
75,288
---------
Entertainment (5.3%)
200 The Walt Disney Co. 13,925
900 Time-Warner, Inc. 33,750
---------
47,675
---------
Financial Services (6.2%)
400 American Express Company 22,600
700 Salomon, Inc. 32,988
---------
55,588
---------
Forest Products & Paper (1.1%)
100 Kimberly-Clark Corp. 9,525
---------
The accompanying notes are an integral part of the financial statements.
<PAGE>
MEYERS SHEPPARD PRIDE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 1996
(Unaudited)
------------------------------------------------------------------------
Market
Shares Value
----------- --------
Insurance (3.0%)
300 Nac're Corp. $ 10,163
500 U.S. Life Corp. 16,625
---------
26,788
---------
Medical-Hospital Management (5.6%)
600 Foundation Health Corp.* 19,050
700 United Healthcare Corp. 31,500
---------
50,550
---------
Mining (2.5%)
1,800 Homestate Mining Co. 22,800
---------
Oil & Gas Exploration (5.4%)
200 Amerada Hess Corp. 11,575
300 Amoco Corp. 24,150
100 Mobil Corp. 12,225
---------
47,950
---------
Pharmaceuticals (7.9%)
600 Amgen, Inc.* 32,625
400 McKesson Corp. 22,400
200 Merck & Co., Inc. 15,850
---------
70,875
---------
Retail (12.0%)
2,000 Ann Taylor Stores, Inc.* 35,000
600 Dayton-Hudson Corp. 31,400
1,100 Lillian Vernon Corp. 13,475
1,500 Limited, Inc. 27,563
---------
107,438
---------
Technology (2.3%)
800 Advanced Micro Devices, Inc. 20,600
---------
Telecommunications (8.2%)
900 AT&T Corp. 39,150
129 Lucent Technologies, Inc. 5,962
700 Sprint Corp. 27,913
---------
73,025
---------
Transportation-Air (2.8%)
1,600 America West Airline, Inc.* 25,400
---------
Total Common Stocks (cost $786,563) $ 856,488
==========
The accompanying notes are an integral part of the financial statements.
<PAGE>
MEYERS SHEPPARD PRIDE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 1996
(Unaudited)
------------------------------------------------------------------------
Market
Shares Value
----------- --------
COMMERCIAL PAPER (4.4%)
39,136 Wells Fargo Sweep Account $ 39,137
---------
Total Commercial Paper (cost $39,137) 39,137
---------
MONEY MARKET ACCOUNT (5.7%)
9,000 Stagecoach U.S. Treasury Money Market Fund 9,000
42,000 Stagecoach Prime Money Market Fund 42,000
---------
Total Money Market Account (cost $51,000) 51,000
---------
TOTAL INVESTMENTS (105.7%)(cost $876,700) $ 946,625
---------
Other Liabilities in excess of Assets (5.7%) (51,406)
NET ASSETS (100.0%) $ 895,219
=========
* Represents non-income producing securities.
+ Cost for book and tax purposes is the same.
The accompanying notes are an integral part of the financial statements.
<PAGE>
MEYERS SHEPPARD PRIDE FUND
NOTES TO FINANCIAL STATEMENTS (unaudited)
-------------------------------------------------------------------
1. Significant Accounting Policies. The Meyers Sheppard Pride Fund (the
"Fund") is a separate series of the Meyers Sheppard Investment Trust (the
"Trust"), a business trust organized under the laws of the State of
Delaware on March 26, 1996. The Fund is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"). The Fund is an
open-ended, no-load, diversified management investment company whose
overall investment objective is to attain long-term capital appreciation.
Prior to June 10, 1996 (commencement of operations), the Fund had no
operations other than the sale of 10,003 shares of common stock at $10.00
per share, to initial seed capital investors. The overall investment
objective of the Fund is to attain long-term capital appreciation by
investing in a diversified portfolio of equity securities of undervalued
but nevertheless fundamentally sound companies which have been identified
as having met the "Social Objective". Companies which meet the "Social
Objective" are defined as companies which, in general, have been identified
as having progressive policies towards gays and lesbians, but at a minimum
have in place specifically stated policies against discrimination in hiring
and promotion based upon sexual orientation. The following are significant
accounting policies followed by the Fund in the preparation of these
financial statements:
a. Valuation of Securities. Equity securities held by the Fund are valued
at the last sale price on the exchange on which they are primarily
traded, or on the NASDAQ system for unlisted national market issues,
or at the last quoted bid price for securities in which there were no
sales during the day or for unlisted securities not reported on the
NASDAQ system. Short-term obligations, with remaining maturities of 60
days or less, are valued at amortized cost, which approximates market
value. Fund securities (other than short-term obligations with
remaining maturities of less than sixty days) for which there are no
such quotation or valuation, are valued at fair value as determined in
good faith by or at the direction of the Fund's Board of Trustees.
b. Organizational Expenses. Costs incurred in connection with the
organization and initial registration of the Fund have been deferred
and are being amortized over a sixty-month period, beginning with the
Fund's commencement of operations.
c. Securities Transactions and Investment Income. Securities transactions
are recorded on a trade date basis. Realized gains and losses from
securities transactions are recorded on the identified cost basis.
Interest income, including, where applicable, amortization of premium
and accretion of discount on investments, is accrued daily.
d. Dividends and Distributions to Shareholders. Dividends from net
investment income and distributions of net realized gains are normally
declared and paid annually by the Fund. The Fund records dividends and
distributions to shareholders on the ex-dividend date. The amount of
dividends and distributions from net investment income and net
realized capital gains are determined in accordance with federal
income tax regulations which may differ with generally accepted
accounting principles. These "book/tax" differences are either
temporary or permanent in nature. To the extent these differences are
permanent in nature, such amounts are reclassified within the capital
accounts based on their federal tax-basis treatment; temporary
differences do not require a reclassification.
<PAGE>
MEYERS SHEPPARD PRIDE FUND
NOTES TO FINANCIAL STATEMENTS (unaudited)
-------------------------------------------------------------------
e. Federal Income Taxes. The Fund intends to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code
and distribute all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
f. Use of Estimates. Estimates and assumptions are required to be made
regarding assets, liabilities, and changes in net assets resulting
from operations when financial statements are prepared. Actual results
could differ from these amounts.
2. Investment Management, Administration, Fund Accounting, Transfer Agency,
and Distribution Agreements. The Fund has entered into an investment
management agreement (the "Investment Management Agreement") with the
Investment Manager, Meyers, Sheppard & Co., LLC (the "Investment Manager").
The Investment Management Agreement provides that the Fund pays the
Investment Manager for its management and investment advisory services, a
monthly fee equal, on an annual basis to 1.00% of the Fund's average daily
net assets. The Investment Manager has undertaken to waive the portion of
its investment management fee necessary to maintain Total Annual Operating
Expenses of no more than 2.25% per year of average daily net assets. For
the period ended December 31, 1996, the Investment Manager earned $1,681,
and waived fees of $1,681.
Furman Selz LLC ("Furman Selz") provides the Fund with administrative services
pursuant to an administration agreement (the "Administration Agreement"). The
services under the Administration Agreement are subject to the supervision of
the Fund's directors and officers and include the day-to-day administration of
matters related to the corporate existence of the Fund, maintenance of its
records, preparation of reports, supervision of the Fund's arrangements with its
custodian and assistance in the preparation of the Fund's registration
statements under federal and state laws. Pursuant to the Administration
Agreement, the Fund pays Furman Selz, per year, an amount equal to 0.15% of the
first $100 million of the Fund's aggregate assets, 0.10% for the next $400
million, 0.07% for the next $500 million, and 0.06% for aggregate assets in
excess of $1 billion. For the period ended December 31, 1996, Furman Selz earned
$82,500, which fees will be assumed and paid by the Investment Manager.
Furman Selz provides the Fund with fund accounting services pursuant to the
terms of a Fund Accounting Agreement. Pursuant to this agreement, Furman Selz is
paid a fee of $35,000 per year, plus out-of-pocket expenses. For the period
ended December 31, 1996, Furman Selz earned $842, which fees will be assumed and
paid by the Investment Manager.
Furman Selz provided the Fund with transfer agency and registrar services
pursuant to the terms of a Transfer Agency Agreement through October 13, 1996.
After this date, BISYS Fund Services, Inc. provided these services as the result
of the sale or assignment by Furman Selz of its mutual fund business to BISYS
Fund Services, Inc., pursuant to which BISYS Fund Services, Inc. executed a
Transfer Agency Agreement. Pursuant to these agreements, each Transfer Agent is
paid a per account fee of $15.00 per year, subject to a $12,000 per year
minimum, and is also reimbursed certain expenses. For the period ended December
31, 1996, Furman Selz and BISYS Fund Services collectively earned fees of
$1,205, which fees will be assumed and paid by the Investment Manager.
<PAGE>
MEYERS SHEPPARD PRIDE FUND
NOTES TO FINANCIAL STATEMENTS (unaudited)
-------------------------------------------------------------------
The Trustees of the Trust have adopted a Plan of Distribution (the "Distribution
Plan") with respect to the Fund in accordance with Rule 12b-1 under the
investment Company Act, after having concluded that there is a reasonable
likelihood that the Distribution Plan will benefit the Fund and its
shareholders. As contemplated by the Distribution Plan, Furman Selz acts as
agent of the Fund in connection with the offering of shares of the Fund pursuant
to the terms of a Distribution Agreement. Pursuant to the Distribution
Agreement, Furman Selz also acts as the Fund's Distributor, and is responsible
for facilitating the continuous sale or redemption of Fund shares. Solely for
the purpose of reimbursing Furman Selz for activities primarily intended to
result in the sale of Fund shares, the Trust has, on behalf of the Fund, adopted
the Distribution Plan wherein, pursuant to Rule 12b-1 of the Investment Company
Act, the Fund is authorized to spend up to 0.25% of net asset value annually for
Furman Selz's services in connection with the distribution of shares of the
Fund. For the period ended December 31, 1996, the Fund incurred distribution
fees of $548 to Furman Selz, which fees will be assumed and paid by the
Investment Manager.
3. Investments. Purchase and sales of securities for the period ended December
31, 1996, other than short-term securities, amounted to $891,471, and
$224,843, respectively. The cost of securities is substantially the same
for Federal income tax purposes as it is for financial reporting purposes.
-------------
Aggregate cost................. $ 876,700
=============
Gross unrealized appreciation.. $93,067
Gross unrealized depreciation.. -------------
23,142
-------------
Net unrealized appreciation.... $ 69,925
=============
4. Capital Stock Transactions. The Fund is authorized, pursuant to the terms
of the Trust Instrument of the Trust, to issue an unlimited number of full
and fractional shares of beneficial interest (par value $0.00001).
Transactions in shares for the period ended December 31, 1996, were as
follows:
-----------------------
Shares Amount
Beginning balance........ ---------- ---------
10,003 $100,028
---------- --------
Shares sold.............. 73,019 727,684
Shares redeemed.......... (200) (2,168)
---------- --------
Net increase............. 72,819 725,516
---------- --------
Ending balance........... 82,822 $825,544
========== ========
5. Agreements with BISYS Fund Services. Effective January 1, 1997, in lieu of
Furman Selz, BISYS Fund Services Limited Partnership became the
Administrator and Distributor for the fund pursuant to the terms of an
Administration Agreement and Distribution Agreement, respectively, and
BISYS Fund Services, Inc. became the Fund's Accounting Agent pursuant to
the terms of a Transfer Agency
<PAGE>
MEYERS SHEPPARD PRIDE FUND
NOTES TO FINANCIAL STATEMENTS (unaudited)
-------------------------------------------------------------------
Agreement. This change was effectuated as a result of the sale or
assignment by Furman Selz of its mutual fund business to BISYS Funds
Services, and entering into of new contracts between the Fund and BISYS
Fund Services to reflect the new relationship.
<PAGE>
===========================================================================
MEYERS SHEPPARD PRIDE FUND
FINANCIAL HIGHLIGHTS (unaudited)
---------------------------------------------------------------------------
The following selected data for a share in the Fund outstanding for the
indicated period has not been audited by KPMG Peat Marwick LLP, the Fund's
independent auditors, and should be read in conjunction with the unaudited
financial statements and related notes appearing in the Statement of Additional
Information dated January 31, 1997. The Fund's Annual Report will include a
discussion of the factors, strategies and techniques that materially affect its
performance during the period of the report, as well as certain other related
information. A copy of the Fund's Annual Report will be made available without
charge upon request and when available.
- ---------------------------------------------------------------------------
For the period
June 10, 1996
(commencement
of operations) to
December 31, 1996
-----------------
(Unaudited)
For a share of beneficial interest outstanding
throughout the period:
Net Asset Value, beginning of period.................. $ 10.00
Income from investment operations:
Net investment income.............................. (0.02)
Net realized and unrealized gain on investments.... 0.83
-------
Total income from investment operations............... 0.81
Less distributions from:
Net investment income.............................. 0
Net realized gains................................. 0
-------
Total distributions................................... 0
Net Asset Value, end of period........................ $ 10.81
Total return.......................................... 8.10%(3)
Ratios/supplemental data:
Net assets, end of period.......................... $895,219
Ratio of expenses to average net assets(1)......... 2.25%(2)
Ratio of net investment income to average net
assets(1)........................................ (0.73%)(2)
Portfolio Turnover rate............................... 6%
Average Commissions per share......................... $ 0.080842
________________________
(1) Reflects the Investment Manager's waiver of its entire investment
management fee and its assumption of liabilities of the Fund. Without such
waiver and assumption by the Investment Manager, the ratio of expenses and
net investment income to average net assets would have been as follows:
Ratio of expenses to average net assets........ 59.68% (2)
Ratio of net investment income to average
net assets................................... (58.16%)(2)
(2) Annualized
(3) Not annualized
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This Schedule contains summary financial information from Meyers Sheppard Pride
Fund's financial statements for the period ended December 31, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001011167
<NAME> MEYERS SHEPPARD PRIDE FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-10-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 876,700
<INVESTMENTS-AT-VALUE> 946,625
<RECEIVABLES> 150,282
<ASSETS-OTHER> 102,818
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,199,725
<PAYABLE-FOR-SECURITIES> $45,058
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 259,448
<TOTAL-LIABILITIES> 304,506
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 825,544
<SHARES-COMMON-STOCK> 82,822
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 1,901
<ACCUMULATED-NET-GAINS> 1,651
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 69,925
<NET-ASSETS> $895,219
<DIVIDEND-INCOME> 3,164
<INTEREST-INCOME> 794
<OTHER-INCOME> 0
<EXPENSES-NET> 5,859
<NET-INVESTMENT-INCOME> (1,901)
<REALIZED-GAINS-CURRENT> $1,651
<APPREC-INCREASE-CURRENT> 69,925
<NET-CHANGE-FROM-OPS> 69,675
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 73,019
<NUMBER-OF-SHARES-REDEEMED> 200
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 725,516
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,681
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 155,100
<AVERAGE-NET-ASSETS> 458,590
<PER-SHARE-NAV-BEGIN> $10.00
<PER-SHARE-NII> (.02)
<PER-SHARE-GAIN-APPREC> .83
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> $10.81
<EXPENSE-RATIO> 2.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
